Agenda Item No. 24
JOINT YUCAIPA CITY COUNCIL
AND HOUSING AUTHORITY
AGENDA REPORT
TO: Honorable Mayor and City Council
Honorable Chairman and Board Members
FROM: Raymond A. Casey, City Manager X4_%�_
Ryan C. Miller, Housing and Economic Development Analyst FOR: City Council and Housing Authority Meeting of September 12, 2022 SUBJECT: Exclusive Negotiating Agreement (ENA)- Fountainhead Shrugged - A portion of APN 0303-131-05 & a portion of APN 0303-131-63 (NW corner of Yucaipa Boulevard and 5th Street) (Yucaipa Business Incubator Centex) RECCOMMENDATION:
That the City Council:
1. Approve the Exclusive Negotiating Agreement (ENA) with Fountainhead Shrugged to negotiate the potential purchase of City -owned property located at Northwest corner Yucaipa Blvd and 51' Street and authorize the City Manager to execute all related documents and make any necessary non -substantive changes; and That the Housing Authority Board:
Approve the Exclusive Negotiating Agreement (ENA) with Fountainhead Shrugged, LLC. to negotiate the potential purchase of City -owned property located at the Northwest corner of Yucaipa Blvd and 51n Street and authorize the Executive Director to execute all related documents and make any necessary non -substantive changes.
BACKROUND:
On September 27, 2021, City Council approved Resolution No. 2021- 58 declaring, pursuant to Government Code Section 54221, that real property owned by the City is surplus property and not necessary for the City' s use. A portion of APN 0303-131-05 & a portion of APN 0303-131-63 (NW corner of Yucaipa Boulevard and 5th Street), generally located at the northwest corner of -360-
Yucaipa Boulevard and 5th Street, where the City's Incubator Center facility is currently located.
The property is currently zoned Institutional, is approximately 1.03 acres, and includes only the property on which the City' s Incubator currently is located (excludes the remainder of the property on which the County of San Bernardino Yucaipa Branch Library and respective parking lot is located). The property is surrounded by commercial developments to the east and south, and institutional developments to the north and west, including the County library and City Hall, respectively.
The City is the owner in fee simple title of the property and staff believes this property is no longer needed for City purposes. Staff recommends developing the property as commercial use given its prime location on Yucaipa Boulevard.
DISCUSSION:
The Fountainhead Shrugged Development Group is prepared to work with the City to develop one to two fast casual restaurants,
Staff is recommending that an ENA be utilized. An ENA is the precursor to entering into a full development agreement and gives both parties a reasonable period to conduct their due diligence to move forward in negotiating the terms of the definitive agreement. The ENA period is expected to result in an approved Development and Disposition Agreement (DDA) (i.e., price and terms of payment for the land and development obligations), and an approved development plan. The ENA will serve as the framework under which the City and Fountainhead will negotiate a DDA, which will govern the development of the site.
The ENA also affirms that the City/Yucaipa Housing Authority (YHA) will not negotiate with any other developer for the development of the site during the ENA's duration. Entering into an ENA does not convey project approval or obligate the City to grant any entitlements.
The objectives of the ENA:
• The City intends to convey the Site to the YHA, after which the YHA will convey the Site to the Developer under the DDA.
• YHA desires to provide for the development of the Site with 1-2 fast casual industry - leading restaurants with drive-throughs.
• YHA and Developer desire to negotiate the potential terms and conditions of the DDA between YHA and Developer for Developer to acquire the Site from YHA and develop the Project on the Site.
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The terms of the ENA include;
Negotiation Period — The negotiation period shall begin on the Effective Date and expire one year after the Effective Date of this ENA, or the approval of the DDA, whichever is the later.
Development Commitment — Developer's commitment to develop the project on the Site, subject to recorded affordability conditions, covenants and restrictions in form and substance reasonably acceptable to Developer and YHA.
Financing Plan — Developer submittal to YHA of a plan for financing the construction and operation of the project for YHA review and approval.
Developer Compliance with Laws — Developer shall comply with the requirements of all applicable YHA and City ordinances, resolutions, regulations or other laws or approvals in all aspects (planning, design, construction, management, and occupancy) of developing and operating the Project on the Site.
Development Related Infrastructure- The project shall be subject to the installation of all standard infrastructure requirements typical of the new development projects, including but not limited to street widening, curb and gutter, and on -site drainage improvements as required.
Cost and Expenses — Developer will reimburse the City in the amount of Five Thousand Dollars ($5,000) for staff cost related to Surplus Property process and ENA preparation. Developer will deposit with the City $45,000 for its out-of-pocket cost and expenses for the cost of developing, reviewing, and processing any general plan amendments for the Site; the cost of reviewing and processing the California Environment Quality Act ("CEQA") documents. The cost of staff reviews of Developer submittals and the cost of the consultants retained by City in connection with the Agreement or Project.
No YHA or City Approval — The Agreement shall not:
+ Modify or replace any land use entitlement process of the City applicable to the Project;
Constitute an approval of all or any portion of the Project by the City; or • Constitute any approval of all or any portion of the future Loan Agreement with Developer by the City or YHA.
YHA Due Diligence — YHA reserves the right to reasonably obtain further information, data and commitments to ascertain the ability and capacity of Developer to develop or operate the Site or the Project.
Once the DDA is negotiated, staff will return to City Council for approval. 3 -362-
Fiscal Impact:
There is no fiscal impact as a result of this item,
Attachments: Conceptual Site Plan
Exclusive Negotiating Agreement - E;NA
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Attachment.
Conceptual Site Plan
YUCAIPA BLVD.
Site Plan is conceptual and will have future modifications. :I
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EXCLUSIVE NEGOTIATING AGREEMENT
This EXCLUSIVE NEGOTIATING AGREEMENT (this "ENA") is dated August _, 2022 (the "Effective Date") and is entered into by and between the CITY OF YUCAIPA (the "City") and Fountainhead Shrugged LLC, a California limited liability company (the "Developer"). The City and the Developer are sometimes individually referred to as a "Party" and are sometimes collectively referred to as the "Parties."
RECITALS
A. The City owns the land in the City of Yucaipa, California that is generally depicted on the "Site Map" attached hereto as Attachment No. I (the "Site").
B. The City has received a proposal from Developer for the purchase of the Site by the Developer and the development of two quick serve drive-thru restaurants (the "Project") on the Site.
C. The Developer and the City desire to negotiate with each other on an exclusive basis to establish the terms and conditions of a Disposition and Development Agreement (the "Agreement") that would result in the Developer's acquisition and development of the Site with the Project, and thus desire to enter into this ENA setting forth, among other things, the terms pursuant to which the Parties will negotiate on an exclusive basis for a specified period regarding the terms of the Agreement.
E. During the ENA Period (as defined below), the staff, consultants and attorneys' of the City will devote substantial time and effort in meeting with the Developer and its representatives, reviewing proposals, plans and reports, and negotiating and preparing the terms of this ENA and the Agreement.
NOW, THEREFORE, the Parties hereto agree as follows;
1. The term of this ENA shall commence on the Effective Date and shall end on the earlier of. (i) the date that is one year after the Effective Date of this ENA, as may be extended by the City Manager under this Section 1, or (ii) the date on which the City terminates this ENA as provided in Section 2 below (the "ENA Period"). Provided that the Developer is not in default under this ENA and the City has not terminated this ENA pursuant to Section 2 below, the ENA period may be extended by the mutual written agreement of Developer and the City Manager of the City (acting for the City) for ,12 calendar months and respectively); provided, however, that the City Manager may only grant such an extension if any one of the following apply: (i) the Developer is not then in default under this ENA (including, without limitation, Section 7 below); (ii) there are no material issues remaining to be resolved with respect to the Agreement; and (iii) to obtain City Council approval of the Agreement (which approval may be given or withheld in the City's sole and absolute discretion). The CEQA Documents shall be -365-
prepared by the City once the Agrccmcnt has been executed and escrow is opened with the Escrow and Title Company.
2. The City may terminate this ENA if the Developer should fail to comply with or perform any provision of this ENA, or if progress is not being made in negotiations hereunder, as determined by City in good faith but in its sole and absolute discretion.
3. If the Developer and the City staff have not fully negotiated and preliminarily agreed upon the terms of the Agreement prior to the end of the ENA Period, then this ENA may be terminated by either Party and, except as expressly provided herein, neither party hereto shall have any further rights or obligations under this ENA. In no event shall any such negotiated Agreement become effective unless duly approved by the City Council after compliance with the California Environmental Quality Act and all other applicable laws.
4. During the ENA Period (as extended under Section 1, if applicable), the City shall not negotiate with any person or entity other than the Developer for the sale, lease or development of the Site.
5, The Developer shall deliver the materials and information identified on Attachment No. 2 attached hereto to the City within the times set forth on Attachment No. 2. At the beginning of each calendar month during the ENA Period (as extended under Section 1, if applicable), Developer shall provide a written report, which may be in the form of an email, to the City describing in reasonable detail the Developer's activities with respect to the Project during the preceding calendar month.
6. During the ENA Period (as extended under Section 1, if applicable), the City shall use good faith efforts to complete (or cause to be completed) the matters set forth in Attachment No. 3 attached hereto.
7. 7. Upon execution of the ENA, Developer shall reimburse the City in the amount of Five Thousand Dollars ($5,000) for staff cost related to Surplus Property process and ENA preparation.
8. Upon execution of the Agreement, Developer shall deposit with City up to Forth Five Thousand ($45,000.00) (the "Reimbursement Funds") for its actual out-of-pocket costs and expenses (including legal fees and costs) incurred in preparing the Agreement and fulfilling its obligations under the Agreement from the Effective Date hereof, including, but not limited to: (i) the cost of developing, reviewing and processing any general plan amendments and/or specific plan amendments for the Site; (ii) the cost of preparing, reviewing and processing the CEQA Documents (as defined in Section 8 below); (iii) the costs of staff review of Developer submittals and the costs of consultants retained by City in connection with the Agreement or Project (including, without limitation, attorneys' fees and costs) at the rates set forth on Attachment No. 4; and (iv) the cost of negotiation and preparing the Agreement (collectively, the "Reimbursable Costs"). The Reimbursement Funds may be used and applied from time to time by the City to pay itself for Reimbursable Costs not otherwise paid or reimbursed by the Developer. The Developer shall deposit with the City funds sufficient to replenish the Reimbursement Funds held by City within ten (10) days after written demand by -2-
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the City with a description of the cost paid from the Reimbursement Funds (unless previously described in writing to Developer). Any remaining amount of the Reimbursement Funds shall be delivered to the Developer (along with a final accounting of the City's application of the Reimbursement Funds) within thirty (30) business days after the earlier of: (i) the execution of the Agreement by the Parties, or (ii) the termination of this ENA. Should City Staff and legal cost exceed the deposit amounts the City must provide an accounting of these costs and request additional funds required to complete the CEQA, GPA, and DDA. It is intended that all associated costs be borne by the developer. The provisions of this Section shall survive the expiration or earlier termination of this ENA. Notwithstanding anything to the contrary in this ENA, express or implied, City shall have the right in its sole and absolute discretion to cease evaluation of submittals relating to the Project, stop any other staff work and/or work of its consultants and stop negotiating or discussing the Project and/or Agreement, in whole or in part, in the event that City determines that the sums then on deposit with City are not sufficient to pay for all of the projected/established Reimbursable Costs projected/estimated by City.
9. 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 cost related to the preparation of the CEQA Documents.
10. The Developer shall bear all costs and expenses of any and all title, environmental, physical, engineering, financial, and feasibility investigations, reports and analyses and other analyses or activities performed by or for the Developer.
11. The Developer and the City understand and agree that neither Party is under any obligation whatsoever to enter into a Agreement. In the event of the expiration or earlier termination of this ENA, the City shall be free at the City's option to negotiate with any persons or entities with respect to the sale, lease and development of the Site.
12. The Developer shall indemnify, defend, and hold the City, City officials, Staff and representatives harmless from any and all costs, expenses, losses, claims, liabilities, damages and causes of action arising out of Developer's entering into or performing this ENA and any entry by Developer or its agents, employees or contractors onto the Site excluding act of active negligence or willful misconduct by City. The Developer's obligations under the preceding sentence shall survive the expiration or earlier termination of this ENA.
13. The Developer represents and warrants that its undertakings pursuant to this ENA are for the purpose of development of the Site and not for speculation in land, and the Developer recognizes that, in view of the importance of the redevelopment of the Site to the general welfare of the community, the qualifications and identity of the Developer and its principals are of particular concern to the City and the City; therefore, this ENA may not be assigned by the Developer without the prior express written consent of the City in its sole and absolute discretion. However, the City acknowledges that the Developer may intend to form a new entity controlled by the parties comprising the Developer that will be the Developer entity 991
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that will be a party to the Agreement. The City shall have the right to review and approve the organizational documents of such entity and the entities comprising such entity.
14. Any notice, request, approval or other communication to be provided by one Party to the other shall be in writing and 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:
Fountainhead Shrugged LLC.
1401 Quail Street Suite 100
Newport Beach, CA 92660
Attention: Tom Swieca
If to the City:
City of Yucaipa
34272 Yucaipa Blvd.
Yucaipa, CA 92399
Attention: City Manager
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.
15. For purposes of the negotiations contemplated by this ENA, the Developer's representative shall be Tom Swieca (Phone: (949) 752-2515; Email:
[email protected]) and the City's representative shall be lay Casey (Phone: (909) 797-2489).
16. 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 expressly set forth herein. All prior negotiations between the Parties are superseded by this ENA. Neither the City nor its officers, members, staff or agents have made any representations, warranties or promises to the Developer other than as expressly set forth herein.
17. This ENA may not be altered, amended or modified except by a writing duly approved and executed by all Parties.
18. If any Party should bring any legal action or proceeding relating to this agreement or to enforce any provision hereof, or if the Parties agree to arbitration or mediation SI
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relating to this ENA, the Party in whose favor ajudgment or decision is rendered shall be entitled to recover reasonable attorneys' fees and expenses from the other. The Parties agree that any legal action or proceeding or agreed -upon arbitration or mediation shall be filed in and shall occur in the County of San Bernardino,
19. The interpretation and enforcement of this ENA shall be governed by the laws of the State of California.
20. Time is of the essence of each and every provision hereof.
21. 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 ENA. -5-
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IN WITNESS WHEREOF, the Parties hereto have executed this ENA as of the day and year first written above.
CITY:
N1V&*1;rV161-117_1
By:
Print Name:
David Avila, Mayor
10 DEVELOPER:
Fountainhead Shrugged LLC.,
a California limited liability company
By:
Print Nance:
Title:
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ATTACHMENT NO. 1
SITE MAP
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A portion of APN 0303-131-05 & a portion of APN 0303-131-63 (NW comer of Yucaipa Boulevard and 51' Street).
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ATTACHMENT NO.2
SPECIFIC DEVELOPER TASKS TO BE INCLUDED IN THE AGREEMENT
1. Within six 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 include a breakdown of the proposed scope of development including a range of building square feet by land use and acreage by land use, improvements, approximate number and mix of residential units (if applicable), affordable housing units by level of affordability (if applicable), proposed public parks/amenities, 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.
2. Within nine 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.
3. Within 9 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. Within nine 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").
4. Within 9 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. Within nine (9) 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.
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 Chicago Title Company in Newport Beach, CA, Title Company.
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 -372-
ownership, control and signing authority of the direct and indirect owners, members or partners of each such entity).
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ATTACHMENT NO.3
SPECIFIC CITY TASKS
1. Within thirty (30) days after the Effective Date, City shall provide to Developer copies of all currently existing plans, studies and other written information regarding the Site in the possession of the City, to the extent not previously delivered to Developer and to the extent material to the Project. Thereafter, the City shall promptly provide to Developer within ten (10) days after receipt thereof -copies of all plans, studies and other written information material to the Project which are received by the City, but not including any privileged or confidential information.
2. As soon as they are available, the City shall provide the Developer with copies of contracts entered into between the City and its consultants for the Project. Developer shall have the right to review and provide input to any and all consultant contracts procured on its behalf prior to execution by the City.
3. Within three months after the Effective Date of this ENA, 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, the Discretionary Permits.
4. City shall use good faith efforts to diligently prepare and process the required CEQA Documents. City agrees to submit a CEQA status report to the Developer monthly during the term of this ENA or as mutually determined by the Parties.
On or before three months following execution of this ENA, City shall provide an initial draft of the Agreement to Developer and thereafter revise the draft: Agreement, to the extent reasonably permitted by the Agreement negotiations.
6. City staff and counsel shall draft and revise the Agreement as permitted by the negotiations.
7. No consents, approvals or comments by City staff shall diminish, affect, or waive either:
(i) rights of the City and City to later impose conditions and requirements under CEQA; (ii) the rights of the City and City not to approve the Agreement in its sole and absolute discretion; (iii) the City's governmental rights, powers and obligations, including but not limited to the City's decision -making authority on project applications and entitlement requests.
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ATTACHEMENT NO.4
STAFF HOURLY RATES
Per the cost of the City's Cost Allocation Plan
$186.67
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