BAYFRONT PROJECT
PARKING OPERATIONS AGREEMENT
This Parking Operations Agreement (“Agreement”) is made as of June 27, 2023 (the “Effective Date”), by and between the CITY OF HERCULES (the “City”) and HERCULES LAND PARTNERS, LP, (“Owner”), with respect to certain real property consisting of approximately 103.9 acres, in the City of Hercules, County of Contra Costa, California, as more fully described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”).
RECITALS
A. On July 22, 2008, the City Council adopted the Waterfront Master Plan Initiative which amended the City’s General Plan and existing Waterfront District Master Plan (“WDMP”) to designate and regulate uses within the WDMP area and facilitate its buildout as a transit-oriented mixed-use neighborhood.
B. On March 14, 2012, the City approved Vesting Tentative Map 9292 and that certain Implementing Development Agreement for the Hercules Bayfront Project (“Project”) by and between the City and Owner’s predecessor in interest (Contra Costa County Recorder Document No. 2012-0142855-00; the “IDA”). The IDA grants Owner, among other things, vested rights to develop the Project consistent with the IDA, Project Approvals, and Governing Ordinances (as those terms are defined in the IDA).
C. To the extent the City’s financial resources allow and to the extent that the necessary funding is acquired, section 6.2 of the IDA states that the City shall fund and construct the City’s Intermodal Transit Center (“ITC”) Project within the Project area (the ITC Project has been renamed and at the Effective Date is referred to as The Hercules Hub). Section 6.2 further states that the City is not obligated to build the ITC Project, but that the City shall diligently pursue its goal of permitting and constructing it. The ITC Project is intended to support train, bus, and ferry service, and will require funding and construction of all related public improvements, including parking to serve the ITC Project.
D. Exhibit H of the IDA explains that Owner and City acknowledge that parking in high-intensity development areas is appropriately treated as a public infrastructure cost and financed through private parcel assessment. Thus, Exhibit H requires the City to impose a condition of approval on the Project that requires Project parking to “be accommodated by a Public Parking District designed to accommodate both public and private needs.” E. The Project is currently being constructed in phases referred to as “Blocks.” As of the Effective Date of this Agreement, Blocks N, Q, and R have been built and are operational and occupied for a total of 404 residential units and approximately 13,767 square feet of retail space, and Blocks M, P, and O are entitled for a total of 387 residential units.
F. Given that the timing of the City’s acquisition of adequate funding to construct the ITC is currently unknown, and given that Owner and City acknowledge that parking in high-intensity development areas should be accommodated consistent with Exhibit H of the IDA and the requirements of the WDMP, Owner and City executed an Operating Memorandum on March 2, 2020 (the “Operating Memorandum”). The Operating Memorandum outlined the terms of this Agreement consistent with the IDA and the WDMP. The Parties now desire to execute this Agreement.
AGREEMENT
Recordation: This Agreement shall be recorded and shall run with the land. All rights and obligations of Owner shall be binding on any successors or assigns of Owner.
Owner’s covenant to share private parking.
Covenant Commencement Events: The Parties agree that this Parking Operations Agreement becomes effective on the Effective Date included above and that Owner’s obligations under this Agreement and covenant to share private parking pursuant to this Section 2 and this Agreement shall commence both in accordance with section B below, and upon the occurrence of any of the following events:
The earlier of train or ferry service becoming fully operational at the ITC Project.
Average peak hour demand (either weekday or weekend) for on-street parking reaches 85% capacity in any of the three Bayfront neighborhoods identified in the WDMP (The Village, Bayfront Boulevard Mixed-Use, and Crescent Heights), as determined by a parking study conducted by a qualified parking consultant. Such a study may be conducted by either party at any time, with each party bearing its own costs and expenses.
Mutual agreement between City and Owner.
Covenant to Provide Shared Private Parking: Owner shall make Shared Private Parking available, on a non-exclusive basis, to the public, including commuters using transportation services of the ITC Project, consistent with the requirements of this section 2.B and this Agreement. “Shared Private Parking” shall mean the following: Owner agrees to share a total of 10% of its private parking spaces (exclusively in Blocks E, G, J, K, L, M, N, O, P, Q and R) in the Project for use by the public (the “10% Shared Parking Spaces”). Owner agrees that at full-build-out of all aforementioned Blocks, the 10% Shared Parking Spaces will include a minimum of 176 and a maximum of 216 spaces. The 10% Shared Parking Spaces shall be evenly distributed among all Blocks (meaning that each Block shall designate approximately 16 spaces as Shared Private Parking, subject to Section 2.C below, and with the understanding that Owner will make a good faith effort to share more spaces in the Blocks closest to the ITC). Owner may redistribute any of the 10% Shared Parking Spaces among the Blocks consistent with the established Shared Parking Regulations (if effective and Applicable) and this Agreement and upon City Manager approval.
Shared Private Parking for Blocks E, G, J, K, and L. Owner shall set aside 10% of the parking spaces included in Blocks E, G, J, K, and L, at the time each of those Blocks are approved for development, as Shared Private Parking as part of its obligation to provide the 10% Shared Parking Spaces. For these Blocks, Owner shall also set aside 40 additional spaces to be distributed at Owner’s discretion but with the understanding that Owner will make a good faith effort to distribute spaces in the Blocks closer to the ITC. City shall require compliance with this section 2.B.ii as a condition of approval for these Blocks, which condition shall require Owner to record a covenant, in a form approved by the City, confirming compliance with this section.
Shared Private Parking for Blocks M, O, P, Q, and R. Prior to or concurrent with any Commencement Event listed in section 2.A above, Owner must record or cause to be recorded a covenant, in a form approved by the City, against Blocks M, O, P, Q, and R requires Shared Private Parking. If the covenants for these Blocks do not include a minimum of 10% of the total spaces within each Block to be designated as Shared Private Parking, the covenant must indicate that it is subject to adjustment pursuant to section 2.C below.
Shared Private Parking for Block N. Block N development has already been approved, built, and sold to another entity as of the Effective Date of this Agreement. Per the entitlements for Block N, Owner is required to comply with the requirements of the IDA and this Agreement and is required as a condition of approval for the Block N development to initially make 25 spaces in the building garage available to visitors, prior to performance of the Shared Private Parking covenants triggered by and contained in this Agreement. “Visitors” for the purposes of this interim condition is defined as guests visiting residents of Block N, as well as employees or customers of the retail and commercial uses within Block N. Owner must record or cause to be recorded a covenant, in a form approved by the City, against Block N requiring Shared Private Parking. If the covenant for this Block does not include a minimum of 10% of the total spaces within that Block to be designated as Shared Private Parking, the covenant must indicate that it is subject to adjustment pursuant to section 2.C below.
Cap on Shared Private Parking. In no event shall this section require Owner to provide more than the 216 total spaces contemplated herein as the 10% Shared Parking Spaces. However, Owner must provide a minimum of 176 total spaces as the 10% Shared Parking Spaces.
Shared Private Parking Recordkeeping: Owner shall submit a record of the total number and locations of Shared Private Parking spaces currently designated to the City in the annual report required by Section 8.1 of the IDA. Upon expiration or termination of the IDA, City may, at any time, request that Owner submit a record of the total number and locations of the Shared Private Parking spaces in writing. Owner shall provide such submittal within 30 days of the City’s written request. If Owner requests changes to the distribution of the Shared Private Parking spaces pursuant to Sections 2.B.i above, Owner shall provide City with an updated record of the number and locations of the Shared Private Parking Spaces. It is the intent of this Section 2.B.ii to ensure that City always has a true and correct record of the current number and locations of the Shared Private Parking spaces.
Adjustment to Parking Covenant: If actual parking demand is different than projected in the demand analysis prepared by CDM Smith dated October 14, 2019 (the “Demand Analysis”), Shared Private Parking could flex higher or lower subject to a cap of 216 spaces and a floor of 176 spaces (collectively, the “Cap and Floor”). If Owner has not recorded covenants pursuant to section 2.B guaranteeing that all approved Blocks are providing the full 10% Shared Private Parking (i.e. if there are approved Blocks with covenants that do not provide 10% of their total spaces as Shared Private Parking), those covenants shall be adjusted pursuant to the following process:
On the first (1st) anniversary of either train or ferry service becoming fully operational at the ITC Project, or upon issuance of the first certificate of occupancy for the final Block to be entitled, Owner shall order an Updated Demand and Rate Analysis (an “Updated Demand and Rate Analysis”) from CDM Smith or another expert approved by the City if the Consultant is not available (the “Consultant”). The cost of any such Updated Demand and Rate Analysis shall be shared 50/50 by the City and Owner.
Owner and City shall have the right to review any Updated Demand and Rate Analysis and provide comments to the Consultant prior to its finalization, but the Updated Demand and Rate Analysis shall reflect the independent judgment of the Consultant.
Upon the Consultant’s issuance of a final Updated Demand and Rate Analysis, the parties shall reasonably determine if any adjustments to the number of Shared Private Parking spaces are appropriate, subject to the Cap and Floor.
At least once every five (5) years following completion of the Updated Demand and Rate Analysis, City may require Owner to order additional updated Demand and rate analysis studies from an expert approved by the City. Owner agrees to split the cost of such studies 50/50 with the City and agrees to follow the process for adjusting the covenant outlined in this section 1.B.
Nothing contained in this section or this Agreement shall preclude Owner from providing or offering more Shared Parking than required by this Agreement.
Rates: The rate for Shared Private Parking use (the “Shared Private Parking Rate”) shall be mutually selected by the City Manager and Owner prior to use by the public of any of the Shared Private Parking. Notwithstanding the foregoing, the Shared Private Parking Rate must cover Owner’s reasonable costs and expenses associated with making the Private Shared Parking available to the public, documentation in support of which shall be provided to the City Manager in advance of rate selection. Owner shall have the right to adjust the Shared Private Parking Rate after consultation with the City based on the following: (i) the results of any Updated Demand and Rate Analysis ordered pursuant to Section 2.C above, (ii) the results of any other Updated Demand and Rate Analysis ordered from the Consultant (or such alternate consultant reasonably approved by the parties) by Owner in its discretion and at its sole cost, or (iii) the adjusted annual average consumer pricing index as published by the US Bureau of Labor Statistics (US City Average, All Items).
Rules and Regulations: The rules and regulations governing Shared Parking shall be established by the City and Owner or the Future Parking Entity upon commencement of the Shared Private Parking obligations described in section 2.A (“Shared Private Parking Rules and Regulations”). The Shared Private Parking Rules and Regulations may be amended from time to time upon agreement by City and Owner or by the Future Parking Entity described in section 3 below. The Shared Parking Rules and Regulations may include, but are not limited to, hours of operation, time limits, use of residential permits, and demand-based pricing. City and Owner shall enforce, manage, operate, and maintain the Private Shared Parking in accordance with the established Shared Private Parking Rules and Regulations, and both City and Owner have the right to engage one or more third party vendor/contractors to carry out City and Owner responsibilities in accordance with the Shared Private Parking Rules and Regulations.
The Shared Private Parking Rules and Regulations shall include, but not be limited to, the following:
The hours the Shared Private Parking shall be available to the public will be Monday through Friday (excluding holidays) from 7:30 AM to 6:00 PM and at no other time (“Shared Private Parking Hours of Operation”).
An explanation of the rate structure and approach, which may include demand-based pricing (i.e. “performance-based parking management).
Provisions governing use of Shared Private Parking during an emergency involving potential danger to life or property, including Owner’s ability to restrict access to Shared Private Parking.
Owner will have the right to obtain the services of a third-party vendor/contractor to manage, operate and/or maintain the Private Shared Parking as Owner reasonably determines is necessary for proper operation of such facilities. Owner and City (or the Future Parking Entity if one exists) shall approve such third-party vendor, which approval shall not unreasonably be withheld.
Operational Budget: Prior to use by the public of any Shared Private Parking, Owner will submit to City, for City’s review and approval, an annual budget for administration/operation of the Shared Private Parking Spaces and facilities. Owner shall update and submit, for City’s review and approval, this annual operational budget at the end of each fiscal year, and shall provide a year-end reconciliation of actual revenues and expenses within 30 days of the end of each fiscal year. If there is more than one Owner, each Owner shall pay for its proportionate share of the administrative/operational expenses of the Shared Private Parking facilities pursuant to a separate recorded agreement among the Owners. If and when a Future Parking Entity is formed, the Future Parking Entity shall prepare annual budgets.
Revenues: Revenues from the Shared Private Parking are retained by Owner. However, Owner and City or Owner and any Future Parking Entity may agree to coordinate collection and remittance of revenues to Owner and City of the Shared Private Parking and adjacent public parking for convenience of the parties and the public (e.g. shared parking kiosks, or mobile app, etc.).
Maintenance and Repair Obligations; Emergencies:
Owner shall be responsible for maintenance and repair obligations for the Shared Private Parking consistent with customary industry standards.
Owner shall maintain reasonable and appropriate levels of insurance for operation of the Shared Private Parking.
Casualty/Condemnation.
In the event of a minor casualty, which involves loss of less than 50% of the Shared Private Parking available for public use in a particular Block at the time of loss, Owner shall be obligated to repair any Shared Private Parking which is affected.
In the event of a major casualty, which involves loss of 50% or more of the Shared Private Parking available for public use in a particular Block at the time of loss, Owner shall only be obligated to repair the Shared Private Parking if Owner has elected to repair or rebuild the other Project structures on the affected such Block.
In the event of a minor condemnation, which is a condemnation action by any public agency that affects any portion of the Shared Private Parking, Owner shall be obligated to provide replacement Shared Private Parking for the portion which was affected by the condemnation, the cost of which can be asserted as an element of the compensation in the condemnation proceedings.
In the event of a major condemnation, which is a condemnation action by any public agency that affects 50% or more of any phase of the Project, Owner’s covenants and obligations hereunder shall terminate with respect to such phase of the Project.
Termination of Covenants. Owner’s Shared Private Parking covenants and obligations shall expire as to each Block upon the occurrence of any of the following:
A major casualty as defined in H.iii.b where Owner does not elect to repair or rebuild the Project or a portion thereof, or major condemnation (in which case the required number of Shared Private Parking spaces shall be proportionately decreased); or At such time as the Project or a portion (i.e. Block) thereof containing Shared Private Parking is no longer used for its approved use and the Project or that portion thereof has obtained entitlements or other approvals for an alternative use.
If Owner’s Shared Private Parking covenants terminates due to any of the above, Owner and City shall work in good faith to unwind and dissolve any Future Parking Entity created pursuant to section 3 and all other obligations.
Owner Representative. Owner shall coordinate with any and all other owners of the Property and shall designate one of the owners as the representative of all of the owners of the Property (the “Owner Representative”). The Owner Representative shall be authorized to speak for and on behalf of all of the Property owners, and to bind all of the owners, pertaining to any and all decisions and authorizations required of Owner by this Agreement, including but not limited to decisions regarding designation of the Shared Private Parking spaces and count, the Shared Private Parking Rate, the operational budget, and the Shared Private Parking Rules and Regulations.
Future Parking Entity
Creation. Following commencement of the Shared Private Parking obligations described in section 2.A above, City, in its sole discretion, may require Owner to participate in, join, and/or annex into a parking entity (“Future Parking Entity”) that governs the Shared Private Parking consistent with this Agreement. City and Owner agree that the type of Future Parking Entity that would best serve the interests of both City and Owner is unknown, but agree that the Future Parking Entity may be formed as a parking authority pursuant to Health & Safety Code section 32500; as a parking and business improvement district under Health & Safety Code section 36600; or as another entity, authority, or district, with the power to govern the Shared Private Parking consistent with this Agreement. The Future Parking Entity will involve input from both Owner and City, either by way of representation on the Future Parking Entity’s board of directors or other methods. Such methods may include, but are not limited to, formation of a mixed-use owners’ association.
Obligations. The Future Parking Entity will be obligated to govern the Shared Private Parking consistent with the terms of this Agreement, including but not limited to overseeing administration of the Shared Private Parking, budgeting, rates, and drafting and enforcing Shared Parking Rules and Regulations.
Agreement regarding other publicly-available parking serving the ITC Project Other Publicly-Available Parking Serving the ITC Project. City and Owner acknowledge that the City intends to provide publicly-available parking which will serve the ITC Project and will be available to the public, including commuters (the “Public Parking”). Owner agrees that the City may provide Public Parking around Block K at the City’s cost to be constructed by the City, and Owner will not exercise its right to purchase the land under the former second crossing of Refugio Creek, provided such wrap around street can also be utilized for EVA purposes for the Project.
Public Parking Rules and Regulations. City shall establish and enforce the rules and manage the operations of the Public Parking, including any and all Public Parking rates. City will coordinate and consult with Owner as may be necessary, including but not limited to creating the Future Parking Entity and its regulation of the Public Parking. The City shall select the rate for the Public Parking unless and until the Public Parking is regulated by a Future Parking Entity.
Revenues: Revenues from the Public Parking will be retained by the City.
Wayfinding obligations
Owner and City agree that the ability of users to determine the location of public parking and Shared Private Parking in the Bayfront Master Plan area will be greatly simplified by use of common software and smartphone apps that map available parking supply by location and allow/promote daily parking reservations, as managed by the Owner for the Shared Private Parking and by the City for publicly shared parking on public streets. Owner shall utilize a commercially available smartphone app that will show available Shared Private Parking spaces, which app shall be selected by Owner in its sole discretion.
Owner and City agree that wayfinding and directional signage for the Shared Private Parking will be consistent throughout the Bayfront Master Plan area, clearly signaling the location and entrances of public parking and Shared Private Parking locations. City shall impose condition(s) of approval on remaining phases of the Project to ensure Owner’s compliance with this section, but any Future Parking Entity may require changes to this signage or require new or additional signage at its discretion.
Obligations for Blocks G and I
City staff and Owner agree to explore the feasibility of options for connecting the below grade garages on the Owner-owned Block G and the City-owned Block I, where the ITC Project will be built, which create efficiency by the possible elimination of ramping the garage under the ITC Project.
Miscellaneous
Nothing in this Agreement shall be construed to require Owner to accommodate parking demand other than as set forth in this Agreement. 1 1
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