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RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
[[TO BE PROVIDED]]
__________________________
__________________________
__________________________
__________________________
APN: 063-240-490 (Space Above For Recorder’s Use)
DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
This DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (this “Agreement”) is made and entered into as of _____________ 2023 (the “Effective Date”), by and between EAST PALO ALTO YOUTH ARTS & MUSIC CENTER, LLC, a California limited liability company, its successors and/or assigns (“Declarant”) and THE CITY OF EAST PALO ALTO, a California municipal corporation, its successors and/or assigns (“Owner”).
Declarant and Owner are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
WITNESSETH:
WHEREAS, Declarantis the current owner in fee simple of that certain unimproved parcel of real property identified by APN 063-240-490, consisting of approximately 1.07 acres of land, as more particularly described on Exhibit A attached hereto and incorporated herein, together with all the rights and appurtenances pertaining to said real property and all paved areas situated on the real property, including all sidewalks, driveways, parking areas, and landscaping, if any (other than monitoring well equipment belonging to the adjacent property owner) (collectively, the “Subject Property”);
WHEREAS, Declarant also owns the youth arts center located at 1950 Bay Road, East Palo Alto, California, as more particularly described on Exhibit B attached hereto and incorporated herein (the “Youth Arts Center”), which is adjacent to the Subject Property; WHEREAS, Declarant, as seller, and Owner, as purchaser, entered into that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of December 28, 2021 (as amended, the “PSA”), pursuant to which Declarant agreed to sell, and Owner agreed to purchase the Subject Property, for the construction by Owner of a new public library and/or community center, or an alternative use complimentary to those of the Youth Arts Center; 401988946.3
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WHEREAS, one of the conditions precedent to obligations of the Parties under the PSA is that the Parties shall have agreed to this Agreement, which is to be recorded concurrent with the closing of the purchase and sale transaction contemplated by the PSA; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Declarant does hereby require and Owner agrees to enter into this Agreement as a condition of the Subject Property transfer from Declarant to Owner in order to ensure that the Subject Property will be used and operated in accordance with the conditions and restrictions described herein.
1. Purpose of Covenants, Conditions and Restrictions
The purpose of the covenants, conditions and restrictions contained herein is to ensure the Subject Property is developed with a public library and/or community center, or a building for other community serving uses consistent with or otherwise complimentary to those of the Youth Arts Center.
2. Regulation of Uses
(a) Permitted Uses. The Subject Property may be used for the development of a public library and/or community center, including, but not limited to, ancillary uses such as administrative offices, event spaces, open spaces, and parking (the “Permitted Use”). (b) Prohibited Uses. Notwithstanding any provision to the contrary contained herein, no portion of the Subject Property shall be made available for uses inconsistent with those of the Youth Arts Center, including, but not limited to: (i) a police station; (ii) a jail or other correctional facility; (iii) ; (iv) an environmental waste facility; (v) a recycling facility; (vi) a water or sewage treatment plant; (vii) an electrical substation; or (viii) a charging station. For avoidance of doubt, a police station does not include office space within the Permitted Use for security services or a resource officer and electric vehicle charging stations included as an ancillary use to the Permitted Use are not prohibited.
3. Complimentary Uses
If at any time during the Term (defined below) of this Agreement, Owner, its successors and/or assigns, desires to use the Property for a use other than the Permitted Use, Owner shall provide written notice to the Declarant of its intended use. Declarant shall, in its reasonable discretion, either approve or disapprove the Owner’s intended use in writing within thirty (30) days of receipt of Owner’s notice. If Declarant disapproves Owner’s intended use, the Parties shall meet and confer over an alternative use that is reasonably complimentary to those of the Youth Arts Center (“Complimentary Use”) for a period of sixty (60) days commencing upon the receipt of Declarant’s notice disapproving Owner’s intended use (“Meet and Confer Period”). If the Parties are unable to agree on a Complimentary Use during the Meet and Confer Period or any extension thereof mutually agreed to by the Parties in writing, Declarantshall have the right to buy back the Subject Property from Owner pursuant to the call option in favor of Declarant described 401988946.3
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below, but otherwise free and clear of all liens and encumbrances that did not exist at the time Owner acquired the Subject Property from Declarant.
4. Option to Purchase Subject Property
(a) Grant of Option. Owner hereby irrevocably grants unto Declarant and Declarant accepts from Owner, the exclusive and irrevocable right and option (the “Option”) to purchase the Subject Property following the Parties’ inability to agree on a Complimentary Use within thirty (30) days of their meet and confer, as described in Section 3 above. (b) Consideration for Option. Owner acknowledges that in consideration of the Option granted herein, Declarant did not offer the Subject Property for sale on the open market and instead sold the Subject Property to Owner.
(c) Option Period; Exercise of Option. Declarant shall have the right to exercise the Option, if the Parties have not agreed upon a Complimentary Use, for a period of one hundred eighty (180) days from the expiration of the Meet and Confer Period (the “Option Period”). Declarant shall exercise the Option by delivering written notice thereof (the “Exercise Notice”) to Owner, which notice shall specify (i) Declarant’s initial determination of the Purchase Price (defined below), and (ii) the date (the “Closing Date”) on which settlement shall occur (the “Closing”). The Parties hereby agree, for the avoidance of doubt, that Owner shall not pursue any change in use of the Subject Property until either (i) the day following the expiration of the Option Period (if Declarant does not exercise the Option) or (ii) Owner’s receipt of Declarant’s express written notice that it does not intend to exercise the Option. (d) Purchase Price. The purchase price for the Subject Property (the “Purchase Price”) shall be the Fair Market Value for the Subject Property as of the date of Declarant’s Exercise Notice. “Fair Market Value” shall mean the value of the Subject Property at its highest and best use determined in accordance with the following procedures:
(i) FMV Notice. The Fair Market Value shall initially be determined by Declarant in its reasonable discretion, and as communicated to Owner in Declarant’s Exercise Notice. Owner shall advise Declarant in writing if it accepts Declarant’s determination of the Fair Market Value (such notice, the “FMV Response Notice”’) within thirty (30) days of Owner’s receipt of the Exercise Notice from Declarant (“Owner’s Review Period”). In the event Owner fails to timely accept in writing such value proposed by Declarant, then such proposal shall be deemed rejected, and Owner and Declarant shall, for a period of thirty (30) days after the end of Owner’s Review Period (the “Negotiation Period”), negotiate in good faith to try to reach agreement upon the Fair Market Value, using their reasonable good faith efforts. (ii) FMV Deadlock. In the event Owner and Declarant are unable to agree as to the Fair Market Value of the Subject Property by the end of the Negotiation Period (the “FMV Deadlock Date”), then each Party shall appoint an appraiser within ten (10) Business Days after the FMV Deadlock Date; the two appraisers thus appointed shall within ten (10) additional Business Days mutually appoint a third appraiser who (1) is licensed by the State of California, (2) is unaffiliated with either Party, and (3) has had full-time experience, during each 401988946.3
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of the immediately preceding five (5) years, in appraising similar commercial real property in the region of the Subject Property, for the purpose of determining the Fair Market Value of the Subject Property. The three appraisers so selected shall be instructed to complete their respective appraisals of the Subject Property and deliver the results of the same, in writing, not later than sixty (60) days after the appointment of the third appraiser. The average of the three appraisals (subject to the qualifications set forth below) shall be the Fair Market Value for the Subject Property and, thereby, the Purchase Price; provided, however, in the event that any (but not more than one) appraisal submitted by an appraiser varies five percent (5%) or more from the average of all three appraisals, then such appraisal shall not be used and the Fair Market Value shall be determined on the basis of the average of the other two appraisals. Further, in the event that the highest and lowest appraisal each varies five percent (5%) or more from the average of all three appraisals, or if fewer than all three of the required appraisals shall have been received by Owner and Declarant, in writing, within sixty (60) days after the appointment of the third appraiser, then, in either such case, the Fair Market Value shall be determined in accordance with the following procedure: (1) if all three of the required appraisals are timely received but there is a five percent (5%) or greater variance of both the highest and lowest thereof with the average of all three as aforesaid, then the Fair Market Value shall equal the middle appraisal amount; or (2) if only two of the required appraisals shall have been timely received, then the Fair Market Value shall equal the average of the amounts of each appraisal that was timely received; or (3) if only one of the required appraisals shall have been timely received, then the Fair Market Value shall equal the amount of such appraisal. In all cases, each appraiser selected by a Party, and each appraiser selected by an appraiser, must (1) be licensed by the State of California, (2) be unaffiliated with either Party, and (3) have had had full-time experience, during each of the immediately preceding five (5) years, in appraising similar commercial real property in the region of the Subject Property.
Each Party will pay the cost of its own appraiser and both Parties will share equally the costs of the third appraiser. “Business Day” shall mean those days of the week which are not a Saturday or Sunday, or a holiday observed by the City of East Palo Alto. (iii) Binding Effect. The Purchase Price as determined in accordance with the foregoing procedure shall be binding on the Parties and shall be payable by Declarant to Owner at the Closing. Notwithstanding the foregoing, Declarant shall be permitted to revoke its exercise of the Option, for any reason or for no reason at all, provided that it sends Owner written notice of such revocation not later than the date which is thirty (30) days immediately following the final determination of the Purchase Price (the “Revocation Period”). Notwithstanding any of the foregoing to the contrary, in the event the Closing Date provided in the Exercise Notice would occur prior to the expiration of the Revocation Period and Declarant does not revoke its exercise, such Closing Date shall automatically be extended to any Business Day designated by Declarant which is not more than 60 days after the end of the Revocation Period.
5. Covenants Running with the Land; Successors-In-Interest The Parties hereby declare their express intent that the covenants, conditions and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Subject Property, provided, however, that on the expiration of the Term of this Agreement said covenants, conditions and restrictions shall expire, unless otherwise expressly stated herein. 401988946.3
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Each and every contract, deed or other instrument hereafter executed covering or conveying the Subject Property or any portion thereof shall be held conclusively to have been executed, delivered and accepted subject to such covenants, conditions and restrictions, regardless of whether such covenants, conditions or restrictions are set forth in such contract, deed or other instrument, unless Declarant expressly releases such conveyed portion of the Subject Property from the requirements of this Agreement.
6. Enforcement
(a) If Owner or any of its successors or assigns shall breach or violate the terms of this Agreement, Declarant or its successors or assigns shall have the right (but not the obligation) to exercise any and all available administrative, legal and equitable remedies, including, without limitation, injunctive relief to enforce the provisions herein and shall have the right to seek damages and any other means of redress permitted by law or equity against Owner, its successors and assigns, and against any grantee or transferee to whom the Subject Property is con veyed, deeded or otherwise transferred.
(b) Failure to enforce any matter contained herein shall in no event be deemed a waiver of the right to do so thereafter as to such violation or breach, or as to any breach or violation occurring prior or subsequent thereto.
7. Indemnification by Owner
(a) To the fullest extent permitted by law, Owner or any of its successors or assigns shall indemnify Declarant or its successors or assigns from and against all losses, costs, damages, expenses and liabilities including, without limitation, reasonable attorneys’ fees and disbursements (“Claims”), which Declarant may suffer or incur arising out of, as a result of, or relating in any manner whatsoever to any misrepresentation or breach of representation or warranty or covenant made by Owner in this Agreement, or in connection with Declarant’s attempt to enforce or cure a breach or violation under this Agreement. (b) To the fullest extent permitted by law, Declarant or any of its successors or assigns shall indemnify Owner or its successors or assigns from and against Claims, which Owner may suffer or incur arising out of, as a result of, or relating in any manner whatsoever to any misrepresentation or breach of representation or warranty or covenant made by Declarant in this Agreement, or in connection with Owner’s attempt to enforce or cure a breach or violation under this Agreement.
(c) The provisions of this Section shall survive the expiration or sooner termination of the Term and any release of part or all of the Subject Property from the burdens of this Agreement, but only as to Claims arising from events occurring during the Term of this Agreement.
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8. Recording and Filing
The Parties shall cause this Agreement, and all amendments and supplements to it, to be recorded against the Subject Property in the Official Records of the County of San Mateo (the “Official Records”) prior to any liens, deeds of trust or other instruments securing any monetary obligation of Owner or recorded against the Subject Property. This Agreement shall not be subordinated to any liens, deeds of trust or other instruments recorded against the Su bject Property and shall survive and remain effective as against any transferee acquiring the Subject Property as a result of any foreclosure or deed in lieu of foreclosure.
9. Notices
Formal notices, demands, and communications between Owner and Declarantshall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of Owner and Declarant concurrently with electronic copies, and shall be effective upon receipt as follows:
If to Declarant: East Palo Alto Youth Arts & Music Center, LLC c/o The John & Marcia Goldman Foundation
101 Second Street, Suite 1625
San Francisco, CA 94105
Attention: Amy Lyons
Tel.: (415) 744-8787
Email: [email protected]
with a copy to: Manatt, Phelps & Phillips, LLP
203 Redwood Shores Parkway, Suite 450
Redwood City, CA 94065
Attention: Michael Polentz, Esq.
Tel.: (650) 251-1440
Email: [email protected]
If to Owner:
City of East Palo Alto
2415 University Avenue
East Palo Alto, CA 94303
Attn.: City Manager
Attn.: City Attorney
City of East Palo Alto
2415 University Avenue, 2nd Floor
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East Palo Alto, CA 94303
Tel.: (510) 853-5901
Email: [email protected]
with a copy to: Goldfarb & Lipman LLP
1300 Clay Street
Eleventh Floor
Oakland, CA 94612
Attn.: Karen M. Tiedemann, Esq.
Tel.: (510) 836-6336
Email: [email protected]
10. Term
This Agreement commences and is effective as of the Effective Date and shall remain in effect until the earlier of (1)thirty (30) years after the Effective Date or (ii) the expiration of the Option Period if Declarant has not given an Exercise Notice prior to such expiration (the “Term”). This Agreement shall automatically terminate after such thirty (30)-year period, unless a recordable written instrument terminating the effectiveness of this Agreement, which is mutually agreed upon and acknowledged by the Parties is filed for recording in the Official Records prior to the expiration of the Term.
11. No Third Party Beneficiaries
The provisions of this Agreement will be for the benefit of the Parties only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement.
12. Title of Parts and Sections
Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement’s provisions.
13. Severability
If any provision of this Agreement, or the application thereof to any entity or any circumstance, shall be found to be invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision, and (ii) the remainder of this Agreement and the application of such provision to other entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 401988946.3
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14. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.
15. Applicable Law. This Agreement shall be construed and governed by the laws of the State of California. Venue will be the County of San Mateo. [Signature pages follow]
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IN WITNESS WHEREOF, the Parties have executed this Agreement by duly authorized representatives, all on the date first written above.
DECLARANT:
East Palo Alto Youth Arts & Music Center,
LLC, a California limited liability company
By: ___________________________
Name: ___________________________
Title: ___________________________
ACKNOWLEDGMENT
State of California
County of ____________________
On ______________________ before me, __________________________________________________, Notary Public, 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 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.
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OWNER:
The City of East Palo Alto, a California
municipal corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
ACKNOWLEDGMENT
State of California
County of ____________________
On ______________________ before me, __________________________________________________, Notary Public, 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 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.
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Exhibit A
Legal Description of Subject Property
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EXHIBIT A
LEGAL DESCRIPTION OF SUBJECT PROPERTY
Real property in the City of East Palo Alto, County of San Mateo, State of California, described as follows:
PARCEL B AS SHOWN ON THAT CERTAIN MAP ENTITLED “PARCEL MAP-- A TWO
LOT SUBDIVISION OF THE LANDS OF EAST PALO ALTO ARTS & MUSIC CENTER,
LLC, A CALIFORNIA LIMITED LIABILITY COMPANY AND BEING A SUBDIVSION OF LOT 1 PER VOLUME 136 OF TRACT MAPS, PAGES 79-80 RECORDED NOVEMBER 26, 2008, SAN MATEO COUNTY RECORDS” FILED FOR RECORD DECEMBER 3, 2018 IN VOLUME 84 OF PARCEL MAPS, AT PAGES 36-37, SAN MATEO COUNTY RECORDS.
APN: 063-240-490
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Exhibit B
Legal Description of Youth Arts Center
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EXHIBIT B
LEGAL DESCRIPTION OF YOUTH ARTS CENTER
Real property in the City of East Palo Alto, County of San Mateo, State of California, described as follows:
[TO COME]
APN: [To come]