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HomeMy WebLinkAboutCostco Wholesale Corporation 2010-05-19Writers Direct No.: 425-427-3972 Writers Fax No.: 425-313-8114 Writer's email: skatznccoostco.com May 12, 2010 RECEIVED CITY OF XIAH VIA EMAIL (JCha bers(-,CityofUkiah.com) MAY 1 $ 2010 AND U.S. MAIL QITY CLERK DEPARTMENT Ukiah Redevelopment Agency 300 Seminary Avenue Ukiah, California 95482 Attn: Jane Chambers - Executive Director Re: Approximately 15.33 acres located along Airport Park Boulevard, Ukiah, California Dear Ms. Chambers: Costco Wholesale Corporation, a Washington corporation, or its assignee ("Purchaser") proposes to purchase from the Ukiah Redevelopment Agency ("Seller") the real property consisting of approximately 15.33 acres, together with all rights appurtenant thereto, located at Airport Park Boulevard in Ukiah, California (the "Prope on the terms and conditions set forth in this letter of intent (the "Letter of Intent"). A sketch of the Property is attached hereto as Exhibit A. Purchaser intends to construct and operate a membership warehouse club, vehicle fueling facility and associated parking (the "Project") on the Property. 1. PURCHASE PRICE. The purchase price for the Property shall be Three and 501100 Dollars ($3.50) per square foot of Property, net of any area that is not available for Purchaser's exclusive use as building, fueling facility, parking lot improvements, including, without limitation, lighting, drive aisles, cart corrals, curb, gutters, and sidewalks, and related landscaping. It is estimated that the Property contains approximately 15.33 acres of land (assuming that all of the land will be usable) and that the purchase price shall be approximately Two Million Three Hundred Thirty-Seven Thousand Two Hundred Eleven Dollars and 80/100 Dollars ($2,337,211.80) (the "Purchase Price"). The exact area of the Property and the total Purchase Price shall be determined prior to the Closing by the survey to be obtained in accordance with Section 3(a) of this Letter of Intent. The Purchase Price shall be payable at the Closing in immediately available funds. 2. EARNEST MONEY. Within ten (10) business days following the full execution and delivery of a Disposition and Development Agreement (the "DDA") for the transaction set forth in this Letter of Intent (the "Effective Date of the Purchase Agreement"), Purchaser will deposit earnest money of Fifty Thousand and No/100 Dollars ($50,000.00) (the "Deposit") with a title company selected by Purchaser ("Title Company"). Title Company will place the Deposit in an interest-bearing account with interest to accrue to Purchaser's benefit. If the transaction closes, the Deposit shall be credited against the Purchase Price. If the transaction does not close for any reason 999 Lake Drive e Issaquah, WA 98027 ® 425/313-8100 0 costco. cam Ukiah Redevelopment Agency May 12, 2010 Page 2 other than default by Purchaser, then the Deposit shall be returned to Purchaser. In the event of Purchaser's default under the DDA, Seller shall have as its sole remedy the right to terminate the DDA and retain the Deposit as liquidated damages. The DDA must contain the provisions required by the California Community Redevelopment Law ("CRL"), and follow the procedures set forth in the CRL for approval of such an agreement. 3. CONTINGENCIES. Purchaser's obligation to purchase the Property will be subject to the following contingencies being satisfied or, in Purchaser's sole and absolute discretion, waived on or before the dates provided for in this Letter of Intent. If the contingencies are not satisfied or waived, in either case in Purchaser's sole discretion, by the applicable dates, the Deposit, with interest, shall be refunded to Purchaser and the DDA shall terminate. (a) TITLE AND SURVEY. Purchaser shall have until 5:00 p.m. local time in the jurisdiction in which the Property is located (the "Governing Jurisdiction") on the date that is 90 days after the Effective Date of the DDA (the "Feasibility Period") to approve a current title insurance commitment covering the Property and a current ALTA survey of the Property, each to be obtained by Purchaser, at Purchaser's cost. Within ten days after Seller's acceptance of this Letter of Intent, Seller shall furnish to Purchaser copies of the most recent title insurance policy (or commitment) and survey pertaining to the Property in Seller's possession. (b) FEASIBILITY AND STUDIES. Purchaser shall have until the end of the Feasibility Period to conduct inspections and studies of the Property and to evaluate the Property and the transaction that is the subject of this Letter of Intent. Within ten days after Seller's acceptance of this Letter of Intent, Seller shall furnish to Purchaser (i) the legal description of the Property, or of the larger parcel(s) that include(s) the Property, and (ii) copies of any studies, reports or surveys in Seller's possession or under Seller's control, including, without limitation, those identified on the Property Questionnaire attached hereto as Exhibit B. Purchaser shall have the right, in its sole and absolute discretion, to extend the Feasibility Period and Purchaser's related termination right for three (3) additional periods of 60 days each in the event Purchaser determines that additional levels of studies are required or desirable. (c) RESTRICTIVE COVENANT. By the end of the Feasibility Period, Purchaser and Seller shall have agreed upon the form and substance of a exclusive use covenant in favor of Purchaser in the form set forth in Exhibit C hereto. (d) APPROVALS AND PERMITS. Purchaser (except as otherwise specifically provided herein) shall have until 5:00 p.m. local time in the Governing Jurisdiction on the date that is 360 days after the Effective Date of the DDA, subject to extension as provided herein (the "Approvals Period") to obtain issuance of all zoning approvals, site plan approvals, subdivision approvals (to be obtained by Seller at Seller's sole cost), environmental approvals, building permits, use permits and any other governmental approvals and permits necessary for Purchaser to develop, construct and operate its Project on the Property (the "Project Approvals"), all of which shall be in Ukiah Redevelopment Agency May 12, 2010 Page 3 final and unappealable form. The timing, conditions and cost of the Project Approvals (including any mitigation fees) must be satisfactory to Purchaser, in its sole discretion. Purchaser shall obtain the Project Approvals at its sole cost and expense and shall pay all fees relating thereto. If Purchaser has not obtained the approvals described in this Section 3(d) by the deadline set forth above, then Purchaser shall have the right, on or before such date (or the extended deadline, if applicable), to extend such date for up to three (3) additional periods of sixty (60) days each by notifying Seller in writing of Purchaser's desire to extend such date. (e) ECONOMIC INCENTIVE PACKAGE. Purchaser shall have until the end of the Feasibility Period to reach agreement on economic incentive package to be negotiated between The City of Ukiah (the "City"), Seller, and Purchaser, including the amount of the package and the material terms of an agreement to provide the incentives. During the Feasibility Period and in the course of negotiating the economic incentive package Purchaser, Seller, and City will engage in due diligence investigations and shall provide relevant information to each other in aid of those investigations.: Information provided to City and/or Seller by Purchaser shall be treated by City and/or Seller, as applicable, as proprietary and confidential information ("Confidential Information"). Except as required by law, including the California Public Records Act (PRA), neither City nor Seller will disclose the Confidential Information it receives from Purchaser to anyone other than such party's employees, agents, representatives, counsel, and/or officials who are engaged in the due diligence process described above. Each person to whom such Confidential Information is disclosed will be advised of its confidential nature and must agree to maintain the confidentiality of the information. 4. SUBDIVISION. Prior to Closing, Seller shall, at Seller's sole cost and expense, cause the Property to become a separate legal lot consisting of a size and configuration approved by Purchaser and allowing for the transfer of the Property at Closing in compliance with all applicable subdivision laws. Any conditions or obligations imposed on either the Property or Purchaser by reason of said subdivision shall be subject to the prior approval of Purchaser. 5. CLOSING. The closing of the transaction set forth in this Letter of Intent (the "Closing") shall occur at the office of Title Company on a date selected by Purchaser that is within 30 days after Purchaser has waived the last of the contingencies set forth in Section 3 hereof. At the Closing, Seller will provide Purchaser with a grant deed to the Property subject only to exceptions approved by Purchaser. Seller shall cause all deeds of trust, mortgages, assessments and liens encumbering the Property (except for the current year's ad valorem real property taxes) to be paid and satisfied at the Closing. At Closing, Seller shall deliver full, sole, vacant and exclusive possession of the Property to Purchaser, subject to no tenancies, leasehold interests, or other similar interests. 6. CLOSING COSTS AND PRORATIONS. Seller will pay the following costs in connection with the Closing: all real estate excise or recording, conveyance, transfer, documentary Ukiah Redevelopment Agency May 12, 2010 Page 4 stamp or similar taxes or fees imposed in connection with the conveyance of the Property, the costs of a CLTA standard owners title insurance policy, and one half (1 /2) of Title Company's escrow fee. Purchaser will pay the following costs in connection with the Closing: any additional premium for an ALTA title insurance policy, including the costs of any survey or any endorsements requested by Purchaser, and one-half (1 /2) of Title Company's escrow fee. Property taxes for the year in which the Closing occurs will be prorated as of the date of the Closing. Each party shall pay its own legal and other consultants' fees incurred in connection with the transaction set forth in this Letter of Intent. 7. BROKER'S FEE. The total commission payable in connection with the transaction set forth in this Letter of Intent is Three Hundred Thousand and No/100 Dollars ($300,000.00) payable by Seller at the Closing in equal shares to NWAP II, Inc. and Collier's International (Jason Gallelli) and 3% of the Purchase Price payable by Seller at Closing to Realty World Seltzer Realty. Purchaser and Seller each represent to the other that it has engaged no other broker in connection with the transaction set forth in this Letter of Intent to whom a commission is or would be payable. 8. REPRESENTATIONS AND WARRANTIES. Each person signing this Letter of Intent on behalf of Purchaser and Seller represents he or she has been duly authorized to do so. Seller shall make usual and customary representations and warranties to Purchaser, which shall be set forth in the DDA. 9. DISPOSITION AND DEVELOPMENT AGREEMENT. Upon Seller's acceptance of this 'Letter of Intent, Purchaser and Seller shall proceed to negotiate and prepare the DDA for this transaction. The DDA shall contain the terms set forth in this Letter of Intent and other terms and provisions customarily contained in DDAs. 10. NO NEGOTIATION WITH THIRD PARTY. Seller shall not negotiate with nor commit to sell, lease or otherwise transfer the Property or any portion thereof to any other party as long as Purchaser is proceeding in good faith to negotiate the terms of the DDA; not to exceed a period of 45 days from the full execution of this Letter of Intent. 11. SELLER'S UNRESTRICTED RIGHT TO SELL. Seller represents and warrants to Purchaser that no understanding, agreement (either express or implied) or reasonable expectancy of agreement with respect to the sale, lease or other transfer of the Property exists between Seller and any party other than Purchaser as of the date Seller accepts this Letter of Intent. Seller further represents and warrants that Seller is not restricted from negotiating with Purchaser for the purchase of the Property. Seller further acknowledges that Purchaser's interest in the Property and willingness to enter into this Letter of Intent is conditioned on Seller's foregoing representations and warranties. Seller agrees to defend, indemnify and hold Purchaser harmless from and against any claim arising from a breach of the foregoing. 12. QUESTIONNAIRE. Attached to this Letter of Intent as Exhibit B is a questionnaire regarding the Property (the "Property Questionnaire") that Seller shall complete for Purchaser's Ukiah Redevelopment Agency May 12, 2010 Page 5 information and submit to Purchaser within 15 days after the date all parties have signed this Letter of Intent. Seller will use its best efforts to provide all of the information requested by the Questionnaire. 13. RIGHT TO ENTER PROPERTY. Seller grants permission to Purchaser and those persons designated by Purchaser to have access to the Property during the Feasibility Period for the purpose of conducting surveys, structural measurements, soil and environmental tests, architectural and engineering studies, and/or any other investigations related to determining the feasibility of the Property for Purchaser's purposes. As consideration for Seller's permission to enter upon the Property as described above, Purchaser agrees to restore the Property to substantially the same condition as existed prior to such entry and to indemnify and hold Seller harmless from and against any and all liability for claims of whatever nature arising out of the entry onto the Property by any agent, employee, associate, independent contractor, or anyone else entering at the request, direction or invitation of Purchaser, provided, however, that (i) this indemnity shall not apply to the extent such liability arises in connection with the negligence or willful misconduct of Seller, and (ii) Purchaser shall have no liability to Seller or to any other person or entity by reason of, nor shall Purchaser have any duty to indemnify, defend or hold any person or entity harmless from or against, any claim, demand, damage, loss, action, liability, cause of action or judgment, including, without limitation, any claim for diminution in value of the Property or for environmental remediation or clean-up costs, arising out of or in connection with the mere fact of having discovered and/or reported (as may be required by law) any adverse physical condition, title condition, or other defect with respect to the Property. This Letter of Intent is not to be deemed an offer and, except for Sections 10, and 13, which shall be binding upon Seller, this Letter of Intent is not binding upon Purchaser or Seller. This Letter of Intent is, however, an expression of our mutual intent to conduct serious negotiations that could result in a binding DDA. With the exception of Sections 10, 11, 12, and 13, which are binding on Seller, neither party will be bound until Purchaser and Seller execute a final DDA. If Seller has not executed and delivered this Letter of Intent without change by 5:00 p.m. local time in the Governing Jurisdiction on June 18, 2010, this Letter of Intent shall expire. If the foregoing is acceptable, please arrange for Seller to sign a copy of this Letter of Intent in the space provided below and return an executed copy to me no later than June 18, 2010. We look forward to your response. Ukiah Redevelopment Agency May 12, 2010 Page 6 This letter may be executed and delivered by facsimile or other electronic transmission, and in more than one counterpart, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, Sincerely, COSTCO WHOLESALE CORPORATION Seth S. Katz Corporate Course 1-___.----'1 Exhibits cc: Melissa McCarthy David Babcock ACCEPTED AND AGREED TO this 19 day of may , 20 10. UKI REDEVELOPMENT AGENCY By Name Ben j Thomas Title Chairperson THE CITY OF UKIAH By Name Ben j Thomas Title mayor Ukiah Redevelopment Agency May 12, 2010 Page 6 This letter may be executed and delivered by facsimile or other electronic transmission, and in more than one counterpart, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Sincerely, COSTCO WHOLESALE CORPORATION Seth S. Katz Corporate Counse Exhibits cc: Melissa McCarthy David Babcock ACCEPTED AND AGREED TO this day of , 20 UKIAH REDEVELOPMENT AGENCY By _ Name Title THE CITY OF U All By _ Name Title EXHIBIT A THE PROPERTY [See the one page following this page.] U. r Q W Q ¢ FQ- ? W U5 p W o zm U p N J F 00 m I G( 1z t r U s c ~ Z ¢ ^ N N N o ~ JQ o N ~ Q N v fn W W ~ j F K Q ~ N W Fa- 6 J o R~ Z ~ 6 W O W K K Q j N N m K W N 6 0 W K QZ a y0 Y 6W.Z z z o ~mQ Y Y' ¢ om aj C1 ( i~ O O z W H 0 N u a a UaO , - 1 -t -=i i 's )A . pit t~' 1 a 11 q Irl~ f ' U O5 _ :_a c rv Uu - .n - 95i~ az Ud ZW 02 o U!q c H 53Ff r i ~ I~ i i i ~a L ' ;.I i f _ En W O a, C7 a w H O w H O z z w U Q U Y \}k ef~ EXHIBIT B PROPERTY QUESTIONNAIRE Please answer the following questions to the best of your knowledge and belief: 1. Are there any wetlands on the site? If so, have they been located? Please specify. 2. Is the site located within a flood plain? Has flooding occurred on this site? 3 Have any environmental reports been prepared for this site? Please specify. 4. Are there any environmentally hazardous materials on or adjacent to the site? Have any cleanup actions or environmental claims been threatened or asserted involving the site? Please specify. 5. Have any geotechnical reports that have been prepared for this site? Please specify. 6. Are there any easements (other than utility easements) or encroachments that impact the site? Please specify. 7. Are there any deed restrictions or restrictive covenants that impact the site? Please specify. 8. Are there any building or use moratoria in place that would impact the site? Please specify. 9. Are there any unique planning or zoning issues that would impact the.site? Please specify. 10. Have you received notice of any actual or proposed condemnation proceedings, special improvement tax proceedings, or other legal or governmental proceedings that may affect the site? Please specify. 11. What utilities serve the site and have you experienced any service problems? Please specify. 12. Have any traffic studies been prepared for this site? Please specify. 13. Are there any lease or use agreements (written or oral) in effect that grants any party the right to use or occupy any portion of the site? Please specify. EXHIBIT C PURCHASER'S EXCLUSIVE USE PROVISION Neither Seller, nor any subsidiary, affiliate, parent or other entity that controls, is controlled by, or is under common control with Seller (collectively "Seller's Entities") shall, directly or indirectly, with respect to all or any portion of any property currently or in the future owned by Seller or any of Seller's Entities within ten (10) miles in any direction from the exterior boundaries of the Property (the "Restricted Property"), (i) sell, lease or otherwise transfer all or any portion of the Restricted Property to, or for use as, a wholesale or retail general merchandise facility that has a merchandising concept based upon a relatively limited number of stock keeping units in a large number of product categories (the "Merchandising_ Concept'), (ii) sell, lease or otherwise transfer all or any portion of the Restricted Property for use as a grocery store or supermarket that primarily sells food products in bulk quantities (a "Wholesale Grocer"), or (iii) sell, lease or otherwise transfer all or any portion of the Restricted Property to any parry to support a facility operating either under the Merchandising Concept or as a Wholesale Grocer (i.e., for parking or other necessary improvements for such a facility; or (iv) sell, lease or otherwise transfer all or any portion of the Restricted Property to any party for use as a "Wal- Mart" store or "Wal-Mart Supercenter" or any other store operated under the "Wal-Mart" brand; provided, however, that in no event shall any of the foregoing prohibitions prohibit the Restricted Property from being used for or as a Costco Wholesale warehouse club or any other facility then operated by Purchaser or by any successor to Purchaser (collectively, a "Costco Facility"). The foregoing prohibitions include, but shall not be limited to: (a) any business that operates as a warehouse club (other than a Costco Facility), (b) any business operated under the tradenames of Sam's, BJ's, Jetro, Price Smart or Smart and Final, and (c) any business (other than a Costco Facility) similar to those operated under the tradenames Costco, Sam's, BJ's, Price Smart, Jetro or Smart and Final. This covenant shall be binding on the Restricted Property and Purchaser shall have the right to record a document containing this restrictive covenant against any Restricted Property (whether currently owned or acquired after the date of the DDA by Seller or any other of Seller's Entities) and Seller (or other Seller's Entities, as applicable) shall cooperate with Purchaser in recording such document. Seller, on its own behalf and on behalf of each of Seller's Entities, acknowledges that the breach of the foregoing restrictive covenant may cause immediate and irreparable harm for which damages are not an adequate remedy and that, to protect against such harm, Purchaser may seek and obtain from a court of competent jurisdiction the issuance of a restraining order or injunction to prohibit any actual or threatened breach. Such an action for a restraining order or injunction is in addition to and does not limit any and all other remedies provided by law or equity.