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HomeMy WebLinkAboutReso - CC - 024-2016RESOLUTION NO. 24-2016 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME AUTHORIZING THE CITY MANAGER TO EXECUTE AN EXCLUSIVE NEGOTIATING AGREEMENT WITH PACIFIC WEST COMMUNITIES, INC. FOR BURLINGAME CITY PARKING LOTS F AND N WHEREAS, the City of Burlingame issued a request for proposals in December 2014 seeking qualified developers interested in creating affordable housing and enhanced parking facilities on Burlingame City Parking Lots F and N; and WHEREAS, the Council conducted extensive review of the responsive proposals and in June, 2015, selected Pacific West Communities, Inc., as its preferred developer for the potential project; and WHEREAS, entering into an exclusive negotiating agreement serves to protect both the City and the developer during the initial project negotiation period; and WHEREAS, the developer has agreed to the terms contained in the attached draft exclusive negotiating agreement; and WHEREAS, the Council finds that the attached negotiating agreement is in the best interests of the City of Burlingame and does not commit the City to approve any development on the sites in question, but rather provides a framework for negotiations. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES HEREBY RESOLVE, DETERMINE, AND FIND AS FOLLOWS: 1. The City Council authorizes the City Manager to execute an exclusive negotiating agreement in the form attached with Pacific West Communities, Inc., for the potential transfer and development of Lots F and N 2. The City Council further authorizes City staff to negotiate a potential agreement providing for site transfer and/or control to Pacific West Communities, Inc., to be brought back to the Council for review. OAK #4817-9347-6399 v1 - 1 - Ann Keighran, I, Meaghan Hassel -Shearer, City Clerk of the City of Burlingame do hereby certify that the foregoing Resolution was introduced at a regular meeting of the City Council on the 4th day of April, 2016, and was adopted thereafter by the following vote: AYES: Councilmembers: NOES: Councilmembers: ABSEP BEACH, BROWNRIGG, COLSON, KEIGHRAN, ORTIZ NONE OAK #4817-9347-6399 v1 - 2 - Exclusive Negotiating Agreement: AGREEMENT TO NEGOTIATE EXCLUSIVELY THIS AGREEMENT TO NEGOTIATE EXCLUSIVELY ("Agreement") dated for reference purposes as of , 2016 ("Date of Agreement"), is entered into by and between the CITY OF BURLINGAME, a California municipal corporation ("City"), and PACIFIC WEST COMMUNITES, INC., an Idaho corporation which will do business in California as Idaho Pacific West Communities, Inc. ("Developer"). RECITALS.• A. In December 2014, City issued a Request for Proposals ("RFP") seeking qualified developers interested in developing the City -owned surface parking lots located south of Howard Avenue between Park Road and Highland Avenue, known as Lots F & N, as depicted in Exhibit A attached hereto ("Site") with affordable housing and underground and/or structured parking. B. Eight prospective developers submitted development proposals in response to City's RFP. City invited three of the eight developers to present their development plans to the City Council and community on March 26, 2015. At the conclusion of the March 26th meeting, City Council provided feedback to the three development teams and the three teams subsequently presented revised concepts to the City Council at a public meeting on June 9, 2015. At the June 9h meeting, City invited two of the three participants, including Developer, to present further refined proposals to the City Council. C. On or about July 6, 2015, City Council considered the proposals submitted by the two prospective developers and selected Developer as the developer with whom City desires to exclusively negotiate regarding the potential development of the Site as an affordable housing project, including underground and/or structured parking, consistent with the requirements of the Burlingame Downtown Specific Plan ("Specific Plan"). D. City and Developer now desire to enter into this Agreement in order to set forth the terms under which City and Developer will exclusively negotiate the terms and conditions of a proposed Disposition and Development Agreement ("DDA") providing for conveyance via fee sale or ground lease and development of the Site. NOW THEREFORE, City and Developer hereby agree as follows: AGREEMENTS: Negotiations. 1.1 Good Faith Negotiations. City and Developer, acknowledging that time is of the essence, agree for the Negotiation Period set forth below to negotiate diligently and OAK #4817-9347-6399 v1 - 3 - in good faith to prepare a DDA (defined in Recital D, above) to be considered for approval by City and Developer, in the manner set forth herein, with respect to the conveyance via fee sale or ground lease and development of the Site (defined in Recital A, above). City agrees, for the period set forth below, not to negotiate with any other person or entity regarding the sale or development of the Site or any portion thereof. A DDA resulting from the negotiations hereunder shall become effective only if and after a DDA has been considered and approved by the Developer and the City Council at a public hearing called for such purpose. If a DDA is executed by City and Developer, the DDA shall thereafter govern the rights and obligations of the parties with respect to the development of the Site. 1.2 Duration of this Agreement. This Agreement shall become effective upon execution by the parties and shall remain in effect until June 15, 2016 ("Negotiation Period"). Upon expiration of the Negotiation Period, this Agreement shall automatically terminate, unless the Negotiation Period has been mutually extended by City and Developer as provided below. The City Manager may approve an extension of the Negotiation Period for up to an additional ninety (90) days, if he (she) determines in his (her) sole discretion that Developer has made substantial progress towards meeting the performance milestones identified in the Schedule of Performance attached hereto as Exhibit B ("Schedule of Performance"). Any further extension of the Negotiation Period shall require the approval of the City Council, which may be granted or denied in its sole discretion. 1.3 Deposit. Within five (5) days following execution of this Agreement by City, Developer shall submit to City a good faith cash deposit in the amount of EIGHTY THOUSAND DOLLARS ($80,000) ("Deposit"). City shall deposit such funds in an interest-bearing account and such interest, when received by City, shall become part of the Deposit. City is authorized to use the Deposit to pay its actual, reasonable out-of-pocket expenses incurred in carrying out its obligations under this Agreement, including the costs of City's economic/financial consultant and special legal counsel fees and costs incurred by City in connection with the negotiation, drafting and consideration of the proposed DDA for approval (collectively, "City Expenses"), but specifically excluding the cost of City staff time, including City Attorney work, which shall be borne by City. The following expenses are anticipated to be incurred by City in carrying out its obligations under this Agreement: (1) up to $30,000 for pro forma review, analysis and the preparation of a Government Code section 53083 economic development subsidy report by Keyser Marston & Associates and (2) up to $50,000 for special counsel legal services to be performed by Burke Williams & Sorensen LLP in connection with the negotiation and drafting of the proposed DDA and affordable housing agreement ("Anticipated City Expenses"). In the event City determines that, in order to carry out its obligations under this Agreement, the City Expenses will exceed the Anticipated City Expense, such excess City Expenses shall be paid by City. City shall transmit to Developer, not more frequently than monthly, a copy of each invoice, bill or other evidence that City has incurred City Expenses. City's legal and advisory services invoices shall be redacted as necessary to preserve attorney-client privilege. OAK #4817-9347-6399 v1 - 4 - If, notwithstanding City's and Developer's mutual diligent, good faith negotiations, the parties have not entered into a DDA on or before expiration of the Negotiation Period or any extension thereof, City shall return to Developer the unexpended portion of the Deposit, if any. 2. Development Concept. The negotiations hereunder shall be based on the Developer's proposed development concept that includes the concurrent development of: a multi -family affordable housing rental project of approximately 144 units, including approximately 78 workforce housing units (62 of which shall be affordable to households up to 60% of area median income ("AMI")) and 66 senior age restricted units (53 of which shall be affordable to households up to 60% of AMI); a pocket park on the panhandle portion of Lot F; below -grade parking with approximately 170 spaces for the multi -family residential component; and an additional approximately 371 below -grade and/or structured parking spaces to replace, at a greater than 1 -to -1 ratio, the existing surface parking spaces located on the Site, together with appurtenant on-site and off-site improvements, including hardscape and landscaping, all to be developed in a manner consistent with the Specific Plan (collectively, the "Project"). 3. Developer's Responsibilities. 3.1 Full Disclosure. Developer is required to make full disclosure to City of its principals; officers; major stockholders, partners or members; joint venturers; and its directly involved negotiators, development managers, consultants and managerial employees (collectively, "Developer Parties"), and all other material information concerning Developer. Any change in the identity of the Developer Parties shall be subject to the approval of the City Manager, not to be unreasonably withheld. Developer shall make and maintain full disclosure to City of its proposed methods of financing to be used in the acquisition of the Site and development of the Project. Final approval of financing will be addressed in the DDA. 3.2 Schedule of Performance: Progress Reports. Developer shall commence and complete performance of the work described in the Schedule of Performance within the times set forth therein. Developer shall keep City apprised as to the status of all work to be undertaken by or on behalf of Developer as described in the Schedule of Performance. Within ten (10) days following City's request, which may be made from time to time during the Negotiation Period, Developer shall submit to City a written progress report advising City on the status of all work being undertaken by or on behalf of Developer. 4. City's Responsibilities. City shall cooperate with Developer by providing information regarding the development potential of the Site. 5. Access to Site. City and Developer shall cooperate to enable representatives of Developer to obtain the right of access to all portions of the Site for the purpose of obtaining data and making surveys and tests necessary to evaluate the development potential of the Site, including the investigation of the soils and environmental condition of the Site. All costs of investigating the physical and environmental condition of the OAK #4817-9347-6399 vi - 5 - Site, including a Phase 1, Phase 2, geotechnical and soils investigations, if any, shall be paid by Developer at its expense and shall not be considered part of City Expenses. Developer agrees to notify City in writing at least two (2) business days prior to undertaking any studies or work upon the Site. City may require Developer to execute one or more right of entry agreements satisfactory to City's legal counsel prior to commencing such studies or work. Any preliminary work by Developer shall be undertaken only after securing (1) such insurance as may be reasonably required by City to protect City and Developer from damages and losses that may arise from such investigative work, and (2) any and all necessary permits from the appropriate governmental agencies. Such work shall be done without unduly disturbing existing occupants of the Site, if any. In the event that Developer causes any damage to any portion of the Site or any adjacent properties or the existing improvements thereon, Developer, at its expense, shall promptly restore the Site, adjacent properties and existing improvements thereon as nearly as possible to the physical condition existing immediately prior to Developer's entry onto the Site. Developer's obligations under this Section 5 shall survive the expiration or termination of this Agreement. 6. Defaults and Remedies. 6.1 Default. Failure by either parry to negotiate in good faith as provided in this Agreement shall constitute an event of default hereunder. Except as otherwise set forth in Section 7 below with respect to City's immediate right to terminate, the non - defaulting party shall give written notice of default to the defaulting party, specifying the nature of the default and the required action to cure the default. If such default remains uncured ten (10) days after receipt by the defaulting party of such notice, the non - defaulting party may exercise the remedies set forth in Section 6.2 or 6.3 below, as applicable. 6.2 Exclusive Remedies for City Default. In the event of an uncured default by City, Developer's sole and exclusive remedy shall be to terminate this Agreement, upon which termination Developer shall be entitled to return of the remaining unexpended and uncommitted balance of the Deposit, if any. 6.3 Exclusive Remedies for Developer Default. In the event of an uncured default by Developer, City's sole and exclusive remedies shall be: (1) to seek specific performance or other equitable relief and/or to recover actual damages if the default is a result of Developer's failure to meet its indemnity obligations set forth herein, or (2) for any other Developer default, to terminate this Agreement and retain that portion of the Deposit needed to pay City Costs incurred prior to the date of such termination. 6.4 Limitation on Damages. Except as otherwise provided in Section 6.3 above, neither party shall have any liability to the other for actual damages for any default. Each party specifically waives and releases any rights or claims it may otherwise have at law or in equity to recover consequential, special or punitive damages from the defaulting party. OAK #4817-9347-6399 v1 - 6 - 7. Lobbying and CampaifZn Contribution Prohibition. Developer agrees and acknowledges that the DDA negotiations shall take place with the City Manager, the City's legal, financial and planning advisers and such other City parties as may be designated by the City Manager from time to time (collectively, the "City -Designated Team"). Developer shall not engage in discussions, negotiations or lobbying of any City Council or Planning Commission members or other City employees or officials as may be designated by the City Manager from time to time (collectively, "Excluded City Parties"), unless requested to do so by the City -Designated Team for specific purposes related to the negotiations. Further, Developer shall not make any contributions to the political campaigns of any City Council or Planning Commission members. Nothing in this Section 7 shall prevent: (1) responses to requests for information from one or more Excluded City Parties, provided such responses are directed to the City -Designated Team; (2) Developer's participation in any question -and -answer sessions, workshops, or tours approved in writing by the City -Designated Team; or (3) Developer's participation in public events or community fora at which one or more Excluded City Parties are present, provided Developer does not engage in communications with such Excluded City Parties at such events that are intended to influence the DDA negotiations. In the event of Developer's violation of its obligations under this Section 7, City may immediately terminate this Agreement by written notice to Developer without affording Developer any opportunity to cure such violation. 8. Rights Following Expiration or Termination. Following expiration or termination of this Agreement, neither parry shall have any further rights against or liability to the other under this Agreement except as otherwise provided herein. Following expiration or termination of this Agreement, unless a DDA is signed by Developer, approved by the City Council, and executed by City, City shall have the absolute right to pursue disposition and development of the Site in any manner and with any party or parties it deems appropriate. 9. Confidentiality of Information. Any information provided by Developer to City, including pro formas and other financial projections (whether in written, graphic, electronic or any other form) that is clearly marked as "CONFIDENTIAL / PROPRIETARY INFORMATION" ("Confidential Information") shall be subject to the provisions of this Section 9. Subject to the terms of this Section, City shall use good faith diligent efforts to prevent disclosure of the Confidential Information to any third parties, except as may be required by the California Public Records Act (Government Code Section 6253 et seq.) or other applicable local, state or federal disclosure law (collectively, "Public Disclosure Laws"). Notwithstanding the preceding sentence, City may disclose Confidential Information to its officials, employees, agents, attorneys and advisors, but only to the extent necessary to carry out the purpose for which the Confidential Information was disclosed. Developer acknowledges that City has not made any representations or warranties that any Confidential Information City receives from Developer will be exempt from disclosure under any Public Disclosure Laws. In the event the City's legal counsel determines that the release of the Confidential Information is required by Public Disclosure Laws, or order of a court of competent jurisdiction, City shall notify Developer of City's intention to release the Confidential Information. If the City Attorney, in his or her discretion, determines that only a portion of the requested OAK #4817-9347-6399 V1 - 7 - Confidential Information is exempt from disclosure under the Public Disclosure Laws, City may redact, delete or otherwise segregate the Confidential Information that will not be released from the non-exempt portion to be released. Developer acknowledges that in connection with City Council's consideration of any DDA as contemplated by this Agreement, City will need to present a summary of Developer's financial projections, including anticipated costs of development, anticipated Project revenues, and returns on cost and investment. If this Agreement is terminated without the execution of a DDA, City shall return to Developer any Confidential Information. If any litigation is filed seeking to make public any Confidential Information, City and Developer shall cooperate in defending the litigation, and Developer shall pay City's reasonable costs of defending such litigation and shall indemnify City against all costs and attorneys' fees awarded to the plaintiff in any such litigation. Alternatively, Developer may elect to disclose the Confidential Information rather than defend the litigation. Developer's indemnity obligations under this Section 9 shall survive the expiration or termination of this Agreement. The restrictions set forth herein shall not apply to Confidential Information to the extent such Confidential Information: (1) is now, or hereafter becomes, through no act or failure to act on the part of City, generally known or available; (2) is known by the City at the time of receiving such information as evidenced by City's public records; (3) is hereafter furnished to City by a third party, as a matter of right and without restriction on disclosure; (4) is independently developed by City without any breach of this Agreement and without any use of or access to Developer's Confidential Information as evidenced by City's records; (5) is not clearly marked "CONFIDENTIAL/PROPRIETARY INFORMATION" as provided above (except where Developer notifies City in writing, prior to any disclosure of the Confidential Information, that omission of the "CONFIDENTIAL/PROPRIETARY INFORMATION" mark was inadvertent), or (6) is the subject of a written permission to disclose provided by Developer to City. 10. Real Estate Commissions. City shall not be liable for any real estate commission or brokerage fees which may arise from the purchase and sale or other acquisition of the Site or any portion thereof or interest therein. Developer represents and warrants to City that it has not engaged any broker, agent or finder in connection with the acquisition or development of the Site, and Developer agrees to indemnify, defend and hold City harmless from any claim by any broker, agent or finder retained by, or alleged to have been retained by, Developer. Developer's indemnity obligations under this Section 10 shall survive the expiration or termination of this Agreement. 11. Notices. Any approval, disapproval, demand or other notice which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means, including first class mail, personal delivery, or overnight courier, to the party to whom the notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by notice. OAK #4817-9347-6399 v1 - 8 - To City: City of Burlingame 501 Primrose Road Burlingame, CA 94010-3997 Attention: City Manager Telephone (650) 558-7200 with a copy to: City of Burlingame 501 Primrose Road Burlingame, CA 94010-3997 Attention: City Attorney Telephone (650) 558-7200 To Developer: The Pacific Companies 430 E. State Street, Suite 100 Eagle, ID 83616 Attention: Caleb Roope Telephone (208) 461-0022 with a copy to: Clayton W. McReynolds 430 E. State Street, Suite 100 Eagle, ID 83616 Attention: Clanton W. McReynolds Telephone 208.908.4861 Any notice shall be deemed received on the date of delivery if delivered by personal service, three (3) business days after mailing if sent by first class mail, and on the date of delivery or refused delivery as shown by the records of the overnight courier if sent via overnight courier. 12. Limitations of this Agreement. This Agreement (and any extension of the Negotiating Period) shall not obligate either City or Developer to enter into a DDA on or containing any particular terms. By execution of this Agreement (and any extension of the Negotiating Period), City is not committing itself to, or agreeing to, undertake disposition of the Site or any portion thereof and Developer is not committing itself to acquire the Site or any portion thereof. Execution of this Agreement by City and Developer is merely an agreement to conduct a period of exclusive negotiations in accordance with the terms hereof, reserving for subsequent City action the final discretion and approval regarding the execution of a DDA and all proceedings and decisions in connection therewith. Any DDA resulting from negotiations pursuant to this Agreement shall become effective only if and after such DDA has been considered and approved by the City Council, following conduct of all legally required procedures, and executed by duly authorized representatives of City and Developer. Until and unless a DDA is signed by Developer, approved by the City Council, and executed by City, no agreement drafts, actions, deliverables or communications arising from the performance of this Agreement shall impose any legally binding obligation on either party to enter into or support entering into a DDA or be used as evidence of any oral or implied agreement OAK #4817-9347$399 vl - 9 - by either party to enter into any other legally binding agreement. This Agreement, which pertains only to negotiating procedures and standards between City and Developer, does not limit in any way the discretion of City in acting on any applications for permits or approvals for the proposed Project. The Parties acknowledge that California Environmental Quality Act ("CEQA") compliance will be required in connection with consideration of such permits and approvals, and that City shall retain the discretion in accordance with CEQA and other applicable law before action on any such permits or approvals to (1) identify and impose mitigation measures to mitigate significant environmental impacts, (2) select other feasible alternatives to avoid significant environmental impacts, (3) balance the benefits of the proposed Project against any significant environmental impacts prior to taking final action if such significant impacts cannot otherwise be avoided, or (4) determine not to proceed with the Project. 13. Plans, Drawings and Reports. Once submitted, all development Project design concepts and plans that Developer owns or has the right to transfer shall become the property of the City. The City, without compensation to Developer or any third party, may use such development Project design concepts and plans, together with any and all ideas and materials submitted in connection with the negotiations hereunder, whether or not City and Developer enter into a DDA; provided, however, to the extent such concepts and plans are used without Developer's permission or agreement, Developer disclaims any representations or warranties regarding such concepts and plans, including whether or not they are sufficient for any particular purpose. 14. Inte rag tion. This Agreement contains the entire understanding between the parties relating to the matters set forth herein. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. 15. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 16. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 17. Applicable Law; Venue. This Agreement shall be construed in accordance with the law of the State of California without reference to choice of laws principles, and venue for any action under this Agreement shall be in San Mateo County, California. 18. No Assig mlent. The qualifications and identity of Developer and the Developer Parties are of particular concern to City. It is because of those unique qualifications and identity that City has entered into this Agreement with Developer. Accordingly, except as provided below, Developer may not assign its right to negotiate with City to any other OAK #4817-9347-6399 v1 - 10- person or entity. Any purported voluntary or involuntary assignment of Developer's negotiation rights shall be null and void. Notwithstanding the foregoing, City acknowledges that Developer intends to form one or more single purpose limited liability companies or limited partnerships, all owned and controlled by Developer (the "SPV") for the exclusive purpose of owning and developing the Site. City further acknowledges and agrees that if a DDA is approved by City, the SPV may enter into such DDA and purchase the Site without any assignment of this Agreement by Developer to the SPV; provided, however, that the foregoing shall not in any way limit Developer's obligations hereunder or under the DDA (if any). 19. Waiver of Lis Pendens. It is expressly understood and agreed by the parties that no lis pendens shall be filed against any portion of the Site with respect to this Agreement or any dispute or act arising from this Agreement. 20. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by both parties, shall constitute a binding agreement. 21. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or any of its terms. 22. Joint and Several. If Developer consists of more than one entity or person, the obligations of Developer hereunder shall be joint and several. 23. Authori . If Developer is a corporation, limited liability company, partnership, trust, association or other entity, Developer and each person executing this Agreement on behalf of Developer does hereby covenant and warrant that (1) Developer is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation; (2) Developer has and is duly qualified to do business in California; (3) Developer has full corporate, partnership, trust, association or other power and authority to enter into this Agreement and to perform all of Developer's obligations hereunder; and (4) each person (and all of the persons if more than one signs) signing this Agreement on behalf of Developer is duly and validly authorized to do so. OAK #4817-9347-6399 v1 - 11 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set opposite their signatures. The Date of Agreement shall be the date this Agreement is signed by City. CITY: CITY OF BURLINGAME, a California municipal corporation M. Lisa K. Goldman, City Manager Date: .2016 APPROVED AS TO FORM: Kathleen A. Kane, City Attorney ATTEST: 0 Meaghan Hassel -Shearer, City Clerk DEVELOPER: PACIFIC WEST COMMUNITIES, INC., an Idaho corporation By: Name: Title: Date: OAK #4817-9347-6399 v1 Caleb Roope President / CEO 2016 EXHIBIT A DIAGRAM OF SITE [to be inserted] OAK #4817-9347-6399 vl Exhibit A 19l:ii� IAC SCHEDULE OF PERFORMANCE 1. By April 15, 2016 Developer to initiate due diligence including environmental investigation of the Site. 2. By May 1, 2016 Developer to prepare and submit to City a progress report including updated proforma identifying all hard costs, soft costs, financing costs and contingencies for the proposed Project. 3. By May 15, 2016 Developer to provide City with copies of all due diligence materials, including any Phase 1 or Phase 2 reports available at that time. 4. By May 15, 2016 Developer to reach conceptual agreement with City on key business terms of proposed DDA. 5. By June 1, 2016 Developer to prepare and submit to City conceptual drawings for the Project, which must include, at minimum, a final dimensioned and detailed Site plan, parking and circulation plan, elevations of all four sides of the proposed Project, elevations of major public spaces and tabulation of areas/uses. 6. By June 1, 2016 Developer to execute DDA for the Project in form acceptable to City staff and City legal counsel and submit said DDA to the City Council for consideration and approval. 14