SSP PUC HOUSING PARTNERS, LLC
April 14, 2024 Via Eletronic Delivery
Ms. Laura Snideman
City Manager
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
RE: Former PUC Sites B and C (the “Project”) - Request for Amendment to Third Phasing Plan Dear Ms. Snideman
We request a further amendment to the schedule of performance for submitting for building permits for Building C1 and commencing construction of Phase I on the subject Project. On November 28, 2022, in the lead up to SSF PUC Housing Partners (“Developer”) closing on the purchase of the SSF PUC Sites B and C, the parties agreed to an Initial Phasing Plan that updated all the milestones initially set forth in the Purchase and Sale Agreement and Escrow Instructions dated December 23, 2019 (“PSA”). This Initial Phasing Plan added a target milestone for submission for Building C1 permits by December 31, 2023, into the Milestone 9 that required commencing construction of Phase I by December 31, 2024.
Pursuant to the Third Phasing Plan, the Building C1 the permit submission milestone was extended to December 31, 2025 and the commencement of construction milestone was extended to December 31, 2025 as well. We were able to meet the permit submittal date; however, despite best efforts, in partnership with the Affordable Developer Bridge Housing and collaboration with South San Francisco, we were unsuccessful in securing the funding necessary to commence construction.
We continue to invest time and resources in this project, having already committed over $12mm and over 7-years as our primary project. The Affordable Project is being abandoned by Bridge Housing and in good faith we are continuing to work with the City of South San Francisco and investing resources to advance applications for funding for that Project as well as design for value engineering. We have completed all the design work and submitted permits for the infrastructure for both projects. We anticipate being able to bring together partners, in collaboration with the City of SSF to submit for both AHSC funding and a CDLAC application for tax-exempt bonds. We have continued communications with HCD and helped facilitate an extension on the IIG Grant.
Additionally, we have engaged in discussions with multiple investors for the C1 Market Rate Project with very encouraging results. We believe that we will be able to secure a committed investor by the end of 2026.
2 Given the timeline for processing the applications for the Affordable Project and the timeline to secure investment in the Market Rate Project, we ask for the extensions outlined in the attached 4th Phasing Plan. Pursuant to Section 5.6 of the PSA, the parties can mutually agree to adjust the dates of the Schedule of Performance and/or a phasing plan. The Project is our company’s priority and will continue to be devoted to seeing that both the Market Rate and Affordable Projects are developed, provided we are granted this extension.
Very truly yours,
Eric Tao
Managing Partner
L37-KASA Partners LLC
Authorized Signatory for SSF PUC Housing Partners, LLC
Attachment
CC:
Nell Selander, Director Economic & Community Development, City of SSF Tony Rozzi, Deputy Director Economic & Community Development, City of SSF Sky Woodruff, Esq., Redwood Public Law
Alexandra Wolf, Esq., Redwood Public Law
Tamsen Plume, Esq., Holland & Knight
Brian Baker, L37 Development
3 ACKNOWLEDGED:
City of South San Francisco
By:
Name: Laura Snideman
Title: City Manager
ATTEST:
By:
Name:
Title: City Clerk
APPROVED AS TO FORM:
By:
Name:
Title: City Attorney
FOURTH PHASING PLAN FOR THE CONSTRUCTION OF THE
SSF PUC PROJECT (FORMER PUC SITES BAND C) BETWEEN SOUTH SAN
FRANCISCO AND SSF PUC HOUSING PARTNERS, LLC
The City of South San Francisco (“Seller” or “City”) and SSF PUC Housing Partners, LLC, a Delaware limited liability company (“Buyer” or “Developer”) entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the “PSA”), and a Development Agreement (the “DA”) on December 23, 2019, for the sale and development of the Former PUC Sites Band C (the “Property”). Seller and Buyer now agree to the following:
A. On March 31, 2021, the Parties confirmed a Force Majeure Delay (COVID-19 pandemic) extension of the closing deadline set forth in the PSA, extending the closing deadline to December 31, 2022.
B. On November 28, 2022, the Parties reconfirmed the continued existence of a Force Majeure Delay (COVID-19 pandemic) of the post-closing obligations set forth in the PSA, extending the post-closing deadlines an additional 9 months beyond the first Force Majeure Delay.
C. Section 5.6.1 of the PSA provides that Buyer may request a 90-day (3-month) extension to extend all following dates set forth in the Schedule of Performance. On October 31, 2022, the Buyer requested and on November 28, 2022, the Seller granted a 90-day Seller’s Extension beyond the additional 9-month Force Majeure Delays (for a total of twelve months).
D. Exhibit C to the PSA set forth the initial Schedule of Performance for both Parties regarding the sale and development of the Property.
E. Section 5.6 of the PSA provides that “if the Seller and Buyer mutually agree to a phasing plan for the construction of the Project, which includes distinct timeframes for the Commencement of Construction or the Substantial Completion of each defined phase that conflict with those set forth in the Schedule of Performance and that move forward the deadlines set forth in the Schedule of Performance, the provisions of such phasing plan shall control.”
F. On November 28, 2022, Buyer and Seller agreed to the Initial Phasing Plan for the Construction of the SSF PUC Project. Thereafter, Buyer closed on the purchase of the Property on December 22, 2022, including deeding a portion of Parcel C to BRIDGE Housing for their construction of Building C2, and deeding the southern portion of the purchased site to SSF for its Civic Campus development.
G. Before the end of 2022, BRIDGE Housing submitted for its building permits for Building C2. BRIDGE Housing has therefore submitted for its building permits ahead of schedule in the Initial Phasing Plan.
H. In May 2023, L37-KASA, BRIDGE, and SSF were awarded $28.8m in funds from HCD under the Infill Infrastructure Grant program.
I. While advancing on the horizontal scope and BRIDGE’s Building C2 ahead of schedule of the Initial Phasing Plan, on October 26, 2023, the Developer requested, and the City Manager mutually agreed to, a modification to one portion of Milestone 9 in the Initial Phasing Plan, to extend the deadline for submitting for Building Cl Building permits by 12 months. The changed language to Milestone 9 was set forth in in the Second Phasing Plan.
J. In November 2023, MTC and the Association of Bay Area Governments approved the Property as a Regionally Significant Priority Site. With this designation, on January 17, 2024 the Developer submitted a response to an LOI for predevelopment funding through the BAHFA REAP 2.0 Priority Site Program for soft cost funds for advancing sitewide infrastructure designs. In June 2024, the Developer was awarded a $2.1 million loan by BAHFA and will utilize these funds in late 2024-early 2025 to advance horizontal designs and permits for all three housing parcels and the Oak Avenue bridge and shared parking Oak Avenue extension.
K. On December 5, 2024, Buyer and Seller agreed to the Third Phasing Plan extending deadlines for submitting for permits for Phase 1 - Horizontal Construction and Buildings C1 and C2 - to December 31, 2025, and for horizontal construction to commence on or before December 31, 2025. Buyer submitted for C1 and Horizontal Building Permits on December 22, 2025 and BRIDGE Housing submitted for C2 building permits in December 2025 as well. Commencement of construction was predicated upon the award of taxexempt bonds financing which was contingent on the grant of funding through the Affordable Housing and Sustainable Communities Program (“AHSC”). BRIDGE Housing was unsuccessful in obtaining such AHSC funding in 2025, as a result the timeline for construction contemplated in the Third Phasing Plan could not be met. As consideration of Buyer’s payment for Section 5.6.2 extensions for the Third Phasing Plan, the Oak Avenue Phase 2 payment of $5,500,000 in the PSA recital L was increased to $5,600,000.
L. BRIDGE Housing and the Developer request, pursuant to Sections 5.6 and 5.6.2 of the PSA, a modification to Milestones (Row(s)) 9-11 in the Third Phasing Plan, by adjusting the deadlines to the dates indicated in Exhibit “A.” Buyer has no extensions remaining under Section 5.6.2 after the extension provided by this Fourth Phasing Plan. The modifications to Milestones 9-11 are set forth below in Exhibit A. In the event of a conflict in or inconsistency between past Agreements and Exhibits, the Fourth Phasing Plan as established in Exhibit A shall prevail.
M. Section 7.5 of the PSA authorizes the City, following notice and opportunity to cure a default by Developer, to repurchase Parcels B and/or C1. The Parties wish to clarify and confirm this repurchase shall include all rights to the drawings, designs, permits, approvals, entitlements and any other interests associated with such Parcels (“ Parcel Work Product”) and that the Parties will use a 30% ratio for Parcel B if the City repurchases only Parcel B.
The PSA also authorizes the City to exercise the right described in Section 7.5 by payment of: (1) the Purchase Price paid by Developer for the specific parcel being repurchased, and (2) the total amount of any mortgages, deeds of trust or other liens encumbering the specific parcel at the time of repurchase. For purposes of clarification, the Parties agree that in order to repurchase Parcel B and/or C1 pursuant to Section 7.5, because such Purchase Price was paid by the Developer by taking out a loan on Parcels B and/or C1, and if such loan still encumbers the Parcels at the time of repurchase, the Purchase Price shall be the unreimbursed equity (i.e. out of pocket payments made without loan funds) for the actual third party costs contributed by Developer for the Work Product (which includes all third party costs to secure the Project entitlements and approvals prior to the purchase of the Property), subject to reasonable documentation and approval by the City Manager, provided the amount of such unreimbursed equity shall not exceed four million dollars ($4,000,000.) The Parties also confirm that the City may, at its option either pay the remaining balance of any mortgages, deeds of trust or other liens encumbering the specific parcel at the time of repurchase, or may instead repurchase the property subject to the mortgage, deed of trust or other lien subject to approval by the lender. The parties agree that it is not the intent of the parties to provide the Developer with a double payment for any funds that the Developer has been reimbursed for out of loan funds upon default by Developer and repurchase by the City.
N. Except as stated herein, this Fourth Phasing Plan has been prepared and mutually agreed to by the Developer and the City pursuant to Sections 5.6 and 5.6.2 of the PSA and the City and Developer intend that it control to the extent it conflicts with Exhibit C to the PSA.
Exhibit A-1
Exhibit A
Phasing Plan
Amendments to the Schedule of Performance (Exhibit C, and the Initial Phasing Plan) are shown in bold and underline.
# MILESTONE PSA TIMING
REQUIREMENT
AMENDED TIMELINE
Pre-Escrow
1 OB Approval Date (§1.2) Prior to Outside OB
Approval Date. N/A; Completed.
2 Identify Escrow Holder
and Opening of Escrow
(§3.2)
Within 10 days after the
OB Approval Date.
N/A; Completed.
Pre-Closing
3 Preliminary Title Report
issued by Escrow Holder
(§4.1)
Within 15 days of
Opening of Escrow.
N/A; Completed.
4 Buyer review of
Preliminary
Title Report (§4.1)
Within 30 days of receipt
of Preliminary Title
Report.
N/A; Completed.
5 Buyer and City to provide
regular updates on
satisfaction and/or waiver
of conditions precedent to
Closing.
No less than monthly or
more often as the
circumstances warrant.
N/A; Completed.
6 Satisfaction or waiver of
conditions precedent to
Closing (§5.2 and §5.3)
Prior to Closing. N/A; Completed.
7 Closing (§5.1) Within 30 days after
satisfaction or waiver of
all conditions precedent,
but no later than prior to
December 31, 2022
(“Outside Closing Date”).
N/A; Completed.
Post-Closing
8 Buyer provides City
regular updates on Project
construction.
No less than quarterly or
more often as the
circumstances warrant.
N/A; ongoing.
9 Buyer Commences
Construction of Building
C1 and Building C2, and
related Adjacent Areas as
defined in the Project
Approvals (“Phase I”)
In sufficient time to
timely Substantially
Complete Phase I
pursuant to this Schedule
of Performance, but
within one (1) year after
Buyer submits for all
necessary building permits
for Building C1 by
December 31, 2025.
[Complete]
Exhibit A-2
# MILESTONE PSA TIMING
REQUIREMENT
AMENDED TIMELINE
For the purposes of this
Schedule of Performance,
“Commences
Construction” means that
the following have
occurred as to the
Project: (i) the City has
issued the Buyer a
demolition permit and/or
a grading permit, (ii) the
Buyer has signed
contracts with a general
contractor for the
demolition and/or
grading work, and (iii)
the Buyer has given the
general contractor a
notice to proceed and has
caused the general
contractor to physically
commence excavation
and/or grading
of the Property.
Closing. Closing Date:
December 31, 2022
Buyer Commences
construction of Phase I no
later than December 31,
2027.
10 Buyer Substantially
Completes Construction
of Phase I.
For the purposes of this
Schedule of
Performance,
“Substantial
Completion” shall be
deemed to have occurred
when construction has
been completed (subject
only to punch list items)
such that the Project (or
applicable portion
thereof) is ready for
occupancy and the life
safety systems, as
applicable, have been
installed and are
functional.
Subject to diligence
pursuit after
Commencement of
Construction; but in no
event later than five (5)
years after Closing.
Closing Date:
December 31, 2022
Buyer Substantially
Completes Phase I no later
than December 31, 2030.
Exhibit A-3
# MILESTONE PSA TIMING
REQUIREMENT
AMENDED TIMELINE
11 Buyer Commences
Construction of Oak
Avenue Phase 1
Extension and shall make
the Oak Avenue Phase II
Extension Payment
required under Section
3.4(a) of the
Development
Agreement.
Within one hundred and
eighty (180) days from
written notice to proceed
from the City with
respect to the Civic
Campus Project;
provided however, notice
shall not be provided
earlier than 180 days
after Commencement of
Construction of Phase I
and no later than
necessary as required to
provide access for Phase
II (defined
below).
Buyer shall commence
construction of Oak Avenue
Phase 1 Extension
concurrent with the
commencement of
construction of Building C1
provided that IIG funding is
available.
12 Buyer Completes
Construction of Oak
Avenue Phase 1
Extension. For the
purposes of this Schedule
of Performance
“Completes
Construction of Oak
Avenue Phase 1
Extension” shall mean
when the Oak Avenue
Phase 1 Extension has
been complete and
accepted for dedication
by the City.
Within eighteen (18)
months from
Commencement of
Construction of Oak
Avenue Phase 1
Extension.
13 Buyer Commences
Construction of the
Building B and related
Adjacent Areas as
defined in the Project
Approvals (“Phase II”).
In sufficient time to
timely Substantially
Complete Phase II
pursuant to this Schedule
of Performance, but in no
event later than six (6)
years after Closing.
Closing date: December
31,2022
Buyer submits for all
necessary foundation and
building permits for Phase Il
by December 31, 2029.
Buyer Commences
construction of Phase II no
later than December 31,
2030.
Exhibit A-4
# MILESTONE PSA TIMING
REQUIREMENT
AMENDED TIMELINE
14 Buyer Substantially
Completes Construction of
Phase II
Subject to diligence
pursuit after
Commencement of
Construction of Phase II;
but in no event later than
eight (8) years after Close
of Escrow. Closing date:
December 31, 2022
Buyer Substantially
Completes Phase II no later
than December 31, 2032.
15 City shall provide the
Certificate of Completion
to Buyer (§13.23)
Within thirty (30) days
following completion of
the each applicable
portion of the Project and
Buyer’s written request
therefor.
N/A.
Exhibit A-5