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CDC - Item 2D - Exclusive Negotiation Agreement• • ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION STAFF REPORT TO: HONORABLE CHAIRMAN AND COMMISSION MEMBERS FROM: ANDREW C. LAZZARETTO, EXECUTIVE DIRECTOR ANm%, 1."WAA-1 t 0 s-C-.-:, DATE: DECEMBER 19, 2006 SUBJECT: EXCLUSIVE NEGOTIATING AGREEMENT - RICHMONT DEVELOPMENT SUMMARY The City of Rosemead received a request for an Exclusive Negotiating Agreement (ENA) from Richmont Development to redevelop the 6+/- site at the northeast corner of Valley Boulevard and Walnut Grove Avenue. Over the past several weeks, Richmont Development, which is a Los Angeles based development company, has worked with staff to develop a finalized ENA for the Commission's consideration, a copy of which is included as Attachment A. Staff Recommendation Staff recommends that the Commission approve the Exclusive Negotiating Agreement between the Rosemead Community Development Commission and Richmont Development for the potential development of the 6+/- acre site at northeast corner of Valley Boulevard and Walnut Grove Avenue. BACKGROUND Richmont Development is a Los Angeles based developer with significant experience in residential, commercial and retail development. Staff has included photos of their existing and proposed projects for the Commission's review as Attachment B. Richmont has proposed a development team that is well suited to address the intricacies in assembling the multiple parcels that would be needed for this comprehensive project. Richmont is proposing several nationally known restaurants and retail uses and high end housing at the Walnut Grove Avenue and Rosemead Boulevard site. ANALYSIS Developers often request ENA's namely because they prohibit cities, agencies, and/or commissions from entertaining other development proposals for a particular site. In turn, cities also encourage ENA's as they require that developers secure conditional commitments from desired tenants and financial institutions, perform all due diligence for the site, and assemble a development team. The ENA, as proposed by staff with Richmont Development, includes all of these elements. Once these tasks are completed by the developer, they will be presented to the Commission for consideration. The ultimately goal of an ENA is to come to a formal agreement for the development of the site. APPROVED FOR CITY COUNCIL AGENDA: `r Community Development Commission December 19, 2006 Page 2 of 2 FINANCIAL REVIEW As part of the proposed ENA, each developer is required to provide the Commission with an initial deposit of $10,000. This will be drawn upon by the Commission to pay actual and reasonable out-of- pocket costs incurred by the Commission during the term of the Agreement. The costs could include fees for an economic consultant, legal and appraisal service fees, any environmental work, etc. If the fees associated with the project exceed the initial amount, the developer will be required to provide additional funds to pay for the services. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. LEGAL REVIEW This staff report and the attached exclusive negotiating agreement have been reviewed and approved by the City Attorney. Submit y' Pin s u Community Development Director Prepared Administrator/RCDC Deputy Executive Director Attachment 1 - Exclusive Negotiating Agreement with Richmont Development Attachment B - Sample photos of projects EXCLUSIVE NEGOTIATING AGREEMENT THIS EXCLUSIVE NEGOTIATING AGREEMENT ("Agreement") is made and entered into this _ day of December, 2006, by and between the Rosemead Community Development Commission ("Commission") and Richmont Development Corp., a corporation organized in the State of California ("Developer"). a. The Commission desires redevelopment of those certain parcels at the northeast corner of Valley Boulevard and Walnut Grove Avenue within the boundaries of Project Area No. 2 and are shown on Exhibit A attached hereto, and designated as the proposed development site ("Site"). b. The Site is composed of five (5) parcels aggregating approximately 5.5 acres. The parcels are owned by third persons. Assembly of the Site may require .Commission acquisition of those parcels by or under threat of eminent domain. C. The parties hereto, by this Agreement, wish to explore the feasibility and terms by which Developer could acquire the Site and develop a commercial/retail project consisting of several nationally recognized retail and restaurant tenants. NOW, THEREFORE, the parties agree as follows: 1 Term. From December 19, 2006 through December 19, 2007, (the "Negotiation .Period") Commission and Developer shall, in good faith, seek to negotiate a disposition and development agreement ("DDA") for the Site. In furtherance of this purpose the parties shall. fulfill their respective obligations set forth herein. If a mutually satisfactory DDA has not been negotiated and executed by Developer and Commission during the Negotiation Period, then this Agreement shall automatically terminate, without notice, at the end of such period. Upon termination, Developer shall have no further rights under this Agreement regarding the Site nor the development thereof. 2 Exclusive Negotiations/Owner Participation. Commission shall not negotiate with any other person or entity regarding development of the Site or any portion thereof nor shall Commission solicit or entertain bids or proposals to do so, during the Negotiation Period, provided, however, that Commission shall not be barred during the Negotiation Period from soliciting and considering owner participation proposals from Site owners and/or occupants for development of some or all of the Site, or for re-entry on the Site in facilities developed by Developer. 3 Developer Deposit. No later than ten days following Commission approval of this Agreement, and prior to execution of this Agreement by Commission, Developer shall deposit with Commission the amount of $10,000.00 (the "Deposit"). 3.1 Use of Deposit. The Commission shall be under no duty to place the Deposit in an interest bearing account. The interest earned thereon shall be added to the Deposit for the account of the Developer. The Deposit shall be drawn upon by Commission to pay actual and reasonable out-of-pocket costs incurred by Commission during the Negotiation Period including costs of an economic consultant and legal fees in connection with negotiating and drafting the MOU provided for in Section 4 of this Agreement and the DDA, and other costs that are authorized by the MOU or are otherwise authorized by Developer in writing. 3.2 Dutv of Commission to Conserve Deposit Funds. In expending funds to be paid from the Deposit, the Commission shall act reasonably and-prudently to conserve Deposit funds. 3.3 Deposit Progress Reports. During the Negotiation Period, Commission shall provide Developer with periodic written progress reports containing itemizations of obligations incurred that are to be or have been paid from the Deposit, together with copies of invoices for expenditures that have been paid. 3.4 Costs in Excess of Deposit. Before incurring any obligations to be charged against the Deposit that, in the aggregate, would exceed the amount of the Deposit, Developer shall promptly increase the Deposit with an amount sufficient to meet any such additional costs, and shall do so prior to Commission being obligated to authorize such work. 3.5 Disposition of DepositIf Parties Enter Into a DDA. If the parties enter into a DDA prior to the end of the Negotiation Period, then the Commission shall apply the unspent and uncommitted balance of the Deposit towards Developer's monetary obligations under the DDA. 3.6 Disposition of Deposit If Parties Do Not Enter Into A DDA. If the parties do not enter into a DDA because the Commission and Developer determine not to go forward with acquisition and development of the Site then the Commission shall refund any unspent and uncommitted portion of the Deposit to Developer. 4 Memorandum of Understanding. At the outset of the Negotiation Period the parties shall attempt to reach agreement on a non-binding memorandum of understanding ("MOU") setting forth the basic terms of the. DDA to be negotiated and the tasks to be performed by the Developer and Commission during the balance of the Negotiation Period. Until such an MOU is agreed upon, either party may terminate this Agreement by written notice to the other, provided, however, that neither party ;shall so terminate this • • Agreement prior to June 19, 2007. Upon termination pursuant to this section 4, work in progress will be promptly terminated, unexpended portions of the Developer' deposit shall be promptly returned to Developer, and Developer shall have no further rights under this Agreement. 5 Commission Tasks. Following execution of an MOU the Commission shall, with funds drawn from the Deposit; undertake and complete studies, surveys, analysis and/or tasks that are specified as Commission Tasks in the MOU, such as appraisals, environmental studies, California Environmental Quality Act processing and relocation studies. 6 Developer Tasks. During the Negotiation Period Developer shall undertake such tests, investigations, surveys inquiries and due diligence as Developer shall deem necessary or-appropriate in order to determine if the Site is suitable and appropriate for the construction and operation of the development contemplated' by this Agreement. Specifically, but without limitation, Developer shall: 6.1 Investigate and examine and obtain reports on the condition of the Site, including the soils and toxic conditions on the Site; 6.2 Determine the satisfactory availability of necessary utilities and functional and appropriate access for ingress and egress to the Site from adjacent streets: 63 Pursue conditional financing commitments sufficient in amount to enable Developer to advance all estimated costs of assembling the Site under the laws governing acquisition by governmental agencies, and to pay for the development of the Site. All such commitments should include financial statements demonstrating that there is sufficient capital available to secure the payment of acquisition, relocation and development costs. 6.4 Secure conditional commitments from retail tenants to locate on the Site upon terms that are mutually acceptable to the Commission and Developer in accordance with the DDA. 6.5 Assemble a development team to design and construct the proposed project, the key members of which will be subject to Commission approval which such approval shall not be unreasonably withheld. Developer shall pay, at no expense to Commission, all costs of performing the Developer Tasks. • • 7 Right ofAccess. Commission shall use its best efforts to provide Developer access to the portion of the Site that is not owned by Developer for the purposes of conducting surveys, collecting soil samples and performing other studies necessary for determining the suitability of the Site for the development contemplated by this Agreement. Developer shall indemnify, defend and hold the Commission, its employees, officers, agents and representatives harmless against any claim for damages to person or property arising from any activity of Developer, its employees, officers, agents, representatives, contractors, subcontractors or consultants on the Site. Commission shall indemnify, defend and hold the Developer, its employees, officers, agents and representatives harmless against any claim for damages to person or property arising from any activity of Commission, its employees, officers, agents, representatives, contractors, subcontractors or consultants on the Site. 8 Access to Reports and Studies. 8.1. Commission shall provide Developer with all documents and information in Commission's possession, if any, regarding the environmental and soils conditions of the Site and the availability and capacity of utility services to the Site. 8.2 Provided that disclosure will not compromise the exemption, if any, of the documents from public inspection under the California Public Records Act, Commission shall provide Developer access to all studies, reports and analyses secured in performance of the Commission Tasks. 8.3 Provided that disclosure will not compromise the exemption, if any, of the documents from public inspection under the California Public Records Act, Developer shall provide Commission access to all studies, reports and analyses secured in performance of the Developer Tasks. 8A Except as may be otherwise required by the California Public Records Act, the Commission 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 Commission shall not be liable to Developer for any damages arising from an inadvertent, negligent or willful breach of this confidentiality provision.. 9 Limitations. This Agreement does not constitute a disposition of property or exercise of control over property by the Commission or City. It is merely an agreement to enter into a period of exclusive negotiations according to the terms hereof. By its execution of this Agreement, Commission is not committing itself to or agreeingf (a) to enter into a DDA with Developer, (b) to acquire land from third parties, (c) to dispose of • • land to the Developer, (d) to effect any changes to City zoning ordinances or the City General Plan or (e) to undertake any other acts or activities requiring the subsequent independent exercise of discretion by the Commission, the City or any agency or department thereof. Developer understands and acknowledges that any DDA resulting from the negotiations hereunder shall become effective only after and only if such DDA has been considered and approved by the Commission Board and the City Council of the City at a public hearing called for such purpose. 10 Notices. ' Formal notices, demands and communications between the parties shall be sufficiently given if personally delivered, transmitted by facsimile reproduction; or dispatched by first class mail postage prepaid to the principal offices of Commission and the Developer as follows: DEVELOPER: Richmont Development Attn: Albert Huang 139 S. Hudson Avenue Pasadena, CA 91101 • • COMMISSION: Rosemead Community Development Commission Attention: Executive Director Rosemead City Hall 8838 E. Valley Boulevard Rosemead; CA 91770 I I Assianment Developer may not assign its rights and obligations under this Agreement except with the approval of the Commission, which approval shall not be unreasonably withheld if the assignment is to an entity owned and controlled,by the principals of Developer that undertakes in writing to perform the obligations of Developer hereunder, provided, however, that such assignment shall not relieve Developer from the obligations undertaken herein. 12 Attorney's Fees. In the event either party shall bring legal action to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and court costs as part of its judgment. 13 Entire Agreement. This Agreement constitutes the entire agreement of the Parties regarding the Site. E In witness whereof the parties have had their duly authorized officers execute this Agreement this _ day of December; 2006. AGENCY: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: ATTEST: By: Agency Secretary APROVED AS TO FORM: By: Agency Counsel Andrew Lazzaretto; Executive Director DEVELOPER: RICHMONT DEVELOPMENT CORP By: Its: Albert Huang ® • Page 1 of I " y ' . loon EXHIBIT A N CityGIS 6.0 Copyright O 2006 All Rights Reserved. The intormation contained herein is the proprietary property of the contributor supplied under license and may not be approved except as licensed by Digital Map Products. I i htip:Hmaps.d igitalmapeentral.com/production/C6reGIS/verI-76f/index.html 12/14/2006 City of Pasadena City of Los Angeles City of Pasadena