Agenda Item 22
YUCAIPA CITY COUNCIL
AGENDA REPORT
TO: Honorable Mayor and City Council _ /
FROM: Raymond A. Casey, City Manager A_A
Ryan C. Miller, mousing and Economic Development Analyst FOR: City Council Meeting of September 12, 2022
SUBJECT: Exclusive Negotiating Agreement — Brewcaipa LLC— APN 0303-253-41 RECOMMENDATION:
That the City Council;
1. Approve the Exclusive Negotiating Agreement with Brewcaipa, LLC to negotiate the potential purchase of a portion of City -owned property identified as APN 0303-253-41; and
2. Authorize the City Manager to execute the necessary documents to complete the agreement process.
BACKGROUND:
In 2014, the City Council approved the purchase of the subject property as well as several other properties on the northwest corner of Yucaipa Boulevard and California Street in the Uptown for the development of the Yucaipa Performing Arts Center. The purchase included the then vacant building located at 35058 Yucaipa Boulevard, and on January 26, 2015, City Council directed staff to proceed with the design and rehabilitation of the building to secure a tenant. Later that year, City Council approved a two-year lease agreement with Brewcaipa, LLC (Brewcaipa) to occupy the building, however due to an extended construction and tenant improvement period, Brewcaipa dirt not occupy the building until March 2017.
Since the opening of Brewcaipa in March 2017, the brewery has been extremely successful and provided a significant boost to activity in the Uptown. In March 2018, City Council approved an Amendment to the lease terms and a Purchase and Sale Agreement (PSA) with Brewcaipa for the acquisition of the building and land located at 35058 Yucaipa Boulevard, as well as a land lease and Exclusive Negotiating Agreement (ENA) for a portion of the City property to the east of 35058 Yucaipa Boulevard, formerly identified as a portion of APN 0303-253-39. The amended lease allowed Brewcaipa to occupy the building while fulfilling the terms of a PSA for the land and building. The land lease for a portion of the adjoining property supported Brewcaipa's efforts in expanding their successful brewery operation with a temporary food facility, additional seating, and -340-
a beer garden, while the ENA allowed Brewcaipa the opportunity to research and prepare conceptual plans for the future expansion and development of adjoining Iand for the City's consideration.
In Febmary 2019, staff completed the sub -division that split the parcel (identified then as APN 0303- 253-39) which included the building, land, and adjoining land into two parcels; APN 0303-253-40 which includes the Brewcaipa building and the land, and APN 0303-253-41 which includes the adjoining land to the east, extending to the Uptown Park/Plaza. In April 2019, the land lease and purchase and sale of the building was completed. Also, that year, conceptual plans were prepared by Brewcaipa and submitted to staff for review that depicted the preliminary development proposal.
After some discussion and exchange of design and development suggestions, Brewcaipa had been in the process of preparing an updated development concept when their circumstances changed. Over the past 2 years, economic circumstances and the COVID-19 pandemic impacted Brewcaipa's ability to meet the terms of the previous ENA for the adjoining land identified as a portion of APN 0303- 253-41. Although the land lease and the ENA for the subject site have expired, Brewcaipa is committed to completing the project under the terms of a new ENA.
DISCUSSION:
The subject site is a portion of APN 0303-253-41, approximately 0.46 acres in size, and excludes the City's easement on the public driveway located along the eastern segment of the parcel. The ENA allows Brewcaipa the time and opportunity to research development of the site for the City's consideration, as well as the time necessary to finish completing the processing of Conditional Use Permit (CUP) entitlement. Once agreement upon the land uses, scale, and scope of the future project is achieved, the City and Brewcaipa will negotiate the terms of, and ultimately enter into a, Disposition and Development Agreement (DDA). The DDA will detail the price and terms of payment for the land and development obligations for the site.
The ENA affirms that the City will not negotiate with any other developer for the development of the site during the duration of the agreement. Provisions of the ENA include a twelve (12) month period for Brewcaipa to obtain a CUP for their development plan. If a CUP is issued within the 12- month period, the ENA period is automatically extended for an additional six (6) months. The City Manager may extend the initial twelve (12) month period and/or the six (6) month extension period by up to sixty (60) days. During the entitlement process, Brewcaipa is to provide staff feedback within thirty (30) days after receiving the draft conditions of approval, Within five (5) days of the date on which the CUP is issued (and approved by the Planning Commission), Brewcaipa must unconditionally accept the conditions of approval imposed in the CUP. If Brewcaipa does not agree to the final draft of the CUP conditions of approval in a timely manner, the City Manager may terminate the ENA.
The ENA is intended to establish a time frame for Brewaipa to complete the CUP process for the proposed development, receive confirmation from the City that the plan meets the objectives set forth by Council and the Uptown Specific Plan, obtain approval of the CUP entitlement, and complete the preparation of the DDA for the sale of the property. The DDA will also include any property use restrictions that the City Council deem appropriate for this location. Should each of these components be completed, staff will return to City Council for consideration of the DDA. -341-
FISCAL IMPACT:
There are no direct casts associated with entering into the ENA with $rewcaipa.
Attachment: Exclusive Negotiating Agreement
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EXCLUSIVE NEGOTIATING AGREEMENT
This EXCLUSIVE NEGOTIATING AGREEMENT ("ENA") is dated as of September 12, 2022 ("Effective Date"') and is entered into by and between the CITY OF YUCAIPA, a municipal corporation (the "City"), and BREWCAIPA BREWING COMPANY, INC., a California corporation (the "Developer"). The City and Developer are sometimes individually referred to herein as a "Party" and are sometimes collectively referred to herein as the "Parties."
RECITALS
A. The City owns the land described on Exhibit "A" (the "Property").
B. The City and the Developer desire that Developer will purchase the Property from City and then construct on the Property a commercial project, as generally described on Exhibit "B" (the "Project") and, in connection therewith, desire to negotiate and enter into a Disposition and Development Agreement ("DDA").
C. It is anticipated that during the term of this ENA, Developer and City, including their respective staff, consultants, and attorneys will devote substantial time and effort in meeting with each other and their representatives and consultants, preparing and reviewing proposals, plans and reports, negotiating and preparing and revising the DDA, obtaining consultant advice and reports (such as an appraisal), and complying with California Environmental Quality Act (CEQA).
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto agree as follows:
AGREEMENT
1. City hereby grants to Developer, and Developer hereby accepts, an exclusive right to negotiate the terms of a DDA for the Property until the date that is twelve (12) calendar months after the date of this ENA (the "ENA Period"); provided, however, that if Developer has obtained a Conditional Use Permit for the Project from City (in its governmental capacity) on or before the date that is six (6) calendar months after the date of this ENA, then this ENA shall automatically extend for another six (6) months from the date the CUP is issued, and provided, further, that the City Manager may extend the initial six (6) month period and/or the six (6) month extension period by up to sixty (60) days in total provided the applicable extension(s) is(are) in writing. City will provide Developer a draft set of conditions of approval prior to scheduling the CUP for hearing before the Planning Commission, and developer shall provide any feedback on the draft conditions of approval in a timely manner, and in no event longer than 30 days after receipt of the draft conditions of approval. Further, Developer shall unconditionally accept the conditions of approval imposed on the CUP in writing within five (5) business days of the date on which the CUP is issued. In the event that the written unconditional acceptance of the conditions of approval is not timely submitted, the City Manager may terminate this ENA by written notice, in his sole and absolute discretion.
2. During the term of this ENA, City agrees not to negotiate for the sale by City of the Property or development of the Property, or any portion thereof, with any party other than Developer.
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3. In the event that either party determines, in its sole and absolute discretion, that the Project is not feasible, or that the parties are not likely to finalize and execute a mutually agreeable DDA, it may terminate this ENA by delivering written notice thereof. The City Manager may give such notice on behalf of the City. Upon such termination, all obligations under this Agreement shall terminate.
4. Sale price will be fair market value as determined by an appraisal conducted by an appraiser selected by the City in its sole discretion, which appraisal shall be completed not less than six (6) months prior to closing. For informational purposes only, an appraisal completed on April 15, 2022 by Epic Land Solutions, Inc established a fair market value of $304,000. Further, if for any reason the negotiated sale price were to be less than fair market value, Developer acknowledges that the DDA will require that Developer acknowledge that if the purchase price for the Property is less than fair market value, the DDA will require that Developer pay prevailing wages for the Project and obtain the bonds required by California Labor Code Section 1781, et seq.
5. The Developer has proposed to enter into this Agreement in which the developer shall develop the project in multiple phases. Phase I consists of expanding the existing tasting room, adding an outdoor patio, adding a full service kitchen as described on Exhibit "B" . Phase II of the project consists of tasting room expansion, distillery addition, and outdoor patio expansion as described on Exhibit "C".
6. The City and Developer acknowledge that all applicable requirements of the California Environmental Quality Act ("CEQA") must be met in order to execute and deliver the Agreement and develop the Site and that this may require an environmental impact report, supplemental environmental impact report and/or other reports or analyses for CEQA purposes (collectively, the "CEQA Documents"). The Developer will fully cooperate with the City in the City's preparation of the CEQA Documents as the lead agency for the CEQA Documents, and will reimburse the City for all costs related to the preparation of the CEQA Documents.
7. The Developer shall deliver the materials and information identified on Attachment No. 1 attached hereto to the City within the times set forth on Attachment No. 1. At the beginning of each calendar month during the ENA Period (as extended under Section 1, if applicable), Developer shall provide a written report to the City describing in reasonable detail the Developer's activities with respect to the Project during the preceding calendar month.
8. Developer and the City understand and agree that neither Party is under any obligation whatsoever to approve or enter into a DDA or approve the Project, and that notwithstanding its approval of this ENA, Developer and City shall have the right to disapprove any proposed DDA in their sole and absolute discretion. Developer hereby expressly agrees that neither Developer nor the City shall be bound by any implied covenant of good faith and fair dealing in connection with such approval or disapproval of any proposed DDA or the Project, or any combination thereof. In the event of the expiration or earlier termination of this ENA, the City shall be free to negotiate with any persons or entities with respect to the Property. No consents, approvals, comments or discussions by staff shall diminish, affect or waive: (i) rights of the City to later impose conditions and requirements under CEQA, or other basis, and to include deed restrictions limiting certain future use of the property provided that such restrictions to not preclude Developer's use of the property for the project as described in Exhibit B; (ii) the right of the City 344-
or Developer not to approve the DDA or Project; or (iii) the City's other governmental rights, powers and obligations.
9. Developer shall indemnify, defend, and hold the City and the City's respective officers, directors, members, employees, agents, attorneys, contractors and affiliated entities (collectively, "Indemnified Parties") harmless from any and all claims, losses, liabilities, damages, costs and expenses actually caused by or resulting from Developer's acts or omissions pursuant to this ENA or by any governmental approval or determination of the City Council of City in relation to this ENA and/or CEQA compliance (based on CEQA noncompliance or otherwise) and any action brought by any third party challenging the validity of this ENA on any grounds whatsoever (including, without limitation, failure to comply with CEQA) and provided that the obligations in this Section shall not apply to any claims arising from the negligence or willful misconduct of any of the Indemnified Parties; and provided, further, that the obligations in this Section shall apply only to the extent damages are the result of negligent acts or omissions or willful misconduct of Developer or Developer's agents, officers, owners or employees.
10. Developer represents and warrants that its undertakings pursuant to this ENA are for the purpose of development of the Project and not for speculation in land, and Developer recognizes that, in view of the importance of the development of the Project to the general welfare of the community, the qualifications and identity of Developer and its principals are of particular concern to City; therefore, this ENA may not be assigned by Developer without the prior express written consent of the City Manager in his or her sole and absolute discretion. However, the City acknowledges that Developer may form a new entity to be the Developer entity that will be party to the DDA and such new entity may assign the DDA to another such new entity, provided that each such new entity is controlled and majority -owned by owners of the current Developer entity, and ]developer first provides the City with (i) reasonable documentation of the financial capability of the new or reconstituted Developer entity to perform its obligations under this ENA, and the proposed DDA and (ii) a copy of the new entity's organizational documents and any amendments thereto.
11. Any notice, request, approval or other communication to be provided by one Party to the other shall be in writing and shall be provided by certified mail, return receipt requested, or a reputable overnight delivery service (such as Federal Express) and addressed as follows:
If to the Developer:
If to the City_:
Brewcaipa Brewing Company, Inc.
35055 Yucaipa Blvd.
Yucaipa, CA 92399
Attn. Scott Daniels
City of Yucaipa
34272 Yucaipa Boulevard
Yucaipa, CA 92399
Attn: Raymond Casey, City Manager
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Notices shall be deemed delivered: (i) if sent by certified mail, then upon the date of delivery or attempted delivery shown on the return receipt; or (ii) if delivered by overnight delivery service, then one (1) business day after delivery to the service as shown by records of the service.
12. This ENA constitutes the entire agreement of the Parties hereto with respect to the subject matter hereof. There are no agreements or understandings between the Parties and no representations by either Party to the other as an inducement to enter into this ENA, except as may be expressly set forth herein, and any and all prior discussions and negotiations between the Parties are superseded by this ENA.
13. This ENA may not be altered, amended or modified except by a writing duly authorized and executed by all Parties.
14. No provision of this ENA may be waived except by an express written waiver duly authorized and executed by the waiving Party.
15, If any Party should bring any legal action or proceeding relating to this agreement or to enforce any provision hereof, the Party in whose favor a judgment or decision is rendered shall be entitled to recover reasonable attorneys' fees and expenses from the other. The Parties agree that any legal action shall be filed in and shall occur in the County of San Bernardino.
16. The interpretation and enforcement of this ENA shall be governed by the laws of the State of California.
17. Time is of the essence of each and every provision hereof in which time is a factor. 18, This ENA may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
19. City's legal counsel will draft (and revised drafts of the DDA.
IN WITNESS WHEREOF, the Parties hereto have executed this ENA as of the day and year first written above.
CITY: DEVELOPER:
CITY OF YUCAIPA
a
David Avila, Mayor
Attest:
Jennifer Crawford, City Clerk
BREWCAIPA BREWING COMPANY, INC.
By:
Print Name: Patricia Daniels
Title: owner
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Approved as to Farm:
David M, Snow, City Attorney
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EXHIBIT "A"
DESCRIPTION OF PROPERTY
Lots 20, 21 and 22 inclusive of Block 68 of Revised Map of Yucaipa City in the City of Yucaipa, County of San Bernardino, State of California, as per plat recorded in Book 17 of Maps, Pages 91- 93, inclusive, records of said County.
EXCEPTING THEREFROM the Easterly 20.5 feet of said Lot 20.
TOGETHER WITH the adjacent alleys as abandoned by Resolution which recorded August 29, 1966 in Book 6688, Page 428, Official Records, which would pass by normal operation of law.
Reserving there from an Easement for public ingress, egress, utilities, and drainage over under and across the Northerly 8 feet of said Parcel.
EXHIBIT "'B"
GENERAL DESCRIPTION OF PHASE 1
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EXHIBIT "C"
GENERAL DESCRIPTION OF PHASE II
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ATTACHMENT NO. 1
SPECIFIC DEVELOPER TASKS TO BE INCLUDED IN THE AGREEMENT l . Prior to execution of the Agreement, the Developer shall submit to the City for its review and approval all organizational documents for the entities signing the Agreement (and, to the extent requested by City, information, certifications and/or documents relating to the ownership, control and signing authority of the direct and indirect owners, members, or partners of each such entity).
2. Within thirty (30) days of execution of the Agreement and receipt of a preliminary title report, Developer shall review and approve in writing (or provide specific written objections with rationale) a preliminary title report for the Site issued by First American Title Company.
3. Within six (6) calendar months after the Effective Date of the Agreement, Developer shall deliver the following items for City staff review and approval:
i. Preliminary site plan and revised architectural concept drawings identifying the location, general configuration, traffic circulation, and proposed design characteristics of the Project.
ii. Conceptual development program. ("Development Program") for the Project that includes a breakdown of the proposed scope of development including a range of building square feet by land use and acreage by land use, improvements, circulation acreage, and other uses.
iii, Detailed market analysis for the Project demonstrating the marketability of the proposed conceptual development program. If appropriate, the findings of the market study may be used to modify and refine the development concept.
4. Within six (6) calendar months after the Effective Date of the Agreement, Developer and City staff shall determine the likely type and schedule for processing entitlements necessary for approval and construction of the Project including, but not limited to, discretionary permits.
5. Within six (6) calendar months after the Effective Date of this ENA, Developer shall deliver to City for City staff review, a preliminary financing plan for the proposed Project.
6. Within six (6) calendar months after the Effective Date of the Agreement, Developer shall submit to City a schedule of development setting forth the proposed timetable for the commencement, substantial completion, and final completion of the, Project (the "Development Schedule").
7. Within six (6) calendar months after the Effective Date of this ENA, Developer shall deliver to City for City staff review and approval, an organizational chart of the Developer.
8. Within six (6) calendar months after the Effective Date of the Agreement, Developer shall deliver to the City a fully completed and executed development application including all items identified on the City°s Development Application Submittal Checklist. -351-
9. Within nine (9) calendar months after the Effective pate of the Agreement, Developer shall deliver the Final engineering and architectural drawings. -352-