SECOND AMENDMENT TO
CONTINGENT AGREEMENT TO PURCHASE AND SELL
REAL ESTATE AND ESCROW INSTRUCTIONS
(Washington & Telegraph)
THIS SECOND AMENDMENT TO CONTINGENT AGREEMENT TO PURCHASE AND SELL REAL ESTATE AND ESCROW INSTRUCTIONS (this “Second Amendment”) is entered into as of ______________, 2022 by and between THE CITY OF COMMERCE, a public entity (“Seller” or “City”),; WASH-TEL COMMERCE, LLC, a California limited liability company (“Wash-Tel Buyer”) and CITADEL HOLDINGS GROUP, LLC, a Delaware limited liability company (“CRC Buyer”), successor-in-interest to Craig Realty Group Citadel, LLC. The Wash-Tel Buyer and the CRC Buyer are sometimes collectively referred to herein as the “Buyers”.
RECITALS
The Successor Agency to the Commerce Community Development Commission (“Agency”) and Buyers entered into that certain Contingent Agreement to Purchase and Sell Real Estate and Escrow Instructions dated May 2017 (“Original Purchase Agreement”), pursuant to which Agency agreed to sell and Buyers agreed to buy certain real property in the City of Commerce, California (“Land”), together with other forms of property (collectively referred to as “Property”), as more particularly described in the Original Purchase Agreement.
On May 19, 2014, the Department of Finance (“DOF”) approved the Successor Agency’s Long Range Property Management Plan (“LRPMP”), thereby approving the Successor Agency’s proposed use or disposition of all the properties listed on the LRPMP; and The Original Purchase Agreement was approved by the Oversight Board on March 28, 2018, and was not required to be approved by the Department of Finance as the transaction was consistent with the Long Range Property Management Plan.
On or about August 6, 2018, Agency and Buyers entered into the First Amendment to Contingent Agreement to Purchase and Sell Real Estate and Escrow Instructions (“First Amendment”) which, among other things reserved approximately 1.8 acres of the Property to the Agency and adjusted the Purchase Price accordingly. The Original Purchase Agreement as amended by the First Amendment are hereinafter referred to as the “Amended Purchase Agreement”.
Successor Agency and Seller entered into that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated May 23, 2018 (“City Purchase Agreement”), pursuant to which Successor Agency agreed to sell and Seller agreed to buy the Property. The transfer of the Property from Agency to City was approved by the Oversight Board on May 30, 2018, and the Department of Finance issued a no action letter (tacit approval) on July 18, 2018. The Successor Agency conveyed the Property to Seller by Grant Deed recorded August 1, 2019 as Instrument Number 20190765076 of Los Angeles County Official Records. As a part of the City Purchase Agreement, the City of Commerce was to assume the obligations of the Agency as referenced in the Amended Purchase Agreement.
On or about October 16, 2018, Craig Realty Group Citadel, LLC assigned all of its right, title and interest in the Amended Purchase Agreement and the Property to Citadel Holdings Group, LLC.
On or about July 21, 2020, the Property was subdivided pursuant to that Parcel Map No. 82490 recorded as instrument 20200810465 in the county recorder’s office of Los Angeles County, and amended by that certain Certificate of Correction recorded September 18, 2020 as instrument 20201138174 in the county recorder’s office of Los Angeles County (as amended, “Parcel Map”).
Seller and Buyers wish to amend the Amended Purchase Agreement pursuant to the terms and conditions of this Second Amendment. Capitalized terms not otherwise defined in this Second Amendment shall have the meanings ascribed to such terms in the Amended Purchase Agreement.
A portion of the Property depicted as Parcel 5 on the Parcel Map and approximately shown on Exhibit “A” attached hereto, consisting of approximately 4.42 acres of the Property is contemplated by Seller for development as a City Public Safety Facility (“City Public Safety Facility Land”). The City Public Safety Facility Land occupies all of the Citadel Use Land and a portion of the previously reserved 1.8 acres of the Property.
The Amended Purchase Agreement will continue to control all aspects of the agreement between Seller and Buyers except for those terms that this Second Amendment explicitly modifies.
NOW, THEREFORE, incorporating the foregoing recitals as a part of this Second Amendment, and in consideration of the mutual covenants and conditions contained in this Second Amendment, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Buyers and Seller agree as follows:
AGREEMENT
Section 1 of the First Amendment is deleted in its entirety and replaced with the following:
1. Property. Except as otherwise provided in Section IV of this Second Amendment, the terms “Land”, “Property”, “Wash-Tel Use Land”, “Wash-Tel Use Property”, “Citadel Use Land” and “Citadel Use Property” shall be modified to exclude the City Public Safety Facility Land containing approximately 4.42 acres. All of the Citadel Use Land is currently part of City Public Safety Facility Land that Seller is reserving and therefore CRC Buyer’s rights to purchase the Citadel Use Land and Citadel Use Property is limited to Section IV of this Second Amendment. Wash-Tel Buyer’s initial acquisition shall include Parcels 1, 2, 3, and 4, and Lot A, a portion of Lot B and Lot C of the Parcel Map (“Initial Wash-Tel Use Land”). The portion of Lot B depicted on Exhibit “A-1, and legally described on Exhibit “A-2” shall be reserved in fee title to the City. Lot A will be dedicated as a public street following the completion of certain road improvements. Section 1 of the First Amendment and the remainder of the Amended Purchase Agreement is hereby amended so as to be consistent with the foregoing.
Section 2 of the First Amendment is deleted in its entirety and replaced with the following:
2. Purchase Price. Except as otherwise provided in Section III of this Second Amendment, the Purchase Price for the Initial Wash-Tel Use Land shall be Four Million, Seven Hundred Eighty Seven Thousand, Eight Hundred Thirty Four and 25/100 Dollars ($4,787,834.25). Section 2 of the First Amendment and the remainder of the Amended Purchase Agreement is hereby amended so as to be consistent with the foregoing.
Section 3 of the First Amendment is deleted in its entirety and replaced with the following:
3. Buyers Option to Acquire City Public Safety Facility Land. In the event, within four (4) years following the Closing of Escrow on the Initial Wash-Tel Use Land, Seller has not finalized arrangements for the development of a City Public Safety Facility on the City Public Safety Facility Land, then Seller shall provide written notice thereof to Buyers (“Facility Option Notice”), and either of the Buyers (or both as the Buyers may elect) shall have the option and right to purchase the City Public Safety Facility Land from the Seller for Four Million, One Hundred Seventy-Five Thousand, One Hundred Ninety-Five and 37/100 Dollars ($4,175,195.37) (“Facility Option”). In the event both Buyers exercise the Facility Option and an alternative allocation is not agreed to in writing between the Buyers, then CRC Buyer shall have the right to purchase approximately three (3) acres of the City Public Safety Facility Land in the location contemplated by the Original Purchase Agreement and Wash-Tel Buyer shall have the right to purchase the remainder of City Public Safety Facility Land containing approximately 1.4230 acres. Either of the Buyers shall exercise such Facility Option by written notice to Seller within two (2) months following receipt by Buyers of the Facility Option Notice. In the event that one of the Buyers does not exercise such Facility Option within such period, then the other Buyer shall have the right to exercise such Facility Option on the entire City Public Safety Facility Land by written notice to Seller within three (3) months following receipt by Buyers of the Option Notice. In the event that either Buyer exercises the Option, then Seller and Buyers (or the exercising Buyer as applicable) shall enter into either an amendment to the Purchase Agreement or a new purchase and sale agreement on substantially the same terms as the Original Purchase Agreement, updated appropriately for matters which have therefore occurred at such time (“City Public Safety Facility Land Purchase Agreement”). Seller and Buyers shall diligently cooperate to finalize, execute and have the City Public Safety Facility Land Purchase Agreement finalized and approved by all applicable parties as quickly as reasonably possible. The closing date for the purchase of the City Public Safety Facility Land under such City Public Safety Facility Land Purchase Agreement shall be not more than one hundred and twenty (120) days following the execution and delivery of the City Public Safety Facility Land Purchase Agreement, however, such closing date shall be subject to the same rights of extension as set forth in Section 3.3 of the Original Purchase Agreement.
Section 4 of the First Amendment is deleted in its entirety.
Section 5 of the First Amendment is deleted in its entirety and replaced with the following:
5. Closing Date. Section 3.2 (Closing Date) of the Amended Purchase Agreement is hereby amended such that Escrow for the Initial Wash-Tel Use Land shall close on or before the date which is ninety (90) days following the later of the (i) execution of this Second Amendment by all parties, or (ii) the CDOF Acceptance Date (“Closing Date”), subject to any extension exercised by Wash-Tel Buyer pursuant to Section 3.3 of the Amended Purchase Agreement.
Section 6 of the First Amendment is deleted in its entirety and replaced with the following:
6. Infrastructure Improvements and Maintenance.
6.1 Infrastructure Cost Sharing. Within twelve (12) months of the Closing of Escrow for the sale of the Initial Wash-Tel Use Land by Seller to Wash-Tel Buyer, Wash-Tel Buyer shall commence infrastructure improvements to the Property including dry and wet utilities, storm drain facilities, and the like, installation of an interior road on Lot A of the Parcel Map and other public improvements to the extent imposed by the City for the development of the Property. Wash-Tel Buyer shall be responsible for 51.77% and Seller shall be responsible for 48.23% of the cost of those components of development of the overall Property, such as engineering and architectural costs and studies, infrastructure costs (dry and wet utilities, storm drain facilities, and the like) and the cost of planning and installation of the roads and shared amenities (or cost imposed on the developer for public roads and improvements). Seller and Buyers shall cooperate in entering into an agreement and/or record covenants, conditions, restrictions, and easements against the Property at Closing that more precisely addresses the foregoing ("Infrastructure and Maintenance Agreement").
6.2 Shared Maintenance Costs. The Infrastructure and Maintenance Agreement shall also provide necessary easements and maintenance and operating obligations of Lots B and C, including the reimbursement of such operating costs. Wash-Tel Buyer shall be responsible for maintenance and operation of Lots B and C, including any portions of Lot B owned by Seller. Wash-Tel Buyer shall be responsible for 51.77% and Seller shall be responsible for 48.23% of the annual operating costs of Lots B and C of the Parcel Map, including without limitation, landscaping, fountain maintenance, electricity, and sidewalk lighting, however, Seller shall not be responsible for any real estate taxes due on Lots B and C after the Closing Date so long as Seller remains the owner of the City Public Safety Facility Land. Prior to the Closing on the Initial Wash-Tel Use Land, Seller shall also remove and reconvey the Easement Note in the Parcel Map which grants an undivided interest in Lots B and C of the Parcel Map to the owners of the five (5) parcels. Seller shall not bear such cost allocation obligation if Buyer(s) exercises the Facility Option and purchases the City Public Safety Facility Land. Wash-Tel Buyer is aware, acknowledges and understands the provisions of California Labor Code Section 1720, and specifically Section 1720(c) which may require the payment of prevailing wages on all or parts of a project which are paid for in whole or in part by public funds. Wash-Tel Buyer agrees to hold harmless, indemnify and defend the City for and from any claim, action, lawsuit or administrative proceeding arising from non-payment of prevailing wages for work performed on the Property. Except for Seller’s share of the infrastructure improvements, Wash-Tel Buyer shall dedicate to the City, free of cost, all public improvements required by the City and thereafter, City shall maintain such public improvements subject to any required warranty periods.
Section 5.3 of the Amended Purchase Agreement is deleted in its entirety and replaced with the following:
5.3 Prohibited Uses. Buyer covenants and agrees that the Property shall not be used for any of the following purposes:
Tattoo Parlor
Liquor Store
Video Arcade
Cannabis Related Business
New or Used Automobile Dealership
Nail Salon
Tobacco Shop
Article 2 (Agreement Contingent on CEQA Compliance) of the Amended Purchase Agreement is deleted in its entirety.
Sections 8.1(h) and 8.2(b) of the Amended Purchase Agreement are deleted in their entirety.
Grant Deed. The Grant Deed attached to the Original Purchase Agreement as Exhibit “E” is deleted in its entirety and replaced with the Grant Deed attached hereto as Exhibit “E”. The Grant Deed shall contain the reservation to the City of fee title to the portion of Lot B mentioned above. The Grant Deed shall also reserve to the City a temporary easement for ingress and egress by vehicles, pedestrians and other means as reasonably necessary across Parcel 1 in favor of Parcel 5, which temporary easement will automatically expire upon the acceptance by the City of Lot A as a public street.
Assignment. Successor Agency hereby assigns to Seller all of Successor Agency’s rights, title, and interest in and obligations under the Amended Purchase Agreement and the Property, if any, and Seller hereby accepts the assignment and assumes Successor Agency’s rights, title, and interest in and obligations under the Amended Purchase Agreement and the Property and agrees to keep and perform all of the covenants, terms and conditions in the Amended Purchase Agreement that were to have been performed by Successor Agency. Further, Buyers hereby consents to this assignment and assumption of Successor Agency’s interest and obligations to Seller.
Construction Penalty. In the event, within five (5) years following the Closing Date of the acquisition of the Initial Wash-Tel Use Land by Wash-Tel Buyer, a certificate of occupancy specific to Parcel 1, 2, 3, or 4 of the Parcel Map shall not have been obtained, then Seller shall have the right to deliver written notice to Wash-Tel Buyer of such failure and in the event Wash-Tel Buyer does not obtain the parcel specific certificate of occupancy within sixty (60) days following the receipt of such notice, then Seller may require that Buyer pay a fine to Seller of One Hundred Thousand Dollars ($100,000.00) per Parcel for each such Parcel upon which a certificate of occupancy has not been obtained. For each subsequent period of four (4) months that a certificate of occupancy is not obtained for each Parcel, Seller may require Wash-Tel Buyer to pay a fine of $__________________, Such fines shall continue until a certificate of occupancy is obtained for each parcel on a per Parcel basis.
Force Majeure. Notwithstanding anything in the Amended Purchase Agreement or this Second Amendment to the contrary, the delay in any construction or commencement thereof resulting from inclement weather, acts of God, natural disasters, war, civil commotion, riots, strikes, picketing or other labor disputes, imposition of a moratorium, court order, acts or omissions of any applicable governmental agency, unavailable of labor or materials or damage by reason of fire or other casualty or causes beyond the reasonable control of Buyer other than for financial reasons (collectively, “Force Majeure”), shall then extend any corresponding period of time for a period equal to the delay caused by such Force Majeure event.
The Amended Purchase Agreement is hereby amended and shall be construed so as to be consistent with the terms of this Second Amendment.
Full Force and Effect. Except as explicitly modified by this Second Amendment, the Amended Purchase Agreement, and each provision thereof, shall continue unmodified and in full force and effect. [SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, Buyer and Seller have executed this Second Amendment to Contingent Agreement to Purchase and Sell Real Estate and Escrow Instructions as of the date first above written. "Seller"
THE CITY OF COMMERCE
By: __________________________________
Name: ________________________________
Title: Mayor
ATTEST:
By: ________________________________
Name: Lena Shumway
Title: City Clerk
APPROVED AS TO FORM:
By: _________________________________
Name: Noel Tapia
Title: City Attorney
[Signatures continued on next page]
"Buyers"
WASH-TEL COMMERCE, LLC,
a California limited liability company
By: _______________________________
Steven L. Craig, Manager
CITADEL HOLDINGS GROUP, LLC,
a Delaware limited liability company
By: Eureka Realty Partners, Inc.,
a California corporation,
Manager
By:
Steven L. Craig
President
AGREED AND ACCEPTED AS OF
_____________________2021
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
Name: ____________________________________
Its: ______________________________________
“Escrow Holder”
Exhibit “A”
Depiction of City Public Safety Facility Land
EXHIBIT “E”
FORM GRANT DEED
RECORDING REQUESTED BY:
THE CITY OF COMMERCE
2535 Commerce Way
Commerce, California 90040
Attention: _________
WHEN RECORDED RETURN TO AND
MAIL TAX STATEMENTS TO:
Craig Realty Group Citadel, LLC
4100 MacArthur Boulevard, Suite 200
Newport Beach, CA 92660
Attn: Deborah Siegel
(Space Above For Recorder’s Use)
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged THE CITY OF COMMERCE, a public body of the State of California (herein called “Grantor”), hereby grants to WASH-TEL COMMERCE, LLC, a California limited liability company (herein called “Grantee”), the real property described in the document attached hereto as Exhibit “A” (the “Property”), and incorporated herein by this reference.
1. Grantor excepts and reserves any existing street, proposed street, or portion of any street or proposed street lying outside the boundaries of the Property which might otherwise pass with a conveyance of the Property.
2. Said Property is conveyed in accordance with the Contingent Agreement to Purchase and Sell Real Estate and Escrow Instructions (the “Agreement”) entered into by and between Grantor and Grantee on May __, 2017, as amended, which document is a public record on file in the offices of the City Clerk of the City of Commerce and the Secretary of Grantor. Capitalized terms not defined in this Grant Deed shall have the meanings ascribed to such terms in the Agreement
3. Grantee covenants and agrees for itself, its successors, its assigns, and all person claiming under or through them that there shall be no discrimination against or segregation of any person or group of person on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use occupancy, tenure, or enjoyment of the Property, nor shall Grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the land.
4. All deeds, leases or contracts made relative to the Property, improvements thereon, or any part thereof, shall contain or be subject to substantially the following nondiscrimination or non-segregation clauses:
(a) In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land.” (b) In leases: “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased.” (c) In contracts pertaining to the real property: “There shall be not discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under of through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land.”
5. Prohibited Uses. Buyer covenants and agrees that the Property shall not be used for any of the following purposes:
(a) Tattoo Parlor
(b) Liquor Store
(c) Video Arcade
(d) Cannabis Related Business
(e) New or Used Automobile Dealership
(f) Nail Salon, or
(g) Tobacco Shop.
6. All conditions, covenants and restrictions contained in this Grant Deed shall be covenants running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of, and enforceable by Grantor, its successors and assigns, and the City of Commerce and its successors and assigns, against Grantee, its successors and assigns, to or of the Property conveyed herein or any portion thereof or any interest therein, and any party in possession or occupancy of said Property or portion thereof.
7. The covenants against discrimination set forth in paragraphs 4 of this Grant Deed shall remain in perpetuity.
8. In amplification and not in restriction of the provisions set forth hereinabove, it is intended and agreed that Grantor shall be deemed a beneficiary of the agreements and covenants provided hereinabove both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of the Grantor, and such covenants shall run in favor of the Grantor for the entire period during which such covenants shall be in force and effect, without regard to whether the Grantor is or remains an owner of any land or interest therein to which such covenants relate. Grantor shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any actions at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant.
9. The covenants contained in this Grant Deed shall be construed as covenants running with the land and not as conditions which might result in forfeiture of title. [SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized this _____ day of ___________, ________.
Grantor:
THE CITY OF COMMERCE, a public entity
By:
Name: _________________________________
Title: _________________________________
ATTEST:
Lena Shumway,
City Clerk
APPROVED AS TO FORM:
By:
Noel Tapia, City Attorney,
Legal Counsel
GRANTEE HEREBY ACCEPTS THE WRITTEN DEED, SUBJECT TO ALL OF THE MATTERS HEREINABOVE SET FORTH.
Grantee:
WASH-TEL COMMERCE, LLC,
a California limited liability company
By:_______________________________
Steven L. Craig, Manager
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document State of California )
)
County of ___________________________ )
On ______________ before me, ____________________________________(here insert name and title of the officer), personally appeared ___________________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________________ (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document State of California )
)
County of ___________________________ )
On ______________ before me, ____________________________________(here insert name and title of the officer), personally appeared ___________________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________________ (Seal)
EXHIBIT “A”
LEGAL DESCRIPTION OF REAL PROPERTY
The Land is that certain real property located in the City of Commerce, County of Los Angeles, State of California, more particularly described as follows:
(the legal description will have to contain a reservation of the fee interest to the City of the portion of Lot B depicted on Exhibit ___ and legally described as:________________________ 14 Second Amendment 06/09/2022