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Staff Report. Market Hall TDM Assignment with attachments PREPARED BY: WooJae Kim Town Engineer Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, Finance Director, and Parks and Public Works Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 11/15/2022 ITEM NO: 9 DATE: November 8, 2022 TO: Mayor and Town Council FROM: Laurel Prevetti, Town Manager SUBJECT: Approve the Assignment of the North 40 Market Hall Transportation Demand Management Agreement from SummerHill N40 LLC to Yuki Farms, a California General Partnership RECOMMENDATION: Approve the assignment of the North 40 Market Hall Transportation Demand Management (TDM) Agreement from SummerHill N40 LLC to Yuki Farms, a California general partnership. BACKGROUND: On August 1, 2017, the Town Council approved the planning application for Phase 1 of the North 40 Specific Plan. The Phase 1 planning application was approved with conditions of approval, including the requirement for a TDM Program and Plan to reduce vehicle miles travelled to and from the site with a target goal of 15% daily trip reduction. On August 18, 2020, the Town Council approved Resolution 2020-036 to authorize the Town Manager to execute the North 40 TDM Agreement for Market Hall with SummerHill (Attachment 1). The Market Hall Development includes approximately 20,761 square feet of commercial space with 2,772 square feet of community space, which is referred to collectively as the “Market Hall Commercial Condo.” The Market Hall Development also includes 50 affordable senior housing units and a garage structure, which are separate from Market Hall Commercial Condo. PAGE 2 OF 3 SUBJECT: Approve the Assignment of the North 40 Market Hall Transportation Demand Management Agreement from SummerHill N40 LLC to Yuki Farms, a California General Partnership DATE: November 8, 2022 DISCUSSION: The North 40 TDM Agreement for Market Hall established an annual contribution amount to the TDM Program for the Market Hall Commercial Condo, which would be adjusted annually by the San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index for All Urban Consumers (CPI). TDM Program and fees shall continue in perpetuity or until the Town acts to cancel the TDM Program. The TDM Agreement for Market Hall allows for SummerHill to assign the TDM program responsibilities and requirements to the future Market Hall Commercial Condo owner. The TDM Agreement further provides that SummerHill shall give written notice of such assignment to the Town, and any assignment shall be considered for approval by the Town. The TDM Agreement and case law require that the Town’s approval not be unreasonably withheld. In this instance, there are no grounds on which to deny approval of the assignment. Once the TDM Agreement has been assigned, the annual payments will be made by the assignee, which is Yuki Farms. SummerHill has provided the Town with notice of its intent to assign the TDM Agreement to Yuki Farms. Staff has reviewed the proposed Assignment and Assumption of North 40 TDM Agreement for Market Hall (Attachment 2) and recommends that the Town Council approve the assignment. CONCLUSION: Staff recommends that the Town Council approve the assignment of the North 40 Market Hall Transportation Demand Management Agreement from SummerHill N40 LLC to Yuki Farms, a California General Partnership. COORDINATION: This memorandum has been coordinated with the Town Attorney. FISCAL IMPACT: There is no fiscal impact to this item. The TDM payments required in the original TDM agreement will be made by a new entity. PAGE 3 OF 3 SUBJECT: Approve the Assignment of the North 40 Market Hall Transportation Demand Management Agreement from SummerHill N40 LLC to Yuki Farms, a California General Partnership DATE: November 8, 2022 ENVIRONMENTAL ASSESSMENT: This item is not a project defined under the California Environmental Quality Act, because it can be seen with certainty that it will not impact the physical environment [CEQA Guidelines Section 15061(b)(3)]. Attachments: 1. North 40 Transportation Demand Management Agreement (Market Hall) 2. Assignment and Assumption of North 40 TDM Agreement (Market Hall) This Page Intentionally Left Blank Attachment 1 This Page Intentionally Left Blank RECORDING REQUESTED BY AND WHEN RECORDED, MAIL TO: SummerHill N40 LLC 777 California Avenue Palo Alto, California 94301 Attn: General Counsel (SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE) ASSIGNMENT AND ASSUMPTION OF NORTH 40 TRANSPORTATION DEMAND MANAGEMENT AGREEMENT (MARKET HALL) THIS ASSIGNMENT AND ASSUMPTION OF NORTH 40 TRANSPORTATION DEMAND MANAGEMENT AGREEMENT (MARKET HALL) (“Assignment”) is made and entered into on this ____ day of ________________, 2022, by and between SUMMERHILL N40 LLC, a California limited liability company (“Assignor”) and YUKI FARMS, a California general partnership (“Assignee”). RECITALS A.Assignor was the owner of that certain real property located in the Town of LosGatos (“Town”), County of Santa Clara (the “County”), State of California, generally known and described as the Market Hall Unit, as described in that certain Condominium Plan, Market Hall, Tract 10441, North 40, Los Gatos, California, and more particularly described on Exhibit A attached hereto (the “Property”). B.Assignor and the Town entered into that certain North 40 Transportation DemandManagement Agreement (Market Hall) recorded in the Official Records of the County on September 28, 2020 as Instrument No. 24632514 (“TDM Agreement”). C.Pursuant to the terms of the Real Estate Purchase and Sale Agreement and Joint Escrow Instructions by and between Assignor and Assignee with an Effective Date of August 31, 2021 (“Purchase Agreement”), Assignor has conveyed and transferred the Property to Assignee. D.Assignor desires to assign, and Assignee desires to assume, Assignor’s rights, dutiesand obligations under the TDM Agreement. Capitalized terms used in this Assignment but not defined herein shall have the meaning given such terms in the TDM Agreement. NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt of which is hereby acknowledged, Assignor and Assignee agree as follows: Attachment 2 1. Assignment of Rights and Obligations. Subject to the terms and conditions of this Assignment, as of the Effective Date (hereinafter defined), Assignor hereby assigns, transfers and grants to the Assignee, and its successors and assigns, all of Assignor’s right, title, interest, obligations, duties and responsibilities under the TDM Agreement which accrue, arise or are required to be performed from and after the Effective Date, including, without limitation, the obligation to pay the TDM Contribution to the Town, as set forth in the TDM Agreement (collectively, the “Rights and Obligations”). 2. Assumption of Rights and Obligations. Assignee, for itself and its successors and assigns, hereby accepts such assignment and assumes all of the Rights and Obligations under the TDM Agreement which accrue, arise or are required to be performed from and after the Effective Date. Assignee agrees, expressly for the benefit of the Town, to comply with, perform and execute all the covenants and obligations of “SummerHill” under the TDM Agreement which accrue, arise or are required to be performed from and after the Effective Date, it being the express intention of both the Assignor and the Assignee that, from and after the Effective Date of this Assignment, the Assignee shall become substituted for the Assignor as “SummerHill” under the Agreement. From and after the Effective Date, Assignor shall be released from all Rights and Obligations under the TDM Agreement which accrue, arise or are required to be performed from and after the Effective Date. 3. Effective Date. The effective date of this Assignment shall be the date of the transfer of record title to the Property to Assignee. 4. Miscellaneous. 4.1 Successors and Assigns. All of the covenants, terms, and conditions of this Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and assigns. 4.2 Counterparts. This Assignment may be executed in one or more counterparts, and each counterpart shall be deemed to be an original document. All executed counterparts together shall constitute one and the same document, and the signature pages shall be assembled to form a single original document. 4.3 Governing Law. This Assignment shall be governed by the laws of the State of California. 4.4 Notices. The notices address for “SummerHill” pursuant to Section 11 of the Agreement shall be as follows: If to SummerHill: Yuki Farms 15495 Los Gatos Boulevard, Suite 11 Los Gatos, CA 95032 Attn: Ed Morimoto Harmonie Park Development 221 Bachman Avenue Los Gatos, CA 95030 Attn: Don Capobres and Wendi Baker Kennedy, Archer & Giffen 24591 Silver Cloud Court, Suite 200 Monterey, CA 93940 Attn: Nolan M. Kennedy 4.5 Severability. If any provision of this Assignment is held invalid, the remainder of this Assignment shall not be affected, except as necessarily required by the invalid provisions, and shall remain in full force and effect unless amended or modified by mutual consent of the parties. 4.6 Valid Signatures. The undersigned is duly authorized to sign, acknowledge and deliver this Assignment on behalf of the undersigned, and no other signatures are required or necessary in connection with the execution and validity of this Assignment. [Signatures on Next Page] IN WITNESS HEREOF, the parties hereto have executed this Assignment as of the day and year first above written. ASSIGNOR: SummerHill N40 LLC, a California limited liability company By: SummerHill Homes LLC, a California limited liability company, its Manager By: ____________________ Name: ____________________ Title: ____________________ By: ____________________ Name: ____________________ Title: ____________________ ASSIGNEE: Yuki Farms, a California general partnership By: Morimoto Family Trust dated September 17, 1998, Its authorized general partner By: ______________________ Edward S. Morimoto, Trustee A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ) On before me, , personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ______________________________________ (Seal) A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ) On before me, , personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ______________________________________ (Seal) EXHIBIT A LEGAL DESCRIPTION PARCEL NO. 1 A condominium consisting of: (1) a separate interest in the “Market Hall Unit” as shown on the Condominium Plan (the “Plan”) recorded on November 1, 2022, as Document No. 2022-25395000 in the records of Santa Clara County, California, and as further described in the Market Hall Declaration of Restrictions (CC&Rs) recorded on _________________, as Document No. ______________in Santa Clara County, California, and any amendments and annexations thereto (the “Declaration”); and (2) an undivided equal interest in the Common Area as described in the Plan and the Declaration, which condominium is located on the real property described on the map entitled “Tract 10441” (the “Map”) recorded on October 11, 2018, in Book 918 of Maps at pages 4 through 18, in the records of Santa Clara County, California. RESERVING THEREFROM THE FOLLOWING: (i) The exclusive right to use all of those areas designated as “Exclusive Use Common Area” as described in the Declaration and Plan set aside and allocated for the exclusive use of the Owners of Condominiums other than the Condominium described in Parcel No. 1, above; and (ii) Easements and rights for use, enjoyment, access, ingress, egress, encroachment, maintenance, repair, replacement, drainage, support, and other purposes as described in the Declaration. SUBJECT TO: Nonexclusive rights of ingress, egress and support through the Common Area. PARCEL NO. 2 Nonexclusive rights of ingress, egress and support in, through and over the Common Area. PARCEL NO. 3 An exclusive right to use the area(s) designated as Exclusive Use Common Area(s) that are appurtenant to Parcel No. 1 above as described in the Declaration and the Plan.