Staff Report
PREPARED BY: ROBERT SCHULTZ
Town Attorney
Reviewed by: Town Manager, Assistant Town Manager, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
TOWN COUNCIL REPORT
MEETING DATE: 04/02/2019
ITEM NO: 5
DATE: MARCH 27, 2019
TO: MAYOR AND TOWN COUNCIL
FROM: ROBERT SCHULTZ, TOWN ATTORNEY
SUBJECT: APPROVAL OF AN EXCLUSIVE NEGOTIATING AGREEMENT (ENA) WITH
IMWALLE ASSET MANAGEMENT COMPANY TO LEASE AND DEVELOP
COMMERICAL PROPERTIES LOCATED AT 4 TAIT AVENUE AND 75 CHURCH
STREET IN THE TOWN OF LOS GATOS
RECOMMENDATION:
Staff recommends that the Town Council authorize the Town Manager to execute an Exclusive
Negotiating Agreement (ENA) with Imwalle Asset Management Company to Lease and develop
the commercial properties located 4 Tait Avenue and 75 Church Street in the Town of Los
Gatos.
BACKGROUND:
The Town has been actively searching for potential tenants for the properties located at 4 Tait
Avenue and 75 Church Street since the Museum vacated in 2016. Imwalle Asset Management
Company (Developer) has approached the Town and is requesting that negotiations take place
regarding the potential leasing of these properties. The Developer is proposing to lease the
properties for a long term and be 100% responsible for all costs related to the project of
rehabilitation, build out, leasing and ongoing management and maintenance of the properties.
Payments to Los Gatos would be a hybrid of fixed base monthly payments and profit
participation. The Developer has completed almost 100 small scale projects over the last 40
years and has experience with ground leases, Master leases, and public private partnerships in
San Jose and Morgan Hill
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SUBJECT: APPROVAL OF ENA WITH IMWALLE
DATE: MARCH 27, 2019
DISCUSSION:
Both properties need significant improvements easily in excess of $1,000,000 to be brought to a
leasable market condition. Care would be taken to restore the historic aspects of both
properties while delivering modern upgrades expected in the market. Leasing instead of selling
the properties would provide consistent long-term cash flow to the Town and maintain the
Town’s ownership over the properties.
The Town may legally enter into an Exclusive Negotiating Agreement and staff recommends
that the Town Council authorize the Town Manager to sign the ENA (Attachment 1). The
purpose of the ENA is to set the parameters between the Town and the Developer that will
guide the negotiations of a Lease Agreement. The Lease Agreement will set the contractual
relationship between the Town and the Developer, and define the project to be developed, the
financial relationships, and the performance milestones for both parties. The Developer has
informed Town staff that it is comfortable with the terms of the ENA. The ENA does not
remove the Developer from the Town’s normal planning and development application
requirements and process, and all financial parameters and obligations of the Town and
Developer will be fully discussed with the Town Council. Upon entering into exclusive
negotiations, the parties will begin to meet regularly to discuss the various issues described
above, as well as new issues not yet identified.
CONCLUSION:
Council should authorize the Town Manager to sign an Exclusive Negotiating Agreement (ENA)
with Imwalle Asset Management Company to Lease and develop the commercial propert ies
located 4 Tait Avenue and 75 Church Street in the Town of Los Gatos.
COORDINATION:
This report was coordinated with the Town Manager’s Office.
FISCAL IMPACT:
No fiscal impact at this time but there will be additional staff time required.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Exclusive Negotiating Agreement