17-0606_THE OAKS, LLC_Agenda Report_E10 6/6/2017
E10
City of San Juan Capistrano
Agenda Report
TO: Honorable Mayor and Members of the City Council
FROM: *n Siegel, City Manager
SUBMITTED BY: Jacob Green, Assistant City Manager
Tom Toman, Assistant Public Works Director7L,r.
DATE: June 6, 2017
SUBJECT; Completion of The Oaks Transition Process
RECOMMENDATION:
Direct the City Manager to transmit the attached transition completion letter to The
Oaks, LLC, certifying the completion of the License Agreement termination and
transition process.
DISCUSSION/ANALYSIS-
On October 10, 2010, the City Council approved a License Agreement with The Oaks,
Inc. for use of the 2.25 acre portion of property located in the corner of Assessor's
Parcel No. 125-172-27, for a temporary equestrian paddock and arena operation for a
period of five years. The City Council took action on October 15, 2013, to authorize
early termination of the License Agreement with The Oaks, Inc. due to the sale of the
property. On January 21, 2014, the Council authorized a month-to-month License
Agreement with The Oaks Farms, LLC, a Delaware Corporation and Davidson
Communities LLC, a California limited liability company for same (Attachment 1).
On December 6, 2016, the Council directed staff to send a notice of termination to the
Licensee effective January 31, 2017, and integrate The Oaks parcel into the Reata Park
and Events Center. A written notice of termination was sent on December 21, 2016, to
the Licensee (Attachment 2).
A follow-up letter was sent on January 30, 2017, detailing specific property
improvements resulting from the transition of the property back to the City (Attachment
3).
All requirements of the transition process have been met including: 1) donation of the
existing paddocks to the City and repair of wood rails with significant damage, 2)
installation of new landscaping and localized irrigation to create a property separation
City Council Agenda Report
June 6, 2017
Page 2 of 4
between The Oaks and the Davidson housing development, 3) removal of the fencing
on the Eastern portion of the property to create contiguous flow with the Reata Park and
Events Center property, 4) installation of a wood rail fence on the Western property
boundary line to separate the adjacent property referred to as The Oaks Farms
equestrian property from The Oaks, 5) installation of localized irrigation for the donated
Oak trees, 6) replacement of 120 linear feet of missing wood rail from the paddocks
closest to Ortega, and 7) removal of all site debris.
On May 22, 2017, the City requested that Doug Porcello, Owner, Doug Porcello
Construction & Decorating, inspect the property to assess the condition of the horse
corrals and overall condition of The Oaks. On May 26, 2017, Mr. Porcello relayed his
findings to staff and concluded that the corrals are "satisfactory for Equestrian use"
and noted that while some of the corral boards have been chewed by horses and could
be replaced, they are "still suitable for use." Once the long term use of the property has
been determined by the Council, staff may recommend minor additional improvements
including replacement of some of the existing corral boards.
Since all transition conditions have been met and the property has been determined to
be safe, it is recommended that the completion transition letter (Attachment 4) be
transmitted to The Oaks, LLC.
Staff further recommends that the new Parks, Recreation, Youth and Senior Services,
Trails and Equestrian Commission discuss possible future uses of The Oaks property,
with the understanding that existing easements and land use restrictions will limit
allowable uses.
FISCAL IMPACT:
On February 7, 2017, the Council appropriated $21,400 ($9,500 landscape materials
and installation and $11,900 maintenance) from General Fund Reserves for The Oaks
property as part of the transition process.
The only unanticipated expense was the purchase and installation of 120' of wood plank
corral fencing. This replacement was necessary as the existing metal corral siding was
stolen sometime between March 30, 2017 and April 3, 2017 (OCSD Police Report Case
No. 17-016803). Therefore, the total actual City cost (including annual maintenance) is
$22,490. The difference of $1,090 has been absorbed into the Public Works
Operations Budget.
The following chart depicts all estimated and actual expenses:
City Council Agenda Report
June 6, 2017
Page 3 of 4
I
I
lp
Hedges 50/50 Split $9,000 $6,080 $4,500 $3,040
Hedge 50/50 Split $4,000 $3,500 $2,000 $1,750
Irrigation
Donated Oak City $3,000 $1,550 $3,000 $1,550
Trees Irrigation
New Fencing Licensee $4,000 $4000 $0 $0
120'Wood City N/A $4,250 $4,250 $4,250
Corral Plank j
One-Time Equip&Install Total $20,000 $19,380 $9,500 $10,590
FY2016-17 Property Maintenance (5 months x $3,500 $3,500
$700/mo.)
FY2017-18 Property Maintenance (12 months x $8,400 $8,400
$700/mo.)
Total Actual City Cost $22,490
Source of Funds
Funded by Appropriation of Reserves $21,400
Funded by Public Works Operations Budget $1,090
ENVIRONMENTAL IMPACT.
In accordance with the California Environmental Quality Act (CEQA) the recommended
action is exempt from CEQA per Section 15061(b)(3), the general rule that the CEQA
applies only to projects which have the potential for causing a significant effect on the
environment. Where it can be seen with certainty that there is no possibility that the
activity in question may have a significant effect on the environment, the activity is not
subject to CEQA. Sending a certification letter of completion regarding The Oaks, LLC
would not be an activity with potential to cause significant effect on the environment and
therefore exempt from CEQA.
PRIOR CITY COUNCIL REVIEW:
• On October 19, 2010, the Council approved the License Agreement with The
Oaks, Inc. for the Oaks Paddock Area of the Lemon Grove Parcel.
City Council Agenda Report
June 6, 2017
Page 4 of 4
• On October 15, 2013, the Council authorized early termination of the License
Agreement with the Oaks, Inc., a Delaware Corporation, Doing Business in
California as "The Oaks Farms" ("Oaks, Inc.") and granted a prorated refund of
the annual license fee in the amount of $4,339.13, and authorized the dissolution
of the Agreement.
• On January 21, 2014, the Council authorized a month-to-month License
Agreement with The Oaks Farms, LLC, a Delaware Corporation and Davidson
Communities LLC, a California limited liability company, for use of the 2.25 acres
portion of property located in the coroner of Assessor's Parcel No. 125-172-27.
• On December 6, 2016, the Council directed staff to send a notice of termination
to the Licensee effective January 31, 2017, and integrate The Oaks parcel into
the Reata Park and Events Center.
• On February 7, 2017, the Council received an update regarding the transition
process and approved the appropriation of$21,400 from General Fund Reserves
for The Oaks landscape and maintenance expenses.
NOTIFICATION:
Parks, Recreation, Youth and Senior Services, Trails and Equestrian Commission
Bill Davidson, President, Davidson Communities
James Weber, Vice President, Director of Operations, Davidson Communities
Rob Meadows, President, Morrow-Meadows Corporation
ATTACHMENTS:
Attachment 1 - License Agreement
Attachment 2 - Notice of Termination of License Agreement
Attachment 3 - Transition Letter from City Manager to Licensee
Attachment 4 — Draft Transition Completion Letter from City Manager to Licensee
LICENSE AGREEMENT
This License Agreement is entered into this 21st day of January, 2014, by and
between the City of San Juan Capistrano (hereinafter "City"), and The Oaks Farms, LLC
(hereinafter "Licensee").
RECITALS
WHEREAS, the City is the owner of APN 125-172-27, approximately 18.5 acres
located in the City of San Juan Capistrano,which property was acquired to be maintained as
open space within the City; and
WHEREAS, the Licensee desires to use the approximate 2.25 acre portion located in
the northwest corner of APN 125-172-27 as a paddock area for The Oaks Farms'equestrian
operation.
NOW, THEREFORE, City and Licensee hereby mutually agree as follows'
Section 1. Scoue of License.
The City hereby grants to Licensee a license to establish and maintain a temporary
paddock/arena area for the term as outlined in Section 3, on that certain property located in
the City of San Juan Capistrano, California, as depicted on the site plan attached hereto as
Exhibit "A" and incorporated herein by reference (the "Property").
This area shall be used solely for the purposes of a temporary equestrian
paddock/arena area in conjunction with the Licensee's equestrian operations on the adjacent
property. No construction equipment or other storage (of equipment,materials, or supplies of
any kind) is permitted on the Property. All uses and operations on the Property shall be
subject to the Southern California Edison easement attached here to as Exhibit "B" and
incorporated herein by reference (the "Easement").
The Licensee shall relocate and/or remove equestrian property fencing currently on
the Eastern portion of the Property to those boundaries of The Oaks Farms equestrian
property, as indicated on Exhibit"A", that are adjacent to City-owned APN 125-172-27, prior
to termination of License. Further, Licensee shall relocate and/or remove all equestrian
paddocks, prior to termination of License.
Section 2. License Fee,
Licensee shall pay the City $400 monthly for the use of the property. This payment
shall be made on the first day of each month in the form of a check made payable to the City
of San Juan Capistrano. This amount shall increase annually on September 1 based on the
Consumer Price Index (CPI) — All Urban Consumers for Los Angeles-Riverside-Orange
County, CA area from March to March.
k
ATTACHMENT
Section 3. License Term
a. Original Terre - The term of this Agreement shall be One Calendar
Month and becorne effective from the date of execution of the Agreement through the end of
the following Calendar Month.
b. Renewal Term -Upon the expiration of the Original Term, the Term of
this license shall be automatically extended for another calendar month, provided that (i)
neither party provides the other party with a prior thirty (30) day written notice of its election
to terminate this License; (ii) there exist no Default or Event of Default under the License;
and (iii) this License has not been terminated in accordance with terms hereof. Upon the
expiration of the Renewal Term, this license shall be automatically extended for another
calendar month until terminated by either party.
Section 4. 1lVates ower and u#ilities,
Licensee will be responsible for providing all water, electricity and other necessary
utilities for the use and operation of the Property. Licensee may use non-potable water from
their own wells on the adjacent parcel,APNs 664-04-107,664-04-108,664-04-109, and 664-
04-110 as allowed by their owned water rights.
Section 5. Default.
In the event of a default by Licensee, Licensor shall give Licensee thirty (30) days'
written notice to cure the default. The notice shall specify in reasonable detail the nature
and extent of the default. If the nature of Licensee's obligation is such that more than thirty
(30)days are required for performance,then Licensee shall not be deemed to be in default if
it shall commence such performance within such thirty (30) day period and thereafter
diligently prosecute the same to completion. If the default is not cured by Licensee within
the time provided by this Section 5, then Licensor may immediately terminate this
Agreement.
Section 6. Condition of ELopgrty.
Licensee accepts the Property in its present condition upon execution of this
Agreement. Licensee agrees, at Licensee's expense, to use reasonable care to control all
weeds growing on Property; keep the Property clean of trash, debris and rubbish; and to
keep fences, ditches, landscaping and borders of the Property in good condition and repair
at all times, reasonable wear and tear expected. The duly authorized representative of City
may enter upon the Property at a reasonable time for the purposes of inspection and to
perform any necessary maintenance or repair.
Section 7. Site Modifications.
Any modifications to the Property, other than those specifically provided for in this
agreement will require prior City Council approval. Additionally, any site modifications
approved in concept by the City Council will be required to follow the City's design guidelines
and permitting processes.
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Section 8. Insurance.
Licensee shall maintain at all times during the terns of this Agreement comprehensive
general liability and property damage insurance in the amount of not less than Two Million
Dollars ($2,000,000)combined single limit. City shall be named as an additional insured on
said policies.
Section 9. i.n_demnity.
Each party shall indemnify and save harmless the other, its successors and assigns
together with its officers, directors, employees, agents and those for whom it is in law
responsible, only from and against any and all liabilities..damages, costs,expenses,causes
of action, claims, suits,proceedings and judgments (collectively"Claims")which each party
may incur or suffer or be put to by reason of or in connection with or arising from arty breach,
violation or nonperformance by the ether of any obligation contained ill this Agreement to be
observed or performed by the respective party, or any wrongful act or negligence of the
respective party or its agents or employees which relates to this Agreement, howsoever
arising. Each party acknowledges and agrees that this indemnity shall survive any
termination of this Agreement.
Section 10. No Assignments.
Licensee shall not assign its rights under this Agreementto any third party without the
written consent of the City.
Section 11. Notices.
All notices, demands, consents, or other communications required to be given under
this Agreement shall be accomplished by first class mail, postage prepaid, and deposited in
the U.S. mails, or personally served upon the other party.
To Licenser"City": Licensee:
City of San Juan Capistrano L. Sheri Merkle
32400 Paseo Adelanto General Manager
San Juan Capistrano, CA 92675 The Oaks Farms
Attn: City Manager 31000 Avenida Siega
San Juan Capistrano, CA 92675
and,
Tim O'Grady
Executive Vice President
Davidson Communities
1302 Camino Del Mar
Del Mar, CA 92014
3
Section 12. Attorne 's Fees:
In the event any legal action or proceeding is commenced to interpret or enforce the
terms of, or obligations arising out of this Agreement, or to recover damages for the breach
thereof, the party prevailing in any such action or proceeding shall be entitled to recover
from the non-prevailing party all reasonable attorney's fees, costs and expenses incurred by
the prevailing party.
Section 13. Entire Agreement.
This agreement contains the entire Agreement of the parties hereto with respect to
the matters covered hereby, and no other previous agreement, statement or promise made
by any party hereto which is not contained herein shall be binding or valid.
Section 14. Taxes.
Pursuant to Revenue&Taxation Code§107.7,the property interest created herein, if
any, may be subject to property taxation and LICENSEE may be subject to property taxes
levied on such interest on a prorated basis, if any. In no event shall LICENSOR be liable for
any taxes owed as a result of this License or Licensee's use of the Premises.
Section 15. No Relocation Benefits.
This License is not intended to convey a property interest but to permit Licensee to
use the Premises as provided for herein. Licensee acknowledges the rights granted by
State and/or Federal Relocation Assistance Laws and regulations and, notwithstanding any
other provision of this License, expressly waives all such present and future rights, if any,to
which Licensee might otherwise be entitled from Licensor or the City of San Juan Capistrano
with regard to this License and the business operated on the Premises. Licensee shall not
be entitled to relocation assistance, relocation benefits, or compensation for loss of goodwill
upon the termination of this License.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF SAN,-JUAN CAPISTRANO
By: fir
t �`Sgm Allevato, Mayor
ATT ES pMii—s,
P
risMaM City*Clerk
THE OAKS FARMS, LLC
a Delaware limited liability company
By: DAVIDSON COMMUNITIES, LLC,
a California limited liability company
Its: Sole Member
By: �%.
Name: William A. Davidson
President
APPROVED AS TO FORM:
Wns Ligten, City Attorney
5
32400 PASEO ADELANTO , t',
MEMBERS 0PTHE C[TYCOUNCIL
SAN JUAN CAPFSTRANO,CA 92675
(949)433-1171 T tt iJi SAMALLFVAID
(949)493-1053 FAX1 t Lti+t:ffra ROY L.BYRNES,h4.1),
a
LARRY KRAMER
wrrw„sanjarncapisn ork 177(,
DEREK REEVE
e * •
JOHN TAYLOR
4
TRANSMITTAL
TO:
L. Sheri Merkle
General Manager
The Oaks Farms
31000 Avenida Siega
San Juan Capistrano, CA 92675
DATE: January 27, 2014
FROM: Manny Ruelas, Office Assistant (949) 443-6308
RE: License Agreement—The Oaks Farms' Equestrian Operation .
Thank you for providing documentation confirming compliance with the terms of the agreement
related to insurance.
Please keep in mind this documentation must remain current with our office during the term of
the agreement. If you have questions related to insurance requirements, please call Christy
Jakl, Deputy City Clerk at (949) 443-6310.
If you have questions concerning the agreement, please contact Cathy Salcedo, Executive
Services Manager at (949) 443-6317.
Enclosed is an Original Copy for your records.
Cc: Cathy Salcedo, Executive Services Manager
San Juan Capistrano: .l'reserving the Past to Enhance the Future
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,i s ♦t- .t'f;:"`€t n• .. :•r�: f of ti � ��.� d'g {+ -
111 t •�,:.�� � _�.
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L a Illllln�l�y �i .',Ya v i:3.
Dccernber 21,2016 f:�f a r•
U.S.N1 ail,First Class
L. Sheri Merkle 11rn O'Grady
C;erieral Manager Executive Vice President,
The:Oaks Farms Davidson Communities
3100 Avenida Siega 1302 Camino Del Mar
San Juan Capistrano, CA 92675 Del Mar, CA 92104
Re: Notice of"1`errnination ofl,icense Agreement dated J�jnary 21, 2014
Ms. Merkle and Mr. 0"Grady:
As a follow-up to the conversation we had on December 12, 2016, and the site visit City staff
conducted with your team on Wednesday, .Decen:iber- 14, 2016this letter serves as the City's
official written notice that, pursuant to sections 3(b) of the above-referenced agreement, the City
of San Juan Capi tr'an.c:has elected to terininate said agreement writh The Oaks Farms, LLC(The
Oaks). Such termination shall be effective January 31,2017.
Pursuant to the License.Agreement, and based on the City Council action of December 6, 2016,
it is agreed that The Oaks, "shall . . . re€hove equestrian property fencing currently on the Eastern
portion of the Property to those boundaries of'1`lre. Oaks I'arins equestrian propeily . . . that are
adjacent to City-owned APN 125-172-27, prior to termination of [the] License [Agreement],"
Additionally, the City would like Io work with "rho Oaks to install a replacement fence along the
western property line between The Oaks and the annex to Re€cta Park.
Thank you. for your cooperation. If you have any questions, please contact Jacob Green,
Assititant City Manager, at (.949)443-61321.
Sincerely, r
I�tt'1�nrrtrn Si •t .1
City Manager
c: City Coulicil
kffi•c:y S. Balling r,City Attorney
brae? , a�: f�°ca at�T rr t��: 'ra",�;<st r3i.r7,r d.CNi j)w,,1 to Ei)hv��rtce .��2e�r`t�tu",
ATTACHMENT 2
32400PASEOADELANTO if MEMBERS OF THE CITY COUNCIL
SAN JUAN CAPISTRANO,CA 92675 rif
(949)493.1171 I Iarllrlbn[I SERGIO FARIAS
(949)493-1053 FAX 0 LSTIILISIEB 1961 KERRY K.FERGUSON
www.sanjuancapistrano.org 1776 BRIAN L.MARYOTT
• PAM PATTERSON,ESQ.
DEREK REEVE
January 30, 2017
U.S. Mail, First Class
L. Sheri Merkle Tim O'Grady
General Manager Executive Vice President
The Oaks Farms Davidson Communities
3100 Avenida Siega 1302 Camino Del Mar
San Juan Capistrano, CA 92675 Del Mar, CA 92104
Re: Transition Agreement - Notice of Termination of License Agreement dated
January 21, 2014
Ms. Merkle and Mr. O'Grady:
On December 21, 2016, pursuant to City Council direction given to staff on December 6,
2016, written notice terminating the license agreement was served pursuant to section
3(b) of the above-referenced agreement. Such termination shall be effective January
31, 2017.
The purpose of this letter is to document a modification to the termination terms outlined
in the January 21, 2014 Agreement, Section 1 "Scope of License." The following is
mutually agreed to by the City and Oaks Farms, LLC ("Licensee"):
1. The Licensee shall leave all paddocks in place and the paddocks shall become
property of the City.
2. The Licensee and the City will share all costs associated with the purchase and
installation of approximately 160 linear feet of landscaping, to include localized
irrigation, along the uppermost portion of the west border of the subject property,
as depicted on Attachment 1. The City will purchase and install all associated
landscaping items and will send Licensee an invoice for 50% of the materials and
installation costs upon completion of the project. Reimbursement to the City will
be due within 30 days following the mailing of the invoice.
San Juan Capistrano: Preserving the Past to Enhance the Fut
ATTACHMENT 3
Printed on 100%recycled paper
Transition Agreement
January 30, 2017
Page 2
3. The Licensee shall, at its sole cost and expense, remove the portion of the
fencing currently on the Eastern portion of the subject property, as depicted on
Attachment 1.
4. The Licensee shall, at its sole cost and expense, install a wood rail fence on the
western property boundary line to separate the adjacent property referred to as
The Oaks Farms equestrian property from the subject property (APN 125-172-
27).
5. Consistent with the City Council Agenda Report of October 19, 2010, the 197 oak
trees currently located on the subject property, as provided by the Oaks Farms,
shall remain property of the City and all future maintenance costs associated with
these donated oak trees will be the responsibility of the City.
Thank you for your cooperation. If these terms are agreeable to the Licensee, please
sign where indicated below and return a copy of this signed letter to me at your earliest
convenience.
If you have any questions, please contact Jacob Green, Assistant City Manager, at
(949) 443-6321.
Sincerely,
/enjam7ih Siegel
City Manager
City of San Juan Capistrano
READ AND APPROVED:
The Oaks Farms, LLC
Attachment—The Oaks Property Map
cc: City Council
Jeffrey S. Ballinger, City Attorney
Sean Kilkenny, Forward Planning Director, Davidson Communities
IIY14,
June 6, 2017
U.S. Mail, First Class
William Davidson James Weber
President Vice President, Director of Operations
Davidson Communities Davidson Communities
1302 Camino Del Mar 1302 Camino Del Mar
Del Mar, CA 92014 Del Mar, CA 92014
Re: The Oaks Transition Completion Notice
Mr. Davidson and Mr. Weber:
On December 21, 2016, pursuant to City Council direction given to staff on December 6,
2016, written notice terminating the license agreement was served pursuant to section
3(b) of the above-referenced agreement. Such termination was noticed as effective on
January 31, 2017.
On January 30, 2017, the City sent a letter memorializing modification of the termination
terms outlined in the January 21, 2014 Agreement, Section 1 "Scope of License." The
following was mutually agreed to by the City and Oaks Farms, LLC ("Licensee"):
1. The Licensee shall leave all paddocks in place and the paddocks shall become
property of the City.
2. The Licensee and the City will share all costs associated with the purchase and
installation of approximately 160 linear feet of landscaping, to include localized
irrigation, along the uppermost portion of the west border of the subject property,
as depicted on Attachment 1. The City will purchase and install all associated
landscaping items and will send Licensee an invoice for 50% of the materials and
installation costs upon completion of the project. Reimbursement to the City will
be due within 30 days following the mailing of the invoice.
ATTACHMENT 4
Transition Completion Letter
June 6, 2017
Page 2
3. The Licensee shall, at its sole cost and expense, remove the portion of the
fencing currently on the Eastern portion of the subject property, as depicted on
Attachment 1.
4. The Licensee shall, at its sole cost and expense, install a wood rail fence on the
western property boundary line to separate the adjacent property referred to as
The Oaks Farms equestrian property from the subject property (APN 125-172-
27).
5. Consistent with the City Council Agenda Report of October 19, 2010, the 197 oak
trees currently located on the subject property, as provided by the Oaks Farms,
shall remain property of the City and all future maintenance costs associated with
these donated oak trees will be the responsibility of the City.
This letter confirms that all requirements of the transition process have been met and
effective June 7, 2017, The Oaks property and all items on the property will be the full
responsibility of the City of San Juan Capistrano.
Please sign where indicated below and return a copy of this signed letter to me at your
earliest convenience indicating your concurrence that all requirements of the transition
process have been met and the property is now the responsibility of the City of San
Juan Capistrano.
The City truly appreciates your partnership through the lease and transition process and
thanks you for your investment in the City of San Juan Capistrano.
If you have any questions, please contact Jacob Green, Assistant City Manager, at
(949) 443-6321.
Sincerely,
Benjamin Siegel
City Manager
READ AND APPROVED;
The Oaks Farms, LLC
Transition Completion Letter
June 6, 2017
Page 3
cc: City Council
Jeffrey S. Ballinger, City Attorney