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Resolution authorizing the City Manager to execute the Third Amendment to the Purchase and Sale Agreement with Ensemble Investments, LLC for the disposition of a City-owned property located at 367 Marina Boulevard (APN 015-011-350) for a hotel development.
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WHEREAS, the City is the owner of certain real property (the “Property”) located in the City of South San Francisco, California, known as County Assessor’s Parcel Number (APN) 015-011-350; and
WHEREAS, on March 23, 2011, the City Council approved the Oyster Point Specific Plan and certified the Phase 1 Project Environmental Impact Report which, among other things, planned for and analyzed the potential environmental impacts of developing a new, full-service hotel with up to 350 rooms on the Property; and
WHEREAS, a Disposition and Development Agreement (“DDA”) was executed on March 23, 2011, between Oyster Point Ventures, LLC, the South San Francisco Redevelopment Agency, and the City of South San Francisco for the master development of Oyster Point, including the potential development of a hotel on the Property; and
WHEREAS, the DDA was assigned to Kilroy Realty (“Kilroy”) in 2018; and
WHEREAS, the DDA requires Kilroy to perform certain site work, grading, and installation of certain infrastructure to prepare for the Property for development, which will be completed, satisfying their obligation, in 2023; and
WHEREAS, in 2017, the City solicited a hotel developer for a proposed development on the Property through an RFQ/RFP process; and
WHEREAS, on December 11, 2017, the City’s Housing Standing Committee recommended that the City Council approve Ensemble Investments, LLC (“Ensemble”) to develop a full-service hotel on the Property and recommended that the City Council authorize the City Manager to enter into an Exclusive Negotiating Rights Agreement (“ENRA”) with Ensemble for the development of the Property; and
WHEREAS, on April 11, 2018, the City Council authorized the City Manager to execute an ENRA with Ensemble, and maintained exclusivity until a Purchase and Sale Agreement (“PSA”) was executed; and
WHEREAS, on October 27, 2021, the City Council approved Resolution 188-2021 authorizing the City Manager to execute a PSA with Ensemble for a sale price of $1,000,000 for the proposed hotel development; and
WHEREAS, on November 17, 2022, the Planning Commission approved the design, Use Permit, draft Development Agreement, and Transportation Demand Management Plan for the project, consisting of the new construction of a 12-story, 165 foot tall, 350 room, 261,000 square foot building, with 232 surface parking space and site improvements, as well as the determination that the project is within the scope of the previously adopted Programmatic EIR under CEQA Guidelines; and
WHEREAS, in December 2022, the City and Ensemble executed a First Amendment that paused negotiations between the parties, which allowed the City to complete the statutory Surplus Lands Act process per Government Code Section 54220 et seq., and resume negotiations if no disposition related to that statutory process occurred; and
WHEREAS, given economic conditions in 2023 and the lingering impact of COVID-19 on hotel performance, Ensemble requested and the City agreed to a Second Amendment to the PSA, which was entered into on December 20, 2023 to further extend the close of escrow to July 15, 2025, with a three month extension at the discretion of the City (the original PSA, First Amendment, and Second Amendment are included as Exhibit A); and
WHEREAS, on March 12, 2025, Ensemble requested the City consider an additional two-year extension to the PSA and close of escrow, from July 15, 2025, to July 15, 2027, due to economic conditions, including the hotel industry not yet returning to pre-pandemic revenues levels, inflation in construction costs, increasing hotel labor costs, and increasing financing costs; and
WHEREAS, to provide sufficient time to evaluate Ensemble’s request, negotiate the terms of a Third Amendment, and draft the document for Council consideration, the City granted a three-month extension as contemplated in the Second Amendment; and
WHEREAS, the Parties now desire to enter into a Third Amendment to further extend the Agreement, extend the deadline for close of escrow, and to modify the term sheet for further Development Agreement negotiations as memorialized in the draft Third Amendment included as Exhibit B.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San Francisco hereby:
1. Authorizes the City Manager to execute the Third Amendment to the Purchase and Sale Agreement with Ensemble Investments, LLC effective as of October 15, 2025, for the disposition of a City-owned property located at 367 Marina Boulevard (APN 015-011-350) for a hotel development, in substantially the same form as attached hereto and incorporated herein as Exhibit B, subject to review by the City Attorney and subject to minor revisions and clarifications of the City Attorney that do not otherwise expand the City’s obligations; and
2. Authorizes the City Manager to take any other related actions consistent with the intention of the resolution.
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