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