CDC - Item 2F - Exclusive Negotiating AgreementROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION
STAFF REPORT
TO: HONORABLE CHAIRMAN AND COMMISSION MEMBERS
FROM: ANDREW C. LAZZARETTO, EXECUTIVE DIRECTOR Atreus ~wli.►re ~
DATE: DECEMBER 19, 2006
SUBJECT: EXCLUSIVE NEGOTIATING AGREEMENT - YK AMERICA INTERNATIONAL GROUP
SUMMARY
The City of Rosemead received a request for an Exclusive Negotiating Agreement (ENA) from YK
America International Group (YK) to redevelop the 8+/- acre site at the southwest corner of Rosemead
Boulevard and Glendon Way. Over the past several weeks, YK, which is a San Gabriel Valley 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 YK for the potential development of the 8+/- acre
site at the southwest corner of Rosemead Boulevard and Glendon Way.
BACKGROUND
YK is an international real estate investment and development company and has several branch
companies strategically located in the United States, Argentina, Taiwan and China. They opened their
US office in the San Gabriel Valley in 1989 and have over 40 years of experience in international real
estate development. A portfolio of their projects has been included for your review as Attachment B.
YK plans to redevelop the site with a nationally known home improvement user, a plan which staff was
able to confirm when meeting with the retailer at the International Shopping Centers Conference held in
Palm Springs this past October 3-5. In fact, it would be accurate to characterize the retailer's interest in
locating at the site as extremely strong.
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 YK, 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:
Community Development Commission
December 19, 2006
Pane 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.
S mitt y:
se ff
Community Development Director
gak Redevel
opment Administrator / RCDC Deputy Executive Director
Attachment A - Exclusive Negotiating Agreement with YK America International Group
Attachment B - Sample photos of projects
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ATTACHMENT A
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 YK America, a California Corporation ("Developer").
a. The Commission desires redevelopment of those certain parcels bordered by the I-10
Freeway to the south, Glendon Way to the north, the west bound onramp to the I-10
Freeway to the east and a vacant parcel at 8828 Glendon Way (APN 5390-018-018) to
the west within the boundaries of Project Area No. 2 that 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 8.5 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 at
least a nationally recognized home improvement tenant.
NOW, THEREFORE, the parties agree as follows:
1 Term. From December 19, 2006 through June 29, 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 Neeotiations/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").
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3.1 Use of Deposit. The Commission shall be under no duty to place the Deposit in
an interest bearing account. However, if the Deposit is placed in an interest bearing
account, 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 Deposit Oversight. Requests to use these funds for work that is conducted by
agents to the Rosemead Community Development Commission (Commission) shall first
be reviewed by the Developer prior to the contracting for the expenditure of the
"Deposit" funds. The Commission and/or Developer has the right to terminate this
Agreement at ally time if the Commission and Developer do not agree upon which
expenditures are to be charged to the "Deposit".
3.3 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.
3.4 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.
3.5 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.
3.6 Disposition of Deposit If 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 Participant's monetary
obligations under the DDA.
3.7 Disposition of Deposit If Parties Do Not Enter Into A DDA. If the parties do not
enter into a DDA because the Commission and / or Developer determine not to go
forward with acquisition and development of the Site then the Commission shall refund
unspent amount of the Deposit to Developer.
3.8 Third Party Use and Compensation. Should the Developer and/or the Commission
choose not to proceed with the Development Agreement, as prescribed in this ENA, then
all reports and/or materials produced with payment made from the "Deposit" may not be
used by any third party. Should the City of Rosemead enter into a future agreement with
another developer, for the purpose of developing the project site covered by this ENA,
any of the material / reports prepared and paid for through the "Deposif', may not be
used until financial compensation by the City of Rosemead for the cost incurred to
produce those reports and materials has been made to YK America.
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 the expiration of this
agreement. Upon termination pursuant to this section 4, work in progress will be promptly
terminated, the full amount 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. In addition the
Commission shall:
5.1 Investigate and examine and obtain reports on the condition of the Site, including
the soils and toxic conditions on the Site; The City of Rosemead shall be responsible for
preparing the initial Phase I, Site Environmental Assessment in the subject property area.
The fee for said Phase I work shall be paid from the "Deposit" funds on account to the
City of Rosemead by YK America.
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 Determine the satisfactory availability of necessary utilities and functional and
appropriate access for ingress and egress to the Site from adjacent streets;
6? 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;
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6.3 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:
6.4 . 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 release all of its "Developer tasks" documents in Paragraph 6 at no cost to
Commission, if Developer decides to withdraw.
7 Right of Access. Commission shall use its best efforts to provide Developer access to the
portion of the Site that is not owned by Developer for the proposes 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.
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.
8.4 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, other than anchor 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
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 agreeing: (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:
YK America
Attn: Justin Huang, Executive Director
10508 Lower Azusa Rd., 4200
El Monte, CA 91731
COMMISSION:
Rosemead Community Development Commission
Attention: Executive Director
Rosemead City Hall
8838 E. Valley Boulevard
Rosemead, CA 91770
] ] Assignment 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 Attornev'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.
Page 6 of 7
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In witness whereof the parties have had their duly authorized officers execute this
Agreement this - day of , 2006.
AGENCY:
ATTEST:
By:
Agency Secretary
APROVED AS TO FORM:
By:
Agency Counsel
ROSEMEAD COMMUNITY
DEVLEOPMENT COMMISSION
By:
Andrew Lazzaretto, Executive Director
DEVELOPER:
YK America
Justin Huang, Executive Director
By:
Page 7 of 7
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