January 26, 2005
Mr. David S. Broderick
Lehman Brothers, Inc.
399 Park Avenue, 8th Floor
New York, NY 10022
Dear Mr. Broderick:
This is in reply to your letter of January 20, 2005, wherein you forwarded to me the Disposition and Development and Owner Participation Agreement (DDOPA) executed by you and requested that I extend the deadline for acquisition of the Sunnyvale, LLC parcel until March 31, 2005. We appreciate receiving the signed copy of the DDOPA. However, Agency Counsel has requested written confirmation from Forum Development Group that the ownership interests in Fourth Quarter Properties XLVIII, LLC have been transferred from Forum Development Group to Lehman ALI, Inc, as is contemplated by the "Transfer and Assignment of Limited Liability Company Interests in Fourth Quarter Properties XLVII, LLC" executed in November 2004 by Forum Development Group and Lehman ALI, Inc and paragraph 59 of the November 15 Memorandum Decision of the bankruptcy court overseeing the Sunnyvale, LLC bankruptcy from Forum Development. Please provide such a letter no later than January 31, 2005.
Upon receipt of a letter from Forum Development Group confirming that Lehman ALI, Inc. is the sole owner of Fourth Quarter Properties XLVII, LLC, I am prepared to execute the DDOPA on behalf of the Agency and grant the 90-extension.
The City of Sunnyvale and its Redevelopment Agency respect the continuing efforts of Lehman Brothers to move ahead expeditiously with the Redevelopment of Town Center Mall. We appreciate your willingness, as expressed by Mark Calvert, to work closely with us in the selection of a new qualified developer for the project. We understand your desire to move quickly in the developer selection process in order to meet the time deadlines set by the Bankruptcy Court. We further understand that the Order confirming the Bankruptcy Plan and Memorandum Decision requires that a fully executed DDOPA and a fully executed OREA be deposited into escrow before closing of the sale of the property.
We wish to assist Lehman in meeting the requirements of the Court so that escrow may close at the earliest possible date. We understand that the conditions of the City’s use of Redwood Plaza is an issue which must be resolved before the OREA will be executed. In an effort to resolve this issue, we are offering revised language (attached) for Section 10.06 of the DDOPA. If the other parties to the OREA find this revision to be acceptable, we will schedule the necessary revision to the DDOPA to be addressed by the Redevelopment Agency on February 15, 2005.
We understand that the Agency ownership of the parking structures may be an issue for potential developers and their lenders. The Agency wishes to retain ownership of the structures, but is willing to encumber them such that they cannot be used by the Agency as collateral for a loan without the prior approval of the Developer.
We question if the time schedule set forth to select a new developer, with offers required by February 4, 2005, is so tight as to cause well qualified developers to pass on the project. The Agency is willing to support a request by Lehman to the Bankruptcy Court to extend the deadline for close of escrow in order to provide more time for selection of a qualified new developer. By separate letter to Mark Calvert, Robert Paternoster, Secretary of the Agency and Director of Community Development for the City, will comment on the list of potential developers submitted by Lehman. We urge you to concentrate on those developers identified as Tier I and Tier II in his letter.
I believe that we have reached a critical point in our mutual efforts to move this important project forward. I pledge my support and that of my staff in working cooperatively with you and your staff in resolving the few outstanding issues, selecting a well qualified developer, and closing escrow in accordance with the Plan approval by the Bankruptcy Court.
Sincerely yours,
Amy Chan,
Executive Director of the Agency
Cc: Chair and Members of the Redevelopment Agency
Mark Calvert, Capital Management & Consulting, LLC
Robert Paternoster, Secretary of the Agency
PROPOSED NEW WORDING
10.06 City Use of Plaza. The City and Agency shall be entitled to use the Redwood Plaza Area on the terms and conditions hereinafter set forth.
(a) City or Agency may use the Redwood Plaza Area only for special events that are (i) City or Agency sponsored and consistent with a First-Class Project, and not sponsored by a third party, and (ii) not likely to interfere with the operations of the Occupants of the Project, including but not limited to the operations of the Macy Facilities and the Target Facilities. The conditions described in the prior sentence are called the “Redwood Plaza Use Conditions”. The City or Agency shall be entitled to such use no more than fifteen (15) days each calendar year. Notice of the intent to schedule a public event in Redwood Plaza (Notice) by the Agency or City shall be given to the Plaza Events Committee at least sixty (60) days prior to the applicable event or such shorter period on which the Plaza Events Committee and Agency or City may agree. The Notice shall be in writing, shall be given by a duly authorized representative of the Agency or City and shall contain (i) a certification by such duly authorized representative on behalf of the City or Agency that the Redwood Plaza Use Conditions are satisfied and (ii) a statement describing the planned event in reasonable detail.
(b) Each such Notice shall be promptly reviewed by the Plaza Events Committee, a five-member committee consisting of a representative of the City appointed by the City Manager and representatives of the following private entities or their successors who shall be an employee or manager of each entity whose primary work location is within the Project: Project Developer, Macy’s, Target, one other merchant in the Project selected by and representing merchants other then Macy’s and Target, which representative should preferably be a local business owner. The Committee shall act to approve or disapprove the Notice within twenty (20) days following receipt of the Notice, or else the Notice shall be deemed approved. If a majority of the members of the Committee deny the Notice, it shall be denied; approval shall not be unreasonably withheld, and denial shall be based on a finding that the proposed event is in conflict with another event already planned in the Plaza or is likely to interfere with the operation of the Project, its tenants and/or the Macy Facilities and the Target Facilities.
(c) The Agency and City shall plan and operate events at the Redwood Plaza so as to minimize interference with pedestrian circulation through the Redwood Plaza Area and to stores facing or otherwise adjacent to the Redwood Plaza Area. The Agency or City shall reimburse Project Developer for the reasonable costs of all services associated with City or Agency use of the Redwood Plaza Area (including but not limited to security and Common Area clean-up) to the extent that the City or Agency does not provide such services.
(d) Nothing set forth in this Section is intended to, or shall be construed so as to, dedicate the Redwood Plaza Area to the public, create any third party beneficiary rights, grant any rights to the City or Agency other than the rights expressly set forth in this Section, or grant any rights to the City or Agency for any time periods in excess of the time periods described in this Section. Agency and the City acknowledge and agree that the Redwood Plaza Area is private, not public, property.
(e) Notwithstanding anything to the contrary set forth in this Agreement or in any other Separate Agreement to which the Agency or the City is a party, the provisions in this Section shall control in the event of any conflict between such provisions and the provisions of any such Separate Agreement. The City's consent to this Agreement shall be deemed to include, without limiting the generality of such consent, its consent to the provisions of this Section.