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HomeMy WebLinkAboutItem 14- Potential Downtown ProjectAGENDA ITEM SUMMARY Meeting Date: Meeting Type: Staff Contact/Dept.: Staff Phone No: Estimated Time: 6/5/2023 Regular Meeting Allie Camp/CMO 541-726-3688 5 Minutes SPRINGFIELD Council Goals: Encourage Economic CITY COUNCIL Development and Revitalization through Community Partnerships ITEM TITLE: POTENTIAL DOWNTOWN PROJECT ACTION Direct the City Manager to enter/not enter into an Exclusive Negotiating Agreement REQUESTED: with Obie Companies substantially in this form for a due diligence period of 365 days on three tax lots of City -owned property downtown. ISSUE To review an Exclusive Negotiating Agreement between Obie Companies and the STATEMENT: City that would allow for time to investigate the future development of City -owned property downtown. ATTACHMENTS: 1. Letter of Interest- Obie Companies 2. Vicinity Map 3. Draft Exclusive Negotiating Agreement DISCUSSION/ Obie Companies approached the City of Springfield with a letter of interest (ATT FINANCIAL 1) to redevelop three City -owned tax lots in downtown, currently used as the IMPACT: Museum parking lot (ATT 2). The letter requests shared parking with City Hall and tax exemption. Obie Companies has verbally described a mixed-use development that fits the look and feel of downtown Springfield. To mutually determine the feasibility of a project at this site, staff have proposed terms and tasks within an Exclusive Negotiating Agreement (ENA) (ATT 3). • An ENA establishes time to exclusively investigate a property's development potential. City tasks include conducting a parking study, an appraisal, a survey, and a Phase 1 environmental. Developer tasks include creating a financial feasibility analysis, pro forma, and schematic drawing. • If the City agrees to enter into the ENA, it may not sell the property to any other party during the term of the agreement, must allow Obie Companies access to the property and confer and provide information in connection with the development of the property. The ENA provides that the parking lot will remain in use as per normal during the term of the agreement. Although the City is the property owner, its role as the local regulatory body is not impacted by this agreement and any land use approval or tax exemption program must follow City regulations and state law. • This ENA is nonbinding and is drafted as a precursor to a Memorandum of Understanding (MOU) and a potential binding agreement conveying the property to Obie Companies. This binding agreement would identify project specifics for the development outcome, including unit numbers, time frame of delivery, and commitments from the City. Agreement from both parties would be needed to proceed after the ENA. The vision described by Obie Companies fits within the policy landscape for downtown. The property is in the Downtown Urban Renewal Plan Area which is governed by the Springfield Economic Development Agency and attracting high- quality development is a primary goal within the Downtown Urban Renewal Plan October 31, 2022 City of Springfield Attn: Mary Bridget Smith 225 Fifth Street Springfield, OR 97477 RE: Downtown Springfield Development Dear Ms. Smith, Thank you for your time recently to discuss the potential for redevelopment opportunities in downtown Springfield. Our team continues to be very interested in the potential partnership with the city on development of the site located adjacent to city hall. To that end, we write this letter to formally recognize our desire to enter into an exclusive negotiating agreement for the property located along Main Street owned by the city. The location of this property, coupled with the previous redevelopment of properties to the west, leave us believing there is significant potential in redevelopment of this site. Should the city be interested in entering into an exclusive negotiating agreement, there are a few items that need to be part of those conversations for Obie Companies to proceed. These items include: • 10 -Year Property Tax Exemption: A property tax exemption is necessary for developments such as ours to financially make sense and achieve success. Obie Co. has used A Multi -Use Property Tax Exemption (MUPTE) for our Market Expansion and will be using it on future developments in Eugene. We cannot stress enough the importance of this tool being available for Obie Co. to move forward. Parking: With the redevelopment of this surface parking lot, Obie Co. will need access to parking to serve the future occupants of the site. Fortunately, the city does have access to covered parking adjacent to the property. As part of this negotiating, Obie Co. will require agreements for use of the adjacent parking to be secured for the benefit of future occupants and users of the redevelopment. Thank you again for your time and energy, to date. We are excited about the opportunities ahead and look forward to your response. Best regards, /r Brian Obie President & CEO Obie Companies Attachment 1, Page 1 of 1 SPRINGFIELD CITY COUNCIL DOWNTOWN DEVELOPMENT SITE EXCLUSIVE NEGOTIATING AGREEMENT May 2023 THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Agreement") is made and entered into as of the last date of signature indicated below (the "Effective Date"), by and between the City of Springfield, an Oregon municipal corporation ("Owner"), and Obie Companies ("Developer"), Oregon business registered with the State of Oregon. RECITALS A. Owner owns real property along Main Street in Downtown Springfield on Map 17-03- 35-31, Tax Lot Nos. 8300, 8400, and 8500 located between two landmark buildings, namely the Springfield History Museum and the Emerald Art Center ("Property"). B. Owner has prioritized revitalizing its downtown core consistent with the historic character of existing structures and seeks to negotiate terms under which to redevelop the Property. C. On April 3, 2023, the Springfield City Council authorized the City Manager to negotiate an Exclusive Negotiation Agreement (the "Agreement") with Developer for the redevelopment of the Property. The intent of entering into this Agreement is to facilitate negotiation of the terms of a pre -development Memorandum of Understanding ("MOU") and binding, definitive documents such as a Disposition and Development Agreement or Purchase and Sale Agreement ("Binding Agreement") under which Owner and the Developer will assess and plan for redevelopment and the Developer will acquire and redevelop the Property with uses, site plans, building designs, and other elements as determined through the MOU between the Owner and the Developer (the "Parties"). 0 D. This Agreement provides Developer with the exclusive rights to negotiate with Owner for conveyance and development of the Property, provides Developer certain exclusive rights regarding the site as defined in this Agreement, and confirms the basis upon which the Parties are prepared to initiate negotiation of the terms of a MOU and Binding Agreement and related documents providing for the desired redevelopment of the Property. The MOU and Binding Agreement must be approved by the Springfield City Council. Now THEREFORE, the Parties agree as follows: TERMS 1. Good Faith Exclusive Negotiations. Owner and Developer agree and covenant to negotiate the terms of the Binding Agreement and any intervening MOU (as defined below) in good faith. Owner acknowledges that Developer expend time and expense in preparing its initial proposal, conducting due diligence, conferring with City staff with regard to design and refining its development proposal. During the term hereof, Owner agrees Developer will have the exclusive right to negotiate with Owner for the rights to develop the Property and that Owner will not accept, solicit, pursue or entertain any other offers or other indications of interest with respect to the Property for any development, sale or other transaction. {oo028907:3} Page 1 of 5 Attachment 3, Page 1 of 6 2. Duration. The Term of this Agreement shall be 365 days from the Effective Date. Owner may, in its sole discretion, extend this Agreement for up to two additional 90 -day renewal terms upon the determination of the City Manager that Developer has made significant progress in defining a feasible, assembled development, and both Owner and Developer have made progress toward drafting an MOU. 3. Termination. This Agreement shall automatically terminate upon execution and delivery of a Binding Agreement which shall thereafter control the rights of the Parties with respect to the Property. The Parties may terminate this Agreement by mutual agreement if latent conditions are discovered on the Property or events occur that would, presently or with the passage of time, prevent the entry into a Binding Agreement. Notwithstanding the above, any party may at their sole option, terminate this Agreement by notice in writing if another parry makes a material misrepresentation in the course hereof, otherwise fails to act in good faith, or if a party becomes insolvent. 4. Due Diligence Assignments and Performance Timeline. The Due Diligence Assignments and Performance Timeline attached as Exhibit A and incorporated into this Agreement establishes the good faith expectations of the Parties during the term of the Exclusive Negotiating Agreement. Unless a specific date is set forth, the times for performance in the Timeline establish ranges and/or estimates and not strict deadlines. 5. Memorandum of Understanding. Tentative agreements on the terms identified by the Parties during this ENA period and to be included in language of the Binding Agreement may be memorialized in a written Memorandum of Understanding ("MOU"), or series of such memoranda, during the Term of this Agreement. Any such MOUS will provide the continuing framework for final negotiations and preparation of the Binding Agreement. 6. Binding Agreement and Preconditions to Closing. a. Owner's conveyance of the Property to Developer, and its willingness to investigate the requests outlined in Letter of Interest dated October 31, 2022 may be formalized within the subsequent MOU and/or Binding Agreement. b. The MOU and Binding Agreement will incorporate terms and conditions necessary in the Owner's sole discretion to warrant the financial assistance. Key areas to be addressed in the MOU and subsequent Binding Agreement will include, but not be limited to: i. formal site survey ii. environmental and geotechnical assessments iii. infrastructure planning iv. design drawings v. detailed timeline for performance vi. periodic construction monitoring reports c. The conditions precedent to entry into the MOU and subsequent Binding Agreement include, but are not limited to: i. footprint the physical redevelopment site ii. Owner satisfaction, in its sole discretion, that there have been no material changes to Developer's qualifications and financial capacity since approval of the ENA iii. Owner approval of the conceptual design (30% completeness) and other due {00028907:3} Page 2 of 5 Attachment 3, Page 2 of 6 diligence established by Owner iv. establishing a Performance Timeline that is satisfactory to Owner v. Springfield City Council authorization to enter into the Binding Agreement 7. Co-application/Cooperation. a. Owner and Developer shall be co -applicants on any land use permit application sought in connection with this Agreement or subsequent MOU issued during the term thereof. Developer shall bear responsibility for drafting and submitting all land use permit applications and will pay permit fees, unless otherwise agreed to by Owner in an MOU or Binding Agreement. Owner will not guarantee approval of any land use permit applications but agrees to diligently process land use permit applications related to the Property consistent with its applicable rules and regulations. b. Owner and Developer shall each promptly provide to the other all information reasonably related to the Property which may be obtained without material expense, upon written request. Owner and Developer shall cooperate in connection with land use applications, permits, approvals or entitlements sought by Developer from any governmental authorities with respect to the Property, provided that Owner shall not be required to incur any material cost or liability in connection with such applications, permits or approvals unless otherwise agreed to by Owner in an MOU or Binding Agreement. c. The Parties will confer on a regular basis throughout the term of this Agreement, particularly with respect to the drafting of a proposed design, MOU and Binding Agreement. d. The Parties intend to cooperate in all aspects of the Property development provided that both parties reach agreement on those aspects. 8. Due Diligence. Developer may conduct due diligence and inspections of the Property, including such physical, legal, and engineering inspections, tests and investigations as it may deem necessary or desirable. Developer shall inform Owner prior to any such studies being undertaken. Such studies and investigations may include, without limitation, zoning, land use, environmental, title, design review, covenants, conditions and restrictions, financing, leasing markets, project feasibility and related matters. The scope and cost of the due diligence and inspections shall be the sole discretion and responsibility of Developer, other than any due diligence activities which Owner in its sole discretion opts to fund. In the event that Developer elects not to proceed with the MOU, Binding Agreement or development of the Property, Developer shall provide to Owner copies of all studies, including environmental and soils studies, surveys, title reports and similar information developed during the Due Diligence by Developer ("studies"). Owner may use the studies in any subsequent negotiations with other developer teams at Owner's discretion, provided that Owner reimburses Developer for Developer's actual cost of the studies. 9. Access. Owner shall provide Developer full access to the Property during the term of this Agreement for the purpose of conducting Due Diligence. The site will remain an active, managed public parking lot during the duration of this Agreement. Developer must provide Owner three business days' notice for work on the Property that will interfere or obstruct its use as a public parking lot. Developer shall repair or restore any damage caused by the entry of Developer or its agents upon or under the Property. foo028907:3) Page 3 of 5 Attachment 3, Page 3 of 6 10. Indemnity and Insurance. Developer hereby agrees to indemnify, defend and hold Owner and City of Springfield, including its appointed and elected officials, officers, employees and agents, harmless from and against any and all claims for injury to persons or damage to property caused by or resulting from the acts or neglect of Developer or its representatives or consultants on or about the Property. During the term of this Agreement, Developer shall maintain insurance with respect to its activities on or about the Property, naming Owner and City of Springfield as an additional insured, in amounts as follows: (i) commercial general liability insurance with a combined single limit of not less than $2,000,000 per occurrence and with at least $3,000,000 general aggregate; (ii) auto liability insurance with combined single limit of $1,000,000 per occurrence; (iii) employers liability insurance with a limit of not less than $500,000. The indemnity required under this Section 10 shall survive termination of this Agreement. 11. No Assignment. No party shall assign or transfer its interest in this Agreement. 12. Brokers. Owner and Developer each represent and warrant to the other that no broker, finder or other representative has acted on its behalf in connection with this Agreement. Owner and Developer agree to indemnify, defend and hold the other harmless from any claim or liability for any fee, commission or other compensation with respect to this Agreement, the MOU, Binding Agreement or other transactions contemplated hereby, asserted by any other broker, finder or other representative claiming through the indemnifying party. Section 12 shall survive termination of this Agreement. 13. Confidentiality. While striving to maintain transparency to the greatest extent practicable, Owner and Developer agree that some information submitted by Developer during the term hereof may need to be submitted on the condition that Owner keep said information confidential to the full extent permitted by law. This includes, but is not limited to, financial statements and pro forma information. Prior to submitting such information, Developer shall indicate a desire to maintain confidentiality, including the rationale for confidentiality. In this event, Owner will either agree not to disclose said confidential information, or inform the Developer that Owner does not agree, in which case Developer may provide further clarification as to why Developer believes it is necessary to maintain confidentiality. This nondisclosure agreement shall survive termination of this Agreement but shall not apply to the extent any such information is publicly available, has been disclosed by other parties or is required to be disclosed by the City of Springfield Attorney's Office under Oregon public records laws. 14. Governing Law. This Agreement shall be governed by the laws of the state of Oregon. 15. Time of the Essence. Time is of the essence of this Agreement. 16. Amendments. This Agreement may be amended only by the written agreement of the Parties hereto. 17. Notices. All notices given under this Agreement must be in writing and either (i) personally delivered, (ii) delivered by express mail, Federal Express or comparable courier service, or (iii) delivered by certified mail, postage prepaid, return receipt requested, as follows: {oo028907:3) Page 4 of 5 Attachment 3, Page 4 of 6 To Owner: City of Springfield Allie Camp 225 Fifth Street Springfield, Oregon 97477 To Developer: Obie Companies Casey Barrett 296 E 5th Avenue, Suite 300 Eugene, Oregon 97401 All notices shall be deemed effective upon receipt. Any party may from time to time change its address for purposes of this Section by notice in writing to the other party. 18. BindingEffect. ffect. During the Term hereof and any extensions thereto, the Parties shall negotiate in good faith to complete and execute the definitive MOU and Binding Agreement upon terms and conditions consistent with this Agreement. No sale agreement or other right, obligation or estate in land shall be created except by delivery of the definitive Binding Agreement and all other related and necessary instruments, duly authorized by the Springfield City Council and all necessary Developer corporate action and executed by authorized representatives of the Parties. If the MOU and/or Binding Agreement is not executed and delivered prior to expiration of the Term and any extensions thereto, or if Developer elects, in its sole discretion, by notice in writing to Owner not to pursue development of the Property, this Agreement shall terminate and be of no further force or effect, except Sections 10, 12, 13, 14 and 16 hereof, which shall survive termination. If during the course of negotiations, it becomes clear that the Parties will not reach an agreement, Developer shall not unreasonably withhold consent to early termination of this Agreement. OWNER: DEVELOPER: City of Springfield, Obie Companies An Oregon municipal corporation ry By: Allie Camp Date: By: _ Date: {oo028907:3) Page 5 of 5 Attachment 3, Page 5 of 6 EXHIBIT A Due Diligence Assignments and Performance Timeline (Note — all dates are tentative and are subject to change) Due Diligence Assignments for Owner include: Order an appraisal Order a Preliminary Title Report Conduct a Phase 1 environmental Order a preliminary site survey Conduct parking use analysis for the Property and adjacent City -owned and managed spaces Consider a housing tax exemption program Research and coordinate for the impact of the adjacent Emerald Art Center mural Identify property dispositioning process(es) for the Property Conduct prevailing wage due diligence (as a potential contributor) Due Diligence Assignments for Developer include: Conduct a land use permit application analysis Develop a financial feasibility analysis, proforma, and statement of financial capability Coordinate with SUB for service considerations (water and electric), installation costs, and infrastructure planning Conduct prevailing wage due diligence (as a potential recipient) Develop a schematic drawing of the conceptual design. Due Diligence Assignments for Owner and Developer include: Jointly draft and negotiate MOU Terms Jointly draft and negotiate Binding Agreement Terms {00028907:3} Attachment 3, Page 6 of 6