AGENDA REPORT
Meeting Date: May 2, 2023
Item Number:
To: Honorable Mayor & City Council
From: Logan Phillippo, Real Property Development Manager Jonathan Gernes, Management Analyst
Subject: APPROVAL OF BROKER AGREEMENT BY AND BETWEEN THE CITY OF BEVERLY HILLS AND THE SCHAFFEL GROUP, INC. FOR
THE ACQUISITION OF REAL PROPERTY
Attachment: 1. Broker Agreement
RECOMMENDATION
Staff recommends City Council approve Broker Agreement by and between the City of Beverly Hills and The Schaffel Group, Inc. for the Acquisition of Real Property along S. La Cienega Blvd. in Los Angeles.
INTRODUCTION
The City is seeking to acquire property for the development of future water wells in the La Brea Subarea of the Central Groundwater Basin, targeting commercial properties along S. La Cienega Blvd. The broker will identify off-market opportunities, provide pricing recommendations, and assist with negotiating terms of any future purchase and sale agreement.
DISCUSSION
The City is seeking to acquire one or more properties for future water well sites in the La Brea Subarea of the Central Groundwater Basin. Prior to the pandemic, the City had considered the purchase of properties and submitted offers, but negotiations did not result in a purchase agreement.
The City has and continues to evaluate cost-saving opportunities that do not require the acquisition of additional property. Such alternatives have included possible well locations at La Cienega Park and the installation of a monitoring well at a City-owned property located at approximately 2323 S. La Cienega Blvd., which is commonly referred to as the Sand Pit. The water quality at the Sand Pit site has been evaluated via the monitoring well E-10
Meeting Date: May 2, 2023
with the last sampling taking place on February 9, 2023. Lab results indicated several constituents of concern that will need to be further monitored periodically. Staff is meeting with the Division of Drinking Water (DDW) in April/May 2023 to present the water quality results and obtain DDW’s input on the frequency of monitoring and recommended next steps. Staff recommends continuing with the search for real property while the options at the Sand Pit and La Cienega Park are further evaluated.
Market activity within this particular area has been limited in recent years, especially when considering the necessary site conditions (land area, access points, nearby overhead utilities, distance from existing/planned water infrastructure, estimated water yield, etc.) that must be present at a particular property to support the construction of water infrastructure.
In 2017, the City acquired property from International Coffee & Tea, LLC at 1945 S. La Cienega Blvd, commonly referred to as the Coffee Bean Site. The site consisted of two office buildings and one single-family residence on Chariton St. that the former owners used as an auxiliary office building. The single-family residence was demolished and a well, LCW-1, was constructed in its place along with a housing structure to match the character of the surrounding residential neighborhood on Chariton St. LCW-1 is currently completed and has been operational since March 2023. Additional wells and well sites are necessary in order to meet groundwater production targets for the La Brea Subarea.
Staff recommends engaging The Schaffel Group to represent the City to identify off-market opportunities and to assist in negotiating any future transaction for properties along S. La Cienega Blvd. The Schaffel Group previously represented the City, as buyer, for the acquisition of real property at 327-335 S. Robertson Blvd. in 2019. The broker has also previously assisted the City in identifying sites and provided recommendations for acquisitions on S. La Cienega Blvd.
Key terms of the Broker Agreement include:
An initial term of six (6) months, which may be extended for up to two (2) additional terms of six (6) months each; and
Standard commission of 2.5% of a negotiated purchase price.
FISCAL IMPACT
There is no fiscal impact directly associated with approval of this agreement at this particular time and no appropriations are requested.
Often, sellers pay for the cost of brokerage commissions, but payment of the commission is ultimately negotiated in the purchase and sale agreement for a particular property. A seller’s expectations will depend on factors such as whether the property is on the market and whether they have already engaged a seller’s broker.
While this particular agenda item is only related to approval of the subject brokerage agreement, acquisition of real property for water wells may require future appropriations from the Water Fund. In addition to the cost of the property, the City may be required to relocate any existing tenants, demolish buildings/structures, construct a monitoring well, and collect samples, before fully knowing whether a permanent well is feasible, which are factors included in the Water Enterprise Plan. All fiscal impacts and necessary budget Meeting Date: May 2, 2023
actions will be presented to City Council concurrently with any recommended purchase and sale agreement in the future.
Ryan Gohlich,
Assistant City Manager
Approved By
Attachment 1
B0785-0001\2804252v1.doc
BROKER AGREEMENT
THIS BROKER AGREEMENT (the “Agreement”) is dated May 2, 2023 and is entered into by and between THE SCHAFFEL GROUP, INC., a California corporation (“Broker”) and the CITY OF BEVERLY HILLS, a California municipal corporation (“City”).
RECITAL
City desires to engage Broker for the limited purpose of negotiating the terms of the City’s potential purchase of properties along or in the vicinity of S. La Cienega Blvd between Olympic Blvd. and the I-10 Freeway in Los Angeles, California 90035 selected by the City Manager (the “Properties”) and currently owned by various owners (the “Negotiation Services”).
AGREEMENT
1. Broker’s License. Broker represents and warrants to City that it holds a valid real estate broker’s license from the State of California and the license number is 00842890.
2. Services and Term. Broker shall diligently perform the Negotiation Services from the date hereof until the earlier of: (i) the approval and execution by the City (in its sole and absolute discretion) and the owners of the Properties of purchase and sale agreements for the Properties; or (ii) the date that is six (6) months from the date of this Agreement as may be extended by the City Manager twice, for up to six (6) months for each extension.
Broker shall have no authority to bind the City and shall expressly disclose that fact in writing to the owners of the Properties, with a copy to the City Manager or City Manager’s designee. Broker shall at all times comply with the directions from the City Manager, or City Manager’s designee as to the terms to be negotiated.
3. Approval of Purchase Agreement by City. The City is under no obligation, express or implied, to accept any negotiated terms or any proposed purchase and sale agreement.
4. Payment of Commission/Compensation. If a purchase agreement is approved and executed by City and an owner, and the sale closes by the closing deadline in the purchase agreement, then City shall pay, or cause to be paid, to Broker from funds in the escrow for the applicable purchase/sale transaction, upon the closing of the applicable purchase transaction, a commission of two and one-half percent (2.5%) of the purchase price. Broker acknowledges that the City may require such commission to be paid by the owner/seller under the terms of the applicable purchase and sale agreement, or by any seller’s broker (by splitting its commission with Broker), but the foregoing will not affect the City’s obligations set forth in the first sentence of this Section 4.
5. Insurance.
DocuSign Envelope ID: D3E7ADEB-7189-40DC-B978-0312A63B1735 -2-
B0785-0001\2804252v1.doc
(a) Broker shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, insurance as follows (with limits that may be met by a combination of primary and excess policies):
(1) A policy or policies of Comprehensive General Liability Insurance, with limits of Five Million Dollars ($2,000,000) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by Broker.
(2) A policy or policies of Comprehensive Vehicle Liability Insurance covering personal injury and property damage, with limits of Five Million Dollars ($1,000,000) per occurrence combined single limit, covering any vehicle utilized by Broker in performing the services required by this Agreement.
(3) Workers’ compensation insurance as required by the State of California. (4) Professional Liability Insurance – a policy or policies of Professional Liability Insurance (errors and omissions) with limits of Five Million Dollars ($1,000,000) per claim and in the aggregate.
Any deductibles or self-insured retentions attached to such policy or policies must be declared to City. Further, Broker agrees to maintain in full force and effect such insurance for one year after performance of work under this Agreement is completed.
(b) The policy or polices required by this Agreement shall be issued by an insurer admitted in the State of California and with a rating of at least a A;VII (or equivalent rating) in the latest edition of Best’s Insurance Guide. (c) Broker agrees that if it does not keep the aforesaid insurance in full force and effect, City may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, City may take out the necessary insurance and pay, at Broker’s expense, the premium therefor.
(d) At all times during the term of this Agreement, Broker shall maintain on file with the City a certificate or certificates of insurance in a form acceptable to the City, showing that the aforesaid policies are in effect in the required amounts. Broker shall, prior to commencement of work under this Agreement, file with the City such certificate or certificates. The general liability insurance shall contain an endorsement covering the City as additional insured. Broker agrees that the policies required under this Agreement shall not be canceled or reduced except on thirty (30) days prior written notice to City by Broker, and specifically stating that the coverage contained in the policies affords insurance pursuant to the terms and conditions as set forth in this Agreement.
(e) The general liability and automobile insurance provided by Broker shall be primary to any coverage available to City with respect to claims to the extent DocuSign Envelope ID: D3E7ADEB-7189-40DC-B978-0312A63B1735 -3-
B0785-0001\2804252v1.doc
arising from Broker’s negligent, fraudulent, or willful misconduct. The general liability, automobile, and workers compensation policies of insurance required by this Agreement shall include provisions for waiver of subrogation. (f) Any deductibles or self-insured retentions must be declared to City.
6. Assignment. Broker may not assign its rights or obligations hereunder, in whole or in part, without the prior consent of City, which consent may be given or withheld in City's sole and absolute discretion.
7. Attorneys' Fees. If either party institutes legal action to enforce its rights under this Agreement, the prevailing party (as determined by the trier of fact) will be entitled to recover its reasonable attorneys' fees and costs from the other party.
8. Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement.
9. Entire Agreement. This Agreement constitutes the entire agreement between City and Broker with respect to the subject matter hereof and may not be altered except by a written amendment executed by both City and Broker.
10. Applicable Law. This Agreement shall be governed by the laws of the State of California.
11. Addresses for Notices. Notices hereunder shall be in writing, shall be addressed as follows, and shall be delivered by certified mail, return receipt requested (and deemed delivered on the date of delivery or refusal of acceptance shown on the return receipt):
City: City of Beverly Hills
455 N. Rexford Drive
Beverly Hills, CA 90210
Attn: Logan Phillippo
Broker: The Schaffel Group, Inc.
220 S. Almont Drive
Beverly Hills, CA 90211
Attn: Sy Schaffel
12. Broker Default. City may terminate this Agreement upon a default by Broker which is not cured within ten (10) days after written notice from City.
13. DocuSign. This Broker Agreement may be executed by using DocuSign.
14. Time of Essence. Time is of the essence of every provision hereof in which time is a factor.
15. Complete Agreement. This Agreement constitutes the complete agreement of the parties as to the subject matter hereof.
DocuSign Envelope ID: D3E7ADEB-7189-40DC-B978-0312A63B1735 -4-
B0785-0001\2804252v1.doc
16. Authority. The person executing this Agreement on behalf of Broker represents and warrants to City that this Agreement has been duly authorized and approved by Broker and that such person has the authority to execute this Agreement on behalf of Broker.
CITY:
CITY OF BEVERLY HILLS
By: ___________________________
Julian A. Gold, M. D., Mayor
ATTEST:
Huma Ahmed, City Clerk
APPROVED AS TO FORM
Laurence S. Wiener,
City Attorney
APPROVED AS TO CONTENT
Nancy Hunt-Coffey,
City Manager
Ryan Gohlich,
Assistant City Manager
Ryan Gohlich,
Sharon L’Heureux Dressel,
Risk Manager
BROKER:
THE SCHAFFEL GROUP, INC.
By: ___________________________
Sy Schaffel, Chairman
DocuSign Envelope ID: D3E7ADEB-7189-40DC-B978-0312A63B1735 Certificate Of Completion
Envelope Id: D3E7ADEB718940DCB9780312A63B1735 Status: Sent Subject: Complete with DocuSign: 2023.04.25 Schaffel Broker Agt Source Envelope:
Document Pages: 4 Signatures: 4 Envelope Originator:
Certificate Pages: 3 Initials: 0 Logan Phillippo
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
455 N. Rexford Drive
Beverly Hills, CA 90210
[email protected]
IP Address: 198.245.189.166
Record Tracking
Status: Original
4/25/2023 9:04:15 AM
Holder: Logan Phillippo
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Bruce Galloway for
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 208.87.235.180
Sent: 4/25/2023 9:20:11 AM
Viewed: 4/25/2023 9:42:44 AM
Signed: 4/25/2023 9:42:50 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Ryan Gohlich
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 198.245.189.166
Sent: 4/25/2023 9:20:09 AM
Viewed: 4/25/2023 9:25:21 AM
Signed: 4/25/2023 9:27:45 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Sharon L'Heureux Dressel
[email protected]
Risk Manager
Sharon Dressel
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 198.245.189.166
Sent: 4/25/2023 9:20:11 AM
Viewed: 4/25/2023 10:18:25 AM
Signed: 4/25/2023 10:20:27 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Sy Schaffel
[email protected]
The Schaffel Group
Security Level: Email, Account Authentication
(None) Signature Adoption: Drawn on Device
Using IP Address: 108.214.86.19
Signed using mobile
Sent: 4/25/2023 9:20:10 AM
Resent: 4/26/2023 9:29:06 AM
Viewed: 4/26/2023 10:38:49 AM
Signed: 4/26/2023 10:41:33 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Signer Events Signature Timestamp
Logan Phillippo
[email protected]
Real Property Development Manager
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 4/26/2023 10:41:35 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Nancy Hunt-Coffey
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Julian A. Gold, M.D.
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Huma Ahmed
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Cory Schaffel
[email protected]
The Schaffel Group
Security Level: Email, Account Authentication
(None)
Sent: 4/25/2023 9:20:10 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Adrianne Rosas
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 4/25/2023 9:20:11 AM
Payment Events Status Timestamps