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HomeMy WebLinkAboutItem 02 Downtown Exclusive Negotiationg AgreementAGENDA ITEM SUMMARY Meeting Date: 9/25/2023 Meeting Type: Regular Meeting Department: City Manager’s Office Staff Contact: Allie Camp S P R I N G F I E L D ECONOMIC Staff Phone No: 541-726-3688 DEVELOPMENT AGENCY Estimated Time: 10 Minutes ITEM TITLE: DOWNTOWN EXCLUSIVE NEGOTIATING AGREEMENT ACTION REQUESTED: Authorize the City Manager to negotiate and enter into an Exclusive Negotiating Agreement with the Motors LLC for two lots in Downtown Springfield in the vicinity of 7th and A Street. ISSUE STATEMENT: The development potential of tax lots 17-03-35-42-02200 and 02000 can assist in meeting the goals for downtown of communicating the viability of dense, market rate housing and providing a market comparable for future, private projects. ATTACHMENTS: 1. Draft Exclusive Negotiating Agreement 2. Vicinity Map DISCUSSION/ FINANCIAL IMPACT: A representative of The Motors LLC approached the Springfield Economic Development Agency (SEDA) with interest in selling two tax lots in downtown Springfield. The two tax lots are tax lots 17-03-35-42-02200 and 17-03-35-42- 02000 and are directly adjacent to the Blue McKenzie project site (ATT 1). The mechanism available to explore the properties more would be an Exclusive Negotiating Agreement (ENA). Negotiations with Blue McKenzie Apartments, LLC, to acquire the Blue McKenzie project site are still ongoing. This additional land has the capability to improve a development project’s viability by adding area for exploration of housing type and construction considerations, parking, and the incorporation of the adjacent existing commercial storefront, the former Buick dealership. Land banking multiple properties for a potential future development allows for more certainty in terms of access and control of the land. It also allows for more flexibility for how that land is programmed to both meet community needs and be economically viable. Both properties are zoned Mixed Use Commercial which allows for a wide range of scheduled uses including housing. Tax lot 2200, the former Buick dealership site, measures 0.31 acres. The dealership building is listed on the National Historic Registry and measures approximately 10,000 square feet. Tax lot 2000 measures 0.51 acres and has an existing auxiliary building on the site which is approximately 1,000 square feet. An ENA is a nonbinding agreement that establishes time to exclusively develop an understanding of a property’s development potential. If directed to proceed with negotiations, an ENA could include the following types of standard items: land use analysis, title report, environmental analysis, and examination of potential development programs. At the same time, staff see value in examining the multiple potential development sites of SEDA and City-owned land in the downtown to best understand the entire picture of phasing for development of future sites. {00030209:1} SPRINGFIELD CITY COUNCIL DOWNTOWN DEVELOPMENT SITE EXCLUSIVE NEGOTIATING AGREEMENT ____________ 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 Springfield Economic Development Agency, an urban renewal agency of the City of Springfield, Oregon (“SEDA”), and The Motors, LLC (“OWNER”), and Oregon limited liability company registered with the State of Oregon. RECITALS A. Owner owns real property at 7th and A Streets in Downtown Springfield on Map 17-03- 35- 42, Tax Lot Nos. 02000 and 02200 (“Property”). B. SEDA is authorized to acquire property in the Downtown Urban Renewal Plan for redevelopment consistent with the Downtown Urban Renewal Plan. This activity is consistent with Section 600B of the plan, which authorizes SEDA to “provide below-market interest rate and market rate loans and provide such other forms of financial assistance to property owners and those desiring to redevelop, rehabilitation, and acquire property.” C. On September 25, 2023, the SEDA Board authorized the City Manager to negotiate an Exclusive Negotiation Agreement (the “Agreement”) with Owner for the redevelopment of the Property. The intent of entering into this Agreement is to facilitate due diligence by SEDA to investigate redevelopment opportunities related to the Property and to negotiate with the Owner for SEDA’s future acquisition of the Property, which may include but is not limited to negotiating a Purchase and Sale Agreement (“Binding Agreement”). During the due diligence period covered under this Agreement, SEDA and Owner intend to mutually cooperate to investigate and assess redevelopment opportunities for the Property, including conceptual uses, site plans, building designs, and other elements as determined by the Parties. D. This Agreement provides SEDA with the exclusive rights to negotiate with Owner for conveyance and development of the Property, provides SEDA certain exclusive rights regarding the site as defined in this Agreement, and confirms the basis upon which the Parties are prepared to conduct due diligence and negotiate terms of a future Binding Agreement. The Binding Agreement must be approved by the SEDA Board. Now THEREFORE, the Parties agree as follows: TERMS 1. Good Faith Exclusive Negotiations. SEDA and Owner agree and covenant to negotiate the terms of the Binding Agreement and any intervening agreements in good faith. Owner acknowledges that SEDA will expend time and expense in preparing its initial proposal, conducting due diligence, and conferring with Owner. During the term hereof, Owner agrees SEDA will have the exclusive right to negotiate with Owner for the rights to acquire the Property and that Owner will not accept, solicit, pursue or entertain any other offers or Attachment 1 Page 1 of 5 {00030209:1} other indications of interest with respect to the Property for any development, sale or other transaction during the term of this Agreement. 2. Duration. The Term of this Agreement shall be 90 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 that SEDA has made significant progress in toward drafting a Binding Agreement. 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, (i) any party may at their sole option, terminate this Agreement by notice in writing if another party makes a material misrepresentation in the course hereof, otherwise fails to act in good faith, or if a party becomes insolvent and (ii) SEDA may, in its sole discretion, terminate this Agreement by notice in writing to Owner if at any time the SEDA Board elects not to pursue development of the Property. 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 SEDA may be formalized within the subsequent Binding Agreement. b. The Binding Agreement will incorporate terms and conditions necessary in the Owner’s sole discretion to warrant the financial assistance. 7. Mutual Cooperation. The Parties will confer on a regular basis throughout the term of this Agreement, particularly with respect to the drafting of a Binding Agreement and/or MOU. 8. Due Diligence. SEDA 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. SEDA shall inform Owner prior to any on-site 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 SEDA, other than any due diligence activities assigned to Owner in Exhibit A or as otherwise agreed upon by the parties in an MOU or the Binding Agreement. In the event that SEDA elects not to proceed with the Attachment 1 Page 2 of 5 {00030209:1} Binding Agreement or development of the Property, SEDA shall provide to Owner copies of all studies, including environmental and soils studies, surveys, title reports and similar information obtained during the Due Diligence by SEDA (“studies”), provided that Owner reimburses SEDA for SEDA’s actual cost of the studies. Owner may use the studies in any subsequent negotiations with other developers or purchasers at Owner’s discretion. 9. Access. Owner shall provide SEDA 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. SEDA must provide Owner three business days’ notice for work on the Property that will interfere or obstruct its use as a public parking lot. SEDA shall repair or restore any damage caused by the entry of SEDA or its agents upon or under the Property. 10. No Assignment. No party shall assign or transfer its interest in this Agreement. 11. Brokers. Owner and SEDA 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 SEDA 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. 12. Confidentiality. While striving to maintain transparency to the greatest extent practicable, Owner and SEDA agree that some information submitted by Owner during the term hereof may need to be submitted on the condition that SEDA keep said information confidential to the full extent permitted by law. Prior to submitting such information, Owner shall indicate a desire to maintain confidentiality, including the rationale for confidentiality. In this event, SEDA will either agree not to disclose said confidential information, or inform Owner that SEDA does not agree, in which case Owner may provide further clarification as to why Owner 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. 13. Governing Law. This Agreement shall be governed by the laws of the state of Oregon. 14. Time of the Essence. Time is of the essence of this Agreement. 15. Amendments. This Agreement may be amended only by the written agreement of the Parties hereto. 16. 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: To SEDA: City of Springfield Allie Camp 225 Fifth Street Attachment 1 Page 3 of 5 {00030209:1} Springfield, Oregon 97477 To Owner: The Motors, LLC ________________ ________________ ________________ 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. 17. Binding Effect. 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 MOU or 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 Economic Development Agency Board and all necessary Owner 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 SEDA 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. SEDA: OWNER: Springfield Economic Development Agency The Motors, LLC _______________________________ _______________________________ By: Allie Camp By: ____________________________ Date: __________________________ Date: __________________________ Attachment 1 Page 4 of 5 {00030209:1} EXHIBIT A Due Diligence Assignments Due Diligence Assignments for SEDA include: Order an appraisal Order an updated Title Report Update previous or order a new a Phase 1, and if needed, a Phase 2 environmental Order a preliminary site survey Conduct redevelopment opportunities analysis and feasibility Identify potential property dispositioning process(es) for the Property Negotiate with Blue McKenzie Apartments LLC regarding deed to adjacent site Pursue amendment of the Downtown Urban Renewal Plan section 700C Due Diligence Assignments for Owner include: Provide copies to SEDA of all prior due diligence materials developed in the last five years related to development or redevelopment of the Property Provide SEDA with history registry information and classification Provide copies to SEDA of building plans, previous property line surveys Due Diligence Assignments for Owner and SEDA include: Jointly draft and negotiate MOU Terms (as needed) Jointly draft and negotiate Binding Agreement terms Attachment 1 Page 5 of 5 Lane County GIS, Bureau of Land Management, State of Oregon, State of Oregon DOT, State of Oregon GEO, Esri Canada, Esri, HERE, Garmin, INCREMENT P, USGS, EPA, USDA ± Lane County, Oregon 0 260 520130 Feet The information on this map was derived from digital databases on the Lane County regional geographic information system. Care was taken in the creation of this map, but is provided “as is”. Lane County cannot accept any responsibility for errors, omissions or positional accuracy in the digital data or the underlying records. Current plan designation, zoning, etc., for specific parcels should be confirmed with the appropriate agency. There are no warranties, expressed or implied, accompanying this product. However, notification of any errors will be appreciated. Downtown ENA Attachment 2 Page 1 of 1