17-0516_ADVANCED GROUP 99-SJ & 03-79-2 (ARES)_D1_Correspondence 2May 16, 2107
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: City Council
Dear Mayor Ferguson and City Council Members;
Tonight you are being asked to extend the term of "The First Amendment to the Development
Agreement" for the Distrito La Novia- San Juan Meadows Project to December 7, 2017.
This action is improper because the developer, Advanced Real Estate Services (ARES), is in default of
the terms of the subject development agreement.
Under the signed and recorded Development Agreement for San Juan Meadows -Distrito La Novia, the
initial term began on November 16, 2010. The provisions of the agreement Section 2.3 Term, states
that "Subject to the provisions of this Agreement, the initial term (hereinafter called "term") of this
Agreement shall commence on the Effective Date and shall terminate at the end of the day
immediately preceding the sixth (6th) anniversary of the Effective Date, subject to the termination
provisions set forth herein;"
That date of November 16, 2016 was assumed to be extended to June 7, 2017 by Letter from ARES on
April 12, 2017. The cause of the seven month extension was justified because of the referendum that
delayed the project by that period of time under Section 12.3 Force Maieure of the Agreement. The
Force Majeure does allow an extension for voter initiative or referenda because it is beyond the
reasonable control of the DEVELOPER. However, "in the case of the requirement for remediation or
closure of the former Foster Canyon Landfill, failure of the San Diego Regional Water Quality Control
Board (SDRWOQCB) and Post- Closure Maintenance Plan (POMP) shall not be deemed sufficient
reason for delay of the development of the "Distrito La Novia "site, provided DEVELOPER takes
prudent and necessary action to secure Plan approval.
The problem arises in Section 12.5 Notice of Delay which states "DEVELOPER shall give notice to CITY
of any delay which DEVELOPER believes to have occurred as a result of the occurrence of any of the
events described in Section 12.3. "For delays of six months or longer, this notice shall be given within a
reasonable time after the DEVELOPER becomes aware that the delay has lasted six months or more. In
no event, however, shall of a notice of delay of any length be given later than (45) forty five days
after the end of the delay or (45) forty five days before the end of the Term whichever comes first."
The earliest notification date for the 45 day notice would have been July 22, 2010 which is 45 days
from the date of the election of June 7, 2010 when the initiative was defeated and the project was
approved. The latest date of notice for the 45 days before the end of the term of November 16,21 -or,
wl�p
would have been October 20, 2016. Obviously the date of July 22, 2010 came first and is the
controlling date.
Since written notice of delay was not provided to the CITY as required by Section 13. NOTICES, the
DEVELOPER was in default of the provisions of this agreement since July 23, 2010.
Even if the term of the Initial Agreement Term were to be extended to June 7, 2017 as agreed to by the
City Attorney, an additional extension of four (4) years of the Term as provided in Section 2.3 cannot
legally be authorized because the Development Agreement states on page 9, "DEVELOPER shall give
CITY written notice of its intent to extend the Term not more than one hundred eighty (180) days and
not less than sixty (60) days before the end of the initial Term, "provided that all of Distrito
improvements and buildings situated within the Community Redevelopment Agency (RDA) planning
area have been constructed consistent with Development Plans." As of today, those Distrito
improvements within the RDA zone have not been constructed, as required above, as a prerequisite for
the 4 year extension of the Term.
Section 2.4 Termination States "This Agreement shall be deemed terminated and of no further effect
upon occurrence of any of the following events:
2.4.1 If termination occurs pursuant to any specific provision of this Agreement"
I therefore conclude that the failure of the DEVELOPER to properly and timely notify the city of a 7
month delay by July 22, 2011 in accordance with Section 12.5 Notice of Delay disqualifies extension
requested by ARES. ARES is also disqualified from applying for a 4 year extension of the Development
Agreement because of the failure to construct the improvements in the Distrito RDA area in
accordance with Section 2.3 Term. Without extensions, this Development Agreement should have
been terminated as of November 16, 2016.
A�
J n Perry
3 175 is Barrida
San Juan Capistrano, CA 92675
Distribution:
Ben Siegel- City Manager
Jeff Ballenger- City Attorney
Maria Morris- City Clerk
Kerry Ferguson- Mayor
Sergio Farias- Mayor Pro Tem
Brian Maryott-Member
Pam Patterson- Member
Derek Reeve -Member