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18-0926_SOUTH COAST INVESTORS II, LLC_Agreement AGREEMENT RELATING TO ENCROACHMENT FOR LANDSCAPING AND PARKING FOR THE PLAZA BANDERAS HOTEL DEVELOPMENT OVER AN UNUSED PORTION OF CITY HIGHWAY EASEMENT This agreement("Agreement") is made by and between the City of San Juan Capistrano ("City") and South Coast Investors II, LLC ("SCI")with respect to SCI's Plaza Banderas Hotel project("Plaza Banderas"). Collectively, the City and SCI are the "Parties." Recitals A. SCI asserts that SCI owns property on which Plaza Banderas is being developed, which property consists of Assessor's Parcel Numbers 124-170-12, -14, -15, and-16 ("Property"). B. A realignment of Ortega Highway was completed in 2015. After the realignment of Ortega Highway, the City is no longer using a portion of a highway easement that runs over the Property, and the City has no near-term plans to again use this area for highway purposes. In light of this, SCI would like to put the area to productive use by constructing landscaping and parking within the area while at the same time providing assurance to the City that the City will retain its easement rights for future highway use. C. In particular, Ortega Highway was originally built by Caltrans in the 1940s. Caltrans obtained the legal right to construct Ortega Highway through an easement deed for right of way for state highway purposes executed on June 5, 1940, that was granted in accordance with a "Right of Way Contract— State Highway." Because of the Ortega Highway realignment a portion of this right of way is no longer physically a part of Ortega Highway. In connection with that realignment, Caltrans transferred its easement rights to the City. D. When Plaza Banderas was originally planned and developed, it was known that Ortega Highway was going to be realigned. However, the timing of that realignment in relation to the timing of the construction of Plaza Banderas was uncertain. Thus, Plaza Banderas was originally site planned on the assumption that Plaza Banderas would be constructed before Ortega Highway was realigned. Below is a depiction of the original alignment of Ortega Highway across the Property, followed by a depiction of the original Plaza Banderas site plan (which accommodated that original Ortega alignment): 1193825-v3 raa +7�r■n 1tl � Y.gYic �� — ��` ur SPRINC; ST y e�r�' in rie esa l}yy 4 YT Wy�byt r��717Y�617 � YN�F7lt ae1LY ti PAROL 2 PARCEL 3 x 0.56 AC. 2.C9 AC. Wwal p PARCEL 1 y CA.r,�;�ri' a a 0.45 AC. dr �. a J� +bY MYl YaY � •���v {{LVY7T I 7f Y� ren. is Ira - or } .. sJ8 ptic �) 7771; ru: :u,t:t; fti.tiw•i� E. Since Ortega Highway was realigned south of its original alignment, there is now a "hump" of land that is no longer being used for highway purposes. That area is also not landscaped or otherwise improved. F. By means of an application to the City designated as Architectural Control (AC) 18-024, SCI, represented by Mission Commercial Properties, Inc., is seeking City approval to 1193825-0 -2- modify the Plaza Banderas site plan ("Site Plan Modification") so as to place landscaping and parking in a portion of the unused easement area, as approximately depicted below: .�..... 13 b =� C3-. .._ u. ALL -%fik - G. SCI asserts that, as the Property owner, it is the owner of the fee title underlying the unused portion of the Ortega Highway easement that crosses Lot 12. SCI further asserts that, as the fee owner, it is entitled to make use of that area, such as for landscaping and parking, as long as the City's rights are not unreasonably impaired. H. The City takes no position with regard to SCI's claim of fee title and right to use the easement area. However, the City is willing to grant SCI an encroachment permit to utilize the unused easement area for landscaping and parking as long as SCI acknowledges and reserves the City's easement rights and provides other assurance to the City as described in this Agreement. Agreement In consideration of the foregoing recitals and the promises made in this Agreement, the City and SCI agree as follows: 1. The City grants an encroachment permit to SCI: Effective if(and only if) and when the City approves the Site Plan Modification, the City hereby grants an encroachment permit to SCI to construct landscaping, parking, site access, storm drain, signage, and security access improvements contemplated by the Site Plan Modification ("Improvements"). This permit does not constitute, nor grant permission, to use or occupy property not under the control of the City. SCI shall obtain all necessary permits and approvals from the City for the construction of the encroaching Improvements and to pay all fees and charges associated therewith prior to commencing any work under this encroachment permit. 1193825-0 -3- 1.1. SCI agrees it is solely responsible for all costs of constructing and maintaining those improvements. The construction shall be subject to monitoring, inspection, and approval by the City. 1.2. SCI agrees that it will be solely responsible for any and all lawful taxes, fees and assessments relating to its use and maintenance of the Improvements and the Encroachment Area. Pursuant to Section 107.6 of the California Revenue and Taxation Code, City hereby advises, and SCI recognizes and understands, that its use of the public rights-of-way may create a possessory interest subject to property taxation and that it will be subject to the payment of property taxes levied on such interest. 1.3. This encroachment permit has an unlimited duration, except that the City may revoke this encroachment permit upon twelve (12)months'written notice to SCI or its successors or assigns. City may terminate this Agreement by giving sixty(60) days written notice for violation of any provision of this Agreement where such violation is not cured within sixty(60) days after written notice by City or, where such violation cannot reasonably be cured within sixty(60) days, SCI fails to promptly begin such cure and thereafter bring it to completion in a reasonably expeditious fashion. 2. Acknowledgment of the City's easement and the City's right of future use of that easement: SCI acknowledges that the City has a right of way easement in the location of the original alignment of Ortega Highway and acknowledges and agrees that neither the City's approval of the Site Plan Modification nor SCI's construction of landscaping and parking in the unused portion of that easement associated with the Site Plan Modification shall diminish in any way the City's easement rights or the City's right to put the right of way easement to future use. SCI acknowledges and agrees that the City's easement will continue to run with the Property and will be binding on successor owners of the Property. 2.1. Upon receipt of a demand from City, SCI or its successor or assigns, at its sole cost and expense, shall remove and relocate any Improvements installed,used, and/or maintained by SCI under this Agreement when such removal or relocation is made necessary due to work being done by or behalf of City or other applicable governmental agency. SCI shall complete the removal or relocation within twelve (12) months of receipt of notice from City or according to an agreed upon schedule with the City. Notwithstanding the foregoing, the City Engineer may require a shorter period due to exigent circumstances and may authorize a longer period if determined in the City Engineer's reasonable discretion. 2.2. If SCI fails to remove or relocate the facilities within the prescribed time period, City may remove the facilities at the expense of SCI, and SCI shall promptly reimburse the City any and all expenses, including administrative overhead. Any removal or relocation work by SCI shall only be done pursuant to an encroachment permit. 2.3. Whenever the removal or relocation of facilities is required under this Agreement, Permittee shall promptly repair and return the public rights-of-way and adjacent property to a safe and satisfactory condition to City in accordance with City's usual standards. 1193825-0 -4- 3. SCI's rights: Nothing about this acknowledgement of the City's easement rights is meant to waive or otherwise diminish any right or claim SCI has with regard to fee ownership of the area underlying the easement or SCI's ability to put that area to use if that use does not unreasonably interfere with the City's use of the easement. 4. Acknowledgment of need for SCI to address any nonconformance caused by future City use of the right of way easement: On behalf of itself and successor owners of the Property, SCI acknowledges and represents to the City that, if the City makes future highway use of the currently unused portion of the Ortega Highway right of way such that parking and/or landscaping for Plaza Banderas is displaced and this displacement creates a non-conformance with the City's zoning requirements for Plaza Banderas, then SCI or any future owner of the Property will be responsible for remedying this nonconformance at SCI's or any future owner's sole cost and expense. 5. Indemnity of the City: On behalf of itself and future owners of the Property, SCI shall indemnify, defend and hold harmless the City and its officers, official, agents, and employees against any and all liability, claims, actions, causes of action or demands whatsoever against any of them arising out of or connected with the Site Plan Modification approval, this Agreement, including the encroachment permit granted pursuant to it, any claim that the City does not have title or authority that would allow the construction of landscaping and parking by SCI within the unused portion of the Ortega Highway right of way, or other liability of any nature, arising out of or connected with the Improvements or performance of this Agreement. 6. No Precedent Established: This Agreement is entered with the understanding that it is not to be considered as establishing any precedent regarding encroachments into the public right- of-way. ACKNOWLEDGED AND AGREED Dated: September 20, 2018 SOUTH COAST INVESTORS, 11, LLC By: Rivendell Land Company, Inc., a California corporation Its Managing Member By: William Griffith Its Chief Execuitive Officer 1193825-0 -5- Dated: September Z6,2018 CITY OF SAN JUAN CAPISTRANO, a municipal corporation By: am Its: er APPROVED AS TO FORM: By: Jdfr4 9.Balli ger,City Attorney Date: Septembe; 2018 1193825-v3 .6-