1993-0316_J & W FARMS_Management and Operation Agreement et-Cr Cej
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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
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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
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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
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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
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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
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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
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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:
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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:
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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
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Dated: 4617 BY: '�'�M�=
3,21 3 1 1
Dated: -- _ By: