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HomeMy WebLinkAbout2026-01-27 - AGENDA REPORTS - NEGOTIATING AGMT MAIN STO Agenda Item: 2 CITY OF SANTA CLARITA W AGENDA REPORT NEW BUSINESS CITY MANAGER APPROVAL: DATE: January 27, 2026 SUBJECT: EXCLUSIVE NEGOTIATING AGREEMENT FOR THE CITY - OWNED MAIN STREET PROPERTY DEPARTMENT: Community Development PRESENTER: Amber Rodriguez RECOMMENDED ACTION City Council: Authorize the City Manager or designee to enter into an Exclusive Negotiation Agreement with Serrano Development Group for the City -owned Main Street property, subject to approval by the City Attorney. 2. Authorize the City Manager or designee to execute all documents, subject to City Attorney approval. BACKGROUND The City of Santa Clarita (City) acquired three adjacent properties located along Main Street near the intersection of Main Street and Railroad Avenue. The Moore's Subs property (APN 2831- 019-901) was acquired in 2005, the Roger Dunn property (APN 2831-018-900) was acquired in 2018, and the Coffey Parking Lot property (APNs 2831-018-901 through -906) was acquired in 2021. Collectively, these parcels (the Property) total approximately 0.86 acres and include approximately 85 public surface parking spaces and one existing, approximately 4,743 square foot, two-story commercial building, formerly occupied by Roger Dunn. The site is located within the Arts and Entertainment Zone of the Old Town Newhall Specific Plan (OTNSP). The OTNSP calls for the development of two public parking structures, one on the north and one on the south of Main Street. On the north side, property assembled through the former Redevelopment Agency allowed the City to construct public parking and negotiate Purchase and Sale Agreements for the Newhall Crossings and Laemmle projects, which provided a theater and a mixed -use development with ground floor commercial space and apartments above. A similar opportunity exists on the south side of Main Street where the Property could be redeveloped to Page 1 Packet Pg. 15 O increase public parking while facilitating a mixed -use project with commercial uses on the ground floor and residential units above. Surplus Land Act Process In 2020, Assembly Bill 1486 strengthened the Surplus Land Act (SLA), which governs the disposition of publicly owned property. The SLA requires cities to offer surplus property to eligible affordable housing developers before pursuing other development options and requires that any future residential development include a minimum of 15 percent affordable housing. As a result, the City was required to complete the SLA process for the Property. On June 11, 2024, the City Council declared the Property surplus and issued a Notice of Availability on June 13, 2024, to the entities identified in Government Code Section 54222. The 60-day interest period closed on August 12, 2024, during which the City received two Notices of Interest from Robin Realty Inc. and Alliant Communities. City staff and Kosmont Companies, the consultant retained by the City to assist with the SLA and Request for Proposal process, reviewed the proposals, and, as required by the SLA, the City entered into a 90-day good faith negotiation period beginning August 13, 2024, to determine whether an agreement could be reached on price and terms consistent with City goals for the site, including retaining existing public parking, compliance with the OTNSP, and receiving fair market value. Neither developer was able to meet these objectives or provide a full fair market value offer without requesting subsidies or other financial contingencies. Kosmont documented the required negotiations and submitted the package to the Department of Housing and Community Development (HCD) on January 22, 2025. On February 26, 2025, the City received confirmation from HCD that the SLA process was complete and that the City met all requirements to proceed with disposition of the Property. Request for Proposal Process Following HCD's confirmation, the City conducted a Request for Proposal (RFP) to market the Property and solicit proposals from qualified developers. The RFP was published and circulated via the City's e-procurement system BidNet on July 17, 2025. The City transmitted the solicitation to 1,054 vendors on BidNet, of which 75 vendors downloaded the RFP. Only one company provided a proposal for consideration. The proposal was reviewed and evaluated based on the ability to meet the specific needs of the City. An evaluation panel comprised of staff from the Department of Community Development scored the responses using the following categories of weighted criteria: • Project Concept (30 Points) • Development Team Relevant Experience (25 Points) • Financial Capacity (25 Points) • Community Engagement and Design Approach (10 Points) • Project Schedule (5 Points) • Proposal Quality (5 Points) The evaluation team scored the responses based on a 100-point system, with the results outlined Page 2 Packet Pg. 16 O below: Rank Company Location Score 1 Serrano Development Group Pasadena, CA 89 In reviewing proposals, the evaluation team awarded a score of 89 to Serrano Development Group (Serrano). Serrano is a multifaceted real estate investment and development company based out of Pasadena, California. They have experience in multi -family, industrial, and retail projects throughout the southwestern United States. Serrano is the developer the City previously worked with on the Newhall Crossings project and the Laemmle Theatre project for the Redevelopment Block on the north side of Main Street. The evaluation team determined that Serrano's proposal offered an overall value to meet the City's desire to partner with a development company to acquire and develop the Property consistent with the OTNSP. City staff and Kosmont met with Serrano to discuss and refine the proposal to best meet the goals of the City. Kosmont has extensive experience with helping cities navigate real estate transactions, the SLA process, and with evaluating real estate proposals from developers. The development profile that is currently being proposed for the Property contemplates a public parking structure with an estimated 300 public parking spaces, a mixed -use project consisting of approximately 2,748 square feet of ground -floor commercial space, and approximately 65 residential units. Next Steps Staff is requesting City Council authorization to enter into an Exclusive Negotiating Agreement (ENA) with Serrano Development Group for the City -owned Main Street property. Entering into an ENA allows the City to negotiate with the developer to further refine project details, evaluate financial components, and outline the terms that would guide the potential sale and development of the site. This follows the same process the City used for the Redevelopment Block on the north side of Main Street, where the City issued an RFP, evaluated responses, and then entered into an ENA to refine project details and purchase and sale terms, before ultimately returning to the City Council with terms of a Purchase and Sale Agreement and project concept for consideration. The ENA would provide an initial six-month negotiation period, with the option for an extension subject to mutual agreement, to refine the proposed purchase price, property details, development phasing, project timelines, and details of the ultimate development project proposed, and financial information. Importantly, entering into an ENA does not constitute approval of the project, the sale of the property, or any project entitlements. Upon successful negotiation of the ENA, staff would return to City Council for consideration of an item to enter into a Purchase and Sale Agreement with Serrano along with project details. ALTERNATIVE ACTION Other actions as determined by City Council. Page 3 Packet Pg. 17 O FISCAL IMPACT There is no fiscal impact. ATTACHMENTS City -Owned Main Street Property (Aerial View) DRAFT - Exclusive Negotiating Agreement Page 4 Packet Pg. 18 2.b EXCLUSIVE NEGOTIATION AGREEMENT BY AND BETWEEN THE CITY OF SANTA CLARITA AND SERRANO DEVELOPMENT GROUP, INC. This Exclusive Negotiation Agreement ("Agreement") is ent d into this day of January, 2026 ("Effective Date"), by and between the City of Santa Clarita, a general law city and municipal corporation ("City") and Serrano Development Group, Inc., a California Limited Liability Company, ("Developer") on the terms and provisions set forth below. Developer and City are sometimes collectively referred to as the "Pies" and each, individually, may be referred to as a "Party." 1. RECITALS. The Parties enter into this objectives: A. City desires to encourag a� attached Exhibit A, which is i eight parcels constituting app including the following APNs: 902; 2831-018-903; 2831-018-904 of the Site into a mr ith City the potential of the follo facts and opment real property identified in ("Site"). The Site is comprised of Developer seeks to develop, 0; 2831-018-901; 2831-018- 228 18-906. feasibility and terms under which it could ;e retail/restaurant development ("Concept") of a purchase and sale agreement (PSA) for to enter into MMAgreement to provide an exclusive negotiation the intent of establishing mutually acceptable terms and i nd operating the Concept upon the Site in the manner and' s ecifically, to determine if mutually acceptable terms and upon for a PSA which would specify the rights, obligations, and it of financial participation of the Parties with respect to ept on the Site. D. The lqqWacknowledge that the implementation of the Concept on the Site will require certain titlements including, without limitation, discretionary legislative acts all of which will require environmental review pursuant to the California Environmental Quality Act ("CEQA"). E. Developer acknowledges that the current City Council cannot and will not commit to complete processing or approve the entitlements and CEQA review that would be necessary for the implementation of the Concept on the Site and that the DOCID Packet Pg. 20 2.b 2 3 individuals that currently constitute the City Council may change during the term of this Agreement. F. The Parties agree that Developer is relying upon this Agreement to incur costs for crafting the Concept for City's consideration. Absent this Agreement, Developer would not be proposing the Concept for City's consideration. G. City believes it is in the public interest to enter into such exclusive negotiations. TERM. A. Concept Negotiation Period. The y under this Agreement for purposes of negoti Site is Six months from the date this Agree to extension or termination as provided b Joe ri exclusi he terms is approved 1 the Negotiation established 'SA for the ncil subject B. Extension of the Negotiation Peri f, expiration of the Negotiation Period Developer has not achieved necessa satisfactory progress toward the negotiation of the proposed P City or D er may terminate this Agreement upon prior written notice deliv other. If oper made substantial progress toward the negotiation of the ose as re bly determined in the City Manager's sole discretion, the Ci ` 1Vlana er ma xte e term of the Negotiation Period for up to a 1 Six months (Extension.Pe . d). long a`sq City's ob mg provided that Developer is not in default of ender this Agreem t, it will negotiate exclusively and in good faith fcj in the Scope of Negotiations. Developer acknowledges and ing pod faith so long as it makes reasonable efforts to attend id direct its consultants to cooperate with Developer. Developer ki at City representatives, from time to time, may have contact with ng the Property and that such contact is expressly permitted so form those developers of the existence of this Agreement and do not actively engage in negotiation with respect to the Property. B. Developer understands and agrees that City is a public entity and must comply with, without limitation, the California Public Records Act ("PRA"). Each party agrees that any and all data, reports and documentation supplied by one party ("Disclosing Party"), or its affiliates or third parties on its behalf, to the other party under this Agreement ("Receiving Party"), which are confidential are, to the extent permitted by the PRA, confidential and cannot be disclosed or otherwise disseminated by the Receiving Party without the consent of the Disclosing Party. For this Section to apply, the 2 Packet Pg. 21 2.b Disclosing Party must mark or label its confidential information as "Confidential and Proprietary." 4. SCOPE OF NEGOTIATIONS. A. During the Term, the Parties will negotiate the Concept proposal that includes the redevelopment of the Site within the boundaries of, and consistent with, the Old Town Newhall Specific Plan and any other applicable City development standards. The final details regarding the mixed -use Concept of approxima 2,748 square feet of retail/restaurant and 65 ownership or rental residentia including the specific density, square footages, height, building and unit mJ,,.., d overall design, are to be determined as a part of the exclusive negotiatioducted pursuant to this Agreement. A City goal is to increase the amou tpublic ng on the Site, which must be considered as the Concept is negotiate B. During the Term, the Parties agr negotiate to develop a'pnrchase and sale agreement for the Site to present to the ouncil fo sideration and approval in its sole and absolute discretion. Such termlr5tid co � ns of the purchase and sale agreement will include the purchase price of the Sits hich must be acceptable to both Parties in their sole and unf discretion an .'� entified as a firm/fixed price in a purchase and sale agreement isposition ument ("Purchase Price"). The Parties acknowledge that the Pu se ill be at the closing of the escrow account for (i) the reasonable closing costs, transfeosts, any and all other prorated associated taxes angidlWhand (ii) Developer's paymen��t�, Broker, if any, of a real estate commission in ancrWh a separate written agree ent, if any. communication ' representatives, to between the Parties requires each to will include all methods of communication one, e-mail, etc.), face-to-face meetings tten correspondence. wi,lkin 30 days after the date of this Agreement, submit in Ss q6 architect, engineers, and any other development team subj ct to City's reasonable approval. Developer may designate F these entities or individuals, subject to City's reasonable t also designate and submit in writing to City the names of its authority to make decisions on its behalf. E. Certain'Wiate and local environmental requirements under CEQA are applicable to the Site. Developer agrees to supply information and otherwise assist City, as requested, to determine the environmental impact of the Concept at the Site (including all requested entitlements and land use approvals), and to allow City to prepare such environmental documents as may need to be completed for the Site pursuant to CEQA. 5. PSA NEGOTIATION. 3 Packet Pg. 22 2.b a 7. A. During the Negotiation Period, City and Developer will negotiate to prepare a PSA for consideration by the City Council. Both Parties will exercise best efforts to complete discussions relating to the final terms and conditions of the PSA and such other matters as may be mutually acceptable to the Parties for the development of the Site, before expiration of the Negotiation Period, as applicable. B. It is contemplated that the proposed PSA will include, at a minimum, the following particulars: i. Describe the Concept in specific detail, includin)retail/commercial square footage, number of stories, architectural style, elf, and may include identification of tenants or tenant mix. The develop m ust utilize a high quality of architectural design and materials, in co o nce with e Old Town Newhall Specific Plan. ii. Include a Schedule of Pe nce which, among otHe" f` ilestone dates, will include processing of la n "use entTej&p by Developef with City, demolition of existing improvements„ if requi , nd construction of the Concept within specified deadlines, subject to delays d , to force majeure. iii. The purchase pr ite, which l t be acceptable to both Parties in their sole and unfettere sc 6ndde as a firm/fixed price in a purchase and sale agreeme ocheion ent ("Purchase Price"). iv. Those impro' ments eloper make to the Site, if any, and to the s*�onrnection ding are', his wil o include a list of supporting infrastructure (if any the impl tation of the Concept on the Site. V. The Parties' respo $ implementing development activities. L00WILSUBMIT.TALS FOR NEGOTIATION AND COSTS. Develope 1 sub uch documentation as is reasonably required by City to t in the Parti negoti n process. Such documentation should include, at a mi m, site plan', and use inventory, development calendar and phasing plan, finan%ftilini/traepts,"" constructif, " and operating pro formas, marketing program including any tenant arking studies, and any market feasibility studies. The pro forma must include costs of all elements of the Concept, including development costs and sources of fin , as well as payment of all associated fees. B. Each Parry will bear its own costs including, without limitation, third -party consultant and legal costs. All documents, plans, and studies for the Concept must be prepared at Developer's sole expense. ACCESS TO REPORTS AND STUDIES. A. Provided that and to the extent that disclosure will not compromise the 4 Packet Pg. 23 2.b we 10. 11 12 exemption, if any, of the documents from public inspection under the California Public Records Act, Developer must provide City access to and copies of all studies, reports, and analyses prepared by Developer for the negotiations. B. Except as may be otherwise required by the California Public Records Act, City agrees that during the Negotiation Period it will not disclose to third parties the names of tenants who have expressed interest in the Site to Developer; provided, however, that the City is not liable to Developer for any damages arising from an inadvertent, negligent, or willful breach of this confidentiality. CHANGE IN OWNERSHIP OR CONTROL OF DFMMIKOPER. Developer understands City is entering into t imrgreem`Wased on Developer's response to a Request for Proposals prov7t�& ted in August 2025 and on the prior experience and qualifications of Develore, except as specifically permitted by this Agreement, Developer may notor otherwise transfer'any or all of its rights under this Agreement to any partr written approl, at its sole discretion. NO OBLIGATION BY AGE11 TO APPROVE THE PSA. This Agreement is merely an agreement to enter into a period of exclusive negotiations, reserving final discretion by the City Council as to any P/SA and all proceedings and decisions in connjo�s-uc� ith. By its exec of this Agreement, City is not committing it to enter into PSA with Developer, or to undertake any other acts ot iethe subsequent independent exercise of discretion by the City or Cicir understands and acknowledges that any PSA becomes effective onaPSA insidered and approved by the City Council at a public hearing called for suc, AL POWERS. this Adf�eementllk`fft ended to, nor can it, act as a limitation on City's present (ercise of municipal owers in accordance with the California Constitution and law including, without limitation, its review of the Concept in accordance with pia Envirop ental Quality Act ("CEQA"). Both Parties acknowledge and agree each Party's exclusive right and remedy upon any breach or default of the other party to negotiate in good faith, as set forth in this Agreement, is to terminate this Agreement. DEFENSE AND INDEMNITY. Developer must indemnify, defend and hold City and its members, officials, 5 Packet Pg. 24 2.b 13. representatives, directors, staff members, attorneys and employees of City ("Representatives") harmless from and against any and all losses, liabilities, demands, claims, judgments, causes of action or expenses, including reasonable attorneys' fees and costs (collectively, "Losses and Liabilities"), arising from or relating to (A) any acts or omissions of Developer or any of its members, managers, agents, employees, contractors or other representatives upon the Site (or any portion thereof), including without limitation any tests or investigations thereof as specified in the Right of Entry; (B) the preparation of any plans for the Concept; (C) claims for inverse condemnation or relocation costs or assistance or loss of goodwill, but only if to the extent based on the Parties' entering into this Agreement or any negotiations conducted between the Parties pursuant hereto but not including any condemnation or relocation costs or assistance that Developer would otherwise be entitl y the California Constitution or the California Relocation Assistance Act (Gout. 7260 et seq.) if such claims arise after title to the Site is transferred to Develo CEQA or other'land use challenges, but only if and to the extent based on t ies' entering into this Agreement, any negotiations conducted between the Pq�tes pursuant h eto, or City's ,consideration or approval of a map, conditional use permit(s) and ther land use titlement(s) necessary or appropriate for development of ALC t; or (E) any litigation, suits or resentatives, but only if and to w, any negotiations conducted ,tion or approval of any map, necessary or appropriate for regoing indemnity does not from the negligence or willful termined by a final and non- .ction. In connection with any this Section, City and its Attorney, or counsel of their )per's expense. This provision i of any applicable statute of DRE. 1 the non -defaulting Party must Such notice must specify the the action required to cure the deficiency; if an action to cure is possible; and a date not less than 30 calendar days from the date of the notice within which action to cure must be taken. B. Notwithstanding anything to the contrary, any default does not constitute cause to terminate this Agreement if the defaulting Party cures, corrects or remedies the default within the time period required in the notice or other agreement between the Parties. In the case of a default by either Parry, the alleged defaulting Parry will promptly commence to cure the identified default and complete the cure within 30 days after receipt of the 6 Packet Pg. 25 2.b 14 15 16. notice of default. The 30-day cure period for a default will be extended as is reasonably necessary to remedy such default, provided that the alleged defaulting Party commences such cure promptly after receiving the notice of default and continuously and diligently pursues such remedy at all times until such default is cured. TERMINATION. This Agreement terminates under the following circumstances: A. Expiration of the Negotiation Period. B. By a Party upon the uncured default of the other Part* C. By City upon giving Developer 10 business d s r. ;ritten notice of its intent to terminate this Agreement, or by Developer upon g Ci� business days prior written notice of its intent to terminate this Agr�rt. D. Upon the latest of (i) all of the C entitlements being ap d and deemed final and (ii) the entering of a purchaseNleagreefnag"reement or other disp document between the Parties; or Upon failure of thes too a Purchase Pri e during the term of this Agreement, or as extended by of the Parties. PUBLIC RECORDS. Developer understands anrees " is a is entity and must comply with, without limitation the California Pub e c� , c ("PRA"). Each Party agrees that any and mancial data, reports and docu ntation supplied by one Parry ("Disclosing) or its sates or third parties on its behalf, to the other Party under this Agree ("Receivin krty") w -,,.,.., are confidential, to the extent permitted by the PRA, can = be disclosed or therwis ,, seminated by the Receiving Parry without ng Party. t,, s Section to apply, the Disclosing Parry must ;ntial inform as "Confidential and Proprietary." If City is ument that Developer deems confidential, and presuming that s Developer so that it may decide whether to consent to pe defend, indemnify and hold harmless City and its ,ees, d agents against and from such challenge. WASTE. to City's knowledge, has any third party used, generated, stored tted the use, generation, storage or disposal of, any Hazardous Material (as defined below) on, under, about or within the Site in violation of any law or regulation. Developer agrees that it will not use, generate, store or dispose of any Hazardous Material (as defined below) on, under, about or within the Site in violation of any law or regulation. Developer agrees to defend and indemnify City, to the extent stated below, against any and all losses, liabilities, claims and/or costs arising from any breach of any Developer warranty or agreement contained in this Section. As used in this Section, "Hazardous Material" means any substance, chemical or waste that is identified 7 Packet Pg. 26 2.b as hazardous, toxic or dangerous in any applicable federal, state or local law or regulation (including petroleum and asbestos). 17. NOTICES. All communications to either Party by the other Party will be deemed made when received by such Parry at its respective name and address, as follows: TO CITY: The City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, California 91355 Attn: Kenneth W. Striplin, City Magi TO DEVELOPER: With a copy to Serrano Development Group, 500 North Brand Boulevar Glendale, CA 91203 Attn: Jason Tolleson AO Burke, Williams ns 444 South Flower Str Los Angeles, CA 90071 AttentioH. Berger, Any such written communicatiol received by the addressee five days after prepaid and properly addr�oted a t City Attorney vely deemed to have been Jnited States Mail, postage 18. ASSIGNM his Ag r nient cannot be assigned by Developer without the City Council's prior w E5approval its sole, absolute and unfettered discretion, except that approval will not be f(Fquired for a wholly -owned successor -in -interest formed, owned, and operated by Developer for the express purpose `f fulfilling the obligations set forth in this 0 understanding c understandings, . This Agreement and its performance will be governed, the laws of the State of California. Exclusive venue for will be in Los Angeles County Superior Court. NT. This Agreement, and its Attachments, sets forth the entire �s to the matters covered in this Agreement. There are no other agreements expressed or implied, oral or written. 21. SEVERABILITY. If any portion of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, then such portion will be deemed modified to the extent necessary in the opinion of the court to render such portion enforceable and, as so modified, such portion and the balance of this Agreement will continue in full force and effect. 22. COVENANT AGAINST DISCRIMINATION. Developer cannot discriminate against nor segregate, any person, or group of persons, on account of sex, race, color, age, marital status, Packet Pg. 27 2.b religion, handicaps, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor will Developer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. 23. CONSTRUCTION. This Agreement will be construed as a whole and in accordance with its fair meaning and without regard to any presumption or other rule requiring construction against the Party preparing this Agreement. This Agreement supersedes any prior understanding or written or oral agreements between the Parties hereto respec ' the subject matter and contains the entire understanding between the Parties with respect - to. This Agreement is the result of negotiations between the Parties who are each relresented by an attorney. This Agreement will be interpreted as though it was jointly dra y the Parties, and it will not be construed against a Parry based upon the Party that draft a particulon, phrase or word of the Agreement. 24. AUTHORITY/MODIFICATION. The action has been taken by the Parties to authoriz to engage in the actions described herein. Thi amendment. Any such amendment must be approved 25. COUNTERPARTS. This A each of which will be an original, executed on the same date. FORCE MAJEURE. not be deemed to be ' ault and war, insurrection, s lock -out causes acts of the pub m' lack of tranaiian, o 11rninental Party satisf represent and warraritfhat all necessary lersig execute this Agreement and ree r may be modified by written in any number or counterparts, ill constitute one instrument in uncured default) will extended where delays or defaults are due to hquakes, fires, casualties, supernatural quarantine restrictions, freight embargoes, priority, unusually severe weather, inability FFFsab'or, materials or tools, delays of any contractor, subcontractor or supplies, other Party, or any other:' uses beyond the reasonable control or without fault of the ling extension of time to Pwrm. Notwithstanding the foregoing, inability to secure ancing or maand economic conditions will not entitle Developer to an extension off the enforced deli if notice by the R knowledge of the extension of time for any such cause will be for the period of mence to run from the time of the commencement of the cause, fig such extension is sent to the other Party within 20 days of ement of the cause. E Packet Pg. 28