HomeMy WebLinkAboutStaff Report 3.A 01/03/2011DATE:
TO:
FROM:
January 3, 2011
Honorable Mayor and Members of the City Council through City Manager
Eric W. Danly, City Attorney
SUBJECT: Urgency Ordinance Approving Amendment No. 1 to Option Agreement between
the City of Petaluma and Regency Petaluma LLC and Resolution Approving Right of Way
Contract between Regency Petaluma LLC, the City of Petaluma and the State of California,
Acting by and through its Director of Transportation.
RECOMMENDATION
It is recommended that the Council adopt the urgency ordinance approving the Option
Agreement amendment and the resolution approving the right of way contract.
BACKGROUND
In 2004, the City approved Ordinance 2181, authorizing the execution of an Option Agreement
with Regency Petaluma LLC ("Regency") to allow Regency to acquire an access easement for
its proposed East Washington Place project over a portion of City property leased to the Fourth
District Agricultural Association ("Fairgrounds"). The Johnson Drive access was evaluated as
the primary project access in the City's CEQA and project approval process.
As part of the separate U.S. 101/East Washington Street Interchange Project (City Project
Number RDA100208) (the "Interchange Project"), the City is required to obtain on behalf of
Caltrans certain rights of way necessary for construction of improved Highway 101 interchange
ramps at East Washington Street. A portion of the required right of way is owned by Regency,
has been appraised by City right of way consultants at $474,554 and an eminent domain offer of
compensation in that amount was made to Regency. The City and Regency subsequently
reached a tentative agreement on $546,482 as the amount of compensation for the rights required
for the Interchange Project.
On November 30, 2010, the Council approved Resolution No. 2010-209, adopting a resolution
of necessity and authorizing the filing of eminent domain proceedings to acquire the right of way
from Regency.
DISCUSSION
At the time the Option Agreement was entered into in 2004, the project proposed for East
Washington Place included more than 300,000 square feet of retail development plus a housing
Agenda Review: y r'
City Attomey � A Finance Director City Manag re a 7
component. The project was subsequently revised to remove the housing units after initial
community input and discussions with the City.
Section 4 of the Option Agreement presently states that Regency shall pay to the City fair market
value of the access easement (and the value of a leasehold interest in the Payran Fire Station
added to the remaining terns of the Fairgrounds lease in place of the Johnson Drive roadway area
which was removed from the Fairground lease) unless Regency's project approvals grant
entitlements to develop a project at the former Kenilworth School Site which "will include at
least 300,000 square feet of retail space in a mixed-use development that includes housing." The
City and Regency have disagreed as to the intent and effect of this provision, and the approved
East Washington Place project no longer includes housing. As a possible resolution, the City
proposed that Regency grant the interests in the Regency property required for construction of
the East Washington Interchange without receiving compensation for the interests. Under the
City's proposal, such grant by Regency would be in full satisfaction of any payment obligation
Regency may otherwise have trader Section 4 of the Option Agreement. Regency has responded
favorably to the City's proposal, and has approved the Option Agreement Amendment and Right
of Way Contract attached to this staff report.
The Interchange Project requires that Caltrans have possession of the Regency right of way by
June, 2011, sufficient for advertising and bidding the project. California Eminent Domain Law
procedures would require the City to file an eminent domain action to acquire the Regency
Petaluma LLC right of way on or before January 14, 2011, to ensure obtaining possession on or
before June, 2011. If an urgency ordinance is adopted, it becomes immediately effective,
resulting in a negotiated acquisition that will make filing Unnecessary, avoiding unnecessary
litigation expense for both Regency and the City. Under the City's Charter, a unanimous vote of
all Council members present is required to adopt the ordinance on an urgency basis. Urgency
findings are contained in the draft ordinance (Attachment 1).
FINANCIAL IMPACTS
If the amendment and right of way agreement are approved, the City will not have to spend at
least $474,554 plus eminent domain litigation costs to acquire the right of way. The City's
potential claim to `fair market value' of the Johnson Drive easement area and the partial Payran
Fire Station leasehold added to the Fairgrounds lease for the years 2004-2023 will be satisfied in
full by the right of way transfer and Option Agreement amendment.
ATTACHMENTS
1. Ordinance approving Amendment No. 1 to Option Agreement
2. Resolution approving Right of Way Contract
3. 2004 Option Agreement w/o attached exhibits
❑ Items listed below are large in volume and are not attached to this report, but may be viewed in
the City Clerk's office.
156 4793.3
AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PETALUMA APPROVING AMENDMENT NO. 1 TO OPTION AGREEMENT
BETWEEN THE CITY OF PETALUMA AND REGENCY PETALUMA LLC
WHEREAS, on May 17, 2004, the Petaluma City Council adopted Ordinance No. 2181,
authorizing execution of an Option Agreement with Regency Petaluma LLC ("Regency") for a
nonexclusive vehicular and pedestrian access easement ("Option Agreement"), and authorizing
execution of an easement agreement upon satisfaction of all required conditions, including
Regency's acquisition of all entitlements necessary for the development of the Kenilworth
School Site; and
WHEREAS, on June 17, 2004, the City executed the Option Agreement; and
WHEREAS, on February 8, 2010, the Petaluma City Council approved land use
entitlements for the East Washington Place project proposed by Regency and located on the
former Kenilworth School Site (the "Project"); and
WHEREAS, on April 13, 2010, the Petaluma Planning Commission approved site design
and architectural review for the Project; and
WHEREAS, on June 14, 2010, the Petaluma City Council heard an appeal challenging
the Project's site design and architectural review approval and denied said appeal; and
WHEREAS, as part of the U.S. 101/East Washington Street Interchange Project (City
Project Number RDA100208) (the "Interchange Project") previously approved by the City, the
City is required to obtain on behalf of Caltrans certain rights of way necessary for construction of
improved Highway 101 interchange ramps at East Washington Street; and
WHEREAS, a portion of the required right of way is owned by Regency Petaluma LLC
and as part of pre -condemnation proceedings by the City, has been appraised by the City at
$474,554; and
WHEREAS, on November 30, 2010, the Petaluma City Council approved Resolution
No. 2010-209, approving a resolution of necessity and authorizing the filing of eminent domain
proceedings to acquire the right of way from Regency Petaluma LLC; and
WHEREAS, Section 4 of the Option Agreement states that the Regency shall pay to the
City fair market value of the access easement and a partial leasehold interest in the Payran Fire
Station, as identified in the Option Agreement unless a project at the East Washington Place is
approved which "includes at least 300,000 square feet of retail space in a mixed-use
development that includes housing'; and
WHEREAS, the approved Project does not consist of a "mixed-use development that
includes housing" because housing was removed from the Project in the course of the review
process for the Project; and
WHEREAS, Regency and the City have tentatively agreed that Regency will provide the
required Interchange Project right of way owned by Regency as full compensation and
satisfaction of any payment obligations Regency may have under Section 4 of the Option
Agreement for the easement and leasehold interest identified in the Option Agreement; and
WHEREAS, Caltrans constriction of the East Washington Interchange project requires
that the City provide possession and use of the Regency Petaluma LLC property necessary for
the interchange project right of way on or before June, 2011; and
WHEREAS, California Eminent Domain Law procedures for obtaining possession of the
necessary right of way of the Regency Petaluma LLC on or before June, 2011, would require the
City to file an eminent domain action to acquire the Regency Petaluma LLC right of way on or
before January 14, 2011; and
WHEREAS, this action involves finding for interchange improvements whose
environmental effects were previously reviewed in full in the Mitigated Negative Declaration,
U.S. Route 101/East Washington Street Interchange, SCH 42007112073, for which a
CalTrans/NEPA Determination was made on March 10, 2008; and satisfaction of conditions
precedent to Regency's exercise of a pre-existing option for an easement to create the primary
access road to Regency's East Washington Place project, the environmental impacts of which
were reviewed in full in the Environmental Impact Report for East Washington Place, SCH
#2005052061, certified by the City Council on February 8, 2010. No changes have been made to
the interchange improvements or to the access road which would create new or substantially
greater environmental impacts, require modification of any mitigation measure or condition of
approval previously adopted, and no new or substantially greater environmental impacts are
created by the funding mechanisms contained in the Amendment No. 1 to Option Agreement
between the City of Petaluma and Regency Petaluma LLC and Resolution Approving Right of
Way Contract between Regency Petaluma LLC, the City of Petaluma and the State of California,
Acting by and through its Director of Transportation.
WHEREAS, proceeding other than by urgency ordinance would require the City to
undertake legal proceedings and the City and Regency to incur staff, legal and consultants' costs
and fees which would be unnecessary upon approval of a negotiated agreement, avoiding
unnecessary expenditures of significant amounts of taxpayer and private funds and judicial
resources; and
WHEREAS, the City Council of the City of Petaluma therefore finds that the immediate
preservation of the public peace, health, and safety requires and is served by proceeding with the
acquisition of right of way from Regency Petaluma LLC for the East Washington Interchange
project in a manner that avoids unnecessary legal proceedings, does not cause the City and/or the
Petaluma Community Development Commission (PCDC) and/or Regency Petaluma, LLC to
incur unnecessary expenditure of funds at a time when the City is facing severe budget shortages,
and Regency Petaluma LLC has incurred and is still incurring significant costs to develop the
Regency Project and that avoids wasteful expenditures and unnecessary use of judicial and court
resources; and
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WHEREAS, Article XII, Section 76A of the Petaluma Charter provides that an urgency
ordinance may be adopted and take inunediate effect upon the unanimous vote of the Council
members present at the meeting.
NOW, THEREFORE, THE COUNCIL OF THE CITY OF PETALUMA
ORDAINS AS FOLLOWS:
SECTION 1. The City Manager is hereby authorized to execute the Amendment No. 1 to
Option Agreement attached hereto as Exhibit A and incorporated herein by reference.
SECTION 2. Severability. The provisions of this Ordinance are severable and if any provision,
clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to
any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability
shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words or
parts thereof of this Ordinance or their applicability to other persons or circumstances.
SECTION 3 Effective Date. This Ordinance of the City of Petaluma shall be imnnediately
effective upon a unanimous vote of the Council members present in accordance with Article XII,
Section 76-A of the Petaluma Charter.
SECTION 4. Publication. The City Clerk is hereby directed to post and/or publish this
ordinance or a synopsis of this ordinance for the period and in the mariner required by the City
Charter.
INTRODUCED, ADOPTED AND ORDERED posted/published this 3`a day of January, 2010
Ayes:
Noes:
Abstain:
Absent:
ATTEST:
David Glass, Mayor
APPROVED AS TO FORM:
Claire Cooper, City Clerk City Attorney
156-17932
EXHIBIT A to
Urgency Ordinance of the City Council of the City of Petaluma
Approving Amendment No. 1 to Option Agreement
AMENDMENT NO. 1 TO OPTION AGREEMENT
This AMENDMENT NO. I TO OPTION AGREEMENT ("Amendment") dated as of
January _, 2011 ("Effective Date"), is entered into by and between the CITY OF PETALUMA,
a charter city duly organized under the laws of the State of California (the "City"), and
REGENCY PETALUMA LLC, a Delaware limited liability company ("Regency"). City and
Regency are sometimes referred to hereafter collectively as the "Parties".
RECITALS
A. This Amendment ("Amendment") relates to the Option Agreement dated as of June 17,
2004, between the City and Regency (the "Option Agreement").
B. City and Regency wish to amend the Option Agreement as set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
I. Definitions. Capitalized terms used but not defined in this Amendment have the meaning
given to them in the Option Agreement.
2. Effective Date of this Amendment. This Amendment shall be effective, and its terns in
full force and effect, from and after the Effective Date of this Amendment.
4. Amendments to the Ortion Aereement
(a) Section 4, "Consideration," of the Option Agreement is amended in its entirety to
read as follows:
Section 4. Consideration.
The parties acknowledge and agree that execution and delivery by Regency to the
City of that certain Right of Way Contract between Regency, the City and the
State of California, acting by and through its Director of Transportation attached
to this Option Agreement as Exhibit F and incorporated herein by reference
("ROW Contract") constitutes full settlement and satisfaction of any payment
obligations of Regency previously set forth in Section 4 of this Option
Agreement. The execution and delivery by Regency to the City of the ROW
Contract and compliance by Regency with all terns and conditions of the ROW
Contract, including but not limited to delivery of all deeds, documents and other
materials specified therein as necessary to transfer the property interests described
therein to Caltrans shall serve as the full and entire consideration for the Easement
and shall constitute full compliance, satisfaction and discharge of any payment
obligations of Regency pursuant to Paragraph 4 of the Option Agreement.
5. The ROW Contract is attached to this Amendment as Exhibit A and incorporated herein
by reference.
6. Conditions. For this Amendment to become effective in accordance with its terns:
(a) On or before January 10, 2011, the City must receive a copy of this Amendment
executed by Regency together with evidence of the execution and delivery by Regency of the
ROW Contract;
(b) Regency represents and warrants that the part(ies) executing this Amendment and
the ROW Contract on Regency's behalf have been duly authorized to execute the Amendment
and ROW Contract;
(c) Execution of this Amendment by a City official authorized to do so in accordance
with the City of Petaluma Charter and applicable law.
7. Recordation. A copy of this Amendment shall be recorded in the Official Records of
Sonoma County. Reference is made to that certain Memorandum of Option dated as of June 17,
2004 made by and between the City and Regency and recorded as Document No. 2006-053243,
Official Records of Sonoma County.
8. Effect of Amendment. Except as provided in this Amendment, all of the terms and
conditions of the Option Agreement remain in full force and effect.
9. Counternarts. This Amendment may be executed in counterparts, each of which when so
executed must be deemed an original, but all such counterparts together will constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed
as of the date first above written.
CITY OF PETALUMA
By:
Name: John Brown
Title: City Manager
[Attach Notarial Acknowledgement]
ATTEST:
City Clerk
APPROVED AS TO FORM:
Eric W. Danly
City Attorney
IAi9:7�Pi�71i
Risk Manager
.'•:• p
Finance Director
REGENCY PETALUMA LLC
By:
Name:
Title:
By:
Name:
Title:
1558848.2
[Attach Notarial Acknowledgment]
EXHIBIT A
RIGHT OF WAY CONTRACT
Fly, III til]:IIT, I'=1.k a
RESOLUTION APPROVING RIGHT OF WAY CONTRACT BETWEEN REGENCY PETALUMA LLC,
THE CITY OF PETALUMA AND THE STATE OF CALIFORNIA, ACTING BY AND THROUGH ITS
DIRECTOR OF TRANSPORTATION
WHEREAS, on November 30, 2010, the Petaluma City Council approved Resolution
No. 2010-209, approving a resolution of necessity and authorizing the filing of eminent domain
proceedings to acquire certain right of way from Regency Petaluma LLC for construction of the
U.S. 101/East Washington Street Interchange Project (City Project Number RDA100208) (the
"Interchange Project"); and
WHEREAS, as part of the Project, the City is required to acquire on behalf of Caltrans
certain rights of way for construction of the Project; and
WHEREAS, this action involves funding for interchange improvements whose
environmental effects were previously reviewed in full in the Mitigated Negative Declaration,
U.S. Route 101/East Washington Street Interchange, SCH #2007112073, for which a
CalTrans/NEPA Determination was made on March 10, 2008; and satisfaction of conditions
precedent to Regency's exercise of a pre-existing option for an easement to create the primary
access road to Regency's East Washington Place project, the environmental impacts of which
were reviewed in full in the Environmental Impact Report for East Washington Place, SCH
#2005052061, certified by the City Council on February 8, 2010. No changes have been made to
the interchange improvements or to the access road which would create new or substantially
greater environmental impacts, require modification of airy mitigation measure or condition of
approval previously adopted, and no new or substantially greater environmental impacts are
created by the funding mechanisms contained in the Amendment No. 1 to Option Agreement
between the City of Petaluma and Regency Petaluma LLC and Resolution Approving Right of
Way Contract between Regency Petaluma LLC, the City of Petaluma and the State of California,
Acting by and through its Director of Transportation.
WHEREAS, Caltrans construction of the East Washington Interchange project requires
that the City provide possession and use of the Regency Petaluma LLC property necessary for
the interchange project right of way on or before June, 2011; and
WHEREAS, California Eminent Domain Law procedures for obtaining possession of the
necessary right of way of the Regency Petaluma LLC on or before June, 2011, would require the
City to file an eminent domain action to acquire the Regency Petaluma LLC right of way on or
before January 14, 2011; and
WHEREAS, proceeding other than by urgency ordinance would require the City to
undertake legal proceedings and the City and Regency to incur staff, legal and consultants' costs
and fees which would be unnecessary upon approval of a negotiated agreement, avoiding
unnecessary expenditures of significant amounts of taxpayer and private funds and judicial
resources; and
10
WHEREAS, Regency Petaluma LLC and the City of Petaluma wish to agree on terns
for the acquisition of the right of way.
NOW THEREFORE BE IT RESOLVED that the City Manager is authorized to
execute the Right of Way Contract between Regency Petaluma LLC, the City of Petaluma and
the State of California, acting by and through its Director of Transportation, which is attached as
Exhibit A hereto and incorporated herein by reference.
11
EXHIBIT A TO
Resolution Approving Right of Way Contract between Regency Petaluma LLC, the
City of Petaluma and the State of California, Acting by and through its Director of
RIGHT OF WAY CONTRACT
Transportation
, California
20 11
REGENCY PETALUMA, LLC,
A DELAWARE LIMITED LIABILITY
COMPANY
Grantor
State of California
Department of Transportation
District 4 — Right of Way
111 Grand Avenue, MS 11
Oakland, California 94612
Dist. I Co. I Rte. P.M. I Exp. Auth.
04 1 SON 1 101 4.8 264000
This Right of Way Contract ("Contract") in consideration for the attached Document No. 60296-
1, for a GRANT DEED; Document No. 69296-2, for a TEMPORARY CONSTRUCTION
EASEMENT ("TCE"); and Document No. 60296-3, for a UTILITY EASEMENT; and the
property and property interests described therein, a copy of which is attached as Exhibits "A",
"13-1 ", "13-2", "C-1" and "C-2" to this Contract, located at 840 — 980 East Washington Street,
Assessor's Parcel Numbers 007-031-001; 007-473-040; 007-251-001; and, 007-241-002,
commonly known to the State of California, Department of Transportation, as Parcel Nos.
60296-1, 60296-2, and 60296-3, in Petaluma, California and has been executed and delivered to
Steven L. Castellano, Right of Way Consultant in the name of the State of California,
Department of Transportation for the East Washington Street — Highway 101 Interchange
Improvements Project ("Project"), a City of Petaluma sponsored Project.
The parties, Regency Petaluma, LLC, a Delaware Limited Liability Company ("Grantor"), and
the City of Petaluma ("City") and the State of California, acting by and through its Director of
Transportation ("Grantee"), collectively "the parties," mutually agree as follows:
(A) The performance of this Contract along with simultaneous execution of that
certain First Amendment to Option Agreement between Regency Petaluma LLC
and the City of Petaluma by the City and Grantor, which is incorporated herein by
this reference as though fully set forth herein, constitutes the entire consideration
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for the acquisition of real property and real property interests and shall relieve
City and Grantee of all further obligation or claims arising from or relating to the
acquisition of these property interests, or on account of the location, grade or
construction of the proposed public improvement.
(B) Grantee requires said property and property interests described in Document No.
60296-1, 60296-2, and 60296-3 for State highway purposes, a public use for
which Grantee and/or City have the authority to exercise the power of eminent
domain.
The parties recognize the expense, time, effort, and risk in determining the
compensation for the property by eminent domain litigation. The compensation
set forth herciu for the property is in compromise, settlement, and in lieu of such
litigation.
2. The City shall:
(A) Accept delivery of property or interest conveyed by above document(s) and
record same when title can be vested in the State of California, Department of
Transportation free and clear of all liens, encumbrances, assessments, easements
and leases (recorded and/or unrecorded), and taxes, except:
I
. Taxes for the tax year in which this escrow closes shall be cleared
and paid in the manner required by Section 5056 of the Revenue
and Taxation Code, if unpaid at the close of escrow.
b. Covenants, conditions, restrictions and reservations of record, or
contained in the above referenced document.
Easements or rights of way over said land for public or quasi -
public utility or public street purposes, if any.
(B) Pay all escrow and recording fees incurred in this transaction, and if title
insurance is desired by the Grantee, the premium charged therefore. Said escrow
and recording charges shall not, however, include documentary transfer tax.
3. It is agreed that the property interests conveyed by Documents No. 60296-1, 60296-2,
and 60296-3 are being transferred to the Grantee by the undersigned Grantor(s) in
exchange for the consideration stated in paragraph I (A) hereof, and that Grantor, having
initiated this transfer has/have been infonned of the right to compensation, and hereby
waive(s) such right to compensation other than the consideration stated herein.
4. Any monies necessary, if any, to satisfy any bond demands and/or delinquent taxes due in
any year except the year in which this escrow closes, together with penalties and interest
thereon and/or delinquent and unpaid nondelinquent assessments which have become a
lien as of the close of escrow shall be paid by Grantor before the close of escrow.
13
5. Any money necessary, up to and including the total amount of unpaid principal and
interest on any notes secured by a mortgage or deed of trust, if any, and all other amounts
due and payable in accordance with the terns and conditions of said trust deeds or
mortgages, shall, upon demand, be made payable to the entitled mortgagee and/or
beneficiary; said mortgagee or beneficiary to furnish Grantor with good and sufficient
receipt showing said moneys credited against the indebtedness secured by said mortgage
or deed of trust.
It is agreed and confirmed by the parties that notwithstanding other provisions in this
contract, the right of possession and use of the subject property by the Grantee, including
the right to remove and dispose of improvements shall commence on January 15, 2011 or
the close of escrow, whichever occurs first, and that the Purchase Price includes, but is
not limited to, full payment for such possession and use from said date.
Grantor hereby grants Grantee or its authorized agents permission to enter, possess, and
use Grantor's land, where necessary within the "Temporary Construction Easement Area"
as described in Exhibit "B-1" and shown as the certain area labeled 60296-2 and shown
on the map attached hereto as Exhibit "13-2," for the lawful and pennitted construction
activities such as, but not limited to, construction, staging, and storage of and for the
Project, together with the right of ingress and egress and any works necessary or
appurtenant thereto, over, through, under and across the real property set forth in Exhibits
"B-1" and "13-2", hereto.
The TCE will be used for a temporary exclusive easement and night of way for the
purpose of moving and/or maneuvering construction equipment and vehicles, the
temporary storage of equipment and materials necessary for the construction of the
Project, and appurtenant facilities, together with the equipment used in earthwork, the
temporary spoil of excavated material during the period of construction of said facilities
and other operations necessary over, through, and across that portion of 60296-2, as set
forth in Exhibits 'B-1" and "B-2" attached hereto.
9. The above TCE area, is to be used for temporary construction for a period of 12 months
commencing with the first entry on Grantor's property by Grantee's contractor. At least
48 (forty-eight) hours advance written notice will be given before entry on said parcel. It
is further understood that in no event shall the temporary rights granted herein extend
beyond the completion of the construction project or December 1, 2013, whichever is
earlier, except as provided below.
10. Grantor agrees that in case of unpredictable delays in construction, upon written
notification, the terms of the temporary construction easement may be extended for up to
twenty-four (24) months from the initial expiration date of the easement at the option of
the Grantee upon written notice thereof at least thirty (30) days in advance.
11. Grantee agrees, upon completion of the Project, it will restore the TCE area described in
Exhibit "B -I" and depicted In Exhibit "13-2", attached hereto to its original condition as is
practicable.
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12. All work done under this Contract shall conform to all applicable building, fire and
sanitary laws, ordinances, and regulations relating to such work, and shall be done in a
good and workmanlike manner. All structures, improvements or other facilities, when
removed, and relocated, or reconstructed by the Grantee, shall be returned in as good
condition as found.
13. Grantee agrees to indemnify and hold harmless Grantor, its officers, agents, and
employees, from any and all liability which may be suffered or incurred by Grantor, its
officers, agents, and employees caused by, arising out of, or in any way connected with
the use, or the exercise of the rights and privileges granted herein, except claims arising
out of intentional or negligent acts of Grantor. Grantee further agrees to assume
responsibility for any damages proximately caused by reason of Grantee's operations and
Project within the TCE area and the Grantee will, at its option, either repair or pay for
such damage.
14. Grantor warrants that there are no oral or written leases on all or any portion of the
property exceeding a period of one month, and the Grantor agrees to hold City and
Grantee harmless and reimburse the City and Grantee for any and all of its losses and
expenses occasioned by reason of any lease of said property held by any tenant of
Grantor for a period exceeding one month.
15. Grantor -hereby represents and warrants that Grantor has no knowledge of any disposal,
release or threatened release of hazardous substances or hazardous waste on, from, or
under the property during the period of Grantee's ownership of the property. Grantor
further represents that Grantor has no knowledge of any disposal, release, or threatened
release of hazardous substances or hazardous waste on, from, or under the property which
may have occurred prior to Grantee taking title to the property.
If the property being acquired is found to be contaminated by the presence of hazardous
waste which requires mitigation under Federal or State law, the Grantee may elect to seek
recovery of its clean-up costs from those who caused or contributed to the contamination.
16. With respect to this Contract, any or all of the rights or obligations of the Grantee may be
transferred, either in whole or in part, to the City and /or to any private, public or
governmental association, agency or entity, whether now existing or created after
execution of this Contract.
17. This transaction will be handled through an escrow with North American Title Company
4255 Hopyard Road, Suite 1, Pleasanton, CA 94588 No. 56901-57990117.
No Obligation Other Than Those Set Forth Herein Will Be Recognized.
[SIGNATURES ON NEXT PAGE]
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In Witness Whereof, the Parties have executed this Contract.
GRANTOR: REGENCY PETALUMA, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
By:
(NAME)
(TITLE)
RECOMMENDED FOR APPROVAL:
By
By
Associated Right of Way
Services, Inc.
STEVEN L. CASTELLANO, SR/WA
Right of Way Consultant
WILLIAM S. TANNENBAUM, SR/WA
Supervisor
565118.2
(NAME)
(TITLE)
City of Petaluma
VINCENT MARENGO
Director of Public Works
Approved to Form
BE
ERIC W. DANLY
City Attorney
State of California
Department of Transportation
C
By
MARK WEAVER
District Office Cliief, District 4
Right of Way Acquisition and Utility
Services
R. A. MACPHERSON
Deputy District Director, District 4
Right of Way
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ATTACHMENT 3
17
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Option Agreement" or "Agreement") is entered
into effective as of June 17, 2004 ("Effective Date"), by and between the City of
Petaluma, a municipal corporation ("City") and Regency Petaluma LLC, a Delaware
limited liability company ("Regency"). City and Regency are hereinafter collectively
referred to as the "Parties."
A. City is the owner of certain real property (the "Easement Area") located
within the City of Petaluma and more particularly described in Exhibit A attached hereto
and incorporated herein by this reference.
S. Regency is a wholly-owned and controlled subsidiary of Regency Realty
Group, Inc., a Florida corporation which owns, or has an option to purchase the real
property on which the Kenilworth Junior High School is located (Sonoma County
Assessor's Parcel Nos. 007031001, 007251001, 007241002, and 007473001 (ptn)
collectively hereafter referred to as the "Kenilworth School Site") from the Petaluma
Joint Union High School District ("School District").
C. The purchase of the Kenilworth School Site will enable the School District to
construct a new junior high school to replace the dilapidated school facilities currently located
on the Kenilworth School Site.
D. Access to the Kenilworth School Site is inadequate to make development feasible,
and Regency desires to acquire the right to obtain a nonexclusive pedestrian and vehicular
easement ("Easement") over the Easement Area in order to improve access to the Kenilworth
School Site and facilitate its development.
E. The redevelopment of the Kenilworth School Site will be of benefit to the City and the
Community Development Project Area ("Project Area"), and will be consistent with the
redevelopment plan adopted for the Project Area.
F. At its meeting of May 17, 2004, the Petaluma City Council authorized the grant to
Regency of an easement across the Easement Area, contingent upon and subject to certain
conditions.
G. In consideration for the grant of Easement and the rights granted hereunder,
Regency has agreed to undertake certain obligations in connection with the construction and
maintenance of improvements located within the Easement Area and the provision of
replacement parking spaces for those currently located within the Easement Area.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.
1. Grant of Option. City hereby grants to Regency an option to acquire an
easement across the Easement Area ("Option") on the terms and conditions set forth
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herein and in the Easement Agreement ("Easement Agreement") attached hereto as
Exhibit D and incorporated herein by reference.
2. reservation of Rights/Nonexclusive Easement. Regency acknowledges that the
Easement shall be subject to (i) a reservation of rights allowing use of the Easement
Area for roadway, pedestrian and vehicular ingress, egress and access by members of
the public, (ii) City's right to grant easements to other parties for, among other purposes,
the installation of utilities and storm drain improvements in the Easement Area, provided
that regency's use of the Easement is not unreasonably impaired thereby, and (iii)
City's right to convert the Easement Area to a public street provided that such street
provides access to the Kenilworth School Site comparable to the access created by the
Easement.
3. Conditions Precedent. Regency's acquisition of the Easement is expressly
conditioned upon all of the following, and Regency and City agree that Regency shall
have no right to exercise the Option granted hereby prior to fulfillment of all of the
following:
a. Regency's acquisition of the Kenilworth School Site and Regency's
provision to City of evidence reasonably satisfactory to City that Regency possesses
title to the Kenilworth School Site.
b. Execution by the Fourth District Agricultural Association of the State of
California ("Association") of a legally binding amendment ("Lease Amendment") to
that certain Lease of Kenilworth Park for Fair, Exhibition and Recreation Purposes by
and between the City as Lessor and the Association as Lessee, dated January 1, 1973,
and amended October 3, 1996 (as so amended, the "Lease"), pursuant to which the
Easement Area together with all property in the area to the north and east of the
Easement Area (all as more particularly described in Exhibit B attached hereto) shall be
excluded from the Lease.
C. Regency's satisfaction of (or Regency's execution of a legally binding
commitment to satisfy) all. of the following conditions at Regency's sole expense:
(i) Provision to the Association of a license granting the Association
and its employees and invitees access to the Fairgrounds from Lindberg Lane;
(ii) Either (a) performance of work necessary to pave a portion of the
property known as "Fairgrounds Parking Lot B" adjacent to the Park & Ride lot
(described below) sufficient in size to replace parking spaces that will be lost as a
result of the use of the Easement Area, or (b) provision to the Association of a
license allowing patrons of specified events the right to park vehicles in the
parking lot Regency shall construct on Regency's property in proximity to the
Park & Ride lot;
(iii) Acquisition of the written consent of the Sonoma County Transit
Manager and of any other party from whom consent is required to the alteration
of the Park & Ride lot developed pursuant to that certain Petaluma Fairgrounds
Park & Ride Facility Agreement for Development, Use and Maintenance, dated
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October 3, 1996, by and among the City, the County of Sonoma, the School
District and the Association;
(iv) Installation of a sign for the Sonoma -Marin Fair on East Washington
Street; and
(v) Payment of the sum of One Hundred Fifty Thousand Dollars
($150,000) to the Association.
e. Regency's acquisition of ail entitlements ("Project Approvals") necessary for
the development of the Kenilworth School Site, including without limitation completion of
CEQA review for the project to be developed on such site and for the creation of a
roadway providing access to such site across the Easement Area. The Parties
acknowledge that this Agreement does not obligate the City to grant any approval
or authorization required for the development of the Kenilworth School Site or the
Easement Area.
f. Execution of an agreement pursuant to which Regency agrees, at its expense
(i) to construct a project in conformity with the Project Approvals, (ii) to construct and
install roadway, sidewalk, lighting and landscaping improvements (collectively
"Improvements") in the Easement Area regardless of whether the City establishes a
public street in the Easement Area, and (iii) to maintain the Improvements unless and
until City establishes a public street in the Easement Area.
4. Consideration. if the Project Approvals grant entitlements to develop a project on
the Kenilworth School Site which will include at least 300,000 square feet of retail space
in a mixed-use development that includes housing, then provided that all conditions set
forth in Section 3 have been satisfied, Regency shall be obligated to pay no further
consideration for the Easement or the rights granted by this Agreement_ If the
condition set forth in the immediately preceding sentence is not satisfied, then upon
exercise of the Option, Regency shall pay to City the fair market value at the time of
exercise of (i) the Easement Area, and (ii) the leasehold interest in the property known
as the "Payran Street Firehouse Property" (and more particularly described in Exhibit C)
which City has agreed to add to the premises leased to the Association in order to
induce the Association to execute the Lease Amendment. if the Parties are unable to
agree upon a fair market value, then each Party shall appoint an appraiser. If the two
appraisers cannot agree upon a value, then they shall appoint a third appraiser. if the
third appraiser agrees with either of the original appraisers, the value so established
shall be binding on the Parties, if there is no such agreement, the middle value shall be
binding on the Parties. Payment of the consideration set forth in this Section is not a
condition precedent to acquisition of the Easement; provided however, Regency shall
be obligated to pay such consideration to City not later than thirty (30) days following
the determination of value pursuant to this Section, and in no event later than 180 days
following delivery of Regency's Notice of Exercise.
5. Term. The term of the Option (the "Option Term") shall commence on the date
when all conditions set forth in Section 3 hereof have been satisfied, and shall end at
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5:00 p.m. on the seventh (7t") anniversary of the Effective Date; provided however, this
Option Agreement shall terminate and be of no further effect if Regency has not
acquired the Kenilworth School Site by June 30, 2004. Notwithstanding any contrary
provision contained herein, this Option Agreement shall terminate and be of no further
effect if and when City determines to establish a public street through the Easement
Area or in a substantially comparable location which will provide access to the
Kenilworth School Site comparable to the access provided by the Easement. No
compensation will be payable to Regency in the event of such termination.
6. Notice of Exercise: Close of Escrow: Allocation of Costs. At any time during the
Option Term, Regency may exercise the Option by providing City with written notice of
its intent to exercise ("Notice of Exercise') together with evidence reasonably
satisfactory to City that all conditions set forth in Section 3 have been satisfied.
Conveyance of the Easement shall be consummated through an escrow to be opened
within three (3) business days following delivery of such Notice of Exercise. Unless
otherwise agreed to by the Parties, within thirty (30) days following delivery of the Notice
of Exercise, the Parties shall execute and deposit into escrow an Easement Agreement
substantially in the form attached hereto as Exhibit D, and shall cause a copy, thereof to
be recorded in the Official Records of'Sonoma County upon payment by Regency of
any consideration payable pursuant to Section 4.
The cost of any investigation Regency undertakes in connection with acquisition
of the Easement, including but not limited to environmental investigations, shall be
payable by Regency. Property taxes and assessments shall be prorated as of the close
of escrow, and Regency shall be responsible for payment of all such charges from and
after close of escrow. Regency shall be responsible for payment of all costs of closing,
including without limitation, all escrow charges, transfer taxes, and title insurance
premiums.
City covenants that it shall do nothing to cause the Easement Area to be subject
to liens, claims or encumbrances that would interfere with conveyance of the Easement
or Regency's use of the Easement Area.
7. Assianment: No Third-Partv Beneficiaries. This Option Agreement and the
option conveyed hereby is personal to Regency and may not be assigned by operation
of law or otherwise without the express written consent of City which shall not be
unreasonably withheld or delayed provided that the assignee assumes all obligations of
Regency hereunder. This Agreement is not intended to benefit, and shall not run to the
benefit of, or be enforceable by, any person or entity other than the Parties and their
permitted successors and assigns.
8. Miscellaneous Provisions.
8.1 Notices. Except as otherwise specified in this Agreement, all notices to be
sent pursuant hereto shall be made in writing, and sent to the parties at their respective
addresses specified below or to such other address as a party may designate by written
notice delivered to the other parties in accordance with this Section_ All such notices
shall be sent by:
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receipt; (i) personal delivery, in which case notice shall be deemed delivered upon
(ii) certified or registered mail, return receipt requested, in which case
notice shall be deemed delivered two (2) business days after deposit, postage prepaid
in the United States mail;
(iii) nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) day after deposit with such courier; or
(iv) facsimile transmission, in which case notice shall be deemed delivered
on transmittal, provided that a transmission report is generated reflecting the accurate
transmission thereof.
CITY: City of Petaluma
11 English Street
Petaluma, CA 94952
Attn: City Manager
Telephone: (707) 778-4345
Facsimile: (707) 7784419
REGENCY: Regency Petaluma LLC
1850 Mt. Diablo Blvd., Suite 225
Walnut Creek, CA 94596 .
Attn: Tom Engberg
Telephone: (925) 279-1760
Facsimile: (925) 935-5902
With copy to: Hanson Bridgett Marcus Vlahos Rudy LLP
80 E. Sir Frances Drake Blvd, Suite 3E
Larkspur, CA 94939
Attn: Mary K. McEachron
8.2 Attomevs' Fees. In any action at law or in equity, arbitration or other
proceeding arising in connection with this Agreement, the prevailing party shall recover
reasonable attorneys' fees and other costs, including but not limited to court costs and
expert and consultants fees incurred in connection with such action, in addition to any
other relief awarded, and such attorneys' fees and costs shall be included in any
judgment in such action.
8.3 Amendments. This Agreement may be amended only by a written
instrument executed by the Parties or their successors in interest.
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8.4 Severability. If any provision of this Agreement shall be held to be invalid,
void or unenforceable, the validity, legality and enforceability of the remaining portions
hereof shall riot in any way be affected or impaired thereby_
8.5 Waiver. A waiver by either party of the performance of any covenant or
condition herein shall not invalidate this Agreement nor shall it be considered a waiver
of any other covenant or condition, nor shall the delay or forbearance by either party in
exercising any remedy or right be considered a waiver of, or an estoppel against, the
later exercise of such remedy or right.
8.6 Remedies: No Damages Aaainst City: Upon the occurrence of an event of
default hereunder, the Parties may pursue all remedies at law or in equity, expressly
including the remedy of specific performance of this Agreement; provided however, in
no event shall damages be awarded against City upon an event of default hereunder,
upon termination of this Agreement pursuant to the provisions hereof, or upon
determination by a court of competent jurisdiction that this Agreement or any part hereof
is unenforceable or invalid.
8.7 Indemnification. Regency shall indemnify, defend and hold harmless City
and the Petaluma Community Development Commission and their respective boards,
commissions, and elected and appointed officials, employees, agents and contractors
(collectively "indemnitees") from and against all claims, actions, proceedings,
demands, liabilities, judgments, losses, expenses (including reasonable attorneys' fees
and expenses) and costs (collectively "Claims") arising out of or related to this
Agreement including any claim, action or proceeding to attack, set aside, void or annul
this Agreement or any part hereof. City shall promptly notify Regency of any such
Claim. Nothing contained in this Section shall prohibit the City from participating in a
defense of any Claim, and if the City chooses to do so, Regency shall reimburse City for
reasonable attorneys' fees and expenses incurred by City.
8.8 Entire Agreement. This Agreement, together with the Easement
Agreement, the Lease Amendment, and Exhibits A through E, 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 negotiations,
documents and discussions pertaining thereto.
8.9 Parties Not Co -Venturers: No Brokers. Nothing in this Agreement is
intended to or shall establish the Parties as partners, co -venturers, or principal and
agent with one another. Each Party represents and warrants to the other that no
brokers have been retained or consulted in connection with this transaction other than
as disclosed in writing to the other party. Each Party shall defend, indemnify, and hold
the other Party harmless from any claim, expense, cost, loss or liability imposed by any
party claiming a fee or commission in connection with this Agreement or the acquisition
of the Easement and arising out of the indemnifying Party's conduct.
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8.10 Captions. The captions of the Sections of this Agreement are for
convenience only and are not intended to affect the interpretation or construction of the
provisions hereof.
8.11 Counterparts. This Agreement may be executed.in multiple counterparts,
each of which shall be an original and all of which together shall constitute one
agreement.
8.12 Further Assurances: Memorandum, The Parties agree to _execute,
acknowledge and deliver to the other such other documents and instruments, and to
undertake such actions, as either shall reasonably request or as may be necessary to
carry out the intent of this Agreement. Without limiting the generality of the foregoing (i)
the Parties agree to execute and record in the Official Records of Sonoma County a
Memorandum of Option substantially in the form attached hereto as Exhibit E, and (ii)
upon termination of this Agreement or upon expiration of the Option, Regency agrees
to execute, acknowledge, and deliver to City a quit claim in recordable form within ten
(10) days following request by City, and to execute, acknowledge and deliver such other
documents reasonably necessary to remove the cloud of this Agreement from title.
8.13 Governina Law: Time is of the Essence. This Agreement shall be
interpreted under and pursuant to the laws of the State of California without regard to
principles of conflict of laws. Time is of the essence and is a material term for all
conditions and provisions contained in this Agreement.
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IN WITNESS WHEREOF, the City and Regency have executed this Option
Agreement as of the date first written above.
REGENCY PETALUMA LLC,
A Delaware limited liability company
By: Regency Realty Group, Inc., a Florida corporation
Its: Manager and Sole Member
By:
Tho erg,
Senior Vice President, Investments
CITY OF PET((A'��LUMA
r
Its:f' f°c2 s1�2tPn'
J .1
ATTEST:
City Clerk
APPROVED S TO FORM:
Q�V.
City Attorney
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