DOCID
EXCLUSIVE NEGOTIATION AGREEMENT
BY AND BETWEEN
THE CITY OF SANTA CLARITA
AND
SERRANO DEVELOPMENT GROUP, INC.
This Exclusive Negotiation Agreement (“Agreement”) is entered into this ___ day of January, 2026 (“Effective Date”), by and between the City of Santa Clarita, a general law city and municipal corporation (“City”) and Serrano Development Group, Inc., a California Limited Liability Company, (“Developer”) on the terms and provisions set forth below. Developer and City are sometimes collectively r eferred to as the “Parties” and each, individually, may be referred to as a “Party.”
1. RECITALS. The Parties enter into this Agreement in light of the following facts and objectives:
A. City desires to encourage and effectuate redevelopment real property ident ified in attached Exhibit A, which is incorporated by reference (“Site”). The Site is comprised of eight parcels constituting approximately one acre that Developer seeks to develop, including the following APNs: 2831 -019-901; 2831-018-900; 2831-018-901; 2831-018- 902; 2831-018-903; 2831-018-904; 2831-018-905; and 2831-018-906.
B. Developer desires to determine the feasibility and terms under which it could develop a portion of the Site into a mixed -use retail/restaurant development (“Concept”) and to negotiate with City the potential terms of a purchase and sale agreement (PSA) for the Site.
C. The Parties desire to enter into this Agreement to provide an exclusive negotiation period to Developer with the intent of establishing mutually acceptable terms and conditions for developing and operating the Concept upon the Site in the manner proposed by Developer, and specifically, to determine if mutually acceptable terms and conditions can be agreed upon for a PSA which would specify the rights, obligations, and the method and amount of financial participation of the Parties with respect to development of the Concept on the Site.
D. The Parties acknowledge that the implementation of the Concept on the Site will require certain entitlements including, without limitation, discretionary legislative acts all of which will require environmental review pursuant to the California Environmental Quality Act (“CEQA”).
E. Developer acknowledges that the current City Council cannot and will not commit to complete processing or approve the entitlements and CEQA review that would be necessary for the implementation of the Concept on the Site and that the
2 individuals that currently constitute the City Council may change during the term of this Agreement.
F. The Parties agree that Developer is relying upon this Agreement to incur costs for crafting the Concept for City’s consideration. Absent this Agreement, Developer would not be proposing the Concept for City’s consideration.
G. City believes it is in the public interest to enter into such exclusive negotiations.
2. TERM.
A. Concept Negotiation Period. The period of exclusive negotiation established under this Agreement for purposes of negotiating the terms of a proposed PSA for the Site is Six months from the date this Agreement is approved by th e City Council subject to extension or termination as provided below (the Negotiation Period).
B. Extension of the Negotiation Period. If, by the expiration of the Negotiation Period Developer has not achieved necessary and satisfactory progress toward the negotiation of the proposed PSA, then City or Developer may terminate this Agreement upon prior written notice delivered to the other. If Developer made substantial progress toward the negotiation of the proposed PSA, as reasonably determined in the City Manager’s sole discretion, the City Manager may extend the term of the Negotiation Period for up to an additional Six months (Extension Period).
3. EXCLUSIVE NEGOTIATIONS.
A. City agrees that, during the term and provided that Developer is not in default of any of its obligations under this Agreement, it will negotiate exclusively and in good faith with Developer as set forth in the Scope of Negotiations. Developer acknowledges and agrees that City is acting in good faith so long as it makes reasonable efforts to attend scheduled meetings and directs its consultants to cooperate with Developer. Developer further acknowledges that City representatives, from time to time, may have contact with other developers respecting the Property and that such contact is express ly permitted so long as such persons inform those developers of the existence of this Agreement and City’s obligations and do not actively engage in negotiation with respect to the Property.
B. Developer understands and agrees that City is a public entity an d mu st comply with, without limitation, the California Public Records Act (“PRA”). Each party agrees that any and all data, reports and documentation supplied by one party (“Disclosing Party”), or its affiliates or third parties on its behalf, to the other party under this Agreement (“Receiving Party”), which are confidential are, to the extent permitted by the PRA, confidential and cannot be disclosed or otherwise disseminated by the Receiving Party without the consent of the Disclosing Party. For this Sec tion to apply, the
3 Disclosing Party must mark or label its confidential information as “Confidential and Proprietary.”
4. SCOPE OF NEGOTIATIONS.
A. During the Term, the Parties will negotiate the Concept proposal that includes the redevelopment of the Site wi thin the boundaries of, and consistent with, the Old Town Newhall Specific Plan and any other applicable City development standards. The final details regarding the mixed -use Concept of approximately 2,748 square feet of retail/restaurant and 65 ownership or r ental residential units, including the specific density, square footages, height, building and unit mix, and overall design, are to be determined as a part of the exclusive negotiations to be conducted pursuant to this Agreement. A City goal is to incr ease the amount of public parking on the Site, which must be considered as the Concept is negotiated.
B. During the Term, the Parties agree to negotiate to develop a purchase and sale agreement for the Site to present to the City Council for consideration and approval in its sole and absolute discretion. Such terms and conditions of the purchase and sale agreement will include the purchase price of the Site, which must be acceptable to both Parties in their sole and unfettered discretion and identified as a fi rm/fixed price in a purchase and sale agreement or other disposition document (“Purchase Price”). The Parties acknowledge that the Purchase Price will be offset at the closing of the escrow account for (i) the reasonable closing costs, transfer costs, and any and all other prorated associated taxes and fees, and (ii) Developer’s payment to Broker, if any, of a real estate commission in accordance with a separate written agreement, if any.
C. The good faith negotiations agreed to between the Parties requires each to reasonably communicate with the other. This will include all methods of communication including via telecommunications (fax, phone, e -mail, etc.), face -to-face meetings between the Parties’ representatives, and written correspondence.
D. Developer mus t, wi thin 30 days after the date of this Agreement, submit in writing to City the names of its architect, engineers, and any other development team member, all of whom are subject to City’s reasonable approval. Developer may designate replacements for any of th ese entities or individuals, subject to City’s reasonable approval. Developer must also designate and submit in writing to City the names of its lead negotiators who have authority to make decisions on its behalf.
E. Certain State and local environmental requirements under CEQA are applicable to the Site. Developer agrees to supply information and otherwise assist City, as requested, to determine the environmental impact of the Concept at the Site (including all requested entitlements and land use approv als), and to allow City to prepare such environmental documents as may need to be completed for the Site pursuant to CEQA.
5. PSA NEGOTIATION.
4 A. During the Negotiation Period, City and Developer will negotiate to prepare a PSA for consideration by the City Co uncil. Both Parties will exercise best efforts to complete discussions relating to the final terms and conditions of the PSA and such other matters as may be mutually acceptable to the Parties for the development of the Site, before expiration of the Negotiation Period, as applicable.
B. It is contemplated that the proposed PSA will include, at a minimum, the following particulars:
i. Describe the Concept in specific detail, including retail/commercial square footage, number of stories, architectural style, etc. , and may include identification of tenants or tenant mix. The development must utilize a high quality of architectural design and materials, in conformance with the Old Town Newhall Specific Plan.
ii. Include a Schedule of Performance which, among other mile stone dates, will include processing of land use entitlements by Developer with City, demolition of existing improvements, if required, and construction of the Concept within specified deadlines, subject to delays due to force majeure. iii. The purchase price of the Site, which must be acceptable to both Parties in their sole and unfettered discretion and identified as a firm/fixed price in a purchase and sale agreement or other disposition document (“Purchase Price”). iv. Those improvements that Developer will make to the Site, if any, and to the surrounding area. This will also include a list of supporting infrastructure (if any) in connection with the implementation of the Concept on the Site. v. The Parties’ responsibilities for implementing development activities.
6. DEVELOPER SUBMITTALS FOR NEGOTIATION AND COSTS.
A. Developer will submit such documentation as is reasonably required by City to assist in the Parties’ negotiation process. Such documentation should include, at a minimum, site plans, land use inventory, d evelopment calendar and phasing plan, financials, construction and operating pro formas, marketing program including any tenant commitments, parking studies, and any market feasibility studies. The pro forma must include costs of all elements of the Concep t, in cluding development costs and sources of financing, as well as payment of all associated fees.
B. Each Party will bear its own costs including, without limitation, third -party consultant and legal costs. All documents, plans, and studies for the Concept must be prepared at Developer’s sole expense.
7. ACCESS TO REPORTS AND STUDIES.
A. Provided that and to the extent that disclosure will not compromise the
5 exemption, if any, of the documents from public inspection under the California Public Records Act, Deve loper must provide City access to and copies of all studies, reports, and analyses prepared by Developer for the negotiations.
B. Except as may be otherwise required by the California Public Records Act, City agrees that during the Negotiation Period it will not disclose to third parties the names of tenants who have expressed interest in the Site to Developer; provided, however, that the City is not liable to Developer for any damages arising from an inadvertent, negligent, or willful breach of this confidentiality.
8. CHANGE IN OWNERSHIP OR CONTROL OF DEVELOPER.
Developer understands City is entering into this Agreement based on Developer’s response to a Request for Proposals process conducted in August 2025 and on the prior experience and qualifications of De veloper. Therefore, except as specifically permitted by this Agreement, Developer may not assign, sell, or otherwise transfer any or all of its rights under this Agreement to any party without City’s prior written approval, at its sole discretion.
9. NO OBLIGATION BY AGENCY TO APPROVE THE PSA.
This Agreement is merely an agreement to enter into a period of exclusive negotiations, reserving final discretion by the City Council as to any PSA and all proceedings and decisions in connection therewith. By its exec ution of this Agreement, City is not committing itself to or agreeing to enter into a PSA with Developer, or to undertake any other acts or activities requiring the subsequent independent exercise of discretion by the City or City Council. Developer unders tands and acknowledges that any PSA becomes effective only after and only if such PSA is considered and approved by the City Council at a public hearing called for such purpose.
10. NO WAIVER OF MUNICIPAL POWERS.
Nothing in this Agreement is intended to, nor can it, act as a limitation on City’s present or future exercise of municipal powers in accordance with the California Constitution and applicable law including, without limitation, its review of the Concept in accordance with the California Environmental Quality Act (“CEQA”).
11. LIMITATION ON LIABILITY.
Both Parties acknowledge and agree each Party’s exclusive right and remedy upon any breach or default of the other party to negotiate in good faith, as set forth in this Agreement, is to terminate this Agreement.
12. DEFENSE AND INDEMNITY.
Developer must indemnify, defend and hold City and its members, officials,
6 representatives, directors, staff members, attorneys and employees of City (“Representatives”) harmless from and against any and all losses, liabilit ies, demands, claims, judgments, causes of action or expenses, including reasonable attorneys' fees and costs (collectively, “Losses and Liabilities”), arising from or relating to (A) any acts or omissions of Developer or any of its members, managers, agen ts, employees, contractors or other representatives upon the Site (or any portion thereof), including without limitation any tests or investigations thereof as specified in the Right of Entry; (B) the preparation of any plans for the Concept; (C) claims fo r inv erse condemnation or relocation costs or assistance or loss of goodwill, but only if and to the extent based on the Parties' entering into this Agreement or any negotiations conducted between the Parties pursuant hereto but not including any condemnat ion o r relocation costs or assistance that Developer would otherwise be entitled to by the California Constitution or the California Relocation Assistance Act (Govt. Code § 7260 et seq.) if such claims arise after title to the Site is transferred to Developer; (D) CEQA or other land use challenges, but only if and to the extent based on the Parties' entering into this Agreement, any negotiations conducted between the Parties pursuant hereto, or City's consideration or approval of a map, conditional use per mit(s) and/or other land use entitlement(s) necessary or appropriate for development of the Concept; or (E) any litigation, suits or actions brought against City, or any of its respective Representatives, but only if and to the extent based on the Parties' entering into this Agreement, any negotiations conducted between the Parties pursuant hereto, or City’s consideration or approval of any map, conditional use permit(s) and/or other land use entitlement(s) necessary or appropriate for development of the Co ncept; provided, however, that the foregoing indemnity does not extend to any Losses and Liabilities to the extent arising from the negligence or willful misconduct of City or any of its Representatives, as determined by a final and non - appealable determin ation of a court of competent jurisdiction. In connection with any defense to be provided by Developer pursuant to this Section, City and its Representatives have the right to be defended by the City Attorney, or counsel of their choice, as reasonably appr oved by Developer, at Developer’s expense. This provision survives termination of this Agreement for the duration of any applicable statute of limitation.
13. NOTICE OF DEFAULT AND OPPORTUNITY TO CURE.
A. Should there be a default in performance by a Party the non-defaulting Party must give written notice of such default to the defaulting Party. Such notice must specify the nature of the event or deficiency giving rise to the default; the action required to cure the deficiency; if an action to cure is possible; and a date not less than 30 calendar days from the date of the notice within which action to cure must be taken.
B. Notwithstanding anything to the contrary, any default does not constitute cause to terminate this Agreement if the defaulting Party cures, cor rects or remedies the default within the time period required in the notice or other agreement between the Parties. In the case of a default by either Party, the alleged defaulting Party will promptly commence to cure the identified default and complete th e cure within 30 days after receipt of the
7 notice of default. The 30-day cure period for a default will be extended as is reasonably necessary to remedy such default, provided that the alleged defaulting Party commences such cure promptly after receiving t he notice of default and continuously and diligently pursues such remedy at all times until such default is cured.
14. TERMINATION. This Agreement terminates under the following circumstances:
A. Expiration of the Negotiation Period.
B. By a Party upon the uncured default of the other Party; C. By City upon giving Developer 10 business days prior written notice of its intent to terminate this Agreement, or by Developer upon giving City 10 business days prior written notice of its intent to terminate this Agreement.
D. Upon the latest of (i) all of the Concept entitlements being approved and deemed final and (ii) the entering of a purchase and sale agreement or other disposition document between the Parties; or Upon failure of the Parties to agree to a Purchase Price during the term of this Agreement, or as extended by mutual written agreement of the Parties.
15. PUBLIC RECORDS.
Developer understands and agrees that City is a public entity and must comply with, without limitation, the California Public Records Act (“PRA”) . Each P arty agrees that any and all financial data, reports and documentation supplied by one Party (“Disclosing Party”), or its affiliates or third parties on its behalf, to the other Party under this Agreement (“Receiving Party”), which are confidential , to the extent permitted by the PRA, cannot be disclosed or otherwise disseminated by the Receiving Party without the consent of the Disclosing Party. For this Section to apply, the Disclosing Party must mark or label its confidential information as “Conf idential and Proprietary.” If City is challenged regarding a document that Developer deems confidential, and presuming that before disclosure City notifies Developer so that it may decide whether to consent to disclosure, then Developer will defend, indemn ify and hold harmless City and its officers, officials, employees, and agents against and from such challenge.
16. HAZARDOUS/TOXIC WASTE.
City has not, nor, to City’s knowledge, has any third party used, generated, stored or disposed of, or permitted the use , genera tion, storage or disposal of, any Hazardous Material (as defined below) on, under, about or within the Site in violation of any law or regulation. Developer agrees that it will not use, generate, store or dispose of any Hazardous Material (as defined below) on, under, about or within the Site in violation of any law or regulation. Developer agrees to defend and indemnify City, to the extent stated below, against any and all losses, liabilities, claims and/or costs arising from any breach of any Developer warranty or agreement contained in this Section. As used in this Section, “Hazardous Material” means any substance, chemical or waste that is identified
8 as hazardous, toxic or dangerous in any applicable federal, state or local law or regulation (including petroleum and asbestos).
17. NOTICES. All communications to either Party by the other Party will be deemed made when received by such Party at its respective name and address, as follows:
TO CITY: The City of Santa Clarita
23920 Valencia Boulevard, Suite 300
Santa Clarita, California 91355
Attn: Kenneth W. Striplin, City Manager
TO DEVELOPER: Serrano Development Group, Inc.
500 North Brand Boulevard, #2120
Glendale, CA 91203
Attn: Jason Tolleson
With a copy to: Burke, Williams & Sorensen, LLP
444 South Flower Street, 40th Floor
Los Angeles, CA 90071-2942
Attention: Karl H. Berger, Assistant City Attorney
Any such written communications by mail will be conclusively deemed to have been received by the addressee five days after the deposit thereof in the United States Mail, postage prepaid and properly addressed as noted above.
18. ASSIGNMENT. This Agreement cannot be assigned by Developer without the City Council’s prior written approval in its sole, absolute and unfettered discretion, except that approval will not be required for a wholly -owned successor -in-interest formed, owned, and operated by Developer for the express purpose of fulfilling the obligations set forth in this Agreement.
19. INTERPRETATION/VENUE. This Agreement and its performance will be g overned, interpreted, construed and regulated by the laws of the State of California. Exclusive venue for any action arising from this Agreement will be in Los Angeles County Superior Court.
20. ENTIRE AGREEMENT. This Agreement, and its Attachments, sets forth the entire understanding of the Parties as to the matters covered in this Agreement. There are no other understandings, terms or other agreements expressed or implied, oral or written.
21. SEVERABILITY. If any portion of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, then such portion will be deemed modified to the extent necessary in the opinion of the court to render such portion enforceable and, as so modified, such portion and the balance of this Agreement will continue in full force and effect.
22. COVENANT AGAINST DISCRIMINATION . Developer cannot discriminate against nor segregate, any person, or group of persons, on account of sex, race, color, age, marital status,
9 religion, handicaps, creed, nation al origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor will Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use, o r occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site.
23. CONSTRUCTION. This Agreement will be construed as a whole and in accordance with its fair meaning and without regard to any presumption or other rule requiring construction against the Party preparing this Agreement. This Agreement supersedes any prior understanding or written or oral agreements between the Parties hereto respecting the subject matter and contains the entire understanding between the Parties with respect thereto . This Agreement is the result of negotiations between the Parties who are each represented by an attorney. This Agreement will be interpreted as though it was jointly drafted by the Parties, and it will not be construed against a Party based upon the Party that drafted any particular section, phrase or word of the Agreement.
24. AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this Agreement and to engage in the act ions described herein. This Agreement may be modified by written amendment. Any such amendment must be approved by City Council.
25. COUNTERPARTS. This Agreement may be executed in any number or counterparts, each of which will be an original, but al l of which together will constitute one instrument executed on the same date.
FORCE MAJEURE. Performance by either Party (who is not otherwise in uncured default) will not be deemed to be in default and the Term will be extended where delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, supernatural causes acts of the public enemy, terrorism, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions on priority, unusually severe weather, inability to secure necessary labor, materials or tools, delays of any contractor, subcontractor or supplies, acts of the other Party, or any other causes beyond the reasonable control or without fault of the Party claiming extension of time to perform. Notwithstanding the foregoing, inability to secure satisfactory financing or market and economic conditions will not entitle Developer to an extension of time to perform. An extension of time for any such cause will be for the period of the enforced delay and will 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 20 days of knowledge of the commencement of the cause.