HomeMy WebLinkAboutOption Agmt ChinatownOPTION TO PURCHASE REAL PROPERT Y
~,~This Option Agreement is made as of f~~..(!.~j /7150 3,by and between THE CITY O F
SAN LUIS OBISPO, a municipal corporation and charter city ("City"), and SAN LUIS OBISP O
COURT STREET, LLC, a California limited liability company ("Copelands").
THE PARTIES HEREBY AGREE AS FOLLOWS :
1.The Property .The property (hereinafter, the "Property ") consists of the five (5) parcel s
located in the block between Palm and Monterey Streets and Morro and Chorro Streets, in San Lui s
Obispo County, California, identified as portions of APN #002-416-034, #002-416-034, #002-416-029 ,
#002-416-029, and #002-416-029, together with any improvements made thereon . A legal descriptio n
of the Property is attached hereto and incorporated herein as Exhibit A .
2.Grant of Option .In consideration for the payment of Eighty-eight Thousand Fiv e
Hundred Dollars ($88,500) (the "Initial Option Price") on or before the Cl sing, as that term is define d
in that certain Real Property Exchange Agreement, dated as of February 78 ,2003, between the Cit y
and the Copelands, the City hereby grants to Copelands an option ("Option ") to purchase the Property at
the Purchase Price on the terms and conditions set forth in this Option Agreement .
3.Term of Option .(a) The term of this Option shall commence as of the date of thi s
Agreement and shall expire at 5 p .m ., on the date which is eighteen months thereafter ("Initial Optio n
Term"), unless extended as provided in the following sentences or otherwise by the written agreement o f
the parties . Copelands may extend the term of the Option (the "Option Term") up to three times for a n
additional year (each an "Additional Option Term") each, by paying to the City the sum of Twenty-nin e
Thousand Five Hundred Dollars ($29,500) (each an "Additional Option Price") for each such one yea r
extension . Notwithstanding the foregoing, Copelands shall not be entitled to the first Additional Option
Term unless prior to the end of the Initial Option Term, Copelands has submitted an application to th e
City for development (the "Development Application") of the project known as the "Chinatown Project "
(the "Project") to be built on the Property consistent with paragraph 4A below and the Copelands shal l
not thereafter be entitled to any subsequent Additional Option Term unless, at the end of eac h
Additional Option Period, either (i) the Development Application has been approved and has not been
terminated and has not expired or (ii) it remains pending . Each Additional Option Price shall be paid t o
the City, if at all, prior to the expiration of the immediately preceding Option Term or Additional Optio n
Term, as the case may be . The Option Term or any Additional Option Term may be terminated earlier
by written agreement of the parties hereto .
4.Conditions of Exercise of the Option .The option is to be exercisable on the followin g
conditions :
A.The Option must be exercised, if at all, during the Option term or any dul y
exercised Additional Option Term . During such period, the Copelands shall pursue the issuance o f
building permits and other required regulatory entitlements (if any) ("Permits") for construction of a
development on the Property consistent with paragraph 7 belo w
B.The Option can be exercised only if all of the following conditions have bee n
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satisfied :
i .
The Permits for construction of the Project have been issued and have no t
expired ;
ii.the Copelands have submitted evidence to City that the Copelands hav e
the financial resources, from lenders and from equity funds and investors as may be necessary, in a
sufficient amount to complete the construction and equipping of the Project in accordance with a budge t
prepared by Copelands ;
iii.the Copelands have entered into construction contracts for the Projec t
evidencing that the work of construction can be completed within the budget ;
iv.Construction of the Retail Complex on the Court Street Project Propert y
shall have been commenced as required under the Real Property Exchange Agreement referred to above ,
and, if construction shall have already commenced, construction to completion of the Retail Complex i s
being diligently pursued .
5.Restrictions on Title to the Property .The parties agree, and the Deed transferring title t o
the Property to Copelands shall reflect, that until substantial completion of the Project substantially i n
accordance with the Permit : (i) the use of the Property shall be limited and restricted to the constructio n
of the Project, (ii) the Copelands shall not encumber the Property except as security for constructio n
loans to finance the construction of the Project, and (iii) the City has the right of reverter and a power o f
termination (Civil Code section 885 .010) to cause the title of the Copelands to the Property to terminat e
and to revert to the City if the construction of the Project pursuant to the Permit does not commence a s
required by this Agreement, or if construction is commenced, such construction is not completed . Upon
the substantial completion of the Project in accordance with the Permit, the City shall execute an d
deliver to the Copelands, a Certificate of Completion in substantially the form attached hereto as Exhibi t
B, which shall acknowledge that the deed restriction and any right of reverter in favor of the City shal l
have terminated. In the event the City, being entitled to do so, causes the title to the Property to revert t o
the City, the City shall pay to the Copelands an amount equal to the Purchase Price (as defined below).
6.Due Diligence Inspections by Copelands .Prior to the exercise of the option, th e
Copelands shall first have performed such due diligence as it elects to perform as to the condition of th e
title to the property and the suitability of the site of the property for the proposed uses and construction ,
and shall have inspected, investigated and tested the condition of the soil and the geology of the site and
the presence of hazardous substances or archaeological materials and shall have accepted suc h
conditions "as-is" with all defects, known or unknown, and without warranty, representation or promise s
of remediation or cure by the City .
7.The Project .The Project shall incorporate a retail and office space, as well as a
downtown residential component for the upper floor or floors of the Project . In connection with th e
Project, Copelands shall be responsible to comply with all laws and to conform to all land use, buildin g
and safety and other regulatory laws, to bear the cost of any compliance with the Californi a
Environmental Quality Act or other laws, and to apply for and obtain any variances, zoning changes o r
other special permits as the Project may require, all of which shall be accomplished and obtained withi n
the time allowed for exercise of this Option . This Option Agreement shall not constitute any agreemen t
by the City to agree to take any action in its regulatory function to implement or favor the Project, t o
waive or reduce any fees, charges or exactions that are otherwise applicable or to agree to grant or issu e
any entitlement or permits . Copelands understands that it may be required to pay in-lieu parking fees in
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connection with the Project, as required by the City's then applicable ordinances and regulations ,
without any preference or reduction .
8 .Exercise of the Option .Provided that Copelands is not in default under any term o r
provision of this Option Agreement, the conditions to the exercise of the Option have been satisfied an d
the City has certified in writing that Copelands have submitted evidence satisfactory to City that th e
conditions to the exercise of the Option referred to above have been satisfied, the Option may b e
exercised by Copelands delivering to Escrow Holder, as defined below, with a copy to the City, a cop y
of the Exercise Notice, in the form attached hereto as Exhibit C, and a copy of the Purchase Agreemen t
and Sale Agreement in the form attached hereto as Exhibit D ("Purchase Agreement"). Prior to the tim e
the Property is transferred, Copelands shall determine the status of title to the Property and accept it as -
is . The City agrees not to add any encumbrance or lien, or suffer any such encumbrance or lien to exist ,
on the Property hereafter. The City shall not have any obligation to eliminate any exceptions identified
in a title report obtained by the Copelands unless the City is not in compliance with the foregoin g
sentence .
A.Purchase Price .The Purchase Price for the purchase of the Property if the title t o
the Property is vested in the Copelands, or its designee, during the initial 18 months shall b e
$2,950,000, net of all expenses and costs of such escrow and the transfer of title to the Property ;
provided that if the title to the Property is not vested in the Copelands during the Initial Term, th e
Purchase Price shall be increased at the rate of .0833% of $2,950,000 for each month or part thereo f
from the effective date of this Option until title is vested in the Copelands pursuant to the exercise of thi s
Option . At the closing of escrow for the Property, Copelands shall be entitled to a credit against th e
Purchase Price for the Initial Option Price plus any Additional Option Price already paid to the City.
B.Escrow .The escrow holder shall be Chicago Title Insurance Company ("Escro w
Holder"). Upon delivery by Copelands to Escrow Holder of the Exercise Notice as provided above ,
Escrow Holder shall deliver the grant deed conveying the Property to Copelands in compliance with th e
escrow instructions provided in the Purchase Agreement and any further escrow instructions that may b e
submitted by both parties to Escrow Holder .
9 .Specific Performance .Without waiving any other available rights or remedies ,
Copelands shall specifically have the right, if applicable, to sue in equity for specific performance of thi s
Option Agreement or any part of this Option Agreement, and expressly the right to file a notice o f
pending action against the Property as provided in California Code of Civil Procedure Section 409 an d
Civil Code Section 1214, subject to all defenses, claims and rights to defend against such suits or t o
eliminate such notices if such notice or filing is found not to be appropriate or warranted . Except as
provided by the foregoing, nothing contained herein shall be deemed an agreement by the City to gran t
rights to Copelands for specific performance, suits in equity, for the filing of notice of pending actions
or other remedies that are not afforded to Copelands without agreement by City, by applicable law o r
principles of equity, nor shall City be deemed to waive or surrender any rights or remedies that City ma y
have due to such actions by Copelands .
10 .
Disclaimer of Warranties .The City makes no representations or warranties regarding th e
Property.
11 .
Inspection ; Indemnification .
A .
During the Option Term, Copelands and its designated agents and independen t
contractors, shall have the right, at their sole risk and expense, to enter onto the Property to the exten t
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necessary for the purpose of conducting such surveys, tests and inspections as Copelands shal l
reasonably require, provided that Copelands shall not make any alterations to the Property, use any o f
the City's personal property in such survey, test or inspection or interfere with the City's use of th e
Property without the prior written consent of the City . Copelands shall leave the Property in the sam e
condition as it was prior to such survey, test or inspection.
B . Copelands agrees to indemnify and hold the City, its officers, shareholders an d
directors, employees, agents and representatives harmless from any and all costs, claims, expenses ,
liability and damages of any kind arising from or in connection with the conduction of such inspection ,
test or survey on the Property.
12.Failure to Exercise.Time is of the essence of this Option Agreement . If the Option i s
not exercised in the manner provided in Section 4 above before expiration of the Option Term or an y
Additional Term, as the case may be, this Option shall automatically terminate, and Copelands shal l
have no interest whatever in the Property . If the Closing never occurs or the Initial Option Price is no t
paid in a timely manner, then the Initial Option Term shall never commence, this Option shal l
automatically terminate, and Copelands shall have no interest whatever in the Property . This Option ma y
not be revived by any subsequent payment or further action by Copelands, without the express writte n
consent of the City.
13.Quitclaim.If this Option Agreement expires or is terminated, Copelands agrees, i f
requested by the City, to execute, acknowledge and deliver to the City a quitclaim deed within ten (10 )
days after such request quitclaiming its interest in this Option Agreement or the Property and to execute ,
acknowledge, and deliver any other documents required by the City or any title company to remove th e
cloud of this Option from the Property .
14.Expenses.Each of the parties shall bear its own respective costs and expenses incurre d
or to be incurred by it in negotiating and preparing this Option Agreement and in closing and carryin g
out the transactions contemplated by this Option Agreement, except as specifically provided in thi s
Option Agreement .
15.Broker's Commission .The City and Copelands ("Indemnitors") hereby represent that
there are no broker's commissions or finder's fees payable regarding this transaction and that neither th e
City nor Copelands has entered into any agreements or understandings with any broker or finde r
regarding this transaction . Indemnitors each agree to indemnify, defend and hold the other harmles s
from and against all liability, claims, demands, damages and costs of any kind arising from or connecte d
with any broker's or finder's fees or commission or charge claimed to be due any person arising fro m
any Indemnitors' conduct regarding this transaction .
16.Effect of Headings .The subject headings of the sections, paragraphs and subparagraph s
of this Option Agreement are included for convenience only, and shall not affect the construction o r
interpretation of any of its provisions .
17.Modification, Waiver and Entire Agreement .This Option Agreement and the Exhibit s
hereto constitute the entire agreement between the parties pertaining to the subject matter contained in i t
and supersedes all other prior and contemporaneous agreements, representations and understandings o f
the parties . No supplement, modification or amendment of this Option Agreement shall be bindin g
unless executed in writing by all the parties . No waiver of any of the provisions of this Optio n
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Agreement shall be deemed, or shall constitute, a waiver of any other provisions, whether or not similar ,
nor shall any waiver constitute a continuing waiver . No waiver shall be binding unless executed i n
writing by the party making the waiver . A Memorandum of Option shall be executed by the parties i n
recordable form which may be recorded by the Copelands, but in the event of any inconsistency betwee n
the Memorandum and this Option Agreement, this Option Agreement shall prevail .
18.Counterparts .This Option Agreement may be executed simultaneously in one or mor e
counterparts, each of which shall be deemed an original, but all of which together shall constitute on e
and the same instrument .
19.Partial Invalidity.The conditions and provisions of this Option Agreement shall b e
interpreted in such a manner as to enhance their enforceability, nonetheless, if any term, covenant ,
condition or provision of this Option Agreement is held by a court of competent jurisdiction to b e
invalid, void or unenforceable, the remainder of the provisions hereof shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated thereby .
20.Parties in Interest .Nothing in this Option Agreement, whether express or implied, i s
intended to confer any rights or remedies under or by reason of this Option Agreement on any person s
other than the parties to it and their respective successors and assigns, nor is anything in this Optio n
Agreement intended to relieve or discharge the obligations or liability of any third persons to any part y
to this Option Agreement, nor shall any provision give any third persons any right of subrogation o r
action against any party to this Option Agreement .
21.Successors and Assigns .Notwithstanding Section 22 below, this Option Agreement shal l
be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, lega l
representatives, successors and assigns .
22.
Assignment.Copelands may assign this Option Agreement to an affiliate controlled by ,
or under common control with, Copelands without the prior written consent of the City .
23.Recovery of Litigation Costs .If any legal action or other proceeding is brought for th e
enforcement of this Option Agreement, or because of an alleged dispute, breach, default o r
misrepresentation in connection with any of the provisions of this Option Agreement, the successful o r
prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred .in that
action or proceeding, in addition to any other relief to which it or they may be entitled .
24.Notice of Party Defaults .If the City or Copelands defaults in the due and timel y
performance of any of their warranties, covenants or agreements under this Option Agreement, the non -
defaulting party or parties may give notice of such default in the manner provided in Section 26 below .
The notice shall specify with particularity the default or defaults on which the notice is based and th e
defaulting party shall be given ten (10) days from the receipt of notice to cure its default . If the
defaulting party does not cure its default within such ten-day (10-day) period, the non-defaulting part y
may avail itself of all legal rights and remedies available, subject to the terms of this Option Agreement .
25.Applicable Law.The validity, performance and enforcement of this Option Agreement
shall be construed under the laws of the State of California applicable to agreements fully executed an d
to be performed in such state .
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26.Consent to Jurisdiction .The City and Copelands agree that any suit, action or other legal
proceeding arising out of or in connection with this Option Agreement may be brought, and shall b e
brought only, in a superior or municipal court of the County of San Luis Obispo, State of California an d
hereby consent to the jurisdiction of any such court in any such suit, action or proceedings . The City
and Copelands hereby waive any objection which such party may have to the laying of any such suit ,
action or proceeding in any such court.
27.Notices .All notices, requests, demands and other communications under this Optio n
Agreement, except for the Exercise Notice which shall be personally delivered under Section 4 above ,
shall be in writing and shall be deemed to have been duly given on the date of service if serve d
personally, by reliable overnight courier, or by telecopy transmission for receipt during the receivin g
parties' normal business hours to the party to whom notice is to be given, or on the third (3rd) day afte r
mailing 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 :
City:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401-324 9
Attention : City Administrative Office r
Facsimile : (805) 781-7109
With a copy to :
City Attorney
City of San Luis Obisp o
990 Palm Street
San Luis Obispo, California 93401-324 9
Facsimile : (805) 781-7409
Copelands :
Court Street Partners, LL C
Post Office Box 134 8
San Luis Obispo, California 9340 6
Attention : Tom Copelan d
With a copy to :
K . Robin Baggett, Esq .
Sinsheimer, Schiebelhut & Bagget t
1010 Peach Stree t
San Luis Obispo, California 9340 1
Facsimile: (805) 541-280 2
Any party may change its address for purposes of this Section 26 by giving the othe r
parties written notice of the new address in the manner set forth above .
28.Interpretation .This Option Agreement has been negotiated by the parties and each part y
had the opportunity to have this document reviewed by their respective legal counsel . That a party
drafted the language of this Option Agreement shall not cause such language to be interpreted for o r
against such party .
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IN WITNESS WHEREOF, the parties to this Option Agreement have duly executed it as of th e
day and year first written above .
SAN LUIS OBISPO COURT STREET, LLC ,
a California limited liability company
By :
Tom Copeland
Its : Managing Member
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter Cit y
B
Approved as to Form :
David F . Romero
Mayor
Attest :
By:
Gilbert A. Truj ill
Acting City Attorne y
By :
Herb Weiser
City Special Counse l
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city of san Luis o&isp o
990 Palm Street, San Luis Obispo, CA 93401-324 9
0111 Ae
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April 26, 200 5
Scott W . Wall
Andre, Morris & Buttery
1102 Laurel Lan e
P .O . Box 73 0
San Luis Obispo, California 93406-073 0
Re :
Chinatown Optio n
Dear Mr . Wall :
Thank you for your letter of April 13, 2005 regarding your clients' concerns about th e
Chinatown Option Agreement . We have now had an opportunity to review and consider th e
information included in your letter and respond as follows .
With respect to your input regarding easements apparently affecting the Bello and Pie r
One buildings, the City notes your clients' concerns and will consider the informatio n
contained in your letter more thoroughly at such time as any action is taken to pursu e
development of the property that is the subject of the Chinatown Option . However, as there i s
no development plan currently on file with the respect to the subject property, the City has no t
undertaken any extensive review of the viability of any particular project or the potentia l
impacts of any development on neighboring properties . We believe such review would b e
premature given the absence of a formal development proposal .
As your clients are aware, no development in the City proceeds without extensive Cit y
review and ample opportunity for and consideration of community input . The City ha s
always found participation from community stakeholders to be an invaluable tool in assistin g
both staff and the City Council in their careful analyses of development impacts o n
neighboring property owners and the community as a whole . Such community input is an
integral part of the City review process and staff looks forward to your clients' activ e
participation in the public review process that will follow the submission of any developmen t
proposal .
With regard to your suggestion that the Chinatown Option expired on August 18 ,
2004, we have reviewed the relevant documents and respectfully disagree . You are correc t
that the Option To Purchase Agreement is hand-dated February 18, 2003 . However, both th e
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Payment Agreement and the Real Property Exchange Agreement contain the Conditio n
The City of San Luis Obispo is committed to include the disabled in all of its services, programs and activities .
Telecommunications Device for the Deaf (805) 781-7410 .
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