HomeMy WebLinkAbout03. CDC Amend National CoreAPPROVED BY
EXEC. DIRECTOR
TO: Chairperson and Members of the Community Development Commission
FROM: Office of the Executive Director
By: Brian Saeki, Director of Community Development
SUBJECT: AMENDMENT TO THE EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
WITH NATIONAL COMMUNITY RENAISSANCE FOR REDEVELOPMENT
OF THE VERIZON AND AVENUE THEATER PROPERTIES
RECOMMENDATION
That the Downey Community Development Commission approve the First Amendment
to the Exclusive Right to Negotiate and Predevelopment Loan Agreement with National
Community Renaissance for redevelopment of the Verizon and Avenue Theater
properties.
BACKGROUND /DISCUSSION
AGENDA MEMO
Staff members have been negotiating with National Community Renaissance ( "National
Core ") pursuant to an exclusive right to negotiate agreement ( "ENA ") dated April 14,
2009. The ENA between the Community Development Commission ( "CDC ") and
National Core was previously approved by the CDC. The ENA set forth negotiation
parameters for two CDC -owned properties: 8314 2 Street and 11022 Downey Avenue
( "Verizon Project" and "Avenue Theater" respectively and depicted on Attachment A).
The intent of the ENA was to create a period where CDC and National Core staff
members could carry out predevelopment activities and finalize the terms of a
disposition and development agreement for redevelopment of the two CDC -owned
properties. Due to resource constraints, staff members focused more on redevelopment
of the Verizon Project and put less emphasis on the Avenue Theater project. However,
staff recently completed all necessary environmental work for the Avenue Theater
project and intends to circulate these environmental documents at the end of 2010, after
adoption of the Downtown Downey Specific Plan ( "Downtown Specific Plan" and
discussed later in this memo).
Staff members, working with National Core, have carried out significant predevelopment
work for the Verizon Project and are now preparing the project for Downey Planning
Commission and CDC hearings. The Planning Commission will review the Verizon
Project on October 20, 2010 and staff members will put the Verizon Project on the CDC
agenda for the November 9, 2010 meeting. The Verizon Project is a 50 -unit affordable
housing project that will set a new standard for residential development in Downey. A
rendering of the Verizon Project (Attachment B) is attached to this memo. A full
description of the Verizon Project's design and economics will be provided when the
CDC considers approval of the project on November 9, 2010.
CITY OF DOWNEY, CALIFORNIA
DATE: September 28, 2010
Staff members are in the process of bringing forward a new specific plan for Downtown
Downey. Staff made a conscious decision to focus on the Downtown Specific Plan
before moving forward with the Verizon Project. However, staff has negotiated and
processed the Verizon Project concurrently with the creation of the Downtown Specific
Plan. This allowed the Verizon Project to be guided by the new zoning regulations in the
Downtown Specific Plan. On September 15, 2010, the Planning Commission approved
a resolution that recommends that the Downey City Council approve the Downtown
Specific Plan. This plan will be considered by City Council on September 28, 2010 and
again on October 12, 2010.
The ENA for the Verizon Project and Avenue Theater will expire on October 14, 2010.
Because this date is before the Planning Commission and the CDC can consider
approval of the Verizon Project, it is necessary that the ENA be extended by 180 days,
or to April 14, 2011. The proposed amendment to the ENA (Attachment C) is attached
to this memo. If approved, the amended ENA would be in effect until the Planning
Commission and CDC consider approval of the Verizon Project. Further, this extension
to the ENA also allows ample time for staff to circulate the environmental documents for
the Avenue Theater project and to finalize a plan for redevelopment of the Avenue
Theater property.
FISCAL IMPACT
This action does not have a fiscal impact on the CDC budget.
Attachment: First Amendment to the Exclusive Right to Negotiate and Predevelopment Agreement
Page 2 of 2
FIRST AMENDMENT TO THE EXCLUSIVE RIGHT TO NEGOTIATE AND
PREDEVELOPMENT AGREEMENT
By and Between
The Community Development Commission of the City of Downey
A California Public Body, Corporate and Politic
and
National Community Renaissance of California
A California Non Profit Public Benefit Corporation
1. Parties and Effective Date
1.1 Parties. This first amendment to the Exclusive Right to Negotiate
Agreement ( "First Amendment Agreement ") is by and between (i)
The Community Development Commission of the City of Downey
( "Commission "), a California pubic body, corporate and politic, and (ii)
National Community Renaissance of California "(Developer"), a
California Non - Profit Public Benefit Corporation.
1.2 Effective Date. This First Amendment Agreement is effective
October 10, 2010 provided the following have all occurred: (i) the
Commission's governing board has approved this First Amendment
Agreement following all legally required notices and hearings; (ii) the
Commission Executive Director, or designee, has signed this First
Amendment Agreement; (iii) the Developer, or its designee, has
executed this First Amendment Agreement.
2. Recitals
1.2.1 The Commission. The Commission address for notices
required or allowed pursuant to this First Amendment
Agreement is 11111 Brookshire Avenue, Downey CA 90241.
All of the terms, covenants, and conditions of this First
Amendment Agreement shall be binding on and shall inure
to the benefit of the Commission, its governing officers,
personnel, staff, nominees, successors, and assigns.
1.2.2 The Developer. The Developer's address of notices
required or allowed pursuant to this First Amendment
Agreement is 9065 Haven Avenue, Suite 100, Rancho
Cucamonga, CA 91730; Attention Alfredo Izmajtovich, Vice
President of Acquisitions; with a copy to Edward A. Hopson,
655 -A North Mountain Avenue, Upland, CA 91786. All of the
terms, covenants, and conditions of this First Amendment
Agreement shall be binding on and shall inure to the benefit
of the Developer, its officers, personnel, staff, nominees,
successors, and assigns.
1.2.3 The Commission and Developer are sometimes individually
referred to herein as "Party" and "Parties."
2.1 The Commission and Developer previously entered into an Exclusive
Right to Negotiate and Predevelopment Loan Agreement ( "ERN ")
dated April 14, 2009. The ERN is attached herewith (Attachment A)
and incorporated herein by reference.
3. Terms
2.2 The ERN encumbered real property located at 11022 Downey
Avenue and 8314 2 Street in Downey, CA. This real property is
more described in more detail in the attached ERN.
2.3 The ERN was administratively extended by 180 days on November
18, 2009 by the Commission Executive Director pursuant to Section
3.6 (i) of the ERN. The letter granting this administrative extension is
attached herewith (Attachment B) and incorporated herein by
reference.
3.1 Section 3.6 (i) of the ERN is hereby deleted in its entirety. Section
3.6 (i) of the ERN shall be replaced with the following text: The term
of this Agreement is from the effective date of this Agreement until
April 15, 2011.
3.2 Except for the changing the term of the ERN, all other provisions of
the ERN remain in full force and effect.
COMMISSION
DEVELOPER
Signed:
Print Name:
Signed:
FIRST AMENDMENT TO THE EXCLUSIVE RIGHT
TO NEGOTIATE AND PREDEVELOPMENT AGREEMENT
The Community Development Commission
of the City of Downey
A California public body, corporate and politic
Signed:
Gerald M. Caton
Title: Executive Director
Date:
National Community Renaissance of California
A California Non Public Benefit Corporation
R ichara WA i 6 4 /n9 1 - 7
Title: Sen/o V Presi , f /n a ce, CFO
Date: 9 Z / - /o
APPROVED AST G FOVI Ude
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Print Name: Charles S • Ifv$P�
Title: a Ct ti n5e,(
SIGNATURE PAGE FOR THE
Attachment A
ERN dated April 14, 2009
EXCLUSIVE RIGHT TO NEGOTIATE AND PREDEVELOPMENT
LOAN AGREEMENT
between
THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF DOWNEY
a California public body, corporate and politic
and
NATIONAL COMMUNITY RENAISSANCE OF CALIFORNIA
A California Non Profit Public Benefit Corporation
1. PARTIES AND EFFECTIVE DATE.
1.1 Parties. This Exclusive Right to Negotiate Agreement ( "Agreement ") is entered into
by and between (i) The Community Development Commission of the City of Downey
( "Commission "), a California public body, corporate and politic, and (ii) National Community
Renaissance of Califomia ( "Developer "), a California Non - Profit Public Benefit Corporation.
1.2 Effective Date. This Agreement is dated as of April 14, 2009 for reference purposes
only. This Agreement will not become effective until the date on which all of the following are true:
(i) this Agreement has been executed by authorized personnel of the Commission and the
Developer; and (ii) this Agreement has been approved by the Commission's governing board
following all legally required notices and hearings. [fall of the foregoing conditions precedent have
not occurred by May 31, 2009, then this Agreement shall be void and unenforceable, regardless of
any prior signatures or approvals of the Parties.
1.2.1 The Commission. The Commission's address for notices required oral lowed
under this Agreement is 11111 Brookshire Avenue, Downey, CA 90241; telephone: (562) 904-
/ 152; facsimile: (562) 904 -7135. All of the terms, covenants and conditions of this Agreement shall
be binding on and shall inure to the benefit of the Commission, its governing officers, personnel,
staff, nominees, successors and assigns.
1.2.2 The Developer. The Developer's address for notices required or allowed under
this Agreement is 9065 Haven Avenue, Suite 100, Rancho Cucamonga, CA 91730; Attention: CFO/
Alfredo Izmajtovich, Vice - President of Acquisitions; telephone: (818) 612 -4882: with a copy to
Edward A. Hopson, 655 -A North. Mountain Avenue, Upland, California 91786. All of the terms,
covenants and conditions of this Agreement shall be binding on and shall inure to the benefit of the
Developer, its officers, personnel, staff, nominees, successors and assigns.
1.23 The Commission and Developer are sometimes individually referred to herein
as "Party" and collectively as "Parties."
2. RECITALS.
2.1 In accordance with the California Community Redevelopment Law ("CRL") (Health
and Safety Code Section 33000, et seq.) ( "CRL "), the City Council of the City of Downey ( "City
Council "), through its adoption of Ordinance No. 553 on August 8, 1978, approved and adopted a
redevelopment plan ( "Redevelopment Plan ") for the redevelopment project area known as the
Firestone Redevelopment Project Area ( "Project Area "). The Redevelopment Plan for the Project
Area was thereafter amended by the City Council of the City of Downey by Ordinance No. 856 on
July 20, 1987.
2.2 The Commission is a California public body, corporate and politic, exercising powers
and organized and existing under the CRL for the purpose of administering the Redevelopment Plan
for the Project Area.
2.3 The Commission owns certain real property ( "Property - ) located at 11022 Downey
Avenue and at 8314 2 Street, Downey, CA 90241, within the Project Area. A site map showing the
location of the Property is attached as Exhibit A. The Property consists of approximately 27,000
square fee. The Commission makes no representation or warranty concerning the actual gross or net
size of the Properly. The Developer shall, at its sole cost, expense and liability, determine the gross
and net acreage of the Property, taking into account required public street dedications, utility
easements, and any other public dedications.
2.4 The Commission and Developer now desire, subject to the terms of this Agreement,
that the Parties enter into a period of exclusive negotiations concerning Developer's possible
acquisition of the Property and development of mixed -use project(s) consisting residential housing
units, both market rate and affordable units, and commercial uses ( "Project "). The Commission and
Developer agree that the object of their negotiations is the preparation of a Disposition and
Development Agreement ( "DDA ") which would provide for, among other things, Developer's
acquisition of the Property from the Commission and the development of the Project upon the
Property.
3. TERMS.
3.1 Term of Agreement. The term of this Agreement ( "Term ") shall commence on the
Effective Date and shall continue thereafter until terminated pursuant to Section 3.6 below.
3.2 Good Faith Negotiations. The Commission and Developer agree for the Term to
negotiate in good faith the terms and conditions ofa DDA for Developer's acquisition of the Property
and development of the Project. During the Term, the Commission agrees to negotiate exclusively
with the Developer, and not with any other person or entity, with regard to sale of the Property or
development of the Project. The term "negotiate exclusively" as used in this paragraph shall
preclude the Commission from accepting acquisition proposals for the Property from persons or
entities other than the Developer, or its representatives, or discussing with persons or entities other
than the Developer or its representatives or lenders, acquisition and development plans for the
Property which might be acceptable to the Commission.
The Commission shall not be precluded by any provision of this Agreement from
furnishing to other persons or entities unrelated to the Developer non - proprietary, general
information related to the Property or Project. The Conunission may also fumish any information
concerning the Project which it is required by law to furnish or which it would otherwise normally
furnish to persons requesting general information concerning the Commission's activities, goals and
matters ofa similar nature.
Further, the Commission shall not be precluded from leasing the Property, in whole or
in part, to any third party, under a short-term lease, provided that (1) any such short-term lease shall
not unreasonably interfere with the Developer's right of entry to investigate the Property as set forth
in Section 3.10 herein, and (2) provided that the term of any such short-term lease shall not be longer
than the Term of this Agreement.
2.
3.3 Negotiation of a DDA; Obligations During the Term. During the Term, the Parties
shall cooperate and work in good faith towards the goal of negotiating a mutually acceptable DDA
concerning the Developer's acquisition of the Property and development of the Project. The exact
terms and conditions of the DDA, if any, shall be determined during the course of these negotiations.
Nothing herein shall be deemed to be a representation by either the Commission or the Developer
that a mutually acceptable DDA will be produced Nothing herein shall be deemed to be a guarantee
or representation that any proposed DDA which may be negotiated by Commission staff and the
Developer will be approved by the Commission's governing board and/or, if applicable, the City
Council. The Developer acknowledges that the Commission's and the City Council's complete
approval of the DDA is subject to the appropriate public hearings, notices, and factual findings
required by the California Environmental Quality Act ( "CEQA ") and other applicable state laws.
3.4 Potential DDA Business Points. The Commission and Developer acknowledge that
the following shall be the basic business points which shall control the negotiation and preparation of
be DEA:
3.4.1 Land Sale Price. The Sales Price for sale of the Property from the
Commission to the Developer shall be at that amount and on those terms as determined by the Parties
in n ring negotiations.
3.4.2 Development Fees and Infrastructure. The Developer will be responsible
for all Project development costs, fees and mitigation measures, including the payment of any
development impact fees imposed by the City of Downey, the Commission, school districts, and
other governmental agencies. The Commission will assist the Developer in identifying and
determining the applicability ofany fee credits to which the Project may be eligible. In addition, the
Commission may assist the Developer in the payment ofany development impact fees imposed by
governmental agencies or may assist with development costs. Such assistance will be determined as
part of the DDA negotiations.
3.43 Timing of Conveyance. As part of the DDA negotiations, the Project budget
must be reviewed and approved, a schedule of performance for the Project negotiated, and the
Developer must be able to demonstrate, to the satisfaction of the Commission, in its sole and .
absolute discretion, that it will have appropriate and adequate financing in place to develop the
Project prior to the conveyance of the Property.
3.4.4 Design Process. Design of the Project will be of paramount concern to the
Commission. Developer acknowledges that the Project will be designed and built with a level of
architectural style and interior and exterior amenities consistent with City of Downey and
Commission standards and equal to the prevailing standard being constructed in the City of Downey,
including as may be set forth in the City of Downey's municipal code and zoning code. During the
term of this Agreement, Commission and Developer shall cooperate on creating conceptual design
for the Project. More advanced Project design, including construction drawings, will occur as part of
the DDA process and the DDA shall identify funding sources for advanced design.
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3.4.5 Right to Reenter, Repossess, Terminate and Revest. The DDA will include
a right to reenter, repossess, termination and revest provision, allowing the Commission to reclaim
ownership of the Property and the improvements if Developer fails to complete the Project as
required, or if the Developer abandons or delays construction beyond certain deadlines to be
established in the DDA. If the Commission reclaims the Property, the Commission will undertake
good faith efforts to resell the Property and distribute the sale proceeds according to a formula which
may result in Developer receiving back a portion of its investment.
3.4.6 Prohibition on Unperrnitted Encumbrances and Financings. The DDA
will provide that, prior to the issuance of a certificate of completion for the entire Project, the
Developer may not assign the DDA or convey any of the Project (other than sales to individual
homeowners, if the Project includes residential homes) without the Commission's written consent. If
need be, and if the Commission and Developer may agree to a multi -phase development approach,
the encumbrance and transfer restrictions may be made applicable to each phase. The DDA may
include certain "pre - approved" transfers/assignments and encumbrances (such as construction
financing, and or limited partnerships necessary for financing purposes).
3.4.7 Prevailing Wages. Developer acknowledges that due to possible
Commission assistance to Developer for the development of the Project, the Project may be subject
to the payment of not less than the prevailing rate of per diem wages, in accordance with California
Labor Code Section 1720, et seg. If applicable, the DDA shall provide that the Developer shall
comply, at its cost and expense, with all applicable provisions of California Labor Code Section
1720, et sm. pertaining to development of the Project. Developer acknowledges that it solely bears
the risk and responsibility in all regards for any failure to pay prevailing wages when such wages are
required to be paid according to law in connection with the projects contemplated by this Agreement
and/or the DDA.
3.4.8 Entitlements; Statutory Development Agreement. Developer and
Commission will work jointly to create a statutory development agreement between Developer and
the City of Downey. This development agreement, as authorized by California Government Code
Sections 65864, et seq., will provide Developer certain assurances and protections in association
with Developer processing the necessary entitlements to develop the Property.
3.5
(i) Pre- Development Budget; Pre - Development Loan. Developer has submitted to
Commission, and Commission has approved, a pre - development budget (Exhibit B; "Pre -
Development Budget ") for predevelopment activities necessary for the Project. Commission has
agreed to make a pre- development loan to Developer ( "Pre - Development Loan") of seventy-five
percent (75 %) of the total Pre - Development Budget amount to facilitate Developer's work relating to
the Project. The principal amount of this Pre - Development Loan shall not exceed Seventy Five
Thousand Dollars (575,000). Developer shall execute a promissory note in favor of Conunission for
575,000. A form of the promissory note is attached herewith (refer to Exhibit C, Form of Promissory
Note). Except upon prior approval by Commission, which it is under no obligation to give,
distribution of funds from the Pre - Development Loan may only be used by Developer to pay for pre -
development costs, expenses and services described on the Pre - Development Budget. In no event
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shall the Commission be obligated to distribute more than the total amount of the Pre - Development
Loan for such pre - development costs and expenses. The remaining 25% of an eligible expense must
be paid by Developer. Developer is responsible for contracting directly with and paying all
consultants or contractors necessary for pre - development activities. In any month in which
Developer wishes to receive a disbursement from the Pre - Development Loan, the Developer shall
submit to the Commission an invoice/draw request for disbursement of a portion of the Pre -
Development Loan. Such invoice shall (i) describe in detail the pre - development activity by
Developer, including time, materials and amounts sought, as such items relates to the line item break
down contained in the Pre - Development Budget, and (ii) include a copy of any billing and/or
advance payment by Developer for all such pre - development costs and expenses. The invoice shall
contain a certification by an authorized representative of Developer specifying that the payment in
question is for work performed in accordance with the terms of this Agreement.
(ii) Disbursements made pursuant to an invoice received by the Commission from the
Developer shall be made promptly after such invoice has been received and approved by the
Commission staff. Developer shall not submit an invoice requesting payment of Pre - Development
Loan proceeds more frequently than once a month. All pre - development services shall be rendered
by Developer in a timely and diligent manner and within a reasonable time period in order to permit
the parties a reasonable opportunity to negotiate and arrive at the provisions of a DDA within the
time periods set forth in Section 3.6 of this Agreement. The time for performance of any pre -
development activity shall be extended on a day to day basis because of any delays due to unforeseen
causes beyond the control and without fault or negligence of the Developer including, but not
restricted to, acts of God or the public enemy, fires, earthquakes, floods, epidemic, quarantine
restrictions, riots, strikes, freight embargoes, acts of any governmental entity other than the
Commission and unusually severe weather.
(iii) In the event that the Commission and the Developer agree to and execute a DDA which
entitles the Developer to purchase the Property from the Commission, and if the provisions of the
DDA further obligate the Commission to make a loan to Developer for the purposes of acquisition,
development, construction and operation of the Project and the improvements thereon ("Commission
Loan ") at the close of any escrow whereby the Commission sells the Property to Developer, the
amount of the then outstanding balance of the Pre - Development Loan shall be credited against any
amount which the Commission is required to lend the Developer pursuant to the Commission Loan.
Until the close of escrow, the Pre- Development Loan shall bear zero interest. As of the date of the
close of escrow, however, all Pre- Development Loan proceeds then advanced by the Commission
shall bear interest at the rate provided in the DDA for the Commission Loan. Developer can seek,
from proceeds from the Commission Loan, recovery of its twenty-five (25 %) share of pre -
development expenses,.
(iv) If for any reason other than the default of Developer (as defined in this subparagraph (iv)), a
DDA is not executed between the Commission and the Developer or if, for any reason other than the
default of the Developer, the escrow for sale of the Property by the Commission to the Developer
does not close, in either event upon compliance with the provisions of subparagraph (v) below the
Developer shall not be obligated to repay the Pre - Development Loan to the Commission. In the case
of Developer's default, however, either in negotiation or execution of a DDA or performance by
Developer under the provisions of the DDA, the Developer shall be obligated to promptly repay the
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amount of the Pre - Development Loan to the Commission. As used in this subparagraph (iv), the
Developer shall not be in "default" in the event that, notwithstanding the good faith efforts of
Developer and the Commission, the parties fail to reach agreement on mutually acceptable terms to
be included in a DDA or, thereafter, if, despite Developer's good faith efforts, Developer is not able
to secure necessary financing to enable Developer to purchase Property and for the Project to go
forward or otherwise perform its obligations under the DDA. Developer's bad faith negotiation,
Developer's refusal to participate in the negotiation process, or Developer's failure or refusal to
perform its required obligation under the DDA, unless otherwise excused by provisions of this
Agreement or of the DDA, shall be deemed a Developer default.
(v) If applicable provisions of subparagraph (iv) above excuse the repayment of the Pre -
Development Loan, as a condition precedent to forgiveness of the Pre - Development Loan all
drawings, specifications, reports, records, surveys, documents, plans, entitlements, and other
materials prepared by or for the Developer resulting from pre - development costs and expenses paid
from the Pre - Development Loan shall be delivered by the Developer to the Commission without
further payment therefore by the Commission and the Developer shall be deemed to surrender its
rights to such materials and work product. By such delivery, the Developer shall be not deemed to
have guaranteed the correctness, accuracy or completeness of materials delivered to the Commission
not the ability of the Commission to use any of said materials without the consent of or further
Fayment to the consultants or professionals preparing the same.
3.6 Termination of this Agreement. This Agreement shall terminate upon the earliest to
occur of the following:
(i) Unless extended by the Commission as provided below, on the three hundred
and sixtieth (360") day following the Effective Date, unless prior to that date
a DDA, acceptable in form and content to both Commission staff and th:•
Developer, is executed by the Developer, delivered to the Commission, and
presented to the Commission's governing board for consideration.
Notwithstanding the above, the Conunission's Executive Director may, in his
or her sole and absolute discretion, extend in writing the Term of this
Agreement by not greater than one I80 -day period, or 540 days from the
Effective Date.
(ii) Upon the Commission governing board's disapproval of any proposed DDA
presented to it by the Developer and Commission staff provided, however,
that in their sole and absolute discretion, the Commission and Developer
may, within fourteen (14) days from such disapproval, mutually elect in
writing to extend this Agreement for one additional sixty (60) day period
following such disapproval, in order to renegotiate a DDA and resubmit said
DDA to the Commission governing board;
(iii) Upon the reasonable and good faith determination by any Party hereto that
the other Party is in material default of that Party's obligations under this
Agreement and such defaulting Party has failed to cure such default within
fifteen (15) days following written notice from the Party alleging the default
or, if such default cannot be reasonably cured within such fifteen (15) days,
the defaulting Party has failed to commence to cure the default within fifteen
(15) days, and/or has failed to diligently prosecute such cure to completion
thereafter.
3.7 Limitation on Remedies for Breach and Release of Claims. The Commission and
Developer both acknowledge that they would not have entered into this Agreement if they were to be
liable to the other for an unknown amount of monetary damages or other remedies. Accordingly,
each Party acknowledges and agrees that its exclusive right and remedy upon the uncured default of
this Agreement by the other Party is to terminate this Agreement, without further cost, expense or
liability to either Party.
Each Party acknowledges that it is aware of the meaning and legal effect of California Civil
Code Section 1542, which provides:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of
executing the release, which if known by him or her would have
materially affected his or her settlement with the debtor."
Civil Code Section 1 542 notwithstanding, it is the intent of the Parties to be bound by the limitation
on damages and remedies set forth in this Section 3.7, and each Party hereby releases any and all
claims against the other for monetary damages or other legal or equitable relief related to such
breach, whether or not such released claims were known or unknown to the Parties as of their entry
into this Agreement. The Commission and Developer each hereby waive, but only as to the claims
released under this Section 3.7, the benefits of Civil Code Section 1542 and all other statutes and
judicial decisions, whether state or federal, of similar effect.
3.8 Solicitation and Conflicts of Interest. The Commission and Developer maintain
and warrant that they have not employed or retained any company or person, other than a bona fide
employee working solely for the Commission or Developer, respectively, to solicit or secure this
Agreement. Further, the Commission and Developer warrant that they have not paid nor have they
agreed to pay any company or person, other than a bona fide employee working solely for the
Commission or Developer, respectively, any fee, commission, percentage, brokerage fee, gift or
other consideration contingent upon or resulting from the making of this Agreement.
For the Term, no member, officer or employee of the Commission, during the term of his or
her service with the Commission, shall have any direct or indirect interest in this Agreement or
obtain any present or anticipated material benefit arising therefrom.
3.9 Disclosures and Cooperation. The Commission and Developer shall generally
cooperate with each other and supply such documents and information as may be reasonably
requested by the other to facilitate the conduct of the negotiations, including applicable legal,
environmental and financing information pertaining to the Property or the Project. The Developer
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shall keep confidential all proprietary information provided by the Commission to the Developer.
Unless precluded by law, the Commission shall keep confidential all proprietary information
provided by the Developer to the Commission.
The Commission shall prepare such public notices and schedule such public hearings, in
accordance with applicable law, as may be necessary for the Commission governing board's and the
City Council's consideration of any DDA which may be agreed upon between Commission staff and
the Developer.
The Developer expressly acknowledges and agrees that the Commission will not be bound by
any statement, promise or representation made by Commission officials and/or staff during the
course of negotiations of a DDA and that the Commission shall be legally bound only upon the
approval of the DDA by the Commission's governing board and/or the City Council, in accordance
with the provisions of applicable law.
3.10 Right of Entry Onto The Property. During the Term, the Commission hereby
grants the Developer a non -exclusive right of entry upon and across the Property for the purposes of
investigating the Property, in order to determine whether the Property is suitable for the Developer's
purposes and feasible for purchase and redevelopment by the Developer.
The Developer shall provide not less than forty eight (48) hours written notice — either by
electronic mail or confirmed facsimile transmittal --to the Commission prior to entering the Property
and/or conducting any investigative activities on the Property. The Commission and Developer shall
make reasonable arrangements for entry upon and investigation of the Property in order to minimize
any interference to the operations of existing tenants or occupants that may be located on the
Property at that time. The Developer may exercise its right of entry between the hours of9:00 A.M.
and 5:00 P.M., Monday through Friday.
The Developer may not conduct any invasive testing of the Property without first obtaining
the prior written consent of the Executive Director. In carrying out any invasive testing, the
Developer shall adhere to all directions and conditions established by the Executive Director and
shall not disturb existing tenant/occupant operations and the natural state and physical features of the
Property as little as reasonably practicable. Upon the conclusion of any invasive testing activities,
the Developer shall remove any and all testing equipment from the Property and, to the greatest
extent feasible, restore the Property to its original condition. All testing, investigation and
restoration activities performed by the Developer as set forth above shall be at the Developer's sole
cost and expense.
The Developer, for itself, its officers, employees, agents, assigns and successors in interest,
shall indemnify, defend (with counsel acceptable to the Commission) and hold harmless, the
Commission, its officers, officials, employees, agents and assigns, from any and all claims and
actions of any nature whatsoever, whether now or hereafter discovered, including, but not limited to,
claims and causes of action arising from injury to or death of persons or property damage or any
combination thereof, resulting from the Developer's activities upon the Property pursuant to the
right of entry granted under this Section 3.10. The obligation of the Developer set forth in this
Section 3.10 shall survive the termination of this Agreement. Notwithstanding anything contained in
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Section 3.10, Developer's indemnification shall not include liability with regard to pre - existing
conditions, i.e. conditions shown to be present at the Property before the Effective Date and which
were not caused by or contributed to by Developer
Within five (5) days following its receipt of a written request of the Commission, the
Developer shall provide copies of all testing and investigative reports and documents generated by
the Developer, or its consultants or contractors, pursuant to the right of entry granted in this Section
3.10 to the Commission, except for confidential or privileged internal memoranda.
3.11 Attorneys' Fees. In the event of the bringing of an arbitration, action or suit by a
Party against the other Party arising out of the breach of this Agreement or any other dispute between
the Parties concerning this Agreement or Property, then, in that event, the prevailing Party in such
action or dispute, whether by final judgment or arbitration award, shall be entitled to have and
recover of and from the other Party all costs and expenses of suit or claim, including actual
attorneys' fees. Any judgment, order or award entered in any final judgment or award shall contain a
specific provision providing for the recovery of all costs and expenses of suit or claim, including
actual attorneys' fees (collectively, the "Costs ") incurred in enforcing, perfecting and executing such
judgment or award. For the purposes of this Section 3.1 1, Costs shall include, without implied
ti ::!ration, attorneys' and experts' fees, costs and expenses incurred in the following: (i) post
�-:t zment motions and appeals, (ii) contempt proceedings, (iii) garnishment, levy and debtor and
third party examination; (iv) discovery; and (v) bankruptcy litigation. This Section 3.11 shall survive
any termination of this Agreement.
3.12 Governing Law; Jurisdiction and Venue. This Agreement shall be interpreted and
enforced in accordance with the provisions of California law in effect at the time it is executed,
without regard to conflicts of laws provisions. Any action brought concerning this Agreement shall
be brought in the appropriate state court for the County of Los Angeles, California. Each Party
hereby irrevocably consents to the jurisdiction of said court. The Developer hereby expressly waives
all provisions of law providing for a change of venue due to the fact that the Commission may be a
party to such action, including, without limitation, the provisions of California Code of Civil
Procedure Section 394. The Developer further waivesand releases any right it may have to have any
action concerning this Agreement transferred to Federal District Court due to any diversity of
citizenship which may exist between the Commission and Developer or due to the fact that a federal
question or right is alleged or involved in such action.
3.13 No Third Party Beneficiaries. The Commission and Developer expressly
acknowledge and agree that they do not intend, by their execution of this Agreement, to benefit any
persons or entities not signatory to this Agreement, including, without limitation, any brokers
representing the Parties to this transaction. No person or entity not a signatory to this Agreement
shall have any rights or causes of action against either the Commission or Developer arising out ofor
due to the Commission's and Developer's entry into this Agreement.
3.14 Counterpart Originals. This Agreement may be executed in two (2) counterpart
originals which, when taken together, shall constitute but one and the same instrument.
3.15 Notices and Demands. All notices or other communications required or permitted
between the Parties under this Agreement shall be in writing, and may be (i) personally delivered, (ii)
transmitted electronically or, (iii) sent by United States registered or certified mail, postage prepaid,
return receipt requested, (iv) sent by telecopier, or (v) sent by nationally recognized overnight courier
service (e.g., Federal Express), addressed to Parties at the addresses provided in Article 1, subject to
the right of either Party to designate a different address for itself by notice similarly given. Any
notice so given by registered or certified United States mail shall be deemed to have been given on
the second business day after the same is deposited in the United States mail. Any notice not so
given by registered or certified mail, such as notices delivered electronically, by telecopier or courier
service (e.g., Federal Express), shall be deemed given upon receipt of the same by the Party to
whom the notice is given.
[Signatures on following pages)
111
Commission Counsel
SIGNATURE PAGE TO
EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT
Commission:
THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF DOWNEY
A Califomia public body, corporate and politic
Signed:
APPROVED AS / � LEGAL FORM:
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Title: Executive Director
Developer:
Gerald M. Caton
NATIONAL COMMUNITY RENAISSANCE OF CALIFORNIA
A Califomia Non - Profit Public Benefit Corporation
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EXHIBIT A - PROPERTY LOCATION
AVENUE THEATER
11022 DOWNEY AVENUE
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MANNER OF PAYMENT
EXHIBIT C
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
1
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FOR VALUE RECEIVED and pursuant to the terms of this promissory note ( "Note "),
National Core Renaissance of California, a California Non -Profit Public Benefit Corporation,
("Borrower "), promises to pay to the Community Development Commission of the City of
Downey, a California public body, corporate and politic, ( "Payee "), in lawful money of the
United States of America, up to the principal sum of SEVENTY FIVE THOUSAND AND NO
CENTS ($75,000.00), together with interest on all sums advanced hereunder, at an annual simple
interest rate equal to 0%, from the date of advancement until the date of repayment, and any
additional amounts due hereunder, in the manner provided below. Interest shall be calculated
based on outstanding balance of this Note on the basis of a year of 365 or 366 days, as
applicable, and charged for the actual number of days elapsed, with interest deferred until time of
final payment.
This Note has been executed and delivered pursuant to and in accordance with the terms
and conditions of the Exclusive Right to Negotiate and Predevelopment Agreement ( "ERN
Agreement "), by and between Borrower and Payee, and is subject to the terms and conditions of
said ERN Agreement, which are, by this reference, incorporated herein and made a part hereof.
The outstanding balance of this Note will change from time to time based on the amount and
date that Commission provides reimbursement funds to Developer for pre- development activities
pursuant to the ERN Agreement.
1. PAYMENTS
1.1 PRINCIPAL, INTEREST AND SECURITY
The principal of this Note shall be due and payable as follows:
(a) The sum of SEVENTY FIVE THOUSAND AND NO CENTS
(575,000.00) shall be due and payable in full no later than March
1, 2011 ( "Due Date "); per the terms of the ERN Agreement_
(b) All interest on the amount advanced herein, shall be deferred
until the due date specified, with all interest due and payable in full
on March 1, 2011;
(c) The amount of interest on the advanced amount, as deferred,
shall not be reduced by any partial or full prepayments made.
Payment of all principal and interest for this Note on or before the Due Date shall be
made by check and sent to: City of Downey, 1111 I Brookshire Ave, Downey, CA 90241, or at
such other place in the United States of America as Payee shall designate to Borrower in writing,
or by wire transfer of immediately available funds to an account designated by Payee in writing.
If any payment of principal or interest on this Note is due on a day which is not a Business Day,
such payment shall be due on the next Business Day, and such extension of time shall be taken
into account in calculating the amount of interest payable under this Note. "Business Day"
means any day other than a Saturday, Sunday or legal holiday in the State of California,
including all federal holidays.
1.2 PREPAYMENT
Borrower may, without penalty, at any time and from time to time, prepay all or any
portion of the outstanding principal balance due under this Note, provided that each such
prepayment shall not affect the deferred accrued interest on the amount of principal prepaid
calculated to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.3 SECURITY
The performance of the terms and conditions of this Note is secured
and conditions of s r , ` � � t � : � � � =�, dated
between Borrower, as the Pledgor, and Payee, as the Pledgee.
2. DEFAULTS
2.1 EVENTS OF DEFAULT
2.2 NOTICE BY BORROWER
2
ursuant to the terms
•
The occurrence of any one or more of the following events with respect to Borrower shall
constitute an event of default hereunder ( "Event of Default"):
(a) If Borrower shall fail to pay all sums due pursuant to this Note
on or before Due Date;
(b) If Borrower shall be in breach or default of any term or
condition of this Note
(c) If Borrower shall be in breach or default of any term or
condition of the Agreement
Borrower shall notify Payee in writing within five (5) days after the occurrence of any
Event of Default of which Borrower acquires knowledge_
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events of Default have
been cured or waived by Payee), Payee may, at its option, (i) by written notice to Borrower,
declare the entire unpaid principal balance of this Note, together with all accrued interest
thereon, immediately due and payable regardless of any prior forbearance, and (ii) exercise any
and all rights and remedies available to it under applicable law, including, without limitation, the
right to collect from Borrower all sums due under this Note. Borrower shall pay all reasonable
costs and expenses incurred by or on behalf of Payee in connection with Payee's exercise of any
or all of its rights and remedies under this Note, including, without limitation, reasonable
attorneys' fees.
3. MISCELLANEOUS
3A l WAIVER
The rights and remedies of Payee under this Note shall be cumulative and not alternative.
No waiver by Payee of any right or remedy under this Note shall be effective unless in a writing
signed by Payee. Neither the failure nor any delay in exercising any right, power or privilege
:'rider this Note will operate as a waiver of such right, power or privilege and no single or partial
exercise of any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right, power or privilege.
To the maximum extent permitted by applicable law, (a) no claim or right of Payee arising out of
this Note can be discharged by Payee, in whole or in part, by a waiver or renunciation of the
claim or right unless in a writing, signed by Payee; (b) no waiver that may be given by Payee
will be applicable except in the specific instance for which it is given; and (c) no notice to or
demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right
of Payee to take further action without notice or demand as provided in this Note. Borrower
hereby waives presentment, demand, protest and notice of dishonor and protest.
3.2 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision
of this Note held invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
3.3 GOVERNING LAW
This Note will be governed by the laws of the State of California without regard to
conflicts of laws principles.
3.4 PARTIES IN INTEREST
This Note shall bind Borrower and its successors and assigns. This Note shall not be
assigned or transferred by Borrower without the express prior written consent of Payee, except
by will or, in default thereof, by operation of law.
3
3.5 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience only and will not
affect its construction or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
All words used in this Note will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the words "hereof' and "hereunder"
and similar references refer to this Note in its entirety and not to any specific section or
subsection hereof.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date
first stated above.
[TITLE] [TITLE]
[ENTITY] [ENTITY]
4
Execute MOU and/or Disposition and
Development Agreement to Transfer Land and
Release Predevelopment Funding
April -09
Commence Entitlement Approval Process /
Environmental Clearance / Design Schematic
Documents
May -09
Complete Environmental Clearance Process
(CEQA & NEPA)
August -09
Complete Entitlement Approval Process /
Design Schematic Documents & Begin Design
Development Documents
December -10
Submit Housing Authority of County of Los
Angeles HACOLA Industry Financing
Applications
March -10
Transportation Oriented Development (TOD)
Financing Applications
April -10
Secure HACOLA Industry Approval of Financti
July -10
Secure HCC IIG and /or TOD Approval of
Financing
September -10
Complete 100% Design Development Documents
& Begin Construction Documents
April -10
Submit CTCAC 9% Tax Credit Application
April -10
Complete 80% Construction Documents & Begin
Submittals for Plan Check Approval
June -10
Receive CTCAC 9% Tax Credit Application and
Initiate Construction Financing Closing
July -10
Secure Plan Check Approval, Pull Budding
Permits and Complete 100% Construction
Documents
September -10
Close Construction Financing and Commence
Construction
_ September -10
EXHIBIT D
AVENUE VERIZON
PRE - DEVELOPMENT SCHEDULE OF PERFORMANCE
PRE - DEVELOPMENT ACTIVITY
DATE
Attachment B
Letter of Extension dated November 18, 2009
Mr. Alfredo Izmajtovich
National Community Renaissance of California
9065 Haven Avenue Suite 100
Rancho Cucamonga, CA. 91730
November 18, 2009
SUBJECT: EXTENSION OF THE TERM OF THE EXCLUSIVE RIGHT TO NEGOTIATE
AGREEMENT
Mr. Izmajtovich:
City of Downey
FUTURE UNLIMITED
The Downey Community Development Commission (°CDC ") and National Community
Renaissance entered into an Exclusive Right to Negotiate Agreement ("ERN ") on April 14,
2009. The purpose of the ERN was to negotiate the terms for the redevelopment of CDC -
owned property located at 11022 Downey Avenue and 8314 Second Street in Downey,
California.
This letters provides you with notice that the termination date for the ERN is hereby
extended by 180 days. This extension is authorized pursuant to Section 3.6 (i) of the ERN,
which is attached herewith.
Please contact John Perfitt of my staff ( 562- 904-7157rperfitt@downeyca.org) should you
have any questions related to this letter.
Sincerely,
Gerald M. Caton
Executive Director of the CDC
11111 BROOKSHIRE AVENUE POST OFFICE BOX 7016 DOWNEY, CALIFORNIA 90241 -7016 www.downeyca.org