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HomeMy WebLinkAboutR24010 - La Spiga Restaurant - Xclusive Negotiating Agrmnt @ Entrada del PaseoContract No. R24010 PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: AUTHORIZE AGENCY CHAIR TO EXECUTE A 90-DAY EXCLUSIVE NEGOTIATING AGREEMENT FOR DEVELOPMENT OF A RESTAURANT AT THE ENTRADA DEL PASEO DEVELOPMENT SUBMITTED BY: LAURI AYLAIAN, REDEVELOPMENT MANAGER DEVELOPER: C V FOOD SERVICE, INC., DBA LA SPIGA 73405 EL PASEO PALM DESERT, CA 92260 DATE: JULY 14, 2005 CONTENTS: EXCLUSIVE NEGOTIATING AGREEMENT DATED JULY 15, 2005 Recommendation: By Minute Motion, that the Agency Board approve the subject 90-day Exclusive Negotiating Agreement and authorize Agency Chair to execute same. Executive Summarv: Approval of the staff recommendation will allow staff to negotiate exclusively with the owners of La Spiga restaurant to sell them approximately .6 acres at Entrada del Paseo for development of a high -end Italian restaurant. Discussion: Vincent and Connie Cultraro, owners of La Spiga restaurant, have operated successfully in leased space on El Paseo for several years. The success of their restaurant has encouraged them to seek larger space wherein they own their own restaurant in a secluded, garden -like setting. The Cultraros have approached Agency staff and have expressed interest in purchasing a parcel of land in the "remote" corner of the Entrada del Paseo site. This corner is bounded by Painters Path and the Palm Valley Storm Channel, and has little to no visibility from Highway 111 or El Paseo. The Cultraros would like to construct a 4,000 to 5,000 square foot, high -end Italian restaurant set in gardens that diners will be invited to stroll through. Their proposed development is consistent with the Entrada del Paseo site and makes use of a portion of the site that is not currently planned for any other use. Contract No. R24010 Staff Report Authorize Agency Chair to Execute a 90-day Exclusive Negotiating Agreement for Restaurant at Entrada del Paseo Development Page 2 of 2 July 14, 2005 Agency staff requests authorization to negotiate exclusively with Mr. and Ms. Cultraro for a period of 90 days in order to determine if agreement can be reached for' selling the property to them for fair market value for development of the proposed restaurant. At the end of the 90-day period, staff will return to the Agency Board with a proposed development agreement or, if terms have not been reached, with a request to be authorized to solicit statements of qualifications from other interested parties for development on this back corner of the Entrada del Paseo site. Submitted by: Lauri Aylaian Redevelopment Manager bl Approval: I Jus ' Carlos Department Head: L--Dave Yrwoy go e g Director of development/Housing G:\RDA\Beth Longman\Staff Reports\Aytaian\Entrada Restaurant DDA 071405.doc Contract No. R24olo EXCLUSIVE NEGOTIATING AGREEMENT This EXCLUSIVE NEGOTIATING AGREEMENT (this "Agreement") is made and entered into as of 15 July 2005, by and between the PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency") and C V FOOD SERVICE, INC. DBA LA SPIGA, a corporation organized under the laws of California (the "Developer'). RECITALS A. The subject matter of this Agreement is that certain real property owned by the Agency located in the City of Palm Desert, California (the "City"), that is within and adjacent to the Entrada del Paseo development and is described on Attachment No. 1 attached hereto (the "Site"). The Site constitutes a portion of Redevelopment Project Area No. 1 ("Project Area"). B. The Agency and the Developer wish to enter into this Agreement to negotiate with each other and establish certain information and the terms and conditions which would be incorporated into a Disposition and Development Agreement (the "DDA") that would result in the acquisition of all or part of the Site by the Developer, and the Developer's development of an Italian restaurant with indoor and outdoor dining, gardens, and amenities on approximately .6 acres of Entrada del Paseo (the "Project"). C. The Agency wishes to encourage the continued planning and economic, environmental, and financial evaluation of the Project and the Site. The Developer and the Agency are willing to enter into this Agreement setting forth the terms pursuant to which the Agency will deal with the Developer on an exclusive basis for a period of ninety (90) days, as such period may be extended as herein provided, regarding the establishment of certain information and terms and conditions regarding the Developer's La Spiya.ena 14 July 2005 La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 2 proposed development of the Site, and on the basis thereof attempt to negotiate and enter into a DDA for the development of the Site. D. The Agency anticipates that following execution of this Agreement and through the ENA Period (as defined below), its staff, consultants and attorneys will devote substantial time and effort in meeting with the Developer, and its counsel and representatives, reviewing proposals, plans and reports, meeting with financial advisors, architects and engineers, and in negotiating and documenting a DDA. NOW, THEREFORE, the parties hereto agree as follows: 1. Subject to extension and termination, as applicable, under Sections 2 and 13 hereof, the term of this Agreement shall commence on the date hereof and shall end on the later of: (i) the date that is ninety (90) calendar days thereafter (the "ENA Period"); or (ii) if the DDA is fully negotiated and documented by Developer and Agency staff during the ENA Period, the date on which said DDA is formally approved or disapproved by the Agency. 2. During the ENA Period, the Developer shall deliver the materials and information identified on Attachment 2 hereto to the Agency for the Agency's review and approval. If such materials and information, in form and content acceptable to the Agency in its sole discretion, are delivered by the Developer prior to the end of the ENA Period, and the Developer and Agency (each in the exercise of their sole discretion) have agreed to the general parameters of the Project and commenced good faith negotiations of the DDA, but have not yet negotiated and documented the DDA, then the Agency, by written notice to the Developer and upon receipt of the good faith deposit described in Paragraph 11 below, may in the exercise of its sole discretion extend the ENA Period for an additional period of thirty (30) calendar days. La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 3 3. During the ENA Period, the Agency shall not negotiate with any person or entity other than the Developer regarding the development of the Site, except for entities or persons which have an interest therein pursuant to applicable law. 4. During the ENA Period (but subject to termination under Section 13 hereof), the Agency and the Developer shall work together to negotiate an agreement that is mutually acceptable to the Agency and Developer in respect of the matters identified in Attachment No. 2 attached hereto and to negotiate and document the DDA. 5. Throughout the ENA Period, Agency staff shall be reasonably available to meet with the Developer to discuss the Project, the Land Use Plan (as defined in Attachment 2), Development Schedule (as defined in Attachment 2), and other issues relating to the Project or this Agreement. 6. The Agency and Developer shall each be solely responsible for the payment of all fees, expenses and costs each may incur in the negotiation and documentation of the DDA and the other matters addressed herein. 7. The Agency and Developer acknowledge that all applicable requirements of California Environmental Quality Act ("CEQA") must be met in order to execute and deliver the DDA, or develop the Site. The Developer acknowledges that an environmental impact report or similar environmental document ("EIR") may be required by CEQA for the proposed development of the Site and that any rights of Developer to develop the Project will be subject to such EIR. 8. Except as provided in Section 6 hereof, the Developer shall indemnify, defend, and hold the Agency and City harmless from any and all costs, losses, claims and other liability resulting from the Developer's performance under this Agreement. Such indemnity shall survive the expiration or other termination of this La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 4 Agreement. In the event that any claim should be filed against the Agency or City which would require indemnification by Developer hereunder, the Agency or City shall notify Developer of such claim in a timely manner to permit Developer the opportunity to provide adequate representation to the Agency or City (which representation shall be subject to the approval of the Agency and City in the exercise of their reasonable discretion) with respect to any such claim. 9. The parties anticipate that the DDA will include the following, or similar, provisions: a. The Developer shall develop and construct the Project on the Site, both at its own cost and expense, and in so doing, shall make expenditures pursuant to a budget that shall be approved by the Agency in the exercise of its reasonable discretion. The Developer shall, at its own cost and expense, commence and continue to use its best efforts to market the Project from the date of execution and delivery of the DDA. The construction of the Project shall be commenced and completed pursuant to a schedule of performance to be incorporated in the DDA and approved by the Agency in the exercise of its reasonable discretion. b. Neither the Site nor the Project shall be pledged by the Developer as security for any financing or refinancing other than a construction and/or permanent loan with respect to the Project, which shall be negotiated between the Developer and the lender and shall be subject to review and approval by the Agency, which approval shall not be unreasonably withheld. c. The obligations of the Developer contained in the DDA shall constitute covenants running with the land comprising the Site and shall bind any future owners or lessees, and it is contemplated that if a DDA is negotiated, approved and La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 5 executed, a Memorandum of DDA will be recorded against the Site. The DDA will provide for the issuance of a Certificate of Completion upon Developer's satisfaction of its development obligations under the DDA, and the DDA will provide that any covenants that are to survive the issuance of the Certificate of Completion shall be included in the deed for the Site from the Agency to the Developer and shall run with the land. d. The Agency and Developer acknowledge and agree that this Agreement does not commit or obligate either the Agency or the City to provide any form of assistance to the Developer (including, without limitation, financial assistance to owners, developers, or users in the Project) in its development of the Project. However, the Developer during the ENA Period may propose such assistance and the Agency staff will consider such proposals in the course of negotiating the DDA with Developer. The Developer will secure all necessary tenants, developers, owners or users for the Project in compliance with all applicable law, including the Community Redevelopment Law. e. The Developer shall covenant and agree that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site and the Project, nor shall the Developer or any person claiming under or through the Developer, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Site and Project, and the Developer shall cause the foregoing provisions to be contained in any La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 6 contracts, leases or other agreements (as required by applicable law) respecting the Project. f. The Developer shall bear all costs and expenses of any title, environmental, engineering, financial, or other analyses or reports incurred by the Developer. g. To the extent required by applicable law, the Developer shall pay or cause to be paid to all workers employed in connection with the construction of the Project and any related public improvements, not less than the prevailing rates of wages. h. The Developer shall represent that its undertakings pursuant to the DDA are for the purpose of redevelopment of the Site and not for speculation in land holding. The Developer shall further recognize that, in view of the importance of the redevelopment of the Site to the general welfare of the community and the public assistance to be made available by law and by the Agency for the purpose of making such redevelopment possible, the qualifications and identity of the Developer and its principals are of particular concern to the Agency. Therefore, prior to completion of the Project, no voluntary or involuntary successor in interest of Developer, except for a permitted mortgagee with respect to the Site, shall acquire any interest in or rights or powers under the DDA except as expressly set forth therein. The DDA may not be assigned by the Developer without the express written consent of the Agency, which consent may be granted or withheld in the exercise of the Agency's reasonable discretion. 10. The Developer and the Agency understand and agree that neither party is obligated to enter into a DDA; however, the Developer and the Agency shall La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 7 negotiate in good faith with respect to the DDA. In the event of termination or expiration of this Agreement, the Agency shall be free at the Agency's option to negotiate with any persons or entities with respect to the acquisition and development of the Site. 11. Neither the submission of this Agreement by the Agency to the Developer, nor the execution of this Agreement by either party, shall constitute an option or offer to acquire or sell any real property by either party or a commitment by the Agency to expend any financial resources on the Project, it being intended hereby that obligations to acquire or sell the Site or any portion thereof or any interest therein shall become effective only following the approval and execution of the DDA by the Agency and the Developer. 12. The Agency may terminate this Agreement if the Developer should fail to comply with and perform in a timely manner, to the reasonable satisfaction of the Agency, all provisions hereof on the Developer's part to be performed, or if Agency reasonably believes that progress is not being made in negotiations hereunder. The Agency shall provide fifteen (15) days written notice to the Developer which specifies any such reasonable dissatisfaction or reasonable belief and the Agency shall not terminate this Agreement if the Developer cures the deficiencies specified by the Agency to the reasonable satisfaction of the Agency within such fifteen (15) day period. 13. Developer shall perform all such due diligence regarding the Site as it reasonably requires and deems appropriate under the circumstances, including performance of any inspection of the geological, soils, environmental, and physical condition of the Site, review of an ALTA survey of the Site, review of the availability of utility and water services to the Site, and review of the condition of title to the Site, and La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 8 shall satisfy itself as to each of these matters. Developer shall bear all costs and expenses associated with due diligence matters. 14. Any notice, request, approval or other communication to be provided by one party to the other shall be in writing and provided by personal service or a form of express mail or service and addressed as follows: If to the Developer: La Spiga 82 St. Georges Crescent Edmonton, AB T5N3M7 Canada Attn: Connie Cultraro, President Tel: (780)455-2099 Fax: (780) 451-3959 Local Phone: (760) 898-4608 If to the Agency: Palm Desert Redevelopment Agency 73-510 Fred Waring Drive Palm Desert, California 92260 Attention: Carlos Ortega, Executive Director Tel: (760) 346-0611 Fax: (760) 346-0574 15. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof. There are no agreements or understandings between the parties and no representations by either party to the other as an inducement to enter into this Agreement, except as expressly set forth herein. All prior negotiations between the parties are superseded by this Agreement. This Agreement may not be altered, amended or modified except by a writing executed by both parties. The Agency shall have no obligation to enter into the DDA with the Developer and neither the Agency nor its officers, members, staff or agents have made any promises to the Developer other than to exclusively negotiate in good faith, but otherwise in the sole and absolute discretion of Agency staff, with the Developer during the ENA Period, and no statements of the Agency or its officers, members, staff or agents as to future obligations shall be binding upon the Agency unless and until the La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 9 DDA is approved and adopted by the Agency and then duly executed by the officers of the Agency duly authorized to do so. This Agreement may not be assigned by the Developer without the express written consent of the Agency, which consent may be granted or withheld in the exercise of the Agency's sole and absolute discretion. 16. If either party should bring any legal proceeding relating to this Agreement, or to enforce any provision hereof, the party in whose favor judgment is rendered shall be entitled to recover reasonable attorneys' fees and expenses of litigation from the other. The interpretation and enforcement of this Agreement shall be governed by the laws of the State of California. 17. This Agreement may be executed simultaneously or in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. "Agency" PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic M Carlos L. Ortega Executive Director Attest: Rachelle D. Klassen, Secretary "Developer" CV FOOD SERVICE INC. DBA LA SPIGA By: Name: Title: By: Name: Title: La Spiga Exclusive Negotiating Agreement 15 July 2005 Page 11 ATTACHMENT NO. 1 Site Description Contract No. R24010 The site comprises approximately 25,500 square feet of the west corner of APN 640-370-012, located along the north side of Painters Path and the east side of the Palm Valley Storm Channel, west of West El Paseo. CONCEPTUAL SITE PLAN _--k - La Spiga Exclusive Negotiating Agreement Contract No. R24010 15 July 2005 Page 12 ATTACHMENT NO.2 Materials to be Delivered by Developer to the Aqencv 1. A detailed Project description and land use plan (to include conceptual site plan and elevation of proposed structures) identifying and setting forth the uses, square footage, approximate construction cost and, if applicable, the phasing of the Project for the proposed development of the Site, including any offsite public improvements (the "Land Use Plan"). 2. A schedule of development (the "Development Schedule") together with a phasing plan, if applicable, setting forth the proposed timetable for the development of the Project, including any offsite public improvements. 3. An identification of the business history and qualifications of the Developer, and of the management company for the restaurant (if the Developer should elect not to manage the Project itself) 4. A list identifying the Developer's sources of funding/financing (including a detailed description of the structure of the funding/financing from each source thereof) and status of funding/financing commitments for the approximate costs of development of the Project, setting forth the approximate percentage of such costs that will be paid from each funding/financing source and which funds constitute equity (as opposed to debt). 5. A financial pro forma for the Project on a phase by phase basis, if applicable, reflecting all anticipated Project income and revenues reconciled against anticipated operating costs for the applicable period. 6. A financial analysis of the Project establishing the Developer's projected return on its investment in the Project, and establishing the amount of financial participation, if any, required from the Agency in order for the Developer to achieve its projected returns. Include information regarding the type(s), amount, and timing of Agency assistance required.