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W A T E R ' F N ( R G ! F F RIVERSIDE PUBLIC UTILITIES f Board Memorandum PUBLIC UTILITIr BOARD OF PUBLIC UTILITIES DATE: November 4, 2011 ITEM NO: 5 SUBJECT_ EXCLUSIVE NEGOTIATING AGREEMENT WITH HILLWOOD ENTERPRISES, LLP FOR THE UTILITY-OWNED ORANGE SHOW ROAD PROPERTIES LOCATED EASTERLY OF WATERMAN AVENUE IN SAN BERNARDINO, CALIFORNIA ISSUE: That the Board of Public Utilities consider approval of a proposed Exclusive Negotiating Agreement with Hillwood Enterprises, LLP ("Developer") for property located along Orange Show Road, easterly of Waterman Avenue, San Bernardino, CA and identified by Assessor Parcel Nos.0281-011-48,0281-021-45, 0281-021-50 and 0281-031-92 CProperty"). RECOMMENDATION: That the Board of Public Utilities recommend that the City Council approve the Exclusive Negotiating Agreement (the "ENA") with Hillwood Enterprises, LLP. BACKGROUND: Since 1981, the City of Riverside, through its Public Utilities Department (the "Utility") leased the 38-acre Property to a wholesale and retail lumber business. In October 2009, the 28-year relationship came to an end when the lessee defaulted on the lease and elected to forfeit the lease agreement. The Property reverted back to the Utility and has since remained vacant. In June 2011, the Developer approached the Utility with interest in the Property; the Utility has not been actively seeking a lease tenant since October 2009. The proposed ENA gives the Developer six(6) months to enter onto the Property for the purpose of obtaining data, making surveys and testing the soil to aid the Developer in determining its interest in leasing the Property. The Developer is considering utilizing the Property for a business park to potentially include light industrial and/or warehousing uses. The Developer will pay a one-time fee of$10 and shall furnish the title, parcel maps, records of survey and all related environmental documents pertaining to the Property to the Utility as they become available. In retum, the City agrees to: (1) not engage in negotiations with any third party for the sale or lease of the Property, or any portion thereof, during the term of the ENA; and (2)to give Hillwood a limited first right of refusal for six months after the termination of the ENA, should the City negotiate a disposition of the Property to a third party- The Property is located within the Bunker Hill Basin area of San Bernardino. Because of the water rights associated with all properties within this area, the Property is not surplus to the needs of the Utility and the City has no current plans to dispose of the Property. The Developer is aware of the City's intent to only lease this Property. This item will be heard by the Finance/Marketing Committee on Friday,October 28,2011. The Committee's action will be presented to the full Board at the November 4, 2011 meeting.