Title
Amend Disposition and Redevelopment Agreement with True North Holdings, LLC (Ordinance S-46289)
Description
Request to authorize the City Manager, or his designee, to amend City Contract No. 146822 with True North Holdings, LLC (Developer) to modify terms pertaining to the close of escrow and the project completion date.
Report
Summary
In August 2018, a Disposition and Redevelopment Agreement (DRA), City Contract No. 146822, was entered into with the Developer for the sale and development of 1.5 acres of City-owned land on 2nd Street north of Roosevelt Street (Site) as authorized by Ordinance S-44110. The Developer intends to construct the following at the Site: approximately 354,000 gross-square-feet (GSF) of commercial office space; approximately 77,000 GSF of retail space; and 1,100 parking spaces, with at least 250 spaces available to the public. In addition, Developer will also rehabilitate and restore the historic Leighton G. Knipe House for a use open to the public. Collectively these improvements are referred to as "The Project."
The DRA detailed the close of escrow for the Site to occur in phases, two of which have been completed,as described below:
- Phase 1, which included the Knipe House, closed in September 2018 at a sale price to the City of $80,000. The Developer signed the 50-year conservation easement for the Knipe House and is nearly complete with improvements to the home. A restaurant named All The Little Things will occupy the home and will be open to the public in the first quarter of 2020.
- Phase 2, which included 0.9 acres of land surrounding the Knipe House, closed in September 2019 with a sale price of approximately $2.3 million to the City. The Developer has received permits to construct an approximately 134,920 square foot, five-story office and retail building which is expected to break ground in December 2019.
- Phase 3 of the Site consists of 0.4 acres of City-owned land combined with an additional 0.9 acres of Developer-controlled land which Developer intends to construct a 19-story office tower and parking structure with ground floor retail.
The Developer has requested two, six-month extensions of the Phase 3 close of escrow date in order to allow for completion of the Project. The following Phase 3 business terms are proposed to be amended:
- Close of Escrow for Phase 3 will occur on or before Jun. 15, 2020 (First Extension).
- Upon signing the amendment, Developer will pay to the City $21,896.62 as non-refundable earnest money that can be applied to the remaining purchase price.
- Should Developer not close escrow by the end of the First Extension, Developer may exercise one additional six-month extension to extend Close of Escrow to Dec. 15, 2020 (Second Extension).
- Upon exercising the Second Extension, Developer will pay to the City $43,793.24 as non-refundable earnest money that may be applied to the remaining purchase price.
- If the Second Extension is exercised, the City will also extend the Completion of Construction Date by one year.
All other terms and conditions of the DRA shall remain in full force and effect.
Financial Impact
There is no impact to the General Fund by this action.
Concurrence/Previous Council Action
City Council originally approved the Project through Ordinance S-44110 on Nov. 29, 2017.
Location
1016 N. 2nd St.
Council District: 7
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Community and Economic Development Department.