HomeMy WebLinkAboutAgenda - 02-18-2014 - 6e 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 18, 2014
Action Agenda
Item No. 6-e
SUBJECT: Southern Library Site Selection Due Diligence Process Update — Butler
Property Due Diligence Agreement
DEPARTMENT: Library, Asset Management PUBLIC HEARING: (Y/N) No
Services, Planning
ATTACHMENT(S): INFORMATION CONTACT:
Due Diligence Authorization Agreement Lucinda Munger, (919) 245-2528
Jeff Thompson, (919) 245-2658
Michael Harvey, (919) 245-2597
PURPOSE: To:
1) Review the Due Diligence Authorization Agreement between Orange County and Main
Street Properties of Chapel Hill, LLC; and
2) Authorize the Chair to execute the Agreement pending final County Attorney approval.
BACKGROUND: The Board authorized staff to continue investigating the Butler Property site
with regard to its adopted Southern Branch Library Site Selection Criteria and process. As part
of this due diligence process, County staff has met extensively with the Butler Property
developer, Main Street Properties of Chapel Hill, LLC ("Developer'), and has developed the
attached Due Diligence Authorization Agreement that provides a framework for the County and
the Developer to work together during this due diligence process.
FINANCIAL IMPACT: This Agreement is non-binding to the County and the Developer and
has no associated costs.
RECOMMENDATION(S): The Manager recommends the Board:
1) Review the Due Diligence Authorization Agreement between Orange County and Main
Street Properties of Chapel Hill, LLC; and
2) Authorize the Chair to execute the Agreement pending final County Attorney approval.
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DUE DILIGENCE AUTHORIZATION AGREEMENT
This Due Diligence Authorization Agreement (this "Agreement'), is made by and
between Main Street Properties of Chapel Hill," LLC (hereinafter called "Main Street") and
Orange County, North Carolina (hereinafter called "County"), for the purpose of authorizing
County to commence certain due diligence on the project described below (the "Projeef'):
WHEREAS, Main Street is the developer of a project located in central Carrboro known
as ":300 East Main" which is comprised of is phased mixed-use development project offering
dining, shopping, arts, a parking deck and hotel accommodations,- and
WHEREAS, Main Street has an option to purchase real property with an address of 120
Brewer Lane, Carrboro, North Carolina, and having Orange County PIN 9778-96-8060 (the
"Property") which such option will be fully documented on or before the expiration of the Term;
and
WHER-EAS, the Property is adjacent to 300 East Main; and
WHEREAS, Main Street anticipates the Property will ultimately contain, among other
improvements, a multi-story building anchored by a single or multiple users on the building's
first floor located at Main Street elevation (the "First Floor") and approximately 4 floors of
single family apartments located on the upper floors of the building, and
WHEREAS, the County has approved a set of guiding principles and a comprehensive
site selection criterion for locating the Orange County Public Library-Southern Branch (the
"Southern Library"),- and
WHEREAS, the County has identified the Property as a potential site for the Southern
Library, and
WHEREAS, the County and Main Street desire to provide for a period Of Mutual due
diligence concerning the potential location of the Southern Library on the Property,
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set,forth herein, the parties hereto agree as follows-.
1® Intent to Negotiate Definitive Contract:
The County and Main Street desire to enter into contract negotiations for the potential. location of
the Southern Library on the Property (the "Contract"). The scope and form of the Contract by
and between Main Street and the County (i.e. contract for the lease of the First Floor either with
or without an option to purchase or purchase of a condominium interest(s) in the building to be
constructed by either Main Street or the County on the Property, etc.J is subject to future
negotiation and any such agreement is conditioned upon the Parties' reaching a mutual written
agreement on terms,
2. Due Diligence:
Main Street grants County, its employees, agents, citizen committees, and contractors a right of
entry onto and into the Property and the property upon which 3001 East Main is located during the
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Term for the purposes of conducting surveys, inspections, tests and other analysis and due
diligence on the Property. County will provide reasonable notice to Main Street prior to entering
the Property to conduct any onsite due: diligence. County understands and agrees that land
disturbing activities on the Property (Including, but not limited to, soil borings, excavation, and
removal) requires prior regulatory approval. Main Street and County shall work cooperatively to
obtain such approval prior to the County conducting any land disturbing activities on the
Property. The Parties will coordinate all entries so as to minimize: any disturbance to tenants on
the subject properties. During the Term, County will work diligently to determine the viability
of locating the Southern Library on the Property. County will keep Main Street informed of its
due diligence progress throughout the Tern-i.
It is the intent of both Parties to work toward entering into a mutually beneficial agreement for
the location of the Southern Library on the Property at the end of the Term based on County's
due diligence and the viability of development options available to the Parties. If the County and
Main Street are unable to reach an agreement at the end of the Term, County will deliver to Main
Street copies of all its due diligence studies.
3. Exclusivity:
In consideration of substantial expenditure of time, effort and funds by County in connection
with due diligence efforts which will be carried on in connection with the transaction
contemplated hereby, Main Street agrees that during the Term, neither Main Street nor any of its
members,, managers, officers, directors, agents, or employees will. directly or indirectly solicit,
encourage, negotiate with any third party or entertain or consider any inquiry, proposal, or offer
relating to the acquisition, development,joint venture or other disposition of the First Floor. It is
expressly understood and agreed that this exclusivity does not pertain to negotiations with third
parties related to portions of the Property other than the First Floor, Main Street will immediately
cease any existing activities, discussions or negotiations with any persons or entities conducted
heretofore with respect to any of the foregoing except as expressly permitted herein. Nothing
contained in this Section 3 shall prevent Main Street from: (i) discussing the terms of the current
option to purchase it holds on the Property with the current owner of the Property; (1i) discussing
any matter related to the Property (specifically including the First Floor) with its lenders and
financing partners-, (111) discussing the development or potential development of the Property
with any regulatory agency or governing body with jurisdiction over the Project. If the County
affirmatively decides, or otherwise reasonably forecasts that its proposed use of the Property may
comprise less than 18,000 sf of the First Floor, then the County promptly shall notify Main Street
of the same, and Main Street shall immediately be permitted to resume discussions with any
other potential user of first floor space that the County has indicated it may not occupy in the
future.
4. Term:
This Agreement shall be effective as of the Effective Date until July 1, 2014 unless earlier
terminated as provided herein or upon the full execution of a Contract (the "Initial Term"). This
Agreement may be renewed and otherwise extended for additional periods upon the mutual
written agreement of the Par-ties (each a "Renewal Term"; the Initial Term and any and all
Renewal Terrn(s) are collectively referred to herein as the"Term"').
5. Termination:
This Agreement shall terminate: (i) immediately and automatically upon execution of the
Contract between Main Street and County pertaining to the subject matter hereof, (ii)
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automatically upon the expiration of the Term; (iii) at any time, by mutual agreement of the
Parties; or (iv) by Main Street, upon the material breach by County of any provision contained
herein which material breach remains uncured by County after Main Street provides thirty days
advance written notice of said material breach to County, and by County, upon the material
breach by Main Streets of any provision contained herein which material breach remains uncured
by Main Street after County provides thirty days advance written notice of said material breach
to Main Street.
6. Joint Publication:
.Main Street and the County desire to coordinate the dissemination and delivery of press releases
and other formal public disclosures regarding the Project. Therefore, no press release or other
public disclosure may be made by Main Street or its members, managers, officers, directors,
agents, or employees concerning the Project, the negotiations regarding the Contract, and any
subsequent agreements or discussions between Main Street and the County regarding the
Property without the prior written consent of County. Nothing contained in this Section 6 shall
prevent Main Street from- (i) discussing the terms of the current option to purchase it holds on
the Property with the current owner of the Property; (ii) discussing any matter related to the
Property (specifically including the First Floor) with its lenders and financing partners, (iii)
discussing the development or potential development of the Property with any regulatory agency
or governing body with j uri sdicti on over the Project.
7. Conditions Precedent & Contingencies:
The Parties understand and agree that there are a number of conditions precedent and
contingencies that will impact the ability to enter into a Contract for the Project. The Parties
agree to negotiate in good faith in an attempt to address such conditions precedent and
contingencies during the Term.
8. Representations and Warranties of Main Street & County:
The Parties understand and agree that each. party will be subject to commercially reasonable
representations and warranties in the Contract. The Parties agree to negotiate in good faith to
address such representations and warranties during the Term.
9. Miscellaneous:
A Assignment. The:rights under this Agreement may be transferred and assigned. only upon
the written consent of the non-assigning party.
B. Fees and Expenses. Each party will be responsible for its own legal fees and other
expenses incurred in connection with the perfon-nance of this Agreement.
C. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina. Any dispute regarding this Agreement shall be
filed in a court of competent jurisdiction located in Orange County,NC,
D. Counter,parts, This s Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to be one
and the same document. A signed copy of this Agreement delivered by facsimile, e-mail
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or other means of electronic transmission shall be deemed to have the same legal effect as
delivery of an original signed copy.
E. Mutual Waiver of Consequential Damages, In no event shall any party be liable to the
other for consequential, punitive or special type of damages or lost profits, on account of
this Agreement. This mutual waiver includes, but is not limited to, all damages incurred.
by the Main Street for rental expenses, for losses of use, income, profit, opportunities,
revenue, funds, financing, business and reputation, for extended interest expenses,
insurance premiums, supervisory costs and common area charges, for increased overhead
costs, for carrying costs, maintenance costs, taxes, insurance deductibles and write-
downs, and for loss of management or employee productivity or of the services of such
persons. This mutual waiver is applicable, without limitation, to all consequential,
incidental, indirect or special damages due to either party's termination of this letter of
agreement, Further, in no event shall any party's liability to the other arising out of this
Agreement exceed $50,000.
F. Amendment, This Letter shall not be amended except by a written instrument executed
by both County and Main Street.
G. No Third Party Beneficiaries, Nothing contained in this Agreement shall be deemed to
create a contractual relationship with, or a cause of action in favor of, any third party
against Main Street or County.
IN WITNESS WHEREOF, Main Street and County have caused this instrument to be
executed under seal as of the day and year first set forth above.
Main Street:: Orange County:
Main Street Properties of Chapel .11ill, LLC Orange County, North Carolina
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By: (SEA.L) By:_ _.._
Name: GEC PA Name:
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Title: Title,-
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