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HomeMy WebLinkAboutR40-Economic Development Agency e CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: SUBJECT: Galaxy Commercial Holding, LLC Redevelopment Project Study and Exclusive Right to Negotiate Agreement (Central City Redevelopment Project Area) Maggie Pacheco Executive Director DATE: June 12,2007 SvnoDsis of Previous Commission/Council/Committee Action(s): On May 24, 2007, Redevelopment Comminee Members Estrada and Johnson unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Communitv DeveloDment Commission) Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the Redevelopment Project Study and Exclusive Right to Negotiate Agreement ("Agreement"), by and between the Agency and Galaxy Commercial Holding, LLC ("Developer") (Central City Redevelopment Project Area) (909) 663-1044 e ContactPerson(s): e Maggie Pacheco Phone: Project Area(s): Central City Redevelopment Project Area Ward(s): Supporting Data Attached: o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Lener(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A N/A Budget Authority: Fiscal Review: ~,{ L'-'--'~"'~ ~ /, '/ (' Baroara Lindseth, Administrative SelVices Director Commission/Council Notes: P:\Alenda$\Comm DevCommission\COC 2007\06-18-07 Galaxy Commercial Holding. LLC _ ERN SRdoc COMMISSION MEETING AGENDA Meeting Date: 06118/2007 Agenda Item Number: R'I D e e e ECONOMIC DEVELOPMENT AGENCY STAFF REPORT GALAXY COMMERCIAL HOLDING, LLC - REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT (CENTRAL CITY REDEVELOPMENT PROJECT AREA) BACKGROUND: The Redevelopment Agency of the City of San Bernardino ("Agency") is the owner of the Court Street parking lot and Court Street Square (the "Property") on the southeast corner of Court and "E" Streets (APN: 0134-251-57, 58 and 59), in the Central City Redevelopment Project Area. The Property consists of 3 parcels containing 88,000 square feet and was acquired by the Agency in 1973. This has always been one of downtown San Bernardino's most prominent sites. In 1874, the County courthouse was erected at this location and replaced in 1893 by the former courthouse which was demolished in 1926. Artifacts from this building still remain today in the form of the original clock, which was restored by Earl Buie in 1972. In 1970, as part of the Gruen plan for downtown, this site was set aside for the proposed new San Bernardino Performing Arts Center and seed funding was made available for this purpose; however, by the early 1990's, it became apparent that approximately $30 million would be required to fund a mid- range performing arts center and such funding would not materialize and the available funds were reassigned to the California Theatre. During the mid-1990's, Projects for Public Spaces ("PPS") from New York was hired to assess public facility opportunities within the downtown. One of their recommendations was to create the Court Street Square on the Property, a public gathering place which would assist in the efforts to revitalize downtown by attracting citizens to the Property with musical concerts and special events, thereby encouraging them to filter into the other shopping and dining experiences in downtown during and after the events, and to thus, stimulate the downtown economy at that time. CURRENT ISSUE: For a number of years, the use of the Court Street Square on the Property proved to be a popular venue with its regular Friday night concerts, Annual Shakespeare Festival, International Music Festival, annual Easter egg drop and the Route 66 Rendezvous. Concession sales generated at the Property were sufficient to cover the cost of the entertainment provided. At that time, downtown San Bernardino was home to a fully operational regional mall with all 3 department stores functioning, as well as several signature restaurants located in the vicinity of the Property such as Court Street Bar & Grill, New City Cafe, La Casita and Isabella's Ristorante. P:\AgendasIComm Dev CommissionlCDC 2007\06-18-07 Galax)' Commercial Holding. LLC. ERN SRdoc COMMISSION MEETING AGENDA Meeting Date: 06/1812007 Agenda Item Number: ML . . . Economic Development Agency Staff Report Galaxy Commercial Holding, LLC - ERN Page 2 Neither' the restaurants nor the mall remain today in their prior forms and attendance at the Property declined so significantly that the Agency decreased the events sponsored by the Agency to approximately 5 or 6 events per year, as well as making the Property available to the Convention and Visitors Bureau for the annual Route 66 Rendezvous. What remains today is an urban pocket park that is occasionally leased to outside organizations and non-profits, rental income of which does not approach anything near the Agency's costs on maintaining and monitoring the facility during the year. Literally, no new development has taken place in downtown San Bernardino in the last 5 years during a period that has seen office, hotel and restaurant development boom in the Hospitality Lane area to such an extent that the area is literally becoming built out. No fewer than 9 new Class "A" office buildings have been built culminating in the recent 279,000 square foot Wells Fargo Bank office building on Tippecanoe Avenue and Hospitality Lane. Encouragingly, this trend now seems to be reversed with new interest being generated in the downtown area, firstly, with the LNR Court Street West project as recently proposed for the Carousel Mall site, and secondly, with the County of San Bernardino's proposal for a new County office tower. The Agency has now been approached by Mr. Raffi Cohen of Galaxy Commercial Holding, LLC (the "Developer"), with a proposal to study the Property with a view to develop the site into a 150,000 square foot Class "A" office tower of approximately 8-10 stories ("Project"). The office building would be constructed on top of 2-3 stories of a parking structure and be wrapped by plaza style commercial development at the ground and plaza levels. Several law firms have expressed an interest in relocating their law firms back to downtown, bringing hundreds of attorneys and highly paid professionals back to the downtown core and the Developer will explore their occupancy for the proposed Project. The Developer is based in Beverly Hills and has been developing properties in California for more than 25 years and is best known for their high-rise commercial and residential properties. The Developer works with communities and government agencies to help revitalize areas and often develops in communities where they are the first to enter an area. The Developer is currently completing the Vue in San Pedro, a $175 million, 16-story condominium project; the Blu, an II-story high-end apartment project in Beverly Hills and a 100,000 square foot Class "A" office building at 1300 Redlands Boulevard in Redlands. The Developer has requested a 12-month Redevelopment Project Study and Exclusive Right to Negotiate Agreement ("Agreement") in order to study the feasibility of the Project and will pay the sum of $17,500 to the Agency by way of a deposit, which will be applied against the purchase price, should a final sale occur and a Disposition and Development Agreement is entered into by and between the Agency and the Developer. ENVIRONMENTAL IMP ACT: The Agreement is categorized as Statutory Exemption under the California Environmental Quality Act ("CEQA"), per Public Resource Code Sections 21102 and 21150. P,lAgendaslComm Dev CommissianlCOC 2007\06.18.07 Galaxy Commercial Holding. LLC - ERN SR.doc COMMISSION MEETING AGENDA Meeting Date: 06/1812007 Agenda Item Number: ~ It e e Economic Development Agency Staff Report Galaxy Commercial Holding, LLC - ERN Page 3 FISCAL IMPACT: None. RECOMMENDATION: That the Community Development Commission adopt the attached Resolution. P:\Agendas\Conm Dev Commission\COC 2007\06-18-07 Gal;lll;y Commercial Holding. LLC - ERN SRdo(: COMMISSION MEETING AGENDA Meeting Date: 06/18/2007 Agenda Item Number: Il. '10 1 . 2 3 4 5 6 7 8 9 10 11 12 13 . 14 15 16 17 18 19 20 21 22 . 27 28 RESOLUTION NO. RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT ("AGREEMENT"), BY AND BETWEEN THE AGENCY AND GALAXY COMMERCIAL HOLDING, LLC ("DEVELOPER") (CENTRAL CITY REDEVELOPMENT PROJECT AREA) WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") owns certain property within the Central City Redevelopment Project Area (the "Project Area") as generally depicted in Exhibit "A" (the "Property") attached to the Redevelopment Project Study and Exclusive Right to Negotiate Agreement ("Agreement"); and WHEREAS, the Agency and Galaxy Commercial Holding, LLC (the "Developer"), are interested in exploring the development feasibility of the Property so as to foster the community economic development goals and objectives of the City of San Bernardino (the "City"), as it relates to the redevelopment plan for the Project Area; and WHEREAS, the Developer is qualified to assist the Agency to undertake the development feasibility for a coordinated and economically sustainable redevelopment project on the Property, which will require specific study, evaluation and planning by the City and the Agency, as applicable, of appropriate and feasible community redevelopment program alternatives; and WHEREAS, in accordance with the provisions of the California Environmental Quality Act ("CEQA"), the Agreement is exempt from the provisions ofCEQA. NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO DOES HEREBY FIND AND DETERMINE, AS FOLLOWS: 23 24 25 26 Section 1. The Community Development Commission of the City of San Bernardino (the "Commission") hereby approves the Agreement by and between the Agency and the Developer in the form as presented at the meeting of the Commission at which this Resolution is adopted and hereby authorizes the Executive Director of the Agency to execute the Agreement on behalf of the Agency, together with such technical and conforming changes as recommended by the Executive Director of the Agency and approved by the Agency Counsel. 1 PAgendas,Resolulions'Resolutions\2007\06-IS.07 Galaxy Commercial Holding. LLC . CDC Reso dol; 1 Section 2. tit 2 Section 3. 3 //1 4 //1 5 /1/ 6 /1/ 7 /1/ 8 /1/ 9 /1/ 10 /1/ 11 //1 12 /1/ 13 /1/ e 14 /1/ 15 //1 16 //1 17 /1/ 181 /1/ 19 /1/ 20 //1 211 //1 i 221 /1/ 23 /1/ 24 /1/ 25 //1 26 /1/ e 27 //1 28 /1/ The Commission hereby finds that the Agreement is exempt from CEQA. The Resolution shall become effective immediately upon its adoption. I II PAg,",,"'R=I"~0,'R"ol",io",20QT06.I8.07 G,'~y C,~i.] H,.io.. LLC. CDe 3, d,,, e e 14 15 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT ("AGREEMENT"), BY AND BETWEEN THE AGENCY AND GALAXY COMMERCIAL HOLDING, LLC ("DEVELOPER") (CENTRAL CITY REDEVELOPMENT PROJECT AREA) 2 3 4 5 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 8 Development Commission of the City of San Bernardino at a meeting 9 thereof, held on the 10 Commission Members: day of ,2007, by the following vote to wit: Abstain Aves Navs Absent 11 ESTRADA 12 BAXTER 13 BRINKER 16 DERRY KELLEY JOHNSON MC CAMMACK 17 18 19 20 21 The foregoing Resolution is hereby approved this Secretary day of ,2007. 22 23 24 25 Approved as to Form: Patrick J. Morris, Chairperson Community Development Commission of the City of San Bernardino 26 e 27 By: { ~;:::ti~~- 28 3 P'Agcndas\Resolulioos',Resotulions'.::!OOHl6_]8.07 Galaxy Cornmerdal Holding. llC - COC Reso doc e tit e II REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT GALAXY COMMERCIAL HOLDING, LLC THIS REDEVELOPMENT PROJECT STUDY AND EXCLUSIVE RIGHT TO NEGOTIATE AGREEMENT is dated as of June 18, '2007 (this "Agreement"), and is entered into by and between Galaxy Commercial Holding, LLC (the "Developer"), a California limited liability company, authorized to do business in the State of California, and the Redevelopment Agency of the City of San Bernardino (the "Agency"), a public body, corporate and politic, in light of the facts set forth in the following recital paragraphs: RECITALS A. The Agency desires to encourage and effectuate the redevelopment of certain real property, located within the Central City Redevelopment Project Area (the "Project Area"). B. The Agency is the fee owner of approximately two (2) acres generally known as Court Street Square and the Court Street Parking lot (collectively, the "Property") which consists of improved land. The Property (the "Study Area") consists of two (2) parcels numbered APN: 0134- 251-57 and 59 is currently zoned for commercial use (CR-2). The Property is located on the southeast comer of Court and "E" Streets, downtown and depicted on the Study Area Map as depicted on Exhibit "A" attached hereto and incorporated herein by this reference (which illustrates the Study Area for purposes of this Agreement). C. The Agency is prepared to consider and study specific proposals and plans to facilitate the development of the Study Area so as to foster the community economic development goals and objectives ofthe City. D. The Developer is qualified to assist the Agency to undertake the study of specific proposals and plans for a coordinated and economically sustainable redevelopment project on the Study Area which will require specific study, evaluation, and planning by the City and the Agency, as applicable, of appropriate and feasible community redevelopment program alternatives. E. The Developer and the Agency believe it is appropriate for the Developer, in consultation with the Agency, to undertake certain redevelopment studies and to incur certain costs, in consultation with the Agency, as part of a program for the study of feasible redevelopment programs for the Study Area, subject to the terms and conditions as set forth below. AGREEMENT IN CONSIDERATION OF THE FOREGOING RECITALS, WHICH ARE INCORPORATED INTO THIS AGREEMENT BY THIS REFERENCE AND THE MUTUAL COVENANTS AND PROMISES SET FORTH HEREIN, THE DEVELOPER AND THE AGENCY HEREBY AGREE, AS FOLLOWS: - 1 - P'Agendas\Agenda Anachmenls\AgrmlS-Amend 2007\06-18-07 Galuy COl1"U"llercial Holding. LLC - Final ERN doc e e e ~ 1. Developer Acknowledl!ments and Term of Al!reement. a. The Developer hereby acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the Agency or an acceptance by the Agency of any offer or proposal from the Developer to convey any interest in the Property to the Developer. Any studies relating to the Study Area and to the Project (as defined below) that may hereafter be undertaken by the Developer, in its sole discretion, shall be the sole responsibility of the Developer and shall not be deemed to be undertaken for the benefit of the Agency and the City. b. The qualifications and identity of the Developer and its principals are of particular importance to the Agency. The Agency relied on these qualifications and identity in entering into this Agreement with the Developer. Accordingly, except as expressly set forth hereinbelow, during the term of this Agreement, the Developer shall not transfer or assign all or any of the Developer's rights or obligations set forth in this Agreement (hereinafter, collectively, a "Transfer") and no voluntary or involuntary successor-in-interest of the Developer shall acquire any rights or power under this Agreement except pursuant to an assignment approved in writing by the Executive Director of the Agency. The Executive Director of the Agency shall approve or disapprove any requested Transfer requiring Agency approval within ten (10) business days after receipt of a written request for approval from the Developer, together with such documentation as may be reasonably required by the Executive Director of the Agency, to evaluate the proposed transaction and the proposed assignee's/transferee's experience and qualifications, including the proposed assignment and assumption agreement by which the assignee expressly agrees to assume all rights and obligations of the Developer under this Agreement arising after the effective date of the assignment, and in which the assignee/transferee agrees to assume, or the Developer expressly remains responsible for, all performance and obligations of the Developer arising prior to the effective date of the Transfer. The assignment and assumption agreement shall be in a form reasonably acceptable to the Agency's legal counsel. No later than the date the Transfer becomes effective, the Developer shall deliver to the Agency the fully executed assignment and assumption agreement. c. Notwithstanding any other provision set forth in this Agreement to the contrary, the Agency's approval of a Transfer by the Developer shall not be required in connection with any of the following transactions: (1) Transfers resulting from the death or mental or physical incapacity of an individual; (2) the approval and execution by the Developer of one or more purchase/sale agreements, leases, and other similar agreements that are not inconsistent with the Developer's ultimate development of the Project (as defined below), and with the understandings that no such agreement shall be deemed to limit or restrict the Agency's or the City's discretion with respect to the terms and conditions of any of the Development Entitlements referred to in Section 2 or the terms and conditions to be set forth in the Project DDA referred to in Section 7 of this Agreement and any such agreement that pertains to all or any portion of the Property shall not be binding upon the Agency, the City or the Property until the Project DDA is approved and executed by all parties (and then subject to such terms and conditions that may be set forth in the Project DDA); -2- P \Agendas'Agenda AnachmentslAgrmts-Amend 2007\06.18.07 Galaxy Commercial Holding. LLC - Final ERN dO(: e e e (3) the granting of such temporary or permanent easements or permits as may be requested by the City or other governmental agencies or utility companies with jurisdiction over the Study Area or as may be necessary and appropriate to facilitate development of the Project on the Study Area; and (4) Transfers for financing purposes. d. This Agreement shall automatically terminate, without further notice or action, and be of no further force or effect twelve (12) months following the Effective Date, unless prior to that time: (I) the parties execute the Project DDA, as described below, which will include, without limitation, other relevant community redevelopment covenants acceptable to the Agency and such other terms and conditions mutually acceptable to the parties, in which case this Agreement shall terminate on the effective date of the Project DDA; or (2) the parties each agree to extend the term of this Agreement in writing to a specific date not to exceed twelve (12) months beyond the initial term of this Agreement, subject to the Executive Director of the Agency first making a finding based upon written documentation and other facts presented to verify that satisfactory progress is being made to complete the activities to be performed by the Developer set forth in Section 3; for purposes of implementing this extension provision to the term of this Agreement by and on behalf of the Agency, and subject to said finding to be made by the Executive Director of the Agency, (i) the Executive Director of the Agency is hereby authorized to administratively approve one (I) extension of not to exceed six (6) months and (ii) the Community Development Commission of the City of San Bernardino (the "Commission") as the governing body of the Agency shall be required to approve any extensions in excess of six (6) months but not to exceed the aforesaid twelve (12) months; or (3) a party terminates this Agreement as provided under Section 19 or Section 20, as applicable. 2. The Proiect. Subject to the terms and conditions of this Agreement, the negotiation and execution of a mutually satisfactory Project DDA as referred to in Sections 3.f. and 7, the approval by the City, the Agency and other governmental agencies with jurisdiction over the Study Area of the general plan amendment, zone change and other discretionary permits and approvals that are needed to accommodate the development contemplated by this Agreement (collectively, the "Development Entitlements"), the City's or the Agency's completion of the environmental review process and certification of an environmental impact report ("EIR") for the development of the Study Area pursuant to the California Environmental Quality Act ("CEQA") and compliance with all other applicable state and local laws, ordinances and regulations for such development, the Developer shall take all reasonable actions required or necessary for determining the feasibility of the acquisition and redevelopment of the Property and undertaking a commercial and retail development project on the Study Area consisting of a 150,000 square foot Class "A" office tower of approximately 8-10 stories The building is currently intended to be constructed upon 2-3 stories of a parking structure and be -3- P'Agendas\Agenda Anachmenls'Agrmu-Amend :!OO7i06-18-07 Galaxy COmrTlCTcial Holding. LtC. Final ER.."l doc e e e wrapped by plaza style commercial development at the ground and plaza levels (the "Project"). The Developer may modify the description of the Project at any time; provided, however, that substantial modifications of the Project shall: . (1) be subject to the written acceptance and written approval of the Agency; and (2) depending on the nature of such a modification, a suitable modification of any applicable development permit and CEQA application and approval and the Project Study referred to below may also be required. The Agency may request that the Developer consider modifications to the description of the Project from time-to-time. Each such modification shall be subject to the approval of the Developer, which shall not be unreasonably withheld. 3. Nel!otiation Period, Proiect Study and Proiect Study Costs. a. The rights and duties of the parties established by this Agreement shall commence following its approval by the Commission as the governing body of the Agency when it has been fully executed by the parties within the period of time authorized in Section 17 (such date being the "Effective Date") and continue for twelve (12) months from the Effective Date unless such date shall have been first extended as authorized under Section l.d.(2). Such time period during which this Agreement shall be in effect (including any extensions of time approved by the Agency) is referred to as the "Negotiation Period". b. Within ninety (90) calendar days following the Effective Date, the Developer shall submit to the Agency a site plan for the Study Area and a feasibility study for the redevelopment project proposed by the Developer (the "Project Study"). The Project Study shall include, without limitation, the following information: (i) projections of the total estimated cost of the Project and the amount of debt and equity to be contributed by the Developer to the Project; (ii) projections of the type, amount and source of any financial assistance that the Developer may propose to have the Agency contribute to the Project; (iii) projections of the overall Project value and property taxes; (iv) projections of the costs and benefits to the City and the Agency for all construction, maintenance and operations of all proposed public improvements; (v) projections of the costs of additional or increased levels of public services; (vi) projections of any new public revenues anticipated to be generated by the Project, by phase, if applicable, and upon completion of the Project; (vii) projections of the number and type of jobs that will be generated by the Project during both the construction phase and upon full build-out and occupancy of the stores comprising the Project; (viii) all proposed Development Entitlements that are required to be obtained for the Project from the City and other governmental agencies with jurisdiction in order to accommodate the Project; and (ix) a proposed time schedule for construction and installation of all of the private and public improvements and infrastructure comprising the Project. The Agency may retain the services, but is under no obligation to do so, of a firm of community redevelopment and planning and environmental consultants to assist in the preparation and review of the various investigations, surveys and reports appropriate in connection with the Project Study and the Project proposed by the Developer. c. The Agency shall, on a best efforts basis during the course of the Project Study, consider the specific terms and conditions of any monetary redevelopment assistance which the -4- P\Agendas\Agenda Atlachmenls\Agnrns-Amend 2007\06.18-07 Galaxy Commercial Holdins. LLC. Fina! ER~ doc e e e Developer may propose to include in the Project DDA; provided, however, the Agency reserves the right to accept, reject or modify any such proposed term or condition to the Project DDA in its sole discretion. In this regard, the Agency acknowledges that the Developer has advised the Agency prior to the Effective Date of this Agreement that in Developer's opinion the financial feasibility of the Project will require the Agency to pay all costs incurred to construct and install certain offsite public improvements of general benefit to the community that will or may be required in conjunction with the Project constructed or installed in conjunction with development of the Project but of general benefit to the community, but the Agency has not made any determination or precommitment with respect thereto. d. During the course of the Project Study, the Developer shall pay for all of its costs associated with the Project Study, including but not limited to, the expenses of third party consultants who are engaged by the Developer under written contract to undertake one or more elements of the Project Study (collectively, the "Project Study Costs"). The Project Study Costs that are the Developer's responsibility do not include any third party costs incurred by the Agency in connection with the Agency's review of the Developer's submittals or the Agency's independent performance of any study or document as part of the Project Study. In addition, each party shall bear its own legal fees and overhead and administrative costs in connection with the preparation and review of the Project Study. e. All third party consultants retained by the Agency to prepare any study or document as part of the Project Study shall be subject to the sole control and direction of the Agency. The work product of any such person shall be the property of the Agency and the Agency shall have the right to use and republish such work product for any purpose; provided, however, that to the limited extent the Developer provides the Agency with copies of architectural and engineering plans or drawings, the Developer does not thereby transfer to the Agency the ownership rights with respect thereto or the rights to reuse or republish the same and the Developer does not waive any legal rights it might have with respect to such work product and the Agency's use and republishing of such work product in the absence ofthis Agreement. f. The Developer shall inform the Agency in writing whether, based on the information set forth in the Project Study to be submitted to the Agency pursuant to Section 3.b., the Developer believes the Project is feasible. Thereafter, assuming the Developer has determined the Project is feasible, the Developer and the Agency may proceed to negotiate the final form of an agreement which will specify the specific business terms upon which the Property will be conveyed to the Developer and the Project will be developed (the "Project DDA"), subject to the understandings that (i) the Agency reserves the right, in its sole and absolute discretion, to approve or disapprove the Project DDA and the Agency does not preapprove or precommit to any particular terms to be included in the Project DDA; (ii) the Project DDA will not constitute City or Agency approval of the Project, which shall not occur until such later date that the Development Entitlements are approved and all applicable CEQA approvals are issued; and (iii) in no event will the Project DDA provide for or allow the conveyance of the Property to the Developer prior to the issuance of all of the' Development Entitlements and the City's or the Agency's approval of the necessary process for approving the Project consistent with CEQA. g. Within twenty (20) calendar days from receipt of any information from the Developer as provided in this Section 3, the Executive Director of the Agency shall determine whether such information is satisfactory. If the specific item of information is unsatisfactory to the Executive Director of the Agency, he or she shall notify the Developer in writing of the reason(s) that the information is unsatisfactory. If the Executive Director of the Agency does not make a determination -5- P IAgendaslAgenda Allachments'Agrmts_Amend 2007106-18-07 Galaxy Commercial Holding, LLC . Final ERN do~ e e e regarding any item of information submitted by the Developer under this Section 3 within twenty (20) calendar days from receipt of such information, the information shall be deemed submitted in acceptable form by the Agency. The determinations to be made by the Executive Director of the Agency under this subsection in no way bind or constitute the approval of the Agency regarding, without limitation, plans, specifications, engineering, architecture, uses, tenants, the Project, the Development Entitlements, the Project's satisfaction of the requirements of CEQA, or the Project DDA. 4. Oblil!ations of the Developer. During the Negotiation Period, the Developer shall proceed diligently and in good faith to perform the following: a. consider the redevelopment of the Project, including, without limitation, the selection of tenants and the design of improvement elements as appropriate for the Project; and b. review and provide the Project Study information described in Section 3 and, if acceptable to the Developer, submit an executed copy of the final form of the Project DDA to the Executive Director of the Agency on or before the end of the Negotiation Period (or such later date corresponding to an authorized extension of the Negotiation Period); and c. consult with the Agency on a regular basis and keep the Agency advised on the progress of the Developer in completing its obligations under this Agreement. In addition to the foregoing, during the Negotiation Period, the Developer shall have the right but not the obligation to file a formal application with the City for approval of one or more of the Development Entitlements for the Project and to initiate the process under CEQA for preparing an initial study and a draft EIR to enable the City and the Agency to independently evaluate the environmental impacts of the Project, a reasonable range of feasible alternatives to the Project, and feasible mitigation measures that may reduce potentially significant environmental impacts of the Project to an acceptable level, all in accordance with CEQA. In the event that the Developer elects to file any such application and/or initiate the CEQA review process during the Negotiation Period and prior to the parties' approval and execution of a Project DDA, the Agency shall cooperate reasonably with the Developer in such regard, subject to the understandings that (i) the Agency does not precommit to support or approve any of the Development Entitlements or the Project EIR, it being understood that the Agency reserves whatever discretionary authority it would otherwise have with respect to such matters in the absence of this Agreement; (ii) the Agency's approval of the Project DDA prior to issuance of the Development Entitlements and certification of the Project EIR shall not constitute an approval of or precommitment with respect to the Project; and (iii) the Project DDA will include provisions that the conveyance of the Property to the Developer and the Developer's right to develop the Project will be conditional and contingent upon the City's and the Agency's approval of the Project, the Development Entitlements and the EIR at a later date. 5. Al!encv Not to Nel!otiate with Others. a. The Agency currently deems the acquisition of the Property by the Agency from the City, disposition of the Property by the appropriate for further Agency to the Developer, and redevelopment of the Study Area for a feasible Project to be review and consideration, and the Developer appears to be qualified to undertake the task of planning the details for the potential acquisition of the Property and development of the Study Area. -6- P \Agendas\Agenda Anachments"AgrmU-Amend 2007\06-18-07 Galaxy Commercial Holding. LLC . Final ERN doc e e e b. During the Negotiation Period, the Agency shall not negotiate with any other person or entity regarding either the disposition of the Property or the redevelopment of all or any portion of the Project. The term "negotiate", as used herein, shall be deemed to preclude the Agency from approving any other offer or proposal from a third party to either acquire from the Agency any interest in the Study Area (in whole or in part) or development of the Project in the Study Area, and from discussing other redevelopment proposals for the Study Area with third persons or entities; provided, however, any person may submit and the Agency may consider any proposal for the disposition and/or redevelopment oflands adjacent to the Study Area. c. Notwithstanding any other provision of this Agreement, during the Negotiation Period, the Agency shall not be precluded from furnishing to persons or entities unrelated to the Developer information in the possession of the Agency relating to the redevelopment of any other land owned or controlled by the City or the Agency outside but in close proximity to the Study Area. Subject to its obligations set forth in 5.b. above, the Agency may also provide any other information in its possession that would customarily be furnished to persons requesting information from the Agency regarding the Study Area and other Agency public information concerning its activities, goals and matters of a similar nature, or as required by law to be disclosed upon request. 6. Al!encv Cooperation. During the Negotiation Period, the Agency shall: a. at the request of Developer, use its best efforts to assemble written materials and documents relating to the Property that are in the possession of the Agency; b. use its best efforts to provide appropriate and timely comments to the Developer with respect to one or more conceptual development plans, as may be proposed by the Developer for the Project, and the redevelopment of the Study Area, including, but not limited to, conceptual plans or studies of vacation, realignment or abandonment of public property and facilities, the installation and improvement of public improvements, any formal Development Entitlements applications that may be filed by the Developer during the Negotiation Period and any environmental evaluation of the Project that may be undertaken during the Negotiation Period under CEQA (but reserving the Agency's discretion and authority with regard to support and approval of such matters as set forth in the last paragraph of Section 4 above); c. use its best efforts to provide the Developer with limited access to the Property during the Negotiation Period, for the purpose of conducting customary due diligence investigations thereon, including environmental investigations of the subsurface or any structure thereon, subject to the terms and conditions of a separate environmental investigation and inspection license agreement to be agreed upon by the Agency and the Developer, at some later date, if applicable; and d. use its best efforts to provide the Developer with information or copies of all reports, studies, and other information in the City's or the Agency's possession relative to the Property and the status of the City's and the Agency's efforts to relocate existing City vehicle parking and public gathering uses from the Property as needed to accommodate the Project. -7- PAgendas',Agenda Al\ach~rl!s\Agrmts~Amcnd 2007\06-18-07 Galaxy Commercial Holding, LLC. Final ER.N doc e e e 7. Nel!otiation of Proiect DDA. It is the intent of the parties that the Developer and the Agency will negotiate the final terms and conditions of a proposed Project DDA between the date that the Developer submits the Site Plan and Project Study for the Project to the Agency pursuant to Section 3.b. of this Agreement at the end of the Negotiation Period. Notwithstanding such commitment of the Agency to negotiate the terms and conditions of the final Project DDA, nothing contained herein commits the Agency Staff to recommend approval of any final form of a Project DDA presented for consideration by the Commission, nor shall the Commission be committed to approve any final form of a Project DDA by reason of the execution of this Agreement or by reason of any other actions of the Agency, the Agency Staff or the Commission prior to the conducting of a noticed public hearing on the consideration of the Project DDA in the manner as required by law. Should the Agency and the Developer execute and deliver a Project DDA, the parties anticipate as of the Effective Date that the Project DDA will or may include, without limitation, the following terms, provisions and covenants: (I) that the purchase price for the Property will be the fair market value of the Property no more than six (6) months prior to the anticipated transfer of the Property to the Developer (in accordance with and pursuant to the Project DDA), as determined by a MAl appraiser acceptable to the Agency in its sole discretion; and (2) such provisions for Agency financial assistance for off-site public improvements to which the Agency and the Developer may mutually agree, as referred to in Section 3.c. of this Agreement and subject to the understanding that the Agency does not precommit to any such financial assistance in this Agreement; and (3) an acknowledgment that the Agency's approval of the Project DDA does not constitute the Agency's or the City's approval of the Project for purposes of CEQA and that the conveyance of the Property to the Developer and the Developer's right and obligation to develop the Project in the Study Area will be conditional and contingent upon the issuance of all of the Development Entitlements and certification of the Project EIR; and (4) that the Project, if approved, will involve a total development with a minimum development cost of Thirty Million Dollars ($30,000,000); and (5) a provision that the ERN Fee payable pursuant to Section 30 of this Agreement shall be credited in full toward the Developer's purchase price for the Property. 8. Consideration for this Al!reement and Reservation of Ril!hts. In consideration for the Agency entering into this Agreement, the Developer will undertake its obligations under this Agreement and provide the Agency with copies of all studies and reports and other information generated by the Developer or its consultants regarding the Project; provided, however, that nothing set forth in this Agreement shall obligate the Developer to provide the Agency with information relating to confidential contract negotiations with prospective tenants or other end -8- P 'Agendas\Ag~nda Anachmc:n1S\Agrmts-Amend ~OOT,06.18_07 Gala~y Convnercial Holding. LtC _ Final ERN doc e , ie e users or any other confidential financial or business information that is not reasonably required by the Agency to perform its obligations set forth in this Agreement. The parties agree that, if this Agreement terminates for any reason, or the Agency fails to extend the Negotiation Period, or the Project DDA is not finally approved by the Agency, for any reason, neither party shall have any further obligation to the other under this Agreement regarding the disposition, acquisition, reuse, redevelopment or development of the Study Area. 9. Planninl!: and Desil!:n: Related Acknowledl!:ments of the Parties. Certain development standards and design controls for the Project may be established between the Developer .and the Agency in negotiation of or in the final form of the Project DDA, but it is understood by both parties that the Project must conform to the City's development, design and architectural standards. The Agency shall fully cooperate with the Developer's professional associates in providing information and non-monetary assistance in connection with the Developer's preparation of drawings, plans, and specifications. Nothing in this Agreement shall be considered approval of any plans or specifications for the Project, itself, by either the Agency or the City. 10. Developer Financial Disclosures. Subject to its reserved rights set forth in Section 8 hereinabove, the Developer acknowledges that it may be requested to make certain confidential financial disclosures to the Agency, its staff or legal counsel, as part of the financial due diligence investigations of the Agency relating to the potential disposition of the Property to the Developer or development of the Project. The parties recognize that such financial disclosures may contain sensitive information relating to other business transactions of the Developer, that the disclosure of such information to third parties could impose commercially unreasonable and/or anti-competitive burdens on the Developer and, correspondingly, diminish the value or fiscal benefit that may accrue to the Agency upon the disposition of the Property to the Developer, if terms for such disposition are mutually agreed upon. Accordingly, the Agency agrees to maintain the confidentiality of any business records described in Government Code Section 6254.15, as may be provided by the Developer to the Agency or its consultants, as permitted by law. The Agency shall advise the Developer of any Public Records Act requests for such business records, and the proposed response of the Agency thereto, a reasonable time prior to the Agency's delivery of such response and, if the Agency proposes to disclose any such business records, the Agency shall first agree to confer with the Developer to consider any objections that the Developer may have to such disclosure. 11. Developer Acquires No Interest in the Property. The Developer hereby acknowledges that it has not acquired and will not acquire, by virtue of the terms of this Agreement, any legal or equitable interest in the Property. Nothing contained in this Agreement shall commit the Agency in advance to accept and approve the final form of the Project DDA except in the manner required pursuant to the provisions of the California Community Redevelopment Law at a duly noticed public hearing of Commission as the governing body of the Agency. 12. Nondiscrimination. The Developer shall not discriminate against nor segregate any person, or group of persons on account of race, color, creed, religion, sex, marital status, handicap, national origin or ancestry in undertaking its obligations under this Agreement. -9- P \Agendas\Agc:nda Auachment<;\AgrrT4S-Amcnd 2007106-18-07 Gala:<y Commercial Holding. l.LC . Final ERNdoo:: e e e 13. Compliance with Law. The Developer acknowledges that the Project DDA, if mutually agreeable terms are established, is likely to require the Developer (among other things) to carry out the construction of certain improvements in conformity with all applicable laws, including all applicable planning and zoning laws, and environmental planning and safety laws. The parties agree that it is their intention as of the Effective Date of this Agreement that in order to assure the feasibility of the Project, they will cooperate in an effort to cause the Project DDA to be structured in such a manner that any public financial' assistance does not result in the Project being classified as a "public work" for purposes of California prevailing wage law requirements except to the extent that prevailing wages may have to be paid with respect to public improvements paid for in whole or in part with Agency funds. 14. Required Approvals. No Project DDA between the parties shall have any force or effect nor shall the Agency be deemed to be a party to any agreement for the disposition of real or personal property to the Developer, until the terms and conditions of the Project DDA are considered and approved by the Commission as the governing body of the Agency, following the conclusion of a public hearing, as required by law. 15. Press Releases. The Developer agrees to discuss any press releases it may propose relating to the Study Area with the Executive Director of the Agency or his/her designee, prior to publication, to assure accuracy and consistency of the information. 16. Notice. All notices required hereunder shall be presented either (i) in person or (ii) by fax and confirmed by First Class Certified or Registered United States mail with return receipt requested. Notice shall be deemed confirmed by United States mail effective the second business day after deposit with the United States Postal Service. Notice by personal service shall be deemed effective upon delivery. Either party may change its address for receipt of notice by notifying the other party in writing. TO DEVELOPER: Galaxy Commercial Holding, LLC Attn.: Raffi Cohen 8906 West Olympic Boulevard, Suite 200 Beverly Hills, California 90211 Telephone: (310) 273-7233 TO AGENCY: Redevelopment Agency of the City of San Bernardino Attn.: Maggie Pacheco, Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 Telephone: (909) 663-1044 17. Acceptance of Al!reement bv the Developer. The Developer shall acknowledge its acceptance of this Agreement by delivering three (3) counterpart executed copies of this Agreement prior to the date of consideration and approval of this -10- P\Agendas\Agenda Anachment$IAgmtts_Amend 2007\06_18.07 Galaxy Commercial Hulding. LLC. Final ERN doc e e e Agreement by the Commission. As further set forth in Section 3a. hereof, the Effective Date of this Agreement shall be deemed to have occurred upon final approval of the Commission and execution by both the Developer and the Executive Director of the Agency. 18. Authoritv. Each signatory to this Agreement represents and warrants that he or she has the authority to execute this Agreement on behalf of the principal whom he or she purports to represent. 19. Optional Termination bv Developer or bv Al!encv. a. The Developer may, in its sole and absolute discretion, exercise an election to terminate this Agreement provided that the Developer gives at least a twenty-one (21) calendar day advance written notice to the Agency. If the Developer terminates this Agreement, it shall not be entitled to a refund of any portion of the ERN Fee referred to in Section 30 unless the Developer has reasonably determined, and after pursuits by the Developer in furtherance of the Project utilizing good faith efforts, that the Project as contemplated by this Agreement is not financially feasible, it shall remain responsible for performance of its indemnity obligations set forth in Section 22 with respect to any acts or omissions of the Developer occurring prior to the effective date of the termination, and neither party shall have any further rights or obligations to the other party hereunder. b. The Agency may not exercise an election to suspend the Project or to terminate this Agreement other than as provided in Section 20 hereof. 20. Defaults and Breach - General. Failure or delay by either party to pefform any material term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if the party who is otherwise claimed to be in default by the other party commences to cure, correct or remedy the alleged default within five (5) business days after receipt of written notice specifying such default and shall in fact complete such cure, correction or remedy, with reasonable diligence, such party shall not be deemed to be in default hereunder. The party, which may claim that a default has occurred, shall give written notice of default to the party in default, specifying the alleged default. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default; provided, however, the injured party shall have no right to exercise any remedy for a default as set forth herein without delivering the written default notice as specified herein. Any failure to delay by a party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with such a default. In the event of an uncured material breach, the party who is not in default shall be entitled to seek any appropriate remedy by initiating legal proceedings; provided, however, that, other than with respect to a Developer default in failing to perform its indemnity obligations set forth in Section 22, (i) the Agency shall not be entitled to specific performance or other equitable or injunctive relief against the Developer for a default by the Developer hereunder and (ii) the Agency's sole damages remedy shall be to retain the Developer's entire ERN Fee referred to in Section 30 as liquidated damages. -11- P \Agendas\Agenda Anachmenls\Agrmts-Amend ~OOl'06-IS-07 Galaxy Commercial Holding. LLC _ Final ERN doc e e e 24. ~ In the event that a material breach has occurred and the non-performing party has not cured such breach within the period of time provided for in this Section 20, the party who is not then in default may terminate this Agreement by serving the other party with a written notice of termination, and thereafter, the Agreement shall terminate on the date specified in such notice, which date shall not be earlier than the later of (i) ten (10) business days following the date of service of the notice of termination on the other party or (ii) the date otherwise specified in such notice. 21. Attornevs' Fees. If any party hereto files any action or brings any action or proceeding against the other arising out of this Agreement, or is made a party to any action or proceeding brought by a third party, then as between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, its reasonable attorneys' fees as fixed by the Court, in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees. As between the Developer and the Agency, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, its reasonable attorneys' fees as fixed by the Court, in such action or proceeding or in a separate action or proceeding brought to recover such attorneys' fees. 22. Indemnification. The Developer agrees to indemnify, protect, defend (if requested by the Agency and/or the City) and hold the Agency and/or the City, and their officers, employees and agents, harmless from and against, without limitation, all actions, causes of action, claims, demands, damages, judgments, costs, expenses and penalties (including, without limitation, attorneys' fees, court costs, consultant fees and costs, and all attorneys' fees and court costs incurred in connection with all appeals), to the extent arising from or related to any uncured default by the Developer hereunder or any intentional misconduct or negligent act or omission of the Developer, its agents, employees and/or independent contractors (and the successors and/or assigns of each of them) in performing, omitting, or failing to perform, in its obligations hereunder (collectively, the "Claims"); provided, however, that (i) the foregoing indemnity obligation shall not apply to the extent any Claims arise out of any default by the Agency in performing its obligations set forth in this Agreement or to the extent the Agency has engaged in any intentional misconduct or is guilty of gross negligence and (ii) the foregoing indemnity obligation shall not cover any Claim for exemplary or punitive damages unless the Developer is guilty of malice. The Agency and/or the City shall give the Developer written notice of the occurrence of any Claim for which the Agency and/or the City seek indemnity under this Section as promptly as practicable following the Agency's and/or the City's knowledge of the occurrence of such matter and the Agency and/or the City shall reasonably cooperate with the Developer in the defense of any such Claim. This indemnity provision shall survive the execution, delivery, expiration and/or termination of this Agreement. 23. Governinl!: Law: Venue. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of California. Further, the parties to this Agreement hereby agree that any legal actions arising from this Agreement shall be filed in California Superior Court, in the County of San Bernardino, San Bernardino District. Severability. If any term, provision or portion of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the -12- P \Agcl1das\Agenda Allachmenls'Agmns_Amend 2007106-18.07 Gab~y COmrneT1;;;J.1 Holding. LtC. Final ERN do<: e e e II' application of such term or provision or portion thereof to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 25. No Intent to Create Third Party Beneficiaries. The parties intend that the rights and obligations under this Agreement shall benefit and burden only the parties hereto, and do not intend to nor shall it create any rights in, or right of action to or for the use or benefit of any third party, including any governmental agency, who is not one of the parties to this Agreement. 26. Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of the time for performance of any obligation or act to be performed herein shall be deemed to be an extension of the time for performance of any other obligation or act to be performed under this Agreement. 27. Entire Al!:reement. This Agreement (including Exhibit "A" attached hereto) is the final expression of, and contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented, or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the appropriate party or by its agent duly authorized in writing or as otherwise expressly permitted herein. This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall constitute a single instrument. 28. Time of Essence. Time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof. Failure to timely perform any of the terms, conditions, obligations or provisions hereof by either party shall constitute a default under this Agreement by the party so failing to perform, which default can be waived by the other party at its sole and complete discretion. 29. Construction. Headings at the beginning of each section, paragraph, and subparagraph are solely for the convenience of the parties and are not a part of this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as ifit had been prepared by one of the parties, but rather as if both parties had prepared the same. Unless otherwise indicated, all references to sections are to this Agreement. Exhibit "A" referred to in this Agreement is attached hereto and incorporated herein by this reference as if fully set forth herein in its entirety. 30. ERN Fee. Concurrently, with the execution and delivery of this Agreement by the undersigned parties on the Effective Date, the Developer shall deliver to the Agency a check in the amount of Seventeen Thousand Five Hundred Dollars ($17,500), representing the Exclusive Right to Negotiate Fee (the -13- P \Agendas'.Agenda Anachmc:nlS\Agnms-Amend 2007\06-18-D7 Galaxy Commercial Holding, LLC Final ER,'1 doc e e e "ERN Fee"). In the event the parties enter into a Project DDA, the parties intend that the Project DDA will provide that the ERN Fee will be credited in full towards the Developer's purchase price for the Property. The ERN Fee will not be retained by the Agency if the Developer, through good faith efforts, is unable to reasonably determine that the Project as intended to be developed upon the Property will be financially feasible to be undertaken in accordance with the proposed Project DDA. IN WITNESS WHEREOF, Galaxy Commercial Holding, LLC, and the Redevelopment Agency of the City of San Bernardino execute this Redevelopment Project Study and Exclusive Right to Negotiate Agreement on the dates indicated next to each of the signatures of their authorized representatives as they appear below. DEVELOPER Galaxy Commercial Holding, LLC, a California limited liability company Dated: By: Its: AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: A~t By: '''-./;.. ~ " " . Agency Co' nsel -14- P "Agendas'Agenda Attachmc:nts\Agmu-Amc:nd 2007\06-18-07 Galaxy Cornrnerclal Holding. LtC - Final ERJ.. du.: . . e EXHIBIT "A" Study Area -15- P\Ag('ndasIAgenda Auachmcnts'Agnms.Amcnd 2007\06-] 8-07 Gala.\y COTTIfTIeI"Cial Holding, LLC Final ER.\l doc e e e 'I = i _hl_ ~ =i= = :=F a~ H~ """'"'" - ~.. - .... ] -~ ~ Nono SCALE - " - ';;;;;'''' nw..~ PInIng EL tort. .... SA ..-. I I THIRD STREET '- r=T fiR ~ -~- c.n,..DlItt1ctIY ""'" FOURTH STREET .. w W II: Iii i" COURT STREET COURT STREET ,- _:-=-=>--o- -c - - - r:!- II IlII 1 'n' 1 American Trust Building 2 Parking Lot 3 GoId's Gym (Vacant) 4 Heritage Building (Ca~os Obriens) 5 Heritage Building Parking Lot 6 Deli 7 Molly's Restaurant _! ~! 'i' sa -- -- (~ ~ u D ,------ ti w I!: III P -- - !Son...., ...." ....... 1-.:.- [