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CITY OF SAN BERNARDINO
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
Site 8 - 288 E. 49th Street, San Bernardino CA 92404
Site 9 – 251/255 E. 49th Street, San Bernardino, CA 92404 Site 10 – 299 E. 49th Street, San Bernardino, CA 92404
(collectively “ East 49th Street, San Bernardino, CA”)
This EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT “East 49th Street, San Bernardino CA” is dated as of __________, 2026 (this “Agreement”), and is entered into by and between the CITY OF SAN BERNARDINO, a California municipal corporation (the “City”) and Neighborhood Housing Services of The Inland Empire (NHSIE) , a California limited liability company (“Developer”).
RECITALS
A. The City desires to encourage and effectuate the development of certain real property located within areas commonly referred to as “Site 8” - 288 E. 49th Street, San Bernardino CA 92404, comprising approximately [insert] acres, “Site 9” - 251/255 E. 49th Street, San Bernardino, CA 92404, comprising approximately [insert] acres, and “Site 10” - 299 E. 49th Street, San Bernardino, CA 92404, comprising approximately [insert] acres.
B. Site 8 is located at or generally bounded by APN 0154-125-07-0000, Site 9 is located at or generally bounded by APNs 0154-126-01 and 0154-126-02, and Site 10 is located or generally bounded by APN 0154-126-30, each of which are depicted on the “Maps” attached hereto as Exhibit “A” and is legally described on Exhibit “B” attached hereto (the “Properties”); and C.The City is the fee owner of the Properties; and
D.The Properties are generally vacant land with all building structures and infrastructure having been demolished; and
E.On November 16, 2022, the City Council of the City of San Bernardino (the “City adopted Resolution No. 2022-_234_, which, among other things, declared the Properties surplus, pursuant to section 54221 of the Surplus Land Act (Government Code section 54220 et seq.) (the “Act”); and
F.On or about November 22, 2024, the California Department of Housing and Community Development (“HCD”) issued letters to the City determining that the City had met “all the requirements under the [Act] for the purposes of disposing of [the Properties]” and “is permitted to proceed with the sale of” the Properties outside of the Act; and G.As a condition of the City’s disposition of the Properties under the Act, the City must, prior to disposition, record on title to each of the Properties a restrictive covenant ensuring that 25 percent (25%) of the total number of those units must be sold or rented at an affordable DRAFT
cost or affordable rent to lower income households – all as defined in Section 50052.5 of the California Health and Safety Code; and
H.The Developer and City contemplate an affordable housing project consisting of 5 or more residential units at Site 8, 8 or more residential units at Site 9, and 6 or more residential units at Site 10, with not less than 25 percent of the total number of residential units developed on each site to be sold or rented at affordable housing cost, to lower income households, as defined in Section 50079.5 of the California Health and Safety Code. Rental units shall remain affordable to and occupied by lower income households for a period of 55 years for rental housing and 45 years for ownership housing (the “Project”); and
I.The Developer proposes acquiring the Properties for fair market value, as determined by an appraisal, and developing the Project pursuant to a disposition and development agreement or some other definitive agreement (“DDA”), which will include compliance with that certain Contract for Loan Guarantee Assistance Under Section 108 of the Housing and Community Development Act of 1974, as Amended 42 U.S.C. § 5308, by and between the City and the U.S.
Department of Housing and Urban Development (“HUD”), dated September 13, 2006, and approved by the City Council on July 27, 2006 by Resolution No. 2006-271 (the “HUD Contract”), a copy of which has been provided to the Developer, and under which, among other things, the City (as subrecipient) is obligated to repay a $7.5 million loan from HUD to the City in annual principal installments through 2025; and
J.In connection with the preparation of the DDA and prior to consideration of the approval of such DDA, the Parties shall determine the necessary steps for compliance with the California Environmental Quality Act of 1970 (as amended, “CEQA”), and take such steps as needed for compliance with CEQA; provided that approval of this Agreement shall not be considered a "project" under CEQA or constitute City's agreement to any course of action with respect to Properties or the development thereof; and
K.Based upon information furnished by the Developer to the City, together with further investigations conducted by the City, the Developer is qualified to assist the City in undertaking economically sustainable development on the Properties, which will include the planning for and development of a specific study, and the evaluation and planning by the Developer and the City of appropriate and feasible development alternatives.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
PROMISES SET FORTH HEREIN, THE DEVELOPER AND THE CITY HEREBY AGREE, AS FOLLOWS:
1.The Negotiation Period; Term of Agreement; Options to Extend. a.The rights and duties of the parties established by this Agreement shall commence on the date that the parties each execute this Agreement (the “Effective Date”). This Agreement will continue in effect for six (6) months from the Effective Date, at which time this Agreement shall automatically terminate, unless the parties (prior to the expiration of such 6- month period) mutually extend the Exclusivity Period in a writing signed by both parties, as authorized by sub-paragraph (b) of this Section 1.
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b.The parties shall, at the sole discretion of the City Manager, be entitled to extend the initial 6-month period two (2) times for a period of three (3) months each time – i.e., for a total time period of twelve (12) months from the Effective Date. The time period during which this Agreement shall be in effect (including any extensions of time approved by the City Manager) shall be referred to as the “Negotiation Period.”
2.Developer Acknowledgments.
a.The Developer hereby acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the City or an acceptance by the City of any offer or proposal from the Developer to convey any interest in the Properties to the Developer. Any studies relating to the Properties that may hereafter be undertaken by the Developer, in its sole discretion, shall be the sole responsibility of the Developer and shall not be deemed to be undertaken for the benefit of the City.
b.The qualifications and identity of the Developer are of particular concern to the City. The City has relied on these qualifications and identity in entering into this Agreement with the Developer. During the term of this Agreement, no voluntary or involuntary successor-in- interest of the Developer shall acquire any right or power under this Agreement. The Developer shall not assign all or any part of this Agreement or any rights hereunder, without the prior written approval of the City Manager, which approval may be granted, withheld, or conditioned in the sole and absolute discretion of the City Manager. Reference herein to the “City Manager” of the City shall refer to the City Manager or the City Manager’s designee. Notwithstanding the foregoing, the Developer shall have the right to assign this Agreement and its rights hereunder to an entity, which controls, is controlled by, or is under common control with the Developer or its principals, members, or affiliates.
c.The Developer shall promptly notify the City in writing of any and all changes whatsoever to the identity of the business entities and individuals in control of the Developer, as well as any and all material changes in the interest or the degree of control of the Developer by any such party, of which information the Developer or any of its partners or officers have been notified or may otherwise have knowledge or information. Upon the occurrence of any material change in interest or control, whether voluntary or involuntary, in membership, ownership, management or control of the Developer (other than such changes occasioned by the death or incapacity of any individual) unless approved in writing, in advance, by the City Manager, the City may terminate this Agreement by serving written notice of such termination on the Developer referencing this Section.
3.Deposit.
(a) Prior to the Effective Date, the Developer shall pay to the City a deposit in the amount of Twenty Five Thousand Dollars ($25,000.00) in immediately available funds (“Initial Deposit”) to ensure that the Developer will proceed diligently and in good faith to fulfill its obligations under this Agreement, as part of the consideration for the City’s agreement not to negotiate with other persons during the Negotiation Period, and to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during the Negotiation Period, including staff time, consultant fees and attorneys’ fees associated with review DRAFT
and implementation of this Agreement or preparing the DDA, all of which shall be charged against the initial Deposit. The City shall provide notice to the Developer if at any time during the Negotiation Period the Initial Deposit falls below Five Thousand Dollars ($5,000), at which time Developer may make additional deposit of any amount. If Developer opts not to make any further additional deposits, then, upon the complete exhaustion of the Initial Deposit, this Agreement shall automatically terminate without any further notice to either party, and neither Party shall have any further rights or obligations to the other under this Agreement, except obligations that expressly survive termination of this agreement. Any funds remaining in the Initial Deposit at the termination of this Agreement shall either be returned to the Developer or applied towards the purchase price of the Properties at the Developer’s discretion. The Initial Deposit shall not include or be applied to any fees and expenses required by the City of Developer for any permit, other required entitlement or Project processing.
(b)Upon each extension of the Negotiation Period, if any, the Developer shall deposit an additional Ten Thousand Dollars ($10,000) in immediately available funds with the City on the first day of any extension of the negotiation Period (each, an “Extension Deposit”). Each Extension Deposit is intended to ensure that the Developer will proceed diligently and in good faith to fulfill its obligations under this agreement during any extension of the Negotiation Period, as part of the consideration for the City’s agreement not to negotiate with other persons during any such extension of the Negotiation Period, and to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during any such extension of the Negotiation Period, pursuant to this Agreement. Any funds remaining in the Extension Deposit at the termination of this Agreement shall either be returned to the Developer or applied toward the purchase price of the Properties at the Developer’s discretion.
4.Exclusive Agreement to Negotiate.
a.Required Actions.
(1)Within thirty (30) days of the Effective Date the Developer shall submit an updated study that validates the financial feasibility of the development scope identified by Developer in the June 30, 2024 response to the City’s request for additional information as part of the developer selection process.
(2)Within ninety (90) days from the Effective Date, Developer shall submit to the City an updated “Preliminary Development Concept Package,” consisting of the following:
(a)A development proposal generally describing the anticipated use, including, affordability levels and targeted population; (b)Identification of the architect proposed to be used by the Developer; (c)Proposed site plan;
(d)A statement describing the proposed method of financing, including construction and permanent financing and identity of the person(s) or companies providing debt financing or equity.
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(e)A list of financial references;
(f)A comprehensive construction and operating pro forma which identifies all sources and uses of funds for the construction and operation of the Project;
(g)A schedule of performance;
(h)A summary of relevant development experience, particularly with affordable housing projects;
(i)A community engagement and outreach plan; and
(j) Evidence of site control required for the project, to the extent non-City Property is involved.
(3)Within one hundred twenty (120) days of the Effective Date, Developer shall submit to the City a “Final Development Concept Package,” consisting of the following:
(a)Updated information, current as of the date of submittal of the Final Development Concept Package, as to each and every item set forth under the heading “Preliminary Development Concept Package” and addressing such other and additional matters as may arise during negotiations, including, but not limited to;
(i)Proposed final identification of sources of financing, with a description of the terms and conditions of such financing; (ii)A revised schedule of performance.
(4)The Developer shall bear all cost for its performance under this Agreement. (5)The City and the Developer will continue to negotiate toward the execution of a DDA within the Negotiation Period for the disposition, use and development of the Properties.
During the term of this Agreement, the City will negotiate exclusively with Developer, except as to potential users, concerning disposition, use, and development of the Properties. If a DDA is approved by the City Council and fully executed by the Parties, it shall supersede this Agreement. (6)The DDA must be presented to the City Council for review and approval, in its sole and absolute discretion The DDA shall contain terms and conditions for the disposition and use of the Properties, including an affordability covenant, as negotiated between the City and the Developer, which comply with all legal requirements for disposition of the Properties. (a)Agreement to Negotiate. The City (by and through its staff and consultants) and Developer agree that for the term of the Negotiation Period (whether said period expires or is earlier terminated by the provisions herein), each party shall negotiate diligently and in good faith to carry out its obligations under this Agreement. The Developer acknowledges that the City holds title to the Properties. The Developer expressly agrees and acknowledges that its DRAFT
rights pursuant to this Agreement are subject to and based upon compliance by the Developer with this Agreement, including without limitation the making of all submittals required pursuant to this Agreement, in conformity with this Agreement, and City's review of the submittals under applicable laws. Developer further agrees and acknowledges that the agreement to negotiation is not, and shall not be construed as, an approval of a DDA or other definitive agreement for disposition of the Properties.
(b)Supplemental Progress Reports. In addition to the information required in Section 3.a above, for so long as this Agreement remains in effect Developer agrees to provide monthly written reports, or as often as reasonably requested, to the Agency Director of Community, Housing, and Economic Development advising the City on all matters and all studies being made.
5.No Predetermination of City Discretion. The Parties agree and acknowledge that nothing in this Agreement in any respect does or shall be construed to affect or prejudge the exercise of the discretion of the City. The Developer acknowledges in this regard that the feasibility of the Developer’s proposal has not been finally determined, and further that, at the discretion of the City, an environmental review will be prepared and circulated for comment by the City, in connection with the consideration of the DDA. Further, nothing in this Agreement in any respect does or shall be construed to affect or prejudge the City’s discretion to consider, negotiate, or undertake the acquisition and/or development of any portion of the Properties, or shall affect the City’s compliance with the laws, rules, and regulations governing land uses, environmental review, or disposition of the Properties.
6.Environmental and Other Requirements. Certain state and local environmental requirements (including, but without limitation, the California Environmental Quality Act of 1970, Public Resources Code Section 21000, et seq.) ("CEQA") may be applicable to the Project.
Pursuant to such requirements, certain environmental documents may be required to be prepared and certified for the Project. The City, by this Agreement, undertakes no obligation to pay any costs associated with such environmental documents or to supply data and information both to determine the impact of the development on the environment and to assist in the preparation of any necessary environmental documents, or any such related information for purposes of determining whether any project on the Properties would qualify for an exemption from CEQA.
7.Costs and Expenses. Except as otherwise provided in this Agreement, each party shall be responsible for its own costs and expenses in connection with any activities and negotiations undertaken in connection with the performance of its obligations under this Agreement.
8.Non-Discrimination. Developer shall not discriminate against nor segregate, any person, or group of persons on account of sex, race, color, marital status, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Properties, nor shall the Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Properties.
9.Address for Notices. Any notices pursuant to this Agreement shall be in writing and sent (i) by Federal Express (or other established express delivery service which maintains delivery DRAFT
records), (ii) by hand delivery, or (iii) by certified or registered mail, postage prepaid, return receipt requested, to the following addresses:
To City: CITY OF SAN BERNARDINO
201 North E Street
San Bernardino, CA 92401
Attention: Agency Director of Community Development
cc: Sonia R. Carvalho, Esq.
City Attorney, City of San Bernardino
BEST BEST & KRIEGER LLP
18101 Von Karman Ave.
Suite 1000
Irvine, CA 92612
To Developer: Neighborhood Housing Services of the Inland Empire (NHSIE)
Attention: Kailin Scott
1845 S. Business Center Drive, Suite 120
San Bernardino, CA 92408
10.Default. Failure by either party to perform any of its duties as provided in this Agreement shall constitute an event of default under this Agreement. The non-defaulting party shall give written notice of a default to the defaulting party, specifying the nature of the default and the action required to cure the default.
11.Remedies for Breach of Agreement. In the event of a default that remains uncured for ten (10) business days, the sole remedy of the non-defaulting party shall be to terminate this Agreement. Following such termination, neither party shall have any further rights, remedies or obligations under this Agreement. Neither party shall have any liability to the other for monetary damages or specific performance for the breach of this Agreement, or failure to reach agreement on a DDA, and each party hereby waives and releases any such rights or claims it may otherwise have at law or at equity. Furthermore, the Developer knowingly agrees that it shall have no right to specific performance for conveyance of, nor to claim any right of title or interest in the Properties or any portion thereof.
12.Termination. This Agreement shall: (i) automatically terminate at the time(s) set forth in Section 1 above, and (ii) terminate prior to the time(s) set forth in Section 1 above in the event the Developer shall fail to perform its obligations hereunder to the reasonable satisfaction of the City Manager; provided that prior to termination, the City shall provide the Developer with notice of the failure(s) and provide ten (10) business days in which to cure, if such failures are curable. In addition, the parties agree that if either party shall determine, in their sole and absolute discretion, that it is infeasible to proceed with the disposition and development of the Properties as contemplated hereunder, either party may, upon ten (10) business days’ written notice to the other party, terminate this Agreement. Upon termination of this Agreement, whether upon expiration of the Negotiation Period or otherwise, both Parties knowingly agree that neither Party shall have any DRAFT
further rights or remedies as to the other and the Developer shall have no rights in respect to the Properties.
13.Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part. During the Negotiation Period the time periods set forth in this Agreement for the performance obligations hereunder shall apply and commence upon a complete submittal of the applicable information or occurrence of an applicable event. In no event shall an incomplete submittal by the Developer trigger any of the City’s obligations of review, approval and/or performance hereunder; provided, however, that the City shall notify the Developer of an incomplete submittal as soon as is practicable and in no event later than the applicable time set forth for the City’s action on the particular item in question. Further, the time periods set forth herein are outside dates of performance.
14.Real Estate Commissions. The City shall not be liable for any real estate commission or brokerage fees which may arise with respect to this Agreement or the Properties.
15.Developer Not an Agent. The Developer is not an agent of the City.
16.Press Releases. The Developer agrees not to issue any press releases about this Agreement or the Properties without the express written approval of the City Manager or his/her designee.
17.Entire Agreement; Modifications; Waiver. This Agreement constitutes the entire understanding and agreement of the parties, integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements, written or oral, between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. Any amendment, modification, or waiver of this Agreement or any part hereof shall not be effective unless in writing and signed by both parties and shall be subject to Section 21.
18.Agreement Does Not Constitute Development Approval. The City reserves final discretion and approval as to any DDA and all proceedings and decisions in connection therewith.
This Agreement shall not be construed as a grant of development rights, interest in the Properties, or land use entitlements to construct the Project or any other project. All design, architectural, and building plans for the Project shall be subject to the review and approval of the City. By its execution of this Agreement, the City is not committing itself to or agreeing to undertake the disposition or development of the Properties or other real property to the Developer, or any other acts or activities requiring the subsequent independent exercise of discretion by the City, or any agency or department thereof.
19.Governing Law; Venue. This Agreement shall be construed in accordance with the laws of the State of California, and venue for any action initiated by a party to interpret or enforce this Agreement shall lie exclusively in the state and federal courts in the County of San Bernardino.
20.Attorneys’ Fees. Each party shall be responsible for payment of its own attorneys’ fees and expenses with respect to negotiation and preparation of this Agreement. In the event any action is brought to enforce or interpret any of the provisions of this Agreement, the prevailing party in such action or proceeding, shall be entitled to have and recover its reasonable attorneys’ fees and expenses.
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21.Implementation of Agreement. The City shall maintain authority to implement this Agreement through the City Manager. The City Manager shall have the authority to issue interpretations, waive provisions, and/or enter into certain amendments of this Agreement on behalf of the City so long as such actions do not materially or substantially add to the costs or risks incurred or to be incurred by the City as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform, subject to Section 1 herein. All other material and/or substantive interpretations, waivers, or amendments shall require the collective consideration, action and written consent of the governing board of the City.
22.Counterparts. This Agreement may be signed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
[Signatures on Following Page]
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NOW THEREFORE, the Parties have executed this Negotiation Agreement as of the date first set forth above.
CITY:
CITY OF SAN BERNARDINO,
a California municipal corporation
By:
Eric Levitt, City Manager
Date:
ATTEST:
Telicia Lopez, City Clerk
Date:
APPROVED AS TO FORM:
Albert Maldonado, City Attorney
BEST BEST & KRIEGER LLP
Neighborhood Housing Services of the Inland
Empire (NHSIE)
a California limited liability company
By:
Title
Date:
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EXHIBIT A
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EXHIBIT B
SITE 8
APN: 0154-125-07:
Parcel 1:
Lot 7 of Block 20, of Tract 1834, as per maps of record in Book 26, Page(s) 52 of Maps in the Office of the County recorder of said County.
Parcel 2:
An appurtenant easement for ingress and egress and public utilities over and across the West 9.5 feet to the Southernmost 55 feet of Lot 8, Block 20, of Tract 1834, as per maps in Book 26, page(s) 52 of maps, in the Office of the County Recorder of said County.
SITE 9
APN: 0154-126-01:
Lot 1, Block 19 of Tract 1834, San Bernardino Heights, in the City of San Bernardino, County of San Bernardino, State of California, as per map recorded in Book 26, Page(s) 52 of Maps in the Office of the County recorder of said County.
Together with an easement for ingress and egress and surface water flow across Lots 1, 2, and 3 and for the benefit of Lots 1, 2, and 3, block 19, Tract 1834, 10 feet in width running East and West, the South line of which is 23 feet North of and parallel to the South line of said Lots 1, 2, and 3.
APN: 0154-126-02
Lot 2, Block 19 of Tract 1834, San Bernardino Heights, in the City of San Bernardino, County of San Bernardino, State of California, as per map recorded in Book 26, Page(s) 52 of Maps in the Office of the County recorder of said County.
Together with an easement for ingress and egress and surface water flow across Lots 1, 2, and 3 and for the benefit of Lots 1, 2, and 3, block 19, Tract 1834, 10 feet in width running East and West, the South line of which is 23 feet North of and parallel to the South line of said Lots 1 and 2.
SITE 10
APN: 0154-126-30:
Parcel 1:
Lots 10 and 11, Block 19 of Tract 1834, in the City of San Bernardino, County of San Bernardino, State of California, as per map recorded in Book 26, Page(s) 52 of Maps in the Office of the County recorder of said County.
Parcel 2:
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A non-exclusive easement for ingress and egress of that portion of Lot 12, Block, 19, Tract 1834, in the City of San Bernardino, County of San Bernardino, State of California, as per map recorded in Book 26, Page 52 of Maps in the Office of the County recorder of said County described as follows:
Commencing at the Northeast corner of said Lot;
Thence West along the North line of said Lot 30 feet;
Thence Southeasterly to a point on the East line of said Lot, distant South 20 feet from the Northeast corner thereof;
Thence North 20 feet to the point of beginning,
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EXHIBIT C
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