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HomeMy WebLinkAbout02/01/2000, 4 - FIRST AMENDMENT OF EXCLUSIVE NEGOTIATING AGREEMENT RELATIVE TO PALM STREET/COURT STREET PROJECT councilMmfim Da j agcnda REpont "mp­t C I T Y OF SAN L U IS O B I S P 0 FROM: John Dunn,CAO Prepared By: Shelly Stanwyck, Economic Development Manager:rp.5;­. SUBJECT: FIRST AMENDMENT OF EXCLUSIVE NEGOTIATING AGREEMENT RELATIVE TO PALM STREET/COURT STREET PROJECT. CAO RECOMMENDATION Authorize the Mayor to execute the First Amendment to the Exclusive Negotiating Agreement with Chinatown-Court Street Partners,LLC in order to extend the ENA's term for 90-days. DISCUSSION Backaroand On October 19, 1999, the City entered into an exclusive negotiating agreement with Chinatown- Court Street Partners, LLC (ENA). The term of the ENA was for 120-days, or until February 15, 2000. The purpose of the ENA was to allow the City and Chinatown-Court Street Partners to work out the details of Tom and Jim Copeland's (Copeland) proposed development in downtown San Luis Obispo. Negotiating Process and Need for Extension of Negotiation Term for 90-Days At the beginning of the negotiations, the project was conceptual. The purpose of the 120-day ENA period was to answer several fundamental questions including but not limited to: What is the proposed project? Does it meet the public interest? In the hopes of helping to answer these questions, the Copeland team held a series of community and stakeholder meetings so that meaningful community input on the project could occur. The workshops occurred with great success. A total of three workshops were held and were very well attended by members of the community. However, as a consequence of the successful workshops, the process for defining the project proposal has taken the Copeland team longer than initially expected. The City Negotiating team (John Dunn, CAO, Jeff Jorgensen, City Attorney, Shelly Stanwyck, Economic Development Manager, and Allan Kotin, Consultant) has held four lengthy negotiating sessions with the Copeland team (Tom Copeland, Marty Tangeman, Attorney, and Mark Rawson, Architect). The initial sessions addressed general policy questions about the project as well as the financial implications of the project. The conceptual proposal has been refined but not yet finalized. The final proposal is taking shape as the result of public workshops, financial considerations, the negotiation process and policy demands and is expected to be submitted in the very near term. Once the final proposal is presented to the City, the parties can complete the negotiation process and initial environmental 4-1 Council Agenda Report—First Amendment of ENA Page 2 work. In addition, a critical component of this process involves the potential sale, trade, or leasing of land, and a contract for appraisal services was awarded by Council on January 18, 2000. However, significant appraisal work cannot be completed until the project is fully defined. The 90-day extension period should provide sufficient time to define the project, complete the appraisal, and return to Council with a proposed agreement framework. Because of the complexity of the project and the longer than expected time it has taken to define the project, staff recommends a 90-day extension to the original term, resulting in a new expiration date of May 15, 2000. FISCAL IMPACT There is no fiscal impact associated with extending the term of the ENA for 90-days. ATTACHMENT First Amendment To Exclusive Negotiating Agreement EXHIBIT 1. Exclusive Negotiating Agreement 4-2 FIRST AMENDMENT OF EXCLUSIVE NEGOTIATING AGREEMENT 7_: This FIRST AMENDMENT OF EXCLUSIVE NEGOTIATING AGREEMENT (First Amendment) is made and entered into in the City of San Luis Obispo on this the fust day of February, 2000, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and CHINATOWN- COURT STREET PARTNERS,LLC,hereinafter referred to as Copeland. WITNESSETH: WHEREAS,on September 20, 1999,Copeland came forward and presented a proposal for redeveloping major portions of the City's downtown(Chinatown-Court Street:A Vision for the Future of Downtown San Luis Obispo, California, Inspired by Its Past),hereinafter referred to as the Project;and WHEREAS,Copeland requested a 120-day exclusive negotiating period with the City to finalize the details of its proposed Project,conduct initial environmental review and resolve real property issues that may arise and on October 19, 1999 the City and Copeland entered into an Exclusive Negotiating Agreement (ENA). A copy of the ENA is attached to this First Amendment as Exhibit"I";and WHEREAS, Copeland and the City have made significant progress toward finalizing the details of the Project, however it is unlikely that they will complete their negotiations within the original 120-day negotiating period;and WHEREAS,Copeland and the City now desire to extend the term of the ENA for a period of 90-days after the original 120-day negotiating period to finalize the details of the Project and resolve any issues which arise during their continued negotiations. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained,the parties hereto agree as follows: 1. TERM. The term of this First Amendment shall be for 90-days from the expiration date of the ENA. 2. ENA REMAINS IN EFFECT.All of the terms and conditions set forth in the ENA shall remain in full force and effect except as expressly modified in this First Amendment. 3. COMPLETE AGREEMENT. This written First Amendment, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties hereto. 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 hereto. 4-3 Exclusive Negotiating Agreement Page 2 4. NOTICE. All written notices to the parties hereto shall be sent by United States mail,postage prepaid by registered or certified mail addressed as follows: City City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo,CA 93401 Copeland Chinatown-Court Street Partners,LLC Post Office Box 1348 966 Monterey Street San Luis Obispo,CA 93406 5. AUTHORITY TO EXECUTE AGREEMENT. Both City and Copeland do covenant that each individual executing this agreement on behalf of each parry is a person duly authorized and empowered to execute Agreements for such party. IN WITNESS WHEREOF,the pares hereto have caused this instrument to be executed the day and year first above written. ATTEST: CITY OF SAN LUIS OBISPO,A Municipal Corporation By: City Clerk Mayor Allen Settle APPROVED AS TO FORM: CHINATOWN-COURT STREET PARTNERS,LLC Gf1 By: ty om 4-4 L,.ZLUSIVE NEGOTIATING AGt%dEMENT THIS AGREEMENT is made and entered into in the City of San Luis Obispo on this 19'day of October, 1999, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and CHINATOWN-COURT STREET PARTNERS, LLC,hereinafter referred to as Copeland. WITNESSETH: WHEREAS,the Conceptual Physical Plan for the City's Center adopted on May 4, 1993,envisioned the development of the Court Street block and the land along Palm Street,but progress on such development has continued to lay dormant;and WHEREAS,on September 20, 1999,Copeland came forward and presented a proposal for redeveloping these major portions of the City's downtown(Chinatown-Court Street:A Vision for the Future of Downtown San Luis Obispo, California,Inspired by Its Past),hereinafter referred to as the Project;and WHEREAS, the Project has generated enthusiasm from a broad range of community members, and it appears that it may help implement a number of City goals, including those set forth in the City's General Plan, Conceptual Physical Plan for the City's Center and 1999-01 Financial Plan(Major City Goal:Downtown Plan);and WHEREAS, Copeland successfully developed a major commercial project in the City's downtown (the Downtown Centre),which reflects its ability to successfully undertake a similar project that will be well-received by the community;and WHEREAS, Copeland proposes to hold a number of community and stakeholder workshops facilitated by a nationally recognized expert on"smart growth"before finalizing its development application in order to provide meaningful community input on the Project and to incorporate the community's ideas and suggestions into its overall design strategy;and WHEREAS, Copeland has represented that it owns or controls much of the privately-held property that will be needed to successfully implement the Project and the City's goals for the downtown;and WHEREAS, Copeland has requested a 120-day exclusive negotiating period with the City to finalize the details of its proposed Project, conduct initial environmental review and resolve real property issues that may arise; and WHEREAS,the unique nature of this Project calls for a unique approach in exploring its feasibility due its private-public partnership approach, under which the City has dual roles in exercising its regulatory responsibilities as a government agency in the development review process,and its proprietary responsibilities as a landowner; and 4-5 Exclusive Negotiating Agreem, Page 2 WHEREAS, for these reasons the City is willing to consider direct negotiations with Copeland in the potential disposition of City properties rather than pursuing a request for proposals, competitive bid or auction process as set forth in the City's Property Management Manual. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained,the parties hereto agree as follows: 1. TERM. The term of this Agreement shall be for 120 days from the date this Agreement is made and entered,as first written above. 2. PURPOSE. The purpose of this Agreement is to further explore the Project concept by: assessing the feasibility of the real property transactions that will be required between the City and Copeland in implementing the concept; and evaluating the planning and other regulatory approvals that will be required from the City. If the parties mutually determine that the Project appears feasible, after the initial term of this Agreement,the patties may extend the term for a reasonable period of time in order to develop a Memorandum of Understanding (MOLT), or other similar agreement, that will set forth the general business principles, framework and key procedures for the disposition of any City properties to Copeland under the Project, including but not limited to, sale, lease, trade or development. If executed,the MOU(or other similar agreement)would be a prelude to a subsequent Development and Disposition Agreement (DDA), or other similar agreement, which would finalize the terms and conditions of any sale, lease, trade or development of the City's property to or by Copeland. The City and Copeland shall not execute this DDA (or other similar agreement) until all discretionary approvals for the Project, including environmental review, have been received. Other than exploring the feasibility of this Project from the City's perspective as set forth above,both parties agree that no other obligations are established under this Agreement. 3. CITY'S OBLIGATIONS. The City agrees to complete the following general tasks: a. Analysis. Research and analyze the likely economic, fiscal, administrative and other organizational issues facing the City in its "proprietary" role as a landowner and potential Project participant in considering the Project concept,and set policy parameters in negotiating the MOU accordingly. b. Development Review Process. Prepare a development review process and schedule that will subsequently provide timely and expeditious review of the Project while at the same time ensuring meaningful public input,and appropriate planning and environmental review. C. Resource Needs. Identify the City's resource needs and funding sources in negotiating the MOU and DDA(or similar agreement),and in processing the Project's development application. 4-6 Exclusive Negotiating Age --nt Page 3 4. COPELAND'S OBLIGATIONS. Copeland agrees to complete the following general tasks: a. Finalized Project Concept. Prepare and submit a finalized Project proposal to the City within forty five (45) calendar days after execution of this Agreement in as much detail as possible, including but not limited to: building program; properties involved and their ownership; parking needs assessment and proposal for how these will-be met; Project phasing and methodology for ensuring that the Project will be completed; proposed form of the City's contributing properties, such as sale, trade, lease or air rights; likely environmental, traffic and archaeological issues that will be encountered by the Project and how these will be addressed; and financial pro forma for the Project b. Financial Capability. Provide documentation satisfactory to the City evidencing: Copeland's financial capacity to successfully fund and complete the Project; the form and identity of its development team;and substantial pre-leasing commitments. C.. Community Workshops. Hold a series of community and stakeholder workshops before finalizing its development application in order to provide meaningful community input on the Project and incorporate the community's ideas and suggestions,as feasible,into its overall design strategy. d. Formal Development Application. Finalize and submit a formal development application for the Project to the City. e. Compensation for City Review Costs. Discuss and finalize how City processing and review costs will be funded, such as: those costs that will be directly paid by Copeland; those that will be paid by the City but reimbursed by Copeland(including the level and method of reimbursement);and those that will be fully paid and funded by the City. f. Fiscal Analysis. Provide sufficient descriptive material for the City to initiate a fiscal analysis of the Project 5. . AMENDMENTS. This Agreement may be extended or modified with the mutual consent of the parties hereto. Any such extension,amendment,modification or variation from the terms of this Agreement shall be in writing and shall be effective only upon approval by the Council. 6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral agreement, understanding or representation not reduced to writing and specifically incorporated herein shall be of 4-7 Exclusive Negotiating Agreem, Page 4 any force or effect. nor shall any such oral agreement, understanding or representation be binding upon the parties hereto. 7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: City City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo,CA 93401 Copeland Chinatown-Court Street Partners,LLC Post Office Box 1348 966 Monterey Street San Luis Obispo,CA 93406 8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Copeland do covenant that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first above written. A T: CITY OF SAN LUIS OBISPO, Municipal Corporation By: >� City C erk Mayor Allen Settle APPROVED AS TO FORM: CHINATOWN-COURT STREET PARTNERS, LLC / By: A tto ey 4-8 Issues to Be Adaressed During the Initial ENDO' erm v..`s.:'�.bf .•ac 'n"' 'vype`...n^.'• "yam.. r �'vou,`y'ap."S aAji :t,. �,ti.wx. "Ye �.J ;;u 'S A. RESEARCH AND ANALYSIS 1. . Properties Involved a. Exactly what properties are involved? b. Are there any title restrictions on the properties? c. What are the legal requirements under State law for disposing of City properties and rights-of- way? d. What surveys need to be completed? e. Who will contract for this work? Who will pay for it? 2. City Property Values a. What City properties are affected? b. How much are they worth? c. How will this be determined? 3. Parldug a. How much existing parking—private and public—will be lost as a result of implementing the Project? b. How much parking demand—both replacement and new demand—will be generated under the City's current zoning standards? c. How will any resulting deficiencies be addressed? 4. Major Policies a. How does the Project proposal compare with the City's major policy documents (such as the General Plan, Conceptual Physical Plan for the City's Center, Facilities Master Plan and Civic Center Master Plan)? b. What uses are currently allowed under the City's zoning code? c. What are the performance standards under this zoning? S. City Space Needs a. What are the City's future civic center space needs? b. Is the proposed"City Hall"space interim or permanent? c. If interim,how long is the likely interim period? d. How should the City fund this space(lease,lease-purchase,acquisition)? 4- xhibit 1 Issues to He Addressed During i.._initial ENA Term Page 2 e. How will the City house the staff currently located at 955 Morro Street during construction? Does this space need to meet seismic safety standards? B. POLICY ISSUES FOR THE CITY IN ITS PROPRIETARY ROLE AS LANDOWNER 1. Parking a. What are the maximum number of parking spaces we will allow? b. What are the minimums? c. What role does the parking enterprise fund play in acquiring and managing the parking spaces after construction? 2. Site Use a. Who should own the walkways and plazas? b. Should the creek be exposed on the Court Street property? c. What is the maximum lot coverage we will allow? d. What underground utility services will be affected (especially those on Morro Street), and how will they be relocated? 3. Relationship to Other City Goals and Projects a. Will we require public art? If yes,how much? (For example,will we require some value amount as a percent of project construction costs?) And where are the appropriate locations? b. What will be our likely archaeological resource preservation requirements? c. What are the likely traffic problems? How can they best be mitigated? Can they be mitigated through parking structure ingress and egress preferred solutions? d. What are the significant fire plan check and inspection issues? e. What are the significant building code plan check and inspection issues? C Is it possible to coordinate the Higuera Street bridge project with the construction of this Project? If yes,what is the best way of doing this? g. What other major goals, objectives and projects are we willing to defer in order to devote adequate resources to completing this Project within an acceptable timeframe? A. Property Disposition and Development a. Wbat is the City's position on sell versus lease or trade? b. Will the City consider condemnation,if necessary,for those properties Copeland does not own? c. What design/build construction options are allowed to the City under the Public Contract Code? How will construction costs be accounted for? d. How will construction on the sites be staged and phased? 4-10 Issues to Be Addressed Dur...,,the Initial ENA Tenn Page 3 e. How can existing developed properties best be addressed? f. How can the project best be developed to minimize business disruptions on surrounding properties that are not directly in the project area? g. How can the City ensure that the Project will be completed? h. What is the seismic retrofit status and future plans for adjacent properties? Does this need to be addressed during Project planning and development? C. NEGOTIATION AND REVIEW PROCESS 1. City Resources What City resources will be required in negotiating a final development agreement and processing the project on a"fast track?" Who will pay for them? 2. Development Review Process What should the development review process look like to ensure meaningful community involvement, full analysis of environmental and culturalthistorical resource concerns,and an expedited process? D. OVERALL"HIGHER LEVEL"QUESTIONS 1. Meet Public Interest Is the Project and its component parts, any agreement that the City and Copeland may enter into,and any actions either party may take,in the public interest and fair to the City and its citizens? 2. Meet High Community Standards Does the Project meet high design standards? Is it economically viable, functional and aesthetically pleasing? Will the Project stand the"test of time'over the years as a testimony to good City planning and implementation? And will it be a significant factor in the long-term strength and viability of the downtown? 4-11 Norms and Organization For Chinatown-Court Street: October 1999 The Chinatown-Court Street concept has the potential of changing our downtown in perhaps the biggest single way since the establishment of the Mission. The Council and the community have embraced the concept with great enthusiasm, and the Council has "challenged"staff to move forward with the project in an expeditious way. In order to 'fast track"a project of this complexity, we must "think outside the box"and do things differently. At the same time, the project must be carefully managed in order to assure organization and focus,proper planning and environmental review, and responsible use of public resources. Undue haste, on the other hand, could lead to setbacks and delays. Consistent with these sentiments, the following norms have been adopted by staff involved in the project: Reordering Priorities to "Make It Happen" • The Top Priority. The Chinatown-Court Street proposal is our highest priority development project. • Making It Happen. Moving the project forward at a faster than usual pace will be accomplished through a variety of methods,including: Council agreement to reprioritize some activities; consultant and contract assistance in core project areas;reallocating existing staff and other resources; sound planning and organization;and maintenance of an orderly hierarchy of involvement. • When Other Things Take A Backseat. When other projects are delayed as a result of the project, staff members will be certain to advise the CAO,who in turn may advise the Council,depending upon the significance of the project/delay. While every effort will be made to avoid delays,they must be expected. It will be essential that we can accept them when they do occur as"trade offs"in exchange for maintaining the"top priority" status of the Chinatown-Court Street project. Council and Advisory Body Leadership and Involvement • Setting the Course But Not Rowing the Boat. The City Council should serve in an overall leadership capacity,setting the tone and making decisions. Individual Council member involvement should be limited and handled with great care to avoid confusion, possible internal differences,and ultimately,delays. This is especially important during the negotiation phase. Toward this end,the CAO will manage the process so strong collective City Council leadership guides the way. The CAO will also work with Council members to assure that individual Council member interests or concerns are communicated through him,and are not"negotiated"by Council members directly with the project applicant. • Navigating Though the Advisory Bodies. Advisory body input will be very important in achieving the best possible project,and several advisory bodies will be involved in the formal processing of Chinatown-Court Street. However, if the project is to be processed in a timely way,this involvement needs to be predictable, organized,and consistent with 4c12t 2 defined roles. Therefore,advisory body involvement should primarily occur at the usual stages in the formal development review process,unless otherwise requested by the Council or by the applicant(although advisory body members may wish to attend community workshops or hearings on the project in an individual capacity). Advisory bodies should not,however,prematurely involve themselves in the project at their own independent initiative. This could lead to confusion for all involved. Staff Leadership,Involvement, Organization • The Rowing Teams. The staff effort will be lead by the CAO,and will consist of two major teams: the Negotiating Team(CAO,City Attorney,and negotiator/fiscal analyst) and the Steering Committee(CAO,City Attorney,Assistant CAO,Community Development Director,Finance Director,and Public Works Director). Other staff members,such as the Development Review Manager,will augment these teams,as needed. • Added Help. With regard to the involvement of other staff,we will think outside the box and,as needed,assign staff members to assist on project tasks that would not normally be in their usual area of responsibility. • "Rowing"in Unison. Staff members will not independently involve themselves in the project in any way without first reviewing their proposed involvement with the Steering Committee(e.g.staff members should not independently involve advisory bodies or, for example,offer recommendations to individual Council members). All matters to be reviewed by the Steering Committee should be scheduled through the Assistant CAO. The Steering Committee will meet on a weekly basis. The Team Ethic • Communication and Teamwork. Extraordinary levels of communication and teamwork will characterize our work on the project. Staff members will take personal responsibility for keeping other appropriate staff members informed,and staff will share a spirit of cooperation and positive follow-through. "Right hand-left hand"disruptions will not occur with this project. • Staying Positive. Recognizing the significance of this undertaking,team members will share a positive,"can-do"attitude. • Staying the Coarse. While people are often enthusiastic at the beginning of a project, the number of decisions and the time frame of this project will provide a number of tests. What is desired by,and in the long-tern best interest of,the community will be the teams' sustaining motivation. • Having Fun. Recognizing the pressure staff will be under,team members will also support one another and maintain a sense of humor! G:Chinatown-Court Streetrream Norms .x} it 2