Attachment No 1
DISPOSITION AND DEVELOPMENT AGREEMENT
by and between
THE CITY OF NORWALK
and
LEWIS LAND DEVELOPERS, LLC
ii
TABLE OF CONTENTS
1. DEFINITIONS. ............................................................................................................................2
2. CONVEYANCE OF THE SITE ..................................................................................................7
2.1. City-Property Acquisition From State.............................................................................7
2.2. Developer-Property Acquisition from the City. ..............................................................7
2.3. Purchase Price..................................................................................................................8
2.4. Escrow. ............................................................................................................................8
2.5. Review of Title. .............................................................................................................10
2.6. Title Insurance.. .............................................................................................................11
2.7. Conditions of Closing....................................................................................................11
2.8. Representations and Warranties. ...................................................................................13
2.9. No Change in the Entitlements......................................................................................15
2.10. Project Plan....................................................................................................................15
2.11. Subdivision Conveyance Map.......................................................................................15
2.12. Development Agreement...............................................................................................15
2.13. Demolition Work/Remediation Work. ..........................................................................15
3. BACKBONE IMPROVEMENTS .............................................................................................19
3.1. Construction of the Backbone Improvements. ..............................................................19
3.2. Backbone Improvement Plans and Permits...................................................................19
3.3. Cost of Construction......................................................................................................20
3.4. Reserved. .......................................................................................................................20
3.5. Construction Bonding....................................................................................................20
3.6. Reserved. .......................................................................................................................21
3.7. Prevailing Wage. ...........................................................................................................21
3.8. Developer Indemnity. ....................................................................................................21
3.9. Warranty and Guarantee................................................................................................21
3.10. Fee Credits/DIF Fees.....................................................................................................21
3.11. Public Financing............................................................................................................21
4. AFFORDABLE HOUSING ......................................................................................................21
4.1. Regulatory Agreement...................................................................................................22
4.2. Affordable Housing Parcel.. ..........................................................................................22
4.3. Affordable Housing Builder. .........................................................................................22
4.4. Affordable Housing Project...........................................................................................22
4.5. City Release and Indemnity...........................................................................................22
5. PROJECT COVENANTS, RESTRICTIONS AND OTHER OBLIGATIONS ........................23
5.1. Construction and Maintenance Covenants.....................................................................23
5.2. Quimby Park Requirements...........................................................................................24
5.3. Art in Public Places Fee.................................................................................................24
5.4. Project Parking Requirements.. .....................................................................................25
6. DEFAULTS AND REMEDIES .................................................................................................25
6.1. Default.. .........................................................................................................................25
6.2. Specific Performance.....................................................................................................25
6.3. Termination By Developer Prior to the State PSA Closing. ...........................................26
6.4. Termination by City Prior to the State PSA Closing......................................................26
6.5. Self-Help-Demolition and Remediation Work..............................................................26
6.6. Self-Help-Backbone Improvements. .............................................................................27 iii
6.7. LIQUIDATED DAMAGES-DEVELOPER SECTION 2.1.2 DEFAULT. ..................27
6.8. Post-Closing Default......................................................................................................27
6.9. Acceptance of Service of Process..................................................................................28
6.10. Rights and Remedies Are Cumulative...........................................................................28
6.11. Inaction Not a Waiver of Default...................................................................................28
6.12. Applicable Law..............................................................................................................28
7. GENERAL PROVISIONS.........................................................................................................28
7.1. Notices, Demands and Communications Between the Parties......................................28
7.2. Force Majeure Delay; Extension of Times of Performance. .........................................29
7.3. Transfers of Interest in the Property or Agreement.......................................................29
7.4. Non-Liability of Officials and Employees of City to Developer.. ................................31
7.5. Non-Liability of Members of Employees.. ....................................................................31
7.6. General Indemnity and Defense.. ..................................................................................31
7.7. Relationship Between City and Developer....................................................................32
7.8. City Approvals and Actions...........................................................................................32
7.9. Counterparts...................................................................................................................32
7.10. Integration......................................................................................................................32
7.11. Real Estate Brokerage Commission...............................................................................32
7.12. Attorneys’ Fees..............................................................................................................33
7.13. Titles and Captions. .......................................................................................................33
7.14. Interpretation .................................................................................................................33
7.15. No Waiver......................................................................................................................33
7.16. Modifications.................................................................................................................33
7.17. Severability....................................................................................................................33
7.18. Computation of Time.....................................................................................................33
7.19. Legal Advice..................................................................................................................33
7.20. Time of Essence.............................................................................................................33
7.21. Cooperation. ..................................................................................................................34
7.22. Conflicts of Interest........................................................................................................34
7.23. Time for Acceptance of Agreement by City. ................................................................34
7.24. Estoppel Certificate. ......................................................................................................34 iv
LIST OF EXHIBITS
A Property Description
B Map of Property
C Copy of Assembly Bill 518
D List of Entitlements
D-1 Conceptual Project Plan
E Backbone Improvements
F Grant Deed
F-1 Bill of Sale and General Assignment
G Rincon Remediation Proposal
G-1 Environmental Documents
G-2 Demolition/Remediation Estimate
G-3 Demolition/Remediation Schedule
H Project DIF Fees
I City PSA Memorandum of Agreement
LIST OF SCHEDULES
1 City Project Costs
2 Development Agreement Terms
1 DISPOSITION AND DEVELOPMENT AGREEMENT
This Disposition and Development Agreement (this “Agreement”) is dated for identification purposes as of December ____, 2024 (“Date of Agreement”), by and between the CITY OF NORWALK, a California municipal corporation (“City”), and LEWIS LAND DEVELOPERS, LLC a Delaware limited liability company (“Developer”).
R E C I T A L S
The following recitals are a substantive part of this Agreement:
A.City is authorized to enter into agreements for the acquisition, disposition and development of real property.
B.City has or will prior to December 31, 2024, execute that certain Agreement of Purchase and Sale and Initial Escrow Instructions (the “State PSA”) for the City’s purchase from the State of California (“State”) of the former Southern Youth Correctional Reception Center and Clinic (the “CYA Facility”) which is comprised of certain real property consisting of approximately
32.3+/- acres, together with improvements located thereon, including, without limitation, approximately 35-40 structures and ancillary improvements, located at 13200 Bloomfield Avenue in the City of Norwalk, Los Angeles County, State of California, Assessor’s Parcel No: 8045-008- 902, which is legally described in Exhibit A and generally depicted in Exhibit B attached hereto (the “Property”). Any capitalized terms used in this Agreement which are not defined in this Agreement shall have the meaning give those terms in the State PSA.
C.The City is purchasing the Property as surplus property pursuant to the provisions of California Assembly Bill No. 518, Chapter 43, Statutes of 2020 which amended Government Code Section 11011.28 (g) (collectively, the “Special Legislation”). A copy of the Special Legislation is attached hereto as Exhibit C.
D.The State has agreed that the mutual execution of the State PSA by State and City on or before December 31, 2024, will satisfy the requirement for the sale of the Property to the City under the Special Legislation.
E.The City and Developer (by assignment from its affiliate Lewis Acquisition Company, LLC) are parties to that certain Exclusive Negotiation Agreement dated July 11, 2019, as amended (the “ENA”), with a current term that expires January 10, 2025, under which the City and Developer have worked together to (i) obtain State approval of the Special Legislation and to meet and negotiate with the State for City’s purchase of the Property, (ii) conduct extensive site investigations of the Property to determine its feasibility for development and the extent of all environmental remediation work required for development, (iii) undertake comprehensive stakeholder and community outreach and visionary programs to solicit ideas for the future development of the Property, (iv) design a Transit Oriented Development project consistent with the results of the outreach efforts that meets mobility and greenhouse gas reduction goals and affordable housing goals of the City, (v) prepare and process for approval by the City’s Planning Commission and City Council all of those entitlements listed on Exhibit D attached hereto (the “Entitlements”), (vi) negotiate this Agreement for Developer’s purchase of the Property from the City and Developer’s development of (a) a for-sale and/or for-rent market-rate residential project on approximately 10-12+/- acres of the Property consisting of a maximum of 462 market-rate 2 residential units (the “Developer Residential Project”) and (b) a neighborhood commercial/retail project on approximately 3.2+/- acres of the Property consisting of a maximum of 66,647 Sq.Ft. of building area (0.5 floor area ratio) together with a possible hotel (the “Hotel”) containing a maximum of 150 rooms (the “Developer Retail Project”) in accordance with the Entitlements (collectively, the “Developer Project”), and (vii) provide for the development by an Affordable Housing Builder of a for-rent housing project consisting of rental units affordable to lower income and very low income households on approximately 3-5+/- acres of the Property and consisting of a minimum number of affordable residential units which equals 40% of the total number of all residential units constructed in the Project (the “Affordable Housing Project”). The Developer Project and Affordable Housing Project are collectively referred to herein as the “Project”.
F.The Project is conceptually planned to be developed as described on the site development plan attached hereto as Exhibit D-1 (the “Project Plan”). The Project Plan will be finalized by Developer consistent with the Entitlements and approved by the City as set forth in Section 2.10.
G.On November 19 , 2024, the City Council approved the Entitlements, which included the first reading of the Specific Plan (defined below); the second reading of the Specific Plan is scheduled for the City Council meeting on January 21, 2025.
H.The Property shall, after the City’s purchase of the Property from the State, be conveyed to Developer hereunder and the Project developed in accordance with a Regulatory Agreement recorded at the State PSA Closing which contains the “Affordability Requirements” for the Affordable Housing Project as set forth in Government Code Section 37364.
I.The Surplus Land Act (“SLA”) (Gov. Code, §§ 54220 et seq.) and California Department of Housing and Community Development (“HCD”) Surplus Lands Act Guidelines (“Surplus Lands Act Guidelines”) require that local agencies declare property as either “surplus land” or “exempt surplus land” prior to sale or lease of the property owned by the local agency. On December 17, 2024, the City Council adopted Resolution No. ___________ declaring the Property “Exempt Surplus Land” in accordance with Section 54221(f)(1)(A) of the Surplus Land Act (the “Exempt Surplus Resolution”) by reason that the Property’s sale to Developer and development of the Project are expressly subject to compliance with the Affordability Requirements. A copy of the Exempt Surplus Resolution has or will be delivered by the City to HCD.
J.On December 17, 2024, the City Council adopted Resolution No. __________ approving this Agreement and authorizing the City Manager to make any non-substantive minor modifications, complete all Exhibits, and execute this Agreement on behalf of the City, in a form approved by the City Attorney.
K.This Agreement is in the vital and best interest of City and the health, safety, morals and welfare of its residents, and in accord with the goals, objectives and public purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, City and Developer hereby agree, as follows:
1. DEFINITIONS.
“Actual Knowledge” of City means the facts known by the City Manager or City Director of 3 Community Development without a duty of further investigation. “Adverse Market Conditions” means the existence of market and/or economic conditions which make the development of the Project economically disadvantageous to Developer in the good faith judgment of Developer (e.g., market and/or economic conditions that Developer expects will result in the sale and/or rent of residential units at a slower frequency and/or at sales prices or rents lower than projected by Developer).
“Affiliate” means an entity directly or indirectly controlling or controlled by or under common control with Developer or any of its members. The phrase “ controlling,” “ controlled by,” or “under common control” as used in the immediately preceding sentence means, with respect to a corporation, the right to exercise a majority of the voting rights attributable to the shares of the controlled corporation and, with respect to an entity that is not a corporation, the possession of a majority of the power to direct or cause the direction of the management or policies of the controlled entity.
“Affordable Housing Builder” means a builder (or builders) that constructs and manages the Affordable Housing Project as set forth in Section 4.3. “Affordable Housing Parcel” means the legal lot or lots shown on a final tract map or final parcel map for the Project which is to be conveyed to an Affordable Housing Builder for the development of the Affordable Housing Project in accordance with the Affordability Requirements and the Regulatory Agreement as further described in Section 4.2. “Affordable Housing Project” has the meaning set forth in Recital E. “Agreement” or “DDA” means this Disposition and Development Agreement between City and Developer.
“Appraisal” means that certain Appraisal of the Southern Youth Correctional Center dated August 16, 2023, prepared for the State by Michael Frauenthal & Associates, Inc. “Backbone Costs” is defined in Section 3.3 of the Agreement. “Backbone Improvements” means the mass grading and all of the other work and improvements generally described in Exhibit E attached hereto. “Backbone Improvement Plans” means the grading and improvement plans for the Backbone Improvements to be prepared by Developer and approved by the City with the Project Map.
“Bill of Sale” means the “Bill of Sale and General Assignment” in the form of Exhibit F-1 attached hereto to be used for the Conveyance of all of the Property other than the real property. “City” means City of Norwalk, a California municipal corporation. “City’s Conditions Precedent” means the conditions precedent to the Closing for the benefit of City, as set forth in Section 2.7.1 hereof.
“City Code” means the City’s Municipal Code.
4 “City Manager” means the City Manager for the City of Norwalk. Whenever a reference is made herein to an action or approval to be undertaken by City, the Manager is authorized to act unless this Agreement specifically provides otherwise or the context should otherwise require. “City Project Costs” means those costs paid by City for the Project listed on Schedule 1 attached hereto to be reimbursed by Developer as set forth in Section 2.3. Schedule 1 shall be updated prior to the Closing as set forth in Section 2.3.1.
“Closing” or “Close of Escrow” means the close of Escrow for the Conveyance from City to Developer, as set forth in Section 2.4.5.
“Closing Date” means the date of the Closing as set forth in Section 2.4.5. “Completion of Backbone Construction” means that the Backbone Improvements have been substantially completed in accordance with the Backbone Improvement Plans as determined by the City Engineer.
“Condition of Title” is defined in Section 2.5.
“Conditions Precedent” means City’s Conditions Precedent and/or Developer’s Conditions Precedent for the Conveyance.
“Convey” or “Conveyance” means the conveyance of the Property by City to Developer at the Close of Escrow.
“County” means Los Angeles County.
“Date of Agreement” is defined in the first paragraph hereof. “Default” means the failure of a party hereto to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 6.1 hereof.
“Demolition Costs” means the total amount of all costs to complete the Demolition Work as estimated in Exhibit G-2 attached.
“Demolition/Remediation Estimate” is the estimate of all Remediation Costs and all Demolition Costs attached hereto as Exhibit G-2.
“Demolition Work” means the demolition and removal of all structures and all ancillary improvements that comprised the CYA Facility as set forth in the Rincon Proposal and Exhibit G-
2. “Developer” means Lewis Land Developers, a Delaware limited liability company. Prior to the Closing, Developer intends to assign its rights under this Agreement to a single purpose entity that is an Affiliate of Developer who will assume the obligations of Developer under this Agreement, such assignment and assumption being subject to Section 7.3 of this Agreement. “Developer’s Conditions Precedent” means the conditions precedent to the Closing for the benefit of Developer, as set forth in Section 2.7.2. 5 “Director” means the Director of Community Development at the City or his designee who shall represent City in all matters pertaining to this Agreement. Whenever a reference is made herein to an action or approval to be undertaken by City, the Director is authorized to act unless this Agreement specifically provides otherwise or the context should otherwise require. “DTSC” means the State of California Department of Toxic and Substance Control. “Effective Date” means the date on which both City and Developer have executed this Agreement.
“Entitlements” means the entitlements listed in Exhibit D. “Environmental Condition” is defined in Section 2.13.5 hereof. “ Environmental Documents” means all of those documents listed in Exhibit G-1. “Environmental Laws” has the meaning set forth below.
“Environmental Liabilities” means any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, or expense (including, without limitation, reasonable attorneys’ fees) made or suffered by third parties for bodily injury or property damage to the extent resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in, or from or the transportation of any such Hazardous Materials to or from, the Property, and (ii) the violation, or alleged violation, of any of the Environmental Laws relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or from the Property, but expressly excluding any claims arising from or related to the Remediation Work performed by the City and its contractors under Section 2.13, inclusive of their disposal of the Hazardous Materials removed from the Property.
“Escrow” is defined in Section 2.4 hereof.
“Escrow Agent” is defined in Section 2.4 hereof.
“Exceptions” is defined in Section 2.5 hereof.
“Grant Deed” means the grant deed to be used for the Conveyance, in the form of Exhibit F attached hereto and incorporated herein by reference. “Government Requirements” is defined in Section 5.1(a) hereof. “Hazardous Materials” means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a “hazardous waste,” “extremely hazardous waste,” or “restricted hazardous waste” under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a 6 “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum and breakdown and derivative products thereof, (vi) asbestos, (vii) polychlorinated biphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as “hazardous” or “extremely hazardous” pursuant to Chapter 11 of Title 22, Division
4.5 of the California Code of Regulations, (x) designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (xi) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. §9601). The foregoing regulations are referred to herein as the “Environmental Laws”
“Holdback” has the meaning set forth in the State PSA.
“Notice” shall mean a notice in the form prescribed by Section 7.1 hereof. “Memorandum” means that certain City PSA Memorandum of Agreement in the form of Exhibit I attached hereto to be executed by City and Developer and recorded by City at the State PSA Closing as set forth in Section 2.2.
“Outside Date” means twenty-four (24) months after the State PSA Closing. “party” means Developer or City in the singular.
“ parties” means Developer and City together.
“Project” means collectively the Developer Project and the Affordable Housing Project to be developed in accordance with the Entitlements.
“Project Map” means a tentative map and final tract map or final parcel map that legally subdivides the Property into the parcels identified on the Project Plan. “Property” means the real property legally described in Exhibit A and depicted in Exhibit B.
“Purchase Price” is defined in Section 2.3 hereof.
“Regulatory Agreement” means that certain Regulatory Agreement recorded against the Property at the State PSA Closing as set forth in the State PSA. “Remediation Costs” means the total amount of all costs to complete the Remediation Work as estimated in Exhibit G-2 attached.
“Remediation Work” means all of the testing, DTSC planning, processing, permitting, and reporting, and all fieldwork, excluding the Demolition Work, described in the Rincon Proposal.
7 “Rincon Proposal” means that certain Remedial Action Path Forward and Cost Estimate dated May 31, 2024, a copy of which is attached hereto as Exhibit G. “Specific Plan” means Specific Plan No.17 (Norwalk Transit Village Specific Plan). “State” means the State of California.
“State PSA” has the meaning set forth in Recital B.
“State PSA Closing” means the Close of Escrow under the State PSA. “State PSA Funds” is defined in Section 2.1.2.
“Title Company” is defined in Section 2.5 hereof.
“Title Report” means the preliminary title report, as described in Section 2.5 hereof. “Title Policy” is defined in Section 2.6 hereof.
“Transfer” is defined in Section 7.3.1 hereof.
2. CONVEYANCE OF THE SITE
2.1. City-Property Acquisition From State.
2.1.1 State PSA. City agrees to take all actions required to execute the State PSA no later than December 31, 2024, in that form substantially consistent with the form approved by the City Council on December 3, 2024, and to thereafter comply with all of the terms and conditions of the State PSA and to complete the purchase of the Property from the State in accordance with and subject to all of the terms, covenants, and conditions of the State PSA. The City shall not amend or otherwise modify the State PSA without the written approval of Developer, which approval shall not be unreasonably withheld.
2.1.2 State PSA Funding. Provided that this Agreement has not previously been terminated, and after satisfaction of the State Funding Conditions below, Developer agrees to make all payments which the City is required to pay under the State PSA as, when and where required under the State PSA (the “State PSA Funds”) by depositing those funds with the Escrow Agent in this Agreement at least three (3) business days prior to the date those State PSA Funds are due and payable by the City under the State PSA together with written instructions signed by Developer instructing Escrow Agent to wire those State PSA Funds into the Escrow established in the State PSA on the dates those funds are due under the State PSA. Those Developer’s Conditions Precedent set forth in Sections 2.7.2 (excepting 2.7.2(i)), shall be satisfied as a condition to Developer’s obligations under this Section 2.1.2 (the “State Funding Conditions”).
2.1.3 Remediation Holdback. The Holdback under the State PSA shall be paid to Developer to reimburse Developer for all Remediation Costs paid by Developer to City to complete the Remediation Work as further set forth in Sections 2.3 and 2.13.3 below.
2.2. Developer-Property Acquisition from the City. City agrees to sell the Property to Developer and Developer agrees to purchase the Property from City, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, including the Conditions Precedent 8 as set forth in Section 2.7. The conveyance of the Property from City to Developer shall be accomplished at the Close of Escrow on or before the Closing Date set forth in Section 2.4.5 through the City’s execution, delivery, and recordation in the official records of the County of the Grant Deed and execution of the Bill of Sale. Concurrent with the State PSA Closing, Escrow Holder shall record the Memorandum.
2.3. Purchase Price. The Purchase Price for the Property shall be equal to (i) the amount of the State PSA Funds paid by Developer for the City under the State PSA which is $20,300,000.00 (the “Appraisal Value”), (ii) subject to the terms of Section 2.3.1, the total amount of all costs set forth in Schedule 1 attached hereto (the “City Project Costs”) which the City has incurred or paid to third parties in connection with the Project, and (iii) subject to Developer’s receipt of the Holdback as set forth in Section 2.2.3 above, the total amount of all costs to complete the Demolition Work (the “Demolition Costs”) and the Remediation Work (the “Remediation Costs”) which is currently estimated to be the amounts set forth in the “Demolition/Remediation Estimate” attached hereto as Exhibit G-2 (collectively the “Purchase Price”). The Purchase Price shall be paid in immediately available funds as follows: (1) the State Funds shall be paid in accordance with Section 2.1.2, (2) the City Project Costs shall be deposited into Escrow within three (3) business days prior to the State PSA Closing and then released to City at the Closing under this Agreement in accordance with Section 2.4.4(c), and (3) the Demolition Costs and Remediation Costs shall be paid to City as those costs are incurred by the City as set forth in Section 2.13.3; provided, City shall concurrently take all actions required under the State PSA for the release and delivery to Developer of the Holdback to reimburse Developer for all of the Remediation Costs paid by Developer in accordance with Section
2.13.3 below. No portion of the Purchase Price paid by Developer is refundable to the Developer except as set forth in Section 6. City and Developer acknowledge and agree that the Appraisal Value is the Fair Market Value of the Property as determined by the Appraisal.
2.3.1 City Project Costs. Schedule 1 lists all City Project Costs paid by the City through the date set forth in Schedule 1. City agrees that it will cease incurring any additional City Project Costs from any of the consultants, contractors and other third parties listed in Schedule 1 or from any other third parties not listed on Schedule 1 from and after the Effective Date except for the (i) reasonable and necessary legal expenses of the City’s contract City Attorney in connection with the State PSA this Agreement, the Project Entitlements or the Project, and (ii) Remediation Costs paid prior to the Closing in connection with the work identified in the Rincon Proposal. City shall provide Developer with copies of all of the contracts, change orders, and other documentation which evidences the City Project Costs as and when requested by Developer (collectively, the “City Contracts”). All of the City’s rights under the City Contracts shall be assigned to Developer in the Bill of Sale. Schedule 1 shall be updated by City a minimum of fifteen (15) days before the Closing for Buyer’s review and approval, which approval shall not be unreasonably withheld so long as the City has provided Developer with reasonable documentation to support the City Project Costs.
2.4. Escrow. City and Developer shall open escrow (“Escrow”) with Fidelity National Title Insurance Company, 4400 MacArthur Blvd., Suite 200, Newport Beach, CA 92660, Attn:
Brenna Ryan (the “Escrow Agent”), by depositing one (1) fully executed copy of this Agreement together with a fully executed copy of the Memorandum with Escrow Agent the next business day after the Effective Date (the “Opening of Escrow”).
2.4.1 Developer Deposit. Within three (3) business days after the Opening of Escrow, Developer shall deposit the amount of Two Hundred Thousand Dollars ($200,000) into Escrow (the “Deposit”) which shall be nonrefundable to Developer after expiration of the 9 Contingency Period under the State PSA except in the event of the State’s or City’s default under the State PSA or a City Default under Section 6 of this Agreement or the failure of a Developer’s Condition Precedent. The Deposit shall be applicable to the Purchase Price (applied to the State PSA Funds) and retained by City as liquidated damages if Developer defaults in its obligation in Section
2.1.2 to pay the State PSA Funds as further set forth in Section 6.7 below.
2.4.2 Costs of Escrow and Title. Developer shall pay the premium for the ALTA Title Policy (standard coverage) as set forth in Section 2.6 hereof and shall pay for the documentary transfer taxes, if any, due with respect to the Conveyance, and all other fees, charges, and costs which arise from Escrow with respect to the Conveyance (the “Developer Closing Costs”).
2.4.3 Escrow Instructions. This Agreement constitutes the joint escrow instructions of Developer and City, and the Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. All funds received in the Escrow shall be deposited in a federally insured interest-bearing general escrow account(s) and may be transferred to any other such federally insured interest-bearing escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check or wire transfer from such account.
The parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. The Closing shall take place within the time period set forth in Section 2.4.5 below after the Conditions Precedent as set forth in Section 2.7 have been satisfied or waived in writing.
2.4.4 Authority of Escrow Agent. When the Conditions Precedent have been fulfilled or waived in writing by the party for whose benefit such conditions are imposed, Escrow Agent is authorized to, and shall, with respect to the Closing:
(a)Pay and charge Developer for the Developer Closing Costs as set forth in Section 2.4.2.
(b)Record the Grant Deed.
(c)Upon written confirmation that the Grant Deed has recorded in the Official Records of Los Angeles County Recorder’s Office, disburse that portion of the Purchase Price deposited by Developer to reimburse City for the City Project Costs. (d)Direct City to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of FIRPTA and any similar state act and regulation promulgated thereunder. City agrees to execute a Certificate of Non-Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act and comparable forms respecting the State of California (collectively the “FIRPTA Forms”) as may be required by Escrow Agent, on forms to be supplied by Escrow Agent.
(e)Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-S form, and be responsible for withholding taxes, if any such forms are provided for or required by law.
10 (f)Deliver to both Developer and City a separate accounting of all funds received and disbursed for each party and deliver to Developer originals of the Bill of Sale and FIRPTA Forms, and a conformed copy of the Grant Deed, with recording and filing date and information endorsed thereon.
(g)Do such other actions as necessary to fulfill its obligations under this Agreement.
2.4.5 Closing. Provided the Developer’s Condition Precedent in Section 2.7.2 have been satisfied (or waived in writing by Developer), the “Closing” or “Close of Escrow” shall occur within thirty (30) days after the City’s completion of the Demolition Work and Remediation Work and issuance by DTSC of its DTSC Certificate of Completion (as set forth in Section 2.13.2, or such later date as may be mutually agreed upon by City and Developer in writing (the “Closing Date”); provided however, in no event shall the Closing occur later than the Outside Date (subject to extension under Section 7.2). The Closing or Close of Escrow shall mean the time and day that the Grant Deed is recorded in the official records of the County Recorder.
2.5. Review of Title. Prior to the Date of Agreement, Fidelity National Title Insurance Company (the “Title Company”) has delivered to Developer a standard preliminary title report (Order No. 989-30062880-A-BAM, dated October 11, 2024) (the “Title Report”) with respect to title to the Property together with legible copies of the documents underlying the exceptions (“Exceptions”) set forth in the Title Report. Developer shall have the right to approve or disapprove the Exceptions for the Property in its sole discretion; provided, however, that Developer hereby approves the following Exceptions (the “Permitted Exceptions”):
(a)Subject to Section 2.7.2(l), the Regulatory Agreement recorded under the State PSA;
(b)Subject to Section 2.7.2(m), the Memorandum;
(c)The lien of any non-delinquent property taxes and assessments (to be prorated at Close of Escrow);
(d)The provisions of the Grant Deed; and
(e)All other Exceptions approved or deemed approved by Developer as provided below.
Developer shall have thirty (30) days from the Effective Date to give written notice to City and Escrow Agent of Developer’s approval or disapproval of any Exceptions in the Title Report.
Developer shall have right to obtain, at its expense, an ALTA survey of the Property and to approve or disapprove the survey and all Exceptions to title shown on the survey. Developer’s failure to give written approval of the Title Report within such time limit shall be deemed Developer’s approval of all Exceptions the Title Report. If Developer notifies City of its disapproval of any Exceptions in the Title Report, City shall have fifteen (15) days from the receipt of written notice of disapproval by Developer to determine whether or not it will undertake the removal of any disapproved Exceptions.
If City elects to remove such Exceptions, it shall diligently proceed to effect the removal of such Exceptions. If City cannot or does not elect to remove any of the disapproved Exceptions within that period, Developer shall have until expiration of the Contingency Period under the State PSA to either 11 give City written notice that Developer elects to proceed with the purchase of the Property subject to the disapproved Exceptions (in which event such disapproved Exceptions shall be deemed approved by Developer and be considered Permitted Exceptions) or to give City written notice that Developer elects to terminate this Agreement. The Permitted Exceptions shall hereinafter be referred to as the “Condition of Title.” Developer shall have the right to approve or disapprove any additional and previously unreported Exceptions reported by the Title Company after Developer has approved the Condition of Title for the Property (which are not created by Developer). City shall not voluntarily create any new exceptions to title following the Date of Agreement. Notwithstanding anything to the contrary contained in this Agreement and regardless of whether Developer provides a notice of approval or disapproval of title matters, the Condition of Title shall specifically exclude, and City shall remove of record prior or cause the State to remove prior to Close or Escrow under the State PSA, any deeds of trust, mortgages, judgment liens, mechanic's liens and materialmen's liens, any other monetary liens or encumbrances on the Property (“City Removal Items”).
2.6. Title Insurance. At the Closing, City shall cause Title Company to issue to Developer an ALTA standard coverage title insurance policy for the Property, or, at Developer’s request, an ALTA extended coverage owner’s policy of title insurance (the “Title Policy”) in the amount of the Purchase Price together with such endorsements as are requested by Developer, insuring that as of the date and time of recordation of the Grant Deed, all title to and all rights of possession for the Property, is vested in Developer in the condition required by Section 2.5 of this Agreement. City agrees to remove on or before the Closing all City Removal Items. All costs of the Title Policy, including the cost of endorsements requested by Developer, or additional premiums to obtain an ALTA extended coverage policy, shall be paid by Developer.
2.7. Conditions of Closing. The Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below (collectively “Conditions Precedent”). Except for a breach of one of the party’s obligations under this Agreement or a breach of one of the party’s representations and warranties under this Agreement, the failure of any Conditions Precedent set forth in this Section 2.7 to be either satisfied or waived in writing prior to the date specified below shall not constitute a Default pursuant to Section 6.1 but shall be cause for termination of this Agreement by the party for whose benefit such condition has been imposed to the extent termination is permitted in Section 6.
2.7.1 City’s Conditions of Closing. City’s obligation to proceed with the Closing is subject to the fulfillment, or waiver by City, of each and all of the conditions precedent (a) through (f), inclusive, described below (“City’s Conditions Precedent”), which are solely for the benefit of City, and which shall be fulfilled, or waived in its sole discretion, within the time periods provided for herein, or if no time frame is provided, by the Closing Date:
(a)No Default. Developer shall not be in Default at any time after the Effective Date.
(b)Execution and Delivery of Documents. Developer shall have executed and, as necessary for recordation, shall have had acknowledged, any documents required hereunder and shall have delivered such documents into Escrow.
(c)Payment of Funds. Developer has deposited into Escrow all of the State PSA Funds and City Project Costs in accordance with Section 2.3. 12 (d)State PSA Closing. City shall have completed the State PSA Closing and acquired title to the Property in accordance with the State PSA. (e)Intentionally Omitted.
(f)Developer Representations. All representations and warranties made by Developer in this Agreement shall be true and correct as of the date of this Agreement and the Close of Escrow under this Agreement.
2.7.2 Developer’s Conditions of Closing. Developer’s obligation to proceed with the Closing is subject to the fulfillment or waiver on writing by Developer of each and all of the conditions precedent (a) through (m), inclusive, described below (“Developer’s Conditions Precedent”), which are solely for the benefit of Developer, and which shall be fulfilled, or waived in writing in its sole discretion, within the time periods provided for herein, or if no time is set forth, prior to the State PSA Closing:
(a)No Default. City shall not be in Default at any time after the Effective Date.
(b)Execution and Delivery of Documents. City shall have executed and, as necessary for recordation, shall have had acknowledged, any documents required hereunder and shall have delivered such documents into Escrow.
(c)Review and Approval of Title. Developer shall have reviewed and approved the Condition of Title of the Property, as provided in Section 2.5 hereof. (d)Title Policy. The Title Company shall, upon payment of Title Company’s regularly scheduled premium, have irrevocably and unconditionally agreed to issue to Developer the Title Policy for the Property upon the Close of Escrow consistent with the Condition of Title, in accordance with Section 2.6 hereof.
(e)Adverse Conditions. As of the State PSA Closing and the Closing, no lawsuit, moratoria or similar judicial or administrative proceeding or government action shall exist or have been threatened which would materially delay or significantly increase the cost of constructing the Project or expose Developer to additional liability. (f)City Representations. All representations and warranties made by City in this Agreement shall be true and correct as of the date of the Agreement, as of the State PSA Closing, and as of the Close of Escrow under this Agreement. (g)State PSA Closing. City shall have completed the State PSA Closing and acquired title to the Property in accordance with the State PSA. (h)Development Entitlements. The Entitlements shall have been Finally Approved by the City (as defined in and required by the State PSA) and five (5) business days have elapsed after all time periods for appeals, challenges, initiatives and referenda within which the Entitlements may be legally challenged after the proper posting of a Notice of Determination with respect to the Entitlements has expired without any appeal, challenge, initiative or referenda having been brought. If any appeal, challenge, initiative or referenda is timely brought, such appeal, challenge, initiative or referenda shall have been fully resolved, within the thirty-six (36) month 13 period set forth in Section 4(b) of the State PSA in a manner substantially consistent with the Entitlements originally approved by the City as determined in Developer’s reasonable discretion.
Subject to Developer’s termination rights under Sections 2.7 and 2.7.2(h), the execution of this Agreement does not constrain City’s discretion, acting as lead agency, with respect to the Entitlements specifically, and nothing contained herein will be construed to mean that City is agreeing or has agreed to exercise its discretionary authority in support of any approvals or entitlements that may be required for the Project. Moreover, this Agreement shall not limit the scope or affect the discretion of the City to review the Project for compliance with CEQA and impose mitigation measures, alter the Project, or deny the Project in consideration of adverse environmental impacts, provided the City shall not have taken any action to void, amend or otherwise modify any of the Entitlements prior to the Closing.
(i)Demolition Work and Remediation Work. Prior to the Closing, City’s completion of the Demolition Work in accordance with Section 2.13.1 and the Remediation Work under CLRRA (as defined in Section 2.13.2, issuance by DTSC of the DTSC Certificate of Completion or equivalent written assurance that the applicable, relevant, and appropriate requirements and standards have been met for unrestricted residential use of all of the Property in accordance with Section 2.13.2, and DTSC approval of the CLRRA Immunity Assignment to Developer in accordance with Section 2.13.2.
(j)Development Agreement. Concurrent with City Council’s second reading of the Entitlements, but no later than the State PSA Closing, City approval of the Development Agreement for the Project in accordance with Section 2.12 below. (k)No Project Plan Reappraisal. State shall deliver written confirmation to the City that the current Project Plan does not trigger a reappraisal under Section 3(d) of the State PSA (the “Reappraisal Waiver”). City shall deliver a copy of the Reappraisal Waiver to Developer prior to the Closing. City acknowledges that the City submitted the Project Plan to the State under Section (d) of the State PSA and requested that the State agree in the Reappraisal Waiver that City’s approval of the Project Plan and/or development of the Property in substantial accordance with the Project Plan does not constitute a “Change to the Project Entitlements” and require a reappraisal of the Property by the State.
(l)Regulatory Agreement. Developer’s approval of the form of Regulatory Agreement which shall not be unreasonably withheld provided it is substantially consistent with the Affordability Requirements, does not require the construction of the Affordable Housing Project concurrent with or before construction of the Developer Residential Project, and permits the City to record the Regulatory Agreement against the Affordable Housing Parcel only. (m)State PSA Memorandum of Agreement. Developer’s approval of the form of State PSA Memorandum of Agreement required by the State to be recorded at the State Closing which shall not be unreasonably withheld.
(n)HCD Exempt Surplus Approval. HCD approval of the City’s Exempt Surplus Resolution in accordance with the SLA.
2.8. Representations and Warranties.
2.8.1. City Representations. City represents and warrants to Developer as follows:
14 (a)Authority. City is a California municipal corporation. (b)FIRPTA. City is not a “foreign person” within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute.
(c)No Conflict. City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which City is a party or by which it is bound. (d)Litigation. Except for all matters contained in the administrative record for the Entitlements, City has no Actual Knowledge of, nor has City received any notice of or know of any basis for, any actual, threatened, or pending litigation or proceeding by any organization, person, individual or governmental agency against City with respect to the Project or the Entitlements or against the Property. In the event City receives notice of any such actual, threatened, or pending litigation or proceeding prior to the Closing, City shall promptly notify Developer thereof. (e)Notices of Violation. Except as disclosed in the Environmental Documents or any New Reports (defined below), City has no Actual Knowledge of, nor has City received any notice of any basis for, any violations of laws, statutes, regulations, ordinances, other legal requirements with respect to the Entitlements, the Project or the Property (or any part thereof), or with respect to the use, occupancy or construction thereof, or any investigations by any governmental or quasi-governmental authority into potential violations thereof. In the event City receives notice of any such violations or investigations affecting the Entitlements, the Project, or the Property prior to the Closing, City shall promptly notify Developer thereof. (f)Environmental Condition. City will provide Developer with access to, and Developer will have the opportunity to make copies of, the reports, investigations, studies, lab results, and documents, pertaining to the existing or past Environmental Condition (as defined in Section 2.13.5) of the Property, as shown in the Environmental Documents and shall provide to Developer any reports, investigations, studies, lab results, and documents, pertaining to the existing or past Environmental Condition of the Property not identified in the Environmental Documents that are generated by City after the date of this Agreement within ten (10) business days of City’s receipt thereof (“New Reports”).
The representations and warranties set forth in this Section 2.8.1 shall survive the Closing.
2.8.2. Developer’s Representations. Developer represents and warrants to City as follows:
(a)Authority. Developer is a duly organized Delaware limited liability company established within and in good standing under the laws of the State of California and is authorized to do business in the State of California. The copies of the documents evidencing the organization of Developer which have been delivered to City are true and complete copies of the originals, as amended to the Date of this Agreement. The execution, performance, and delivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of Developer.
15 (b)No Conflict. Developer’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which Developer is a party or by which it is bound. (c)No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding.
The representations and warranties set forth in this Section 2.8.2 shall survive the Closing.
2.9. No Change in the Entitlements. Neither City nor Developer shall take any action to amend or modify the Entitlements before or after the State PSA Closing in a manner that would cause a “Change in the Entitlements” under the State PSA without the written consent of the other party which consent may be withheld in that party’s sole and absolute discretion.
2.10. Project Plan. Unless otherwise mutually agreed by City and Developer, the Developer Project shall be planned and developed by Developer, and the Affordable Housing Project planned and developed by the Affordable Housing Builder, in accordance with the Project Plan and in accordance with the Entitlements and this Agreement. Developer shall finalize the Project Plan and submit the Project Plan to the City for approval within six (6) months after the Closing. City’s approval shall not be unreasonably withheld provided the Project Plan is consistent with the Entitlements and substantially similar to the Project Plan attached hereto as Exhibit D-1.
2.11. Subdivision Conveyance Map. Prior to or within twelve (12) months after the Close of Escrow, as Developer elects, Developer shall process a tentative map and final tract map or final parcel map (collectively the “Project Map”) that subdivides the Property into the parcels identified on the Project Plan, including the Affordable Housing Parcel.
2.12. Development Agreement. Concurrent with City Council’s second reading of the Entitlements but no later than the State PSA Closing, City and Developer agree to negotiate, in good faith, a statutory development agreement in accordance with Government Code Section 65864 et seq, that will vest the Entitlements and include those terms and conditions as generally described in Schedule 2 attached, including without limitation, the terms in Sections 3, 4 and 5 of this Agreement and as otherwise mutually agreed by City and Developer (the “Development Agreement”). The Development Agreement shall be submitted to the City’s Planning Commission and City Council, as required by the Development Agreement laws, for review and approval; provided such approval is a discretionary action by the Planning Commission and City Council and nothing herein (or in Section
2.7.2(j)) shall be construed to limit or obligate the City’s exercise of its police power in connection with such review and approval of the Development Agreement and, subject to Developer’s termination rights under Sections 2.7 and 2.7.2(j), the City retains full authority to approve, conditionally approve, or deny the Development Agreement in accordance with applicable laws and based on the best interests of the community as determined by the City at its sole and absolute discretion.
2.13. Demolition Work/Remediation Work.
2.13.1 Demolition Work. The City shall, prior to the State PSA Closing, contract with those third-party contractors selected by City and Developer as set forth below to commence and complete the Demolition Work after the State PSA Closing all in accordance with the Demolition 16 and Remediation Schedule attached hereto as Exhibit G-3, subject to Force Majeure extension under Section 7.2 below. The Demolition Work shall also include all asbestos, lead, and PCBC abatement identified in the Rincon Proposal and be completed to a condition that will allow for Developer’s mass grading of the Property. Developer acknowledges that this requirement for the City’s completion of the Demolition Work is material consideration for the participation by Developer in this Agreement, and that but for such requirements, Developer would not have entered into this Agreement. City shall competitively bid the Demolition Work in accordance with the Public Works Code and copies of all bids received and those contracts selected by City to be awarded shall be submitted to Developer for its review before any contract is awarded. No change orders or contract amendments may be executed by the City unless such change order or contract amendment is first approved by Developer. Developer shall have the right to supervise and manage the Demolition Work for the City at Developer’s cost.
2.13.2 Remediation Work. The City shall, prior to the State PSA Closing, contract with Rincon, or such other environmental engineer selected by City and approved by the Developer, and all other third-party contractors necessary to commence and complete the Remediation Work after the State PSA Closing all in accordance with the Demolition and Remediation Schedule, subject to Force Majeure extension under Section 7.2 below. Other than the contract with Rincon, City shall competitively bid the Remediation Work for the City in accordance with the Public Works Code, and copies of all bids received and those contracts selected by City to be awarded shall be submitted to Developer for its review before any contract(s) is/are awarded. Developer shall not unreasonably withhold its approval of any contract selected by City. For purposes of this paragraph, any disapproval that would result in the City violating the Public Works Code is per se unreasonable. No change orders or contract amendments may be executed by the City unless such change order or contract amendment is first approved by Developer. Developer shall have the right to supervise and manage the Remediation Work for the City at Developer’s cost. The Remediation Work shall be conducted by the City in accordance with the California Land Reuse and Revitalization Act) (Health and Safety Code Chapter 6.82 and 6.83) (“CLRRA”), to the extent the City and the Property are eligible for CLRRA 1, including, without limitation, the City’s execution and compliance with a CLRRA Agreement in a form approved by DTSC which provides the City with all of the immunities provided by CLRRA (the “CLRRA Immunities”) and which Remediation Work meets all of the requirements of DTSC in order for DTSC to issue a certificate of completion in accordance with the CLRRA Agreement permitting unrestricted residential use of the Property and certifying that “no further action” is required for development of the Project (the “DTSC Certificate of Completion”).
City shall provide Developer with a copy of the CLRRA Agreement for its review and approval before executing the same which approval shall not be unreasonably withheld. City and Developer shall further take all actions required by DTSC and the CLRRA Agreement to assign and transfer the CLRRA Immunities for the benefit of Developer effective upon the Closing (the “CLRRA Immunity Assignment”). Developer acknowledges that this requirement for the City’s completion of the Remediation Work is material consideration for the participation by Developer in this Agreement, and that but for such requirements, Developer would not have entered into this Agreement. Copies of all reports, plans, and agreements with DTSC submitted to DTSC as part of the Remediation Work shall first be submitted to Developer for its review and approval which approval shall not be unreasonably withhold.
1 If the City or Property ae not eligible to proceed under CLRRA, then the City shall proceed under the DTSC Voluntary Cleanup Program (“VCP”) to obtain a “No Further Action” letter under the VCP permitting unrestricted residential use of the Property.
17 2.13.3 Demolition Costs/Remediation Costs. Subject to Developer’s right to receive all of the Holdback in the State PSA, Developer shall be solely responsible for the payment of the Demolition Costs and Remediation Costs incurred by City in connection with the Demolition Work and Remediation Work; provided any costs in excess of the Demolition/Remediation Cost Estimate must be approved by Developer which approval shall not be unreasonably withheld.
Payments shall be made by Developer to the City within fifteen (15) days after written request by the City which request shall be accompanied by all documentary evidence and lien releases reasonably requested by Developer. City’s execution of this Agreement shall constitute its assignment, effective at the Closing, of all rights under the State PSA to the Holdback and City shall take all action required under the State PSA for the release and delivery to Developer of the Holdback to reimburse Developer for all of the Remediation Costs paid by Developer.
2.13.4 Soils and Geotechnical Conditions. As soon as feasible after the Demolition Work and Remediation Work is completed by City, Developer shall have the right of access to all portions of the Property for the purpose of obtaining data and making surveys and tests relating to the condition of the Property, including the environmental, soils and geotechnical condition of the Property.
2.13.5 As Is/No Warranties as to Property. Except as otherwise expressly provided herein, and subject to the City’s completion of the Demolition Work and Remediation Work, the physical condition of the Property is and shall be delivered from City to Developer in an “as-is” condition, with no warranty expressed or implied by City, including without limitation, the presence of Hazardous Materials (“Environmental Condition”), or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Property for the development purposes intended hereunder. To the extent authorized by contract or law, by effectuating the Closing, City shall be deemed to have assigned to Developer all warranties, indemnities, guaranties, claims, and causes of action with respect to the Environmental Condition of the Property, if any, that City has received from or has against prior owners or operators of the Property or received from or has against any contractors or consultants performing any of the Demolition Work or Remediation Work. If requested by Developer, City agrees to execute additional documentation to confirm this assignment.
2.13.6 Developer Environmental Release. As of the Close of Escrow, Developer agrees, with respect to the Property, to release the City from and against any and all claims, losses, fines, penalties, costs, damages, liabilities, demands, actions, causes of action, suits and expenses of any nature whatsoever (including without limitation, reasonable attorneys’ fees, court costs and litigation expenses), direct or indirect, known or unknown, foreseen or unforeseen (collectively, “Claims”) which concern any Hazardous Materials, inclusive of all Environmental Liabilities, except to the extent such Claims relate or arise out of the following (i) the negligence or willful misconduct of City (or its or their officers, officials, members, agents, employees, or representatives) occurring before or after the Close of Escrow, (ii) a breach of the representations, warranties, covenants or other obligations of City set forth in this Agreement, (iii) any personal injury and property damage occurring on or in connection with the Property prior to the Close of Escrow or (iv) the Remediation Work which Claims occur prior to issuance by DTSC of the DTSC Certificate of Completion and approval of the CLRRA Immunity Assignment, including any Claims related to the City’s disposal of the Hazardous Materials removed from the Property (collectively the “Excluded City Claims”).
At the request of Developer, City shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that City shall not be obligated to incur any material expense in 18 connection with such cooperation or assistance. This release shall survive the Closing.
Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE, AND THAT IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.”
_______________
Developer
With respect to the Claims set forth in this Section 2.13.6, effective as of the Closing, Developer waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code.
2.13.7 Developer Environmental Indemnity. Except for the Excluded City Claims, Developer agrees to indemnify, defend, and hold City and its officers, agents, employees, and representatives harmless from and against all Environmental Liabilities which may arise from the acts, errors, or omissions of Developer or its contractors, subcontractors, agents, employees or other persons while acting on Developer’s behalf in relation to the Project or in any manner arising from any obligations pursuant to this Agreement which cause or exacerbate, in a non-de minimis manner, environmental conditions related to the presence of any Hazardous Material at, in, on, under or migrating from the Property, including without limitation:
(a) all applicable claims, lawsuits, demands, obligations, investigations, damages, penalties, fines, or actions by any federal, state, or local governmental agency (collectively, “Government Claims”) relating to the presence of Hazardous Materials, in, on, or under, or migrating from the Property;
(b) all applicable claims, lawsuits, demands, obligations, investigations, damages, (including but not limited to diminution in value of property and related stigma damages, lost profits, and consequential damages), penalties, fines, or actions by owners and operators of adjacent and nearby properties or any other persons (collectively, “Third-Party Claims”); and (c) all applicable claims, lawsuits, demands, obligations, investigations, damages, penalties, fines, or actions by subsequent owners and operators of the Property or any lenders providing financing with respect to the Property arising from any Government Claims in connection with the presence of Hazardous Materials in, on, under, or migrating from the Property (collectively, “Owner/Operator Claims”).
Developer’s obligations under this Section 2.13.7 are collectively referred to in this Agreement as “Developer’s Environmental Indemnity Obligations.” The Government Claims, Third-Party Claims, and Owner/Operator Claims are collectively referred to as the “Environmental Claims”). 19 2.13.8 Pollution Legal Liability Insurance. Developer agrees to use its commercially reasonable efforts to secure a Pollution Legal Liability insurance policy (the “PLL Policy”) from a carrier selected by Developer, with coverage limits of at least Ten Million Dollars ($10,000,000) and for a term of 10 years or longer, naming both Developer and City as named insureds, that provides protection from liability for environmental issues, claims or lawsuits that may arise as to the Property, the remedial actions (including the completed Remediation Work) on the Property or the planned development of the Property. City agrees to cooperate with Developer to obtain the PLL Policy but all costs of the PLL Policy shall be paid by Developer. The PLL Policy deductible, endorsements, and other policy provisions shall be as reasonably approved solely by Developer. City agrees that for purposes of satisfying Developer’s Environmental Indemnity Obligations as set forth in Section 2.13.7 of this Agreement, City shall first tender all Environmental Claims to the insurance carrier under the PLL Policy procured pursuant to this Section 2.13.8.
2.13.9 Defense of Environmental Claims. Provided that Developer accepts any tender of any reasonable expense or reasonable Environmental Claim by City without any reservation, and provided that City has first tendered such Environmental Claim to the insurance carrier and the PLL Policy procured pursuant to Section 2.13.8 of this Agreement, Developer shall have the right, in consultation with City to control on behalf of City any and all negotiations, settlement discussions, investigations, testing, defenses, trials, actions, proceedings, hearings, additional remediation obligations, and other resolutions with all Agencies and third parties arising out of, incidental to, or in connection with Developer’s performance of Developer’s Environmental Indemnity Obligations. If Developer does not accept a tender of any reasonable expense or reasonable Environmental Claim by City without reservation, City shall be entitled to engage in all such matters described in the preceding sentence on its own account, and shall be entitled to recover from Developer the costs of engaging in such matters (including consultants’ fees and reasonable attorneys’ fees), provided Developer’s denial of liability is adjudicated to be in violation of the terms hereof. Without limiting Developer’s rights as described above, Developer shall undertake reasonable consultation with City with respect to all matters materially involving Hazardous Materials, Environmental Claims, or Environmental Liabilities related to the Property.
3. BACKBONE IMPROVEMENTS
3.1. Construction of the Backbone Improvements. After the Closing, Developer shall use commercially reasonable efforts to complete the mass grading of the Project (the “Grading Work”) within eighteen (18) months after City approval of the Backbone Improvement Plans and Project Map and recordation of the Project Map subject to Force Majeure extension under Section
7.2 below. City acknowledges that timing for commencement of the construction of the remainder of the Backbone Improvements is dependent upon market and economic conditions. Provided there are no Adverse Market Conditions, Developer will begin that construction when commercially feasible as determined by Developer, and Developer agrees to diligently and continuously complete that construction after it is commenced, subject to Force Majeure extension. Developer acknowledges that the requirements for the construction of the Backbone Improvements set forth in this Agreement are material considerations for the participation by City in this Agreement, and that but for such requirements, City would not have entered into this Agreement.
3.2. Backbone Improvement Plans and Permits. Developer shall perform its 20 obligations with respect to the development of the Backbone Improvements in strict accordance with this Agreement and in accordance with grading and improvement plans and specifications (the “Backbone Improvements Plans”) prepared by the Developer (and the engineers and consultants selected by Developer) and approved by the City which are consistent with Project Plan. The Backbone Improvements are to be designed, constructed, and dedicated to the City in accordance with the City's standard policies and practices concerning the same. Consistent with the City’s standard policies and practices for work within public rights of way, Developer shall have access to, through, and across public rights of way to construct the Backbone Improvements. If any other governmental official, agency, department, or bureau having jurisdiction over the Backbone Improvements requires material revisions or corrections of the City-approved Backbone Improvements Plans, the Developer and the City shall cooperate in efforts to develop a mutually acceptable set of alternative Backbone Improvements Plans. Before the commencement of construction or development of the Backbone Improvements, Developer shall, at its own expense, secure or cause to be secured any and all permits, entitlements, or other approvals that may be required by or from the City or any other governmental agency with jurisdiction over the Backbone Improvements in accordance with all applicable local, state and federal laws and regulations (the “Backbone Permits”). The City staff shall use reasonable efforts to assist Developer in securing approval of the Backbone Improvements Plans and Backbone Permits; provided that the City shall not incur any material expenses or costs in connection therewith except as specifically required in the Entitlements. Nothing herein shall be construed to limit the City’s exercise of its police power.
Without limiting the foregoing, the Backbone Improvement Plans shall be approved by City within sixty (60) days after submittal by Developer and City, provided the grading plans shall be approved by the City within thirty (30) days after submittal, and the City shall be ready to issue a grading permit for the Project within ten (10) days after approval of the grading plans for the Project, subject only to Developer’s payment of the City’s grading permit fees.
3.3. Cost of Construction. Except to the extent otherwise expressly set forth in Section 4 of this Agreement or in the Entitlements and, subject to Developer’s receipt of the Fee Credits set forth in Section 3.10, all of the cost of planning, designing, developing and constructing all of the Backbone Improvements (the “Backbone Costs”) shall be borne solely by Developer.
3.4. Reserved.
3.5. Construction Bonding. After completion of the Grading Work, and prior to commencement of the construction of the remaining Backbone Improvements, the Developer shall be required to deposit with the City, for the benefit of the City, adequate performance and payment security in a form approved by the City and otherwise meeting all applicable requirements of Chapter 5 of Divisions 2 of Title 7 of the California Government Code to satisfy certain conditions of approval of the Entitlement related to the Backbone Improvements which shall include the following (the “Construction Security”):
Public Improvements Bond (Faithful Performance and Labor & Material Bonds). A City approved Backbone Improvements cost estimate is required. A faithful performance bond in an amount equal to 120% of the approved cost estimate to assure City that the Backbone Improvements will be satisfactorily completed and a labor and materials bond in an amount equal to 120% of the approved cost estimate to assure City that Developer’s contractors, subcontractors, and other persons furnishing labor, materials, or equipment for the Backbone Improvements shall be paid, are required upon the issuance of a 21 building permit or City approval of the Project Map, whichever comes first.
Public Improvements Maintenance (Warranty) Bond. A warranty bond in an amount equal to 20% of the final cost of the Public Improvements is required prior to City acceptance of Public Improvements. The warranty period shall be no more than one (1) year.
3.6. Reserved.
3.7. Prevailing Wage. City acknowledges and agrees that Developer’s construction of the Backbone Improvements on the Property is not a “public work” under California Labor Code § 1720 et seq (the “Prevailing Wage Law”) and is not subject to any prevailing wage requirements under the Prevailing Wage Law.
3.8. Developer Indemnity. Developer agrees to defend, indemnify and hold the City harmless from all claims, demands, damages, defense costs or liability for any damages to property or injuries to persons, including accidental death (including reasonable attorneys’ fees and costs), to the extent caused by any negligent acts or omissions with respect to the construction of the Backbone Improvements by Developer, whether such activities or performance thereof be by Developer or by anyone directly or indirectly employed or contracted with by Developer. The Developer shall not be responsible for (and such indemnity shall not apply to) any acts, errors or omissions directly or indirectly caused by the City, or its officials, officers, directors, servants, employees or contractors.
3.9. Warranty and Guarantee. Developer hereby warrants and guarantees all Backbone Improvements against any defective work or labor done, or defective materials furnished in the performance of this Agreement for a period of one (1) year following completion of the work and acceptance by the City of the Backbone Improvements (the "Warranty"). During the Warranty, Developer shall repair, replace, or reconstruct any defective or otherwise unsatisfactory portion of the Backbone Improvements, in accordance with the current ordinances, resolutions, regulations, codes, standards, or other requirements of the City, and to the approval of the City Engineer. All repairs, replacements, or reconstruction during the Warranty shall be at the sole cost, expense, and liability of Developer and its surety. Nothing herein shall relieve Developer from any other liability it may have under federal, state, or local law to repair, replace, or reconstruct any Backbone Improvements following expiration of the Warranty or any extension thereof. Developer’s Warranty obligation under this section shall survive the expiration or termination of this Agreement.
3.10. Fee Credits/DIF Fees. Exhibit H attached hereto identifies those DIF Fees to be assessed against the Developer Project and the fee credits to be provided to Developer for certain of the park improvements to be constructed by Seller as part of the Backbone Improvements. The amount of those DIF Fees is to be finalized and fixed in the Development Agreement for the Project as identified in Exhibit H and shall be assessed and credited at building permit issuance. Any necessary allocation of fee credits between the Retail Project and Residential Project shall be determined by Developer from time to time subject to the written approval of City Manager or Director which approval shall not be unreasonably withheld.
3.11. Public Financing. The City will cooperate with Lewis to provide Mello Roos CFD financing or other eligible public financing to fund all or some of the Backbone Costs, development impact fees or other development fees, and/or the maintenance of any public improvements.
4. AFFORDABLE HOUSING.
22 4.1. Regulatory Agreement. City agrees that development of the Affordable Housing Project on the Affordable Housing Parcel by an Affordable Housing Builder in accordance with the Regulatory Agreement and the Entitlements shall meet the requirements of Government Code Section 37364 (the “Affordability Requirements”). City shall take all actions required to release the Regulatory Agreement from all of the Property except the Affordable Housing Parcel (defined below) concurrent with the recordation of the Project Map.
4.2. Affordable Housing Parcel. The Project Plan shall identify the location of the Affordable Housing Parcel which shall be included as a separate legal lot (or lots) on the Project Map restricted for the development of the Affordable Housing Project in accordance with the Affordability Requirements and the Regulatory Agreement.
4.3. Affordable Housing Builder. Developer intends to contract with a third-party affordable housing builder (an “Affordable Housing Builder”) to assume all of the City’s obligations under the Regulatory Agreement with regards to the Affordable Housing Parcel and the Affordable Housing Project and to construct and manage the Affordable Housing Project.
Developer’s selection of the Affordable Housing Builder shall be based, in part, upon evaluation criteria, reasonably approved by the City, which will consider a prospective builder’s experience and financial wherewithal in working on projects of similar type, size, scope, and quality. Without limiting the foregoing, the Developer agrees that the Affordable Housing Builder selected by Developer shall have the capital necessary to successfully fund and/or finance the Affordable Housing Project. Developer may also elect at any time after completion of the Backbone Improvements, upon thirty (30) days prior written notice to the City, to convey fee title in the Affordable Housing Parcel to the City whereupon the City shall be responsible for the selection and management of an Affordable Housing Builder. The conveyance of the Affordable Housing Parcel to the Affordable Housing Builder or to City (the “Affordable Housing Parcel Conveyance”) shall be by grant deed in substantially the same form as the Grant Deed attached hereto as Exhibit F.
4.4. Affordable Housing Project. Except for Developer’s construction of the Backbone Improvements, the Affordable Housing Builder shall be solely responsible for the planning, design, development, construction, leasing, operation, and management of the Affordable Housing Project in accordance with the Regulatory Agreement, Entitlements, Development Agreement, and this Agreement.
4.5. City Release and Indemnity. Except as otherwise expressly provided herein, and subject to Developer’s completion of the Backbone Improvements, the physical condition of the Affordable Housing Parcel is and shall be delivered from Developer to the Affordable Housing Builder or the City in an “as-is” condition, with no warranty expressed or implied by Developer, including without limitation, the presence of Hazardous Materials, or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Affordable Housing Parcel for the development purposes intended hereunder. As of the date of the conveyance of the Affordable Housing Parcel to the Affordable Housing Builder or City, City agrees, with respect to the Affordable Housing Parcel, to release Developer from and against any and all claims, losses, fines, penalties, costs, damages, liabilities, demands, actions, causes of action, suits and expenses of any nature whatsoever (including without limitation, reasonable attorneys’ fees, court costs and litigation expenses), direct or indirect, known or unknown, foreseen or unforeseen, inclusive of all Environmental Liabilities, related to the Affordable Housing Parcel or the Affordable Housing Project (the “Affordable Parcel Claims”), except to the extent such Affordable Parcel Claims arise 23 out of the following: (i) the negligence or willful misconduct of Developer occurring before or after the Affordable Housing Parcel Conveyance, (ii) a breach of the representations, warranties, covenants or other obligations of Developer set forth in this Agreement, and/or (iii) personal injury and property damage occurring on or in connection with the Affordable Housing Parcel between the Close of Escrow and the date of the Affordable Housing Parcel Conveyance (the “Excluded Developer Claims”). This release shall survive the Closing.
City acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, AND THAT IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.”
City
With respect to the Affordable Parcel Claims set forth in this Section 4.5, effective as of the Affordable Housing Parcel Conveyance, City waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. The Affordable Housing Builder shall be required to execute a similar waiver and release.
City further agrees to indemnify, defend, and hold harmless Developer from and against any and all Affordable Parcel Claims arising out of or in connection with any act or omission of City or the Affordable Housing Builder in violation of this Agreement, the Regulatory Agreement, or the Surplus Land Act with regards to the Affordable Housing Parcel or the Affordable Housing Project excepting any Excluded Developer Claims.
5. PROJECT COVENANTS, RESTRICTIONS AND OTHER OBLIGATIONS
5.1. Construction and Maintenance Covenants.
a. Reciprocal Construction Covenants. Developer shall carry out the Developer Project, and the Affordable Housing Builder or City shall carry out the Affordable Housing Project, each in accordance with, and in substantial conformity with, the Entitlements and all applicable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, the County of Los Angeles, the City or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the City, the Developer, the Property or the Affordable Housing Parcel, including all applicable federal, state and local occupation, safety and health laws, rules, regulations and standards, applicable state and labor standards, applicable prevailing wage requirements, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City and its Municipal Code and all applicable disabled and handicapped access requirements, including, without the limitation, the Americans With Disability Act, 42 U.S.C. §12101 et seq., Government Code §4450 et seq., and the Unruh Civil Rights Act, Civil Code §51 et seq. (“Governmental Requirements”). The provisions of this Section shall survive the Close of 24 Escrow and shall not be merged with the Grant Deed. Notwithstanding the foregoing and except for the Developer’s obligation to complete the mass grading of the Property, nothing in this Agreement or the Development Agreement shall obligate the Developer or the City to develop the Developer Project or Affordable Housing Project within any required time period. Each party acknowledges and agrees that neither party can predict when or the rate at which the Developer Project or Affordable Housing Project, respectively, will be developed. Such decisions depend upon numerous factors that are not within the control of the parties, such as market orientation and demand, available financing, affordable housing credits, interest rates, absorption, completion, and other similar factors.
Except as expressly provided herein for the mass grading, the rate, timing, phasing, and sequencing of development of the Developer Project and the Affordable Housing Project shall be at the discretion of the Developer and the Affordable Housing Builder, respectively. b. City Maintenance Covenants/LLMD. City shall at all times maintain all portions of the Property dedicated to the City for public use (the “Dedication Parcels”) together with all improvements that are constructed within the Dedication Parcels, including all landscaping, all in good condition and repair and in full compliance with the terms of all applicable provisions of the Entitlements and the City Municipal Code. Without limiting the foregoing, the City agrees to form a landscape and lighting maintenance district (“LLMD”) for the Project to maintain all of the Dedication Parcels, including, without limitation, all park, open space, trail, and parkway landscaping and improvements.
c. Developer Maintenance Covenants. Developer shall, at all times that the Developer or its Affiliates own any portion of the Property, maintain, the Property, together with all improvements that are constructed as part of the Developer Project, including all landscaping, all in good condition and repair, and in full compliance with the terms of all applicable provisions of the Entitlements and the City Municipal Code. The common areas of the Developer Retail Project shall be maintained by Developer (or an affiliate) in accordance with the Developer Retail Project’s reciprocal easement agreement and covenants, conditions, and restrictions for the use, operation, and maintenance of the Developer Retail Project (the “REA”) and the common areas of any of the Developer Residential Project shall be maintained by Developer (or an affiliate) and/or by a homeowner’s association (“HOA”) in accordance with covenants, conditions and restrictions (“CC&R’s”) for the HOA. The REA and CC&Rs will be subject to the City’s review and reasonable approval and provide the City with rights to enforce the maintenance obligations in the REA and CC&Rs.
5.2. Quimby Park Requirements. The Backbone Improvements include the Developer’s construction of the Project park and Project trails as set forth in the Entitlements. City agrees that such construction and completion of the Project park and Project trails, together with its construction of all private recreational areas within the Developer Residential Project will satisfy all of the City’s Quimby park dedication and in-lieu fee requirements for the Project under Government Code Section 66477 and City Code Section 16.03.080 as set forth in Exhibit H.
5.3. Art in Public Places Fee. Notwithstanding the requirement of the City’s “Art in Public Place Program” as set forth in Chapter 15.44 of the City Code (the “Public Art Program”), and without limiting the terms of Section 3.11 of this Agreement, the City agrees that the In-Lieu Contribution or fee payment under the Public Art Program for the Developer Project shall be negotiated and fixed in the Development Agreement as further set forth in Exhibit H (the “Public Art Fee”). Developer may elect to install artwork within public parks or other public areas within, 25 or in the vicinity of, the Project as approved by the City Manager or Director and the City of Norwalk Art in Publice Places Advisory Committee (the “Arts Committee”) in accordance with the requirements of the Public Art Program. The cost or value of such artwork as approved by the City Council (and Art Committee if required) shall equal or exceed the Public Art Fee.
5.4. Project Parking Requirements. City agrees to allocate public street parking within the Project for use by Project residents as necessary to meet City parking code requirements. City shall allow private enforcement of such parking rights.
6. DEFAULTS AND REMEDIES
6.1. Default. Subject to the extensions of time set forth in Section 7.2 of this Agreement, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a “Default” under this Agreement. The breach or falsity of any representation or warranty by a party as set forth in this Agreement also constitutes a “Default” under this Agreement following notice and failure to cure as described hereafter. The refusal or failure of Developer to pay the State PSA Funds or the remainder of the Purchase Price when required by, and pursuant to the terms of, this Agreement following satisfaction of the Conditions Precedent to Closing for the benefit of Developer set forth in Section 2.7.2 constitutes a “Default” under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of (a “Default Notice”). Except for a breach of (i) a covenant against Transfers not permitted under Section 7.3 of this Agreement, (ii) the City obligation to complete its purchase of the Property under the State PSA, (ii) the City’s obligation to complete its sale of the Property, or (iii) the Developer’s obligation to complete its purchase of the Property under this Agreement (as to all of which Defaults no right to notice or cure shall apply), a party shall not be in Default as to non-monetary Defaults if such party within thirty (30) days from receipt of such notice promptly commences to cure, correct or remedy such failure or delay and thereafter continuously and diligently completes such cure, correction or remedy. As to monetary Defaults, a cure period of ten (10) days upon written notice shall apply.
6.2. Specific Performance. In addition to any other rights or remedies set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement or to cure, correct, or remedy any Default of the other party. Specific performance shall be available as a remedy to the greatest extent legally allowable. Such legal action must be instituted in the Superior Court of the County of Los Angeles, in an appropriate municipal court in that County, or in the District of the United States District Court in which such County is located.
PROVIDED AND NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IF CITY IS IN DEFAULT OF ITS OBLIGATION TO
COMPLETE THE SALE AND CONVEYANCE OF THE PROPERTY TO
DEVELOPER AND DEVELOPER IS UNABLE TO SECURE THE
REMEDY OF SPECIFIC PERFORMANCE AS A RESULT OF CITY’S
ACTS OR INACTIONS, THEN DEVELOPER SHALL BE ENTITLED TO
BRING AN ACTION AGAINST CITY FOR ALL DAMAGES SUFFERED
OR INCURRED BY DEVELOPER AS A RESULT OF THE CITY’S
BREACH WHICH DAMAGES INCLUDE THE RECOVERY OF ALL OF
THE PURCHASE PRICE PAID BY DEVELOPER UNDER SECTION 2.3. 26 6.3. Termination By Developer Prior to the State PSA Closing. In the event that prior to the State PSA Closing, (i) the City is in default of the State PSA, or (ii) City is in Default in the performance of its obligations or in breach of a representation or warranty in this Agreement or (iii) one or more of Developer’s Conditions Precedent to be satisfied or waived prior to the State Closing have not been satisfied or waived, then, as Developer’s sole and exclusive remedies, Developer may either (i) specifically enforce City’s obligations in accordance with Section 6.2, or (ii) terminate this Agreement by written notice thereof to City. In the event of such termination, the Deposit shall be returned to Developer, the City shall reimburse Developer for any of the State PSA Funds paid by Developer, and neither party shall have any further rights or obligations under this Agreement except for those provisions hereof which expressly survive the termination of the Agreement.
6.4. Termination by City Prior to the State PSA Closing. In the event that prior to the State PSA Closing, (i) the Developer is in default in the performance of its obligations or in breach of a representation or warranty in this Agreement or (ii) one or more of City’s Conditions Precedent to be satisfied or waived prior to the State Closing have not been satisfied or waived, then, as City’s sole and exclusive remedy, City may terminate this Agreement by written notice thereof to Developer. In the event of such termination, the Deposit shall, if termination is for reason of Developer’s Default, be released to the City by Escrow Agent as liquidated damages under Section
6.7, and if termination is for reason of the non-satisfaction of any of the other City’s Conditions Precedent, be returned to Developer, and , in either case, the City shall reimburse Developer for any of the State PSA Funds paid by Developer, and neither party shall have any further rights or obligations under this Agreement except for those provisions hereof which expressly survive the termination of the Agreement.
6.5. Self-Help-Demolition and Remediation Work. If City fails to complete the Demolition Work and Remediation Work in accordance with the Demolition and Remediation Schedule for any reason other than (i) a default by Developer under this Agreement, or (ii) delays caused by Force Majeure under Section 7.2, and such failure continues for a period of thirty (30) days after receipt of written notice from Developer, then Developer’s sole and exclusive remedies shall be to either (i) specifically enforce City’s obligations in accordance with Section 6.2, or (ii) elect to complete the Demolition Work and Remediation Work itself subject to the terms and provisions of this Section 6.5. If Developer elects to complete the Demolition Work and Remediation Work, then Developer shall be entitled to receive from City, in addition to the Holdback, an amount equal to ten percent (10%) of the total actual, third-party out-of-pocket costs incurred by Developer in completing the Demolition Work and Remediation Work to reimburse Developer for its overhead and administrative costs incurred in this process (the “Developer’s Self-Help Costs”). Developer’s Self-Help Costs shall be due and payable by City within ten (10) days after written demand therefor by Developer, provided that such demand is accompanied by invoices or other written documentation that reasonably evidence Developer’s Self-Help Costs. In the event City fails to pay any sum due hereunder when due, then such past due amount shall accrue interest from the original due date until paid at an annual rate equal to the lesser of (i) the prime rate then published in the Wall Street Journal plus three percent (3%) or (ii) the maximum rate permitted by law. In order to facilitate Developer’s ability to complete the Demolition Work and Remediation Work if Developer elects to do so pursuant to this Section, City shall assign to Developer, on a non-exclusive basis, effective immediately and automatically upon Developer’s election to complete the Demolition Work and Remediation Work, to the extent assignable: (1) City’s contracts for such work; and (2) City’s agreements with any consultants for such work, including without limitation City’s agreements with Rincon. 27 6.6. Self-Help-Backbone Improvements. If Developer fails to complete any of the Backbone Improvements in accordance with Section 3 for any reason other than (a) a default by City under this Agreement, or (b) delays caused by Force Majeure under Section 7.2, and such failure continues for a period of thirty (30) days after receipt of written notice from City, then City’s sole and exclusive remedies shall be to either (i) specifically enforce Developer’s obligations under Section 6.2, or (ii) elect to complete the Backbone Improvements itself subject to the terms and provisions of this Section 6.6. If City elects to complete the Backbone Improvements, then City shall be entitled to enforce the Construction Security or receive from Developer an amount equal to one hundred ten percent (110%) of the total actual, third-party out-of-pocket costs incurred by City in completing the Backbone Improvements (the “City’s Self-Help Costs”). City’s Self-Help Costs shall be due and payable by Developer within ten (10) days after written demand therefor by City, provided that such demand is accompanied by invoices or other written documentation that reasonably evidence City’s Self-Help Costs. In the event Developer fails to pay any sum due hereunder when due, then such past due amount shall accrue interest from the original due date until paid at an annual rate equal to the lesser of (i) the prime rate then published in the Wall Street Journal plus three percent (3%) or (ii) the maximum rate permitted by law. In order to facilitate City’s ability to complete the Backbone Improvements, if City elects to do so pursuant to this Section, Developer shall assign to City, on a non-exclusive basis, effective immediately and automatically upon City’s election to complete the Backbone Improvements, to the extent assignable: (1) Developer’s contracts for such work; and (2) Developer’s agreements with any consultants for such work.
6.7. LIQUIDATED DAMAGES-DEVELOPER SECTION 2.1.2 DEFAULT.
DEVELOPER RECOGNIZES THAT THE PROPERTY WILL BE REMOVED FROM THE MARKET DURING THE EXISTENCE OF THIS AGREEMENT. BOTH PARTIES AGREE
THAT IF DEVELOPER MATERIALLY BREACHES ITS OBLIGATIONS UNDER SECTION
2.1.2 OF THIS AGREEMENT AND FAILS TO CURE THAT BREACH UNDER SECTION 6.1 AND SUCH BREACH RESULTS IN CITY’S FAILURE TO COMPLETE THE STATE PSA
CLOSING, CITY SHOULD BE ENTITLED TO COMPENSATION FOR THE DETRIMENT
DESCRIBED ABOVE, BUT THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE EXTENT OF CITY’S ACTUAL DAMAGES WHICH WOULD BE BASED ON OPINIONS OF VALUE WHICH COULD VARY SIGNIFICANTLY. IN PLACING THEIR
INITIALS AT THE PLACES PROVIDED BELOW, THE PARTIES AGREE THAT IN THE
EVENT OF SUCH DEFAULT, CITY SHALL RETAIN THE DEPOSIT AS ITS SOLE AND ONLY REMEDY AT LAW OR IN EQUITY, AND AS LIQUIDATED DAMAGES (“LIQUIDATED DAMAGES”) FOR SUCH DETRIMENT. CITY HEREBY EXPRESSLY WAIVES ANY
RIGHTS IT MAY HAVE PURSUANT TO CALIFORNIA LAW OR OTHERWISE TO COMPEL
DEVELOPER TO PURCHASE THE PROPERTY BY SPECIFIC PERFORMANCE AND
WAIVES ANY AND ALL RIGHTS TO RECOVER ANY ACTUAL, CONSEQUENTIAL,
SPECIFIC, EXEMPLARY, PUNITIVE OR OTHER DAMAGES FROM DEVELOPER BY REASON OF DEVELOPER’S DEFAULT UNDER SECTION 2.1.2 EXCEPT FOR THE LIQUIDATED DAMAGES.
6.8. Post-Closing Default. In the event of any Default under this Agreement after the Close of Escrow under this Agreement, and except as set forth in Sections 6.6, the non-defaulting party may exercise any remedy for such Default available under law or equity except City and Developer hereby waive any all rights to recover any punitive damages, consequential damages, lost profits, and special and speculative damages, whether based on common law, statute, equity or otherwise. The limitations of liability contained in this Section are in addition to, and not in limitation 28 of, any limitation on liability applicable by law or equity.
6.9. Acceptance of Service of Process. In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the City Manager, Director or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made by personal service upon applicable person or entity specified in the documents on file for Developer with the California Secretary of State, or in such other manner as may be provided by law.
6.10. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party.
6.11. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
6.12. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
7. GENERAL PROVISIONS
7.1. Notices, Demands and Communications Between the Parties. All notices, demands, consents, requests or other communications required to or permitted to be given pursuant to this Agreement shall be in writing, shall be given only in accordance with the provisions of this Section, shall be addressed to the parties in the manner set forth below, and shall be conclusively deemed to have been properly delivered: (a) upon receipt when hand delivered during normal business hours (provided that, notices which are hand delivered shall not be effective unless the sending party obtains a signature of a person at such address that the notice has been received); (b) upon receipt when sent by email to the email address set forth below (provided that, any Default Notice given by email shall not be effective unless the sending party delivers the notice also by one other method permitted under this Section); (c) upon the day of delivery if the notice has been deposited in an authorized receptacle of the United States Postal Service as first-class, registered or certified mail, postage prepaid, with a return receipt requested (provided that, the sender has in its possession the return receipt to prove actual delivery); or (d) one (1) business day after the notice has been deposited with either Golden State Overnight, FedEx or United Parcel Service to be delivered by overnight delivery (provided that, the sending party receives a confirmation of actual delivery from the courier). The addresses of the parties to receive notices are as follows For purposes of notice, the addresses of the parties shall be:
To City: City of Norwalk
127000 Norwalk Boulevard
Norwalk, CA 90650
Attention: Jesus Gomez, City Manager
Email: [email protected]
With copy to:
29 Alvarez-Glasman & Colvin
13181 Crossroads Pkwy. North
Suite 400 - West Tower
City of Industry, CA 91746
Attn: Arnold M. Alvarez-Glasman, City Attorney
Email: [email protected]
To Developer: Lewis Land Developers, LLC
c/o Lewis Management Corp
1156 North Mountain Ave,
Upland, CA 81785
Attention: John Goodman
Email: [email protected]
With copy to: Lewis Management Corp.
1156 North Mountain Ave
Upland, California 91785
Attn: W. Bradford Francke
Email: [email protected]
Any party may change its address for notice hereunder to any other location within the continental United States by giving ten (10) days’ notice to the other party in the manner set forth hereinabove.
7.2. Force Majeure Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to: war; insurrection; acts of terrorism; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; pandemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; adverse weather conditions; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier or other unforeseen construction delays; acts or omissions of the other party; acts or failures to act of City, or any other public or governmental agency or entity (except that the acts or failures to act or delay of the City shall not excuse performance by City); or any Adverse Market Condition. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of the City Manager or Director and Developer. Notwithstanding any provision of this Agreement to the contrary, the lack of funding shall not constitute an Adverse Market Condition or other grounds of enforced delay pursuant to this Section 6.2.
7.3. Transfers of Interest in the Property or Agreement.
7.3.1 Prohibition. The qualifications and identity of Developer are of particular concern to City. Furthermore, the parties acknowledge that City has negotiated the terms of this Agreement in contemplation of the development and marketing of the Project. Accordingly, for the period commencing upon the date of this Agreement and until the Completion of Backbone 30 Construction, no voluntary or involuntary successor in interest of Developer (other than the assignee of a Permitted Transfer, as defined in Section 7.3.2) shall acquire any rights or powers under this Agreement, nor shall Developer make any total or partial sale, transfer, conveyance, assignment, further encumbrance, refinancing or lease of the whole or any part of the Property thereon (other than the assignee of a Permitted Transfer, as defined in Section 7.3.2), nor shall any uses other than the Developer Project or Affordable Housing Project be developed on the Property (collectively referred to herein as a “Transfer”), without the prior written approval of City, except as expressly set forth herein. As used herein, the term “Transfer” shall not include the conveyance of the Affordable Housing Parcel to the City or to any Affordable Housing Builder, or any portion of the Property to a public utility or any governmental agency having jurisdiction over the Project, or as otherwise permitted under this Agreement.
7.3.2 Permitted Transfers or Other Conveyances. Notwithstanding any other provision of this Agreement to the contrary, City approval of a Transfer or other conveyance shall not be required in connection with any of the following (“Permitted Transfers”):
(a)Any Transfer to an entity or entities in which Developer, or its members or any of them directly or indirectly, retains ownership or beneficial interest and retains management and control of the Transferee entity or entities. (b)The conveyance or dedication of any portion of the Property to City or other appropriate governmental agency, or the granting of easements or permits to facilitate the construction or operation of the Project.
(c)Any Transfer for secured financing purposes, including the grant of a mortgage or deed of trust for any acquisition or construction loans if procured by Developer for the Developer Project.
(d)After Completion of Backbone Construction and the recordation of the Project Map, the Transfer of any subdivided parcels or lots to (i) merchant homebuilders experienced in residential development similar in size, scope, and quality to the Developer Project approved by the City and (ii) retail pad developers or retail ground lessees experienced in retail development similar in size, scope, and quality to the Developer Project approved by the City.
In the event of a Transfer by Developer, Developer agrees that at least thirty (30) days prior to such Transfer it shall give written notice to City of such Transfer. In the case of a Transfer pursuant to subparagraph (a) above, Developer agrees that at least thirty (30) days prior to such Transfer it shall provide satisfactory evidence that the Transferee has assumed or upon the effective date of Transfer will assume in writing through an assignment and assumption agreement in form reasonably acceptable to City all of the obligations of Developer under this Agreement which remain unperformed as of such Transfer or which arise from and after the date of Transfer. Notwithstanding the foregoing or anything contained in this Agreement to the contrary, the prohibitions in this Section
7.3.2 shall not be deemed to prevent the leasing or pre-leasing of tenant space for occupancy, provided the uses by such tenants comply with the permitted uses under the Entitlements.
7.3.3 Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon and shall inure to the benefit of Developer and its successors and assigns, including those acquiring such interest pursuant to a permitted Transfer. Whenever the term “Developer” is used in this Agreement, such term shall include any other permitted successors and 31 assigns, including those acquiring such interest pursuant to a Permitted Transfer, as herein provided.
Developer shall be liable for the performance of all of its covenants, obligations, and undertakings herein set forth which first accrue during the period of its ownership of the Property. In the event that Developer Transfers all or a portion of the Property in accordance with this Agreement, the transferring Developer shall be released from the obligations of this Agreement first arising subsequent to the effective date of such Transfer with respect to the portion of the Property transferred.
7.4. Non-Liability of Officials and Employees of City to Developer. No member, official, director, officer, agent, or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any Default or breach by City or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Agreement.
7.5. Non-Liability of Members of Employees. No member, shareholder, affiliate, officer, partner, director, agent, or employee of Developer shall have any personal liability for the performance of Developer’s obligations hereunder.
7.6. General Indemnity and Defense. Except for the Excluded City Claims and the Affordable Parcel Claims, and in addition to the Developer’s indemnities set forth in Sections 2.13.7 and 3.8, of this Agreement to the extent not covered thereunder, Developer shall, at its expense, defend, indemnify, and hold harmless the City and its officers, agents, employees and representatives harmless from any and all losses, liabilities, claims, lawsuits, causes of action, judgments, settlements, court costs, reasonable attorneys' fees, and other legal expenses, and other damages of whatsoever nature to the extent arising out of or in connection with, or relating in any manner to any negligent act or omission of Developer or its agents, employees, contractors and subcontractors of any tier and employees thereof in connection with or arising from Developer's development, construction, ownership, or operation of the Project, or any part thereof, except and to the extent any such loss, liability, claim, lawsuit or other damage arises from any Excluded Claims or Affordable Parcel Claims.
Subject to Developer’s receipt of the Reappraisal Waiver under Section 2.7.2(k), Developer’s obligations to indemnify and hold the City harmless under this Section 7.6 shall also include, but is not limited to, any liabilities, claims, lawsuits, causes of action, judgments, settlements, court costs, reasonable attorneys' fees, and other legal expenses arising out of or in connection with Section 3(d) of the State PSA arising out of a Change to the Project Entitlements requested by Developer and approved by the City after the Closing, unless the Change to the Project Entitlements is initiated by the City.
Developer shall also defend, indemnify, and hold harmless the City from and against any and all claims, damages, demands, suits and/or proceedings of any kind brought by any third party challenging the validity and/or legality of this Agreement, or the process followed by the City to sell the Property to Developer excepting (i) any claims made by HCD or any other third party regarding the Surplus Land Act, or (ii) any challenge to City’s purchase of the Property from the State, or (iii) any Excluded City Claims or Affordable Parcel Claims. Developer shall further defend, indemnify, and hold harmless the City from and against any and all claims, damages, demands, suits and/or proceedings of any kind brought by anyone challenging the validity and/or legality of the Developer's future development of the Property, including any and all challenges to any permits and/or approvals, including the Entitlements, that may or may not be granted by the City for the development of the 32 Property except any Excluded City Claims or Affordable Parcel Claims or any other claims expressly excluded above from the indemnities in this Section 7.6.
7.7. Relationship Between City and Developer. It is hereby acknowledged that the relationship between City and Developer is not that of a partnership or joint venture and that City and Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, City shall have no rights, powers, duties or obligations with respect to the development, operations, maintenance or management of the Project.
7.8. City Approvals and Actions. City shall maintain authority of this Agreement and the authority to implement this Agreement through the City Manager or Director (or their duly authorized representative). The City Manager or Director shall have the authority to issue interpretations, extend time limits, approve Transfers, waive provisions, and/or enter into other amendments to this Agreement on behalf of City so long as such actions do not materially or substantially change the uses or development permitted on the Property, or add to the costs incurred or to be incurred by City as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform, and, to the extent allowable and consistent with the goals and objectives of City pursuant to this Agreement, to reasonably accommodate requests of lenders. Any document evidencing the City Manager’s or Director’s exercise of the Authority set forth in this Section 7.7 shall be subject to approval as to form by the City Attorney. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of City Council.
7.9. Counterparts. This Contract may be executed in multiple counterparts by original signature or electronic signature (such as DocuSign, Adobe Sign, and signNow) which together shall constitute the complete agreement and shall be binding on all parties, even though all the parties did not sign the original or the same counterpart signature page. Hand signatures transmitted by fax or electronic mail such as PDF are also permitted as binding signatures to this Contract.
7.10. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party’s own independent investigation of any and all facts such party deems material.
This Agreement includes all of those Exhibits and Schedules attached hereto, each of which are incorporated herein.
7.11. Real Estate Brokerage Commission. Developer’s affiliate, Lewis Management Corp. (“LMC”), is licensed by the California Department of Real Estate (“DRE”) under DRE Broker License No. 01994759, and certain of its employees, including Robert Martin (DRE Broker License No. 00963777) represent Developer in this transaction. LMC and such employees claim no commission or finder’s fee in connection with this transaction. City and Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder’s fee in connection with Developer’s acquisition of the Property from City. The parties agree to defend and hold harmless the other party from any claim to any such commission or fee from any broker, agent, 33 or finder with respect to this Agreement which is payable by such party.
7.12. Attorneys’ Fees. In any action between the parties to interpret, enforce, reform, modify, or rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled (subject to the limitations set forth in this Agreement), reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys’ fees and expert fees and court costs.
7.13. Titles and Captions. Titles and captions are for the convenience of reference only and do not define, describe, or limit the scope or the intent of this Agreement or of any of its terms.
Reference to section numbers is to sections in this Agreement unless expressly stated otherwise.
7.14. Interpretation. As used in this Agreement, masculine, feminine, or neuter gender, and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word “including” shall be construed as if followed by the words “without limitation.” This Agreement shall be interpreted as though prepared jointly by both parties.
7.15. No Waiver. A waiver by either party of a breach of any of the covenants, conditions, or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement.
7.16. Modifications. Any alteration, change, or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party.
7.17. Severability. If any term, provision, condition, or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected and shall be valid and enforceable to the fullest extent permitted by law.
7.18. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday, Saturday or Sunday, and then that day is also excluded. The term “holiday” shall mean all Federal holidays as specified in 5 U.S.C. 6103. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time.
7.19. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise.
7.20. Time of Essence. Time is expressly made of the essence with respect to the performance by City, Developer of each and every obligation and condition of this Agreement. 34 7.21. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents that may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements.
7.22. Conflicts of Interest. No member, official, or employee of City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement that affects his/her personal interests or the interests of any corporation, partnership or association in which he/she is directly or indirectly interested.
7.23. Time for Acceptance of Agreement by City. This Agreement, when executed by Developer and delivered to City, must be authorized, executed, and delivered by City on or before ten (10) days after signing and delivery of this Agreement by Developer or this Agreement shall be void, except to the extent that Developer shall consent in writing to a further extension of time for the authorization, execution, and delivery of this Agreement.
7.24. Estoppel Certificate. City agrees that it will issue within thirty (30) days after receipt of a request to Developer, or its prospective mortgagee or successor, an estoppel certificate stating to the best of City’s knowledge as of such date:
(a)Whether it knows of any default under this Agreement by Developer, and if there are known defaults, specifying the nature thereof in reasonable detail; (b)Whether this Agreement has been assigned, modified, or amended in any way by it and if so, then stating the nature thereof in reasonable detail; (c)Whether this Agreement is in full force and effect; and (d)Such other information is reasonably requested by Developer or its prospective mortgagee or successor.
[All Signatures on Next 2 Pages]
IN WITNESS WHEREOF, the parties hereto have signed this Disposition and Development Agreement as of the respective date set forth below.
CITY:
CITY OF NORWALK,
a California municipal corporation
Dated: , 2024 By:
Jesus Gomez
City Manager
City Clerk
APPROVED AS TO FORM:
________________________________
Arnold M. Alvarez-
Glasman
City Attorney
DEVELOPER:
LEWIS LAND DEVELOPERS, LLC
a Delaware limited liability company
By: LEWIS MANAGEMENT CORP.
a Delaware corporation
Its Manager
By:______________________________
Name: John M. Goodman
Title: Sr. Exec VP/CEO
Dated: ____________________, 2024
WBF:aa Z:\Users\aaguilera\Documents\CYA DDA Draft (12.11.2024) FINAL FORM.docx Exhibit A
Exhibit A
Property Description
Exhibit B
Exhibit B
Map of Property
Exhibit C
Exhibit C
Copy of Assembly Bill 518
Exhibit C
Exhibit D
Exhibit D
List of Entitlements
Exhibit D-1
Exhibit D-1
Conceptual Project Plan
Exhibit D-1
Exhibit E
Exhibit E
Backbone Improvements
Public Improvements
Surveying and Staking
Elect Dist System
Street Paving
Curb and Gutter
Sidewalk
Traffic Signals
Other Street Work
Park Development
Perimeter Landscape
Site Work
Surveying and Staking
Demolition
Clearing/Prewater/Mobil
Dirt Haul incl Import/Export
Erosion Control/SWAPP
Over Excavation
Grading/Earthwork
Sewer System
Storm Drain System
Water System
Recycled Water
Electric/Gas
Electrical Distribution
A/C Paving
Curb and Gutter
Sidewalks and Steps
Street Lights
Perimeter Block Walls
Landscaping
Monuments
Exhibit F
Exhibit F
Grant Deed
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Lewis Land Developers, LLC
1156 N. Mountain Avenue
Upland, CA 91786-3633
Attn: Legal Dept (WBF)
Mail Tax Statements to:
Lewis Land Developers, LLC
c/o Lewis Management Corp.
P.O. Box 670
Upland, CA 91785-0670
Attn: Acct. - Property Taxes
This document exempt from recording fee Space Above For Recorder’s Use pursuant to Section 27383 of the California Government Code THE UNDERSIGNED GRANTOR(S) DECLARE(S):
DOCUMENTARY TRANSFER TAX IS $______________________
____________________ City of Norwalk
Parcel No.
computed on full value of interest or property conveyed or computed on full value less value of liens or encumbrances remaining at time of sale and
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the CITY OF NORWALK, a California municipal corporation (“Grantor”), hereby grants to LEWIS LAND DEVELOPERS, LLC, a Delaware limited liability company (“Grantee”), that certain real property located in the City of Norwalk, County of Los Angeles, State of California, described in the legal description attached hereto as Exhibit “A” (“Property”), together with all buildings, improvements, fixtures, easements, tenements, hereditaments, and appurtenances of every kind or nature belonging thereto or relating to the Property.
[Signatures On Next Page]
Exhibit F
[Signature Page – Grant Deed]
CITY OF NORWALK,
a California municipal corporation
Dated: , 2020 By:
Jesus Gomez
City Manager
Exhibit F
ACKNOWLEDGMENT
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 ____________________, 20__ before me, ____________________________, a 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 that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
[SEAL]
Exhibit F
EXHIBIT “A” TO GRANT DEED
LEGAL DESCRIPTION OF PROPERTY
Exhibit F-1
Exhibit F-1
Bill of Sale and General Assignment
Reference is hereby made to (a) that certain real property described on Exhibit A attached hereto located in the City of Norwalk, California, and referred to in that certain Disposition and Development Agreement dated ___________________ __, 2024, by and between the CITY OF NORWALK, a California municipal corporation (“City”) and LEWIS LAND DEVELOPERS, LLC, a Delaware limited liability company (“Developer”), (the “DDA”) and (b) to the improvements, if any, located on the above-described real property, and (c) to the easements, rights, privileges and entitlements incident thereto (collectively, the “Property”).
For good and valuable consideration, receipt of which is hereby acknowledged, City does hereby, give, grant, bargain, sell, transfer, assign, convey and deliver to Developer, all of City’s right, title and interest in the following: (i) all development rights, entitlements, permits, licenses, plans and approvals relating to the development of, or benefiting, the Property, including without limitation, the Entitlements listed in Exhibit D of the DDA; (ii) all intangible rights benefiting the Property; (iii) all rights, claims, causes of action, actions or awards, warranties or indemnities benefiting the Property, including, without limitation, all rights, claims, causes of action, actions or awards, warranties or indemnities that City has, or may have under the City Contracts or relating to or arising out any environmental contamination or conditions on or about the Property or under any contracts of the City relating to the demolition and remediation work performed for City on the Property; (iv) all surveys, grading plans, geologic, soils, groundwater and environmental reports and engineers’ and consultants’ plans, reports and studies which City may have prepared or caused to be prepared (or received) relating to the Property, including without limitation, the Environmental Reports listed in Exhibit G-1 of the DDA; (v) all improvements, fixtures and personal property, if any, located in and upon or used in connection with the Property, (vi) that certain “Holdback” as defined in that certain Agreement of Purchase and Sale and Initial Escrow Instructions dated _______, 2024 between the City and the State of California concerning the Property and any reimbursements, credits or refunds from the State of California related to the Property, and (vii) all other rights, claims or awards benefiting the Property.
City hereby covenants that City will, at any time and from time to time upon reasonable written request by Developer, execute and deliver to Developer, its nominees, successor and/or assigns, any new or confirmatory instruments which Developer, its nominees, successors and/or assigns, may reasonably request in order to fully transfer possession and control of, all the assets, rights or interests of City intended to be transferred and assigned hereby.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale and General Assignment effective as of ______________ _____, 20__.
CITY OF NORWALK,
a California municipal corporation
By:
Jesus Gomez
City Manager
Exhibit G
Exhibit G
Rincon Remediation Proposal
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G
Exhibit G-1
Exhibit G-1
Environmental Documents
Phase I Environmental Site Assessment Report Dated June 23, 2021 Phase II ESA Report Dated August 11, 2021
Subsurface Feature Investigation and Step-Out Soil Sampling Assessment Report Dated November 2, 2021
Road Repair Summary Letter Report Dated May 13, 2022
Soil and Soil Vapor Delineation Assessment (Draft) Report Dated July 20, 2023 Exhibit G-2
Exhibit G-2
Demolition/Remediation Estimate
Exhibit G-2
Exhibit G-2
Exhibit G-2
Exhibit G-3
Exhibit G-3
Demolition/Remediation Schedule
[City and Lewis to Complete Prior to Closing]
Exhibit H
Exhibit H
Project DIF Fees
1.City Park Fee:
City requires park dedication or in/lieu fee of 133.73 sf per residential unit.
The Project will include the construction and dedication of two (2) parks in the Project: (1) a main park at 1.66 acres and (2) a linear park at 1.19 acres for a total of 2.76 acres of parkland provided (collectively the “Project Parks”). Assuming a maximum of 700 residential units at 133.73 SF per unit, the construction and dedication of the Project Parks fully satisfies the City’s Park dedication requirement and no Park fee will be required.
2.Public Art Fe:
1% of total project cost (NMC 15.44.030) which provides as follows:
§ 15.44.030. Requirement to provide artwork or pay in-lieu contribution.
When a project is subject to the requirements of this chapter, the applicant shall comply with provisions of either subsection A or B of this section or a combination of both:
(Prior code § 5-26.3; Ord. 05-1555 § 1; Ord. 21-1722 § 2) A. The project applicant shall acquire and install an artwork in a public place on or in the vicinity of the project site as approved by the City Council pursuant to this chapter. The cost or value of such work as approved by the City Council shall equal or exceed the amount to be in-lieu contribution that would otherwise be made under subsection B of this section.
B. In-Lieu Contribution. In lieu of acquiring and installing an artwork, project applicants may contribute funds to the Art in Public Places Fund established pursuant to Section 15.44.080 equal to one percent of the total project cost. The in-lieu contribution shall be paid by the project applicant before the issuance of building permits, unless otherwise provided by the City Council. Project applicants shall indicate on their art in public places application that they wish to make an in- lieu contribution.
Project Cost under Section 15.44 030 (B) means the construction value of all Developer Project buildings. Developer will negotiate with the City Manager the final Public Art Fee amount which may include actual artwork (approved by the City of Norwalk Art in Public Places Advisory Committee) and/or in lieu fee payments, to be fixed in the Development Agreement.
NO OTHER DIF FEES WILL BE CHARGED TO THE PROJECT
Exhibit I
Exhibit I
City PSA Memorandum of Agreement
RECORDING REQUESTED BY:
WHEN RECORDED RETURN TO:
LEWIS LAND DEVELOPERS, LLC
c/o Lewis Management Corp.
1156 N. Mountain Avenue
Upland, CA 91786-3633
Attn: Brad Francke (Legal Dept.)
(Space Above for Recorder’s Use)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement (the “Memorandum”) is made as of ______________, 20__, between CITY OF NORWALK, a California municipal corporation (“City”), and LEWIS LAND DEVELOPERS, LLC, a Delaware limited liability company (“Developer”).
RECITALS
A. City owns the real property in the City of Norwalk, Los Angeles County, California, described on Exhibit 1 attached hereto and incorporated herein by this reference (the “Property”).
B. City and Developer have entered into a Disposition and Development Agreement dated __________, 2024 (the “Agreement”) under which City has agreed to sell the Property to Developer.
C. Developer and City desire to record this Memorandum to give notice of their agreement that City is to sell and Developer is to purchase the Property in accordance with the Agreement.
Therefore, Developer and City agree as follows:
1.Incorporation by Reference. All of the terms and conditions set forth in the Agreement are incorporated herein by this reference as though fully set forth herein.
2.Purchase and Sale. City hereby agrees to sell the Property to Developer, and Developer hereby agrees to purchase the Property from City, in accordance with and subject to the terms and conditions set forth in the Agreement.
3.Purpose of Memorandum. This Memorandum is being recorded to give notice of the rights and obligations of the parties in the Agreement and the terms and conditions contained therein. This Memorandum is not intended to modify the Agreement. If there is any inconsistency Exhibit I
between the provisions of this Memorandum and the provisions of the Agreement, the provisions of the Agreement shall control.
4.Termination. Upon Developer’s acquisition of the Property from City in accordance with the terms and conditions of the Agreement, this Memorandum shall automatically terminate and be of no further force and effect concerning the Property.
5.Counterparts. This Memorandum may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one agreement with the same effect as if all parties had signed the same signature page. Any signature page of this Memorandum may be detached from any counterpart of this Memorandum and reattached to any other counterpart of this Memorandum identical in form hereto, but having attached to it one or more additional signature pages.
[Intentionally Blank; Signatures On Next Page]
Exhibit I
The parties have executed this Memorandum as of the date first written above.
CITY OF NORWALK
a California municipal corporation
By:______________________________
Jesus Gomez, City Manager
City Clerk
APPROVED AS TO FORM:
___________________________
John Lam
City Attorney
LEWIS LAND DEVELOPERS, LLC
a Delaware limited liability company
By: LEWIS MANAGEMENT CORP.
a Delaware corporation
Its Manager
By:______________________________
Name: John M. Goodman
Title: Sr. Exec VP/CEO
Exhibit I
EXHIBIT 1
to
Memorandum
Description of the Property
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF NORWALK, LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
[TO BE INSERTED]
Exhibit I
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 whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person 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.
Exhibit I
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 truthfulnes s, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss:
COUNTY OF )
On ___________, 20___, before me, __________________________ a 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 that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[SEAL] __________________________________
Schedule 1
Schedule 1
City Project Costs
[City to Complete]
Schedule 2
Schedule 2
Development Agreement Terms
•Entitlements. All entitlements and subsequent entitlements are to be vested in accordance with Development Agreement law (Government Code Section 65864 et seq). •Demolition/Hazmat Remediation. In accordance with DDA, the City to complete demolition and hazmat remediation work and obtain DTSC NFA before close of escrow with Developer; Developer to fund demolition and remediation with reimbursement from State/City PSA escrow holdback for remediation costs.
•Backbone Improvements. Developer to construct the Backbone Improvements in accordance with Section 3 of the DDA.
•Market Rate Housing. The construction by or for Developer or by merchant homebuilder (s) selected by Developer of all market rate housing (for rent/for sale) at times determined by Developer in its sole discretion.
•Retail Development. The construction by or for Developer of the retail portion of project at times determined by Developer in its sole discretion. •Affordable Housing. Developer or City will contract with an affordable housing builder or builders to construct all affordable housing when funding is available in accord with affordability restrictions.
•Development Impact fees (DIF). Developer shall receive available DIF Fee credits for Backbone Improvements. DA to provide protection for Developer against new DIF Fees and DIF Fee increases. There will be no inclusionary fees associated with the Project. •Park (Quimby). Developer will fund and cause the construction of the Project park and all trails (to be dedicated to the City) in full satisfaction of all Quimby requirements. Developer (or merchant homebuilder(s)) will fund and construct any private recreational improvements in the Developer Project.
•DA Term. 20 years.
•Dedication. Developer shall construct and dedicate all public streets, parks, trails, and other public areas to the City.
•LLMD. City to form a Landscape, Lighting, and Maintenance District to fund the public park/trail/parkway maintenance costs.
•HOA. Developer to form homeowners’ association to include all for-sale housing and to maintain all for-sale private rec areas.
•REA. Retail center (and hotel if developed) will be subject to reciprocal easement agreement Schedule 2
(REA).
•Prevailing Wage. Only affordable housing, demolition/remediation work, and public improvements subject to fee credit or reimbursement to be subject to prevailing wage requirements.
•Condemnation. City to use its condemnation authority to acquire any necessary offsite land or easement if necessary to develop Project in the event Developer is unable to acquire from offsite property owners; Developer will fund all condemnation costs. •Public Street Parking. City to allocate/restrict certain street parking for exclusive use by Project residents as necessary to meet City parking code requirements. City shall allow private enforcement of parking on public streets.
•Public Financing. The City will cooperate with Developer to consider use of CFD, EIFD, or other public financing.
•Expedited Planning Approvals. Reasonable time periods for City staff plan check and planning application review to be included.
•Art in Public Places Fee. In-Lieu Contribution for the Developer Project under Section
15.44.030 of the City Code to be fixed in accordance with Section 5.3 of the DDA.