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1993-0316_J & W FARMS_Management and Operation Agreement et-Cr Cej M Page 1 of 9 MANAGEMENT AND OPERATION AGREEMENT CITY FARM OF SAN JUAN CAPISTRANO This agreement for management and operations services (the "Agreement") is made and entered into by and between the City of San Juan Capistrano (the "City") , the San Juan Capistrano Community Redevelopment Agency (the "Agency") and J & W Farms, (the "Contractor") a California partnership. RECITALS This Agreement is made and entered into upon the basis of the following facts and intentions of the parties: The City and the Agency own, in undivided interests, a 56.45 acre farm in San Juan Capistrano (the "Farm") . The public purpose for which the property was acquired is the provision of open space within San Juan Capistrano, a purpose which includes maintaining all or a portion of the property in agricultural activities. The City and the Agency desire to continue farming the property until such time as all or part of it becomes utilized for other open space uses of the community. The Contractor has farming expertise and experience, and desires to manage and operate the Farm for the City and the Agency. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other valuable consideration, the parties agree as follows: 1.0 GENERAL PURPOSE OF THE AGREEMENT It is the intent of the parties to provide for the interim operation of the Farm until the City and the Agency can devise an appropriate means of providing for the long-term development of the Farm property as a public park, recreation area, open space and agricultural resource. To accomplish this goal, Contractor shall provide the expertise, supervision and management of the agricultural operations of the Farm, in exchange for which City and Agency shall compensate Contractor with a major portion of the gross revenues derived from Farm operations, as set forth more fully herein. The parties hereto agree that this Agreement is intended to be an operational agreement for the short term use of the Farm property and does not represent a loan to the Contractor. Title to the Farm property is not therefore, and will not be, transferred to the Contractor by the operation of this Agreement. 2.0 TERM The primary term of this Agreement shall be for a Page 2 of 9 period of three (3) years, commencing upon execution of this Agreement. At the end of said term, the Agreement may be extended for an additional period of one (1) year by mutual agreement of the parties, provided Contractor is given six (6) months advance written notice by City or Agency of the intent and desire to so extend the Agreement. The Agreement may be terminated by any party at any time during its term, provided that one hundred and twenty (120) days advance written notice is given to the other parties. In the event thatsuch notice is given during the term of the Agreement by City or Agency, Contractor shall be allowed reasonable accommodation to harvest any crop in the field, subject to the conditions of this Agreement. 3.0 COMPENSATION City and Agency shall receive, and shall thereafter divide according to their respective ownership interests in the Farm property, the following sums from Contractor, not to exceed a total payment of forty seven thousand, five hundred dollars ($47, 500. 00) per year: 1. Three percent (3%) of the cash receipts of all gross sales of fresh produce to wholesale; 2. Three percent (3%) of the cash receipts of all gross sales of on-site retail transactions at the Farm; and 3 . Three percent (3%) of the cash receipts of all gross sales of all other production of the Farm property except "seconds" , defined as fresh produce of insufficient quality or size for retail or wholesale marketing, and which shall be used exclusively for non-profit purposes by Contractor. All produce designated as "seconds" shall be subject to a right of inspection by City and Agency before removal from the Farm. Payment for both City and Agency shall be made monthly, not less than 45 days after the end of the month in which the cash receipts are received by Contractor. City and Agency shall have the right to audit Contractor at any time upon reasonable notice. 4.0 SERVICES OF CONTRACTOR 4. 1 Operation of Farm. Contractor shall be responsible for the supervision and management of every aspect of running the Farm in a businesslike manner. Such Page 3 of 9 supervision and management shall include, but not be limited to: a) The employment, supervision and direction of all employees engaged in the farming operation; b) Providing for the maintenance of all equipment and supervising its use in a safe and prudent manner; c) Soil preparation, planting, fertilizing, irrigating, pesticide and herbicide applications, and the harvesting of all crops; d) The marketing and sale of crops; e) Maintenance of records and accounting for all revenues and expenditures, including employee payroll and related records; f) The purchasing of all seeds, plants, fertilizers, herbicides, pesticides, and other materials and supplies, such as boxes and packaging materials, required for marketing and sale of the crops; g) Management and maintenance of all on-site improvements, including temporary housing, for Contractor's employees. Contractor warrants that all services will be performed in a competent and satisfactory manner, consistent with the standards of the industry and in accordance with applicable Federal, State and local regulations. 4.2 Maintenance of Property and Equipment. Contractor agrees to accept the Farm premises and equipment in present condition on the date of execution of this Agreement. Specified buildings and farm equipment shall be provided to Contractor by City and Agency, for Contractor's use in operating the Farm. Contractor shall maintain, at Contractor's expense, the property, including all structures except the historical farmhouse residence, and all equipment owned and furnished by City or Agency that is used in the farming operation, in a reasonable state of repair and working order. All other equipment to be used in the farming operation shall be furnished by Contractor at Contractor's expense. Equipment owned and furnished by City and Agency shall not be removed from the Farm premises without the consent of City and Agency, except for temporary repairs, after which it shall be immediately returned. An inventory of all equipment owned by the City or Agency shall be provided to Page 4 of 9 Contractor. Contractor and the authorized representatives of City and Agency shall inspect all equipment within sixty (60) days of execution of this Agreement and mutually agree upon the condition of the equipment. 4. 3 Marketing and Sale of Crops. Contractor shall be responsible for the marketing and sale of crops produced on the Farm. The parties agree that crops will be sold retail at the cash stand located on the property and to commercial produce wholesalers and distributors. All cash receipts will be accounted for in a manner acceptable to City and Agency. 4 .4 Water and Utilities. Contractor agrees to pay all costs for public utilities installed or used during the term of the Agreement. Contractor agrees to use water provided by the local agencies in the Farm operation, and to pay for water usage, including the charges for new hookups, maintenance and repairs. 4 .5 Condition of Property. Contractor accepts the Farm premises in its present condition upon execution of this Agreement. Contractor shall not be responsible nor have any liability for holdover tenants in the onsite temporary housing on the Farm premises at the commencement of performance of this Agreement. City and Agency make no warranty of the suitability of the property for growing crops. Contractor agrees, at Contractor's expense, to use reasonable care to control all weeds, noxious or otherwise, growing on the Farm property, including in drainage ditches. Contractor shall furnish all labor and materials required to eliminate and otherwise reasonably control all rodents, insects and other pests on the property. Contractor agrees to farm the property in a manner reasonably calculated to protect the soil and maintain the fertility through the use of fertilizers and chemicals in accordance with good farming practices as generally followed and recognized in Orange County, California. Contractor agrees, at Contractor's expense, to keep fences, ditches and borders of the Farm property in good condition and repair at all times, reasonable wear and tear excepted. The duly authorized representative of City and Agency may enter upon the Farm premises and all buildings thereon, or any portion thereof, at a reasonable time for the purposes of inspection. 4 . 6 Residential Use of Property. Contractor agrees that no persons or employees will be allowed to reside upon the Farm premises except for the use of existing temporary farm labor residences during irrigation periods only. Contractor shall obtain all necessary licenses, permits and approvals, and shall abide by all state, local and national laws for such temporary residential use. 4.7 Termination and Surrender. Upon expiration or the termination of this agreement, Contractor shall quietly and Page 5 of 9 peacefully vacate the premises. Contractor shall have the right to harvest crops planted prior to termination or expiration of this Agreement, provided such harvesting occurs within a reasonable time, not to exceed ninety (90) days, and does not unreasonably interfere with alternative uses of the property by City and/or Agency. Contractor shall remove any personal property of Contractor on the Farm premises or within any building or structure thereon; any such personal property or trade fixtures of Contractor not removed within thirty (30) days from the date of termination shall be deemed abandoned, and shall become the property of City and Agency. Contractor shall restore the premises to the condition in which they were received at the commencement of the term of this Agreement, or to an improved condition acceptable to City and Agency, ordinary wear and tear excepted. Any equipment or personal property of City or Agency shall be immediately surrendered and returned in the condition originally received, reasonable wear and tear excepted. 4.8 Partial Surrender. In the event that City and/or Agency shall elect to remove portions of the Farm premises from agricultural use for development of public projects, parks or other uses, Contractor agrees to surrender such acreage and vacate same upon ninety (90) days written notice, provided that Contractor shall be allowed a reasonable time to harvest existing crops in the field on such acreage, or in lieu thereof be paid the fair market value of such crops in place, not to exceed Five Thousand Dollars ($5, 000) per acre. All parties understand that the location of such property has not been ascertained with finality at the time of execution of this Agreement, and shall be subject to a public review process which may alter the location and plan for such improvements. Contractor has been provided with a draft "Conceptual Park Plan", attached hereto as Exhibit A, but acknowledges that this "plan" is subject to change. 4.9 Compliance with Law. All services rendered hereunder shall be provided in accordance with applicable Federal, State and local regulations, including regulations governing the employment of farm laborers. Contractor shall obtain, at Contractor's expense, such licenses, permits, and approvals as may be required by law for the performance of the services to be provided by the Contractor under this Agreement. 5.0 INSURANCE AND INDEMNIFICATION 5. 1 Indemnity. The Contractor shall defend, indemnify and hold harmless the City and the Agency, their respective officers, employees and agents from and against any and all actions, claims, demands, losses, costs, expenses, including legal costs and attorneys fees, for death or injury to persons, or damage to property, including property of City or Agency, or for the pollution thereof and cleanup costs, arising out of or related to Contractor's performance under this Agreement, except Page 6 of 9 to the extent of such loss as may be caused by City or Agency's own negligence, including that of their respective officers and employees. Contractor shall not be held accountable for any preexisting soil contamination including those identified in the report dated January 28 , 1990, prepared by Chem Risk, and the report dated December 18, 1990, prepared by South Coast Geological Services, Inc. 5. 2 Insurance. The Contractor shall procure and maintain during the term of this Agreement, public liability and property damage insurance against all claims for injury or damage resulting from Contractor's acts or omissions arising out of or related to Contractor's performance under this Agreement. Contractor shall also carry worker's compensation insurance in accordance with applicable California laws. All insurance policies shall contain severability of interest clauses providing that the coverage shall be primary for the losses arising out of Contractor's performance and the City and Agency, and their insurers, shall not be required to contribute to such loss. A certificate evidencing the foregoing and naming the Agency and the City as additional insureds shall be delivered to, and approved by, the City and the Agency prior to commencement of services under this Agreement. The amount of insurance required shall be One Million Dollars ($1, 000, 000) General Aggregate, One Million Dollars ($1, 000, 000) products liability and Five Hundred Thousand Dollars ($500, 000) per occurrence. All insurance required by this Agreement shall be maintained during the term of this Agreement and shall not be cancelled without thirty (30) days written notice to the City and the Agency. 6.0 ADMINISTRATION OF CONTRACT 6. 1 Subcontracting and Assignment. Contractor shall not contract with any other person or entity to perform the services required hereunder without the prior approval of City and Agency. Neither this Agreement nor any interest herein may be assigned or transferred, voluntarily or by operation of law, without the prior written consent of City and Agency. 6.2 Independent Contractor. At all times during the term of this Agreement, Contractor shall be an independent contractor and shall not be an employee of City or Agency. All persons employed by Contractor to perform services under this Agreement shall be employees of Contractor and shall not be deemed employees of City or Agency for any purpose. City and Agency shall have the right to control Contractor only insofar as the results of Contractor's services rendered pursuant to this Agreement; however, City and Agency shall not have the right to control the means by which Contractor accomplishes the services rendered pursuant to this Agreement. Contractor shall not act as an agent of City or Agency, and shall have not authority, express Page 7 of 9 or implied, pursuant to this Agreement to bind City or Agency to any obligation whatsoever. 6. 3 Conflict of Interest. No officer or employee of City or Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such officer or employee participate in any decision relating to the Agreement which effects his personal interest or the interest of any corporation, partnership or association in which he or she is directly or indirectly interested, in violation of any state Statute or regulation. The Contractor warrants that no payment has been nor will be given to any third party, in money or other consideration, for obtaining this Agreement. 6.4 Amendment and Severability. This Agreement contains all of the agreements of the parties. This Agreement may be amended at any time by mutual consent of the parties by an instrument in writing. In the event that any one or more of the phrases, sentences, clauses, paragraphs, or sections contained in this Agreement shall be declared invalid or unenforceable by a valid judgement or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining phrases, sentences, clauses, paragraphs, or sections of this Agreement which are hereby declared as severable and shall be interpreted to carry out the intent of the parties hereunder. 6. 5 Notice. Any notice, demand, request, consent, approval or communication that either party desires or is required to give to the other parties shall be in writing and either served personally or sent prepaid by first-class mail to the addresses set forth below. Notice shall be deemed communicated in forty eight (48) hours from the time of mailing if so mailed. Any change of address must be communicated promptly to the other parties to this Agreement. To City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California 92675 To Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 To Contractor: Page 8 of 9 J & W Farms 31648 Rancho Viejo Road, Suite D San Juan Capistrano, California 92675 Attention: John H. Kotake 7.0 ENFORCEMENT OF AGREEMENT 7. 1 Disputes. Any dispute over a question of fact arising under this Agreement which cannot be resolved by agreement between the parties may be, by mutual consent of all parties, submitted to a mutually agreed upon arbitrator, the cost of which shall be shared by the parties. 7. 2 Default of Contractor. If termination is due to the failure of Contractor to fulfill its obligations under this Agreement, City and Agency may take over the operation of the Farm premises immediately upon notice thereof to Contractor. 7. 3 Legal Action. In addition to any other rights or remedies available under this Agreement, any party may take legal action at law or in equity to cure, correct or remedy any default, to recover damages, to compel specific performance, or to obtain injunctive relief or any other remedy consistent with the purpose of this Agreement. In the event such legal action is commenced, the prevailing party shall be entitled to recover reasonable attorney's fees and costs of suit from the losing party. 7. 4 Authority. The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of such parties and that the parties hereto are formally bound to the provisions of this Agreement. IN WITNESS WHEREOF the parties have executed this Agreement as of the dates stated below, to become effective on the last date so executed. City of Son JUai-Capistrano March 16, 1993 Dated: By: ,�- Mayor ATTEST: Page 9 of 9 By: -- 'A, 40, City Clerk San Juan Capistrano Community Redevelopment Agency, a public body, 1 March 16, 1993 Dated`: By: _ Chairperson, Agency Board of Directors ATTEST: City Cler}c APPRO / AS 2yD:Zzez4 By: -- - - - City Attorney, 93 J & ' - , a California pa p g ) Ar. Dated: 4617 BY: '�'�M�= 3,21 3 1 1 Dated: -- _ By: