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HomeMy WebLinkAbout11 EXCLUSIVE NEGOTIATING AGREEMENT WITH JAMBOREE HOUSING CORPORATIONAgenda Item 1 1 Reviewed: AGENDA REPORT City Manager Finance Director /A MEETING DATE: APRIL 17, 2018 TO: JEFFREY C. PARKER, CITY MANAGER FROM: ECONOMIC DEVELOPMENT DEPARTMENT SUBJECT: EXCLUSIVE NEGOTIATING AGREEMENT WITH JAMBOREE HOUSING CORPORATION SUMMARY: City Council approval is requested to enter into an Exclusive Negotiating Agreement ("ENA") with Jamboree Housing Corporation ("Jamboree"). RECOMMENDATION: The City Council authorize the City Manager to enter into an Exclusive Negotiating Agreement by and between the City of Tustin and Jamboree Housing Corporation. FISCAL IMPACT: Jamboree will reimburse the City up to One Hundred Fifty Thousand Dollars ($150,000) in transactions expenses. Staff will negotiate the terms and conditions under which the property will be leased. If negotiations are successful, staff will present to City Council an Option to Lease and a Ground Lease for consideration. COORELATION TO STRATEGIC PLAN: The ENA with Jamboree aligns with Goal A — Economic and Neighborhood Development, enhancing the vibrancy and quality of life in the community. BACKGROUND: In Tustin Legacy, the City owns a 3.55 -acre parcel, south of the Anton Legacy apartment complex. Jamboree is proposing to build a two-phase, 100% affordable housing project. The first phase will be approximately 54 units, serving a mix of very - low incomes between 30% and 60% of the Orange County Area Median Income, and Jamboree will be applying to the California Tax Credit Allocation Committee ("TCAC") for 9% tax credits to fund the project. The second phase will be approximately 60 units for permanent supportive housing for the homeless. The project could include funding Agenda Report April 17, 2018 Page 2 from neighboring cities, using their former redevelopment funds as allowed under Assembly Bill 364, as well as funding from the county of Orange. Jamboree is a successful affordable housing developer based in Irvine. Jamboree has built over 7,500 affordable units in 44 cities. More than 75 Jamboree projects serve over 18,750 residents in the affordable income category ranging from Very -Low to Moderate. The proposed project will be their first development in Tustin. A summary of the proposed ENA is as follows: • Jamboree will have an option to exercise a ground lease from the City. The option will only be exercised by Jamboree in the event they are successful in receiving adequate funding to construct the proposed development. In order to apply for TCAC eligibility an applicant must have the ability to secure land for the project through either a purchase agreement or a ground lease agreement. • City will lease the property to Jamboree for not less than 55 -years. • Project will be of high quality and complimentary to the development currently under construction at Tustin Legacy. • The site will preserve a view corridor to the Hangar for vehicles exiting south- bound Jamboree Avenue at Warner Avenue. • Jamboree will reimburse the City up to $150,000 in transaction expenses and pay the $458,026 Backbone Infrastructure Program Fee. Staff recommends that the City Council authorize the City Manager to execute an ENA with Jamboree for a period of not more than eight (8) months, commencing with action by the City Council. John Buchanan Jerry Craig �'.„ erector of Economic Development Deputy Director of o o is Development Attachments: Exclusive Negotiating Agreement with Jamboree Housing Corporation EXCLUSIVE NEGOTIATING AGREEMENT (CITY OF TUSTIN / JAMBOREE HOUSING CORPORATION) This EXCLUSIVE NEGOTIATING AGREEMENT ("Agreement") is entered effective April _, 2018 ("Effective Date"), by and between the CITY OF TUSTIN, a California municipal corporation (the "City") and JAMBOREE HOUSING CORPORATION, a California non-profit corporation ("Developer"). The City and Developer, each referred to herein as a "Party" and collectively as the "Parties," agree as follows: RECITALS A. Pursuant to the Defense Base Closure and Realignment Act of 1990, (Part A of Title XXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended (the "Base Closure Law") the federal government closed the Marine Corps Air Station -Tustin ("MCAS Tustin") located substantially in the City of Tustin. In 1992, the City was designated as the Lead Agency or Local Redevelopment Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City and surrounding region. The MCAS Tustin Reuse Plan was adopted by the City on October 17, 1996, and amended in September, 1998 (the "Reuse Plan"). B. A Final Environmental Impact Statement/Final Environmental Impact Report for the Disposal and Reuse of MCAS Tustin (the "Final EIS/EIR") and Mitigation Monitoring and Reporting Program for the Final EIS/EIR were adopted by the City on January 16, 2001. In March 2001, a Record of Decision was issued by the United States Department of the Navy (hereinafter, "Navy") approving the Final EIS/EIR and the Reuse Plan. Subsequently, a Supplement to the Final EIR/EIS and an Addendum to the Final EIS/EIR were approved by the City. C. In May 2002, the Navy and the City entered into that certain Agreement between the United States of America and the City of Tustin, California for the Conveyance of a Portion of the Former Marine Corps Air Station Tustin dated as of May 13, 2002 (the "Memorandum of Agreement"), pursuant to which the Navy agreed to convey 1,153 acres of MCAS Tustin to the City. On May 13, 2002, a total of 977 acres were conveyed by the Navy to the City by quitclaim deed in accordance with the provisions of the Memorandum of Agreement and the additional acreage was made subject to a ground lease to the City from the Navy. The 1,153 acres of MCAS Tustin located within the City of Tustin, conveyed by the Navy to the City or subject to ground lease between the Navy and the City, is referred to in this Agreement as "Tustin Legacy." D. On February 3, 2003, the City adopted an ordinance approving the MCAS Tustin Specific Plan/Reuse Plan setting forth the zoning and entitlement framework for future development of Tustin Legacy. Since its initial adoption, the City has approved numerous Specific Plan Amendments. The Specific Plan conforms to and implements the Reuse Plan and the City's General Plan. E. The City desires to develop Tustin Legacy in accordance with applicable federal and local requirements and via the adoption by the City of a Disposition Strategy for the Master Development Footprint ("Disposition Strategy") to address the redevelopment of land within Tustin Legacy. 1305431.1 F. Pursuant to the Disposition Strategy, the City wishes to develop an approximately 3.55 acre site of unimproved real property located within Tustin Legacy, wherein the City owns a certain portion of the real property in fee title and has a Lease in Furtherance of Conveyance (LIFOC) with the Navy for the balance of the site (the "Site"). The location of the approximately 3.55 acre Site is more particularly described and depicted on the attached Site Map, Exhibit A, which by this reference is incorporated herein. Exhibit B, attached hereto and incorporated herein by reference, is a map depicting the entire area subject to the LIFOC, which on the map is designated as CO (Carve -Out) -9. The Site is thus comprised of the LIFOC area within its boundaries and the remaining area, which is owned in fee by the City. G. Developer is experienced in furnishing, planning, designing, constructing, and managing affordable housing developments in California and proposes to construct on the Site a high quality housing development serving low income and homeless individuals and families, and/or those persons with special needs ("Housing Project"). H. In order to further the goals and requirements of Government Code section 65400, it is contemplated by the Parties that the Housing Project will be comprised of two phases. The first phase shall be the construction of affordable low income housing on a portion of the Site qualified and certified by the California Tax Credit Allocation Committee (TCAC) (`Phase I"). The Parties contemplate that the second phase will consist of the construction of permanent supportive housing for the homeless on the remainder of the Site, with 'the intent to seek participation by one (1) or more additional public entity development partners, including, without limitation, the cities of Costa Mesa and/or Newport Beach ("Phase II"). Attached hereto is a Conceptual Site Mn, Exhibit C, which is incorporated herein, delineating the anticipated development boundaries of Phase I and Phase II and depicting the potential unit mix, parking, shared entry drive, and amenities for each phase. I. During the term of this Agreement, the Parties intend to negotiate exclusively and in good faith for the development of Phase I of the Housing Project to establish mutually acceptable terms and conditions to construct and implement Phase I of the Housing Project, with the goal of entering into an option to lease agreement ("Option Agreement") for a ground lease (a "Ground Lease") for the portion of the Site to be developed within Phase I of the Housing Project (the "Phase I Portion of the Site") and by the same or separate agreements, to set forth (1) development conditions, schedules, and entitlements required for the Site and the Housing Project; (2) terms and conditions relating to financing for Phase I of the Housing Project; (3) environmental conditions, responsibilities, and indemnification; (4) access and development conditions for a proposed shared driveway to Phase I of the Housing Project; (5) management and operating responsibilities for Phase I of the Housing Project; and (6) terms and conditions on the level of affordability and nature of affordability controls for Phase I of the Housing Project (collectively, the "Transaction Documents"). Agreement on some of these terms and conditions represent a threshold requirement to make application to TCAC, and must be documented prior to Developer submitting an application to TCAC. J. The Parties, as part of the Transaction Documents, shall also agree upon general terms and conditions upon which the City will lease to Developer that portion of the Site to be developed as Phase II of the Housing Project (the "Phase II Portion of the Site"), which shall, at a minimum, include the successful development of the Phase I Portion of the Site and include a 1304729.1 2 1305431.1 definitive exclusive period for the Parties to negotiate in good faith to reach an agreement on a ground lease for the Phase II Portion of the Site. K. Nothing in this Agreement obligates either Party to enter into the Transaction Documents, or any document or agreement whatsoever, and no project is defined by this Agreement. NOW, THEREFORE, in consideration of the foregoing, and incorporating the Recitals above herein, the Parties agree as follows. 1. Exclusive Negotiations. A. Phase I: During the Term of this Agreement, the City and Developer warrant and agree to diligently negotiate exclusively and in good faith with each other in an effort to arrive at mutually acceptable terms for the Transaction Documents for Phase I of the Housing Project. Good faith negotiations shall generally include, without limitation, attending scheduled meetings, staff and consultants cooperating with each other to the extent reasonably practicable and, necessary to advance negotiations, providing information reasonably available to a Party when requested, and promptly reviewing and returning any comments on correspondence, reports, agreements, or other documents received from the other Party, and specifically shall include making its best efforts to meet the 2019, application deadline for TCAC, or if not, and if an extension of the Option Agreement is warranted, to meet the 2020 TCAC application deadline. B. Phase II: As the Parties anticipate a successful completion and implementation of Phase I of the Housing Project, this Agreement is intended to cover Phase II of the Housing Project to the extent of providing within the Transaction Documents an exclusive negotiating period for the Parties to enter into a ground lease or option to lease for the Phase II Portion of the Site and the general terms and conditions to be met before the Parties are obligated to undertake such exclusive negotiations regarding the leasing or option to lease the Phase II Portion of the Site. Developer shall keep the City fully and completely apprised of its progress and use its commercially reasonable efforts to enter into agreements for the development of homeless housing at the Site with one or more additional public entity development partners, including, without limitation, the cities of Costa Mesa and/or Newport Beach with a minimum of 60 housing units, or as near that number as is reasonable, given site and feasibility constraints, but with the goal of maximizing density. It is the intent of the Parties that the units constructed will, to the extent legally permissible, and to the extent such cities equally participate, be equally allocated for "Residents" from each of these two cities and the City of Tustin (i.e., if a total of 60 units are built then 20 units will be allocated to each city) and each city shall have also agreed to their payment of the "Tustin Legacy Backbone Infrastructure Program Fees" As used herein, the term "Residents" shall be defined in accordance with all applicable federal, State and local fair housing laws. This Agreement, or completion of the Transaction Documents for Phase I, shall not grant Developer any rights or entitlements to the development of Phase II. 2. Term of the Agreement. A. Initial Term. The Initial Term of this Agreement shall be eight (8) months from the date of execution by the last Party to execute this Agreement ("Termination Date") and 1304729.1 3 1305431.1 unless otherwise extended pursuant to Section 2.13. herein, shall automatically terminate without any further notice or action by the Parties and neither party shall have any further rights or obligations under this Agreement unless provided for herein. B. Extension of Initial Term. The City Manager shall have the authority to grant two (2) extensions to the Initial Term of this Agreement each for a period of sixty (60) days upon a determination by the City Manager, in his or her sole discretion, that Developer has negotiated diligently and in good faith and that reasonable and sufficient progress has been made toward fulfillment of the requirements of this Agreement. No such extension of time shall be effective unless it is in writing. C. Termination Based Upon Unsuitability. This Agreement may be terminated by either Party upon providing ten (10) calendar days' written notice to the other Party in the event that during the course of the investigations and evaluation of the Site and Housing Project, and the ongoing negotiations, either Party determines in good faith that the Site or Housing Project is not physically feasible or financeable, or based on the terms offered by the other Party, that it is unlikely that the Parties will reach an agreement on the Transaction Documents and approval of the same as described herein prior to the Termination Date ("Unsuitability Notice"). If an Unsuitability Notice is provided by either Party, this Agreement shall terminate without any further notice or action by the Parties and neither party shall have any further rights or obligations under this Agreement. D. ENA Not a Final Aereement. This Agreement (including all exhibits hereto) is solely an exclusive right to negotiate and is not a final agreement. The City and Developer do not intend this Agreement to be a purchase, option, lease, or similar form of contract or binding agreement, and thus do not intend to be bound in any way by this Agreement, other than to establish a period of exclusive negotiations during which time each of the City and Developer shall negotiate with the other in good faith for development of Phase I of the Site. Nothing in this Agreement shall be deemed or interpreted to impose any obligation whatsoever upon the City to negotiate, or enter into any agreement, lease, or similar form of contract with Developer with regard to the use or development of Phase II of the Site. City acknowledges, however, that in order to submit to TCAC for tax credit financing, City must provide Developer with the Option Agreement contemplated herein, and that this Agreement or similar document does not meet TCAC Site Control requirements. E. Essential Terms Not Agreed. The City and Developer acknowledge that although the Parties have set forth a framework for negotiation of essential terms to certain transactions: (a) they have not herein agreed upon essential terms of any transactions, including e.g. rent, lease terms, or timing to complete the transactions; (they do not intend this Agreement to be a statement of essential terms of the transaction, which shall be the subject of their future negotiations; and (c) the essential terms of the transaction, if agreed to by the City and developer, shall be set forth, if at all, in the Ground lease and other Transaction Documents approved and executed by authorized representative of each of the City and Developer. 3. General Terms: Scope of NeEotiations. The Parties shall address, discuss, negotiate, and cooperate in good faith on the "General Terms" set forth below in an effort to enter into the Transaction Documents to complete Phase I of the Housing Project: 1304729.1 4 1305431.1 A. TCAC Application. City and Developer shall cooperate in seeking to timely file a TCAC application by July 2, 2018. The Parties acknowledge that the City anticipates acquiring fee title to the LIFOC portion of the Site sometime in mid -2018, but the Parties agree that there shall be no liability or obligation to the Developer on the part of the City as to the TCAC application with regard to the City's failure to acquire fee title to the LIFOC portion of the Site as anticipated, or at all. B. Ground Lease Effectiveness. Developer and City agree that it is their intent, prior to the Termination Date, to negotiate an Option Agreement and a form of a Ground Lease to be attached thereto for the Phase I Portion of the Housing Project. The Option Agreement shall provide terms and conditions that the option may only be exercised and the Ground Lease shall be effective if and only if. (a) Developer obtains full entitlements for Phase I of the Housing Project and the Phase I Portion of the Site, including receiving final permits for grading and construction; (b) Developer demonstrates to the satisfaction of the City in its sole discretion the physical and financial feasibility for Phase I of the Housing Project, including obtaining any and all necessary funding sources; (c) Developer establishes to the satisfaction of the City in its sole discretion that it is ready and able to commence construction; and (d) the City will sublease those portions required for the Phase I Portion of the Site; provided, however, that if Navy approval is required for such sublease, then Navy approval shall be a condition to any such City sublease. C. Ground Lease Terms. In addition to any other terms to which Developer and City may agree, the term of the Ground Lease is anticipated to be rat least 55 years from a date to be negotiated and the Ground Lease is anticipated to address and include the following terms and conditions: (a) the Ground Lease shall not be encumbered as to any mortgage, and City shall have no obligation to subordinate its fee or leasehold interest in the Site to any person, entity or instrument, including, without limitation, with respect to financing of Phase I of the Housing Project or recording of affordable housing covenants unless otherwise agreed by the City in its sole discretion; (b) Developer shall be required to accept the Ground Lease and the Site on an "AS- IS, WHERE -IS AND WITH ALL FAULTS" basis; (c) costs and revenues of the Housing Project will be separately analyzed and funding of all costs of Housing Project will be the responsibility of Developer and in this regard, Developer acknowledges that it will be subject to applicable development fees, including, but not limited to, those required by the City, or other jurisdictions such as the Foothill/Eastern Corridor Fee, the Santa Ana/Tustin Transportation System Improvement Area (TSIA) fee, school impact fees by the Tustin Unified School District (TUSD), current Orange County School Facility Bonds (Measure G and Measure L), utility meter and connection fees; and may be subject to a future community facilities district for financing of school facilities to benefit Tustin pursuant to an agreement between the City and TUSD; (d) the Ground Lease and other Transaction Documents shall contain limitations on transfer and assignment of the rights of Developer, including the right of the City to approve in its sole discretion all assignments and transfers by Developer or interests in Developer except those transfers expressly enumerated in the Ground Lease and Transaction Documents as "Permitted Transfers"; (e) the Ground Lease shall include an obligation of the Developer to release, defend, indemnify and hold harmless the City with respect to any environmental remediation and liability regardless of cause (except for remediation and liability caused by the City's willful misconduct or active negligence) and whether known or unknown as of the effective date of the Ground Lease; (f) the proposed Housing Project shall be consistent with the Reuse Plan, the City's General Plan, and the Specific Plan unless otherwise specifically agreed by the City, at its sole discretion; (g) the 1304729.1 rJ 1305431.1 Ground Lease shall contain standard mortgagee protection provisions as reasonably approved by the City, and (h) subject to the rights of any mortgagees, the Ground Lease shall contain remedies and termination rights in favor of the City for breach of the Ground Lease, including, but not limited to, termination or cancelation of a portion of the leasehold if Phase II of the Housing Project does not occur within a certain period after Phase I, or the -parties cannot agree on terms and conditions with regard to the development of Phase II. It is contemplated that any rental payment for the Ground Lease shall come from the net cash flow for the Housing Project after payment of Developer's debt service coverage in an order of priority to be determined (i. e. developer fees, City Expenses (defined below), Tustin Legacy Backbone Infrastructure Program Fees, etc.) and then such net cash flow to be shared equally (50150) between (i) City and any lenders of loans to the Housing Project which are repaid through project cash flow, on a proportionate basis, and (ii) Developer, with any shortfall in rent due and owing to the City becoming additional debt owed by Developer to the City until paid. D. Other Funding Sources. In addition to TCAC, the Parties shall endeavor to identify funding sources and potential lenders for the Housing Project and the City shall support Developer in its efforts to obtain tax credits and other sources of funding. The Developer's developer fee shall be governed and determined by the TCAC regulations. E. Housing Mix. Phase I of the Housing Project shall include a mix of very low income levels between 30% and 60% of the area median income. F. Design and Construction. Developer shall design and construct Phase I of the Housing Project in a manner that (1) reflects the contemporary design of FLIGHT and the proposed Levity development by CalAtlantic on Lot 19 at Tustin Legacy; (2) maximizes the density of the Site, which shall not be less than 31.5 dwelling units per acre; and (3) preserve the view corridor of the south hangar for vehicles exiting southbound Jamboree Avenue at Warner Avenue. G. Costs and Terms of Construction. Unless otherwise agreed, Developer shall design and construct the Housing Project at its own cost and expense in accordance with a scope of development and a schedule of performance to be negotiated as part of the transaction Documents, and in accordance with plans and specifications prepared by Developer and approved by the City in accordance with such schedule of performance and in compliance with all requirements and regulations of the City including, without limitation, applicable zoning. H. Backbone Fair Share. The Tustin Legacy Backbone Infrastructure Program Fee for the Site is $458,026, which Developer shall pay a proportionate share for Phase I of the Housing Project and also pay any other impact fees and offsite obligations as required by the City.. 4. Additional Obligations of Developer. In furtherance of meeting the General Terms above, and among other obligations set forth in this Agreement, Developer shall perform the following as part of its good faith negotiations: 1304729.1 6 1305431.1 A. Schedule of Performance. Developer shall commence and complete all tasks required to be completed hereunder, and deliver all documents, studies, and analysis required to be delivered hereunder, within the times set forth in the schedule of performance attached hereto as Exhibit D, which by this reference is incorporated herein (the "Schedule"). B. Evidence of FinancinLy. Within the time set forth in the Schedule, Developer, at its cost, shall provide the City Manager with a sources and uses of funds and financial pro forma for the development of the Phase I Portion of the Site. In addition, during the term of this Agreement, Developer shall promptly provide to the City Manager copies of any applications for funding or other funding requests submitted by Developer to finance the development of the Phase I Portion of the Site, and any response documentation received in connection with such submittals. Notwithstanding the foregoing, however, Developer shall not be required to obtain written commitments for any such financing during the term of this Agreement. However, written commitments to funding of Phase I shall be a condition precedent to Developer exercising any option to lease the Phase I Portion of the Site under the contemplated Option Agreement. C. Development Plans, Entitlements, and CEQA Review. Within the time set forth in the Schedule, Developer shall prepare preliminary conceptual development plans for the Phase I Portion of the Site (the "Phase I Site Plans"), and during the Term of this Agreement, the Phase I Site Plans will be refined, based on discussions and meetings with City representatives and the activities to be conducted by Developer pursuant to this Agreement described herein. Concurrently with such refinement, and in accordance with the timeframes set forth in the Schedule, Developer shall commence processing any entitlements necessary for development of the Phase I Portion of the Site (collectively, the "Entitlements"), and shall furnish such information to City regarding the Phase I Site Plans and Phase I of the Housing Project as may be required by City to perform an environmental review, the Entitlements, and any permits for the development of the Phase I Portion of the Site pursuant to the California Environmental Quality Act ("CEQA"). The obligations set forth in this paragraph shall be conditions precedent to Developer exercising any option to lease the Phase I Portion of the Site under the contemplated Option Agreement, D. Developer's FindinEs and Reports to City Manager. Developer, at its cost, shall, at the request of the City Manager, make periodic oral progress reports on all matters and all studies being made related to Developer's acquisition of a leasehold interest and development of the Phase I Portion of the Site and other matters under negotiation to the extent that they do not include confidential matters. Developer, at its cost, shall participate in workshops, meetings, or presentations concerning the Phase I Portion of the Site as reasonably required by the City Manager. E. Press Releases. Developer agrees to obtain the approval of the City Manager prior to publication of any press releases Developer may propose relating to the lease and/or development of the Phase I Portion of the Site. 5. City Expenses. Developer shall pay up to $150,000 to apply towards the City's transaction fees and expenses, including, but not limited to, any City Attorney and special counsel legal expenses, and staff expenses, associated with the negotiations, and other expenses associated 1304729.1 7 1305431,1 with the Transaction Documents incurred by the City (collectively, "City Expenses"). City Expenses are in addition to and separate from Developer Processing Fees (as defined below), where the latter includes such things as plan review and processing and the former does not. The City Expenses shall be apportioned between Phase I of the Housing Project and Phase II of the Housing Project, as applicable, such that no City Expenses shall be billed to both Phase I and Phase II, and the collective amount of all City Expenses shall not exceed the $150,000 maximum. The City Expenses apportioned to each phase of the Housing Project shall constitute a loan to Developer for the applicable phase, with each such loan (a "City Expenses Loan") to be evidenced by a promissory note, the repayment of which shall be secured by a deed of trust. Repayment of each City Expenses Loan shall come from and be part of Developer's debt service coverage for the applicable phase, in an order of priority to be determined (i.e. developer fees, City Expenses, Tustin Legacy Backbone Program Fees, etc.). 6. Developer Expenses. Developer acknowledges and agrees that the City shall have no responsibility to pay or reimburse Developer for costs and expenses incurred by Developer in connection with this Agreement or the compliance by Developer with its obligations under this Agreement unless the City expressly assumes in writing such specific responsibilities and expenses. Developer shall be solely responsible, without limitation, for (a) all pre -contractual expenses incurred by Developer; (b) all costs and expenses incurred by Developer to comply with the terms of this Agreement; (c) all fees and deposits required of Developer .for processing entitlement applications, including complying with provisions of the California Environmental Quality Act ("CEQA") and any implementing regulations; (d) all costs of inspections, remediation, investigation of the Phase I Portion of the Site; and (e) all other typical processing fees and costs charged by the City for the processing of entitlements, plans and specifications, permits and inspection costs (collectively, "Developer Processing Fees"). City shall not be obligated to pay or reimburse any Developer Processing Fees incurred by Developer whether or not this Agreement is eventually terminated or extended, or whether or not an Option Agreement or Ground Lease is entered into between City and Developer in the future. Nothing herein reduces or eliminates any requirements of City or any other governmental entity with jurisdiction over the Phase I Portion of the Site. 7. Status of the Phase I Portion of the Site A. Phase I Portion the Site Taken "As -Is". Developer should undertake its own investigation to determine the presence of hazardous materials and suitability of the Phase I Portion of the Site for development and thus, the Phase I Portion of the Site shall be leased on an "AS -IS, WHERE -IS AND WITH ALL FAULTS" basis, and Developer shall be obligated to release, defend, indemnify and hold harmless the City with respect to its acquisition and development of the Phase I Portion of the Site. Developer acknowledges the presence of monitoring wells and injection points, which may require relocation for any development to occur. During the term of this Agreement, Developer will be allowed to conduct its own due diligence as is necessary to allow Developer to continue to evaluate the feasibility and advisability of the Phase I Portion of the Site and Developer's obligation to consummate and enter into any of the Transaction Documents shall be contingent upon Developer's satisfaction, in its sole discretion, of the results of such inspection, examination and other due diligence with regard to the Phase I Portion of the Site and its suitability for construction of Phase I of the Housing Project. 1304729.1 8 1305431.1 B. Access License. Upon reasonable terms, the City shall grant to Developer, its employees, representatives, agents, contractors, suppliers, consultants and other related parties (collectively, the "Developer Parties"), a non-exclusive license during the first six (6) months of the Initial Term ("Due Diligence Period") to enter upon the Site for purposes of allowing Developer to conduct a due diligence inspection of the Phase I Portion of the Site. Such terms of access and inspection shall include (1) Developer Parties delivering to the City written evidence of insurance prior to entry on the Site meeting the requirements as set forth below in Section 7.D. of this Agreement; (2) limitations on invasive testing or boring without the written consent of the City; (3) barring bringing onto the Site dangerous or hazardous materials; (4) Developer Parties complying with all laws and obtaining all permits required in connection with such access; (5) keeping the Site free and clear of any and all liens of any kind, including, without limitation, mechanics' liens or materialmen's liens related to Developer's access to or inspection of the Site; and (6) returning the Site to its condition prior to any inspections and testing. Developer acknowledges and agrees that the Due Diligence Period is an adequate time to complete such investigations. In addition, Developer acknowledges that the City's current rights to a portion of the Site arise solely under the LIFOC and accordingly, Developer hereby agrees as follows: (i) Developer shall be bound by and perform all of the terms and conditions to be performed by the City under the LIFOC to the extent applicable to the Site and/or Developer's access under this Agreement; and (ii) if the LIFOC expires or is terminated for any reason, including without limitation, any default by the City or United States of America thereunder, or the United States of America's election to exercise any right to terminate, then any license granted shall thereupon terminate with respect to the Phase I Portion of the Site, without any liability to the City, as if such date were the scheduled expiration date of the term of the access license. C. City Plans, Reports, Studies and Investigations. Within 10 business days after the Effective Date, the City agrees to provide Developer copies of all plans, reports, studies, investigations, and other materials (collectively, the "Property Reports") that the City, to the knowledge of its management staff, has in its possession with respect to the Phase I Portion of the Site; provided, however, that the City makes no representations, warranties or guarantees regarding the completeness or accuracy of such plans, reports, studies, investigations and other materials. Upon request by Developer, City shall meet and confer with Developer and Developer's consultants regarding any of such Property Reports. D. Insurance Requirements Developer shall obtain, with no cost or expense to the City, prior to commencement of any investigative activities on the Site, a policy of commercial general liability insurance covering any and all liability of Developer, Developer Parties, and/or the City arising out of any investigative activities of Developer or its consultants with respect to the Site in an amount of One Million Dollars ($1,000,000) and issued by a company authorized by the Insurance Department of the State of California and rated A, VII or better (if an admitted carrier) or A-, X (if offered by a surplus line broker), by the latest edition of Best's Key Rating Guide. Such policy of insurance shall name the City, its officials and employees as additional insureds on the policy. Developer shall provide certificates of insurance and insurer endorsements (or a copy of the signed policy binder, if applicable), signed by a representative of the carrier evidencing the required insurance. Such policy of insurance shall be kept and maintained in force during the term of this Agreement and so long thereafter as necessary to cover any Claims of damages suffered by persons or property resulting from the above referenced 1304729,1 9 1305431,1 activities and any acts or omissions of Developer and/or the Developer Parties in undertaking said referenced activities. 8. Cm's Failure to Negotiate in Good Faith. During the term of this Agreement, the City covenants and agrees to negotiate exclusively with Developer and not to solicit another party for the Housing Project or enter into any agreement with any other party regarding the sale, lease, or development of the Site. The City acknowledges and agrees that but for this exclusivity, Developer would not have entered into this Agreement, but hereby acknowledges and Developer agrees that its sole remedy for any breach by the City of the City's obligations under this Agreement shall be the right to terminate this Agreement. Neither City, nor Developer shall be under any further obligation to each other regarding the disposition of the Site or the development thereof. 9. Developer's Failure to Negotiate in Good Faith. Developer's failure to negotiate exclusively with the City, the solicitation of another party for Phase I the Housing Project, or a failure to submit to the City plans, reports, studies, investigations, applications and materials as requested by the City shall be deemed to be a material breach by Developer to negotiate diligently and in good faith. In such event, the Parties agree that the City's remedy shall be the payment of the City Expenses by Developer incurred up to the time of the breach (but in no event more than the $150,000 maximum) and Developer shall pay this amount to City upon demand; provided, however, that nothing herein shall be deemed to preclude the City from seeking or receiving payment for amounts that Developer is already obligated to pay the City apart from the City Expenses (i.e., review, permit, and other processing fees). 10. Release of Liability of City. No officer, official, member, employee, agent, representative, or volunteer of the City shall be personally liable to Developer, or any successors in interest, in the event of any default or breach by City of this Agreement, or for any amount which may become due to Developer or to any successors under this Agreement, or for breach of any obligation of the terms of this Agreement. Developer acknowledges and agrees that no provision of this Agreement shall be deemed to be an offer or proposal by City to Developer, nor an acceptance by City of any offer or proposal from Developer, for City's conveyance of any interest in the Phase I Portion of the Site, or any portion or parcel thereof, to Developer or for City to provide any financial or other assistance to Developer for development of the Phase I Portion of the Site. Developer acknowledges and agrees that neither Developer nor any affiliate of Developer has acquired, nor will acquire, by virtue of the terms of this Agreement, any legal or equitable interest in real or personal property from City. Except for the Parties obligations to negotiate exclusively with each other and any financial obligations that are due and owing under this Agreement, the Parties, on behalf of themselves and their successors and assigns, hereby waive the right to recover from, and fully and irrevocably release, each other, their employees, agents, attorneys, affiliates, representatives, consultants, contractors, successors, and assigns, and as to the City its elected and appointed officials (the "Released Parties") with respect to any and all claims, actions, causes of action, demands, orders, or other means of seeking or recovering losses, damages, liabilities, costs, expenses (including, without limitation, attorneys' fees, consultant fees, and court, arbitration and litigation costs) or any other type of compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen (collectively, "Claims") the Parties may now or hereafter have or incur relating to or arising from (a) the terms of this Agreement; (b) the breach of their obligations under this 1304729.1 10 1305431.1 Agreement or its termination; (c) the failure of the Parties, or either of them, to agree upon the essential terms or the terms of the Transaction Documents; (d) any disputes, claims, actions, causes of action, demands or orders arising between the Parties and any third parties; (e) any actions of the Parties in connection with the foregoing, including, without limitation, the exercise by the Parties of their discretion, decision, or judgment with respect to the foregoing; (f) any and all damages and/or monetary relief (whether based in contract or in tort), including, without limitation, any right to claim direct, compensatory, reliance, special, in direct or consequential damages with respect to or arising out of this Agreement, and any other rights or claims it may otherwise have at law or at equity; (g) except as specifically set forth herein, any right to payment or reimbursement from the City; (h) any right to specific performance for conveyance of or to claim any right of title or interest in the Phase I Portion of the Site or any portion thereof, (i) the actions, inaction, compliance, or non-compliance by the City or any third party, including without limitation, the Navy, with respect to the LIFOC, Reuse Plan, the City's General Plan, the Specific Plan, the LIFOC, the conveyance deeds from the Navy to the City and the other Navy Document's, or any special restrictions or other covenants and agreements applicable to other property at Tustin Legacy, or any other agreement or governmental restriction or plan affecting Tustin Legacy; and/or 0) the failure to enter into any of the Transaction Documents. Nothing in the foregoing constitutes any waiver or release with respect to environmental remediation, or other obligations of the Navy under the LIFOC. By the releases provided herein, the Parties hereby waive any and all the rights under California Civil Code section 1542, which states: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Notwithstanding the foregoing releases and for express clarification, nothing herein shall be deemed to preclude the City from seeking or receiving payment for amounts due and owing the City at the time this Agreement terminates, including the recovery of City Expenses. 11. Assumption of Risk. The General Terms and other parameters set forth in this Agreement are intended as only a framework for negotiations: Any of the Transaction Documents shall be binding if and only if such document is approved by counsel to each Party as to form, approved by the City Council, and fully executed by authorized representatives of both Parties. Nothing in this Agreement shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City pursuant to the Tustin City Code, or the provisions of any applicable State or Federal law or regulation, including compliance with the CEQA. 12. No Liens or Lis Pendens. Each Party, on behalf of itself and its successors and assigns, hereby expressly waives any and' all rights to record a lis pendens or to otherwise place a lien or restriction of any type upon or affecting the Site. 13. Indemnity. Developer hereby agrees to indemnify, defend, protect and hold the City and its elected officials, employees, agents, representatives, consultants and contractors free 1304729.1 1305431.1 and harmless from and against any and all Claims arising or resulting from or related to Developer's or the Developer Parties': (a) exercise of any license, including, without limitation, entry onto or access to the Site or its exercise of any inspections, surveys, tests or studies performed by Developer or the Developer Parties in connection therewith; (b) presence, activities or work on or related to use of the Site and any mechanics' or materialmen's liens arising with respect thereto; or (c) bodily injury to or death of any person (including, without limitation, any of the City Parties) or damage to or loss of use of property resulting from the foregoing, save and except to the extent such Claims result from (x) the discovery by Developer of any pre-existing environmental conditions on the Site not caused or contributed to by Developer or the Developer Parties, save and except to the extent such Claims result from the active negligence or willful misconduct of the City or its agents, employees or representatives. Developer shall keep the Site free and clear of any mechanics' liens or materialmen's liens related to Developer's inspection of the Site. 14. Additional Information. Developer understands and agrees that the City reserves the right at any time to reasonably request from Developer additional information, including, without limitation, information, data and commitments to ascertain the depth of Developer's capability, financial capability and desire to develop the project expeditiously. The City's negotiating team will provide a reasonable time in which Developer may obtain and submit to the City such additional information. 15. Contacts during Negotiations. Developer shall only negotiate with the City's negotiating team, which will be defined in writing by the City Manager, and with no other persons unless expressly authorized to do so in writing by the City's negotiating team. During the period of negotiations, Developer shall make no statements to the media about the proposed Housing Project without the written approval of the City. Developer's failure to comply with the provisions of this Section shall be conclusive evidence that Developer has not "negotiated in good faith." Developer shall designate in writing to the City its negotiating team and the City shall only negotiate with the Developer's negotiating team and with no other persons unless expressly authorized to do so in writing by the Developer. Each party shall designate their negotiating team in writing within five (5) days after the Effective Date. 16. Consultants and Professionals. Developer shall make full disclosure to the City of any changes to its principals, officers, stockholders, partners, joint venturers, employees, and other associates and all other pertinent information concerning Developer and its associates during the term of this Agreement. Developer agrees to substitute or supplement any of its consultants and professionals as reasonably requested by the City; provided, however, that City may not request any substitution or supplement to any of Developer's consultants or professionals except (i) a consultant or professional who has caused Developer to default under the terms of this Agreement, or (ii) to the extent City determines, in City's reasonable discretion, that a substitution or supplement of one or more of Developer's consultants and/or professionals is necessary to prevent Developer from defaulting under the terms of this Agreement. 17. Real Estate Commissions. The City shall not be liable for any real estate commission, finder's fee, or any broker's fees which may arise from this Agreement or the Transaction Documents, including the Ground Lease. The City represents that it has not engaged any broker, agent, or finder in connection with this Agreement. Developer agrees to hold the City and its representatives harmless from any losses and liabilities arising from or in any way related 1304729.1 12 1305431.1 to any claim by any broker, agent, or finder retained by Developer regarding or arising from this Agreement, or development of the Phase I Portion of the Site. 18. Entire Agreement. This Agreement represents the entire Agreement of the Parties with respect to the matters set forth herein and supersedes any prior negotiations or contemporaneous writings or statements. This Agreement may not be amended except in writing signed by each of the Parties hereunder. 19. Attorneys' Fees. If any Party brings an action or files a proceeding in connection with the enforcement of its respective rights or as a consequence of any breach by the other Party of its obligations hereunder, then the prevailing Party in such action or proceeding shall be entitled to have its reasonable attorneys' fees and out-of-pocket. expenditures paid by the losing Party. 20. Prohibition against AssiEnments and Chante in Control. The qualifications and identity of Developer and its principals are of particular concern to the City. It is because of these qualifications and identity that City has entered into this Agreement with Developer. During the Term of this Agreement, no voluntary or involuntary successor -in -interest of Developer shall acquire any rights or powers under this Agreement. Developer shall not assign all or any part of this Agreement or any rights in or under this Agreement, without the prior written approval of the City Manager, which approval may be given or withheld in the City Manager's sole and absolute discretion. Any assignment or transfer in interest, whether voluntary or involuntary, by Developer that has not been approved in writing by the City Manager prior to the time of such assignment or transfer shall be deemed a material breach of this Agreement by Developer which shall entitle City to terminate this Agreement, without liability, by sending written notice of termination to Developer. Notwithstanding anything to the contrary in this Section 20, the City agrees that the Option Agreement may be entered into by Developer, or by an entity operated and controlled by Developer but only upon the City's sole approval of such other entity's ownership, control, and governance 21. Confidentiality Protocols and Public Records. City and Developer recognize that financial disclosures and other additional information provided pursuant to Section 14 above, may contain sensitive information relating to other business transactions of Developer,, which the disclosure of such information to third parties could impose commercially unreasonable and/or anti-competitive burdens on Developer. Developer, however, acknowledges that documents or other "records" (as that term is defined in the California Public Records Act ("CPRA")) related to Phase I of the Housing Project may be required to be made public upon request. Government Code Section 6253(a) provides that "Public records are open to inspection at all times during the office hours" of the City. Accordingly, City agrees to maintain the confidentiality of any business records of Developer disclosed to City, except as the City Attorney reasonably determines must be disclosed pursuant to the California Public Records Act or other applicable law. The defense of any action seeking disclosure of protected business records shall be solely at Developer's expense and handled, at City's option, either by the City Attorney, or legal counsel selected by Developer and reasonably acceptable to the City Attorney. 22. Nondiscrimination. In undertaking its obligations under this Agreement, Developer covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination 1304729.1 13 1305431.1 against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code as those bases are defined in Sections 12926, 12926. 1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, nor shall Developer or any person claiming under or through Developer, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees. 23. Relationship of Parties. No partnership, joint venture or similar relationship has been formed or is contemplated by this Agreement, nor does this Agreement give any rights or benefits to anyone that is not a party hereto. 24. Modification. No modification or extension of this Agreement shall be valid unless in writing and executed by both Parties. 25. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed to be effective on receipt if delivered by personal delivery; by depositing same in the United States mail, postage prepaid, certified mail, return receipt requested; or by overnight delivery service, addressed to the Parties at the respective addresses set forth below: If to the City: City Manager City of Tustin 300 Centennial Way Tustin, California 92780 If to Jamboree Housing Corp.: Scott Riordan Business Development Manager Jamboree 17701 Cowan Ave., Suite 200 Irvine, CA 92614-6840 Either party may change its address for notice purposes by notifying the other party of such change in accordance with the provisions of this section. 26. Governing Law. This Agreement shall be construed and interpreted in accordance with, and shall be governed by, the laws of the State of California, without giving effect to the conflicts of laws principles thereof. 27. Integration. This Agreement supersedes any prior understandings or written or oral Agreements between the Parties respecting the subject matter herein. 28. Miscellaneous. Time is of the essence in this Agreement. This Agreement is a product of negotiations and both Parties are responsible for its authorship. Accordingly, this Agreement shall not be construed in favor of or against either party. This Agreement may be executed in multiple originals, each of which, when signed and delivered, shall be deemed an 1304729.1 14 1305431.1 original of this Agreement for all purposes. The signed Agreement may be delivered via delivery of the original, via facsimile, or via email with a .pdf attachment showing the signed Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement effective the date and year first set forth above. Dated: ATTEST: By: Erica Rabe City Clerk APPROVED AS TO FORM By: David Kendig, City Attorney Dated: 1304729.1 1305431.1 CITY OF TUSTIN: LE Jeffrey C. Parker, City Manager DEVELOPER: Jamboree Housing Corporation 15 Michael Massie Senior Vice President, Finance EXHIBIT A SITE MAP [SEE FOLLOWING PAGE] 1304729.1 16 1305431.1 EXHIBIT B LIFOC PARCEL (not to scale) [SEE FOLLOWING PAGE] 1304729.1 18 1305431.1 EXHIBIT C CONCPETUAL SITE PLAN (not to scale) [SEE FOLLOWING PAGE] 1304729.1 20 1305431.1 EXHIBIT D SCHEDULE OF PERFORMANCE FOR PHASE I OF THE HOUSING PROJECT ITEM OF PERFORMANCE TIME FOR PERFORMANCE 1. City provides Developer a draft of the 60 days after this Agreement is Option Agreement approved by the City. 2. Developer submits to City a sources and 60 days after this Agreement is uses of funds and financial pro forma for the approved by the City. development of the Property. 3. Developer commences processing 120 days after this Agreement is entitlements necessary for development of approved by the City. Property and furnishes to City information regarding the Plans in order to conduct CEQA analysis. 1304729.1 22 1305431.1