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AGENDA BILL Agenda Item No. 6 Date: October 3,20 1 1 To: El Cerrito Municipal Services Corporation Board From: Lori Treviiio, Redevelopment Manager Subjeck Amendment of the Tri-Party Agreement with Safeway Inc. Adopt a resolution approving the amendment of the Tri-Party Agreement between the El Cerrito Redevelopment Agency, Safeway, Inc., and Target Corporation, subsequently assigned to the El Cerrito Municipal Services Corporation, and thereby its partial assignment to Property Development Centers. The property is located at the corner of Hill Street and San Pablo Avenue. BACKGROUND In October 2009, the El Cerrito Redevelopment Agency entered into a Tri-Party Agreement (TPA) with Safeway Inc. and Target Corporation for the transfer of the Target property to Safeway. As part of that agreement and in consideration for the Agency releasing its option to acquire the property, Safeway agreed to transfer to the Agency a parcel consisting of approximately 39,000 square feet at the corner of the property fronting on Hill Street and San Pablo Avenue. In June 201 1, Safeway was prepared to convey the Hill Street Parcel (HSP) to the Agency pursuant to the terms of the TPA. At that time, due to uncertainty regarding possible elimination of redevelopment agencies, the Agency assigned to the Corporation its rights and obligations under the TPA related to the HSP conveyance. In consideration, the Corporation agreed to develop the HSP in keeping with the Agency's Redevelopment Plan and to pay to the Agency any funds received by the Corporation related to development of the Property. On June 29, 201 1, the State enacted ABxl 26 and ABxl 27, legislation that would dissolve redevelopment agencies and then provides the Voluntary Alternative Redevelopment Program (VARP), which agencies could opt into by making payments to the State. The California Redevelopment Association and League of California Cities sued the State for the legislation's violation of Proposition 22, which prohibited the State from taking local tax revenues for State use. The California Supreme Court accepted jurisdiction for the litigation and issued a stay on all provisions of the legislation, with the exception of those provisions that suspended redevelopment agency activities, until ruling on the case, expected in January 20 12. ---PAGE BREAK--- Agenda Item No. 6 In light of uncertainty regarding the"Corporation ability to develop the HSP and the Agency's ability to fund a $1.85 million payment in Fiscal Year 201 1-12 for participation in the VARP, the Corporation and Safeway are now considering amending the TPA. 1 ANALYSIS The proposed amendment includes several significant changes. The Corporation would assign its interest in the TPA to Property Development Centers (PDC), a wholly owned subsidiary of Safeway that develops shopping centers. Instead of Safeway conveying the HSP to the Corporation, PDC would make a $1.85 million cash payment to the Corporation. Additionally, the Corporation would assume responsibility for the cost of widening Hill Street paid for in part by a $350,000 cash payment from Safeway. The Corporation, Safeway and PDC would all acknowledge that the City will use the Greenway Contribution previously paid by Safeway for 1) improvements to the portion of the Ohlone Greenway between Hill and Blake Streets; 2) the pedestrian path situated on Safeway's property; and 3) pedestrian improvements between the Safeway property and the BART station across Hill Street. They also acknowledge that the City may use a portion of the Greenway Contribution towards widening Hill Street, should the funds not be necessary to complete improvements to the Greenway consistent with the Greenway Master Plan. The amendment will make more certain development of the HSP in a way that is cohesive with the surrounding area. Under the terms of the Assignment Agreement between the Agency and the Corporation, the Corporation is required to pay any amounts it receives related to development of HSP to the Agency as consideration for the assignment. The amounts paid by Safeway under the Amendment would be considered payments received related to development and would be paid to the Agency upon receipt. The Agency in turn could use these funds to make the payment required under the Agency Transfer Payment Agreement, whereby the Agency agreed to pay to the City funds equal to the amount required to be paid by the City for the opt-in payment. The amendment would provide assurance that the development of the HSP would not be clouded by the legislation or the current litigation. It would also provide a source of funds for the opt-in payment should the legislation be found constitutional. FINANCIAL CONSIDERATIONS Without the cash payment that would result from amending the TPA and the subsequent payment by the Corporation of proceeds received to the Agency, the Agency would not have sufficient funds to reimburse the City for the full amount of the opt-in payment. The City would need to dip into resources that would seriously curtail all city services, not just redevelopment activities. ---PAGE BREAK--- Agenda Item No. 6 LEGAL CONSIDERATIONS ' 7 . The amendment to the TPA was prepared by the Corporation's Legal Counsel. Attachments : 1. Resolution 2. Proposed Amendment to the Tri-Party Agreement ---PAGE BREAK--- Agenda Item No. 6 Attachment 1 RESOLUTION NO. 20 1 1 -XX A RESOLUTION OF THE EL CERRITO MUNICIPAL SERVICES CORPORATION BOARD APPROVING THE AMENDMENT OF THE TRI-PARTY AGREEMENT WITH SAFEWAY INC. AND PROPERTY DEVELOPMENT CENTERS RELATED TO THE PROPERTY LOCATED AT THE CORNER OF HILL STREET AND SAN PABLO AVENUE WHEREAS, the El Cerrito Redevelopment Agency (the "Agency") entered into a Tri- Party Agreement (the "TPA") dated October 5, 2009 with Safeway, Inc. and Target Corporation that gave the Agency the right to acquire certain property located at the corner of Hill Street and San Pablo Avenue (the "Hill Street Parcel") from Safeway, Inc.; and WHEREAS, Target has fulfilled its obligations under the TPA and no longer has any interest in the Hill Street Parcel; and WHEREAS, on June 20, 201 1, the Agency and the El Cerrito Municipal Services Corporation (the "Corporation") entered into an Assignment and Assumption Agreement (the "Assignment") whereby the Corporation assumed the right to acquire title to the Hill Street Parcel, and the obligation to cause its development consistent with the Agency's Five-Year Implementation Plan and pay the value received by the Corporation for the property to the Agency; and WHEREAS, the Corporation's ability to cause development of the Hill Street Parcel is uncertain in the current economic and legal environment; and WHEREAS, Property Development Centers a wholly owned subsidiary of Safeway, Inc. desires to acquire title to the Hill Street Parcel and the Corporation desires to assign to PDC its right to take title to the Hill Street Parcel in consideration for a cash payment; and WHEREAS, the Third Amendment to the Tri-Party Agreement (the "Agreement"), Exhibit A to this Resolution, provides for such assignment and payment; and WHEREAS, pursuant to Section 16004(b)(2)(A) of the Guidelines for the implementation of the California Environmental Quality Act ("CEQA"), the Agreement is exempt from the requirements of CEQA because the future use of the Hill Street Parcel is conditioned upon CEQA compliance, and the City retains full discretion in approving, denying, or conditioning any land use entitlement, or any other planning approval, necessary for the development of the Hill Street Parcel. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF THE MUNICIPAL SERVICES CORPORATION AS FOLLOWS: 1. The Board finds that the above recitals are accurate. ---PAGE BREAK--- Agenda Item No. 6 . I . Attachment 1 2. The Board hereby approves and authorizes the Executive Director to execute the Third Amendment to the Tri-Party Agreement substantially in the form attached hereto and to take all actions and execute all documents necessary to implement the Third Amendment to the Tri-Party Agreement. 3. This Resolution shall take immediate effect upon its adoption. I CERTIFY that at a special meeting on October 3,201 1, the Board of Directors of the El Cerrito Municipal Services Corporation passed this Resolution by the following vote: AYES: DIRECTORS : NOES: DIRECTORS: ABSENT: DIRECTORS: ABSTAIN: DIRECTORS: Cheryl Morse, Corporation Clerk APPROVED: Ann Cheng, Chair ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 2011iXX, Exh. A THIRD AMENDMENT TO TRI-PARTY AGREEMENT This Third Amendment to Tri-Party Agreement ("Third Amendment") is entered into as of , 201 1, by and between the El Cerrito Municipal Services Corporation, a California nonprofit public benefit corporation and Safeway Inc., a Delaware corporation ("Safeway"), and Property Development Centers LLC, a Delaware limited liability company Safeway and PDC are sometimes collectively referred to herein as the "Company." This Third Amendment is entered into with reference to the following facts. R E C I T A L S A. Safeway, the El Cerrito Redevelopment Agency, a public body, corporate and politic ("Agency") and Target Corporation, a Minnesota corporation ("Target"), entered into that certain Tri Party Agreement dated October 5, 2009, that certain First Amendment to Tri-Party Agreement dated April 29, 20 1 0, and that certain Second Amendment to Tri-Party Agreement dated September 22, 20 10 (collectively, the "Original Agreement"). The Original Agreement relates to certain property located at 11450 San Pablo Avenue, El Cerrito, California, as more particularly described in Exhibit A attached hereto and incorporated herein ("Property"). B. Target has conveyed the Property to Safeway and no longer has any interest in the Property. This Third Amendment does not affect any rights or obligations of Target under the Original Agreement. C. Under the terms of the Original Agreement, Safeway was to convey to the Agency a certain portion of the Property designated as the "Hill Street Parcel" for no cost as partial consideration for the Agency releasing any rights the Agency had pursuant to the Agency Option to Purchase. The Hill Street Parcel is more particularly described in Exhibit B attached hereto and incorporated herein. D. The Agency assigned it interest in the Original Agreement to the MSC pursuant to that certain Assignment and Assumption Agreement dated June 21, 201 1 including the right to acquire the Hill Street Parcel. E. The MSC and the Company are entering into this Third Amendment for the purpose of effectuating the MSC's desire to assign its right to take title to the Hill Street Parcel to PDC and PDC's desire to acquire title to the Hill Street Parcel. NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, the MSC and the Company enter into this Third Amendment as set forth below. 1. Definitions. Unless otherwise defined herein, capitalized terms as used herein shall have the same meanings as given thereto in the Original Agreement and all terms defined in this Third Amendment shall have the same meanings when incorporated into the provisions of the Original Agreement. The Original Agreement, as amended by this Third Amendment is hereinafter collectively referred to as the "Agreement." ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 201PXX, Exh. A 2. Assignment and Assumption. I Subject to the payment and receipt of the Assignment Fee, the MSC hereby assigns to PDC its right to require the conveyance by Safeway to the MSC of the Hill Street Parcel pursuant to the Agreement, and PDC hereby accepts such assignment. The "Assignment Fee" shall be equal to One Million Eight Hundred Fifty Thousand Dollars ($1,850,000). PDC shall pay the Assignment Fee to the MSC within ten (10) business days after the date that the last of the required signatures is made to this Third Amendment. Payment of the Assignment Fee shall be made in accordance with the wire transfer instructions attached hereto as Exhibit C. Upon receipt of the Assignment Fee, the MSC shall be deemed to have released all of its rights and interests in and to the Hill Street Parcel and Safeway shall own the Hill Street Parcel free and clear of any such rights or interests. 3. Development of Hill Street Parcel. PDC hereby acknowledges and agrees that Safeway has the continuing right under the Agreement to require that the Hill Street Parcel be self- parked as contemplated under Section 2(d) of the Original Agreement, (ii) to install sign panels on any monument or pylon sign installed on the Hill Street Parcel as contemplated under Section 2(f) of the Original Agreement, and (iii) to approve the HSP Site Plan as contemplated under Section 2(h) of the Original Agreement as contemplated by Section. Further, as the future developer of the Hill Street Parcel, PDC shall be required to reimburse Safeway for twenty-five percent (25%) of the Four Hundred Eighty-Seven Thousand Dollars ($487,000) Greenway Contribution paid by Safeway to the City of El Cerrito as set forth in Section l(d) of the Original Agreement. 4. Responsibility for Required Transportation Mitigation. The MSC hereby agrees to assume responsibility for costs associated with implementation of Mitigation Measure TRANS- l b of the El Cerrito Safeway Mitigation Monitoring Reporting Program dated November 17 2010, subject to PDC agreeing to pay to the MSC, in addition to the Assignment Fee, a portion of the costs associated with the mitigation implementation in the amount of Three Hundred Fifty Thousand Dollars ($350,000). Notwithstanding Section 6(h) of the Agreement, the City shall be a third party beneficiary of the MSC's assumption of Safeway's obligations with respect to Mitigation Measure TRANS-lb and shall be entitled to look to the MSC for implementation of such mitigation measure. Safeway and PDC hereby agree that neither shall have any claims against the City or the MSC if the City determines at a later date that the improvements required to be installed as part of Mitigation Measure TRANS-lb are not required to mitigate traffic impacts or the City determines that different mitigation measures would be adequate to mitigate any impacts associated with the El Cerrito Safeway Project. Safeway and PDC understand and agree that any future use and development of the Hill Street Parcel shall be consistent with the Redevelopment Plan and the City General Plan then in effect; that no particular use or development proposal for the Hill Street Parcel has been identified as of the execution of this Agreement; and that any future use and development of the Hill Street Parcel shall be subject to an independent City land use entitlement process and an independent CEQA evaluation at such time as a specific use and development program for the Hill Street Parcel has been defined to ---PAGE BREAK--- Agenda Item No. 6 ' 1 . Attachment 2 MSC Resolution 2011'1XX, Exh. A enable such independent City land use entitlement process and CEQA evaluation. Safeway and PDC further acknowledge that nothing herein shall affect or limit the City's 'discretion in approving, disapproving or conditioning any permits or approvals necessary for the development of the Hill Street Parcel. 5. Greenway Contribution. The MSC acknowledges and agrees that the Greenway Contribution shall be used to improve that portion of the Ohlone Greenway situated between Hill Street and Blake Street and to construct that portion of the pedestrian path that will be situated on the Property, but only to the extent that the San Francisco Bay Area Rapid Transit District ("BART") does not itself undertake such work or pay for the same pursuant to that certain Consent to Temporary Construction Easement dated January 20, 2010 between BART and Safeway. Notwithstanding the foregoing, the MSC, Safeway and PDC acknowledge and agree that the City may use a portion of the Greenway Contribution to fund the implementation of Mitigation Measure TRANS-lb, as well as pedestrian improvements to provide a cohesive connection from the Ohlone Greenway and the Property across Hill Street to the El Cerrito del Norte BART Station, provided, such funds are not necessary to complete improvements to the Ohlone Greenway consistent with the Greenway Master Plan. 6. Termination of DDA. The MSC agrees to cause the Agency to execute and deliver to Safeway a memorandum of termination of the DDA within two business days after the receipt by the MSC of the Assignment Fee, which memorandum shall be in the form attached hereto as Exhibit D. 7. The Safeway Obligation. Provided that Safeway and PDC shall have agreed upon the substance of a Declaration of Easements with Covenants and Restrictions Affecting Land or similar document ("ECR), Safeway shall convey to PDC insurable fee simple title to the Hill Street Parcel. The ECR shall be recorded at the same time that the deed conveying the Hill Street Parcel to PDC is recorded. 8. Termination of the Agreement. The MSC and the Company acknowledge and agree that upon the fulfillment of the obligations set forth in Sections 2 and 4 of this Third Amendment, the MSC shall have no further rights or obligations under the Agreement and the MSC shall no longer be considered a party to the Agreement. Upon the conveyance of the Hill Street Parcel to PDC, the Agreement shall be deemed to have terminated. 9. Miscellaneous. 3.1 Full Force and Effect; Inconsistencies. Except as amended hereby, the terms and provisions of the Original Agreement are unmodified and in full force and effect. In the event of any inconsistencies between the terms of the Original ---PAGE BREAK--- Agenda Item No. 6 ' I . Attachment 2 MSC Resolution 201I;XX, Exh. A Agreement and the terms of this Third Amendment, the terms of this Third 1 Amendment shall control. 3.2 Email Delivery. Executed counterparts of this Third Amendment may be delivered by email. Email delivery will have the same effect as delivery of original executed documents. The parties will subsequently exchange original documents with original signatures. A facsimile or .PDF signature shall be deemed an original signature. 3.3 Due Execution. Each of the individuals who have executed this Third Amendment represents and warrants that he or she is duly authorized to execute this Amendment on behalf of the MSC, Safeway and PDC, as the case may be; that all corporate, partnership, trust, municipal or other action necessary for such party to execute and perform the terms of this Third Amendment has been duly taken by such party; and that no other signature and/or authorization is necessary for such party to enter into and perform the terms of this Third Amendment. 3.4 Counterparts. This Third Amendment may be executed in counterparts, each of which shall be deemed to be an original, but all of which, together, shall constitute one and the same instrument. SIGNATURES ON FOLLOWING PAGE ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 2011'~XX, Exh. A IN WITNESS THEREOF, the parties have executed this Third Amendment as of the date first above written. 1 MSC SAFEWAY EL CERRITO MUNICIPAL SERVICES SAFEWAY INC., CORPORATION, a California nonprofit public a Delaware corporation benefit corporation Name: Title: Date: ,2011 Name: Title: Name: Title: Date: ,201 1 Form Approved: PROPERTY DEVELOPMENT CENTERS LLC, a Delaware limited liability company By: SAFEWAY INC., a Delaware corporation, Its Sole and Managing Member By: Title: By: Title: Date: ,201 1 Form Approved: ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 201TlXX, Exh. A EXHIBIT A 1 LEGAL DESCRIPTION OF THE PROPERTY REAL PROPERTY IN THE CITY OF EL CERRITO, COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCELS ONE AND TWO, AS SHOWN ON THAT CERTAIN PARCEL MAP MS 45 1-1 0, FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTRY OF CONTRA COSTA, STATE OF CALIFORNIA ON JULY 1,201 1, BOOK 206 OF PARCEL MAPS, PAGES 26 AND 27. ---PAGE BREAK--- Agenda Item No. 6 ' 7 . Attachment 2 MSC Resolution 201T:XX, Exh. A EXHIBIT B LEGAL DESCRIPTION OF HILL STREET PARCEL REAL PROPERTY IN THE CITY OF EL CERRITO, COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL TWO, AS SHOWN ON THAT CERTAIN PARCEL MAP MS 451-10, FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTRY OF CONTRA COSTA, STATE OF CALIFORNIA ON JULY 1, 2011, BOOK 206 OF PARCEL MAPS, PAGES 26 AND 27. ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution Exh. A EXHIBIT C AGENCY WIRE TRANSFER INSTRUCTIONS (Must be on Agency letterhead) ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 20lGXX, Exh. A I EXHIBIT D 1 I TERMINATION OF DDA THIS TERMINATION OF DISPOSITION AND DEVELOPMENT AGREEMENT ("Termination") is entered into as of this day of , 20-, by and between SAFEWAY INC., a Delaware corporation ("Safeway"), and The El Cerrito Redevelopment Agency, a public body, corporate and politic ("Agency"). A. Safeway's predecessor-in-interest and the Agency entered into a Disposition and Development Agreement dated November 16, 1990 setting forth the terms and provisions applicable to the acquisition and development of the property described in Exhibit A attached hereto ("Property"). B. Safeway and the Agency desire to confirm the termination of the rights and obligations set forth in the DDA. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, Safeway and the Agency confirm that the DDA has terminated and is of no further force and effect. This Termination may be executed in counterparts, each of which shall be deemed to be an original, but all of which, together, shall constitute one and the same instrument. MSC SAFEWAY EL CERRITO MUNICIPAL SERVICES SAFEWAY INC., CORPORATION, a California nonprofit public a Delaware corporation benefit corporation Name: Name: Title: Title: Name: Title: Date: ,20 Date: ,20 Form Approved: ALL SIGNATURES TO BE NOTARIZED ---PAGE BREAK--- Agenda Item No. 6 Attachment 2 MSC Resolution 2 0 l l : ~ ~ , Exh. A ACKNOWLEDGMENTS I STATE OF CALIFORNIA ) )ss. COUNTY OF ALAMEDA ) On ,20 , before me, , Notary Public, personally appeared and , who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons or the entity upon behalf of which the persons acted, executed the instrument. I hereby certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA ) )SS. COUNTY OF CONTRA COSTA ) On 2 0 , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in hislher authorized capacity, and that by hidher signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument. I hereby certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal)