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HomeMy WebLinkAboutDEPOT AT SANTIAGO, L.P - 2016INSURANCE NOT REQUIRES A-2016-266 WORK MAY PROCEED CLERK OF COUNG DATF, AGREEMENT FOR THE PAYMENT OF PUBLIC IMPROVEMENTS THIS AGREEMENT, made and entered into this __,�-&--day of,�� , 2016, by and between the CITY OF SANTA ANA, a municipal corporation of the State of California ("City") and DEPOT AT SANTIAGO, L.P., a California limited partnership ("Developer"). RECITALS A. The Developer Is developing affordable rental housing on property located at 923 N. Santiago Street and 914 N. Logan Street in the City of Santa Ana ("Development"). B. As a condition to the Development, the Developer is required by the City to install certain public improvements ("Improvements"). The City and the Developer wish the City to perform the installation of the Improvements on behalf of the Developer, at the Developer's sole cost and expense. WHEREFORE, in consideration of the foregoing, the parties hereby agree as follows: The City partnered with the Developer for an affordable housing grant. Part of the grant included installation of transportation -related infrastructure, including enhanced street crossings at Santa Ana Boulevard / Garfield Street and Santa Ana Boulevard / Lacy Street. The City will be finalizing the design for these Improvements and bidding the project out. The City shall require the contractor to complete the Improvements prior to April 1, 2017, and require delay penalties for failure to complete on time. 2. The estimated costs of the Improvements is $400,000,00. The Developer shall pay the sum of only $400,000.00 to the City. 3. NOTICE All notices pertaining to this Agreement and all communications from the parties may be made by delivery and said notices or communications in person or through the U.S. Mail, first class, certified, return receipt requested and addressed as follows: To Developer: Depot At Santiago, L.P. 14211 Yorba Street, Suite 200 Tustin, CA 92780 To City: City of Santa Ana Public Works Agency 20 Civic Center Plaza, M-21 P.O. Box 1988 Santa Ana, CA 92702 Attn: City Engineer Written notice is effective five days after mailing to the most current address provided by the parties. Failure by either party to notify the other of a change in mailing address shall not Invalidate service by mail to the most current address provided by that party. Personal service of notice is effective upon delivery. 1070149\1939012.2 4. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be held 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. 5. This Agreement has been executed and delivered in the State of California and the validity, enforceability and interpretation of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. All duties and obligation of the parties created hereunder are to be performed in Orange County, which shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 6. To the maximum extent allowed by law, the City shall indemnify, defend, reimburse, save and hold harmless Developer from and against all liability, damage, loss, claims, demands, actions, costs and expenses (including but not limited to attorney's fees and disbursements) which arise out of or are connected with, or claimed to arise out of or be connected with, the City's construction of the Improvements, including, but not limited to, claims by third parties that the Improvements were constructed in such a way to result in harm to person or property. 7. This Agreement may not be modified or amended except in writing signed by the Developer and City. Signatures on following page 1070\49\1939012.2 IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first written above. ATTEST: JU MA IA D. HUIZAR Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City 0 R MMkNIIVED FOR APPROVAL: R D OI OUR Executive Director Public Works Agency 3 1076\49\1939012.2 CITY OF 'ANTA ANA: DAVID VAZOS City Manager DEVELOPER: DEPOT AT SANTIAGO, L.P., a California limited partnership By: OHDC LLC Depot LLC, a California limited liability company, its managing partner By: Orange Housing Development Corporation, a California nonprofit public benefit corporation, its sole member By: Eunice Bobert Chief Executive Officer By: C&C Depot, LLC, a California limited liability company, its administrative general partner By: C & C Development Co., LLC, a California limited liability company, its sole member By: Todd R. Cottle its member By: 0 ��— Barry A. Cottle, Trustee of The Cottle Family Trust Dated 3/18/1987 its member A-2016-277 INSURANCE NOT REO UIRM VVDIK MAY PROCEED CLERK OF COUNCIL. DATC. /0 ,?# EXCLUSIVE NEGOTIATION AGREEMENT This Exclusive Negotiation Agreement ("Agreement') is dated , 2016,.for reference purposes only, and is entered into by and among (1) the CITY OF SANTA ANA, a California charter city in the County of Orange of the State of California ("City"), (2) NET DEVELOPMENT CO., INC., a, California corporation ("Developer"), in order to provide a specified period of time to attempt to negotiate a disposition and development agreement ("DDA"). City and Developer are sometimes referred to in this Agreement individually, as a "Party" and, collectively, as the "Parties." This Agreement is entered into by the Parties with reference to the following recited facts (each, a "Recital"): RECITALS WHEREAS, the intent of the Parties in entering into this Agreement is to establish a specific, limited period of time to negotiate regarding a future agreement among them governing the potential acquisition and development of certain real property, subject to mutually agreeable terms, conditions, covenants, restrictions and agreements to be negotiated and documented in a fixture DDA; and WHEREAS, the property contemplated is located at 21.29 Main Street, Santa Ana, CA (APNs 003-113-80 & 003-113-81) (the Property); and WHEREAS, City owns the Property; and WHEREAS, the Property is more particularly described in the legal description attached to this Agreement as Exhibit "A" (hereinafter, collectively, the "Property") and incorporated into this Agreement by this reference; and WHEREAS, Developer proposes to develop a hotel on the Property, as more particularly described in Exhibit `B" attached to this Agreement ("Project'); and WHEREAS, the Parties propose to conduct negotiations in order to produce a DDA in accordance with the timeline and milestones attached to this Agreement as Exhibit "C"; and WHEREAS, the Parties now agree to enter into this Agreement for the purpose of finther planning and evaluating the feasibility of the proposed Project; and WHEREAS, the Developer has represented its willingness and ability to undertake certain studies, plans and other- activities necessary to define the scope of development and determine the feasibility of the Project on the Property and that such pians and other information to be prepared during the course of this Agreement shall serve as the basis for entering into a DDA among City and Developer; and WHEREAS, City is willing to enter into a period of exclusive negotiations with Developer concerning Developer's potential development of the Project, subject to the terms and conditions of this Agreement; NOW, THEREFORE, IN VIEW OF THE GOALS AND OBJECTIVES OF THE PARTIES RELATING TO THE PROJECT AND THE COVENANTS AND PROMISES OF THE CITY AND THE DEVELOPER SET FORTH IN THIS AGREEMENT, AND FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY AND RECEIPT OF WHICH ARE HEREBY ACKNOWLEDGED BY THE PARTIES. THE CITY AND THE DEVELOPER AGREE AS FOLLOWS: 1. Incorporation of Recitals. The Recitals of fact set forth above are true and correct and are incorporated into this Agreement, in their entirety, by this reference. 2. Deposits. Concurrent with the Developer's execution of this Agreement, the Developer shall pay to the City a deposit in the amount of Ninety Thousand Dollars ($90,000) in immediately available funds ("Initial Deposit") to ensure that the Developer will proceed diligently and in good faith to fulfill its obligations under this Agreement during the Negotiation Period (as defined in Section 3(a), as part of the consideration for the City's agreement not to negotiate with other persons during the Negotiation Period, and to defray certain costs of the City in pursuing the contemplated negotiations with the Developer during the Negotiation Period, pursuant to this Agreement. City shall draw down against the Initial Deposit for all out of pocket staff and third party costs incurred related to the Project and negotiation of a DDA. Any amount of the Initial Deposit remaining at the conclusion of the Negotiation Period shall be transferred to escrow upon the execution of a Purchase and Sale Agreement and credited against the purchase price thereunder. City shall provide Developer with copies of invoices and such back up information as is reasonably requested by Developer regarding the use of the Initial Deposit on a quarterly calendar basis as the Initial Deposit is utilized. Upon each extension of the Negotiation Period occurring pursuant to the provisions of Section 3(b), if any, the Developer shall not be required to make any additional deposit. However, if, at any time the Initial Deposit held by the City is less than Five Thousand Dollars ($5000), Developer shall make an additional Deposit of Twenty Thousand Dollars ($20,000) ("Additional Deposit"). The Additional Deposit amount shall be subject to the provision above applicable to the Initial Deposit. 3. Term of Agreement. (a) The rights and duties of the City, and the Developer established by this Agreement shall commence on the first date on which all of the following have occurred (the "Effective Date"): (1) execution of this Agreement by the authorized representative(s) of the Developer and delivery of such executed Agreement to the City, (2) payment of the Initial Deposit to the City by the Developer, in accordance with Section 2(a), and (3) approval of this Agreement by the City's execution of this Agreement by their respective authorized representatives and delivery of such executed Agreement to the Developer. The City shall each deliver a fully executed counterpart original of this Agreement to the Developer, within ten (10) calendar days after the governing bodies of the City have approved this Agreement, and their authorized representatives have executed this Agreement. This Agreement shall continue in -2- effect for the period of one hundred eighty (180) consecutive calendar days immediately following the Effective Date ("Negotiation Period"), subject to the limitations of Sections 3(b). (b) The Negotiation Period may be extended upon the mutual written agreement of the City Manager and the Developer for no more than two (2) additional consecutive ninety (90) calendar day periods. Notwithstanding the immediately preceding sentence or any other part of this Agreement, in no event shall the Negotiation Period exceed three hundred sixty (360) consecutive calendar days from the Effective Date. (c) This Agreement shall automatically expire and be of no further force or effect at the end of the Negotiation Period (as may be extended pursuant to the terms of this Agreement), unless, prior to that time, the City and the Developer approve and execute a separate DDA acceptable to the two Parties, in their respective sole and absolute discretion, in which case this Agreement will terminate on the effective date of such DDA. 4. Obligations of Developer. During the Negotiation Period, the Developer shall proceed diligently and in good faith to develop and present to City staff for review, all of the following: (a) A complete development application, together with the payment of all applicable review fees for the Project on the Property that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings; (b) Proposed zoning change or changes to the City's General Plan, if any, necessary to accommodate the Project on the Property; (c) A written commitment from an agent of a recognized hotel chain which written commitment must reflect the exact class and quality of the hotel brand; A proposed time schedule and cost estimates for the development of the Project on the Property; (d) A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and (e) A preliminary financial analysis demonstrating the costs and benefits to the City regarding all construction, maintenance and operations of all proposed public improvements, the costs of additional or increased levels of public services and any new public revenues anticipated to be generated by the Project. 4.1 Parties acImowledge and agree that all submittals required by this Agreement shall be made pursuant to the time attached hereto as Exhibit C. Exhibit C may be amended administratively by City Manager with the concurrence of Developer, provided that the timeline does not exceed the Negotiation Period. 5. Negotiation of DDA. During the Negotiation Period, the Parties shall negotiate diligently and in good faith to negotiate a DDA among them. The Parties shall generally cooperate with each other and supply such documents and information as may be reasonably requested by the other to facilitate the conduct of the negotiations. The Parties shall exercise -3- reasonable efforts to complete discussions relating to the terms and conditions of a DDA and such other matters, as may be mutually acceptable to the Parties, in their respective sole discretion. The exact terms and conditions of a DDA, if any, shall be determined during the course of these negotiations. Nothing in this Agreement shall be interpreted or construed to be a representation or agreement by either the City or the Developer that a mutually acceptable DDA will be produced from negotiations under this Agreement. Nothing in this Agreement shall impose any obligation on either Party to agree to a definitive DDA in the future. Nothing in this Agreement shall be interpreted or construed to be a guaranty, warranty or representation that any proposed DDA that may be negotiated by City staff and the Developer will be approved by the governing bodies of the City. The Developer acknowledges and agrees that the City's considerations of any DDA is subject to the sole and absolute discretion of their City Council and all legally required public hearings, public meetings, notices, factual findings and other determinations required by law. 6. Restrictions Against Change in Ownership, Management and Control of Developer and Assignment of Agreement. (a) The qualifications and identity of the Developer and its principals are of particular concern to the City. It is because of these qualifications and identity that the City has entered into this Agreement with the Developer. During the Negotiation Period, no voluntary or involuntary successor -in -interest of the Developer shall acquire any rights or powers under this Agreement, except as provided in Section 6(c). (b) The Developer shall promptly notify the City in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in Control (as defined in Section 6(d)) of the Developer, as well as any and all changes in the interest or the degree of Control of the Developer by any such person, of which information the Developer or any of its shareholders, partners, members, directors, managers or officers are notified or may otherwise have knowledge or information. Upon the occurrence of any significant or material change, whether voluntary or involuntary, in ownership, management or Control of the Developer (other than such changes occasioned by the death or incapacity of any individual) that has not been approved by the City, prior to the time of such change, the City may terminate this Agreement, without liability to the Developer or any other person, by sending written notice of termination to the other Parties, referencing this Section 6(b). (c) Notwithstanding anything in this Agreement to the contrary, Developer may assign its rights under this Agreement to an Affiliate (as defined in Section 6(d)), on the condition that such Affiliate expressly assumes all of the obligations of the Developer under this Agreement in a writing reasonably satisfactory to the City and further provided that Net Development Company, Inc., a California corporation, shall, at all times, Control any such Affiliate. (d) For the purposes of this Agreement, the term "Affiliate" means any person, directly or indirectly, controlling or controlled by or under common control with the Developer, whether by direct or indirect ownership of equity interests, by contract, or otherwise, including Kevin Coleman, K. Gregory Wohl or Peter Desforges. For the purposes of this agreement, "Control" means possession, directly or indirectly, of the power to direct or cause 0 the direction of the management and policies of an entity, whether by ownership of equity interests, by contract, or otherwise. 7. Developer Obligations to Review Draft Agreements and Attend Meetings. (a) During the Negotiation Period, the Parties shall diligently review and comment on drafts of a DDA prepared by the City Attorney, and if the terms and conditions of such a DDA are agreed upon among the City staff and the Developer, Developer shall submit the DDA fully executed by the authorized representative(s) of the Developer to the City Manager for submission to City Council for review and approval or disapproval. Any future DDA shall consist of terms and conditions acceptable to the Developer and the City Council of the City, in their respective sole and absolute discretion. (b) During the Negotiation Period, the Developer shall also keep City staff advised on the progress of the Developer in performing its obligations under this Agreement, on a regular basis or as requested by City Staff including, without limitation, having one or more of the Developer's employees or consultants who are knowledgeable regarding this Agreement, the design and planning of the Project and the progress of negotiation of a DDA, such that such person(s) can meaningfully respond to inquiries from City and regarding the progress of the design and planning of the Project or the negotiation of a DDA, attend both: (1) weekly meetings with City staff, as reasonably scheduled by City Staff during the Negotiation Period, which may be held telephonically (each, a "Weekly Meeting"), and (2) meetings of the City's, when reasonably requested to do so by their respective staff. 8. Developer to Pay All Costs and Expenses. All fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or negotiation of a DDA that may be undertaken by the Developer during the Negotiation Period, pursuant to or in reliance upon this Agreement or in the Developer's discretion, regarding any matter relating to a DDA, the Property or the Project, shall be the sole responsibility of and undertaken at the sole cost and expense of the Developer and no such activity or matter shall be deemed to be undertaken for the benefit of, at the expense of or in reliance upon the City. The Developer shall also pay all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City and all applications and other documents and information to be submitted to the City and by the Developer pursuant to this Agreement or otherwise associated with the Project. The City shall not be obligated to pay or reimburse any expenses, fees, charges or costs incurred by the Developer in pursuit of any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the 'Property or the Project or negotiation of a DDA that may be undertaken by the Developer during the Negotiation Period, whether or not this Agreement is, eventually, terminated or extended or a DDA is entered into among the Parties, in the future. -5- 9. City Not To Negotiate With Others. (a) During the Negotiation Period, the City, and their respective staff shall not negotiate with any other person regarding the sale or development of the Property, except owners of or business tenants occupying property within the Project. The term "negotiate," as used in this Agreement, means and refers to engaging in any discussions with a person other than the Developer, regardless of how initiated, with respect to that person's development of the Property to the total or partial exclusion of the Developer from redeveloping the Property, without the Developer's written consent, subject to the provisions of Section 9(b) and further provided that they may receive and retain unsolicited offers regarding development of the Property, but shall not negotiate with the proponent of any such offer during the Negotiation Period. (b) Nothing in this Agreement shall limit, prevent, restrict or inhibit the City from providing any information in its possession or control that would customarily be furnished to persons requesting information from the City concerning their respective goals, matters of a similar nature relating to development plans or as required by law to be disclosed, upon request or otherwise. 10. Acknowledgments and Reservations. (a) The Parties agree that, if this Agreement expires or is terminated for any reason, or a future DDA is not approved and executed by the Parties, for any reason, none of the Parties shall be under any obligation, nor have any liability to each other or any other person regarding the sale or other disposition of the Property or the development of the Project or the Property. (b) The Developer acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer by the City, nor an acceptance by the City of any offer or proposal from the Developer for the City to convey any estate or interest in the Property to the Developer or for the City to provide any financial or other assistance to the Developer for development of the Property or execution of the Project. (c) The Developer acknowledges and agrees that the Developer has not acquired, nor will acquire, by virtue of the terms of this Agreement, any legal or equitable interest in real or personal property from the City. (d) Certain development standards and design controls for the Project may be established among the Parties, but it is understood and agreed among the Parties that the Project and the development of the Property must conform to all City, and other applicable governmental development, land use and architectural regulations and standards. Drawings, plans and specifications for the Project shall be subject to the approval of the City through the standard development application process for acquiring the real estate and entitlements within the Project. Nothing in this Agreement shall be considered approval of any plans or specifications for the Project or of the Project itself by the City. (e) The City reserves the right to reasonably obtain further information, data and commitments to ascertain the ability and capacity of the Developer to purchase, develop and operate the Property and/or the Project. The Developer acknowledges that it may be requested to M make certain financial disclosures to the City, their staff, legal counsel or other consultants, as part of the financial due diligence investigations of the City and relating to the potential sale of the Properties and development of the Project on the Property by the Developer and that any such disclosures may become public records. The City shall maintain the confidentiality of financial information of the Developer to the extent allowed by law, as determined by the City Attorney. Notwithstanding the foregoing, if the City receives a request for documents related to this Agreement or the Project pursuant to the California Public Records Act (Govt. Code Section 6254 et. seq) or similar statute, and the City determine that the City has responsive documents, the City shall provide Developer notice not less than three (3) days prior to releasing the responsive documents to the requesting party. During this three (3) day period Developer may seek a court order prohibiting the release of the documents. Any litigation or costs associated with protecting documents from disclosure shall be borne solely by Developer. (f) The City shall be deemed to be a Party to any agreement for the acquisition of, lease of or disposition of real or personal property, the provision of financial assistance to the Developer or development of the Project on the Property or elsewhere, until the terms and conditions of a complete future DDA are considered and approved by the City Council, in their respective sole and absolute discretion, following the conclusion of one or more duly noticed public hearings, as required by law. The Developer expressly acknowledges and agrees that the City will not be bound by any statement, promise or representation made by their respective staff or representatives during the course of negotiations of a future DDA and that the City shall only be legally bound upon the approval of a complete DDA by the City Council, in their respective sole and absolute discretion, following one or more duly noticed public hearings, as required by law. 11. 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. 12. Limitation on Damages and Remedies. (a) THE PARTIES ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY THE DEVELOPER UPON THE BREACH OF THIS AGREEMENT BY THE CITY. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES THE DEVELOPER WOULD SUFFER UPON THE BREACH OF THIS AGREEMENT BY ANOTHER PARTY, THE PARTIES AGREE THAT A REASONABLE ESTIMATE OF THE DEVELOPER'S DAMAGES IN SUCH EVENT IS THIRTY THOUSAND DOLLARS ($30,000) (THE "LIQUIDATED DAMAGES AMOUNT"). THEREFORE, UPON THE BREACH OF THIS AGREEMENT BY THE CITY, THE BREACHING PARTY SHALL PAY THE LIQUIDATED DAMAGES AMOUNT TO THE DEVELOPER AND THIS AGREEMENT SHALL TERMINATE. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE THE DEVELOPER'S SOLE AND EXCLUSIVE REMEDY ARISING FROM ANY BREACH OF THIS AGREEMENT BY THE CITY. -7- r Ini ials of Authorized Representative of City Initials of Authorized Representative of Developer (b) THE PARTIES EACH ACKNOWLEDGE AND AGREE THAT THE CITY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT, IF EITHER WERE TO BE LIABLE TO THE DEVELOPER FOR ANY MONETARY DAMAGES, MONETARY RECOVERY OR ANY REMEDY OTHER THAN TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE LIQUIDATED DAMAGES AMOUNT. ACCORDINGLY, THE PARTIES AGREE THAT THE DEVELOPER'S SOLE AND EXCLUSIVE RIGHT AND REMEDY UPON THE BREACH OF THIS AGREEMENT BY THE CITY IS TO TERMINATE THIS AGREEMENT AND RECEIVE THE LIQUIDATED DAMAGES AMOUNT. (c) THE DEVELOPER ACKNOWLEDGES THAT IT IS AWARE OF THE MEANING AND LEGAL EFFECT OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. (d) CALIFORNIA CIVIL CODE SECTION 1542 NOTWITHSTANDING, IT IS THE INTENTION OF THE DEVELOPER TO BE BOUND BY THE LIMITATION ON DAMAGES, RECOVERY AND REMEDIES SET FORTH IN THIS SECTION 12, AND THE DEVELOPER HEREBY RELEASES ANY AND ALL CLAIMS AGAINST THE CITY FOR MONETARY DAMAGES, MONETARY RECOVERY OR OTHER LEGAL OR EQUITABLE RELIEF RELATED TO ANY BREACH OF THIS AGREEMENT, EXCEPT RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT, WHETHER OR NOT ANY SUCH RELEASED CLAIMS WERE KNOWN OR UNKNOWN TO THE DEVELOPER AS OF THE EFFECTIVE DATE OF THIS AGREEMENT. THE DEVELOPER SPECIFICALLY WAIVES THE BENEFITS OF CALIFORNIA CIVIL CODE SECTION 1542 AND ALL OTHER STATUTES AND JUDICIAL DECISIONS (WHETHER STATE OR FEDERAL) OF SIMILAR EFFECT WITH REGARD TO THE LIMITATIONS ON DAMAGES AND REMEDIES AND WAIVERS OF ANY SUCH DAMAGES AND REMEDIES CONTAINED IN THIS SECTION 12. (e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN THE EVENT OF A BREACH BY DEVELOPER, DEVELOPER SHALL NOT BE LIABLE OR RESPONSIBLE TO CITY FOR ANY LOST OR FOREGONE TAX REVENUES, ECONOMIC OR COMMUNITY BENEFITS, FEES, CHARGES, OR ANY OTHER AMOUNT. THE PARTIES ACKNOWLEDGE THAT IT IS EXTREMELY In DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY THE CITY UPON THE BREACH OF THIS AGREEMENT BY THE DEVELOPER. HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL DAMAGES THE CITY WOULD SUFFER UPON THE BREACH OF THIS AGREEMENT BY ANOTHER PARTY, THE PARTIES AGREE THAT A REASONABLE ESTIMATE OF THE CITY'S TOTAL DAMAGES IN SUCH EVENT IS THE LIQUIDATED DAMAGES AMOUNT. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE THE CITY SOLE AND EXCLUSIVE REMEDY ARISING FROM ANY BREACH OF THIS AGREEMENT BY THE DEVELOPER. NOTWITHSTANDING THE FOREGOING, IF DEVELOPER'S BREACH IS A FAILURE TO MAINTAIN THE INITIAL OR ADDITIONAL DEPOSIT REQUIRED BY THIS AGREEMENT, IN ADDITION TO THE LIQUIDATED DAMAGES DEVELOPER SHALL REIMBURSE THE CITY FOR THE ACTUAL INCURRED STAFF TIME AND THIRD PARTY CONSULTANT TIME EXPENDED ON THE PROJECT PRIOR TO THE DATE OF TERMINATION. itials of Authorized Representative of City 13. Default. Initials of Authorized Representative of Developer (a) Failure or delay by any Party to perform any material term or provision of this Agreement shall constitute a default under this Agreement, If the Party who is claimed to be in default by another Party cures, corrects or remedies the alleged default within fifteen (15) calendar days after receipt of written notice specifying such default, such Party shall not be in default under this Agreement. The notice and cure period provided in the immediately preceding sentence shall not, under any circumstances, extend the Negotiation Period. If there are less than fifteen (15) days remaining in the Negotiation Period, the cure period allowed pursuant to this Section 13(a) shall be automatically reduced to the number of days remaining in the Negotiation Period. Nothing in this subparagraph (a) shall prohibit Developer from extending the Negotiation Period pursuant to Paragraph 3. (b) The Party claiming that a default has occurred shall give written notice of default to the Party claimed to be 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, However, the injured Party shall have no right to exercise any remedy for a default under this Agreement, without first delivering written notice of the default, (c) Any failure or delay by a Party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default or of any rights or remedies associated with a default. (d) If a default of any Party remains uncured for more than fifteen (15) calendar days following receipt of written notice of such default, a "breach" of this Agreement by the defaulting Party shall be deemed to have occurred. In the event of a breach of this Agreement, the sole and exclusive remedy of the Party who is not in default shall be to terminate ME this Agreement by serving written notice of termination on the Party in breach and, in the case of a breach by the City, the Developer shall also be entitled to receive the Liquidated Damages Amount. 14. Compliance with Law. The Developer acknowledges that any future DDA, if approved by the City Council will require the Developer (among other things) to carry out the development of the Project in conformity with all applicable laws, including all applicable building, planning and zoning laws, environmental laws, safety laws and federal and state labor and wage laws. 15. Press Releases. The Developer agrees to obtain the approval of the City Manager in function of any press releases Developer may propose relating to the lease or development of the Property or negotiation of a DDA with the City prior to publication. 16. Notice. All notices required under this Agreement shall be presented (A) in person, (B) by a reputable same-day or overnight delivery service, or (C) facsimile and confirmed by first class certified or registered United States Mail, with return receipt requested, to the address and/or fax number for the Party set forth in this Section. Notice shall be deemed confirmed by United States Mail effective the third (3rd) business day after deposit with the United States Postal Service. Notice by personal service or reputable same-day or overnight delivery service shall be effective upon delivery. Either Party may change its address for receipt of notices by notifying the other Parties in writing. Delivery of notices to courtesy copy recipients shall not be required for valid notice to a Party. TO DEVELOPER: Net Development Company, Inc. Attention: Kevin Coleman 3130 Airway Avenue Costa Mesa, CA 92626 (T)(714)754-4454 (F) (714) 754-0198 COPY TO: Kim D. Thompson, Esq. Rutan & Tucker, LLP 611 Anton Blvd. Suite 1400 Costa Mesa, CA 92626 (T) (714) 641-3449 (F) (714) 546-9035 kthompson@rutan.com TO CITY: The City of Santa Ana Hassan Haghani Executive Director Planning and Building Agency 20 Civic Center Plaza (M-20) P.O. Box 1988 Santa Ana, California 92702 -10- COPY TO: City Attorney 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, California 92702 Fax: 714-647-6515 17. Warranty Against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section 17, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and other consultants, when such fees are considered necessary by the Developer. 18. Acceptance of Agreement by Developer. The Developer shall acknowledge its acceptance of this Agreement by delivering to the City three (3) original counterpart executed copies of this Agreement each signed by the authorized representative(s) of the Developer. 19. Counterpart Originals. This Agreement may be executed by the Parties in multiple counterpart originals, all of which together shall constitute a single agreement. 20. No Third -Party Beneficiaries. Nothing in this Agreement is intended to benefit any person or entity other than the Parties. 21. Governing Law. The Parties acknowledge and agree that this Agreement was negotiated, entered into and is to be fully performed in the City of Santa Ana, California. The Parties agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of California, without application of such laws' conflicts of laws principles. 22. Waivers. No waiver of any breach of any term or condition contained in this Agreement shall be deemed a waiver of any preceding or succeeding breach of such term or condition, or of any other term or condition contained in this Agreement. No extension of the time for performance of any obligation or act, no waiver of any term or condition of this Agreement, nor any modification of this Agreement shall be enforceable against a Party, unless made in writing and executed by the Parties. 23. Construction. Headings at the beginning of each section and sub -section of this Agreement are solely for the convenience of reference 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 if it had been prepared by one Party, but rather as if the Parties cooperated equally in preparing this Agreement. Unless otherwise indicated, all references to sections are to this Agreement. All exhibits referred to in this Agreement are attached to this Agreement and incorporated into this Agreement by this reference. If the date on which a 'Party is required to take any action pursuant to the terms of this Agreement is not a business day of the City or the , the action shall be taken on the next succeeding business day of the City or the . -ll- 24. Attorneys' Fees. If a Party hereto files any action or brings any action or proceeding against another Party arising out of this Agreement, then 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. For the purposes hereof the words "reasonable attorneys' fees" mean and include, in the case of the City or the , salaries (or fees) and expenses of the lawyers employed by the City (allocated on an hourly basis) who may provide legal services in connection with the representation of the City in any such matter. 25. Enforced Delay. No party shall be deemed in default of its obligations under this Agreement where a delay or default is due to an act of God, natural disaster, accident, breakage or failure of equipment, enactment of conflicting federal or state laws or regulations, third -party litigation, administrative action including, strikes, lockouts or other labor disturbances or disputes of any character, interruption of services by suppliers thereof, unavailability of materials or labor, unforeseeable and severe economic conditions, rationing or restrictions on the use of utilities or public transportation whether due to energy shortages or other causes, war, civil disobedience, riot, or by any other severe and unforeseeable occurrence that is beyond the control of that party (collectively, "Enforced Delay"). Performance by a party of its obligations shall be excused during, and extended for a period of time equal to, the period (on a day -for -day basis) for which the cause of such Enforced Delay is in effect. [Signatures on following page] -12- IN WITNESS WHEREOF, the Parties have executed this Exclusive Negotiation Agreement on the dates indicated next to each of the signatures of their authorized representatives, as appear below. ATTEST: .e a - / MARIA D. HUIZAR Clerk of the Council AS TO FORM: By: ' SONIA City Ati RECOMMENDED FOR APPROVAL: ASSAN HA HA Executive Director Planning and Building Agency -13- CITY OF SANTA ANA e� /I,", l DAVID CAVAZOS d City Manager NET Dated: IF)- & GUNK By: Vice -President Dated: EXHIBIT "A" TO NEGOTIATION AGREEMENT Property Legal Description [To Be Attached Behind This Cover Page] EXHIBIT "A" -t- LEGAL DESCRIPTION Real property in the City of Santa Ana, County of Orange, State of California, described as follows: THAT PORTION OF LOTS 2 THROUGH 6 INCLUSIVE OF PHELP'S SUBDIVISION OF THE DERICOT TRACT IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BOUNDED NORTHEASTERLY, NORTHERLY AND WESTERLY BY THE CALIFORNIA STATE DEPARTMENT OF TRANSPORTATION RIGHT OF WAY LINE, DESCRIBED IN PART AS FOLLOWS: CALIFORNIA STATE DEPARTMENT OF TRANSPORTATION RIGHT OF WAY LINE: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF 20TH STREET (TWENTIETH STREET, 50 FEET WIDE), WITH THE CENTER LINE OF BUSH STREET (60 FEET WIDE) AS SAID STREETS ARE SHOWN ON A MAP OF THE MAIN STREET TRACT FILED IN BOOK 3, PAGE 20 OF SAID MISCELLANEOUS MAPS; THENCE ALONG SAID CENTER LINE OF BUSH STREET AS SHOWN ON SAID MAPS NORTH 01045'25 EAST, 746.26 FEET TO THE TRUE POINT OF BEGINNING OF THIS LINE DESCRIPTION; THENCE NORTH 33011'04" WEST, 361.06 FEET; THENCE NORTH 88039'07" WEST, 75.86 FEET; THENCE SOUTH 01020'53" WEST, 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE WESTERLY AND HAVING A RADIUS OF 899.00 FEET; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 09042'56" A DISTANCE OF 152.44 FEET; THENCE SOUTH 11°03'49" WEST, 88.03 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 841.00 FEET; THENCE SOUTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05058'14" AND ARC DISTANCE OF 87.64 FEET. THERE SHALL BE NO ABUTTER'S RIGHT OF ACCESS APPURTENANT TO THE ABOVE DESCRIBED REAL PROPERTY IN AND TO THE ADJACENT STATE FREEWAY OVER AND ACROSS THOSE CERTAIN COURSES HEREINABOVE DESCRIBED AS "NORTH 33011'04" WEST, 361.06 FEET, NORTH 88039'07" WEST, 75.86 FEET AND SOUTH 01020'53" WEST, 50.00 FEET". APN: 003-113-81 EXHIBIT "A" -2- LEGAL DESCRIPTION Real property in the City of Orange, County of Orange, State of California, described as follows: THAT PORTION OF LOTS 8 THROUGH 12 INCLUSIVE OF PHELP'S SUBDIVISION OF A PORTION OF THE DERICOT TRACT, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BOUNDED NORTHEASTERLY BY THE CALIFORNIA STATE DEPARTMENT OF TRANSPORTATION RIGHT OF WAY LINE, DESCRIBED IN PART AS FOLLOWS: CALIFORNIA STATE DEPARTMENT OF TRANSPORTATION RIGHT OF WAY LINE: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF 20TH STREET (TWENTIETH STREET, 50 FEET WIDE), WITH THE CENTER LINE OF BUSH STREET (60 FEET WIDE) AS SAID STREETS ARE SHOWN ON A MAP OF THE MAIN STREET TRACT FILED IN BOOK 3, PAGE 20 OF SAID MISCELLANEOUS MAPS; THENCE ALONG SAID CENTER LINE OF BUSH STREET AS SHOWN ON SAID MAPS NORTH 01045'25" EAST, 746.26 FEET TO THE TRUE POINT OF BEGINNING OF THIS LINE DESCRIPTION; THENCE NORTH 33011'04" WEST, 361.06 FEET; THENCE NORTH 88039'07" WEST, 75.86 FEET; THENCE SOUTH 01020'53" WEST, 50.00 FEET. AND BOUNDED SOUTHERLY AND SOUTHEASTERLY BY THE FOLLOWING DESCRIBED LINE: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF 20TH STREET (TWENTIETH STREET, 50 FEET WIDE), WITH THE CENTER LINE OF BUSH STREET (60 FEET WIDE) AS SAID STREETS AS SHOWN ON A MAP OF THE MAIN STREET TRACT FILED IN BOOK 3, PAGE 20 OF SAID MISCELLANEOUS MAPS; THENCE ALONG SAID CENTER LINE OF BUSH STREET AS SHOWN ON SAID MAPS NORTH 01045'25" EAST, 724.60 FEET; THENCE NORTH 88014'35" WEST, 30.00 FEET TO A POINT ON THE WESTERLY SIDELINE OF SAID BUSH STREET, SAID POINT ALSO BEING THE SOUTHEASTERLY TERMINUS OF THAT CERTAIN PORTION OF THE SOUTHWESTERLY LINE OF THE LANDS DESCRIBED AS STATE PARCEL NO. 101273-1 IN A GRANT DEED RECORDED NOVEMBER 10, 1994 AS INSTRUMENT NO. 94-0659276 OF OFFICIAL RECORDS IN SAID OFFICE OF THE COUNTY RECORDER, SAID SOUTHWESTERLY LINE BEING DESCRIBED IN SAID GRANT DEED AS HAVING A DISTANCE OF "NORTH 33010'45" WEST, 21.22 FEET"; THENCE ALONG SAID SOUTHWESTERLY AND THE SOUTHERLY AND SOUTHWESTERLY LINE OF SAID GRANT DEED THAT FOLLOWING FOUR (4) COURSES: 1). NORTH 33011'04" WEST, 21.22 FEET; THENCE 2). NORTH 60049'37" WEST, 13.92 FEET; THENCE EXHIBIT "A" -3- 3). NORTH 88028'09" WEST, 29.23 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE NORTHEASTERLY AND HAVING A RADIUS OF 45.00 FEET; THENCE 4). WESTERLY AND NORTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 63050'21" AN ARC DISTANCE OF 50.14 FEET. THENCE LEAVING THE SOUTHWESTERLY LINE OF SAID GRANT DEED AND CONTINUING NORTHWESTERLY AND NORTHERLY ALONG THE ARC OF SAID 45.00 FOOT RADIUS CURVE ,THROUGH A CENTRAL ANGLE OF 23019'05" AN ARC DISTANCE OF 18.31 FEET TO THE TRUE POINT OF BEGINNING AND A POINT HEREINAFTER REFERRED TO AS POINT "A"; THENCE CONTINUING NORTHERLY, NORTHEASTERLY AND EASTERLY ALONG THE ARC OF SAID 45.00 FOOT RADIUS CURVE THROUGH A CENTRAL ANGLE OF 89045'55" AN ARC DISTANCE OF 70.50 FEET; THENCE NORTH 88027'12" EAST, 21.43 FEET TO AN INTERSECTION WITH THAT PORTION OF THE HEREINABOVE DESCRIBED CALIFORNIA STATE DEPARTMENT OF TRANSPORTATION RIGHT OF WAY LINE DESCRIBED AS HAVING A BEARING AND A DISTANCE OF "NORTH 33011'04" WEST, 361.06 FEET". AND ALSO BOUNDED SOUTHERLY BY THE FOLLOWING DESCRIBED LINE: BEGINNING AT THE POINT HEREINABOVE DESCRIBED AS POINT "A"; THENCE RADIAL TO SAID CURVE HEREINABOVE DESCRIBED AS HAVING A RADIUS OF 45.00 FEET, SOUTH 88041'17" WEST, 31.81 FEET TO AN INTERSECTION WITH THE WESTERLY LINE OF THE AFORESAID LOT 12. APN: 003-113-80 EXHIBIT "A" -4- EXHIBIT `B" TO NEGOTIATION AGREEMENT Project Desch tion [To Be Attached Behind This Cover Page] EXHIBIT "B" -I- Exhibit "B" TO NEGOTIATION AGREEMENT Project Description Design and build a hotel EXHIBIT "C" TO NEGOTIATION AGREEMENT Exclusive Negotiating_ Agreement Timeline and Milestones Milestone Description Within Days of Effective Date , 2016 of ENA Initial Pro Forma Submit initial pro forma for the proposed development. Project Development Submit projected construction schedule for the proposed development. Schedule Due Diligence Provide written determination of property's physical suitability for development, taking into account relevant regulatory and environmental conditions. Full Project Submittal Submit site plans and elevations. Submit all relevant applications and fees Within Das of Effective Date , 201 of ENA Plan Review Staff reviews plans for compliance with applicable codes and regulations; letter prepared by Project Manager summarizing staff comments is sent to developer. Within Days of Effective Date , 201 off ENA Revised Site Plans and Submit revised site plans and elevations Elevations 2nd Plan Review Staff reviews plans for compliance with applicable codes and regulations; letter prepared by Project Manager summarizing staff comments is sent to developer, Revised Proforma and Development Schedule Submit refined proforma and development schedule based on revised site pTans and elevations. Market Study Submit a market study containing a forecast of regional and local real estate market conditions and anticipated performance of project. EXHIBIT "C" -I- Development Partners and Structure Submit letter identifying investment partners, if any. Funding Partners and Structure Submit letter identifying lenders and proof of ability to obtain financing. Within Days of Effective Date 201 of ENA Draft DDA Complete negotiations and draft Disposition and Development Agreement, Final Revisions Finalize revisions to development proposal and all relevant materials Within Days of Effective Date , 201 of ENA City and Hearings Present development proposal and DDA to City for final review and approvals by governing bodies. EXHIBIT "C" -2-