HomeMy WebLinkAboutResolutions 2011-022 N.C.S. 02/07/2011Resolution No. 2011 -022 N.C.S.
of the City of Petaluma, California
APPROVING TERMINATION OF MEMORANDUM OF UNDERSTANDING WITH
PETALUMA ECUMENICAL PROPERTIES REGARDING THE PROPERTY AT 951
PETALUMA BOULEVARD SOUTH AND AUTHORIZING THE EXECUTION OF
DOCUMENTS AND FURTHER ACTION IN CONNECTION THEREWITH
WHEREAS, in June 2006 the City of Petaluma entered into a Memorandum of
Understanding ( "MOU ") with Petaluma Ecumenical Properties, a California nonprofit public
benefit corporation ( "PEP ") and First Community Bank (`Bank ") regarding the purchase by
PEP of the real property located at 951 Petaluma Boulevard South (the "Property "), located in
the Petaluma Community Development Project Area (the "Project Area "), for development of
portions of the Property as affordable senior housing; and,
WHEREAS, the MOU documented Bank's first loan to PEP in the amount of
$1,250,000, and City's second loan to PEP in the amount of $1,432,000 from the Low and
Moderate Income Housing Fund of the Petaluma Community Development Commission
( "PCDC "), for a portion of the purchase price and feasibility costs. Both loans were evidenced
by promissory notes and secured by deeds of trust recorded in the Official Records of Sonoma
County; and,
WHEREAS, as a result of adverse market conditions, the expected housing development
and other actions contemplated by the MOU have not occurred; and,
WHEREAS, PCDC desires to purchase the Property and lease it back to PEP for a term
not to exceed four years, pending development of the Property for affordable housing, and PCDC
and PEP will enter into a Purchase and Sale Agreement and Commercial Lease, whereby the
Bank loan will be paid in full prior to close of escrow.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City hereby:
1. Approves the Termination of Memorandum of Understanding with Petaluma
Resolution No. 2011 -022 N.C.S. Page I
Ecumenical properties and First Community Bank, attached as Exhibit A , and
authorizes the City Manager or his designee to execute it, and to make such changes,
with the advice of counsel, which do not materially or substantially increase the
City's obligations thereunder.
2. Authorizes the City Manager or his designee to sign all documents, including without
limitation a Release and Reconveyance, to make all approvals and to take all actions
necessary or appropriate to implement the Termination of Memorandum of
Understanding and the City's responsibilities thereunder.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Uovedas to
Council of the City of Petaluma at a Regular meeting on the 7` day of February, for
2011, by the following vote:
AYES: Albertson, Barrett, Mayor Glass, Vice Mayor Healy, Renee
NOES: None
ABSENT: Harris
ABSTAIN
ATTEST:
Attorney
Resolution No. 2011 -022 N.C.S. Page 2
EXHIBIT A TO RESOLUTION 2011 -022 N.C.S.
TERMINATION OF MEMORANDUM OF UNDERSTANDING
BETWEEN THE CITY OF PETALUMA AND PETALUMA ECUMENICAL PROPERTIES
REGARDING THE PROPERTY AT 951 PETALUMA BOULEVARD SOUTH
This Termination of Memorandum of Understanding ( "Termination Agreement ") is entered
into as of , 2011 ( "Effective Date ") by and among the City of Petaluma, a
California municipal corporation ( "City "), Petaluma Ecumenical Properties, a California nonprofit
corporation ( "PEP "), and First Community Bank (the "Bank "). City, PEP and Bank are referred to
herein individually as "Party" and collectively as the "Parties."
RECITALS
A. On July 25, 2006, City and PEP entered into that certain Memorandum of Understanding
( "MOU ") regarding the purchase by PEP of the real property located at 951 Petaluma Boulevard
South in the City of Petaluma and commonly known as Sonoma County Assessor's Parcel
Number 008 - 530 -007, as more particularly described in Exhibit A attached hereto (the
"Property "). As set forth in the MOU, PEP intended to occupy an existing office building and to
develop the vacant portion of the Property as an affordable senior housing development.
B. Pursuant to Resolution 2006-111 N.C.S., adopted by the City Council of the City on June
5, 2006, City authorized a loan to PEP in the amount of One Million Four Hundred Thirty Two
Dollars ($1,432,000) for a portion of the purchase price and feasibility costs for the Property ( "City
Loan "). Pursuant to the MOU, PEP agreed to split the Property into an "Office Parcel" for its use
and a "Residential Parcel" for the housing development. The MOU provided that the City Loan
would be used solely for acquisition, feasibility costs and eventual development of the
Residential Parcel. The MOU further provided that within five years, PEP would diminish the size of
the Office Parcel and transfer the additional available land to the Residential Parcel.
C. Bank agreed to lend PEP approximately One Million Two Hundred Fifty Thousand Dollars
($1,250,000) pursuant to the terms of agreements and documents between PEP and Bank for
acquisition of the Property. Bank executed the MOU solely for purposes of agreeing to the future
proposed lot line adjustment and reconveyance from the lien of Bank's Deed of Trust of the
Residential Parcel.
D. Pursuant to the MOU, PEP executed that certain Promissory Note ( "City Note ") and that
certain Deed of Trust and Assignment of Rents ( "City Deed of Trust "), recorded on July 31, 2006,
in the Official Records of Sonoma County (the "Official Records ") as Instrument No. 2006094344.
E. As a result of adverse market conditions, the lot line adjustment has not occurred and
the affordable housing project has not been developed by PEP. The Petaluma Community
Development Commission ( "PCDC ") desires to purchase the Property from PEP, and PEP desires
to sell the Property to PCDC for such use as it determines, in its sole and absolute discretion, is
appropriate. In the interim, PCDC is willing to lease the Premises, as defined in a proposed
Commercial Lease Agreement, to PEP through August 30, 2014. Approval of the proposed
Purchase and Sale Agreement and Commercial Lease Agreement with PEP is scheduled for
consideration by PCDC following a noticed public hearing on February 7, 2011.
Accordingly, the Parties desire to terminate the MOU as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows.
Recitals The foregoing Recitals are true and correct and made a part hereof.
Resolution No. 2011-022 N.C.S. Page 3
2. Termination of MOU Upon PCDC's approval of the Purchase and Sale Agreement and
Commercial Lease Agreement, the MOU and all rights and obligations of the Parties thereunder,
except such matters as are expressly stated therein to survive such termination, are and shall be
hereby terminated.
3. Forgiveness of City Loan and Release and Reconveyance by City City agrees to
forgive repayment of the City Loan and to execute and cause to be recorded in the Official
Records a Release of Note and Reconveyance of Property Interest with respect to the City Note
and City Deed of Trust.
4. Release and Reconveyance by Bank In connection with the close of escrow for PCDC's
purchase of the Property, Bank's loan shall be fully repaid from PCDC's purchase price, and
upon such payment Bank therefore agrees to execute and cause to be recorded in the Official
Records a Release of Note and Reconveyance of Property with respect to Bank's security
interest in the Property.
5. Further Assurances The Parties agree to execute such other documents and to take
such other and further actions as necessary to effectuate the purposes of this Agreement.
b. Mutual Release Except as to Surviving Obligations, which are not waived or relinquished
by the Parties, the Parties hereby release and discharge one another and their successors and
assigns, agents, employees and representatives from any and all obligations, claims, actions and
liabilities, whether past, present or future, of whatever character, known or unknown, by reason
of or existing in connection with the MOU (the "Settled Obligations "). The Parties acknowledge
that they have read and understand the terms of Section 1542 of the California Civil Code,
which provides as follows:
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 must have
materially affected his or her settlement with the debtor.
The Parties hereby waive and relinquish all rights and benefits they, and each of them, may
have under Civil Code Section 1542 with respect to the Settled Obligations, and acknowledge
that the consequence of such waiver and relinquishment is that no Party may make a claim
against another Party for damages that may be discovered in the future with respect to the
Settled Obligations.
7. Litigation Costs If any legal action or other proceeding, including arbitration or action
for declaratory relief, is brought to enforce this Agreement or because of an alleged breach or
default in connection with this Agreement, the prevailing Party shall be entitled to recovery
reasonable attorneys' fees and other costs of such legal action or other proceeding, in addition
to any other relief to which such Party may be entitled.
8. Non - Liability of Officials, Employees and Agents No member, official, employee or
agent of City shall be personally liable to the other Parties or their successors in interest in the
event of any default or breach by City in connection with this Agreement.
9. Entire Agreement This Agreement, including Exhibit A attached hereto and
incorporated herein by this reference, contains the entire agreement between the Parties with
respect to the subject matter hereof, and supersedes all prior written or oral agreements,
understandings, representations or statements between the Parties with respect to the subject
matter hereof.
10. Counterparts This Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which taken together shall constitute one instrument.
Resolution No. 2011 -022 N.C.S. Page 4
1 1. Severability If any term, provision, or condition of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall
continue in full force and effect unless an essential purpose of this Agreement is defeated by
such invalidity or unenforceability.
12. Governing Law; Venue This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to principles of conflicts of
laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of
Sonoma County, California or in the Federal District Court for the Northern District of California.
13. Construction The Parties have had a full and fair opportunity to review and negotiate
the provisions of this Agreement, and therefore any ambiguities herein shall not be construed or
resolved against the drafting Party.
IN WITNESS WHEREOF, the Parties have executed this Termination of Memorandum of
Understanding as of the date first written above.
CITY OF PETALUMA
By:
Attest:
John Brown, City Manager
Claire Cooper, City Clerk
Approved as to form:
Eric W. Danly, City Attorney
PETALUMA ECUMENICAL PROPERTIES
By:
Mary Stompe, Executive Director
FIRST COMMUNITY BANK
By:
Resolution No. 2011 -022 N.C.S. Page 5