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HomeMy WebLinkAbout01-20-2015 C3 Real Property Exchange Agreement - 1804 Osos StreetCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number FROM: Derek Johnson, Community Development Director Prepared By: Hal Hannula, Supervising Civil Engineer Diane Dostalek, Engineering Consultant SUBJECT: APPROVAL OF A REAL PROPERTY EXCHANGE AGREEMENT AND ENVIRONMENTAL INDEMNITY AGREEMENT TO DISPOSE OF CITY SURPLUS PROPERTY, BEING A PORTION OF RAILROAD AVENUE FOR PARCEL MAP SLO 07-0094, 1804 OSOS STREET (GPC/TR 45-07) RECOMMENDATION Adopt a resolution approving the Real Property Exchange Agreement and the Environmental Indemnity Agreement with Mike and Trudy Hodge and Chad and Deborah Van Till, who are the subdividers of Parcel Map SLO 07-0094 at 1804 Osos Street, to dispose of City surplus property, being a portion of Railroad Avenue. DISCUSSION Background The surplus property consists of a portion of real property granted to the City by Southern Pacific Transportation Company by Grant Deed dated December 30, 1985. It is a strip of land approximately 13’ wide located adjacent to a proposed subdivision at 1804 Osos Street (Attachment 1 - vicinity map). A vesting tentative map for the proposed subdivision, Parcel Map SLO 07-0094 (TR 45-07), was approved by City Council on April 21, 2009, by Resolution No. 10073 (2009 Series) (Attachment 2). The vesting tentative map (Attachment 3) approved a vertical subdivision for a mixed-use development. The Council Resolution that approved the tentative map also included the necessary findings to dispose of the City surplus property in order to facilitate this infill development. The approved tentative map and the project’s Architectural Review Commission Approval ARC 45-07 dated January 26, 2009, both show the surplus property being incorporated into the proposed development. Approving the Real Property Exchange Agreement and Environmental Indemnity Agreement The proposed Real Property Exchange Agreement (Attachment 4) defines the City surplus property to be conveyed to subdivider and formalizes the terms of the exchange. In return for City agreeing to convey the surplus property to subdividers, subdividers agree to construct certain parking, sidewalk, and accessibility improvements that benefit the City and the public. The cost of the improvements is roughly equal to the fair market value of the surplus property. The conditions that are required to be met before the City will convey the surplus property are listed in Section 3 of the Real Property Exchange Agreement. Due to the proximity of the surplus property in relation to the railroad operations, the Environmental Indemnity Agreement (Attachment 5) requires subdividers to indemnify the City against future issues that may arise with regards to potential contamination on the surplus property. The resolution approving the Real Property Exchange Agreement and Environmental Indemnity Agreement (Attachment 6) also authorizes the City Manager to sign the agreements and the Mayor to convey the surplus property to subdividers. 1/20/2015 C3 C3-1 REAL PROPERTY EXCHANGE, 1804 OSOS STREET (GPC/TR 45-07) Page 2 There are several ways to convey the surplus property to the subdivider, including grant deed or quitclaim deed. In this case, it is recommended that the surplus property be conveyed by quitclaim deed because there are some minor discrepancies in the metes and bounds legal description between the City surplus property and the original grant deed. Furthermore, in the original grant deed, Southern Pacific retained the rights to the property 500’ below the surface. With a quitclaim deed, the City conveys only those portions of the real property that it actually owns and makes no representation as to what those ownership rights may be. The Real Property Exchange Agreement authorizes the City to decide the means of conveyance. CONCURRENCES The Public Works Department concurs with the recommended action. ENVIRONMENTAL REVIEW Included in the resolution approving the tentative map were the necessary General Plan conformity findings required by California Government Code Section 65402 to dispose of City property. The sale of surplus government property is exempt from the California Environmental Quality Act, pursuant to Section 15312 (Surplus Government Property Sales) of the CEQA Guidelines. Therefore, no further environmental review is required. FISCAL IMPACT There is a potential for lost revenue related to the disposition of the surplus property, but the value of the improvements being constructed in exchange for the surplus property are essentially equal. The number of parking stalls along this section of Railroad Avenue is proposed to remain the same, so there should be no loss in parking revenue or spaces available for customers and employees within the Railroad District. ALTERNATIVES Deny approval of the Real Property Exchange Agreement and the Environmental Indemnity Agreement. If Council denies approval of the Real Property Exchange Agreement, then the project as proposed by subdividers could not be built in its approved configuration. This would be in conflict with the discretionary approvals already granted to subdividers by the City. ATTACHMENTS 1. Vicinity Map 2. Resolution No. 10073 (2009 Series) 3. Vesting Tentative Map 4. Real Property Exchange Agreement 5. Environmental Indemnity Agreement 6. Draft Resolution Approving the Real Property Exchange Agreement and the Environmental Indemnity Agreement T:\Council Agenda Reports\2015\2015-01-20\Real Property Exchange Agreement (Johnson-Hannula-Dostalek)\Council Agenda Report.docx C3-2 C3-3 Attachment 2 C3-4 Attachment 2 C3-5 Attachment 2 C3-6 Attachment 2 C3-7 Attachment 2 C3-8 Attachment 2 C3-9 Attachment 2 C3-10 Attachment 2 C3-11 Attachment 2 C3-12 Attachment 2 C3-13 Attachment 3 C3-14 Attachment 3 C3-15 Attachment 3 C3-16 ATTACHMENT 4 RECORDING REQUESTED BY AND WHEN RECORDED, RETURN TO: City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 REAL PROPERTY EXCHANGE AGREEMENT THIS REAL PROPERTY EXCHANGE AGREEMENT (“Agreement”) is dated as of ________________________, 201___, and is made and entered into by and between Michael K. Hodge, Trudy Hodge, and Chad Van Til and Deborah L. Van Til, Trustees of the Van Til Family Trust dated March 7, 2002 and amended and restated July 16, 2004 (collectively “DEVELOPERS”), and the City of San Luis Obispo, a California municipal corporation and charter city (“City”). DEVELOPERS and City are collectively referred to as “Parties”. RECITALS A. DEVELOPERS own that certain real property located at 1804 and 1814 Osos Street, San Luis Obispo, CA as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (“DEVELOPERS’ Property”). B. City owns that certain real property located adjacent to the railroad right-of-way as more particularly described in Exhibit B attached hereto and incorporated herein by this reference (“City Property”). C. DEVELOPERS were granted approval to develop DEVELOPERS’ Property per City Council Resolution No. 10073 (2009 Series) and per Architectural Review Commission (ARC) approval ARC 45-07. D. To develop DEVELOPERS’ Property as entitled, it is necessary for DEVELOPERS to obtain and utilize a portion of said City Property (“Surplus Property”) as described in Exhibit C and shown in Exhibit D both of which are attached hereto and incorporated herein by this reference. E. City Council Resolution No. 10073 made findings regarding the disposition of the Surplus Property. It was determined that City no longer has need for the Surplus Property, and that the disposition of Surplus Property to facilitate an affordable housing development is consistent with the policies of the Land Use and Housing Elements of the General Plan. F. In exchange for obtaining Surplus Property, DEVELOPERS agreed to construct certain improvements (“Improvements”) benefitting the City and the public. G. The Parties recognize that there is a risk that Surplus Property is impacted by underground soil contamination resulting from past railroad operations. It is the intention of the Parties that, through this agreement and a separate Environmental Indemnity Agreement recorded concurrently herewith, DEVELOPERS assumes all risks, liabilities, and financial obligations arising from or relating to contamination, if any. C3-17 ATTACHMENT 4 AGREEMENT NOW, THEREFORE, in consideration of the above recitals and the mutual covenants set forth below, City and DEVELOPERS agree as follows: 1. Recitals Incorporated. The above Recitals are true and correct and are incorporated into this Agreement by this reference. 2. Conveyance of Real Property. The method of conveyance/exchange shall be by quitclaim or any other means as determined by City, in City’s sole and absolute discretion. The documents conveying the property shall be recorded in the office of the County Recorder of San Luis Obispo County, California (“County”) at no cost to City. Any fees and taxes required by County to record the conveyance shall be the sole responsibility of DEVELOPERS. 3. Conditions Precedent to Conveyance for City’s Benefit. City’s obligation to convey title of Surplus Property to DEVELOPERS is expressly conditioned upon DEVELOPERS completion of the following conditions: a. Submittal of improvement plans (“Improvement Plans”) showing the Improvements within the City Property consistent with the tentative map for Parcel Map SLO 07-0094. Improvements include parking reconfiguration, accessible path of travel upgrades, sidewalk improvements, landscaping and irrigation, signing and striping, and drainage. b. Approval of the Improvement Plans by the City. c. Concurrent recordation of the second phase of Parcel Map SLO 07-0094 or some other map or document approved by the City that incorporates the Surplus Property into the adjoining parcels. d. Construction and completion of the Improvements to the satisfaction of the City, or submittal of an appropriate security guaranteeing completion of Improvements. 4. Condition of Title of Real Property. City makes no warranties, representations, claims or guarantees as to the condition of title of Surplus Property. 5. Consideration. The Parties agree that the cost of Improvements and Surplus Property are of equal value. The Improvements, together with the indemnification granted to City by DEVELOPERS in a separate Environmental Indemnity Agreement, provide a significant public benefit as a whole and constitute adequate consideration for the property transferred, and no monetary consideration shall be exchanged. 6. “As-Is”; Environmental Indemnity Agreement. AS-IS, WHERE IS To the maximum extent permitted by law, DEVELOPERS agree to accept the Surplus Property on an “as-is” and “where-is” basis, with all faults and any and all latent and patent defects, and without any representation or warranty, all of which City and its representatives hereby disclaim. As a material part of the consideration for the City’s agreement to enter into the Real Property Exchange Agreement, City shall be released, held harmless and indemnified by DEVELOPERS and its successors and assigns, and completely protected, to the fullest extent possible under the law, from any and all claims, liabilities and obligations associated with the physical or environmental condition of Surplus C3-18 ATTACHMENT 4 Property and DEVELOPERS and its successors and assigns, as transferees, shall accept all risks, liabilities and financial obligations arising from or relating to the physical and environmental condition of Surplus Property, regardless of the nature or degree of any defect in such condition. An Environmental Indemnity Agreement shall be recorded concurrently with the Real Property Exchange Agreement. 7. Waiver. No delay or omission in the exercise of any right or remedy of a non-defaulting party regarding any default by the other party shall impair such right or remedy or be construed as a waiver. A party’s consent or approval of any act by the other party requiring consent or approval shall not be deemed to waive or render unnecessary said party’s consent to or approval of any subsequent act of the other party. Any waiver by either party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement. 8. Legal Action. In addition to any other rights or remedies either party has under this Agreement, either party may take legal action to: (a) cure, correct or remedy any default by the other party; (b) compel specific performance of this Agreement; (c) obtain injunctive relief; or (d) obtain any other remedy consistent with the purpose of this Agreement. 9. Notices. Any notice, demand, request, consent, approval or communication under this Agreement shall be in writing and either served personally or sent by prepaid, first-class mail to the address set forth below. Either party may change its address by notifying the other party of the change of address in writing. Notice shall be deemed given (a) upon personal delivery or (b) forty-eight (48) hours from deposit of such notice in the United States mail, postage prepaid. To City: City of San Luis Obispo 919 Palm Street San Luis Obispo, CA 93401 Attn: Director of Public Works To DEVELOPERS: Michael Hodge 351 San Miguel Avenue San Luis Obispo, CA 93405 10. Agreement Assignment. DEVELOPERS shall not assign, transfer, convey or otherwise dispose of the contract, or its right, title or interest, or its power to execute such a contract to any individual or business entity of any kind without the previous written consent of the City. 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12. Amendment. This Agreement may be amended at any time by the mutual consent of the Parties by a written instrument signed by both Parties. 13. Authority. The persons executing this Agreement on behalf of the Parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said Parties and that by so executing this Agreement, the Parties hereto are formally bound to the provisions of this Agreement. 14. Severability. Each term, covenant, condition or provision of this Agreement is intended to be severable. If any term, covenant, condition or provision contained in this Agreement is held to be invalid, C3-19 ATTACHMENT 4 void or illegal by any court of competent jurisdiction, such provision shall be deemed severable from the remainder of this Agreement and shall in no way affect, impair or invalidate any other term, covenant, condition or provision contained in this Agreement. If such term, covenant, condition or provision shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent of the scope or breadth permitted by law. 15. Interpretation. The paragraph headings of this Agreement are for reference and convenience only, are not made part of this Agreement and shall have no effect upon the construction or interpretation of any part hereof. The provisions of this Agreement shall be construed in a reasonable manner to implement the purposes of the Parties and of this Agreement. This Agreement shall be construed as if drafted jointly by City and DEVELOPERS. 16. Indemnification. DEVELOPERS shall defend, indemnify, and hold harmless the City or its agents, officers, and employees from any claim, action, or proceeding against the City or its agents, officers, or employees arising out of or related to the City’s approval of this Agreement. The City shall promptly notify DEVELOPERS of any claim, action, or proceeding received by the City. 17. Entire Agreement. This Agreement represents the entire understanding of City and DEVELOPERS as to the matters contained herein, and no prior oral or written understanding shall be of any force or effect with respect to the matters covered in this Agreement. 18. Attorney’s Fees. If any legal action or proceeding arising out of or relating to this Agreement is brought by either party to this Agreement, the prevailing party will be entitled to receive from the other party, in addition to any other relief that may be granted, the reasonable attorney's fees, costs, and expenses incurred in the action or proceeding by the prevailing party. C3-20 ATTACHMENT 4 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers and representatives as of the date first set forth above. CITY OF SAN LUIS OBISPO, a California municipal corporation By: Name: Title: ATTEST: City Clerk APPROVED AS TO FORM: By: City Attorney DEVELOPERS ______________________________ ______________________________ Michael K. Hodge Trudy Hodge Van Til Family Trust dated March 7, 2002 and amended and restated July 16, 2004 ______________________________ ______________________________ By: Chad Van Til, Trustee By: Deborah L. Van Til, Trustee C3-21 ATTACHMENT 4 CONSENT AND SUBORDINATION OF TRUST DEED BENEFICIARY NOTICE: THIS CONSENT AND SUBORDINATION OF TRUST DEED BENEFICIARY RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO THE AGREEMENT OF THE FOREGOING INSTRUMENT The undersigned, beneficiary under that certain deed of trust and assignment of rents recorded on April 12, 2013, as Document No. 2013-021166, in the Official Records of the County of San Luis Obispo, does hereby join in, and consent to, each and all of the terms and provisions of the within instrument, and does hereby subordinate its interests to the entire effect of this instrument. In this regard, the undersigned does hereby agree upon request of any insuring title company to direct the trustee under said deed of trust to execute and deliver to the County in recordable form acceptable to such insuring title company partial re-conveyances as to any rights granted and to be granted to the City of San Luis Obispo pursuant to this instrument. Dated: ____________________ TRUST DEED BENEFICIARY Premier Valley Bank By: ______________________________________ Name: ____________________________________ Its: ______________________________________ STATE OF CALIFORNIA ) )ss COUNTY OF SAN LUIS OBISPO ) On ______________, 201__, before me, ____________________________, Notary Public, personally appeared _______________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. I declare under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public A notary public or other officer completing this certificate verifies only the identity of the individual, who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. C3-22 ATTACHMENT 4 Exhibit A Legal Description of Existing DEVELOPERS Property Parcels 1, 3, and Remainder Parcel of Parcel Map SLO 07-0094-Phase 1, in the City of San Luis Obispo, County of San Luis Obispo, State of California, according to the Map thereof recorded August 12, 2010 in Book 74, pages 20 through 23 inclusive, of Parcel Maps in the Office of the County Recorder of said County. C3-23 ATTACHMENT 4 Exhibit B Legal Description of Existing City Property Those portions of Blocks 181, 182, 183, and 187A of the Ingleside Homestead Tract in the City of San Luis Obispo, County of San Luis Obispo, State of California, according to map thereof recorded in Book A, page 132 of Maps in the Office of the County Recorder of said County and those portions of the Loomis Addition to said City according to map thereof recorded in Book A, Page 126 of Maps, in the Office of the County Recorder of said County described in the Grant Deed from Southern Pacific Transportation Company to the City of San Luis Obispo recorded December 30, 1985, in Book 2786, Page 550 of Official Records of said County Recorder. C3-24 ATTACHMENT 4 C3-25 ATTACHMENT 4 C3-26 ATTACHMENT 5 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of San Luis Obispo City Clerk 990 Palm Street San Luis Obispo, CA 93401 ENVIRONMENTAL INDEMNITY AGREEMENT THIS ENVIRONMENTAL INDEMNITY AGREEMENT is dated as of ___________________, 201___, and is made and entered into by and between Michael K. Hodge, Trudy Hodge, and Chad Van Til and Deborah L. Van Til, Trustees of the Van Til Family Trust dated March 7, 2002 and amended and restated July 16, 2004 (collectively “DEVELOPERS”), and the City of San Luis Obispo, a California municipal corporation and charter city (“City”). City and DEVELOPERS are collectively referred to herein as the "Parties," and each individually as a "Party." ARTICLE I. RECITALS 1.1 City is the owner of certain real property located at 1820 Osos Street in the City of San Luis Obispo (Assessor’s Parcel No. 003-571-023), a portion of which was transferred to DEVELOPERS pursuant to Document # _____________________ of the official records of San Luis Obispo County, State of California (the “Transfer Document”), recorded on ___________________, 20___, (“Transfer Date”) as pursuant to that certain “Real Property Exchange Agreement” dated __________________, 20___, (the “Exchange Agreement”). Said portion of City property transferred to DEVELOPERS by said Transfer Document, together with that portion of Church Street abandoned according to Resolution No. ______ (20____ Series) recorded on ___________________, 20___, as Document # _____________________ in the official records of said County, are hereinafter collectively referred to as “Real Property”. The Real Property is described in Exhibits A-1 and B-1, and shown in Exhibits A-2 and B-2, which are attached hereto and incorporated herein by this reference. 1.2 As a material part of the consideration for the City’s agreement to enter into the Exchange Agreement, City wishes to be released, held harmless and indemnified by DEVELOPERS and its successors and assigns, and completely protected, to the fullest extent possible under the law, from any and all claims, liabilities and obligations associated with the physical or environmental condition of the Real Property and to have DEVELOPERS and its successors and assigns, as transferees, accept all risks, liabilities and financial obligations arising from or relating to the physical and environmental condition of the Real Property, regardless of the nature or degree of any defect in such condition. 1.3 After allowing DEVELOPERS a full opportunity to inspect the Real Property in whatever manner it deemed appropriate, and in order to induce the transfer of the properties, and pursuant to the Exchange Agreement, the Parties are executing C3-27 ATTACHMENT 5 this Environmental Indemnity Agreement ("Indemnity Agreement") effective as of the date first set forth above. 1.4 By this Indemnity Agreement, the Parties intend to insure that the City is insulated, to the fullest extent possible, from all risks, liabilities and financial obligations arising from or relating to the physical or environmental condition of the Real Property, including, but not limited to any contamination by Hazardous Materials, as defined below. ARTICLE II. DEFINITIONS 2.1 For purposes of this Indemnity Agreement, the following capitalized terms shall have the following meanings: 2.1.1 The term "Environmental Expenses" shall mean all costs and expenses reasonably incurred in response to (a) a Hazardous Release; (b) an Environmental Claim; or (c) the requirements of the Environmental Laws, including but not limited to investigating, characterizing, responding to, removing or remediating Hazardous Materials existing or allegedly existing, in, on or over the Real Property. By way of example, and not limitation, it includes consulting and investigation fees, feasibility studies, repair, detoxification, closure or other clean-up costs, reasonable attorney's fees incurred (including, without limit, consultants’ and attorneys’ fees incurred in evaluating, reviewing and supervising the response, removal and remediation measures and in negotiating, litigating, satisfying or settling the Environmental Claims). W ithout limitation such costs and expenses shall be at least coextensive with the types and categories of reimbursable costs and expenses and administrative overhead recoverable by the United States Government in cost recovery actions under the Environmental Laws, including CERCLA, as defined below. 2.1.2 The term "Hazardous Materials" shall mean any substance or material, which, because of its status as a waste, or its quantity, concentration or physical or chemical characteristics, is at any time now or hereafter deemed by any federal, state or local governmental authority to pose a present or potential hazard or threat to public health, welfare or the environment, or which is regulated based on such potentially hazardous effects. The term “hazardous materials” includes, without limitation, any material or substance defined as a “hazardous” or “toxic” substance or “waste,” and any pollutant or contaminant regulated under the federal or California Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) (42 U.S.C. Sections 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), or pursuant to Section 25316 et seq. of the California Health and Safety Code; any material listed pursuant to Section 25140 et seq. of the California Health and Safety Code; any man-made asbestos and asbestos containing materials, and any petroleum, including, without limitation, crude oil or any fraction thereof, natural gas or natural gas liquids; or otherwise under the Environmental Laws. 2.1.3 The term "Hazardous Release" shall include any historic, actual or imminent spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, C3-28 ATTACHMENT 5 escaping, leaching, dumping, storing, or disposing in, on, under or about the Real Property of any Hazardous Materials. 2.1.4 The term "City Representatives" shall mean the City of San Luis Obispo, its Council members, officers, employees, agents, contractors, and their respective successors and assigns. 2.1.5 The term "Transfer Date" shall mean _____________, 201___ [the date that the Transfer Document is recorded]. 2.1.6 The term "Agency" shall mean any governmental agency having jurisdiction over any Hazardous Materials located in, on, above, or under the Real Property. 2.1.7 The term “Environmental Claim” shall mean (i) any claim, demand, complaint, process, proceeding, penalty, or cause of action relating to a Hazardous Release or (ii) any action, proceeding, penalty, liability, loss, damage or cost caused by a breach of the provisions of this Indemnity Agreement. 2.1.8 The term "Environmental Laws" shall mean all present and future federal, state and local laws, regulations, ordinances, mandates, decrees or other regulation or imposition enforceable by any police powers, including those of an Agency or other branch of government, as developed, created or amended from time to time, and whether under common law, statutes, ordinances, regulations, rules, administrative rules and policies, judicial or administrative orders or decrees, and all other requirements or impositions of any Agency relating to the protection of human health or the environment. Such term includes, without limitation: the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (“RCRA”); the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq.; the Clean Water Act, 33 U.S.C. Sections 1251 et seq.; the California Hazardous Waste Control Act, Health and Safety Code Sections 25100 et seq.; the California Hazardous Substance Account Act, Health and Safety Code Sections 25330 et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code Sections 25249.5 et seq.; California Health and Safety Code Sections 25280 et seq. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code Sections 25170.1 et seq.; California Health and Safety Code Sections 25501 et seq. (Hazardous Materials Response Plans and Inventory); the California Porter-Cologne Water Quality Control Act, Water Code Sections 13000 et seq. C3-29 ATTACHMENT 5 ARTICLE III. INDEMNITY 3.1 DEVELOPERS and their successors and assigns hereby unconditionally agree at their sole cost to indemnify, protect and to hold City Representatives harmless from, and to defend the City Representatives (with counsel selected by City) against, any and all (a) Environmental Claims; (b) Environmental Expenses; and (c) liabilities, losses, damages, fines, penalties, charges, orders, judgments or liens; to the extent any of the foregoing arise, directly or indirectly, in whole or in part out of: (i) a Hazardous Release into, through, from or upon the Real Property; or (ii) any act or omission by DEVELOPERS in discharge of its obligations under this Indemnity Agreement, including without limit, the handling, investigation, treatment, storage, decontamination, remediation, removal, transport or disposal of any Hazardous Materials. DEVELOPERS’s liability hereunder is absolute and does not depend on whether the events described in (a), (b), or (c) resulted from any act or omission of City, or if so caused, whether City’s acts or omissions were legal, negligent, or within its control. 3.2 City’s rights to the indemnity and defense identified herein, and the obligations undertaken by DEVELOPERS herein to provide such indemnity and defense, shall supersede all other agreements between the Parties as of the Transfer Date which are inconsistent with these provisions, and any contrary rights that DEVELOPERS may have at common law or by statute are waived by DEVELOPERS. No inspection, nor any failure by DEVELOPERS to inspect the Real Property, nor any failure of any Party to exact any particular form of representation or warranty from any other Party, shall be construed to modify, eliminate or diminish the indemnity obligations of DEVELOPERS hereunder. Nothing in this Indemnity Agreement is meant to affect the rights of any third party or governmental agency to proceed against any Party under any federal, state or local law. Notwithstanding the foregoing, the City’s right to indemnity and defense identified herein shall not extend to any liability for an environmental condition of which the City had actual knowledge as of the date of the Real Property Exchange Agreement. ARTICLE IV. CONDITION OF PROPERTY 4.1 Prior to the Transfer Date, City may have delivered to DEVELOPERS information or reports relating to the condition of the Real Property (collectively, the “Reports”). DEVELOPERS acknowledges and agrees that if DEVELOPERS acquires the Real Property, then it is acquiring the Real Property subject to any and all deficiencies, defects and other matters referred to or otherwise set forth in any Reports delivered to DEVELOPERS or otherwise made available to DEVELOPERS. City makes no representations or warranties with respect to the adequacy or accuracy of the Reports. City shall have no liability with respect to any matters disclosed or contained in the Reports provided to DEVELOPERS. For purposes of this Indemnity Agreement, DEVELOPERS shall be deemed to have actual knowledge of the contents of the Reports, and to have pursued all reasonable further diligence that any reasonably prudent person would have pursued in light of the information provided in such documents. C3-30 ATTACHMENT 5 4.2 DEVELOPERS acknowledge and agree: (i) that, prior to the Transfer Date, DEVELOPERS has thoroughly inspected the Real Property and observed all of the legal, environmental, zoning, land use, seismic, title, survey and physical characteristics and conditions of the Real Property and has approved of all such characteristics and conditions and by acquiring the Real Property, DEVELOPERS waive any and all right or ability to make a claim of any kind or nature against any of the City Representatives (defined herein) for any and all deficiencies or defects in the characteristics and conditions of the Real Property which would be disclosed by an inspection; (ii) to acquire the Real Property with any and all of such deficiencies and defects, and subject to all matters disclosed by City herein or in any separate writing with respect to the Real Property; (iii) none of the City Representatives has made any representations, warranties or provided any promises or assurances of any kind whatsoever respecting the Real Property, its condition, its size, the permitted uses or the suitability of DEVELOPERS’s intended use of the Real Property other than as provided in this Indemnity Agreement; (iv) that it is purchasing (and the City is conveying) the Real Property in its present condition, “AS IS”, “WHERE IS” AND WITH ALL FAULTS, and that no patent or latent defect or deficiency in the condition of the Real Property whether or not known or discovered, shall affect the rights of City, the City Representatives, or DEVELOPERS hereunder; (v) that any and all information and documents furnished to DEVELOPERS by or on behalf of City relating to the Real Property, including the Reports, shall be deemed furnished as a courtesy to DEVELOPERS and without any warranty of any kind from or on behalf of the City; (vi) that DEVELOPERS have performed an independent inspection and investigation of the Real Property and have also investigated and have knowledge of operative or proposed governmental laws and regulations including without limitation, land use laws and regulations to which the Property may be subject; and (vii) that DEVELOPERS shall acquire the Real Property solely upon the basis of its independent inspection and investigation of the Real Property, including without limitation, (a) the quality, nature, habitability, merchantability, use, operation, value, marketability, adequacy or physical condition of the Real Property or any aspect or portion thereof, including, without limitation, appurtenances, access, landscaping, availability of utility systems, soils, geology and groundwater, or whether the Real Property lies within a special flood hazard area, an area of potential flooding, a very high fire hazard severity zone, a wildland fire area, an earthquake fault zone or a seismic hazard zone, (b) the development or income potential of the Real Property, (c) the zoning or other legal status of the Real Property or any other public or private restrictions on the use of the Real Property, (d) the compliance of the Real Property or its operation with any applicable codes, laws, regulations, statutes, ordinances, C3-31 ATTACHMENT 5 covenants, conditions and restrictions of any governmental or regulatory agency or authority or of any other person or entity, (e) the ability of DEVELOPERS to obtain any necessary governmental approvals, licenses or permits for DEVELOPERS’s intended use or development of the Real Property, (f) the presence or absence of Hazardous Materials on, in, under, above or about the Real Property or any adjoining or neighboring property, or (g) the condition of title to the Real Property. CITY’S INITIALS: DEVELOPERS’S INITIALS: _____________ _____________ ARTICLE V. REPRESENTATIONS 5.1 DEVELOPERS represent and warrant to City that: (i) this Indemnity Agreement (a) is duly authorized, executed and delivered by DEVELOPERS, (b) does not violate any provision of any judicial order to which DEVELOPERS is a party or to which DEVELOPERS is subject and (c) constitutes a valid and legally binding obligation of DEVELOPERS; (ii) DEVELOPERS have full and complete power and authority to enter into this Indemnity Agreement and to perform its obligations hereunder; (iii) DEVELOPERS are not presently the subject of a bankruptcy, insolvency or probate proceeding and DEVELOPERS neither anticipate nor intend to file or cause to be filed any bankruptcy or insolvency proceeding involving DEVELOPERS or DEVELOPERS’s assets during the pendency of this Indemnity Agreement; (iv) DEVELOPERS are a sophisticated property manager with substantial experience in acquiring assets of the same type as the Real Property and has such knowledge and experience in financial and business matters that DEVELOPERS are capable of evaluating the merits and risks of the Real Property; (v) DEVELOPERS are represented by competent counsel; and (vi) DEVELOPERS and their agents have thoroughly inspected the Real Property, fully observed the characteristics and conditions of the Real Property, and are purchasing the Real Property subject to the terms of this Indemnity Agreement, including without limitation, Article III. The foregoing representations and warranties of DEVELOPERS shall survive the transfer of the Real Property to DEVELOPERS. 5.2 DEVELOPERS and City each specifically acknowledge and agree that all references in this Indemnity Agreement, in any of the exhibits attached hereto and in any document, certificate or statement to be delivered by City to DEVELOPERS hereunder, to the phrases “to City’s actual knowledge,” or “known to City” (whether used in the phrase “to the actual knowledge of City,” “actually known to City,” “City’s knowledge,” or in similar or other contexts): C3-32 ATTACHMENT 5 (i) shall mean the actual (not constructive or imputed) personal knowledge of the management employees of City with knowledge of the Real Property (which City representatives are limited to Mayor Jan Marx and Public Works Director Daryl Grigsby; (ii) shall in no case mean or refer to the actual or constructive knowledge of any other City Representative; and (iii) shall in no event or circumstance impose upon City or any of the City Representatives any duty or obligation to verify, inquire or make any independent inquiry or investigation of any such representation, warranty or statement, or to otherwise investigate the facts or circumstances relating or otherwise pertinent thereto. DEVELOPERS further acknowledge and agree that: (i) none of the City Representatives shall be personally liable, or otherwise have any personal liability, under or in connection with this Indemnity Agreement, including without limitation, in connection with any of the representations, warranties or statements made in connection with, or pursuant to, this Indemnity Agreement; and (ii) DEVELOPERS shall have no right to rely on, and City shall have no liability with respect to, any representation or warranty (including any future certification or statement, actually or deemed made, as to representations or warranties) which DEVELOPERS actually knows to be inaccurate or untrue at any time prior to the Transfer Date. Any claim, action or proceeding brought by DEVELOPERS against the City for any alleged misrepresentation or failure to disclose any material fact relating to the Real Property must be brought within one year of the Transfer Date or the same shall be deemed waived and of no further effect. Any such claim shall be limited to the recovery of direct damages. ARTICLE VI. RELEASES 6.1 DEVELOPERS hereby agree that the City Representatives shall be, and are hereby, fully and forever released and discharged from any and all liabilities, losses, claims (including third party claims), demands, damages (of any nature whatsoever), causes of action, costs, penalties, fines, judgments, attorneys’ fees, consultants’ fees and costs and experts’ fees, special, indirect or consequential damages (collectively, the “Claims”), whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or in any way be connected with the Real Property including, without limitation, the physical, environmental and seismic condition of the Real Property or the violation of any law or regulation applicable thereto, including, without limitation, any Environmental Claim (regardless of when it first appeared) relating to or arising from: (i) the presence of any Hazardous Release, or the use, presence, storage, release, discharge, or migration of Hazardous Materials on, in, under or around the Real Property regardless of when such Hazardous Materials were first introduced in, on or about the Real Property; C3-33 ATTACHMENT 5 (ii) any patent or latent defects or deficiencies with respect to the Real Property; and (iii) any and all matters related to the Real Property or any portion thereof, including without limitation, the condition and/or operation of the Real Property and each part thereof, provided, however, that the City Representatives shall not be released from any claim involving intentional and written misrepresentation or the direct damages arising from a breach by City of this Indemnity Agreement. DEVELOPERS hereby waive and agree not to commence any action, legal proceeding, cause of action or suits in law or equity, of whatever kind or nature, including, but not limited to, a private right of action under the federal superfund laws, 42 U.S.C. Sections 9601 et seq. and California Health and Safety Code Sections 25300 et seq. (as such laws and statutes may be amended, supplemented or replaced from time to time), directly or indirectly, against the City Representatives or their agents in connection with the Claims described above. In connection with all of the foregoing provisions of this section 6.1, DEVELOPERS expressly waives the provisions of Section 1542 of the California Civil Code which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR and all similar provisions or rules of law. DEVELOPERS elect to and do assume all risk for such Claims heretofore and hereafter arising, whether now known or unknown by DEVELOPERS. DEVELOPERS hereby agree, represent and warrant that: (i) factual matters now unknown to it may have given or may hereafter give rise to Claims which are presently unknown, unanticipated and unsuspected and (ii) the waivers and releases herein have been negotiated and agreed upon in light of that realization and that DEVELOPERS nevertheless hereby intend to release, discharge and acquit City from any such unknown Claims. Without limiting the foregoing, if DEVELOPERS have actual knowledge of (i) a default in any of the covenants, contracts or obligations to be performed by City under this Indemnity Agreement, (ii) any breach or inaccuracy in any representation of City made in this Indemnity Agreement, and/or (iii) any fact or other matter related to the Real Property, DEVELOPERS shall be conclusively deemed to have waived any such default, breach or inaccuracy and/or fact or matter, and shall have no Claim against City with respect thereto. City has given DEVELOPERS material concessions regarding this transaction in exchange for DEVELOPERS’s Release and all other assurances and agreements under this Section 6.1. City and DEVELOPERS have each initialed this Section to further indicate their awareness and acceptance of each and every provision hereof. C3-34 ATTACHMENT 5 The provisions of this Section shall survive the transfer of the Real Property to DEVELOPERS and shall not be deemed merged into any instrument or conveyance. CITY’S INITIALS: DEVELOPERS’S INITIALS: _____________ _____________ ARTICLE VII. MISCELLANEOUS 7.1 Notices. All notices and other communications under this Indemnity Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered personally on the Party to whom notice is given, or if made by telecopy directed to the Party to whom notice is to be given at the telecopy number listed below, or (b) on receipt, if mailed to the Party to whom notice is to be given by first class mail, registered or certified, return receipt requested, postage prepaid and properly addressed as follows: To City: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401-3249 Attention: City Manager Facsimile: (805) 781-7109 with a copy to: City Attorney City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401-3249 Facsimile: (805) 781-7409 To DEVELOPERS: Michael Hodge 351 San Miguel Avenue San Luis Obispo, CA 93405 7.2 Governing Law. This Indemnity Agreement shall be governed by and construed in accordance with the laws of the State of California. 7.3 Headings. The article and section headings in this Indemnity Agreement are for convenience only and shall not be used in its interpretation or considered part of this Indemnity Agreement. C3-35 ATTACHMENT 5 7.4 Counterparts. This Indemnity Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.5 Effect of Indemnity Agreement. This instrument sets forth the entire agreement between the Parties concerning its subject matter. All negotiations relative to the matters contemplated by this Indemnity Agreement are merged herein and there are no other understandings or agreements relating to the matters and things herein set forth other than those incorporated this Indemnity Agreement. No provision of this Indemnity Agreement shall be altered, amended, revoked or waived except by an instrument in writing signed by the Party to be charged with such amendment, revocation or waiver. Subject to the provisions of Section 7.14, this Indemnity Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and assigns. 7.6 Severability. If any clause or provision of this Indemnity Agreement is illegal, invalid or unenforceable under applicable present or future laws, then it is the intention of the Parties that the remainder of this Indemnity Agreement shall not be affected but shall remain in full force and effect. 7.7 Payment; Interest. All payment obligations of any Party hereunder shall be payable immediately upon demand. If not paid within sixty (60) days after demand, they shall bear interest at ten percent (10%) per annum, unless otherwise specified herein. Where the specified interest rate exceeds the maximum rate allowed by law, the rate shall be deemed restated at the maximum legal rate. 7.8 Survival. Unless otherwise specified in this Indemnity Agreement, the Parties hereby acknowledge and agree that the rights and obligations of each Party under this Indemnity Agreement shall survive any transfer of title to any portion of the Real Property. 7.9 Independent Obligations. Each Party's obligations hereunder are independent of any or all of its other obligations to any other Party, and each Party may enforce any of its rights hereunder independently of any other right or remedy that it may at any time hold. 7.10 No Waiver. No failure or delay on the part of any Party in exercising any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor shall any single or partial exercise of any right, power or remedy preclude the further exercise thereof. Any change in the rights and remedies of the Parties shall be by written agreement, executed by each Party; it shall not arise by conduct or implication. 7.11 Attorney's Fees. If any dispute arises out of or pertains to this Indemnity Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs as the court may determine, regardless of whether the matter is tried to judgment. 7.14 Binding Nature. This Indemnity Agreement and the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the Parties, the City Representatives, and their respective successors and assigns. C3-36 ATTACHMENT 5 7.15 Third Party Beneficiaries. The Parties hereby expressly acknowledge and agree that this Indemnity Agreement is made and entered into for the express protection and benefit of the Parties hereto, and those designated in this Indemnity Agreement and no other party or entity whatsoever is a third party beneficiary hereof. 7.16 Jurisdiction. The Parties hereby expressly consent to, and will not contest, the exercise of jurisdiction by a competent court of the State of California. 7.17 Construction. Whenever the context requires, all terms used herein in the singular shall be construed in the plural and vice versa, and each gender shall include each other gender. 7.18 No Party Deemed Drafter. Each Party participated in the preparation of this Indemnity Agreement personally and with the benefit of counsel. If this Indemnity Agreement is ever construed by a court of law or equity, such court shall not construe this Indemnity Agreement or any provision hereof more harshly against any Party by virtue of its role as drafter. 7.19 Time is of the Essence. Each Party recognizes that time is of the essence in the performance of this Indemnity Agreement. C3-37 ATTACHMENT 5 IN WITNESS WHEREOF, the Parties hereto have caused this Indemnity Agreement to be duly executed as of the date first above written. CITY OF SAN LUIS OBISPO, a California municipal corporation By: Name: Title: ATTEST: City Clerk APPROVED AS TO FORM: By: City Attorney DEVELOPERS ______________________________ ______________________________ Michael K. Hodge Trudy Hodge Van Til Family Trust dated March 7, 2002 and amended and restated July 16, 2004 ______________________________ ______________________________ By: Chad Van Til, Trustee By: Deborah L. Van Til, Trustee ALL SIGNATURES MUST BE NOTARIZED C3-38 ATTACHMENT 5 CONSENT AND SUBORDINATION OF TRUST DEED BENEFICIARY NOTICE: THIS CONSENT AND SUBORDINATION OF TRUST DEED BENEFICIARY RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO THE AGREEMENT OF THE FOREGOING INSTRUMENT The undersigned, beneficiary under that certain deed of trust and assignment of rents recorded on April 12, 2013, as Document No. 2013-021166, in the Official Records of the County of San Luis Obispo, does hereby join in, and consent to, each and all of the terms and provisions of the within instrument, and does hereby subordinate its interests to the entire effect of this instrument. In this regard, the undersigned does hereby agree upon request of any insuring title company to direct the trustee under said deed of trust to execute and deliver to the County in recordable form acceptable to such insuring title company partial re-conveyances as to any rights granted and to be granted to the City of San Luis Obispo pursuant to this instrument. Dated: ____________________ TRUST DEED BENEFICIARY Premier Valley Bank By: ______________________________________ Name: ____________________________________ Its: ______________________________________ STATE OF CALIFORNIA ) )ss COUNTY OF SAN LUIS OBISPO ) On ______________, 201__, before me, ____________________________, Notary Public, personally appeared _______________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. I declare under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public A notary public or other officer completing this certificate verifies only the identity of the individual, who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. C3-39 ATTACHMENT 5 C3-40 ATTACHMENT 5 C3-41 ATTACHMENT 5 C3-42 ATTACHMENT 5 C3-43 R _____ RESOLUTION NO. (2015 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING THE REAL PROPERTY EXCHANGE AGREEMENT AND THE ENVIRONMENTAL INDEMNITY AGREEMENT WITH THE SUBDIVIDERS OF PARCEL MAP SLO 07-0094, 1804 OSOS STREET, TO DISPOSE OF CITY SURPLUS PROPERTY, BEING A PORTION OF RAILROAD AVENUE WHEREAS, The City of San Luis Obispo is a charter city as defined in the California Constitution article XI, section 5 and may transfer real property as provided by City Charter Section 906; and WHEREAS, the City Council made certain findings concerning the disposition of surplus property (a portion of Assessor’s Parcel No. 003-571-023), as prescribed in Resolution No. 10073 (2009 Series); and WHEREAS, the City no longer has need for the surplus property, and the disposition of the surplus property to facilitate infill development is consistent with the policies of the Land Use and Housing Elements of the General Plan; and WHEREAS, the sale of surplus government property is exempt from the California Environmental Quality Act (“CEQA”), pursuant to Section 15312 of the CEQA Guidelines; and WHEREAS, in exchange for acquisition of the surplus property, the subdividers of Parcel Map SLO 07-0094 have agreed to construct certain improvements that benefit the City and the public; and WHEREAS, the parties recognize that there is a risk that the City property being transferred herein is impacted by underground soil contamination resulting from past, present, and future railroad operations; and WHEREAS, the City wishes to be released from any claims, liabilities and obligations associated with the physical or environmental condition of the surplus property; and WHEREAS, the subdividers of Parcel Map SLO 07-0094 agree to accept all risks, liabilities and obligations arising from or relating to the physical and environmental condition of the surplus property. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The above recitals are true and correct and incorporated herein by this reference. SECTION 2. That the surplus property being transferred does not have any significant value as wildlife habitat or other environmental purposes and that, due to the size and shape of the property, it is incapable of independent development or use. Attachment 6 C3-44 Resolution No. (2015 Series) Page 2 SECTION 3. The Real Property Exchange Agreement is hereby approved. SECTION 4. The Environmental Indemnity Agreement is hereby approved. SECTION 5. The City Council hereby authorizes the City Manager to execute said agreements on behalf of the Council of the City of San Luis Obispo. SECTION 6. The City Council hereby authorizes the Mayor and City staff to take action necessary to carry out the intent of this resolution. Upon motion of _______________________, seconded by ________________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this ______ day of _______________ 2015. ________________________________ Mayor Jan Marx ATTEST: ______________________________ Anthony Mejia City Clerk APPROVED AS TO FORM: _____________________________ J. Christine Dietrick City Attorney T:\Council Agenda Reports\2015\2015-01-20\Real Property Exchange Agreement (Johnson-Hannula-Dostalek)\Attachment 6 - Draft Resolution Approving Agreements.docx Attachment 6 C3-45 This page is intentionally blank. C3-46