10-19-2010 - Exclusive Negotiating Agreement with CGM Developme - ENA att. 1 & 2 (2).pdfATTACHMENT NO.
September 27, 2010
Mr. Chris Chung
Community Development Commission Director
City of West Covina
Community Development Commission
1444 West Garvey Ave.
West Covina, CA 91790
RE: Request to Enter Exclusive Negotiation Agreement
Dear Chris,.
C.G.M. Development, Inc. (CGM) would like to request to enter an exclusive negotiation
agreement (ENA) regarding the city property located at the southeast corner of West
Covina Parkway and West Garvey Avenue South. CGM is proposing a 5-story, 50,000
square foot upscale office condominium building as shown on the attached preliminary
site plan.
In order to examine the feasibility of this new development project, CGM would like to
request a 180-day exclusive negotiation period with two 60-day extension options.
During this period, we can further discuss the purchaSe terms and also finalize the design
and development plan with the City.
. , . We believe the value of this project should be greatly enhanced by our experienced i . .
development team. We look. forward to. entering the ENA soon and havin-g this i
1
opportunity to bring one more high-quality development to the City of West Covina.
Sincerely,
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-Chin Lee
President and CEO •
17528 East Rowland Street, City of Industry, CA 91748 Tel 626 913 8939 Fax 626 913 '19
Email: robertc@cgniclevelopment.com Website: www.cgmdevelopment.corn
WEST COVINA CIVIC CENTER OFFICE CONDO 1607 WEST COVINA PKWY., WEST COVINA, CA 91790 - W. GARVEY AVE.WEST COVINA MALL) =RNARDINO FR __IEEwAy TO 13 15 rrrrnrni12 P 15. \ 15 51 1 1 1 „.„1414 > OFFICE CONDO 5 - STORY . \ Cb ROJECT DATA '1'< NNN 1/j), CROSS SITE AREA 43,556 SOFT. (1 ACRE) A. BUILDING AREA • 1ST FL. (100: 5 MY). 6,000 2ND — 5TH FL. (box 110) 11.000 BUILDING TOTAL AREA: 50,000 B. REQUIRED PARKING I 00.000 S.F. OFFICE BLDG. 167 C. PARKING PROVIDED 1 O.K. 64 0-103 =167 1/ , • -A@ .i-- „ , . /
ATTACHMENT NO.
EXCLUSIVE NEGOTIATING AGREEMENT
(Civic Center Property)
THIS EXCLUSIVE NEGOTIATING AGREEMENT (the "Negotiating Agreement") is
entered into on October 19, 2010, between the CITY OF WEST COVINA, a public body, corporate
and politic (the "City"), and CGM DEVELOPMENT, INC., (the "Developer") (the Developer, and
the City are collectively referred to herein as the "Parties"), on the terms and provisions set forth
below.
RECITAL
The following recitals are a substantive part of this Negotiating Agreement.
A. The City Council of the City of West Covina (the "City Council") approved and
adopted the Redevelopment Plan (the "Plan") for the West Covina Redevelopment Project (the
"Project Area") by the merger of the Central Business District and Eastland Redevelopment Plans on
December 21, 1993 by Ordinance No. 1928, and the City Council did duly pass and approve
Ordinance No. 1951 on December 20, 1994, and did thereby amend the Plan.
B. In furtherance of the objectives of the Community Redevelopment Law of the State
of California, Health and Safety. Code Section 33000, et seq. (the "CRL"), the City desires to review
the feasibility and consider the redevelopment of certain parcels of land, of approximately 2.2 acres,
within the Project Area, located at southeast corner of West Covina Parkway and Garvey Avenue
South in the City of West Covina, as shown on the site map attached hereto as Exhibit "A" (the
"Site").
C. The Parties agree and acknowledge that the purpose of this Negotiating Agreement is
to establish a period during which the Developer shall have the exclusive right to negotiate with the
City the terms of a Disposition and Development Agreement or other agreement (the "DDA") for the
development of a 5-story office building and/or other related uses on the Site (the "Proposed
Development"). The City is interested in reviewing the Proposed Development's feasibility, and, if
mutually agreed, to facilitate and implement the Proposed Development.
D. The Parties intend that during and for the period of negotiations set forth herein (the
"Negotiating Period") each will perform certain actions and fulfill certain obligations and
responsibilities under this Negotiating Agreement.
THE CITY AND THE DEVELOPER HEREBY AGREE AS FOLLOWS:
I. [1001 Agreement to Negotiate
A. [101] Agreement to Engage in Good Faith Negotiations
The City, by and through its staff and consultants, and the Developer, acknowledging that
time is of the essence, agree for the Negotiation Period set forth below to negotiate diligently and in
good faith to prepare a Disposition and Development Agreement (the "DDA") and ancillary
agreements to be considered for execution between the City and the Developer, in the manner set
forth herein with respect to the Proposed Development of the Site. The City agrees, for the period set
forth below, not to negotiate with any other person or entity regarding development of the Site or any
portion thereof.
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B. [102] Duration of this Negotiating Agreement
The duration of this Negotiating Agreement (the "Negotiation Period") shall be one hundred
eighty (180) days from the execution date of this Agreement by the City. If upon expiration of the
Negotiation Period, the Developer has not signed and submitted a DDA to the City or engaged in
substantial progress towards finalizing terms of a DDA, as determined by the City Manager, or his
designee, then this Negotiating Agreement shall automatically terminate unless this Negotiating
Agreement has been mutually extended by the City and the Developer. However, if in the opinion of
the City Manager the Parties have made substantial progress in finalizing terms of a DDA and all
other conditions of Developer's Submissions, as set forth in paragraph 202, below, have been filed,
the City Manager in his sole and absolute discretion may extend the Negotiating Period for an
additional two (2) ninety (90) day extensions in order to process the DDA and other applications
required by this Negotiating Agreement.
C. [103] Termination due to Failure to Negotiate in Good Faith
In the event the Developer has not continued to negotiate diligently and in good faith, the
City shall give written notice thereof to the Developer who shall then have ten (10) working days to
commence negotiating in good faith. Following the receipt of such notice and the failure of the
Developer to thereafter commence negotiating in good faith within such ten (10) working days, this
Negotiating Agreement may be terminated by the City. In the event of such termination by the City,
neither party shall have any further rights against nor liability to the other under this Negotiating
Agreement.
In the event the City has not continued to negotiate diligently and in good faith, the
Developer shall give written notice thereof to the City, which shall then have ten (10) working days
to commence negotiating in good faith. Following the receipt of such notice and the failure of the
Agency to thereafter commence negotiating in good faith within such ten (10) working days, this
Negotiating Agreement may be terminated by the Developer. In the event of such termination by the
Developer, neither party shall have any further rights against or liability to the other under this
Negotiating Agreement.
D. [104] Deposit
Prior to execution of this Negotiating Agreement, Developer shall deposit with the City the
sum of Five Thousand Dollars ($5,000.00) as a good faith deposit (the "Deposit"). The Deposit shall
be promptly returned to the depositing party should this Negotiating Agreement and subsequent
extension terminate within the two (2) ninety (90) day extensions of the 180-day ENA period.
II. [200] Development Concept
A. [201] Scope of Development
The negotiation hereunder shall be based on a development concept, which shall include the
development on the Site of a 5-story office building and/or other related uses as approved by the City
to be included in the DDA.
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B. [202] Developer Submissions
Within the times specified below the Developer must complete certain submissions to the
City. Failure of Developer to timely complete the specified submissions may result in termination of
this Negotiating Agreement by City.
1. Developer shall submit a concept development site plan and elevations within 60
days from the effective date of this Negotiating Agreement.
2. Developer shall submit a project proforma within 90 days from the effective date of
this Negotiating Agreement, which includes the following:
o Development costs, including construction and non-construction costs,
o Project income and return, and
o Consideration to be paid to the City.
3. Developer shall submit update on progress of obtaining necessary land entitlements
and related approvals, including but not limited to a general plan amendment, zone change, precise
plan, conditional use permit, and CEQA review, within 120 days, from the effective date of this •
Negotiating Agreement.
4. Other relevant business development information requested by the City in order to
allow the City to reasonably evaluate the terms of the DDA or related negotiations.
C. [203] Developer's Findings, Determinations, Studies and Reports
Upon reasonable notice, as from time-to-time requested by the City, the Developer agrees to
make oral and written progress reports advising the City on all non-confidential or non-proprietary
matters and all studies being made by the Developer. In the event the City and the Developer do not
enter into a DDA, and the Deposit is returned to the depositing party pursuant to Section 104 of this
ENA, the Developer shall submit to the City copies of all studies and reports prepared for the
proposed development of the Site by or for the Developer to the extent the Developer is legally able
to do so, and the City shall have the right to the use and benefit of all such non-confidential or non-
proprietary studies and reports.
D. [300] Acquisition of the Site and Costs of Appraisals and Related
Consulting Work
The consideration to be paid by the Developer to the City will be established by the City after
negotiations with the Developer. Such consideration will be based upon such factors as market
conditions, density of development, costs of development, risks of the City, risks of the Developer,
estimated or actual Developer profit, public purpose and/or reuse value for the uses permitted to be
developed and financial requirements of the City, and will be subject to approval by the City and the
City Council after a public hearing or other public meeting as required by law. Any costs, fees and
charges associated with the appraisals for the value of the land and/or costs associated for retaining
and utilizing economic consultants necessary to evaluate the feasibility of the proposed projects shall
be paid solely by the City. The selection of the appraiser(s) and other economic consultant(s) and
type of appraisal report(s) or other consultant report(s) necessary for the project is at the sole
discretion of the City.
III. [400] The Developer
A. [401] Nature of the Developer and Tenant
The Developer is:
CGM Development, Inc.
B. [402] Office of the Developer
The principal office of the Developer is:
CGM Development, Inc.
17528 East Rowland Street
City of Industry, California 91748
C. [403] Full Disclosure
Pursuant to Section 202, the Developer will make full disclosure to the City of its principals,
officers, major stockholders, major partners, joint venturers, and key managerial employees. Any
significant change in the principals, associates, partners, joint venturers, negotiators, development
manager, consultants, professional and directly-involved managerial employees of the Developer is
subject to the approval of the City. Notwithstanding the foregoing, the Developer reserves the right,
subject to written approval of the City, to join and associate with other entities in joint ventures,
partnerships or otherwise for the purpose of developing the Site, provided that the Developer retains
responsibility for day to day management of such entities and remains fully responsible to the City
hereunder.
IV. [500] Agency's Responsibilities
D. [501] Redevelopment Plan
This Negotiating Agreement and the DDA are subject to the provisions of the
Redevelopment Plan as it currently exists.
E. [502] City Assistance and Cooperation
The City shall cooperate fully in providing the Developer with appropriate information and
assistance for development of the Site, including all existing documents, surveys, maps and reports
concerning the Site and the feasibility of the Proposed Development.
F. [503] Environmental Documents
The City of West Covina shall prepare any and all environmental documents required for the
Proposed Development under the California Environmental Quality Act. The Developer shall
cooperate with the City in preparing environmental documents by supplying necessary technical data
and other related information and/or development plans concerning the proposed development on the
Site. Any costs, fees and charges associated with the requirements of the California Environmental
Quality Act shall be paid by the Developer, unless otherwise agreed by the City.
G. [504] City Council Public Hearing
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A DDA resulting from the negotiations hereunder shall become effective only after and if the
DDA has been considered and approved by the City Council at a public hearing, if required, and
called for such purpose.
V. [600] No Predetermination of Agency Discretion
The Parties agree and acknowledge that nothing in this Negotiating Agreement in any respect
does or shall be construed to affect or prejudge the exercise of the City's discretion concerning
consideration of any submittal by the Developer or any other party. Further, nothing in this
Negotiating Agreement in any respect does or shall be construed to affect or prejudge the City's
discretion to consider, negotiate, or undertake the Proposed Development or any required approvals
necessary by the laws, rules, and regulations governing the development of property.
VI. [700] Hazardous Materials and Development Assessment
The Developer at it's sole cost and expense shall conduct or cause to be conducted
environmental assessments, audits and/or testing and any other activities, audits, tests and
assessments to determine the feasibility of the Proposed Development ("Tests") of the Site, as and if
permitted by the owner of such property. The Developer shall have the right to terminate this
Negotiating Agreement if the Developer is not reasonably satisfied with the findings and the
recommendations made in the Tests, if either Party is unable to gain access to the property to conduct
Tests or if the Development is determined not to be feasible in the sole discretion of the Developer.
However, both Parties acknowledge and agree that specific representations or warranties,
agreements, obligations, liabilities or responsibilities pertaining to the condition or title of the Site
and/or the Proposed Development may be the subject of negotiations between the Parties in
connection with the negotiations of any DDA or other agreement entered into by the Parties.
VII. [800] Costs and Expenses
Except as provided herein, each party shall be responsible for its own costs and expenses in
connection with any activities and negotiations undertaken in connection with the performance of its
obligations under this Negotiating Agreement.
VIII. [900] Non-Discrimination
Developer shall not discriminate against nor segregate any person, or group of persons on
account of sex, race, color, marital status, religion, creed, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Developer
establish or permit any such practice or practices of discrimination or segregation in the selection,
location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.
IX. [1000] Real Estate Commission
Each party represents that it has not engaged any broker, agent or finder in connection with
this transaction and each party agrees to hold the other party harmless from any claim by any broker,
• agent or finder retained by or claimed through such party.
X. [1100] Limitations of this Negotiating Agreement
By its execution of this Negotiating Agreement, the City is not committing itself to or
agreeing to undertake: (1) disposition of land to the Developer; (2) approval of the project concept,
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tenants or design; or (3) any other acts or activities requiring the subsequent independent exercise of
discretion by the City or any agency or department thereof.
This Negotiating Agreement does not constitute a disposition of property by the City.
Execution of this Negotiating Agreement by the City is merely an agreement to enter into a period of
exclusive negotiations according to the terms hereof reserving final discretion and approval by the
City as to any Disposition and Development Agreement and all proceedings and decisions in
connections therewith.
XI. [1200] Governing Law
This Negotiating Agreement shall be constructed in accordance with the laws of the State of
California.
XII. [1300] Attorney's Fees
In the event any action is taken by either party to this Negotiating Agreement to enforce this
Negotiating Agreement, the prevailing party shall be entitled to recover from the other party its
actual attorneys' fees and costs.
XIII. [1400] Implementation of Agreement
The City shall maintain authority to implement this Negotiating Agreement through the City
Manager (or his or her duly authorized representative). The City Manager shall have the authority to
issue interpretations, waive provisions, and/or enter into certain amendments of this Negotiating
Agreement on behalf of the City so long as such actions do not materially or substantially change the
uses or concept of the Proposed Development, or add to the costs incurred or to be incurred by the
City as specified herein.
XIV. [1500] Time of Essence
Time is of the essence of every portion of this Negotiating Agreement in which time is a
material part. During the Negotiating Period the time periods set forth in this Negotiating Agreement
for the performance of obligations hereunder shall apply and commence upon a complete submittal
of the applicable information or occurrence of an applicable event. In no event shall an incomplete
submittal by the Developer trigger any of the City's obligations for review, approval and/or
performance hereunder: provided, however, that the City shall notify the Developer of an incomplete
submittal as soon as is practicable and in no event later than the applicable time set forth for the
City's action on the particular item in question.
XV. [1600] Entire Agreement
This Negotiating Agreement contains the entire understanding and agreement of the Parties,
integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all
negotiations or previous agreements between the Parties or their predecessors in interest with respect
to all or any part of the subject matter hereof. -
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IN WITNESS WHEREOF, the parties hereto have executed this Negotiating Agreement as
of the date set opposite their signatures. The effective date of this Negotiating Agreement is
, 2010.
"CITY"
CITY OF WEST COVINA, a public body, corporate
and politic
Shelley Sanderson, Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
Arnold M. Alvarez-Glasman
ity Attorney
"DEVELOPER"
CGM DEVELOPMENT, INC.
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