HomeMy WebLinkAboutItem 6c. Approve an Exclusive Negotiating Agreement for Rosa Butron de Canet Adobe (466 Dana St.) Item 6c
Department: Administration
Cost Center: 1005
For Agenda of: 9/7/2021
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Robert Hill, Sustainability & Natural Resources Manager
SUBJECT: APPROVE AN EXCLUSIVE NEGOTIATING AGREEMENT FOR ROSA
BUTRON DE CANET ADOBE
RECOMMENDATION
Approve an Exclusive Negotiating Agreement between the City of San Luis Obispo,
Ecologistics as fiscal sponsor for The Peace Project, and Smart Share Housing Solutions,
for adaptive reuse and rehabilitation of the Rosa Butron de Canet Adobe and grounds, in
a final form satisfactory to the City Attorney.
DISCUSSION
Background – Property History
The City of San Luis Obispo has owned the Rosa Butron de Canet Adobe located at 466
Dana Street since 1989. The City Council adopted a Resolution of Acceptance at that
time and agreed to acquire the property as a life estate gift from Ms. Mary Gail Black for
site stewardship, restoration, and public uses. It is understood that the donor’s intent was
for the City to hold and take care of the property over the long-term, including both the
residence and the grounds.
The Rosa Butron de Canet Adobe is listed as an historic residence on the City’s Master
List of Historical Resources. Only the front room of the existing structure is the circa. 1845
historic adobe itself, while a subsequent veranda that was added around 1865 is also
considered to be a contributing component of the structure’s historicism. Several other
additions and outbuildings were added and / or modified much later to the rear of the
structure (Gil Sanchez, FAIA. 1998). There are numerous large, mature heritage trees
on the site (magnolia, avocado, pecan, coast live oak, valley oak, redwood), as well as a
portion of Stenner Creek at the back of the site, comprising grounds of about three-
quarters of an acre.
The City rented the house in the early years of its ownership until it became unsafe and
uninhabitable and has used it for storage in more recent years. The hou se is currently
vacant, although the City does provide basic maintenance and upkeep to the house and
grounds. It is important to note that the Rosa Butron de Canet Adobe needs extensive
refurbishment, restoration, or rehabilitation prior to it being suita ble for occupancy.
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Item 6c
City resources to maintain, restore, and activate its suite of adobe properties are limited
and all of the City’s adobes are in need of some level of investment and utilization to
preserve these important historic resources; partnering with community organizations and
private entities is one way to accomplish this.
Background – Request for Information
Following City Council’s direction, staff issued a Request for Interest (RFI) document
seeking community partners to help the City rehabilitate and re-use the City’s Rosa
Butron de Canet Adobe. The RFI was issued on March 6, 2020, to known interested
parties, broadly to non-profit hubs such as The San Luis Obispo County Community
Foundation and SPOKES: Resources for Non -Profits, and to local affordable housing
organizations including the Housing Authority and People’s Self Help Housing in
accordance with California Surplus Land Act, as may be applicable. The RFI was also
published on the City’s website together with a notification item.
The close of the RFI period occurred on April 17, 2020. Meritorious responses were
received from two community-based organizations; one was from The Peace Project (with
fiscal sponsorship from Ecologistics) and the other was from Smart Share Housing
Solutions. In reviewing their respective proposals, it appeared that there might be
opportunities for collaboration between the two groups. After introductory conversations,
the two groups sat down together and came to a conceptual agreement through a signed
Memorandum of Understanding (“MOU”) for a combined approach that will provid e
revenue and options to get the adobe rehabilitated and activate the site, while also
adhering to Mary Gail Black’s donative intent and other City goals and objectives.
Collectively, the proposed project is known as the “Waterman Peace Village” and entails
three components: 1. Rehabilitation of the adobe itself and site infrastructure for public
use, 2. Construction and installation of tiny housing units by Smart Share Housing
Solutions, and 3. Construction and installation of new studio for art and sculpture exhibits
and community space around the themes of peace, sustainability, and diversity, equity
and inclusion.
Key Highlights of the Exclusive Negotiating Agreement
The ENA includes the following key deal points and structure that are consistent with prior
direction from the City Council:
1. Two-year term for exclusive negotiations.
2. Maintenance of non-profit status at all times.
3. Fundraising plan submittal and proof of financial ability to complete the project.
4. Lease negotiation and execution can begin upon satisfactory due diligence,
including zoning and / or General Plan requirements, submittal of satisfactory
design and construction schedule, and evidence of available funds.
5. Anticipated lease terms include a 55-year term and rent of $1 per year.
6. Standard review and approval process, including public hearings with the Cultural
Heritage Committee and other applicable City bodies, as well completion of the
environmental review process prior to any construction.
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Item 6c
Previous Council Action
In August 2019, the City Council directed staff to issue an informal Request for Information
(“RFI”), as described above, to better understand and gauge community interest in the
Rosa Butron de Canet Adobe site.
On December 5, 2020, the City Council directed staff to negotiate the Exclusive
Negotiating Agreement with the above-named community groups.
Policy Context
The City’s Financial Management Manual (Section 475 -C) allows exclusive negotiations
for long term leases of City property, as well as provisions for leases to non -profit
organizations, where there is a clear link between the proposal and accomplishment of
significant City goals, plans or policies and where the proposal has a clear and
measurable community benefit. Staff considers the activities described for The
Waterman Peace Village to be in the public interest in accordance with the City's historic
preservation goals, the Conservation and Open Space Element of the General Plan that
provides policy regarding adaptive re-use of the City’s historic structures, with the
Downtown Concept Plan, and with the Housing Element of the General Plan.
Accordingly, the proposed project appears to meet the basic policy framework and
parameters for entering into an ENA in accordance with the Financial Management
Manual.
Public Engagement
The RFI was also published on the City’s website , together with a notification item, and
was broadly distributed. In addition, this item is on the agenda for the September 21,
2021, City Council meeting and will follow all required postings and notifications. The
public may have an opportunity to comment on this item at or before the meeting. It is
important to note that this item authorize the ENA only; any subse quent lease agreement
and projects that may arise from these negotiations are subject to additional, future public
review processes.
CONCURRENCE
The City’s Community Development Department concurs with the recommendation from
both a housing and historic preservation perspective.
The Board of Directors for Ecologistics and Smart Share Housing Solutions approved the
draft Exclusive Negotiating Agreement at their meetings that took place on August 2,
2021, and August 12, 2021, respectively.
ENVIRONMENTAL REVIEW
Entering into the ENA is not a Project, in and of itself, in accordance with the California
Environmental Quality Act (CEQA). However, any future activities that meet the definition
of a “Project” under CEQA Guidelines will be subject to the environmental review process.
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Item 6c
FISCAL IMPACT
Budgeted: Yes/No Budget Year: 2021-22
Funding Identified: Yes/No
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund
State
Federal
Fees
Other:
Total N/A N/A N/A N/A
The recommended action does not entail any direct expenditures. Modest staff time to
complete the ENA and attend to the agreement is supported within the operating budgets
of the City Administration and IT Department and Community Development Department.
ALTERNATIVES
1. Request additional information or clarification prior to taking action.
2. Request further changes to the draft Exclusive Negotiating Agreement.
3. Deny the Exclusive Negotiating Agreement. This action is not recommended as staff
have worked in good faith with the other parties to the ENA in accordance with prior
City Council direction.
ATTACHMENTS
A – Draft Exclusive Negotiating Agreement FOR Rosa Butron Adobe
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EXCLUSIVE NEGOTIATING AGREEMENT
This Exclusive Negotiating Agreement (“Agreement”) is entered into this ___day of ______, 2021 (the
“Effective Date”), by and between the City of San Luis Obispo, a California charter municipal corporation
("the City'') and Ecologistics, a California non-profit corporation, through the Peace Project, an
unincorporated association which operates under fiscal sponsorship by Ecologistics, and Smart Share
Housing Solutions, Inc., a California non-profit organization. These entities shall be jointly referred to as
the “Parties”. Ecologistics, operating through the Peace Project, and Smart Share Housing Solutions shall
be jointly referred to as the “Project Partners”.
RECITALS
WHEREAS, the City is the legal owner of the property located at 466 Dana Street in San Luis Obispo,
California (the “Property”) commonly known as the Rosa Butron de Canet Adobe; and
WHEREAS, the City received the Property as a life estate gift from Mary Gail Black in 1989 and desires
to preserve and maintain the historic adobe structure, trees, and grounds that comprise the Property, as well
as public recreational uses, all in keeping with the donative intent of the gift; and
WHEREAS, in March 2020, pursuant to City Council direction, the City issued a Request for Information
(“RFI”) soliciting community partners that may be interested in working with the City towards restoration,
adaptive reuse, and long-term stewardship of the City’s Rosa Butron de Canet Adobe. Further, it was
anticipated at this time that the chosen community partner(s) would enter into a negotiation period with the
City, and if all parties choose to move forward following the negotiation period, the Parties would enter
into a long-term lease agreement for use of the site; and
WHEREAS, the City received meritorious responses to the RFI from both the Peace Project and Smart
Share Housing Solutions. Through subsequent conversations, both groups entered into a Memorandum of
Understanding (“MOU”) dated August 13, 2020, and incorporated herein by reference, in order to set forth
a vision for a shared project to be known as the Waterman Peace Village (“Peace Village”), as well as
identification of tasks and responsibilities agreed upon by both groups; and
WHEREAS, the Peace Village project, as currently described, entails rehabilitation and adaptive re-use of
the adobe structure, construction of a new multi-use straw bale studio facility, and installation of tiny
housing units, together with related on-site and off-site (if any) improvements on or appurtenant to the
Property; and
WHEREAS, the Parties recognize that the exact site plan, improvements, and location of improvements
that can be accommodated by the Property cannot be determined at this time, and understa nd that the
Property has certain zoning requirements, regulations, and development restrictions including permissible
uses, maintenance of trees, street setbacks, creek protection, and other provisions that affect the net
buildable and usable land; and
WHEREAS, the City’s Financial Management Manual allows exclusive negotiations for long term lease
of City property when the there is a clear link between the proposal and accomplishment of significant City
goals, plans or policies; and
WHEREAS, the City considers the restoration, adaptive reuse, and long-term stewardship of the Property
to be in the public interest and in accordance with the City's goals and policies.
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NOW, THEREFORE, in consideration of the mutual covenants, conditions, promises and agreements
herein set forth, the parties agree as follows:
AGREEMENT
1. RECITALS. The above Recitals are true and are incorporated herein by reference.
2. TERM. This Agreement shall commence upon the Effective Date and shall continue in effect
for a period of two (2) years (the “Term”), unless sooner terminated as provided herein. The
Parties may extend the Term of this Agreement in writing upon mutual consent.
3. PURPOSE. The purpose of this Agreement is to enable the Parties to explore the feasibility of
designing, permitting, constructing, and financing the Peace Village on the Property.
4. CITY’S OBLIGATIONS. The City shall, during the Term of this Agreement:
a. Exclusivity. Negotiate exclusively with the Project Partners as the future tenant of the
Property.
b. Project Entitlements and Permitting Requirements. The City will work with the
Project Partners to review zoning and General Plan requirements and any other
applicable local, state, or federal regulations. The intent of this portion of the
Agreement is for the Parties to reach an understanding of the legally permissible uses
and restrictions on the Property; however, the City legally cannot, and therefore does
not, contractually agree as to how it will exercise its legislative authority to administer
the General Plan and its zoning and land use authority.
c. Environmental Review. The City will act as Lead Agency pursuant to the
requirements of the California Environmental Quality Act. If any project-specific
environmental documentation is necessary in order for the City to conduct its
environmental review, such documentation shall be at the Project Partners sole cost
and expense.
5. PROJECT PARTNERS’ OBLIGATIONS. Project Partners shall, during the term of this
Agreement:
a. Non-Profit Status. Be a California non-profit corporation in good standing and be
exempt from state and federal income taxes under section 501 (c) (3) of the Internal
Revenue Code.
b. Proof of Financial Ability. Provide to the City's reasonable satisfaction that it has the
financial ability to design, construct and operate the Peace Village on the Property. At
a minimum the Project Partners shall:
i. Preliminary Cost Estimates. Provide the City with preliminary capital
development cost estimates (including but not limited to planning, design,
engineering and construction) and two (2) year operating cost estimates, within
these established timeframes:
-Primary Component Plan: Smart Share Housing Solutions and Peace
Project, jointly, for the adobe rehab, initial site infrastructure and public
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neighborhood park installation; by one year from effective date of this
agreement;
-Secondary Component Plan S1: Smart Share, solely, for the tiny housing
unit component; by one year of effective date of this agreement; and
-Secondary Component Plan S2: Peace Project, solely, for the New Studio
component; by two years from the effective date of this agreement.
Inability of Smart Share to provide cost estimates for its housing project
or the Peace Project to provide cost for its New Studio project will not prevent
the Primary Component Plan, adobe rehab, or other secondary project
component.
Cost estimates will be updated as design progresses, at least every 6
months.
The Project Partners will include the payment of prevailing wages in
estimates for construction.
ii. Fundraising Plans. Provide the City with fundraising and / or financing plans
with milestones that are acceptable to, and approved by, the City Manager,
whose approval shall not be unreasonably withheld, delayed or conditioned,
within these established timeframes:
-Primary Component Plan: Smart Share Housing Solutions and Peace
Project, jointly, for the adobe rehabilitation, initial site infrastructure and public
neighborhood park installation; by one year of effective date of this agreement;
-Secondary Component Plan S1: Smart Share, solely, for the tiny housing
unit component; by one year of effective date of this agreement; and
-Secondary Component Plan S2: Peace Project, solely, for the New Studio
component; by two years from the effective date of this agreement.
Inability of Smart Share to provide cost estimates for its housing project
or the Peace Project to provide cost for its New Studio project will not prevent
the Primary Component Plan, adobe rehabilitation, or other secondary
component.
Milestones shall, at a minimum, prior to commencement of lease
negotiations demonstrate to the City Finance Director’s reasonable satisfaction
that the Project Partners have available at least 50% of all the funds necessary to
design and construct the Primary component, at a minimum, and/or either or both
of the Secondary Components in addition to the Primary Component. “Funds
necessary” may include cash on hand, donor pledges or evidence of financing.
Inability for one or other of the parties (i.e. the Peace Project to fund and
construct its Secondary New Studio project or Smart Share to fund and construct
its Secondary housing project) will not prevent the Primary Component adobe
rehabilitation and other project components.
iii. Annual Financials. Annually, commencing on or before December 31st of 2022,
provide the City with a current financial statement, copy of most recent filed
state and federal tax returns, and copies of current bank statements, to
demonstrate fundraising results for the Peace Village.
iv. Formal Development Application. Finalize and submit a formal development
application for the Peace Village to the City.
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v. Compensation for City Review Costs. Discuss and finalize how City
processing and review costs will be funded. Notwithstanding, parties will agree
to seek cost estimates prior to entering into lease.
c. Environmental Review Information. Provide the City promptly with all information
necessary to conduct any subsequent environmental review of the Peace Village that
may be necessary. This information includes, but is not limited to, square footage of
structures; square footage of various uses such as public or common areas, storage,
studio, and other accessory structures, and any other information deemed necessary by
City to conduct its evaluation and inform its environmental determination.
6. TERMINATION. Either the City or Project Partners may terminate this Agreement with or
without cause and without liability to the other party at any time by providing forty-five (45)
days’ written notice to the other party.
7. CONDITIONS PRECEDENT TO LEASE NEGOTIATION AND EXECUTION. All of the
following conditions must be met as conditions precedent prior to lease execution for the
Property:
a. Lease negotiation:
i. Project Due Diligence. The Parties have reviewed zoning and General Plan
requirements and any other applicable local, state, or federal regulations and
agree with the likely conditions and requirements that will be necessary to carry
out the project.
ii. Availability of Funds for Design, Construction, and Operation. Prior to
execution of the lease, Project Partners demonstrate to the City Manager’s
reasonable satisfaction that they have met all applicable financial milestones in
the fundraising and financing plan approved by the City Manager, at a minimum,
for Primary Component, adobe rehab and public park.
iii. Obligations Met. Both City and Project Partners have met all of their respective
obligations under the Agreement, for Primary Component, at a minimum, and
agree that the Peace Village appears economically feasible, physically possible,
and legally permissible.
b. Non-Profit Status. Project Partners have established and maintain non-profit and tax-
exempt status under applicable state and federal law.
c. Design and Construction Schedule. Prior to lease execution, Project Partners shall
provide, to the City’s Community Development Director’s reasonable satisfaction, a
design and construction schedule, demonstrating, at a minimum, the Peace Village will
be constructed and completed within 7 years of the execution of the long-term lease,
allowing for Primary and Secondary component phasing, and the potential for either
Secondary component to be removed from the project description, without sacrificing
the project as a whole, as described in section 5.
8. GENERAL LEASE TERMS. As the Parties enter into the exclusive negotiations, the Parties
desire that the lease include the following general provisions; provided, the actual language of
each provision is subject to further negotiation, and most material terms and provisions of the
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lease have not yet been discussed. The City shall not lease the land for minimal rent unless the
lease is completely acceptable to the City and approved by the City Attorney. The following
provisions serve as guidelines of the Parties’ general intent but nothing in this paragraph shall be
interpreted as an agreement or offer to lease upon the terms, provisions or language set forth
below.
a. Project Partners shall commence construction of the Peace Village no later than one (1)
year after the execution of the lease agreement and shall complete construction of the
Peace Village within seven (7) years after execution of lease. Project Partners shall not
commence construction of the Peace Village unless and until they have demonstrated, to
the City’s Finance Manager’s reasonable satisfaction prior to expiration of the year
within which Project Partners are to commence construction, that they have all of the
funds necessary to design and construct, at a minimum, the Primary Component (adobe
rehabilitation, site infrastructure and public park construction), as well as operate for at
least two (2) years after completion of construction, plus a 15% contingency, available
in cash or approved financing (the “Required Funds”).
Secondary component tiny house construction will commence within 3 years, and;
Secondary component New Studio construction will commence within 5 years of
lease agreement.
If Project Partners do not timely demonstrate that they have the Required Funds,
or if Project Partners fail to timely begin or timely complete construction of the Primary
Component, Project Partners shall be in substantial default, and the lease shall
automatically terminate unless City agrees otherwise in writing. Failure of Smart Share or
Peace Project to complete either one or both of the Secondary Components will not place
Project Partners in default.
The Peace Village shall be deemed complete only upon issuance of a Certificate(s)
of Occupancy.
b. Minimum 55-year term with the right of first refusal for additional lease years provided
that the Project Partners are in good standing at the time of the renewal.
c. Rent of $1.00 per year provided Project Partners:
i. Are a California non-profit corporation in good standing; and
ii. Are a federal and state income tax exempt 501 (c)(3) entity; and use the Property
solely as described herein, consistent with the RFI and other related City
approved community uses.
iii. Project Partner’s failure to maintain their non-profit corporate status in good
standing or its tax-exempt status under applicable state and federal law or to use
the Property for any purpose other than as approved and related City approved
community uses during the term or any extended term of the lease, shall be a
material breach of the lease. In the event any such breach occurs, City may, at
its option, either terminate the lease or raise the rent to fair market rates for
neighboring commercial uses.
d. Project Partners shall design, construct, operate and maintain the Peace Village and all
street frontage and landscaping, utility extensions and connections, and other
improvements, based on agreed upon and approved plans and specifications, at its sole
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cost and expense without any assistance from the City, unless otherwise agreed to by the
City.
e. Project Partners agree and understand that the City’s Cultural Heritage Committee shall
have the opportunity to review the Peace Village project in order to ensure consistency
with the City’s Historic Preservation Guidelines and any other applicable guidance or
regulations, including the Secretary of the Interior’s Standards for Historic Preservation.
f. Project Partners shall be responsible for meeting or mitigating all conditions, impacts,
mitigations and requirements identified in the environmental review and entitlement
processes for issues associated with the Project Partners’ operation of the Peace Village
on the Property, at Project Partners’ sole cost and expense. Some cost sharing between
the City and Project Partners may be possible, i.e. tree maintenance, hardscape
improvements, historic structure repair and infrastructure costs, where they support
public access and purpose.
g. Project Partners shall take all reasonable efforts to preserve, protect, and maintain the
heritage trees and grounds of the Property in accordance with a Tree Preservation and
Protection Plan agreed to by the Parties.
h. If the Project Partners are not in material compliance with the Lease or ceases to be
financially solvent and to maintain the Property in a commercially reasonable manner,
the lease shall contain provisions for the City to declare a default of the Lease, for Project
Partners to effect a reasonable cure of the default(s), and for the City to t erminate the
Lease if the default(s) are not cured pursuant to the terms and conditions of the Lease,
and for the Remainder Property to revert to the City.
i. Prevailing wages shall be paid by Project Partners for construction of the Peace Village
and related improvements where applicable.
j. Payment of possessory interest and other taxes by Project Partners.
k. Other long-term landlord protection ground lease provisions, such as City standard
insurance requirements, indemnity provisions, attorneys’ fees, prohibitions against
nuisance, waste, requiring maintenance at the Project Partners’ expense.
l. The City will not subordinate its interest in the Property to any financing.
10. AMENDMENT. This Agreement may be extended, amended, or modified with the mutual
consent of the parties. Any such extension, amendment or modification from the terms of this
Agreement shall be in writing and shall be effective only upon approval by the City Council.
11. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties.
No oral agreement, understanding or representation not reduced to writing and specifically
incorporated herein shall be of any force or effect, nor shall any such oral agreement,
understanding or representation be binding upon the parties.
12. NOTICE. All notices to the parties shall be in writing and shall be sent by United Stat es mail,
postage prepaid by registered or certified mail addressed as follows:
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13. AUTHORITY TO EXECUTE AGREEMENT. Both City and Project Partners warrant and
represent that each individual executing the Agreement on behalf of each party is a person duly
authorized and empowered to execute agreements for such party.
IN WITNESS WHEREOF, the parties execute this Agreement on the day and year first above written.
CITY OF SAN LUIS OBISPO
_________________________________
Mayor
ATTEST:
____________________________
City Clerk
Approved:
____________________________
City Manager
Approved to as form:
____________________________
City Attorney
ECOLOGISTICS, a California non-profit corporation, as fiscal sponsor for The Peace Project
__________________________
President
SMART SHARE HOUSING SOLUTIONS, a California non-profit corporation
__________________________
President
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