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CC Resolution No. 00-261RESOLUTION NO.00-261 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AUTHORIZING EXECUTION OF AGREEMENT FOR HOUSING ASSISTANCE, PURCHASE OF EQUITY INTEREST IN HOUSE AND LOT LOCATED AT 10346 SCENIC BOULEVARD BY DAVID KNAPP, CITY MANAGER WHEREAS, there has been presented to the City Council an Agreement for Housing Assistance between the City of Cupertino an David Knapp for purchase of an equity interest in the house and lot located at 10346 Scenic Boulevard; and WHEREAS, the terms, conditions and provisions of the agreement have been reviewed and approved by the City Attorney. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Cupertino hereby approves the aforementioned agreement and authorizes the Mayor to execute said agreement on behalf of the City of Cupertino. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 16th day of October 2000, by the following vote: Vote Members of the City Council AYES: Burnett, Chang, James, Lowenthal, Statton NOES: None ABSENT: None ABSTAIN: None ATTEST: APPROVED: /s/Kimberly Smith /s/John Statton City Clerk Mayor, City of Cupertino AGREEMENT FOR HOUSING ASSISTANCE THIS AGREEMENT is executed this /�lk—day of C)d-fb slo to, ►r , 2000, by and between the CITY OF CUPERTINO, a municipal corporation, hereinafter referred to as "CITY" and DAVID KNAPP who has been employed as City Manager by CITY, hereinafter referred to as "KNAPP." RECITALS WHEREAS, CITY has retained KNAPP as its City Manager, the chief administrative position in CITY, after an extensive search for the most qualified candidate; and WHEREAS, CITY requires its City Manager to reside within the City limits; and WHEREAS, CITY and KNAPP have met and discussed compensation and realize that due to extremely high costs of housing within Cupertino, CITY must assist KNAPP in obtaining suitable housing within Cupertino; and WHEREAS, KNAPP contemplates the purchase of an equity interest in the house and lot located at 10346 Scenic Blvd., Cupertino, California, (hereinafter referred to as "the residence", and the CITY'S former City Manager DONALD BROWN; and WHEREAS, The CITY may elect to purchase DONALD BROWN'S interest in the residence at a price based upon current market value (hereinafter referred to as "the market value"). In order to determine the market value of PC/DIR/K/KA 9-11-00 the residence, the CITY has ordered the preparation of a written appraisal performed by a qualified appraiser. NOW, THEREFORE, IT IS AGREED as follows: 1. Purpose. The purpose of this Agreement is to set forth those understandings reached by CITY and KNAPP regarding housing assistance. It is understood that subsequent to the execution of the Agreement, KNAPP must execute further documents and KAY L. KNAPP, his wife, will execute the same documents with respect to the purchase of equity interest in the residence. 2. Terms of Employment. This Agreement addresses only one segment of KNAPP'S terms and conditions of employment. It is understood that CITY and KNAPP may agree to such other terms as are consistent with the municipal code and California law. Further, it is expressly agreed that nothing contained herein shall be construed to provide KNAPP a contract of employment as City Manager. CITY, through its City Council, continues to maintain its sole authority to retain or dismiss its City Manager from employment. The exercise of such authority by CITY shall not establish in KNAPP a cause of action for money damages due to a loss of the housing assistance provided herein. Nothing herein is intended to create any obligation to provide housing assistance for any person or persons except KNAPP himself. 3. City Loan for Purchase of Equity Interest. KNAPP may obtain, upon request, a loan from the CITY not to exceed $300,000 to be used for the purchase of an equity share in the residence. Said loan is to be evidenced by a promissory note in favor of the CITY secured by a first deed of trust encumbering the residence. Said promissory note shall contain the terms of repayment which are consistent with the terms specified for Department Heads PC/DIR/K/KA 9-11-00 described in City Council Resolution 99-070. KNAPP may prepay at any time all, or a portion, of this loan without penalty. KNAPP shall authorize CITY to make an automatic payroll deduction to cover payments with respect to the CITY'S loan. Such payroll deduction shall have priority over all other deductions except those required by law. The CITY shall provide KNAPP a year-end statement showing the amount allocated paid to principal and the amount paid as interest. Notwithstanding any provision to the contrary, the note shall become immediately due and payable upon sale or transfer of the residence or upon cessation of it as KNAPP'S primary residence. Said loan is only available to KNAPP as part of an equity interest purchase, whereby he invests a minimum of $50,000 of his own funds in the residence. 4. Equity Share Title. Title to the residence shall be held by CITY and KNAPP as tenants in common. 5. Allocation of costs with respect to the residence: A) KNAPP shall be responsible for taking out and maintaining, at his sole cost, fire, casualty, and liability insurance on the residence with coverage and terms, and in an amount, which are satisfactory to CITY and naming the CITY, and its officers, agents, and employees, as additional insureds thereunder, and as beneficiaries in proportion to the CITY'S equity interest. The City and the Manager shall share earthquake insurance premium in same proportion as their investments. B) KNAPP shall be responsible for making all necessary repairs to the residence, provided, however, that with respect to any specific repair whose cost is greater than $3,500, the parties shall share the cost of said repair in proportion to their respective equity interests at the time said repairs are made. Prior to commencing any work of repair costing more than $3,500, PC/DIR/K/KA 9-11-00 KNAPP shall confer with Mayor and City Attorney and obtain CITY'S agreement as to said repair. C) The parties shall share real property taxes and assessments on the same basis as their respective interests in the property. 6. Sale of the Residence. A) The parties may sell the residence at any time based upon a price which is mutually agreed upon by the parties. B) At the time of sale, the balance of loan made by CITY to KNAPP pursuant to paragraph 3 shall be fully paid. C) Upon said sale, the parties shall receive the amount of proceeds, after said loan above described and all costs of sale are paid, as follows: a) KNAPP shall receive a percentage of the balance based upon the ratio that his original contribution (including cash and loan) described in paragraph 3 of this Agreement bears to the total market value of the residence. As used in this Agreement, the phrase "total market value of the residence" means 1.4 million dollars, based upon recent appraisals. b) CITY shall receive the remaining percentage of said balance. 7. Adjustments of Equity Between the Parties. A) At any time or times during the period KNAPP resides at the residence, he may purchase all, or a portion of CITY'S interest in the residence. The price shall be established as provided herein. B) Unless the parties otherwise agree as to the price, each party shall appoint an appraiser, and their decisions shall be averaged and shall be final, unless they shall differ by 5% or more in value, in which case a third appraiser shall be selected by the other two appraisers, unless CITY and PC/DIR/K/KA 9-11-00 4 KNAPP jointly select such third appraiser. Said third appraiser shall appraise the residence, and his appraisal shall be averaged with the closest other appraisal. The amount so averaged shall be final. Costs of all appraisals shall be split equally between the parties. C) KNAPP shall pay CITY that portion of CITY'S interest he wishes to purchase based upon the formula for sale of residence contained in section 6 of this Agreement and CITY shall execute the necessary documents evidencing such transfer. 8. Termination of Agreement. A) KNAPP acknowledges and agrees that this housing assistance agreement is not assumable by any subsequent buyer or transferree of the residence in that it was specifically negotiated as part of the City Manager's employment agreement, that the payroll deductions provisions act as security to the benefit of the CITY, and that the general aspects of the City Manager/City Council relationship indicate that the assistance is fashioned for KNAPP alone. - B) It is further agreed that upon termination of KNAPP's employment, or upon his failure to utilize the residence as his primary residence, or upon his death, the balance of CITY'S loan shall become due and payable within 24 months; provided that KNAPP's employment extends for at least 5 years; otherwise, said loan will be due and payable within 12 months of termination. C) In the event of KNAPP's death, his executor or administrator shall be granted the option of purchasing CITY'S interest in the residence within 24 months of death. Upon occurrence of any other event described in paragraph 8B above, KNAPP shall be granted said option to purchase but only for a period of 24 months from the date of the occurrence; provided that PC/DIR/K/KA 9-11-00 KNAPP's employment extends for at least 5 years; otherwise said option extends for only 12 months from termination. During said option periods above described, KNAPP or his executor or administrator, as the case may be shall continue to make all payments with respect to the residence that KNAPP would otherwise be required to make regardless of whether any option described herein is actually exercised. D) In the event that KNAPP or his executor or administrator does not exercise his option to purchase the residence hereunder, CITY shall have the option to purchase KNAPP'S interest in the residence within one hundred eighty (180) days thereafter. E) Any option described above shall be for the purchase of the residence at a price established under paragraph 7B and with respect to the allocation formula described in paragraph 6. F) If neither party exercises any of the options described herein, then the property shall be sold in the open market at a price determined under paragraph 7 B and with respect to the allocation formula described in paragraph 6. G) Neither KNAPP nor his executor or administrator shall sell, lease, rent, or encumber the residence in any way without the written consent of CITY in advance. 9. Binding Effect. This Agreement binds the parties, their successors, and personal representatives, and is not assignable by either party without the express written consent of the other party. 10. Invalidity. In the event this Agreement or any part thereof should be held invalid, CITY and KNAPP agree to discuss alternatives within the CITY'S discretion; however, KNAPP has no vested right to alternative compensation. PC/DIR/K/KA 9-11-00 11. Spousal Agreement. This Agreement shall become effective only upon the consent and agreement thereto by KAY L. KNAPP, and shall become null and void if she shall refuse to execute any or all other documents deemed necessary by CITY to initially consummate this transaction in its entirety. KAY L. KNAPP also agrees to execute all documents necessary to carry out this Agreements at all times during its term. 12. Authority. The Mayor is hereby authorized and directed to execute all documents necessary to carry out this Agreement. Dated: 1 DAVID KNAPP I agree and consent to each of the provisions of this Agreement. CITY OF CUPERTINO , 6 � b-Sn Statton, Mayor Attest: City Clerk APPROVED AS TO FORM: 4—HARLES T. KILIAN PC/D1RWKA 9-11-00