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AGENDA BILL Agenda Item No. 7(A) Date: March 17, 2015 To: El Cerrito City Council From: Melanie Mintz, Interim Community Development Director Scott Hanin, City Manager Subject: Amend Professional Services Agreement with Trust for Public Land to Waive or Reduce the Professional Services Fee ACTIONS REQUESTED Adopt a resolution amending the Professional Services Agreement with Trust for Public Land for service provided in conjunction with the acquisition of the Madera Hillside Natural Area Property (APN 505-142-014, -012 and -013). Due to information available at the time this Agenda Bill went to print, there are two resolutions attached with two separate options: 1. One resolution waives the $100,000 Professional Services Fee authorized by Resolution No. 2013-39. 2. The second resolution authorizes the City Manager to enter into an Agreement to share 50% of the net proceeds of any future sale of a private lot (APN 505-421-029), up to $100,000. BACKGROUND On July 16, 2013 City Council adopted Resolution No. 2013-39 authorizing the City Manager to enter into a Purchase and Sale Agreement with the Trust for Public Land (TPL) to purchase approximately 8.08-acres of Hillside Natural Area property and to enter into a Professional Services Agreement for acquisition-related and fundraising assistance. The Purchase and Sale Agreement specified that the City would purchase the property from TPL for $475,000 by December 17, 2014. The Professional Services Agreement committed the City to paying up to $100,000 for acquisition related services, including real estate related, grant solicitation and private fundraising assistance. The actual amount of the professional services fee would be based upon the success of the fundraising efforts. The Purchase and Sale Agreement was amended three times by the City Manager extending it through March 19, 2015. Around the same time that TPL acquired the 8.08 acre Madera property for the purpose of re-conveyance to the City, TPL was also donated and assumed ownership of a 9,500 square foot residentially-zoned property (APN 505-421-029) adjacent to the Madera Hillside Natural Area property. According to TPL, one of the ways they fund their non- ---PAGE BREAK--- Agenda Item No. 7(A) Page 2 profit organization’s activities nationwide is through acceptance of donations, including donations of land for non-conservation purposes. When land donations are received for purposes other than conservation, TPL evaluates them for their conservation value and, where low, measures how much additional conservation could be catalyzed through the sale of the property. TPL conducted this form of analysis on the residential property and concluded that the amount of conservation funding that could be created through a sale of the property in today’s market was much greater than the amount of additional conservation value that could be created through protection of the property itself. Key considerations included the following: • Due to its steep slope, the property provides little usable land for the public. • Due to the existing, adjacent public staircase, the property would not improve public access to the Hillside Natural Area. • The property contains marginal natural resource value. Locally significant plants that exist onsite can be transplanted to the Hillside Natural Area. • The property would only marginally increase the size of the Madera open space and the greater Hillside Natural Area (less than 0.01%). • Development would be consistent with the underlying zoning, parcel size and neighboring land uses. • The opportunity to preserve $100,000 in City funds for other park and recreation needs in El Cerrito. TPL and City staff has discussed the situation and are in agreement that if the property is to be sold, a portion of the sale proceeds should be reinvested in El Cerrito to contribute to local parks and recreation projects as this donation would likely not have occurred without the City’s purchase of the main property. Before Council this evening is two resolutions. There are two resolutions because at the time this Agenda Bill went to print, TPL was in contract with a buyer to purchase the single private lot, scheduled to close on March 12, 2015. The two resolutions reflect two separate scenarios: Scenario A is if the property successfully closes on March 12 and Scenario B is if the property does not close and continues to be marketed. In Scenario A, if the current sale contemplated by TPL is successful, TPL will waive the $100,000 Professional Services Fee agreed to previously, as the proceeds from the sale would cover project costs. In Scenario B, if the current sale is not successful, TPL agrees that fifty percent (50%) of the net proceeds from a future sale, up to $100,000, would be granted to the City. (“Net proceeds” is defined in the amended agreement as “sale price less closing costs and realtor commission.”) The attached resolutions reflect these two scenarios. DISCUSSION Funding for the purchase of the 8.08 Madera Hillside property was planned to come from three sources: 1) Outside grants; 2) Measure WW; and 3) Private Fundraising. ---PAGE BREAK--- Agenda Item No. 7(A) TPL and City staff worked together to submit two grants: one to the Land and Water Conservation Fund (L WCF) for $251,525 (Resolution 2014-01) which was successful and a second to the National Fish and Wildlife Foundation for $80,000 which was not. In addition, TPL and community members who came together to form the Open Space Fund, conducted a very successful private fundraising campaign that raised $103,409 from approximately 275 donors, including a large donation of $25,000 directed to the purchase by TPL. With the $100,000 Professional Services Fee, the total cost of the project would be $575,000 necessitating an expenditure of $220,066 of the $587,469 remaining non-committed remaining Measure WW funds to close the transaction. If the Professional Services Fee is waived, as in Scenario A, the cost of the project to Measure WW would be $120,066 leaving additional Measure WW funds available for other City parks and recreation priorities. If the Fee is not waived, but Scenario B comes to fruition, TPL will grant the City up to $100,000 to use for future parks and recreation projects. FINANCIAL CONSIDERATIONS No General Fund monies are involved in the Madera Hillside Natural Area acquisition. The fu'nding for the project is provided by Measure WW, private donations and outside grants. A total of $354,934 was raised from private donations and outside grants, leaving a balance of up to $220,066 to be funded by Measure WW. The Measure WW balance is currently $587,469. If TPL's current proposed sale of property is successful and the resolution amending the Professional Services Agreement is adopted, $120,066 Measure WW funds would be required to complete the project. If the current sale is unsuccessful, the cost to Measure WW would be $220,066. If TPL successfully sells the prope11y in the future, it will grant the City fifty (50%) of the proceeds from the sale, up to $100,000. Staff believes that this proposal is reasonable. LEGAL CoNSIDERATIONS The City attorney has reviewed the proposed Professional Services Agreement amendment. Reviewed by: _Aff Scott Hanin, City Manager Attachments: 1. Resolution xx-xx (Scenario A) 2. Resolution xx-xx (Scenario B) Page 3 ---PAGE BREAK--- Agenda Item No. 7(A) Attachment 1 RESOLUTION 2015-XX RESOLUTION OF THE CITY COUNCIL AMENDING THE PROFESSIONAL SERVICES AGREEMENT WITH TRUST FOR PUBLIC LAND TO WAIVE THE PROFESSIONAL SERVICES FEE WHEREAS, Resolution No. 2013-39 authorized the City Manager to enter into a Purchase and Sale Agreement with the Trust for Public Land to purchase approximately 8.08 acres of Hillside Natural Area property; and WHEREAS, Resolution No. 2013-39 also authorized the City Manager to enter into a Professional Services Agreement with the Trust for Public Land for acquisition-related and fundraising assistance; and WHEREAS, the Purchase and Sale Agreement specified that the City would purchase the property for $475,000 by December 17, 2014 and pay up to $100,000 for professional services based upon the success of the fundraising efforts; and WHEREAS, the Purchase and Sale Agreement was amended by the City Manager extending it through March 19, 2015; and WHEREAS, Trust for Public Land also accepted a donation and assumed ownership of a 9,500 square foot residentially-zoned property adjacent to the Hillside Natural Area and has since marketed the property for sale; and WHEREAS, the property (APN 505-421-029) has since successfully sold; and WHEREAS, Trust for Public Land and the City concur that a portion of the proceeds from the sale of the parcel should benefit local parks and recreation projects. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of El Cerrito that it hereby approves the First Amended Professional Services Agreement with the Trust for Public Land to waive the $100,000 Professional Services Fee, as set forth in the attached Exhibit A. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon passage and adoption. I CERTIFY that at a regular meeting on March 17, 2015 the City Council of the City of El Cerrito passed this Resolution by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ---PAGE BREAK--- Agenda Item No. 7(A) Attachment 1 IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on March XX, 2015. Cheryl Morse, City Clerk APPROVED: Mark Friedman, Mayor Exhibit A: First Amendment to Professional Services Agreement ---PAGE BREAK--- Agenda Item No. 7(A) Resolution No. 2015-XX, Exhibit A FIRST AMENDMENT TO PROFESSIONAL SERVICES FEE AGREEMENT THIS FIRST AMENDMENT TO PROFESSIONAL SERVICES FEE AGREEMENT (this “Amendment”) is made and entered into as of the 18th day of March, 2015, by the CITY OF EL CERRITO, a California general law city (“City”), and THE TRUST FOR PUBLIC LAND, a California nonprofit public benefit corporation with reference to the following recitals of fact: RECITALS A. City and TPL entered into that certain Professional Services Fee Agreement dated as of July 29, 2013 (“Fee Agreement”), pursuant to which City agreed to compensate TPL for its expertise in acquiring real property for public use, in connection with City’s wish to acquire approximately 8.08 acres of real property located between Madera Circle, Potrero Avenue and Regency Court in the City of El Cerrito, California (“Property”). All capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Fee Agreement. B. As contemplated in the Fee Agreement, on August 30, 2013, TPL acquired the Property, with the intention of holding the Property for approximately 16 months, until the City was ready to purchase it from TPL. TPL also acquired a separate lot nearby (“Private Lot”), which the prior landowner donated to TPL concurrently with the sale of the Property to TPL. TPL marketed the Private Lot for sale separately. C. TPL’s holding of the Property, the Buy-and-Hold Period under the Fee Agreement, was to end on December 17, 2014, but various circumstances prevented the City from purchasing the Property from TPL by that date. Accordingly, the parties agreed to extend the Close of Escrow, as defined in that certain Purchase and Sale Agreement between TPL and the City, dated July 29, 2013 (as amended, the “Purchase and Sale Agreement”). D. With the sale of the Private Lot now completed by TPL, TPL and City wish to amend the Fee Agreement as described below. NOW, THEREFORE, in consideration of the foregoing, and of the conditions, terms, covenants and agreements set forth herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that the Fee Agreement is amended as follows: AGREEMENT 1. Amended and Restated Section. Section 3 is amended and restated in its entirety as follows, upon execution of this Amendment: Professional Services Fee. Notwithstanding anything to the contrary contained herein, TPL hereby agrees to waive the Professional Services Fee which was to be paid to TPL upon Close of Escrow, and City concurs with such waiver.” ---PAGE BREAK--- 2 2. Cancellation of Fee Agreement. Upon execution of this Amendment by both parties and delivery of the within signed Amendment to the other party (by email or fax), the Fee Agreement shall be null and void and neither party shall have any further obligations under the Fee Agreement, except those terms, if any, which specifically state that they are to survive such a cancellation. 3. Counterparts. This Amendment may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument when each party has signed one such counterpart. This Amendment may be executed and delivered to the other party by facsimile transmission or by pdf and a facsimile signature or a pdf received by email shall have the same legal effect as an original signature. 4. Entire Agreement. The Fee Agreement, as amended by this Amendment, constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in the Fee Agreement, as so amended, and no provision of the Fee Agreement, as so amended, may be modified, amended, waived or discharged, in whole or in part, except by a written instrument executed by all of the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above. CITY TPL CITY OF EL CERRITO, a California general law city Title: Date: THE TRUST FOR PUBLIC LAND, a California nonprofit public benefit corporation By: Gilman Miller, Senior Counsel Date: ---PAGE BREAK--- Agenda Item No. 7(A) Attachment 2 RESOLUTION 2015-XX RESOLUTION OF THE CITY COUNCIL AMENDING THE PROFESSIONAL SERVICES AGREEMENT WITH TRUST FOR PUBLIC LAND TO SHARE NET PROCEEDS FROM FUTURE SALE OF RESIDENTIAL PROPERTY WHEREAS, Resolution No. 2013-39 authorized the City Manager to enter into a Purchase and Sale Agreement with the Trust for Public Land to purchase approximately 8.08 acres of Hillside Natural Area property; and WHEREAS, Resolution No. 2013-39 also authorized the City Manager to enter into a Professional Services Agreement with the Trust for Public Land for acquisition-related and fundraising assistance; and WHEREAS, the Purchase and Sale Agreement specified that the City would purchase the property for $475,000 by December 17, 2014 and pay up to $100,000 for professional services based upon the success of the fundraising efforts; and WHEREAS, the Purchase and Sale Agreement was amended by the City Manager extending it through March 19, 2015; and WHEREAS, Trust for Public Land also accepted a donation and assumed ownership of a 9,500 square foot residentially- zoned property adjacent to the Hillside Natural Area and has since marketed the property for sale; and WHEREAS, Trust for Public Land and the City concur that a portion of the proceeds from any future sale of the parcel (APN 505-421-029) should benefit local parks and recreation projects; and WHEREAS, Trust for Public Land agreed to grant the City fifty percent (50%) of the net proceeds from a future sale up to $100,000; and WHEREAS, the City will restrict the proceeds received from Trust for Public Land to parks and recreation projects. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of El Cerrito that it hereby approves the First Amended Professional Services Agreement to reflect that the Trust for Public Land will grant the City fifty percent (50%) of net proceeds of any future sale of the private parcel up to $100,000, as set forth in the attached Exhibit A. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon passage and adoption. I CERTIFY that at a regular meeting on March 17, 2015 the City Council of the City of El Cerrito passed this Resolution by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ---PAGE BREAK--- Agenda Item No. 7(A) Attachment 2 IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on March XX, 2015. Cheryl Morse, City Clerk APPROVED: Mark Friedman, Mayor Exhibit A: First Amendment to Professional Services Agreement ---PAGE BREAK--- Agenda Item No. 7(A) Resolution No. 2015-XX, Exhibit A FIRST AMENDMENT TO PROFESSIONAL SERVICES FEE AGREEMENT THIS FIRST AMENDMENT TO PROFESSIONAL SERVICES FEE AGREEMENT (this “Amendment”) is made and entered into as of the 18th day of March, 2015, by the CITY OF EL CERRITO, a California general law city (“City”), and THE TRUST FOR PUBLIC LAND, a California nonprofit public benefit corporation with reference to the following recitals of fact: RECITALS A. City and TPL entered into that certain Professional Services Fee Agreement dated as of July 29, 2013 (“Fee Agreement”), pursuant to which City agreed to compensate TPL for its expertise in acquiring real property for public use, in connection with City’s wish to acquire approximately 8.08 acres of real property located between Madera Circle, Potrero Avenue and Regency Court in the City of El Cerrito, California (“Property”). All capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Fee Agreement. B. As contemplated in the Fee Agreement, on August 30, 2013, TPL acquired the Property, with the intention of holding the Property for approximately 16 months, until the City was ready to purchase it from TPL. TPL also acquired a separate lot nearby (“Private Lot”), which the prior landowner donated to TPL concurrently with the sale of the Property to TPL. TPL marketed the Private Lot for sale separately. C. TPL’s holding of the Property, the Buy-and-Hold Period under the Fee Agreement, was to end on December 17, 2014, but various circumstances prevented the City from purchasing the Property from TPL by that date. Accordingly, the parties agreed to extend the Close of Escrow, as defined in that certain Purchase and Sale Agreement between TPL and the City, dated July 29, 2013 (as amended, the “Purchase and Sale Agreement”). TPL’s sale of the Private Lot was intended to occur on or before the extended Close of Escrow on the Property. D. In spite of TPL’s best efforts to market and sell the Private Lot concurrently, the sale of the Private Lot will not close by Close of Escrow on the Property, so the parties wish to amend the Fee Agreement as described below. NOW, THEREFORE, in consideration of the foregoing, and of the conditions, terms, covenants and agreements set forth herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that the Fee Agreement is amended as follows: AGREEMENT 1. Amended and Restated Section. Section 3 is amended and restated in its entirety as follows, upon execution of this Amendment: Professional Services Fee. City shall pay to TPL a fee (“Professional Services Fee”) as compensation for TPL’s performance of the Services, as further described in ---PAGE BREAK--- 2 Exhibit A to this Fee Agreement, payable in one lump sum of ONE HUNDRED THOUSAND DOLLARS ($100,000) due on Close of Escrow when title to the Property is conveyed to the City, which is anticipated to occur on March 19, 2015. After Close of Escrow on the Property, TPL shall continue to use good faith efforts to sell the Private Lot to a third party (the “Private Lot Sale”). Upon the occurrence of such a Private Lot Sale, TPL shall make a grant to the City of fifty percent (50%) of the Private Lot Sale’s net sale proceeds (sale price less closing costs and realtor commission), up to a maximum grant to the City of One Hundred Thousand Dollars ($100,000). This grant to the City shall be made within ten (10) business days of the Private Lot Sale.” 2. Counterparts. This Amendment may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument when each party has signed one such counterpart. This Amendment may be executed and delivered to the other party by facsimile transmission or by pdf and a facsimile signature or a pdf received by email shall have the same legal effect as an original signature. 3. Entire Agreement. The Fee Agreement, as amended by this Amendment, constitutes the full and complete agreement and understanding between the parties hereto and shall supersede all prior communications, representations, understandings or agreements, if any, whether oral or written, concerning the subject matter contained in the Fee Agreement, as so amended, and no provision of the Fee Agreement, as so amended, may be modified, amended, waived or discharged, in whole or in part, except by a written instrument executed by all of the parties hereto. 4. Force and Effect. Except as modified by this Amendment, the terms and provisions of the Fee Agreement are hereby ratified and confirmed and are and shall remain in full force and effect. Should any inconsistency arise between this Amendment and the Fee Agreement as to the specific matters which are the subject of this Amendment, the terms and conditions of this Amendment shall control. This Amendment shall be construed to be a part of the Fee Agreement and shall be deemed incorporated in the Fee Agreement by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above. CITY TPL CITY OF EL CERRITO, a California general law city Title: THE TRUST FOR PUBLIC LAND, a California nonprofit public benefit corporation By: Gilman Miller, Senior Counsel