02 Attachment 3 - First Addendum to Vacant Land Purchase Agreement.docx1
ATTACHMENT 3
FIRST ADDENDUM TO REAL ESTATE PURCHASE AGREEMENT
This First Addendum to Real Estate Purchase Agreement ("Addendum") is entered into as
of this 2nd day of June 2020 (the "Effective Date"), by and between the Town of Los Gatos, a
Municipal Corporation, ("Town"), and Sarah Chaffin ("Buyer"). The Agency and the Buyer
(sometimes collectively referred to as the "parties") have entered into this Agreement on the basis
of the following facts:
RECITALS
A. WHEREAS, the Town and/or the Successor Agency to the Los Gatos
Redevelopment Agency (“Successor Agency”) own the property located at 20 Dittos Lane, Los
Gatos, CA; APN: 529-29-034 (“Dittos Property”); and
B. WHEREAS, the Dittos Property was purchased by the former Redevelopment
Agency for the Town of Los Gatos for the purpose of providing below market price residential
uses; and
C. WHEREAS, the Town desires to develop an Affordable Residential Housing
Project with a preference for Teacher & School Employees (“Project”) on the Dittos Property and
has selected Sarah Chaffin, the Developer for the Project; and
D. WHEREAS, the Town and Buyer desire for the Buyer to develop improvements on
the Dittos Property, consisting of two (2) single-family residential units and two (2) accessory
dwelling units on two lots which shall be made available to and occupied by households who earn
no more than 120% of Area Median Income; and
E. WHEREAS, The Buyer intends to finance the costs of development of the
Improvements with sources that include but are not limited to a Town Loan and Tax Credit Funds;
and
F. WHEREAS, the Buyer represents that it has the necessary expertise, skill and
ability to carry out the commitments set forth in this Agreement. This Agreement will materially
contribute to the implementation of the Town by increasing the supply of affordable housing; and
G. WHEREAS, the Project has generated enthusiasm from a broad range of
community members, and will help implement a number of Town goals, including those set forth
in the Town’s General Plan and Housing Element.
AGREEMENT
THEREFORE, in consideration of the mutual promises, agreements, understandings, and
undertakings in this Addendum, the Parties to this Addendum agree as follows:
ARTICLE 1.
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GENERAL PROVISIONS
Section 1.1 Good Faith Collaboration. The Town and the Buyer shall collaborate diligently
and in good faith, during the Escrow Period to meet the terms of this Addendum.
Section 1.2 Escrow Period. The escrow period (the "Escrow Period") under this
Agreement shall be 365 days, commencing on the Effective Date. The Escrow Period may be
extended on the Town’s behalf for up to an additional 180 days by the Town Manager
(“Manager”), if sufficient progress toward completion of the Addendum has been made during the
initial 365 day escrow period to merit such extension. The requirements set forth in this Addendum
are conditions precedent to the closing of escrow and the Town’s obligation to sell the Property to
the Buyer.
Section 1.3 Exclusive Negotiations. During the Escrow Period, the Town and the
Buyer shall not negotiate with any entity, other than the parties hereto, regarding development of
the Project, or solicit or entertain bids or proposals to do so.
Section 1.4 Off Site Improvement. The Buyer will not be responsible for any Off Site
Improvements.
Section 1.5 Fees. The Town will be responsible for all Town related fees related to
subdivision, lot line adjustment, New Parcel Map, Site Work and Architecture Plans. These fees
include but are not limited to building permits, connection fees, HCP etc.
Section 1.6 Condition of Property. The Buyer specifically acknowledges and agrees that
the Town is conveying, and the Buyer is obtaining the property on an “AS IS” basis and that the
buyer is not relying on any representations or warranties of any king whatsoever, expressed or
implied from the Town as to any matters concerning the property.
Section 1.7 Buyer’s Release of the Town. The Buyer, on behalf of itself and anyone
claiming by, through or under the Buyer hereby waives its right to recover from and fully and
irrevocably releases the Town and its councilmembers, employees, officers, directors,
representatives, and agents (the "Released Parties") from any and all claims, responsibility and/or
liability that the Buyer may have or hereafter acquire against any of the Town Parties for any costs,
loss, liability, damage, expenses, demand, action or cause of action arising from or related to (1)
the condition (including any construction defects, errors, omissions or other conditions, latent or
otherwise), valuation, salability or utility of the Property, or its suitability for any purpose
whatsoever, (2) any presence of Hazardous Materials, and (3) any information furnished by the
Town Parties under or in connection with this Agreement. The release set forth in this Section
includes claims of which the Buyer is presently unaware or which the Buyer does not presently
suspect to exist which, if known by the Buyer, would materially affect the Buyer's release of the
Town Parties. The Buyer specifically waives the provision of any statute or principle of law that
provides otherwise. In this connection and to the extent permitted by law, the Buyer agrees,
represents and warrants that the Buyer realizes and acknowledges that factual matters now
unknown to the Buyer may have given or may hereafter give rise to causes of action, claims,
demands, debts, controversies, damages, costs, losses and expenses which are presently unknown,
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unanticipated and unsuspected, and the Buyer further agrees, represents and warrants that the
waivers and releases herein have been negotiated and agreed upon in light of that realization and
that the Buyer nevertheless hereby intends to release, discharge and acquit the Town from any
such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and
expenses. Accordingly, the Buyer, on behalf of itself and anyone claiming by, through or under
the Buyer, hereby assumes the above-mentioned risks and hereby expressly waives any right the
Buyer and anyone claiming by, through or under the Buyer, may have under Section 1542 of the
California Civil Code, which reads as follows:
"A general release does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
Buyer’s Initials: __________
Notwithstanding the foregoing, this release shall not apply to, nor shall the Town be released from,
the Town's actual fraud or misrepresentation.
Section 1.8 No Fault Termination Prior to Closing. Either Party may terminate this
Agreement prior to the Closing without the fault of the other if the Buyer, despite good faith and
diligent efforts, is unable to meet any condition to Closing set forth in this Agreement within the
time and in the manner specified. Upon the happening of any of terminating event and at the
election of either Party, this Agreement may be terminated by written notice to the other Party.
After termination, neither Party shall have any rights against or liability to the other under this
Agreement.
Section 1.9 Assignment. The Buyer, or each of them, shall have the right to sell,
encumber, convey, assign or otherwise transfer (collectively "assign"), in whole or in part, its
rights, interests and obligations under this Agreement to third party during the term of this
Agreement with the approval of the Town. Town approval shall not be unreasonably withheld
provided:
(a) The assignee (or the guarantor(s) of the assignee's performance) has the financial ability
to meet the obligations proposed to be assigned and to undertake and complete the
obligations of this Agreement affected by the assignment; and
(b) The proposed assignee has adequate experience with developments of comparable
scope and complexity to the portion of the Project that is the subject of the assignment.
Any request for Town approval of an assignment shall be in writing and accompanied by certified
financial statements of the proposed assignee and any additional information concerning the
identify, financial condition and experience of the assignee as the Town may reasonably request.
All detailed financial information submitted to the Town shall constitute confidential trade secret
information if the information is maintained as trade secret by the assignee and if such information
is not available through other sources. If the Town wishes to disapprove any proposed assignment,
the Town shall set forth in writing and in reasonable detail the grounds for such disapproval.
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ARTICLE 2.
ESCROW PERIOD TASKS
Section 2.1 Overview. To facilitate consummation of the Purchase Agreement, the
parties shall use reasonable good faith efforts to accomplish the tasks set forth in this Article 2 in
a timeframe that will support consummation of the Purchase Agreement prior to the expiration of
the Escrow Period. The Buyer acknowledges that execution of this Agreement by the Town does
not constitute approval by the Town of any required Town Land Use Entitlements, and in no way
limits the discretion of the Town in the permit allocation and approval process. The Buyer shall
construct the Improvements in accordance with the requirements set forth in the Town’s Land Use
Entitlements.
Section 2.2 New Parcel Map. During the Escrow Period the Buyer and Town will work
collaboratively on the review and approval of a New Parcel Map, identified in Exhibit A. Town
will grant 18 Dittos Lane land as described in Exhibit A, (labeled LANDS TO BE GRANTED TO
#18 DITTOS), in exchange for ingress easement, egress easement, emergency vehicle easement,
public utility easement, sanitary sewer easement. The New Parcel map will be recorded prior to
Closing.
Section 2.3 Crib Wall Easement. Prior to Closing, Buyer will execute a “Grant
Easement” for maintenance of the “Crib Wall” identified in Exhibit A attached.
Section 2.4 Water Meter & Public Service Easement. Prior to Closing, the Town will
grant to Buyer an easement of ingress and egress to access the water meter identified in Exhibit A,
ready the meter, and for its maintenance, repair and replacement.
Section 2.5 Identity of Parcel 1 and Parcel 2. Prior to Closing, Town will execute a
deed to Buyer to the two parcels identified in Exhibit A. The Town, at its own cost and expense,
agrees to take all of the necessary steps for any lot line adjustment, and the preparation and
recording of a new Parcel Map.
Section 2.6 Loan Agreement. Prior to Closing, Town agrees to loan Buyer the sum of
$600,000.00, with zero interest, amortized over 55 Years from the Inclusionary Fund. The Buyer’s
obligation to pay the Town Loan shall be evidenced by a Promissory Note and secured Deed of
Trust, and shall be used solely for construction and permanent financing of the Improvements. The
Town agrees to subordinate the Town’s Deed of Trust to Senior Liens,
Section 2.7 Tree Removal. Prior to Closing, the Town will be responsible for all Tree
Removal at its sole cost and expense.
Section 2.8 Deed Restriction & Below Market Rate Guidelines. Prior to Closing, Buyer
agrees to execute a “Deed Restriction” for Below Market Housing with a preference for Teachers
& School Employees along with special Below Market Rate Guidelines on terms consistent with
all laws and ordinances and consistent with the reasonable expectations of both Parties for a period
of 55 years with an opportunity to extend for the longest feasible time.
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Section 2.9 Option to Repurchase. Prior to Closing, the Buyer and Town will execute
an Option to Repurchase Agreement which will be in effect if the Project has not been built within
5 Years after Closing.
Section 2.10 Financial Proforma. Prior to Closing, Buyer shall submit a detailed
financial proforma for the Project containing, among other matters, a detailed development cost
budget, which will be used to evaluate the financial feasibility of the Project.
Section 2.11 Access Easements and Lot Line Adjustments Prior to the Closing, Buyer
shall obtain ingress and egress easements to the Project from adjoining property owners in
exchange for a lot line adjustment/parcel map from the Town.
Section 2.12 Ratification of The Purchase Agreement. Except as modified by this
Addendum, all provisions of the Purchase Agreement are ratified and affirmed and govern the
relationship of the Parties with respect to the subject matter of this Addendum.
Section 2.13. Costs of Escrow and Closing. Seller, as customary in Santa Clara County,
shall pay the cost of title insurance, transfer tax, Title Company document preparation, recordation
fees and the escrow fees of the Title Company, if any, and any additional costs to close the Escrow.
ARTICLE 3.
REQUIREMENTS FOLLOWING CLOSING
Section 3.1 Construction. The Buyer hereby agree to develop the Project in accordance
with the Project Approvals and shall construct the Improvements in accordance with the
requirements set forth in the Town Land Use Entitlements for the project, including the conditions
of approval and the mitigation measures for the Project as adopted by the Town, and any
amendments to the Project Approvals or Agreement as may, from time to time, be approved
pursuant to this Agreement.
Section 3.2 Project as Private Undertaking. It is specifically understood and agreed by
and between the Parties hereto that the development of the Property is separately undertaken
private development. No partnership, joint venture or other association of any kind between the
Developers and the Town is formed by this Agreement.
Section 3.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, Buyer shall cause construction of the Improvements to be undertaken and completed: (i)
by no later than five years from the date of close of escrow is granted for the project.; or by such
other date as the parties shall mutually agree upon in writing. Buyer agrees that it shall permit
designated representatives of the Town, upon reasonable notice (which does not have to be
written), to enter upon the Property during the construction of the Improvements to inspect such
construction and the progress thereof.
BUYER:
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Sarah Chaffin
By: _________________
TOWN OF LOS GATOS
By: ___________________________
Laurel Prevetti, Town Manager
APPROVED AS TO FORM:
_____________________________
Robert Schultz, Town Attorney