Title
Report regarding approval of the Fourth Amendment to an Exclusive Negotiating Rights Agreement with Ensemble Investments, LLC for a proposed hotel development at Oyster Point. (Ernesto Lucero, Economic Development Coordinator)
Recommendation
Staff recommends that the City Council authorize the City Manager to execute the Fourth Amendment to the Exclusive Negotiating Rights Agreement with Ensemble Investments, LLC.
Body
BACKGROUND
In 2011, the City approved the Oyster Point Disposition and Development Agreement (DDA) and the Oyster Point Specific Plan (Specific Plan). These documents established the vision and development plan for Oyster Point; and as part of that vision they identified a 4.7 acre, City-owned parcel as an opportunity site for an upscale hotel. The Specific Plan provided preliminary entitlements for up to 350 hotel rooms and 40,000 sq. ft. of retail. The site (Attachment 1) is ideal for a full-service waterfront hotel connecting to the large employment cluster in Oyster Point, and its proximity to San Francisco International Airport.
On April 11, 2018, the City Council approved a resolution authorizing the City Manager to enter into an Exclusive Negotiating Rights Agreement (ENRA) with Ensemble Investments (Ensemble) to begin negotiating on a proposed hotel development on the City-owned parcel in Oyster Point. The agreement was executed on May 4, 2018.
Since the execution of the ENRA, Ensemble has conducted extensive due diligence, continuing to refine the programming and development of the hotel. Recognizing the complexity of the site, the Council has previously approved three ENRA amendments to allow additional time for negotiations. At this time, staff believes the City and Ensemble have made significant progress I in negotiating key project issues and business terms, and are very close to being able to finalize the terms of a Purchase and Sale Agreement (PSA) for the Council’s consideration.
The current ENRA expires on July 22, 2021. The City and Ensemble continue to conduct necessary due diligence to finalize some remaining terms of the potential property disposition. Approval of the Fourth Amendment to the ENRA with Ensemble would provide an additional 65 days, with the possibility of one additional 30-day administrative extension upon discretion of the City Manager, for continued negotiations and due diligence on legal and financial risks to the City.
DISCUSSION
An ENRA extension will allow both the City and Ensemble to continue negotiating terms related to the legal and financial feasibility of the proposed project. Due to the complexity of the development of the site, approval of the Fourth Amendment will allow an additional 65 days to continue site due diligence. The Amendment also allows for the possibility of one additional 30-day administrative extension upon City Manager approval. If the City and Ensemble are able to come to an agreement on the project, a PSA will be brought to the City Council for consideration prior to the termination of the ENRA for the disposition of the City-owned site.
CONCLUSION
The approval of the resolution will amend the ENRA between the City and Ensemble, allowing Ensemble to continue working with the City on the further development of the hotel for an additional 65 days, and finalize due diligence on legal and financial risks to the City. If the project is feasible and parties can come to an agreement, a Purchase and Sale Agreement and a Disposition Agreement would come before the City Council for consideration of approval.
Attachments:
1. Site Map