HomeMy WebLinkAboutChinatown MOU 091900MEMORANDUM OF UNDERSTANDIN G
Between The City of San Luis Obisp o
An d
Chinatown-Court Street Partners LL C
For the Sale and Subsequent Development of Selected City Propertie s
Dated : September 19, 2000
Table of Contents For Memorandum of Understanding betwee n
The City of San Luis Obispo and Chinatown-Court Street Partners LLC
For the Sale and Subsequent Development of Selected City Propertie s
RECITALS 3
1 PROJECT DESCRIPTION 31.1 Overview 31.2 Project Parcels and Components 41.3 Court Street 41.4 Palm Street and Subterranean Parking Structure 51.5 Monterey Street 51.6 Additional Development 52PROVISION FOR NEW AND REPLACEMENT PARKING 52.1 No Guarantee of Offsite Public Parking 62.2 Additional Development 62.3 Location and Timing of Subsidized New Demand Parking 62.4 Public Parking Requirement 62.5 Parking In-Lieu Fee 72.6 Developer Construction of Public Parking 8
3 LAND PURCHASE 93ALand Area, Land and Air Rights Purchase Price :93.2 Cash Payment for Court Street and Monterey Street 1 03.3 Acquisition of Yung Parcel 1 03.4 Palm Street Air Rights Purchase 1 13:5 Interim Use of Air Rights 1 13.6 Right of First Refusal and Consent to Transfer 1 23.7 Developer Right to Put Back Palm Street 1 23.8 Repurchase at Discount 1 23.9 Ownership of Plans 1 23.10 Conditions Precedent to Initial Closing
4 ENTITLEMENT PROCESSING AND TRANSACTION SCHEDULE 1 44.1 Timing of Initial Closing 144.2 Commencement of Phase 1 Construction 144.3 Commencement of Phase 4 Construction 144.4 Managed Parking 14
5 RECIPROCAL EASEMENT AGREEMENT 1 4
6 CONTINGENCIES TO CLOSING 1 56.1 City Contingencies :156.2 Developer Contingencies 15
7 DOCUMENTATION 1 57.1 Purchase And Sale Agreement 157.2 Application For Regulatory Approval 157.3 Development Agreement 157.4 Reciprocal Easement Agreement(s)157.5 Parking Construction and Purchase Agreement 1 67.6 Performance Bond for Parking Structure Completion 1 67.7 Enhancement and Maintenance of Court Street Streetscape 1 67.8 Additional Documents 1 6
8 RESPONSIBILITIES OF THE PARTIES 1 68.1 Developer :1 6...........................................................................................................8 .2 City 17
9 OTHER MUNICIPAL PROCESSING 1 7
10 NON-BINDING NATURE OF THE AGREEMENT 1 7
11 POSSESSORY INTEREST TAXES 1 8
12 TAX FREE EXCHANGE 1 8
13 ACCEPTANCE AND ACKNOWLEDGEMENT 18
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RECITAL S
Whereas, Chinatown–Court Street Partners L .L.C . (the Developer) desires to construct retail ,
office, restaurant, residential, and theater facilities in downtown San Luis Obispo (the Project )
over three project areas which total approximately 93,000 square feet ; and the land area unde r
consideration is currently owned by the City of San Luis Obispo (the City), the Developer shal l
purchase a portion of the land from the City outright, and purchase air rights to another portio n
for development ; and on the parcel of the project for which the Developer is purchasing air
rights, the Developer shall build a partially subterranean parking structure (Parking Structure )
consisting of 259 spaces, which the City will purchase upon completion and subsequently ow n
and operate ; and
Whereas this project appears to have an important revitalization effect on the downtown area ,
and therefore may be worthy of particular consideration by the City ; and
Whereas the .acquisition of City property and the rearrangement of City parking is critical t o
effect this project ; and
Whereas the City will incur costs not traditionally associated with private development of retail;
and
Whereas the City has no formal Redevelopment Agency or Redevelopment Areas but this
project is consistent of downtown revitalization and redevelopment ; and
Whereas the City contemplates the sale of the property without a competitive bidding proces s
that might be used were it not for the revitalization objectives served by this project ;,and
Whereas the City Council has directed the staff and consultants of the City of San Luis Obispo to
prepare for their review a MOU describing the proposed transaction ; and
Whereas the City has determined that this project will be designated as the highest priorit y
private development project in the City ; and
Whereas the MOU is non-binding in nature ;
Now, therefore, the parties have prepared the following MOU :
1 PROJECT DESCRIPTIO N
1 .1 Overview
The proposed Project is to be built in three distinct components in downtown San Luis Obispo .
Each of the three component areas is described below and shown on the Map in Exhibit 1 . Area
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definitions correspond with information in the April 27, 2000 appraisal performed by th e
Ventura Appraisal Consulting Corporation .
a)Court Street Area (Court Street) — Three adjacent parcels located at the southwes t
corner of the intersection of Monterey Street and Osos Street and a portion of the
adjacent 40-foot right of way, which is now Court Street, together consisting o f
approximately 34,656 square feet .
b)Monterey Street Area (Monterey Street) — Two portions of an irregularly shape d
parcel which extend in a northwestern direction from Monterey St . toward th e
middle of the block flanking a historic structure, and which consist o f
approximately 17,885 square feet combined.
c)Palm Street Area (Palm Street) — Two adjacent parcels and a portion of a thir d
located on the southwest corner of the intersection of Mono Street and Pal m
Street, and consisting of approximately 40,526 square feet .
d)Due Diligence — Developer should perform and rely upon its own pre -
development inspections and testing to assure that the parcels to be conveye d
are suited for the proposed development, with any warranties or representations of
City to be negotiated subsequently, including but not limited to :
i.Soil and geolog y
ii.Hazardous materials
iii.Archeological and historica l
1 .2 Project Parcels and Component s
If the Project is approved, it will be constructed in four phases . The first phase to be started wil l
be Court Street . The Subterranean Parking Structure will be started second . Development of the
Monterey parcels will be the third phase started . The fourth and final phase is currently planne d
for the construction of improvements above the Parking Structure on Palm Street . Detail
regarding the proposed uses and square footages are shown below, by area . Exhibit 2 shows th ephasing:
1 .3 Court Stree t
This portion of the Project will be completed in the first phase of construction and will consist o f
uses currently estimated to be :
Retail 45,873 s .f.
Office 10,669 s .f.
Restaurant / Food 5 .000 s .f.
Total .61,542 s .f.
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1 .4 Palm Street and Subterranean Parking Structur e
The Parking Structure will be located on the Palm Street Area, and will be built in Phase 2 . At an
unspecified date after completion of Phase 3, but no later than 5 years, or as otherwise specifie d
in Section 3 .8, Phase 4 construction of improvements shall begin on top of the parking structure ,
and is anticipated to include 64,900 square feet, at a minimum, and will consist of uses currentl y
estimated to be :
Retail 17,000 s .f.
Office 30,000 s .f.
Restaurant / Food 8,900 s .f.
Theater 9,000 s .f.
1 .5 Monterey Stree t
The Monterey Street portion of the Project will be built in Phase 3, and will consist of 20,00 0
square feet of retail improvements .
1 .6 Additional Development
1 .6 .1 Desirability of Residential
As far as possible, the developer intends to incorporate a residential component in Palm Street s o
as to be in conformance with both the policies articulated in the City's General Plan and becaus e
of the strong public sentiment manifested in the prior workshops .
1 .6 .2 Responsibility for Cost of Additional Parkin g
The application for entitlements may, at the Developer's option, also include provision for
residential construction and possibly some additional office to be located on the Palm Stree t
parcel . So long as no additional parking costs are incurred by the City and there is no diminutio n
of the available parking provided for in the currently proposed transaction, the terms set fort h
herein shall continue to apply. For this purpose, additional .City parking costs shall specificall y
include any costs incurred in providing all parking, including parking for which Developer ha s
paid additional in lieu fees and would otherwise not be responsible . Any additional parkin g
required due to additional development will be paid for entirely by the Developer .
2 PROVISION FOR NEW AND REPLACEMENT PARKING
The Developer shall be obligated to meet parking Requirements for all new construction b y
paying in-lieu fees as currently specified in the City Zoning code for special designation CC . In
addition, the Developer shall construct and sell to the City a partially subterranean garage as par t
of a subsequent purchase and sale agreement . The parties acknowledge that the parking structur e
will not be adequate to meet the combined needs of the new parking required and the existing
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public parking to be replaced. Furthermore, the City makes no representation as to where an d
when the additional parking for which the Developer has paid in-lieu fees will be provided .
2.1 No Guarantee of Offsite Public Parkin g
If development review of the project specifies the need for offsite public parking, the City canno t
guarantee its availability .
2 .2 Additional Development
If any additional parking is required due to additional development, the Developer will pay th e
full cost of such parking to the City . Payment shall be made as follows : $4,000 per space in-lie u
fee at the customary time and the balance at such time as the City provides additional permanen t
public parking . The test for additional parking shall be an increase of greater than 2% in the tota l
number of spaces required (i .e ., 601) for all three non-parking components (Court Street ,
Monterey Street, and Palm Street). In addition, the Developer shall be entitled to pay in-lieu fees
for the additional parking required for build-out of the Yung Parcel if that property i s
incorporated in the Palm Street garage and development component (Phases 2 and 4).
2 .3 Location and Timing of Subsidized New Demand Parkin g
The City cannot specify where and when it will provide parking spaces for which the Develope r
has paid in-lieu fees.
2 .4 Public Parking Requirement
Currently, there are an aggregate 287 public surface parking spaces on the Court, Monterey an d
Palm Street Areas which will be eliminated at some point during construction, or permanently ,
and which must be replaced . There are 118 spaces on Court Street, 52 spaces on the Monterey
Area, and 117 spaces on the Palm Street Area (please see table below). By the end of Phase 3 o f
construction, when all elements other than Palm Street are completed, the surface spaces o n
Court and Monterey Streets will be eliminated, while the 117 existing spaces on Palm will hav e
been replaced by an estimated 105 spaces above the subterranean Parking Structure, allowing . for
landscaping and access . The net need for replacement public spaces will be 182*. The 259-spac e
subterranean Parking Structure will be completed as the need for 168 spaces is generated by th e
development . Insofar as replacement public parking takes precedence over required new parking,
the first 182 spaces in the Parking Structure will be available for use as replacement publi c
parking spaces, with the remaining 77 spaces available as new spaces . Therefore, the overall
deficit for new spaces comes to 91* at the end of Phase 3 (please refer to the table below). While
These estimates assume the incorporation of the Yung Parcel in the Palm Street garage and developmen t
component (Phases 2 and 4); there may be legal and/or financial obstacles to this incorporation, in which even t
these numbers will change .
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smaller, this 91 space estimate represents a deficit which will probably need to be addressed an d
resolved as part of the CEQA process .
By the end of Phase 4, additional need for 146 spaces will have been generated by th e
development, along with the elimination of the 105 surface spaces above the Parking Structure ,
creating a total deficit of 342 .
Analysis of Parking Availability by Phas e
Start of
Construction End of Phase 3 End of Phase 4
AVAILABLE SPACE S
Court St.118 0 0
Monterey St ..52 0 0
Palm St . (surface)117 105 *0
Subterranean Garage 0 259 259
Total 287 364 259
SPACES NEEDE D
Public 287 .287 28 7
New Deman d
Court St .0 128 128
Monterey St .0 40 4 0
Palm St .0 0 14 6
Subtotal Private 0 168 31 4
Total 287 455 60 1
PARKING DEFICIT 0 (91)*(342)*
* Replacement of original 117 spaces reduced by an assumed 10% for landscaping ,
garage access, etc .
2 .5
Parking In-Lieu Fe e
2 .5 .1 . Basic Arrangemen t
The Developer shall pay, in cash, a parking in-lieu fee of $4,000 per space for new development .
2 .6
Developer Construction of Public Parkin g
2 .6 .1 Specifications and Finis h
With respect to general design the proposed garage shall generally correspond to the pla n
attached as Exhibit 3 . In its capacity as the subsequent owner and operator of the propose d
garage, the City shall have rights of specific approval and review of all designs and plans ,
initially at the concept and schematic plan level, and subsequently at the final plans. These right s
shall be supplemental to and not concurrent with its rights of inspection in connection wit h
building permit, fire and other regulatory functions .
2.6 .2 Contract Arrangement s
Prior to initiation of construction of the, parking garage, the Developer shall provide the City wit h
(1) a final construction contract containing a fixed price contract for all work, materials, an d
contingencies,....
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. The form and content of—these documents is to be
acceptable to the City .
2 .6.3 City Rights of Approval and Inspectio n
During the construction process, the City shall have the right, as- an owner, to review all chang e
orders, to require change orders if it reasonably deems necessary only in order to ensur e
consistency or equivalency with the approved plans and specifications,and to inspect all parts of
construction at any time . These rights, like the rights of initial plan review and approval, ar e
supplementary to and separate from the regulatory functions of the City.
2 .6 .4 Cost
0 tly estimated to
Because the parking structure will have to be engineered to support the Developer Improvement s
in the Air Rights, a portion of the costs of the Parking Improvements (e .g., the additional weight -
bearing foundations, support, etc . and those intrusions into the parking structure that are t o
accommodate the Air Rights Improvements) should be paid for by the Developer . Therefore ,
the construction contract will include the costs to be paid for by the City for its structure and wil l
also include the costs of elements to be designed and paid for by the Developer . There should b e
an allocation of these costs based on the engineering and architectural designs.
In the event the final contract cost of the Palm Street Underground Parking Structure exceeds the Ct +(As
Laid—,City or-Developer may at its sole discretion terminateehe Projec t
without any liability to the-ether .l)eJe Lo(ae~,
Ph 1Rses 2.)3)a^at °C .
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2 .6 .5 Cost Confirmatio n
A guaranteed maximum contract with the City (with performance and completion bonds) for th e
construction of the Parking Improvements, in an amount not to exceed the budget for the Parkin g
Improvements accepted and approved by City, which at a minimum takes into consideration th e
following factors :
i .Contractor to pay prevailing wages if required by law .
ii Competitive bidding may be required.
iii.City to own all rights in the plans, and Developer shall deliver "as-built" plans .
iv.A completion guarantee by the Developer to commence and complet e
construction of the Parking Improvements and to supply any needed funds i n
addition to the guaranteed maximum cost to the City, except for such costs
specified in Section 7 .6 .
v.City's satisfaction that City has a source of funding to pay for the guarantee d
maximum parking improvements contract (issuance of bonds or other financin g
arrangements) and that City shall not be liable for any capital expenditures excep t
the payment of the guaranteed maximum contract, and such costs specified i n
Section 7 .6 .
2 .6.6 Conditions Precedent to Transfer
The City, in its capacity as owner, shall have the right to review completion of the property an d
assure itself of satisfactory completion in addition to its capacity as building inspector befor e
issuing an initial Certificate of Occupancy . A second condition precedent to the actual payment
for the garage shall be the submission by the Developer to the City of a complete set of "as built "
plans .
3 LAND PURCHAS E
3 .1 Land Area, Land and Air Rights Purchase Pric e
The Developer and the City of San Luis Obispo have agreed on the purchase price for the tw o
properties the'Developer proposes to purchase from the City outright, which are the Court Stree t
and Monterey Street Areas, and for the Yung Parcel, which will be acquired by the City, throug h
the Developer at a stipulated price . For the Court Street Right-of-Way Area, the square footag e
used to calculate the purchase price is based on the Developer's site plan. For the Palm Stree t
Area, the Developer will purchase both an existing 6,000 square foot building and the air right s
above the proposed Parking Structure . The approximate square footages and agreed upon price s
are as follows :
Court Street 30,000 s.f.$60/s .f.$1,800,000
Court Street Right-of-Way 2,700 s .f.$60/s .f.$162,000
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Monterey Street 10,000 s .f.$40/s .f.$ 400,000
Palm Street - Value of Land and On-Site Building $2,550,00 0
Less 50% Discount for Air Rights ($1,275,000)
Total Cost for Palm Street $1,275,00 0
Yung Parcel *— Negotiated Price $ 625,00 0
Less Negotiated 50% Discount (312,500)
Total Cost for Yung Parcel $312,50 0
Total Land and Air Rights Purchase Price $3,949,50 0
Round to $3,949,000
3 .2 Cash Payment for Court Street and Monterey Stree t
Developer shall pay, in full, in cash, upon closing of escrow of the Purchase and Sal e
Agreement, for the parcels comprising Court Street and Monterey Street, which shall b e
immediately transferred to it at the "Initial Closing Date".
3 .3 Acquisition of Yung Parce l
3 .3 .1 Purpose of Inclusion
If the Yung parcel is purchased by the Developer, the City and Developer have agreed that th e
Developer will re-convey it to the City as part of the assemblage of land for construction of th e
Subterranean Parking Structure . The closing of the reconveyance shall be concurrent with th e
Initial Closing Date for the Court Street Parcel, Monterey Street Parcel and Palm Street Ai r
Rights Parcel . The City shall pay for the Yung Parcel, in full, in cash, upon closing of escro w
upon conveyance to the City . Inclusion of the Yung Parcel facilitates construction of 28 mor e
parking spaces than could be constructed if the Parking Structure were constructed solely on th e
Palm Street Parcel and also reduces the average construction cost per parking space .
* These estimates assume the incorporation of the Yung Parcel in the Palm Street garage and development
component (Phases 2 and 4); there may be legal and/or fmancial obstacles to this incorporation, in which event thes e
numbers will change .
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3 .3 .2 Resolution of Tenant Relocation Costs Prior to Closin g
Developer will resolve all relocation problems before closing escrow and shall provid edocuments attesting to the resolution of all relocation issues and a complete waiver of relocatio nassistance executed by all tenants . Any additional costs associated with relocation shall b eincluded in the City's acquisition costs .
3 .3 .3 Provision for Development without the Yung Parce l
For purposes of presenting the financial analysis and implications, presenting design and sit ediagrams and other references in this MOU, acquisition and incorporation of the Yung parce linto the Palm Street component has been assumed . The parties have specifically agreed ,however, that the transaction is in no way contingent upon the acquisition and/or incorporatio nof the Yung parcel . In the event that the Yung parcel is to be excluded, alternative plans an dfinancial analyses already exist, on the basis of which the final documents can be modified an dthe parties have acknowledged to each other their willingness to make such modifications .
3 .4 Palm Street Air Rights Purchas e
3 .4 .1 Payment Terms
At the Initial Closing Date the purchase of the Palm Street Parcel shall be evidenced by 10 %
down payment ($158,700) at closing and a non-interest bearing note in the amount of $1,269,60 0payable $158,700 upon completion of the garage with the balance all due and payable at th eearlier of: (a) commencement of construction on Palm Street (Phase 4); or (b) five years from th e
date of closing of escrow of the Purchase and Sale Agreement .
3 .4 .2 Security for Not e
To assure payment of the note and, additionally, to provide incentive for completion of Phase 4 ,the City will require that the note have full recourse to the maker and be personally guarantee dby Tom and Jim Copeland .
In fulfillment of the terms of the guarantee, personal financial statements for Tom and Ji m
Copeland will be provided to a designated representative of the City so as to assure adequat eassets are available to repay the note . To the extent permitted by law, the personal financia l
statements shall be maintained in strict confidence and shall not be distributed beyond th emutually agreed designated representative .
3 .5 Interim Use of Air Right s
The City will lease back for $1 .00 per month the use of the surface of the Parking Structure unti lthe Developer commences construction of Phase 4 above the Parking Structure . During th eperiod between completion of the Parking Structure and commencement of construction of Phas e
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4, the City, as property owner, will not take any action that would preclude or inhibit late r
development of the site .
3 .6 Right of First Refusal and Consent to Transfe r
The City reserves the right of first refusal to acquire the Palm Street property for any sale prior t o
completion of the Palm Street Component within five (5) years of the closing of escrow of th e
Purchase and Sale Agreement . The City also maintains the right of approval over any transfer o f
the property from the Developer to a third party, with its consent not to be unreasonably withhel d
if the assignee meets appropriate financial and experience standards, which standards are to b e
incorporated in both the purchase and sale agreement and the REA .
3 .7 Developer Right to Put Back Palm Stree t
If in the course of the development review process a requirement is imposed that Palm Stree t
construction cannot begin until the City has identified a specific parking solution and at the time ,
by the end of five years of the "Initial Closing Date," and Developer is ready to build it bu t
cannot because of this factor, then Developer has the right to put Palm Street back to the City ,
i.e . to require the City to refund all monies paid for the air rights parcel, and Developer als o
forfeits any entitlement rights or preferential rights in its development .
3 .8 Repurchase at Discount
If, after the note is paid in full at the end of five (5) years, upon 180 days notice to commenc e
construction of the then approved project, the Developer does not commence construction, the n
the City shall have the right to repurchase the air rights parcel for the amount paid by th e
Developer to the City for the air rights parcel, less twenty percent (20%). The Developer shal l
not be deemed to be in default of its obligation to commence construction within five (5) years i f
and/or to the extent that the commencement of construction is delayed or becomes impossibl e
because of any act of God, war, earthquake, fire, strike, accident, civil commotion, epidemic ,
unanticipated weather conditions, labor disputes, act of government (other than normal and
customary regulatory acts of the City), or any other unavoidable cause which was not within th e
reasonable control of the Developer to prevent or avoid by the exercise of reasonable diligenc e
during all or any part of the five (5) year period . Upon the occurrence of any such event, then th e
period within which to perform hereunder shall be extended for a period equivalent to all or an y
part of the period that any such conditions shall prevail . In the event of any such extension(s), th e
specific dates, periods, and time requirements shall be postponed or extended accordingly .
3 .9 Ownership of Plans
In the event that the Developer does not build the Palm Street component and the Right o f
Repurchase at Discount described above is exercised, the repurchase shall include the transfer t o
the City from the Developer of all plans, specifications and designs for the proposed structure t o
be erected above the Palm Street Garage . Such plans shall then become the property of the City .
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3 .10 Conditions Precedent to Initial Closin g
In order to assure that the Project will be constructed and completed, and in addition to any othe r
requirements set forth in this Agreement, all of the following are conditions precedent to th e
transfer of any of the properties described in Section 1, PROJECT DESCRIPTION, to th e
Developer at the time of initial closing .
3 .10 .1 Court Street
Developer shall provide approved plans and a building permit for Court Street with evidence o f
financing for its development or a guarantee of completion for Court Street with a reversion righ t
to the City and a liquidated guarantee .
3 .10.2 Monterey Street
Developer shall provide approved plans and working drawings with evidence of financing for it s
development or a guarantee of completion for Monterey Street with a reversion right to the Cit y
and a liquidated guarantee .
3 .10 .3 Palm Strcct Garag e
I eveis as specified in section2 .6 .5 .
3 .10 .3 3 .10 .4 Palm Street Air Rights
Developer shall provide approved plans, and if additional parking is required pursuant t o
Sections 1 .6 .2 and 2 .2, satisfaction of the additional parking cost in a form acceptable to the City .
3 .10,4 Managed Parking Plan
Developer shall provide a Managed Parking Plan acceptable to the City as specified in Sections
4 .4.1 – 4 .4.2 .
3 ,0 ,5 .3 .10 .6 Copeland-French MOU
Closing shall be concurrent with the closing of escrow of the City's purchase of the Copeland -
French property (as defined in a separate MOU entitled "Memorandum of Understandin g
between the City of San Luis Obispo and Chinatown-Court Street Partners LLC, for the Purchas e
of the Copelands' and French Properties," dated September 19, 2000 .)
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ENTITLEMENT PROCESSING AND TRANSACTION SCHEDUL E
4 .1 Timing of Initial Closin g
The Initial Closing shall occur as soon as possible after the Developer's receipt of ful l
entitlements, which shall include the expiration of the 30-day appeal period .
4 .2 Commencement of Phase 1 Constructio n
Construction of Phase 1 shall begin as soon as possible after the Initial Closing Date .
4.3 Commencement of Phase 4 Constructio n
Construction of Phase 4 shall begin no later than the latter of :
a)Five (5) years from the Initial Closing Date, o r
b)That date at which the City has satisfied its obligation to provide additiona l
parking, if any, due to additional development for which the Developer has pai d
parking in lieu fees .
4.4 Managed Parkin g
4 .4.1 Managed .Parking Plan
Developer shall prepare a Parking Management Plan to allow off-site and/or more intense use o f
existing parking during the period that either or both of the Court Street and Palm Street sites ar e
unavailable for parking and prior to completion of the Palm Street Garage and the surfac e
parking above it .
This Parking Plan shall be presented to the staff and City Council for their review and approval .
4 .4.2 Administration of Parking Plan
The initial costs for preparation of the parking plan shall be paid by the developer . Subsequently,
the parking plan will be administered by the City but its implementation and net operating losse s
will be reimbursed by the developer according to the budget prepared by the developer an d
approved by the City .
5 RECIPROCAL EASEMENT AGREEMEN T
Concurrent with the transfer of the air-rights parcel and cancellation of the City's interim parkin g
use, the parties will execute a Reciprocal Easement Agreement (REA) which will provide ,
among other items, the specific protections for the City set forth in outline form in Exhibit 4 .
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6 CONTINGENCIES TO CLOSIN G
6 .1 City Contingencie s
In its capacity as landowner and land seller, the City is under no obligation to fulfill the terms o fany purchase and sale agreement until the development review process is concluded and al l
approvals are obtained and such other requirements as may pertain to final entitlement an dapproval of this project are fulfilled .
6 .2 Developer Contingencie s
The City acknowledges that the Developer may have certain financing or pre-leasin g
contingencies for the commencement of construction . Exhibit 5, to be prepared by th e
Developer, shall enumerate these contingencies and indicate the process by which they will b e
satisfied as well as the notice to be provided to the City of their satisfaction or of their failure to .
satisfy and associated termination of this transaction . In addition, Developer shall not be
obligated to fulfill the terms of any purchase and sale agreement until the development reviewprocess is concluded and all approvals are obtained and such other requirements as may pertai n
to final entitlement and approval of this project are fulfilled .
DOCUMENTATIO N
At a minimum the documentation to be created as a result of this MOU will include th efollowing:
7 .1 Purchase And Sale Agreemen t
7.2 Application For Regulatory Approva l
7 .3 Development Agreemen t
A statutory development agreement (and such other zoning changes, ordinance changes ,
environmental review, and certifications as may be necessary to confirm the Developer's
entitlement to construct the proposed project) will be prepared ;
7 .4 Reciprocal Easement Agreement(s )
At a minimum, a final Reciprocal Easement Agreement embodying the terms set forth in outlin eform in Exhibit 4 will be prepared . To the extent that shared access to other publicly owne d
properties is required for either Court Street or Monterey, other Reciprocal Easemen t
Agreements may be prepared .
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7 .5 Parking Construction and Purchase Agreemen t
The form of an agreement between the City of San Luis Obispo and the Developer for th e
construction and financing of the parking structure shall be prepared . This documentation shall
contain a fixed price bid for all work .
7 .6 Performance Bond for Parking Structure Completio n
In addition to the fixed price contract, the Developer shall also provide a surety bond to
guarantee completion of the Parking Structure which meets City standards for such bonds . This
surety bond and guaranty will be conditioned on the facts and then-known remediation cost s
associated with any archaeological impacts associated with the Parking Structure construction .
The final agreement will also include provisions for the sharing of such archeological costs i n
addition to those already known at the time, including a provision by which either party ma y
terminate if costs reach a certain .level .
7 .7 Enhancement and Maintenance of Court Street Streetscap e
In his presentation of the project, the Developer contemplates the installation of som e
mechanism to assure high levels of maintenance, uniformity of street facade appearance an d
"maintenance, adequate security and a variety of other enhancement improvements to th e
streetscape of Court Street adjoining the project, some of which will occur on public property o r
on property not owned by the Developer . Before undertaking or implementing any such plans ,
the Developer shall either provide evidence of formation of a Property and Busines s
Improvement District (PBID) including the other owners of property on Court Street who will b e
affected or, alternatively, provide evidence satisfactory to the City of the formation of some othe r
voluntary cooperative enterprise to accomplish the same goals .
7 .8 Additional Document s
There may be additional documentation or further elaboration of this documentation .
8 RESPONSIBILITIES OF THE PARTIE S
8 .1 Developer
It shall be the responsibility of the Developer to diligently pursue all aspects of the applicatio n
for development, including all environmental processing, all zoning processing, any supportin g
technical studies, and any other supporting studies as may be necessary, including visual, traffi c
and circulation, historical, and archaeological investigation and mitigation, etc .
All costs associated with both the processing of entitlements and City approvals and th e
production of studies and planning for the development shall be paid for by the Developer ,
including reimbursement to the City for those certain third-party expenses identified on Exhibit 6
incurred after approval of the MOU in the preparation of the required documents identified in
16
Section 7 . It is anticipated that costs associated with development of the Palm Street Parkin g
Structure will be included in the total cost of the Parking Structure .
8 .2 City
The City, in its role as landowner, shall cooperate with and furnish information to the Develope ron the properties .
With regard to zoning, the City's responsibility shall be limited to providing that level o f
interaction, timely response, and review as provided for in regulations and ordinances of the Cit yof San Luis Obispo .
9 OTHER MUNICIPAL PROCESSIN G
The Parties understand and agree that those approvals required of the City acting in it s
governmental or regulatory capacity are separate and distinct from those approvals required b ythe City under this agreement . Notwithstanding anything to the contrary in this Agreement ,
nothing herein shall be interpreted to mean that the City is an any way waiving, limiting, o r
weakening any regulatory or police power the City may have in any of its governmentalcapacities. It is intended that the Developer shall be obligated to fulfill such requirements a s
may be imposed by the City or any other governmental agency or authority having or exercisin g
any jurisdiction over the Property or over any construction to be undertaken by Developer in, o nor about said Property .
Refusal or failure by the City in its governmental or regulatory capacity to take a legislativ e
action, issue any permit, license or any other action or approval sought by the Developer fo r
construction of improvements on, or development of, the Property shall not constitute a breach o fthis Agreement .
10 NON-BINDING NATURE OF THE AGREEMEN T
Without obligating either of the parties, this memorandum summarizes what the Developer an d
the City perceive to be the major deal points with respect to the proposed Project . No binding
obligation is created by this MOU or can be created other than by execution of both a bindin g
Purchase and Sale Agreement and final, binding development agreement, and other associate ddocuments listed in Item 7, above . Notwithstanding the foregoing, the parties agree that if a
Purchase and Sale Agreement is entered into between the parties, it shall substantially includ ethe terms of this MOU.
This MOU is an outline for discussion purposes only, is not intended to be contractual or bindin g
for any purpose and is not an offer or representation by either party . It is designed to reflect th e
ideas being formulated, to provide a framework to attempt to resolve issues and concerns whic h
have been raised, as well as for the resolution of issues and concerns which may arise . In some
instances, a tentative, but not binding, agreement on a matter is referred to, and in othe rinstances, material agreements are yet to be defined and specified . The fact that any particular
17
component or issue is not addressed in this MOU does not mean that it cannot be the subject o f
future discussions and negotiations, and the fact that a component is addressed does not mean
that it cannot be rejected or modified by either party . The proposed Developer furthe r
acknowledges and agrees that the officers, employees and consultants of the City, or any membe r
of the City Council, do not have authority to bind the City, and the final form of any propose d
agreement to be negotiated may have to contain matters not contemplated by this MOU, bu t
which may be needed to accommodate compliance with the California Environmental Qualit y
Act (CEQA), and that there is no agreement by City to reimburse or defray any cost or expens e
incurred by the proposed Developer . The parties acknowledge that neither party will b e
contractually bound to any sale, purchase or development nor to any element of the propose d
development until the final execution of a mutually acceptable final agreement approved an d
executed by authorized representatives . Alternatively, either of the parties may determine tha t
further negotiations will not be fruitful and then terminate this MOU or allow this MOU to laps e
without further liability to the other.
11 POSSESSORY INTEREST TAXE S
If the project contemplated by this Memorandum of Understanding is subsequently
approved and constructed, a possessory interest subject to property tax may be created and ma y
rest in the Developer . The Developer or its interest in the property and the improvement s
"thereon may be subject to payment of property taxes levied on such possessory interest .
Developer shall pay all such taxes, however categorized or calculated .
12 TAX FREE EXCHANG E
City agrees to cooperate with Developer to effectuate a Section 1031 tax free exchange,or
similar transaction, to the extent reasonably possible, provided that City will not bear an y
additional cost or expense for exchange transactions to benefit Developer .
13 ACCEPTANCE AND ACKNOWLEDGEMENT
Mayor Allen Settl e
Lee Price, City Clerk
By:
18
•
APPROVED AS TO FORM :
CHINATOWN — COURT STREE T
PARTNERS, L .L .C .
B
To Copeland, Mana_' Member
19
LIST OF EXHIBIT S
Exhibit 1 Site Map
Exhibit 2 Phasing Diagra m
Exhibit 3 Parking Garage Plan
Exhibit 4 Reciprocal Easement Agreement s
Exhibit 5 .Developer Contingencies
Exhibit 6 Expense Items Eligible for Developer Reimbursement
20
•
Exhibit 1Overall Project Site Ma p
CHINATOW N1-istoric District
COURT STREET
Ban hula Obispo, California
..i.~:.L.I ►,...~i.
fi
♦'■ir ...m n.il ...~~.~111212!o~!ii1111111111 ~C11 1
HIGUERA STREE T
Lan d
Purchas e
Air Rights Purchas e
Over Garag e
Air Rights Purchas e
Over Land 0 50 '
SCALE
21 .
••
Exhibit 2
Phasing Diagram
Phase 2
Underground Garage (below )
Note: Project is identified as four phasin g
components . Phasing may overlap or hav e
portions combined, phase 1 and 2 ma y
start simultaneously .
Phase 1
Court Stree tCHINATOWN
F iistoric District
COURT STREE T
San Luis Obispo.California
0 50 '
SCALE
Exhibit 3 .1
Subterranean Garage Plan -Upper Leve l
TTT allm St e e t
4\.O
O
Level B-1
Note: This exhibit is intended for schematic purposes only. I t
is not intended to represent the final design, instead it is on e
possible design provided for illustration purposes only . The fina l
design will be subject to the usual City review process and n o
approvals have been granted .
CHINATOW NI-istoric District
COURT STREET
Ban Luis Obiapo . California p 30 '
SCALE
Exhibit 3 .2
Subterranean Garage Plan -Mid Leve l
Street T T
(- anti1.in;;t
4
1ii1ii1Lffl
0
0
O
c)
Q0
0
0
0
v4
imiloctrNI IN ;1 NI =11-m:
11.
Level B-2
Note: This exhibit is intended for schematic purposes only . I t
is not intended to represent the final design, instead it is on e
possible design provided for illustration purposes only . The final
design will be subject to the usual City review process and n o
approvals have been granted .
CHINATOW N
tistoric District
COURT STREET
Ban Luis Obispo. California 0 30 '
SCALE
24
r
-Exhibit 3 .3
Subterranean Garage Plan -Lower Leve l
PIm Stree t
T --I --I----t--I O
I I I I I
I I I ~O
- I -T
111111 iiiiiI Il!O
IiuhiiIIiiIIIM tU!11fl41II' M No-
O
O
Level B-3
Note : This exhibit is intended for schematic purposes only. I t
is not intended to represent the final design, instead it is on e
possible design provided for illustration purposes only . The fina l
design will be subject to the usual City review process and n o
approvals have been granted .
CHINATOW N
Historic District
COURT STREET
San Luis Obispo. California 0 30 '
SCALE
•
Exhibit 3 .4
Interim Parking Pla n
.1
Palm Street Parki Level a
Surface Parking on top of garage -Prior to Phase 4
Note : This exhibit is intended for schematic purposes only. I t
is not intended to represent the final design, instead it is on e
possible design provided for illustration purposes only . The final
design will be subject to the usual City review process and n o
approvals have been granted .
CHINATOW N
iistoric District
COURT STREET
Ban Luis Obispo,California
0
30 '
SCALE
26
Exhibit 4
Reciprocal Easement Agreemen t
1.Recitals
2.Parties
3.Purpos e
4.Legal Descriptions (as an attachment )
5.Grant of Easements by City .
5 .1 Temporary easement for the purposes of constructing the Parking Facilit y
pursuant to the plans and specifications approved by City .
5 .1 .1 Owner to conduct due diligence and satisfy itself as to the soil, geological
and environmental condition or other suitability of the land for the
construction of the Parking Facility and the Owner's Improvements .
5 .1 .2 Covenant of Owner to design and construct the Parking Facility in
accordance with plans and specifications approved by City and in
compliance with all applicable law etc (including prevailing wages i f
required by law).
5 .1 .3 Owner is solely responsibility for design and construction of the Parkin g
Facility pursuant to plans and specifications prepared by Owner an d
approved by City.
5 .1 .4 Owner will provide or arrange for indemnification and warranties for an y
defects in the design or construction of the Parking Facility, and th e
workmanship and materials incorporated into the Parking Facility .
5 .1 .5 Owner to indemnify City for any injuries, deaths or damages arising eta
during the design or construction of the Parking Facility ..
5 .1 .6 Approval of the plans for the Parking Facility or the Owner's
Improvements pursuant to this REA is not the issuance of any regulator y
permit, and Owner must apply for and obtain, at its own expense, an y
entitlements for the construction of any work or improvement prior to an y
construction .
5 .1 .7 Ownership of plans, specifications, drawings by City.
5 .1 .8 During construction, the Parking Facility Improvements shall be owned by
Owner. On completion, Owner shall prepare and deliver As-built plans t o
City.
5 .1 .9 Ownership of plans, specification, drawings, reports, studies, etc . by City .
5 .1 .9 .1 Consent to ownership and assignment by Architects, contractors ,
engineers, consultants .
27
5 .1 .10 Upon completion of construction (as evidenced by an architect's certificat e
and C of 0 by the City, inspection by City, etc .), title to sai d
Improvements shall be conveyed to City lien free and without an y
encumbrance by or through Owner, and City shall deliver the purchas e
price to Owner (the purchase price should not include the incremental cost
of enhancing the footings, foundations and other supports engineered i n
the Parking Facility in order to support the Owner's Improvements). The
temporary easement for such construction shall terminate and City shall b e
the owner of the Parking Facility Improvements .
5 .1 .11 During construction, Owner shall procure and maintain insurance i n
coverage and amounts satisfactory to the City .
5 .1 .11 .1 Public liabilit y
5 .1 .11 .2 All risk
5 .1 .11 .3 Course of constructio n
5 .1 .11 .4 Worker's Compensation, etc .
5 .2 After title to the Parking Facility is vested in City, Easements in Parking Facility .
5 .2.1 Describe dominant (Owner) and servient (Parking Facility) tenements .
5 .2 .2 A temporary easement on the Parking Facility for construction of th e
approved Owner Improvements .
5 .2 .3 An easement to enter upon portions of the Parking Facility necessary t o
perform repairs and restoration of the Owner's Improvements .
5 .2 .4 An easement for minor deviations, overhangs, etc .
5 .2 .5 An easement for the use and support of the columns and structura l
members of the Parking Facility to support the Owner's Improvement s
(the roof of the Parking Facility is not to be used as the floor of the Owne r
Improvements).
5 .2 .6 An non-exclusive easement, for the benefit of the businesses in th e
Owner's Improvements to be enjoyed with the general public, of access o f
vehicles, passage of pedestrians to and from parked vehicles .
5 .2 .6.1 Identify any special parking rights, if any (e .g., employees, specific
uses or leaseholds )
1 .Identify any reservation of rights by City, if an y
2 .Identify and reserve space for items needed for the Parkin g
Facility that penetrate the Air Space
1.Equipment
2.Utility lines
3.Stairways, escalators
4.Ducts, vents, exhausts, other items
5.Others
3 .Parking of City vehicle s
4 .Use of common facilities, if any .
5 .Easements for Owner Improvements that are in, abut o r
attached to the Parking Facility .
1.Doors
2.Elevators and stairways
3.Utility lines
28
5 .2 .7 Parking Plan.
6.Grant of Easements by Owner to City .
6 .1 Describe dominant (Parking Facility) and servient (Owner) tenements .
6 .2 Rights to inspect Owner Improvement s
6 .3 Rights of public passage through walkways, etc .
6 .4 Right to enter and perform work for repair, maintenance, restoration, etc . of the
Parking Facility .
6 .5 Rights for utility lines through Air Space .
7.No other Easements by Implication .
8.Signage for Parking Facility and Owner Improvements .
8 .1 Directorie s
8 .2 Directional signs .
9.Benefits of City Easements run to the Improvements approved by City and constructe d
by Owner of Air Space, and not to the Air Space itself (i .e., no obligation of City to
maintain or operate Parking Facility for non-approved uses or Improvements)..
10.Covenant of City to Use for Public Parking .
11.Covenant of Owner and to design, construct, operate, maintain and repair the Owner's
Improvement s
11 .1 Owner is the owner of Owner's Improvements .
11 .2 Design and construction of the Owner's Improvements are not to damage o r
adversely affect the Parking Facility . Owner shall make the separation betwee n
the roof of the Parking Facility and the Owner Improvements (floor, etc .)
watertight .
11 .3 Allowed uses of the Owner's Improvements ; no changes without City consent.
11 .4 Alterations, further construction .
11 .5 Restrictions on uses in the Owner's Improvement s
11 .5 .1 No change of or increase in uses (i .e ., retail space, theater, etc) of th e
Owner's Improvements without City consent or that would increase nee d
for parking spaces .
11 .5 .2 Restrictions on nuisances, noises, bright lights, odors, etc.
11 .6 City makes not warranties or representations as to suitability of the land or th e
Parking Facilities for the construction and operation of the Owner's
Improvements .
11 .6 .1 Owner will review Parking Facility plans and specifications for th e
purposes of its own use and operation .
11 .6 .2 Owner assumes all design and engineering risks for the construction of th e
Improvements (adequate support, proper materials of Parking Facility),
etc .
11 .6 .3 Owner takes the land and the Parking Facility "as-is" and "where-is".
11 .6 .4 No duty of City to redesign, improve or modify Parking Facility .
11 .6 .5 Indemnity of Owner that Improvements will not damage Parking Facility ,
allow water or anything else to leak into the Parking Facility, cause an y
repair, special maintenance, undue stress, shorten the useable life of th e
Parking Facility, etc .
12.Maintenance and repair of Parking Facility
12 .1 Standards of maintenance for City
29
12 .1 .1 Lighting
12 .1 .2 Stripin g
12 .1 .3 Cleaning
12 .1 .4 Mechanical devices and control s
12 .1 .5 Comparable to other City parking facilitie s
12.2 Standards of maintenance of Owner Improvements .
12 .3 Self-Help if standards are not met ; right of entry ; right to reimbursemen t
13.Operation of Parking Facility
13 .1 Management as elected by City (independent contractors, City employees )
13 .1 .1 Management agreements shall comply with public purposes and IR S
restrictions applicable to any tax-exempt financing .
13 .2 Rates, fees and charges ; compliance with IRS requirements .
13 .2 .1 Hourly rate s
13 .2 .2 Validation programs ; not for employees .
13 .2.3 Theater patrons
13 .2 .4 Monthly parker s
13 .2.5 Comparable to rates in other City parking facilities ; set by City Council .
13 .3 Hours of Operation; Right to close for emergencies, public safety, etc.
13 .3 .1 Coordinate with hours of businesses, theater (e .g., one-half hour after
closing, but not later than 1 :30AM ; open at 10 :00AM).
13 .4 Security
13 .4 .1 Right of City to eject or ban users for improper behavior, breach of goo d
conduct, violation of rules, etc .
13 .4 .2 Right of City to patrol by City police .
13 .5 Rules and regulations for users of the Parking Facility.
14.Formation of business improvemen t
14 .1 Purposes, scope of authorit y
14 .2 Agreement to formatio n
14 .3 Waiver of objection s
14 .4 Agreement to pay assessment s
14 .5 Liens for assessment s
15.Operation of Owner Improvement s
15 .1 Plan of operation
15 .2 Leasing plan, tenant mix .
15 .3 Hours of operatio n
15 .4 Non-discriminatio n
15 .5 Tenant's association, if any .
16.Insurance
16.1 Required Insurance for Parking Facility and Owner Improvements
16.1 .1 Specify risks and losse s
16.1 .2 Coverage amounts (risk manager of City)
16.1 .3 Deductible s
16 .1 .4 Exclude certain risks and losses (e .g ., earthquake)
16 .2 City self insurance ; pooling .
17.Covenants against Hazardous Materials .
17 .1 Restrictions on introduction of materials
30
17.2
17.3
17 .4
Indemnities
Remedial action s
Reporting
18 .Transfers of Ownership of Air Rights
18 .1 Consent of City
18 .2 Qualified Buyer.
19 .Mortgagee protection s
19 .1 Notice s
19 .2 Rights to cur e
20 .Damage and Destruction of Parking Facility and Owner Improvement s
20 .1 Use of insurance proceeds to restore, repair, reconstruc t
20 .2 No liability of City for uninsured casualties unless insurance in force .
21 .Condemnation of Parking Facility and Owner Improvements .
21 .1 Each retains own claim for compensation and damages.
21 .2 Use of proceeds for restoration .
22 .Termination
22 .1 If the Owner Improvements are materially damaged or taken and not restored t o
reasonable use ; if the Parking Facility is materially damaged or taken an d
available proceeds of insurance or awards are not sufficient to repair or restore th e
Parking Facility .
22 .2 Cessation of use, or change of use not approved by City, of Owner Improvements .
22 .3 Wear and tear of Parking Facility causes inability to function properly withou t
capital expenditures and City elects not to make such capital expenditures (n o
obligation to rebuild, redesign, etc .).
22 .4 A termination, if not otherwise previously terminated .
23 .Defaults ; Notices ; Remedies
3 1
lb
Exhibit5
Developer Contingencie s
Section 6.2 of MO U
1 .The Close of Escrow and Developer's obligation to consummate the transaction
contemplated by this Agreement are subject to the satisfaction or waiver of the followin g
conditions for Developer's benefit on or prior to the Initial Closing Date . Developer may,. in
Developer's sole and absolute discretion, terminate this Agreement at any time by written notic e
of cancellation to City if Developer determines that any of the conditions set forth in thi s
Agreement will not be satisfied .
A.The development review process is concluded and all approvals and entitlement s
are obtained, including all requirements or conditions as may pertain to final entitlements an d
approvals of the project, and such approvals, conditions and requirements (however phrased) ar e
acceptable to Developer in its sole discretion . The timing, conditions and cost of the permits and
approvals (including any mitigation fees) imposed on the Project by any governmental entit y
having jurisdiction are acceptable to Developer .
B.Developer has received binding commitments from a lender or lenders to provid e
construction and permanent financing for acquisition of the Court Street and Monterey Stree t
properties and the construction of all improvements to be undertaken by Developer in connectio n
with the Court Street, Monterey Street, and Palm Street Underground Parking Structure portion s
of the Project, on terms satisfactory to Developer in its sole discretion .
C.Developer has received commitments for leases from tenants on terms satisfactor y
to Developer in its sole discretion, including minimum amounts of square footages deeme d
satisfactory to Developer.
2 .Removal of Developer's Contingencies .
Developer will provide City with written notice within ten (10) days of satisfaction o f
each of the contingencies listed herein . If Developer does not give City written notice o f
removal of contingencies or notice of cancellation prior to the Initial Closing Date, Develope r
shall have the right to cancel this Agreement by giving written notice to City .
32
Exhibit 6
Expense Items Eligible for Developer Reimbursemen t
Subsequent to the adoption of the MOU by the City Council, Developer has agreed to reimburs e
the City on a monthly basis for additional third party costs incurred in conjunction with th e
processing of this project . Such third-party costs shall include, but not necessarily be limited to ,
the following items :
1.Charges for the services of PCR Kotin, the City's Economic Consultant .
2.Charges for special counsel retained to assist in drafting the documentation, tentativel y
identified as Herbert Weiser of King, Weiser, Bazar and Jacobs LLP .
3.Charges (whether in reimbursement of salary and benefits or subcontractor costs) for an y
additional planning staff hired to expedite the review process for this project in th e
Community Development, Public Works and other affected departments of the City .
As a matter of information but not of consent, and subject to the City's unrestricted judgment o f
deletion and editing, the Developer will be provided in advance with copies of the contracts an d
scope of work statements governing the services provided by third-parties and for which th e
Developer will be billed .
Subsequently, the Developer will be billed at monthly intervals with all reimbursement request s
due and payable within thirty (30) days .
33