Resolution No. 91641
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RESOLUTION NO. 9164
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
LETTER AGREEMENT BY AND BETWEEN THE CITY OF VERNON
AND 365 MAIN, INC. FOR PROPERTY LOCATED AT -ATLANTIC
BLVD. AND DISTRICT BLVD.
WHEREAS, the City of Vernon is interested in selling certain
real property in the City consisting of approximately 7.15 acres
located at the southeast corner of Atlantic Blvd. and District Blvd.
(the "Property") to 365 Main, Inc. ("365 Main") for the sum of
$10,300,000.00; and
WHEREAS, the City and 365 Main are in the process of
negotiating the sale of the Property and in the interim wish to
memorialize the terms and conditions under which the sale of the
Property will be held in abeyance for a period of one (1) year; and
WHEREAS, City staff has recommended that the City enter into
a letter agreement regarding the pending sale of the Property to 365
Main,
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Letter Agreement with 365 Main, in substantially the same
form as the copy which is attached hereto as Exhibit A and
incorporated by reference.
SECTION 3: The City Council of the City of Vernon hereby
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authorizes the Mayor to execute the Letter Agreement for, and on
behalf of, the City of Vernon and the Acting City Clerk is hereby
authorized to attest thereto.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the Acting City Clerk, or his designee, to make whatever
nonsubstantive, administrative and/or text changes, upon advice of
counsel, to the Agreement.
SECTION 5: The Acting City Clerk of the City of Vernon
shall certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this lst day of November, 2006.
ATTEST •
BRUCE V. MALKENHORST, JR.
Acting City Clerk
R
LEONIS-C. MAL URG, Mayor
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1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, BRUCE V. MALKENHORST, JR., Acting City Clerk of the City of
5 Vernon, do hereby certify that the foregoing Resolution, berg
6 Resolution No. 9164, was duly adopted by the City Council of the City
7 of Vernon at a regular meeting of the City Council duly held an
8 Wednesday, November 1, 2006, and thereafter was duly signed by the
9 Mayor of the City of Vernon.
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BRUCE V. MALKENHORST, JR.
12 Acting City Clerk
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(SEAL)
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EXHIBIT
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LETTER OF AGREEMENT
The City of Vernon (Seller) is interested in selling and 365 Main Inc. (Buyer) is interested in purchasing
the property at the southeast corner of Atlantic Blvd. and District Blvd. in the City of Vernon.
Therefore, the City of Vernon and 365 Main Inc. separately and collectively agree:
PROPERTY
The Property is the 7.15-acre (-311,600 sq ft) portion of the former Thermador site (Property) as
delineated in Exhibit A, attached. The City of Vernon will hold the Property, for purchase by 365 Main, Inc.
for one (1) year from the date of this agreement, to allow 365 Main, Inc. time to identify customers for the
facility they plan to construct. The City of Vernon will not actively market the Property and will notify
unsolicited inquirers that the property is under letter of agreement to sell. Where and when 365 Main, Inc.
wishes to have their position disclosed, the City will inform inquirers that 365 Main, Inc. has the option of
purchasing the Property.
PURCHASE PRICE
The purchase price for the Property shall be $10,300,000 in cash at the closing.
PHYSICAL CONDITION OF STRUCTURES
With this agreement, the City of Vernon will commence the process of having the existing structures on
the Property demolished and removed, with the intent of delivering the Property to 365 Main, Inc. cleared
of all manmade structures with the surface graded and re -compacted to 90%.
ENVIRONMENTAL CONDITIONS OF PROPERTY
The Property is known to have petroleum contamination below the surface in the northwest section. Said
contamination originated from the neighboring property to the north. The City of Vernon has been working
with, and continues to work with, the responsible regulatory authorities to cause the neighbor to clean up
the contamination on the City owned property, as well as on their own property. Prior to any sale to 365
Main, Inc., the City will insure that any environmental contamination has been properly dealt with,
including the above mentioned petroleum contamination, and the property will be delivered to 365 Main,
Inc. environmentally ready for redevelopment.
DUE DILIGENCE
365 Main, Inc. shall have 270 days to conduct the due diligence review. All documents, in possession of
Seller, related to the physical condition of the property are located at the Department of Community
Services in Vernon City Hall. Likewise, all documents, in the possession of Seller, related to
environmental conditions of the property are located at the Health Department in the Vernon City Hall. All
such documents may be inspected and reviewed during the City's standard hours for counter service and
the City, for the Buyer's files, will copy a reasonable number of documents. Such due diligence period will
be extended month -to -month, if the adverse environmental conditions at the site have not been rectified
within the 270-day time span. During the due diligence period, the Seller will keep Buyer informed of
status and progress regarding demolition and environmental clean-up. During the due diligence period,
Buyer may obtain their own Phase I and/or Phase II environmental evaluations but must obtain written
approval from the Seller for any invasive testing on the Property.
ELECTRIC RATE
The City of Vernon agrees that the future 365 Main, Inc. facility could qualify for and be accepted at the
Vernon Light & Power TOU-1 or TOU-V rate, provided they took power at 66kV and 20 MVA or more, as
anticipated. Under the current TOU-1 rate schedule, with a 20-MVA load, 98% load factor, and the entire
20-MVA load subject to interruption, the effective cost per kWh would be $0.057. 365 Main, Inc. will work
365 MAIN STREET SAN FRANCISCO. CALIFORNIA 94105 MAIN 415.764.1601 FAX 415.546,6259 www.365main.com
with the City of Vernon to determine the appropriate electrical rate schedule for the Property. A copy of
the current TOW schedule and the TOU-V schedule it references are attached as Exhibit B
ELECTRIC SERVICE
Vernon Light & Power will, if 365 Main, Inc. constructs the anticipated facility, construct a 66kV substation
and associated facilities on the Property to enable 365 Main, Inc. to take service at a single point of
delivery metered at 66kV and a potential service level of 40MVA.
AGREEMENT OF MUTUAL SUPPORT
The City of Vernon agrees that it will support 365 Main, Inc.'s efforts to attract customers for the future
facility by providing marketing data and participating in customer meetings where appropriate. The City
will confirm to any potential customers the anticipated electric rates that the 365 Main, Inc. facilities will
secure and the fact that the Property is reserved for 365 Main, Inc. The City will also refer all potential
customer inquiries to 365 Main, Inc.
FUTURE PURCHASE AND SALE AGREEMENT
The City of Vernon and 365 Main, Inc. agree that once 365 Main, Inc_ has progressed in their efforts to
the point of a high level of certainty concerning the Property purchase, the two parties will formalize their
agreement in a Purchase and Sale Agreement including escrow instructions and purchase money
deposits.
AGREMENT DURATION
This agreement is effective for one year from the date signed by the City of Vernon, below. This
agreement my be terminated in advance of that date by written notice from 365 Main, Inc. indicating that
they no longer intend to purchase, or construct a facility on, the Property.
CITY OF VERNON 365 MAIN, INC.
Lepnis C. Malbu g
Mayor
Date: November 28, 2006 Date: cr--z • 5, ?-eka6
ATTST
BruV V. Malkenhorst, Jr.
Acting City Clerk
i
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365 MAIN STREET SAN FRANCISCO, CALIFORNIA 94105 MAIN 415.764.1601 FAX 415.546.6259 www.365main.com