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HomeMy WebLinkAbout4000 RESOLUTION NO.4 0 0 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A PURCHASE AND SALE AGREEMENT BETWEEN THE CITY OF AUBURN AND AUBURN ON FIRST, LLC WHEREAS, the City of Auburn is the owner of certain real property located in the City of Auburn commonly known as 115 A Street NW, Auburn, Washington, which has been used by the City for city employee parking; and WHEREAS, Auburn on First, LLC, is the owner of certain real property located in the City of Auburn commonly known as 120 First Street NW, Auburn, Washington, which is adjacent to the above-described property owned by the City of Auburn; and WHEREAS, Auburn on First, LLC, desires to purchase the City of Auburn's property and the City of Auburn desires to sell the property to Auburn on First, LLC; and WHEREAS, the City of Auburn and Auburn on First, LLC, have negotiated an agreement which would be beneficial to both parties at a cost that is acceptable to the City. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, KING COUNTY, WASHINGTON, HEREBY RESOLVES as follows: Resolution No. 4000 March 7, 2006 Page 1 Section 1. The Mayor of the City of Auburn and the Auburn City Clerk are hereby authorized to execute a Purchase and Sale Agreement between the City of Auburn and Auburn on First, LLC, which agreement shall be in substantial conformity with the Agreement a copy of which is attached hereto, marked as Exhibit "A" and incorporated herein by this reference. Section 2. The Mayor is hereby authorized to implement such administrative procedures as may be necessary to carry out the directives of this legislation. Section 3. This resolution shall be in full force and affect upon passage and signatures hereon. DATED and SIGNED thisWb..day of V"\'1 a V"C ~~ 2006. t...- ----- -" P TER B. LEWIS Mayor Attest: '~~/'~ ;( I p{.b;J; " ~. 'Danlelle E. Daskam, City Clerk D Resolution No. 4000 March 7, 2006 Page 2 PURCHASE AND SALE AGREEMENT This PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of the :zc\l,l,'-day of March, 2006, by and between the CITY OF AUBURN, a Washington municipal corporation ("City"), and AUBURN ON 1st, LLC, a Washington limited liability company ("AOF"). RECITALS A. The City is the owner of certain real property and all improvements thereon located in the City of Auburn, County of King, Washington, legally described as: Block 7 in L.W. Ballard's Park Addition to Slaughter (Auburn), King County W.T. (Washington), as per plat recorded in Volume 3 of Plats, Page 91, records of King County, EXCEPT the South 100 feet, and EXCEPT the West 118 feet; TOGETHER WITH the West 10 feet of vacated Silver Street adjoining the north 96 feet of said Block 7, which attached thereto by operation of law upon vacation (the "City Parcel"). The City Parcel is more commonly known as 115 A Street NW, Auburn, Washington 98002 and more particularly known by the King County, Washington Tax Assessor as Assessor's Parcel No. 049200 0461. The City Parcel contains approximately 11,247 square foot of land area and is currently being used by the City for City employee parking (the "Employee Parking Lot"). B. AOF is the owner of certain real property located at the corner of I st Street NW and A Street NW, in the City of Auburn, King County, Washington, legally described as: (A) the west 188 feet of Block 7, Map of 1. W. Ballard's Park Addition to the town of Slaughter ("Auburn"), according to the plat thereof recorded in V olurne 3 of Plats, page 91, in the official records of King County, Washington; and (B) the south 100 feet of Block 7, Map of 1. W. Ballard's Park Addition to the town of Slaughter ("Auburn"), according to the plat thereof recorded in Volume 3 of Plats, page 91, in the official records of King County, Washington, except the west 118 feet thereof (collectively, the "AOF Property"). The AOF Property is more commonly known as 120 First Street NW, Auburn, Washington 98002 and more particularly known by the King County, Washington Tax Assessor as Assessor's Parcel Nos. 049200 0463 and 049200 0460. The AOF Property currently contains buildings which have been used as a part of a retail lumber aud hardware business. The AOF Property and the City Parcel are adjacent. C. AOF desires to purchase the City Parcel from the City and develop certain improvements on the City Parcel and the AOF Property (the "Combined Parcels"), including a new joint public/private parking lot containing approximately seventy (70) or more vehicular parking spaces (the "Parking Lot") and a new office building for medical- dental or comparable professional offices containing approximately five thousand (5,000) square feet or more of space (the "Office Building"), together with associated surface parking and landscaping improvements (collectively, the "Project"). D. The City desires to sell the City Parcel to AOF, on the terms and conditions set forth herein, as more fully described in Section 14 below. ~ 03/20/06 E. In addition to setting forth the terms of the purchase and sale of the City Parcel and the possible conveyance of the Parking Lot Lease, the parties desire to set forth their respective duties and obligations with respect to, and the process for development and construction of, the Project. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the City and AOF hereby agree as follows: 1. Certain Defined Terms. For purposes of this Agreement, the terms set forth below shall have the meaning assigned to them: 1.1 "Closing" or "Close of Escrow" means the recordation of the Deed in the Official Records and the City's receipt ofthe Purchase Price. 1.2 "Closing Date" means any business day selected by AOF that is no earlier than three (3) business days following the end of the Due Diligence Period and no later than ninety (90) days following the end of the Due Diligence Period. 1.3 "Deed" means a statutory warranty deed. 1.4 "Escrow" means the escrow opened with Escrow Agent for the consummation of the transaction described in this Agreement. 1.5 "Escrow Agent" means Pacific Northwest Title Company of Washington, Inc., 215 Columbia Street, Seattle, Washington 98104 Attn: Jane Jeppe, Senior Escrow Officer (Telephone: 206-622-1040 and 206-343-1336). 1.6 "Official Records" means the official real property records of King County, Washington. 1.7 "Opening of Escrow" means the date a fully executed copy of this Agreement is deposited with Escrow Agent. 1.8 "Parking Lot" has the meaning as set forth in Section 14 below. 1.9 "Parking Lot Lease" has the meaning as set forth in Section 14.4 below. 1.10 "Permits" has the meaning as set forth in Section 9.1.1 below. 1.11 "Purchase Price" has the meaning as set forth in Section 3. 1.12 "Title Company" means Pacific Northwest Title Company of Washington, Inc., 215 Columbia Street, Seattle, Washington 98104 Attn: Marilyn Sanden, Chief Title Officer. (!)) 2 03/20/06 1.13 "Title Policy" means an ALTA (1970 Form B) extended coverage owner's policy of title insurance issued by the Title Company to AOF with coverage in the amount of One Hundred Twenty Five Thousand and xx/100 Dollars ($125,000.00), showing title to the City Parcel vested in AOF subject only to the Permitted Exceptions. 2. Purchase and Sale. The City agrees to sell to AOF, and AOF agrees to purchase from the City, the City Parcel upon the terms and conditions set forth in this Agreement. 3. Purchase Price; Cash Payment. The total cash purchase price for the City Parcel (the "Purchase Price") shall be One Hundred Twenty Five Thousand and xxii 00 Dollars ($125,000.00), provided, however, if AOF offers (which AOF may choose to do or not do in its discretion) and the City accepts (which the City may choose to do or not do in its discretion) the Parking Lot Lease, the Purchase Price shall instead be Fifty Thousand and xx/IOO Dollars ($50,000.00). The Purchase Price, including the Deposit, shall be paid to the City in cash at Closing. 4. Earnest Money Deposit. On execution of this Agreement, AOF shall deposit with Escrow Agent the sum of Ten Thousand and xxl1 00 Dollars ($10,000.00) in cash (the "Deposit"), which shall be held by Escrow Agent as an earnest money deposit hereunder. The Deposit shall be held in Escrow and applied or disposed of by Escrow Agent as provided herein. Escrow Agent shall place the Deposit in an interest-bearing account approved by AOF and the City and all interest earned thereon shall be added to and become a part ofthe Deposit. 5. Due Diligence; Due Diligence Period. AOF shall have the right for a period of one hundred fifty (150) days from the date of this Agreement (the "Due Diligence Period") to conduct AOF's due diligence review, examination and inspection of all matters pertaining to its acquisition of the City Parcel, including such inspections, tests, and surveys as AOF deems appropriate to determine the suitability of the City Parcel for AOF's intended use. The City shall provide AOF and AOF's agents and consultants with reasonable access to the City Parcel and, to the extent such information is in the possession or control of the City, shall provide reasonable access to appropriate information respecting the City Parcel, subject to the terms and conditions of this Agreement. AOF's obligation to purchase the City Parcel shall be contingent upon its approval of the City Parcel after conducting its due diligence review. If, based upon AOF's review, examination and inspection, AOF shall determine in its sole discretion that it intends to acquire the City Parcel, then AOF shall promptly notify the City of such determination in writing prior to the expiration of the Due Diligence Period, whereupon AOF's due diligence contingency shall be deemed satisfied and waived, the Deposit shall become nonrefundable (except as otherwise provided herein), and AOF shall proceed to Closing. In the event that AOF shall fail to have delivered such notice to the City on or before the expiration of the Due Diligence Period, then this Agreement shall automatically terminate, the Deposit shall be returned to AOF, and AOF's rights under this Agreement shall be of no further force or effect. /" /1 3 03/20/06 5.1 Delivery of Due Diligence Items. Within three (3) business days after the date of this Agreement, the City shall make available to AOF for its review, the following items: 5.1.1 Tax Statements. Copies of the real estate tax statements for the City Parcel for the past two (2) years, if any; 5.1.2 Other Documents. All other documents in the City's possession or control relating to the City's ownership of the City Parcel and any improvements thereon, including surveys, planning and zoning documents and approvals, environmental and water and soils reports and tests and evidence confirming the location and capacity of all utilities and utility easements. 5.2 Title Commitment. Promptly after mutual execution of this Agreement, AOF shall obtain an extended preliminary title insurance commitment covering the City Parcel from the Title Company (the "Commitment"), together with copies of all recorded documents listed as special exceptions therein. Approval by AOF of the exceptions to title set forth in the Commitment (other than as hereinafter set forth) shall be a condition precedent to AOF's obligation to purchase the City Parcel. Unless AOF gives written notice that it disapproves the exceptions to title shown on the Commitment (other than the exceptions to title approved by AOF and described in Section 5.4 below), stating the exceptions so disapproved, within thirty (30) days after the receipt of the Commitment, AOF shall be deemed to have approved such exceptions. If AOF disapproves any title exceptions, the City shall have a ten (10) day period after its receipt of AOF's written notice of disapproval of the same within which to provide written notice to AOF as to which of such disapproved title exceptions the City will remove (or cause to be removed) from title; provided, however, that the City shall not be required to actually remove such exceptiones) until Closing. If, for any reason, the City's notice given pursuant to the immediately preceding sentence does not covenant to remove all of AOF's disapproved title exceptions at or prior to Closing, AOF shall have the right to terminate this Agreement by written notice to the City and Escrow Agent given within ten (10) days after the earlier of the expiration of such ten (10) day period or the date the City informs AOF that it does not intend to remove the disapproved items (the "Termination Notice"). AOF's failure to deliver the Termination Notice within such ten (10) day period shall be deemed AOF's approval of any such previously disapproved title exception. If AOF delivers the Termination Notice within such ten (10) day period, the obligation of the City to sell, and AOF to buy, the City Parcel as herein provided shall terminate and the Deposit shall be returned to AOF. AOF shall have the option to waive the condition precedent set forth in this Section 5.2 by written notice to the City. In the event of such waiver, such condition precedent shall be deemed satisfied. .jJ 4 03/20/06 5.3 Permitted Exceptions. In addition to such other exceptions to title as may be approved by AOF pursuant to the provisions of Section 5.2 above, AOF shall accept title to the City Parcel subject to the following (collectively, the "Permitted Exceptions"): 5.3.1 The printed exceptions which appear in the ALTA (Form 1970B) form extended coverage owner's policy of title insurance issued by Title Company in the State of Washington; and 5.3.2 Items created by, or on behalf of, AOF. 5.4 No New Leases or Contracts. Prior to Closing, the City shall not enter into any new leases, contracts or agreements affecting the City Parcel without the prior written consent of AOF, except the City may enter into interim contracts or agreements in connection with the management, maintenance, repair or preservation of the City Parcel in the normal course of business if each such contract or agreement expires or is terminated at or prior to Closing. 5.5 AOF's Right of Entry. AOF, and its agents and consultants, at AOF's sole expense and risk, may enter the City Parcel during the term of this Agreement at reasonable times scheduled in advance with the City for the purpose of AOF's due diligence study of the City Parcel. AOF shall (a) exercise care at all times on or about the City Parcel, and (b) take precautions for the prevention of injury to persons or damage to property on or about the City Parcel. AOF shall keep the City Parcel free from all mechanics', materialmen's and other liens, and all claims thereof, arising from any work or labor done, services performed, or materials and supplies furnished in connection with AOF's actions in the exercise of its right of entry on the City Parcel, and AOF shall indemnify and defend the City against and hold the City harmless from all such liens and claims. If this transaction fails to close for any reason other than a default by the City hereunder, AOF shall furnish the City with a copy of all such inspections, studies and surveys and shall assign or quitclaim all of AOF's right, title and interest in and to any permits, approvals, or permit or approval applications. 6. Closing. 6.1 Time for Closing. This purchase and sale shall be closed in the office of Escrow Agent on the Closing Date. AOF and the City shall deposit in Escrow with Escrow Agent all instruments, documents and monies necessary to complete the sale in accordance with this Agreement. Funds held in reserve accounts pursuant to escrow instructions shall be deemed, for purposes of this definition, as available for disbursement to the City. 6.2 Closing Costs. 6.2.1 City's Costs. The City shall pay (a) the premiums for the standard coverage portion of the Title Policy, including applicable sales tax, (b) one-half (Yz) of all escrow fees and costs, (c) the City's share of prorations, if any, (d) t~) 5 /I 03/20/06 real estate excise taxes due as a result of this transaction, and (e) all assessments for local improvement or special benefit districts. 6.2.2 AOF's Costs. AOF shall pay (a) one-half (Yz) of all escrow fees and costs, (b) the recording fees for the Deed, (c) AOF's share of prorations, if any, and (d) any additional premium charged for extended coverage for the Title Policy and any additional endorsements or coverage AOF may require, including applicable sales tax. 6.2.3 Other Costs. AOF and the City shall each pay its own legal fees and fees of its own consultants. All other costs and expenses shall be allocated between AOF and the City in accordance with the customary practice of King County, Washington. 6.3 Real Property Taxation. The parties acknowledge that, as public property, the City Parcel has not been subject to real property taxation. Accordingly, AOF shall be responsible for all real property taxes due and owing from and after the Closing. 6.4 Closing Documents. 6.4.1 City's Documents. At Closing, the City shall deliver to Escrow Agent the following instruments and documents: 6.4.1.1 The executed and acknowledged Deed conveying the City Parcel to AOF; 6.4.1.2 The executed real estate excise tax affidavit to accompany the Deed; and 6.4.1.3 An executed nonforeign person affidavit in the form required under Section 1445 of the Internal Revenue Code. 6.4.2 AOF's Documents. At Closing, AOF shall deliver to Escrow Agent the following funds, instruments and documents: 6.4.2.1 The balance of the Purchase Price in accordance with Section 3; 6.4.2.2 AOF's share of costs and expenses as determined in accordance with Section 6.2; and 6.4.2.3 The executed real estate excise tax affidavit referenced in Section 6.4.1.2 above. 7. Possession. AOF shall be entitled to possession of the City Parcel upon Closing, free and clear of all tenancies, licenses and occupants. /f 6 03/20/06 8. Title Insurance. As soon as available after Closing, the City shall cause the Title Company to issue to AOF the Title Policy, dated as of the Closing Date, subject only to the Permitted Exceptions. 9. Conditions to Closing. 9.1 AOF's Conditions to Closing. Notwithstanding anything to the contrary set forth herein, AOF's obligation to close hereunder is expressly subject to satisfaction or waiver by AOF in writing of each of the following conditions: 9.1.1 Permits. AOF shall be responsible for applying for and obtaining all governmental permits, approvals and consents necessary for development and construction ofthe Office Building and, if AOF elects to construct it, then, in addition the Parking Lot (the "Permits"). 9.1.2 Lease Documents. If applicable, AOF and the City shall have approved the Parking Lot Lease, as described in Section 14.4 below. 9.2 City's Conditions to Closing. Notwithstanding anything to the contrary set forth herein, the City's obligation to close hereunder is expressly subject to satisfaction or waiver by the City in writing of each of the following conditions: 9.2.1 Lease Documents. If applicable, the City and AOF shall have approved the Parking Lot Lease as described in Section 14.4 below. 10. Representations and Warranties. 10.1 City's Representations and Warranties. In addition to any other representations or warranties of the City elsewhere in this Agreement, the City represents and warrants to AOF now, and as ofthe Date of Closing, that: 10.1.1 Authority. The City, and the person signing on behalf of the City, has full power and authority to execute this Agreement and perform the City's obligations hereunder, and all necessary action to authorize this transaction has been taken. 10.1.2 Zoning. Redevelopment of the Combined Parcels for purposes of construction and operation of the Office Building, a Parking Lot (if desired by AOF) and the related improvements is in compliance with the City's current applicable zoning and land use laws and regnlations. 10.1.3 Hazardous Substances. The City has not received notification of any kind from any governmental agency suggesting that the City Parcel is or may be targeted for a Hazardous Substances cleanup; to the best of the City's knowledge the City Parcel has not been used (a) for the storage, disposal or discharge of oil, solvents, fuel, chemicals or any type of toxic, dangerous, hazardous or biological waste or SUb~ 7 03/20/06 (collectively, "Hazardous Substances"), or (b) as a landfill or waste disposal site; to the best of the City's knowledge the City Parcel has not been contaminated with any Hazardous Substances; and to the best of the City's knowledge, there are no underground storage tanks on the City Parcel. 10.1.4 Other Rights. No person or entity has any right to lease, license, occupy andlor purchase any interest in the City Parcel or any part thereof. 10.2 AOF's Representations and Warranties. In addition to any other representations and warranties of AOF elsewhere in this Agreement, AOF represents and warrants to the City now, and as of the Date of Closing, that (a) AOF has full power to execute, deliver and carry out the terms and provisions of this Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement; and (b) the individual executing this Agreement on behalf of AOF has the authority to bind AOF to the terms and conditions of this Agreement. 10.3 "AS IS" CONDITION OF PROPERTY. THE PURCHASE PRICE REFLECTS THAT THE CITY PARCEL IS BEING PURCHASED BY AOF ON AN "AS IS" "WHERE IS" AND "WITH ALL FAULTS" BASIS, EXCEPT TO THE EXTENT OF REPRESENTATIONS AND WARRANTIES SPECIFICALLY MADE BY THE CITY HEREIN OR IN THE WARRANTY DEED OR OTHER DOCUMENTS TO BE DELIVERED TO AOF AT CLOSING. AOF HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND PRIVILEGES ARISING OUT OF, OR WITH RESPECT TO, ANY REPRESENTATIONS, WARRANTIES OR COVENANTS, WHETHER EXPRESS OR IMPLIED, WHICH MAY HAVE BEEN MADE OR GIVEN, OR WHICH MAY BE DEEMED TO HAVE BEEN MADE OR GIVEN, BY THE CITY OR ITS REPRESENTATIVES, INCLUDING BUT NOT LIMITED TO ANY BROKER, EXCEPT FOR THOSE REPRESENTATIONS, WARRANTIES AND COVENANTS SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY THE CITY AT CLOSING. EXCEPT TO THE EXTENT OF ANY REPRESENTATIONS OR WARRANTIES SET FORTH ELSEWHERE IN THIS AGREEMENT OR IN ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY THE CITY AT CLOSING, AOF HAS NOT RELIED UPON AND WILL NOT RELY UPON, AND THE CITY EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO, AND SHALL HAVE NO LIABILITY FOR: (I) THE CONDITION OF THE CITY PARCEL OR ANY BUILDINGS, STRUCTURES OR IMPROVEMENTS LOCATED THEREON OR THE SUITABILITY THEREOF FOR HABITATION, OCCUPANCY OR FOR AOF'S INTENDED USE OR FOR ANY USE WHATSOEVER; (II) COMPLIANCE WITH ANY APPLICABLE BUILDING, ZONING OR FIRE LAWS OR REGULATIONS; (III) EXCEPT if 8 03/20/06 SPECIFICALLY SET FORTH ABOVE, THE PRESENCE OF ANY HAZARDOUS SUBSTANCES IN ANY IMPROVEMENTS ON THE CITY PARCEL, INCLUDING WITHOUT LIMITATION ASBESTOS OR FORMALDEHYDE, OR THE PRESENCE OF ANY ENVIRONMENTALLY HAZARDOUS WASTES OR MATERIALS ON OR UNDER THE CITY PARCEL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT TO THE EXTENT OF ANY REPRESENTATIONS OR WARRANTIES SET FORTH ELSEWHERE IN THIS AGREEMENT OR IN ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY THE CITY AT CLOSING, THE CITY SHALL HAVE NO LIABILITY TO AOF WITH RESPECT TO THE CONDITION OF THE CITY PARCEL UNDER COMMON LAW, OR ANY FEDERAL, STATE, OR LOCAL LAW OR REGULATION, INCLUDING BUT NOT LIMITED TO THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980 AS AMENDED, 42 U.S.C.A. SECTIONS 9601 ET SEQ., AND THE WASHINGTON MODEL TOXICS CONTROL ACT ("MTCA"), RCW 70.105D. AOF HEREBY RELEASES AND WAIVES ANY AND ALL CLAIMS WHICH AOF HAS OR MAY HAVE AGAINST THE CITY UNDER ANY OF THE FOREGOING LAWS OR WITH RESPECT TO THE CONDITION OF THE CITY PARCEL, EXCEPT TO THE EXTENT OF ANY CLAIMS AOF MAY HAVE ARISING FROM ANY EXPRESS REPRESENTATIONS, WARRANTIES OR COVENANTS OF THE CITY UNDER THIS AGREEMENT OR ANY DOCUMENTS TO BE EXECUTED AND DELIVERED BY THE CITY AT CLOSING. AOF ACKNOWLEDGES TO THE CITY THAT AOF IS GIVEN THE OPPORTUNITY UNDER THIS AGREEMENT TO FULLY INSPECT THE CITY PARCEL AND AOF ASSUMES THE RESPONSIBILITY AND RISKS OF ALL DEFECTS AND CONDITIONS, INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT CANNOT BE OBSERVED BY CASUAL INSPECTION, SUBJECT TO THE EXCEPTION OF RIGHTS E ESSL Y SET FOR TIjABOVE. CITY: AOF: ;$/ 11. Maintenance of Property; Risk of Loss, Condemnation. 11.1 Maintenance of Property. From the date of this Agreement until the Closing Date (or any earlier termination of this Agreement), the City agrees to maintain the City Parcel in substantially the same condition existing as of the date hereof, ordinary wear and tear, damage by casualty excepted. 11.2 Risk of Loss; Condemnation. Risk of loss of or damage to the improvements on the City Parcel shall be borne by AOF at all times and no event of casualty or damage shall affect the parties' obligations hereunder or the Purchase Price, however, AOF shall have the right to receive any insurance proceeds due the City in connection with any casualty or damage and the City hereby covenants to maintain commercially reasonable casualty insurance in p]= Mfu "''I,co' '" fuc City P=] 9" ,II tim prim to C]"". The City 'h~ 03/20/06 promptly notify AOF of any condemnation or eminent domain proceeding which affects the City Parcel, and the City covenants and agrees not to commence or pursue any such action. In the event of any condemnation or eminent domain proceeding by any entity other than the City, or a deed in lieu or under threat thereof, which affects a material portion of the City Parcel, AOF may elect either to terminate this Agreement, or to purchase the City Parcel in the condition existing on the Closing Date without adjustment of the Purchase Price. If AOF elects to terminate this Agreement, the Deposit shall be returned to AOF. If AOF elects to purchase the City Parcel, the City shall not be liable to restore same, and AOF shall be entitled to any condemnation award or payment in lieu thereof payable to the City in its capacity as the owner thereof. 12. Default. 12.1 Time of Essence. Time is of the essence of this Agreement. 12.2 City's Remedies for AOF's Default and Failure to Close. If AOF fails, without legal excuse, to complete the purchase of the City Parcel in accordance with this Agreement, the City's sole and exclusive remedy shall be to retain the Deposit as liquidated damages. AOF expressly agrees that the retention of the Deposit by the City represents a reasonable estimation of the damages in the event of AOF's default and failure to close hereunder, that actual damages may be difficult to ascertain and that this provision does not constitute a penalty. In this respect, AOF and the City acknowledge that these damages have been specifically negotiated between AOF and the City and are, inter alia, to compensate the City for delaying the eventual sale of the City Parcel and to compensate the City for its costs and expenses associated with this Agreement. AOF hereby waives the rights and benefits of any law, rule, regulation or order now or hereafter existing that would allow AOF to claim a refund of the Deposit as unearned earnest money, a penalty or for any other reason except default by the City. 12.3 City's Remedies for AOF's Default. Except as provided in Section 12.2 above and except as to any breach by AOF of its covenants under Section 14.1 hereof, should AOF breach any of its obligations under this Purchase and Sale Agreement, and such failure shall not be cured by AOF within thirty (30) days after AOF's receipt of written notice thereof, the City shall have the right to pursue any remedies available to it at law or equity, but excluding rescission. If AOF shall breach its covenants under Section 14.1 hereof, the City shall have, as its exclnsive remedy, the right of repurchase as set forth in Section 14.1 hereof. 12.4 AOF's Remedies for City's Default. Ifthe City fails to complete the sale of the City Parcel in accordance with this Agreement, AOF shall have and may enforce the following exclusive remedies: (a) seek specific performance; (b) terminate this Agreement, receive a refund of the Deposit and recover from the City all of AOF's damages, including but not limited to actual third-party costs and expenses incurred by it in connection with the transaction and the /1 10 03/20/06 Project; or (c) seek rescission of this Agreement and receive a refund of the Deposit. 13. Notices. All notices, demands and other communications required or permitted to be given hereunder shall be in writing, and shall be sent by personal delivery (including by means of professional messenger or courier service) or registered or certified mail, postage-prepaid, return-receipt requested. Notice shall be deemed to have been given if personally delivered, upon receipt, and if sent by mail, two (2) days after duly deposited in the U.S. Mail. The parties' respective addresses for notices are as follows: If to the City: With copies to: If to AOF: With copies to: City of Auburn Finance Department 25 West Main Street Auburn, W A 98001-4998 Attn: Finance Director City of Auburn City Attorney's Office 25 West Main Street Auburn, W A 98001-4998 Attn: City Attorney Auburn on 1st, LLC 3700 Beazer Road Bellingham, W A 98226 Attn: Jeffrey Oliphant, President Michael John Klein, CPA 5743 CorsaAvenue, Suite 216 Westlake Village, CA 91362 And to: Anthony Rafel, Esq. Rafel Manville, PLLC 999 Third Avenue, Suite 1600 Seattle, W A 98104 Notice of change of address shall be given by written notice in the manner detailed in this Section 13. 14. Development of Project, Parking Lot. As additional consideration for the City's willingness to sell the City Parcel to AOF, AOF hereby covenants and agrees, at its expense, to develop and construct the upon the City Parcel andlor the AOF Property, an office building ("Office Building") and, if AOF elects, a Parking Lot for use in whole or in part by the City, subject to the following terms and conditions: 1// 11 03/20/06 14.1 Office Building. 14.1.1 AOF Covenants. AOF shall develop and construct the Office Building, at its sole cost and expense. AOF initially intends to use the Office Building for operation of a medical-dental or other professional office building and associated uses. The Office Building shall be not less than five thousand square feet (5,000 sf) in size; it may be one or multiple stories in height and more than one Office Building may be constructed. The Office Building(s) may be located anywhere on the AOF Property or the City Parcel. The Office Building(s) shall comply with all applicable governmental requirements and AOF shall obtain and pay for all applicable permits and approvals therefor. AOF shall substantially complete construction and occupancy of the Office Building on or before the date twenty-four months after Closing, subject to Permitted Delays. As used herein (and also as used in Section 14.3 below), the term "Permitted Delays" shall mean and include any delays which are the result of: (i) strikes, lockouts, or labor disputes; (ii) failure of power or other utilities; (iii) inability to obtain labor or materials or reasonable substitutes therefor; (iv) war, acts of terror, court order, condemnation, civil unrest, riot, fire or other casualty; or (v) extreme or unusual weather conditions, acts of God or unforeseen soil conditions. 14.1.2 City Covenants. The City shall cooperate with AOF in connection with the approval of plans and issuance of permits for construction of the Office Building and related improvements, including landscaping and site improvements. This Purchase and Sale Agreement does not constitute such approval or the issuance of any such permits, which shall be considered, reviewed and, if appropriate, issued by the City and other governmental agencies in the ordinary course of business. 14.1.3 Default by AOF, City's Exclusive Remedy. If AOF fails to complete the Office Building within the time period set forth in Section 14.1.1 above, the City's sole and exclusive remedy for such default by AOF shall be, at the City's option, to purchase back the City Parcel from AOF within one hundred twenty (120) days after AOF's default under Section 14.1.1, at a price equal to Ninety-Five Thousand and xxllOO Dollars ($95,000.00). Prior to exercising such exclusive remedy, the City shall give AOF notice of such default and a reasonable opportunity to cure such default. To memorialize the herein remedy, the parties shall record at the time of Closing a Memorandum reflecting the existence of the City's aforesaid remedy, which Memorandum shall, at AOF's request, be subsequently subordinated to the interest of AOF's construction lender and the lien of its construction mortgage. 14.2 Parking Lot. If as part of its development of the Office Building, AOF elects to provide additional parking to replace the thirty (30) parking spaces presently on the City Parcel, that is, provide the City with thirty parking & 12 I/" 03/20/06 for the City's exclusive use ("Parking Lot"), then the parties shall enter into a lease ("Parking Lot Lease") upon the terms and conditions hereinafter set forth. There shall be no obligation on the part of AOF to so provide the Parking Lot or enter into the Parking Lot Lease. If AOF does offer to provide the Parking Lot and the parties do enter into the Parking Lot Lease, then the Purchase Price for the City Parcel shall be reduced as set forth in Section 3 hereof. 14.3 Completion of Parking Lot. If AOF shall elect to provide the Parking Lot, AOF shall complete construction of the Parking Lot, at its sole cost and expense, and the Parking Lot shall be available for occupancy and use by the City on or before twenty-four (24) months after the Closing, subject to Permitted Delays. The Parking Lot shall be constructed in compliance with all applicable City codes and Chapter 18.22 of the City's Zoning Code. 14.4 Parking Lot Lease. If AOF shall elect to provide the Parking Lot, it is the intent of the parties that following completion of the Parking Lot, AOF shall convey to the City at that time the Parking Lot Lease, which shall contain thirty (30) vehicular parking spaces and shall be located and configured consistent with that shown in the plans prepared by AOF and approved by the City as part of the permitting process. The form of the Lease documents shall be prepared by AOF in accordance with applicable law and submitted to the City within one hundred twenty (120) days after the date of AOF's decision to provide the Parking Lot to the City. The term of the Parking Lot Lease shall be for a period of not more than ten (10) years and the lease rate shall be One Dollar ($1.00) per year. The Lease Documents shall be subject to the City's review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. 14.5 Operations. The Parking Lot shall be designed in such a manner as to clearly designate AOF's parking spaces and the City's parking spaces under the Lease Documents and each party shall be responsible for the operation and day- to-day cleaning and maintenance of their respective Parking Spaces. Nothing herein shall preclude the parties from entering into a shared parking and cost sharing arrangement, rather than segregated parking spaces and segregated costs. 14.6 No Obligation to Provide Parking Lot. Nothing herein shall be construed to imply, and AOF shall not be required to construct or provide the Parking Lot or any parking spaces for use by the City. 15. General. This is the entire agreement of AOF and the City with respect to the matters covered hereby and supersedes all prior agreements between them, written or oral. This Agreement may be modified only in writing, signed by AOF and the City. Any waivers hereunder must be in writing. No waiver of any right or remedy in the event of default hereunder shall constitute a waiver of such right or remedy in the event of any subsequent default. This Agreement shall be governed by the laws of the State of Washington. This Agreement is for the benefit only of the parties hereto and shall inure to the benefit of and bind the heirs, personal representatives, successors and permitted assigns of the parties hereto. The invalidity or unenforceability of any Provisff 13 /' 03/20/06 Agreement shall not affect the validity or enforceability of any other provision hereof. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 16. Commissions. The City represents to AOF that the City has engaged no broker, agent or finder in connection with the negotiations leading to this Agreement. AOF represents to the City that AOF has not engaged or in any way dealt with any broker, agent or finder in connection with the negotiations leading to this Agreement. Each party hereby agrees to indemnify, defend and hold the other party harmless from and against any claims for broker's, agent's, or finder's fees or commissions arising from or through the actions of the indemnifying party. 17. Assignment. AOF may, without need of the City's consent bnt after at least five (5) days prior written notice to the City, assign this Agreement and AOF's rights hereunder prior to Closing to an entity owned or controlled by AOF or which is under common control with AOF or Oliphant Real Estate Services, Inc., but no such assignment shall release AOF from its obligations under this Agreement. 18. Attorneys' Fees. In the event suit or action is instituted to interpret or enforce the terms of this Agreement, the prevailing party therein shall be entitled to recover from the other party such sum as the Court may adjudge reasonable as attorneys' fees, including fees incurred at trial, on any appeal and in any petition for review. 19. Exclusivity. During the term of this Agreement the City shall not market nor list the City Parcel for sale, nor accept any offers from third parties with respect to sale ofthe City Parcel. 20. Reservation of Police Power. Notwithstanding anything to the contrary set forth herein, AOF understands and acknowledges that the City's authority to exercise its police (regulatory) powers in accordance with applicable law shall not be deemed limited by the provisions of this Agreement. SIGNED in duplicate original as ofthe date first above written. AOF: AUBURN ON 1st, LLC a Washington limited liability company By: Oliphant Real Estate Services, Inc. a Washington corporation its Manager 14 03/20/06 CITY: CITY OF AUBURN BQ~ Peter B. Lewis, Mayor .~ --.. A tlest: ~--" 7 " .' p" ^ \ --< tv.. ~~L.J>'-80S=:"'-' ,.....- ~-,~vl.~ City Clerk ( - (f 15