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04-0907_PUEBLO SERRA WORSHIP HOLDINGS_Development AgreementRecorded in Offici Records, Orange County Tom Daly, Clerk -Recorder Ilillllllllllllllllllllllllllllllllllillllllllllllllllllllltlillllllll!IIIINO FEE 2004000865150 03:31pm 09/27104 213 110 Al2 26 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Recording Requested by And When Recorded Return to: Meg Monahan City Clerk City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, Ca. 92675 n [Exempt From Recording Fees-G.C. 6103] DEVELOPMENT AGREEMENT (Assessor's Parcel #649-361-03; 649-011-025; 649-011-30, County of Orange, California) This Development Agreement is made this `day of004, by and between the City of San Juan Capistrano ("City') and PueGbIoCterra Worship Holdings, a California not for profit religious corporation ("Developer"). The City and Developer are also referred to as "Parties" and individually as a "Party". RECITALS Whereas, Developer owns in fee simple title approximately 9 acres of real property adjacent to, and east of, Camino Capistrano and northerly of Junipero Serra Road and designated as Orange County Assessor's Parcel # 649-361-03. Developer currently has a vested leasehold interest in approximately 29 acres of unimproved real property southerly of Junipero Serra Road and designated as Orange County Assessor's Parcel # 649-011-025, & 649-011-30. All three above stated parcels are collectively referred to herein as the "Subject Property", and Whereas, Assessor's Parcel # 649-361-03 is commonly referred to as the "north campus" and Assessor's Parcels # 649-011-025 & 649-011-30 are commonly referred to as the "south campus", and Whereas, on or about July 25, 2002, citizens of San Juan Capistrano commenced circulation of the "JSerra Education Initiative" which is hereby expressly incorporated by this reference as if set forth in full ("the Initiative"), and Whereas, the City Council on May 19, 2003 adopted the Initiative pursuant to the requirements of the state Elections Code, and 1032/022359-0003 515451.02 x09/02/04 23841\City of SX/Development Agr betty PSWH and City CLI Whereas, on June 30, 2004, the California Court of Appeal, in Native American Sacred Site and Environmental Protection Association v. City of San Juan Capistrano (Case. No. G033198) affirmed that the City's adoption of the Initiative on May 19, 2003 was lawful; and Whereas, the Initiative contains General Plan and zoning regulations that allow the previously -entitled structures on the north campus to be used as a private Catholic high school and also allow the development of supporting school facilities on the south campus, and Whereas, construction of improvements on the south campus parcels as applied for by Developer entail Architectural Control land use approvals from the City, and Whereas, the Parties agree that this Agreement will promote and encourage the development of the Subject Property by providing the Developer, and its successors, assigns, and lenders, with a greater degree of certainty as to the Developer's ability to complete the Project, and that the consideration to be received by the City pursuant to this Agreement and the rights secured to Developer hereunder constitute sufficient consideration to support the covenants and agreements of the Parties, and Whereas, the Agreement provides a mechanism by which the City can obtain valuable public revenues which will assist in the long-standing, desired economic development of the Subject Property and which will offset costs for City services such as police, fire, and recreational services, while at the same time ensuring the prompt processing of applications for the development and operation of a Catholic high school on the Subject Property; and Whereas, the City has processed, considered, and approved an environmental impact report that has fully analyzed the environmental impacts of the project NOW, THEREFORE, City and Developer mutually agree as follows: ARTICLE 1. General Provisions. 1.1 Ownership of the Property. The City and Developer acknowledge and agree that Developer has the requisite legal or equitable interest in the Subject Property, and thus, Developer is qualified to enter into and be a party to this Agreement in accordance with Government Code section 65865(b). 1.2 Assignment of Rights. Developer shall be permitted to assign or otherwise transfer this Agreement, and its rights and obligations hereunder, to any other person, firm or entity, but only if the prior 1032/022359-0003 515451.02 a09/02/04 23641\City of SX/Development Agr betw PSWH and City CL1 2 written consent of the City or the City's delegate is obtained. Such consent of the City shall not be unreasonably withheld. Notwithstanding any other provisions in this Agreement (including, but not limited to, the previous two sentences), Developer or its successors in interest may assign or otherwise transfer this Agreement and its rights and obligations hereunder to any entity or entities owned or controlled either directly or indirectly by Junipero Serra High School, a California non-profit religious corporation ("JSerra High School") (each such entity being a "Permitted Transferee"). Assignments or transfers of the Agreement, or rights or obligations thereunder, to a Permitted Transferee do not require the prior written consent of the City, such consent being affirmatively given herein. As used in this subsection "owned or controlled by" means an entity in which JSerra High School has either a direct or indirect equitable or beneficial ownership interest equal to at least 25% or an amount sufficient to exercise control, or a limited liability company in which Timothy R. Busch or an entity controlled by Timothy R. Busch serves as a managing member. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns. To the extent of the interest of the Developer, and its assigns, in the Subject Property, the covenants of Developer set forth in this Agreement shall be covenants running with the land and enforceable to the full extent permitted by applicable law. 1.3 Term. Unless otherwise terminated as provided in this Agreement or otherwise provided, this Agreement shall continue in full force and effect for a period of 20 years from its effective date. ARTICLE 2. Development of the Property. 2.1 Vested Right to Develop. Pursuant to Government Code sections 65865.4 and 65866, Developer is obtaining vested rights to develop the Subject Property in accordance with applicable General Plan and zoning regulations, as amended by the Initiative, the terms of this Agreement, and Architectural Approval (AC) 02-07. Unless amended or terminated in the manner specified in this Agreement (and subject to the provisions of this Agreement), Developer shall have the rights and benefits afforded by this Agreement and this Agreement shall be enforceable by Developer and the City notwithstanding any growth control measure or any development moratorium adopted after the Execution Date, or any change in applicable general or specific plans, zoning, or subdivision regulation adopted by the City which alter or amend the City's General Plan or Zoning Code or effect a change to City policies that prevent or materially adversely affect development of the Project as 1032/022359-0003 515451.02 a09/02/04 23841\City of WC/Development Agr betw PSWH and City CL1 3 contemplated by this Agreement and Architectural Approval (AC) 02-07. Developer agrees to comply with all conditions of approval imposed on the project through City's adoption of Architectural Approval (AC) 02-07. 2.2 Permitted Uses. (a) Unless otherwise provided by this Agreement, the land use rules, regulations and official policies governing the permitted uses of the Subject Property, governing density, design, improvement, and construction standards and specifications, applicable to development of the property shall be those rules, regulations, and official policies set forth in the Initiative, the Architectural Approval, and the land use rules, regulations, and official policies in force at the time of the execution of the agreement. Pursuant to Government Code section 65866, the City in subsequent land use actions applicable to the Property may apply new rules, regulations, and policies which do not conflict with those rules, regulations, and policies which are applicable to the Subject Property. (b) In addition, at no time shall the student population of the school exceed 2,000 full time equivalent students. Full time equivalent students does not include individuals who are not enrolled in the school and who attend after school programs at the school facilities. (c) Performing Arts Center. Developer intends to propose a Performing Arts Center on the South Campus at a future point in time. Developer may apply for an exception to the City's 35 foot height rule as part of an architectural control ("AC") application by filing an exception request with the AC application. The following criteria shall apply in the Planning Commission's determination of whether to grant a height limitation exception: (1) whether the design and layout of the structure is compatible with surrounding land uses; (2) whether the general design considerations, including the character, scale, and quality of the design are consistent with the City's Design Guidelines; (3) whether the design and layout would pose significant impairment of view sheds; (4) whether Developer has demonstrated that feasible design solutions have been studied such that the specific height proposed represents the only feasible means available to construct the proposed structure. (d) If any provision of the City's Title 9 Zoning regulations otherwise applicable to the South Campus project is found to be in conflict with the Architectural Control approval for the South Campus or the terms of this Development Agreement, then the Architectural Control approval and the Development Agreement shall control and supercede the conflicting provisions in the City's Zoning Regulations, 2.3 Future Developer Requested Land Uses Changes. Developer shall not be entitled to any change, modification, revision or 1032/022359-0003 515451.02 a09/02/04 23641\City of WC/Development Agr betw PSWH and City CLI 4 alteration in applicable General Plan and zoning regulations or Architectural Control (AC) 02-07 without review and approval by the City in accordance with City's Municipal Code requirements as they relate to modification of such land use entitlement requirements. 2.4 Future Voter Actions. Notwithstanding any other provision of this Agreement to the contrary, any general plan amendment, zoning ordinance or regulation, or any other law, policy, or procedure adopted by the voters of the City after the Execution Date of this Agreement shall not apply, in whole or in part, to the Subject Property or the JSerra High School project, unless such voter approved amendments expressly further the development of the Subject Property for the JSerra High School Project. Additionally, because the Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal.3d 465 that the failure of the parties therein to provide for the timing of development permitted a later enacted ordinance restricting the timing of development, it is the intent of the Developer and the City to hereby acknowledge and provide a right for the Developer to develop the Project in such an order and at such rate and time as Developer deems appropriate within the exercise of its sole and subjective business judgment. 2.5 Reservation of Authority/Exceptions. Notwithstanding any other provision of this Agreement, the following additional subsequent land use regulations shall apply to the development of the Subject Property: (a) Processing fees and charges of every kind and nature imposed or enacted by the City to cover the estimated actual costs to the City of processing applications for land use approvals or for monitoring compliance with applicable land use approvals; (b) Procedural regulations consistent with this Agreement relating to hearing bodies, applications, notices, findings, records, hearing, reports, recommendations, appeals and any other matter of procedure; (c) Changes adopted by the International Conference of Building Officials, or other similar body, as part of the then most current versions of the Uniform Building Code, Uniform Fire Code, Uniform Plumbing Code, Uniform Mechanical Code, National Electrical Code, or Dangerous Building Code. 1032/022359-0003 515451.02 x09/02/04 2384KCity of WC/Development Agr betty PSWH and City CL1 5 (d) Regulations that are in conflict with Developer's Project provided Developer has given written consent to the application of such regulations to the Subject Property. (e) (e) Federal, state, county, and multi -jurisdictional laws and regulations which the City is required to enforce as against the Subject Property or development of the Subject Property. (f) Utility connection fees which would ordinarily be required to be paid by Developer. (g) Regulations that do not apply to the development of the Subject Property but to future potential temporary uses such as temporary use permits. 2.6 Modification or Suspension by Federal, State, County, or Multi - Jurisdictional law. In the event that federal, state, county, or multi -jurisdictional laws or regulations, enacted after the effective date of this Agreement, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall be modified or suspended as may be necessary to comply with such federal, state, county, or multi -jurisdictional laws or regulations, and this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provision impractical to enforce. ARTICLE 3. PUBLIC BENEFITS 3.1 General. The Parties acknowledge and agree that Developer's Project will result in demands on public services and further acknowledge and agree that this Agreement confers unique benefits to Developer that can be balanced by the provision of public benefits to the City. Accordingly, the Parties intend by this Agreement to provide additional consideration to the public that exceeds the costs attributed to the demands on public services created by the project. 3.2 Per Student Fee Imposition. Developer shall make payments to the City as follows: 3.2.1 For the school year commencing September 1, 2005 through August 31, 2006, Developer shall pay City a single Per Student Mitigation Fee of One Hundred Seventy -Two Thousand Dollars ($172,000). 3.2.2 For the school years commencing September 1, 2006 through August 31, 2007 and each school year thereafter for 1032/022359-0003 515451.02 a09/02104 23641\City of SX/Development Agr betty PSWH and City CL1 6 the duration of this Agreement, Developer shall pay the City an annual fee ("Per Student Mitigation Fee") equal to Two Hundred Dollars ($200) per student enrolled in the regular full time curriculum at the School as of October 1, but in any event not less than Two Hundred Thousand Dollars ($200,000) per school year. As an example, if during the September 1, 2006 through August 31, 2007 school year, Developer has a student enrollment of 500 students, Developer shall pay the City $200,000 to cover the annual payment for that school year ($200 x 500= $100,000, which is less than $200,000). If, however, during this same school year, Developer has a student enrollment of 2,000 students, Developer shall pay the City Four Hundred thousand Dollars ($400,000) for that school year ($200 x 2,000= $400,000). 3.2.3 In addition to the above provisions, commencing the third year the Per Student Mitigation Fee (initially at $200 per student) is to be paid by Developer pursuant to Section 3.2.2, the Per Student Mitigation Fee shall be increased two percent (2%) per year (on original base amount). 3.2.4 The Parties expressly acknowledge that at this point in time, it is unclear whether the Subject Property will be deemed by the applicable authority to be exempt from the payment of real property taxes. To this end, notwithstanding any of the provisions of this Agreement, if the Subject Property is not deemed to be tax exempt in its entirety, Developer shall continue to be obligated to pay the annual Per Student Mitigation Fee set forth above, but the amount due shall be reduced by an amount equal to the sum of (1) the gross real property taxes and assessments attributable to the Subject Property that is allocated to (a) the City, (b) City -controlled special districts, and (c) other City -controlled taxing entities, and (2) the gross property tax increment attributable to the Subject Property allocated to the Community Redevelopment Agency of the City pursuant to Health and Safety Code section 33670(b) or successor statute (collectively, the "City/Agency Property Tax Allocation"). The City/Agency Property Tax Allocation shall not include the diversion of all or a portion of City or Agency property tax receipts attributable to the Subject Property to the Educational Revenue Augmentation Fund, but shall include all other tax amounts attributable to the Subject Property which would otherwise be received by the City or Agency but for the other acts of the County of Orange, State of California, or federal government. If the Per Student 1032/022359-0003 515451.02 a09/02/04 23641\City of SJC/Development Agr betty PSWH and City CL1 7 Mitigation Fee is less than zero (e.g., City/Agency Property Tax Allocation exceeds the Per Student Mitigation Fee owed for a particular year), Developer shall not be obligated to make any Per Student Mitigation Fee Payment for that school year and the amount less than zero shall be carried over to the following year and added to the City/Agency Property Tax Allocation for the following year. The City/Agency Property Tax Allocation is determined on the basis of a July 1 to June 30 fiscal year. The City/Agency Property Tax Allocation for a particular fiscal year shall correspond to the school year falling principally within the fiscal year (e.g., the City/Agency Property Tax Allocation for the period July 1, 2005 to June 30, 2006, shall apply to the school year falling September 1, 2005 to August 31, 2006). 3.2.5 Notwithstanding the provisions of Sections 3.2.1 through 3.2.4 above, the Per Student Mitigation Fee shall never exceed, per fiscal year, that amount equal to the City/Agency Property Tax Allocation the City, City -controlled special districts, other City controlled taxing entities, and the Community Redevelopment Agency of the City of San Juan Capistrano would have received if the Subject Property was not deemed to be tax exempt. The parties expressly agree that the purpose of this provision is to ensure that no party obtains a financial windfall. 3.2.6 Timing of Payment. Developer shall be obligated to make the Per Student Mitigation Fee for the school year falling principally within the corresponding fiscal year and such payment shall be made within sixty (60) days after such fiscal year ending June 30, subject to notification of Developer of the amount due, if applicable. 3.2.7 Interest Penalty for Late Payments. If Developer fails to make a payment of the Per Student Mitigation Fee to the City (if required when the credit for the City/Agency Property Tax Allocation is applied) within four (4) weeks from delivery of written notice from the City setting forth the amount of the Per Student Mitigation Fee due for such year, then a penalty at the rate of the Prime Rate plus three percent (3%) per annum shall be applied to the payment. For purposes of this section, the applicable Prime Rate shall be published in the Wall Street Journal on the 15th day of the prior month (or preceding business day if the 15th day is not a business day). 1032/022359-0003 515451.02 a09/02/04 23541\City of SJC/Development Agr betty PSWH and City CU 8 3.2.8 Reconciliation of Per Student Mitigation Fee Payments. The Parties hereby expressly acknowledge and agree that the Per Student Mitigation Fee Payments may need to be reconciled on a yearly basis to ensure effectuation of and adherence to the Parties' intentions as expressed in this Article. To this end, the Parties agree to create a mechanism by which to ensure that no overpayments or underpayments of the Per Student Mitigation Fee Payments are made. 3.2.9 Security. If Developer fails to make a Per Student Mitigation Fee payment to the City (if required when the credit for the City/Agency Tax Allocation is applied) within four (4) weeks from delivery of written notice from the City setting forth the amount due, Developer shall be required to provide immediate payment of the amount in arrears and shall also be required to immediately deposit with City, to be held in trust in a separate, segregated fund, $200,000 to cover one year's worth of a Per Student Mitigation Fee Payment. This amount held in trust shall not be expended by the City for any purpose, and shall be held as security for Developer's obligations set forth herein. The $200,000 security shall be held in an interest bearing account to be mutually agreed upon by Developer and the City, with interest bearing on the account to be payable to the Developer on January 31 of every year. 3.2.10 Audit. City at its discretion is entitled to request and Developer shall cooperate with a third party audit of school records pertaining to the student fee obligation. 3.3 Joint Public Use of Project Facilities. Developer and City agree to enter into a memorandum of understanding for the joint use of certain designated portions of the south campus facilities by the City. The Parties acknowledge that the "Joint Facilities Use Agreement", dated April 22, 1996, between the City and the Capistrano Unified School District will serve as a model of the memorandum of understanding to be entered into between the City and Developer pursuant to this Section. 3.4 Financial Aid for, and Outreach to, City Children. Developer agrees to designate a portion of its financial aid program exclusively for children of City residents. A committee made up of local individuals (e.g., a Councilmember, Developer representative, cultural commission member, etc.) will distribute awards. Such awards shall be reviewed and approved by JSerra's financial aid 1032/022359-0003 515451.02 a09/02104 23641\City of SJC/Development Agr betw PSWH and City CL1 9 committee. Developer also shall adopt a proactive outreach program to attract students from the City focusing particularly on the economically distressed areas of the City. 3.5 Commitment to On -Site Private Security. Developer agrees to provide private, 24-hour security at the School utilizing a combination of electronic monitoring systems and patrols. 3.6 Traffic Mitigation Obligation. Developer shall perform certain traffic impact mitigation activities more particularly set forth in Exhibit A, attached and incorporated herein by reference, under the terms and conditions as set forth in Exhibit A. ARTICLE 4. REVIEW FOR COMPLIANCE 4.1 Periodic Review. The City Council shall review this Agreement annually, on or before the anniversary of the Effective Date, in order to ascertain the good faith compliance by Developer, with the terms of the Agreement. As part of that review, Developer shall submit an annual monitoring review statement describing its actions in compliance with the Agreement, in a form acceptable to the City Manager or his/her authorized designee, within thirty (30) days after written notice therefrom requesting such a statement. The statement shall be accompanied by an annual review and administration fee sufficient to defray the estimated costs of review and administration of the Agreement during the succeeding year. The amount of the annual review and administration fee shall be the actual costs incurred by City as determined by the City Manager, but not to exceed $1,000 without the express prior approval of the Developer. No failure on the part of the City to conduct or complete the review as provided herein shall have any impact on the validity of this Agreement. 4.2 Special Review. The City Council may, in its sole and absolute discretion, order a special review of compliance with this Agreement at any time at City's sole cost. Developer shall cooperate with the City in the conduct of such special reviews. 4.3 Procedure. Each Party shall have a reasonable opportunity to assert matters which it believes have not been undertaken in accordance wit the Agreement, to explain the basis for such assertion, to receive from the other Party a justification of is position on such matters. 4.3.1 If on the basis of the Parties' review of any terms of the Agreement, either Party concludes that the other Party has 1032/022359-0003 515451.02 a09/02104 23641\City of SJC/Development Agr betw PSWH and City CL1 10 not complied in good faith with the terms of the Agreement, then such Party may issue a written "Notice of Non - Compliance" specifying the grounds therefore and all facts demonstrating such non-compliance. 4.3.2 The Party receiving a Notice of Non -Compliance shall have thirty (30) days to cure or remedy the non-compliance identified in the Notice of Compliance, or if such cure or remedy is not reasonably capable of being cured or remedied with such thirty (30) days period, to commence to cure or remedy the non-compliance and to diligently and in good faith prosecute such cure or remedy to completion. 4.3.3 If the Party receiving the Notice of Non -Compliance does not believe it is out of compliance and contests the Notice, it shall do so by responding in writing to said Notice within ten (10) calendar days after receipt of the Notice. 4.3.4 If the response to the Notice of Non -Compliance has not been received in the offices of the Party alleging the non- compliance within the prescribed time period, the Notice of Non -Compliance shall be presumed to be valid unless good cause exists for not responding within the time period. 4.3.5 If a Notice of Non -Compliance is contested, the Parties shall, for a period of not less than fifteen (15) days following receipt of the response, seek to arrive at a mutually acceptable resolution of the matter(s) occasioning the Notice. In the event that a cure or remedy is not timely effected or, if the Notice is contested and the Parties are not able to arrive at a mutually acceptable resolution of the matter(s) by the end of the fifteen (15) day period, the party alleging the non-compliance may thereupon pursue the remedies provided in Section 5.4 of this Agreement. 4.3.6 Neither Party hereto shall be deemed in breach if the reason for noncompliance is due to a "force majeure" as defined in, and subject to the provisions of Section 10.7 below. 4.4 Certificate of Agreement Compliance. If, at the conclusion of a periodic or special review, Developer is found to be in compliance with this Agreement, City shall, upon request by Developer, issue a Certificate of Agreement Compliance ("Certificate") to Developer stating that after the most recent Periodic or Special Review and based upon the information known or made known to the City Council that (1) this Agreement remains in effect and that (2) 1032/022359-0003 515451.02 a09/02/04 23641\City of SJC/Development Agr betty PSW H and City CL1 11 Developer is in compliance. The Certificate, whether issued after a Periodic or Special Review, may be in recordable form if required, shall contain information necessary to communicate constructive record notice of the finding of compliance, and shall state that the Certificate expires upon the earlier of (i) one (1) year form the date thereof, or (ii) the date of recordation of a Notice of Termination of Development Agreement. Additionally, Developer may at any time request from the City a Certificate stating, in addition to the foregoing, which obligations under this Agreement have been fully satisfied with respect to the Subject Property, or any lot or parcel within the Subject Property. Developer may record the Certificate with the County Recorder. If City does not expressly issue a Certificate, or expressly decline to issue a Certificate within 15 calendar days of after the conclusion of the periodic or special review, a Certificate shall be deemed to have been provided to Developer. ARTICLES. TERMINATION/DEFAULT AND REMEDIES 5.1 Termination for Default by Developer. The City may terminate this Agreement for any failure of Developer to perform any of its material duties or obligations hereunder to comply in good faith with the terms of this Agreement (hereinafter referred to as "default" or "breach"); provided, however, the City may terminate this Agreement pursuant to this Section only after following the procedure set forth in Section 4.3. 5.2 Termination of Agreement for Default of City. Developer may terminate this Agreement pursuant to this Section only after following the procedure set forth in Section 4.3 and thereafter providing written notice by Pueblo Serra to the City of the default setting forth the nature of the default and the actions, if any, required by the City to cure such default and, where the default can be cured, the failure of the City to cure such default within thirty (30) days after the effective date of such notice or, in the event that such default cannot be cured within such thirty (30) day period, the failure of the City to commence to cure such default within such thirty (30) day period and to diligently proceed to complete such actions and to cure such default. 5.3 Rights and Duties Following Termination. Upon the termination of this Agreement, no Party shall have any further right or obligation hereunder except with respect to (i) any obligations to have been performed prior to said termination, or (ii) any material default in the performance of the provisions of this Agreement which has occurred prior to said termination. 1032/022359-0003 515451.02 a09/02104 23641\City of SX/Development Agr betw PSWH and City CL1 12 5.4 Dispute Resolution by Binding Arbitration. Subject to the notice of default and opportunity to cure under Section 4.3, all disputes, claims, and questions regarding the rights and obligations of the Parties under the terms of this Agreement shall be resolved by binding arbitration. In case of a dispute, either party may make a demand for Arbitration by filing such demand in writing with the other party within ten (10) days after the notice of default and cure process has been exhausted. The arbitrator shall be mutually selected by the Parties. In the event that the Parties cannot agree on an arbitrator within ten (10) days, then one or both Parties shall file a written request with the Judicial Arbitration and Mediation Service ("JAMS") for a list of nine (9) potential arbitrators. Upon receipt of such list, the Parties shall promptly conduct a strike -off of unacceptable names. A coin toss shall be initially conducted to determine which Party shall strike off the first name. Once the arbitrator is chosen, the Parties immediately shall forthwith request JAMS to set an arbitration hearing not later than 120 days from date of the arbitration request. Costs of the arbitration proceeding shall be shared equally. 5.5 Surety Bond. Nothing in this Article shall prevent City from making a demand on the surety bond for untimely performance of the traffic mitigation measures set forth in Exhibit A provided the provisions of section 4.3 have been complied with. ARTICLE 6. THIRD PARTY LITIGATION The City shall promptly notify Developer of any claim, action, or proceeding filed and served against the City to challenge, set aside, void, annul, limit or restrict the approval and continued implementation and enforcement of this Agreement. Developer agrees to fully defend and indemnify the City for all costs of defense and/or judgment obtained in any such action or proceeding. Developer shall assume the obligation of providing a legal defense in such litigation, including the choice of defense legal counsel, unless otherwise provided for by mutual stipulation of the Parties. ARTICLE 7. MORTGAGEE PROTECTION 7.1 The Parties hereto agree that this Agreement shall not prevent or limit Pueblo Serra, in any manner, at Pueblo Serra's sole discretion, 1032/022359-0003 515451.02 x09/02/04 23841\City of SX/Development Agr betty PSWH and City CL1 13 from encumbering the Subject, Property or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Subject Property. The City acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with Pueblo Sera and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. Subject to compliance with applicable laws, the City will not unreasonably withhold its consent to any such requested interpretation or modification provided the City determine such interpretation or modification is consistent wit the intent and purposes of this Agreement. 7.2 Any Mortgagee of the Subject Property shall be entitled to the following rights and privileges: (a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Subject Property made in good faith and for value, unless otherwise required by law. (b) The Mortgagee of any mortgage or deed of trust encumbering the Subject Property, or any part thereof, which Mortgagee has submitted a request in writing to the City in the manner specified herein for giving notices, shall be entitle to receive written notification from the City of any default by Pueblo Serra in the performance of Pueblo Serra's obligations under this Agreement. (c) If the City timely receives a request from a Mortgagee requesting a copy of any notice of default given to Pueblo Serra under the terms of this Agreement, the City shall make a good faith effort to provide a copy of that notice to the Mortgagee within ten (10) days of sending the notice of default to Pueblo Serra. The Mortgagee shall have the right, but not the obligation, to cure the default during the period that is the longer of (i) the remaining cure period allowed such Party under this Agreement or (ii) thirty (30) days. (d) Any Mortgagee who comes in to possession of the Subject Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Subject Property, or party thereof, subject to the terms of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, no 1032/022359-0003 515451.02 a09/02/04 23641\City of WC/Development Agr betty PSWH and City CL1 14 Mortgagee shall have an obligation or duty under this Agreement to perform any of Pueblo Serra's obligations or other affirmative covenants of Pueblo Serra hereunder, or to guarantee such performance; except that (i) to the extent that any covenant to be performed by Pueblo Serra is a condition precedent to the performance of a covenant by the City, the performance thereof shall continue to be a condition precedent to the City's performance hereunder, and (ii) in the event any Mortgagee seeks to develop or use any portion of the Property acquired by such Mortgagee by foreclosure, deed of trust or deed in lieu of foreclosure, such Mortgagee shall strictly comply with all of the terms, conditions and requirements of this Agreement and the Development Plan applicable to the Subject Property or such part thereof so acquired by the Mortgagee. ARTICLE 8. INSURANCE Developer shall submit within 30 days from date of adoption of the ordinance approving this Development Agreement to the City duplicate originals of policies and endorsements, or appropriate certificates of insurance, of public liability insurance and broad form property damage insurance policies in the amount of not less than Two Million Dollars ($2,000,000), combined single limits, for death and injury to any person and property damage, naming the City and its officers, officials, employees, agents, and representatives as additional insureds, and in addition all such insurance: (a) shall be primary insurance and not contributory with any other insurance the City or its officers, officials, employees, agents, and representatives may have; (b) shall contain no special limitations on the scope of protection affordable to the City and its officers, officials, employees, agents, and representatives; (c) shall be "date of occurrence" and not "claims -made" insurance; (d) shall apply separately to each insured against whom claim is made or suit is brought, except with the respect to the limits of the insurer's liability; (e) shall provide that the policy shall not be canceled by the insurer or Developer unless there is a minimum of ninety (90) days prior written notice to the City; 1032/02235M003 515451.02 a08/02/04 2304hCity of SJC/Development Agr betw PSWH and City CL 15 (f) shall be endorsed to include a waiver of subrogation rights against the City or its officers, Officials, employees, agents, and representatives; and (g) shall otherwise be in a form acceptable to the Office of the City Attorney. ARTICLE 9. Developer agrees to and shall indemnify, defend, and hold harmless the City and the City's officers, officials, members, employees, agents, and representatives, from and against any and all claims, liabilities, damages, and losses, including without limitation reasonable attorneys' fees and litigation expenses, including court, courts and expert witness fees (collectively, "Claims") arising out of City's approval of land use entitlements for Developer's project and this development agreement; or due to the death or personal injury of any person, or physical damage to any person's real or personal property, caused by construction of improvements by, or construction -related activities of, Developer or Developer's employees, agents, representatives, servants, invitees, consultants, contractors, or subcontractors (collectively, "Developer's Representatives") on the Property, or for any construction defects in any improvements constructed by Developer or Developer's Representatives on the Subject Property; provided, however, that Developer shall not be required to indemnify the City for any and all misconduct of the City, or the City's officers, officials, members, employees, agents, or representatives, subject to any immunities which may apply to the City with respect to such Claims. The foregoing indemnification provision shall survive the termination of this Agreement. ARTICLE 10. MISCELLANEOUS PROVISIONS 10.1 Entire Agreement. This Agreement sets forth and contains the entire understanding and agreement of the Parties with respect to the subject matter set forth herein, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony of evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 10.2 Severability. If any word, phrase, term, provision, clause, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the invalid provision shall be deemed to be severable from the, remaining provisions contained within the Agreement. The Parties hereby state and acknowledge they would 1032/022359-0003 515451.02 a09/02104 23841\City of SX/Development Agr betw PSWH and City CL1 16 have adopted each and every provision contained within this Agreement notwithstanding the presence of an invalid provision. 10.3 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party or in favor of the City shall not be employed in interpreting this Agreement, all Parties having been represented by counsel in the negotiation and preparation hereof. 10.4 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 10.5 Waiver. Failure of a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party, or the failure by a Party to exercise it s rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 10.6 No Third Party Beneficiaries. This Agreement is made an entered into for the sole protection and benefit for the Parties and their successors and assigns. No other person shall have any right of action based upon any provision of this Agreement. 10.7 Force Majeure. Upon the Effective Date of this Agreement, Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by earthquakes, other acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), or other causes of a similar nature beyond the Party's reasonable control. If any such events shall occur, the term of this Agreement and the time for performance shall be extended for the duration of each such event, provided that the term of this Agreement shall not extended under any circumstances of more than five (5) years. 10.8 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or 1032/022359-0003 515451.02 a09/02/04 23841\City of SJC/Development Agr betw PSWH and City CL1 17 subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 10.9 Litigation Expenses. In the event of any action pursuant to section 5.4 between the City and Pueblo Serra seeking enforcement of any of the terms and conditions to this Agreement, the prevailing party in such action shall be awarded, in addition to such relief to which such party entitled under this Agreement, its reasonable litigation costs and expenses, including without limitation its expert witness fees and reasonable attorneys' fees. 10.10 Covenant Not to Sue. The Parties to this Agreement, and each of them, agree that this Agreement and each term hereof is legal, valid, binding, and enforceable. The Parties to this Agreement, and each of them, hereby covenant and agree that each of them will not commence, maintain, or prosecute any claim, demand, cause of action, suit, or other proceeding against any other Party to this Agreement, in law or in equity, or based on an allegation, or assert in any such action that this Agreement or any term hereof is void, invalid, or unenforceable under the Development Agreement legislation. 10.11 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties that the Development of the Subject Project is a private development, that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between the City and Pueblo Serra is that of a government entity regulating the Development of private property, on the one hand, and the holder of a legal or equitable interest in such property and as a current or future holder of fee title to such property, on the other hand. 10.12 Corporate Authority. The person(s) executing this Agreement on behalf of each of the Parties hereto represent and warrant that (i) such Party are duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said Party, (iii) by so executing this Agreement such Party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement such Party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which such Party is bound. 1032/022359-0003 515451.02 x09/02/04 23641\City of WC/Development Agr betw PSWH and City CL1 18 10.13 Notices. All notices under this Agreement shall be effective upon personal delivery, via facsimile so long as the sender receives confirmation of successful transmission from the sending machine, or three (3) business days after deposit in the United States mail, first class, postage fully prepaid and addressed to the respective Parties as set forth below or as to such other address as the Parties may from time to time designate in writing: To City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: City Manager Facsimile: (949) 488-3874 To Pueblo Serra: Pueblo Serra Worship Holdings 2532 Dupont Drive Irvine, CA 92612 Attn: Timothy Busch Telephone: (949)474-7368x100 Facsimile: (949) 474-7732 Copy to: Rutan & Tucker, LLP 611 Anton Boulevard, 14th Floor Costa Mesa, CA 92626 Attn: John A. Ramirez, Esq. Facsimile: (714) 564-9035 And George Mulcaire The Busch Firm 2532 Dupont Drive Irvine, CA 92612 Telephone: (939) 474-7368 x205 Facsimile: (949) 474-7732 10.14 Notability of City Officials. No officer, official, member, employee, agent, or representatives of the City shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, member, employee, agent, or representative. 10.15 Time of the Essence. The Parties expressly acknowledge and that time is of the essence in the performance of the provisions of this Agreement. 1032/022359-0003 515451.02 a09/02/04 23541\City of SJC/Development Agr betw PSW H and City CLI 19 10.16 Execution Date. The Execution Date of this Agreement is that date on which all parties have executed this Agreement. 10.17 Effective Date/Condition Subsequent. This Agreement shall not go into effect until the earlier of the occurring of the following: (a) 60 days following the lapsing of any and all statutes of limitation applicable to any legal challenge to any of the project approvals, including Architectural Permit _, this Agreement, and to any and all environmental impact reports prepared in connection with the project approvals, or (b) 60 days following the entry of a final, non - appealable judgment in any action challenging any of the project approvals, including Architectural Permit_, this Agreement, and any and all environmental impact reports prepared in connection with the project approvals. If litigation results in the invalidation of any of the project approvals, including Architectural Permit_, this Agreement, or any and all environmental impact reports prepared in connection with the project, this Agreement shall be void and shall be of no further force and effect. 10.18 Survival Clause. Notwithstanding Section 1.3 of this Agreement, Sections 2.2(b), 3.2, 3.3, 3.4, 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, 5.3, 5.4, 7. 1, and 7.2 shall survive the termination of this Agreement after 20 years pursuant to Section 1.3. 1032/022359-0003 515451.02 a09/02/04 23541\City of WC/Development Agr betty PSWH and City CL1 20 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year first set forth above. n ATTEST: Mona Clerk I_TUTW Z • a_ •. ; In Shaw, City Attorney STATE OF CALIFORNIA COUNTY OF 0 f G ,nc e City: Y OF S N U N APISTRANO By _z Mayor, r of San Juan Capistrano SS. PUEBLO SERRA WORSHIP HOLDINGS, a California n-QagFofit religious cor By Pr nted Nam Ti othy R. Busch Itt: Chief Executive Officer On A Q . ,�) o Q! , before me, ( r ,_ ] _ . 3e, [r.�, a Notary Public, personally appeared T, . 14-L y Q u Seo NY personally known to me -OR- [ ] proved to me on the basis of satisfactory evidence to be the e sono whose name* is/am subscribed to the within instrument and acknowledged to me that he/shaft" executed the same in his s authorized capacityo*, and that by hisAwwthek signature(* on the instrument the person* or the entity upon behalf of which the personjiiii; acted, executed the instrument. Witness my hand and official seal. AHERINL. DANKER'r V COMM, # 1337311 3 (� CTENOTARY PUBLIC.CALIFORNIAU) ORANGE COUNTY 0 COMM, EXP, JAN, 30. 2006'' 1032/022359-0003 515451.02 a09/02/04 23841\City of SJC/Development Agr betty PSWH and City CLI 21 SIGNATURE OF NOTARY •PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 1181) On September 22, 2004 before me, Margaret R. Monahan, City Clerk, personally appeared Joe Soto personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Capacity Claimed by Signers Mayor Title Signers are Representing City of San Juan Capistrano OPTIONAL Description of Attached Document Development Agreement APN 649-361-03; 649-011-025; 649-011-20, County of Orange, CA Exhibit A: TRAFFIC MITIGATION REQUIREMENTS A. Mitigation Measures. Camino Capistrano & Junipero Serra Road. At this location, Developer shall construct intersection improvements consisting of: an additional northbound through lane (this shall consist of an additional northbound lane from its intersection with Junipero Serra Road, northerly to a distance of approximately 160 feet, to provide a new entry only, no exit, driveway to align with existing drive aisle in the Sycamore Commons parking lot — the design to be subject to the approval of the City Engineer); a northbound right -turn lane; an additional westbound left -turn lane; and a westbound right -turn lane. Developer shall also construct appropriate and necessary traffic signal modifications to conform to the intersection improvements required under this section. Developer shall complete the above stated work in complete accordance with the plans and specifications for the work prior to student enrollment reaching 501 students. 2. 1-5 Northbound Ramps & Junipero Serra Road: At this location, Developer shall construct intersection improvements consisting of: an additional left - turn lane for the northbound off -ramp in a manner required and approved by Cal -Trans; widen Junipero Serra Road to five lanes between the 1-5 Northbound and Southbound ramps. Developer shall also construct appropriate and necessary traffic signal modifications to conform to the improvements required under this section. Developer shall complete the above stated work in complete accordance with the plans and specifications for the work prior to student enrollment reaching 1501 students. Developer's obligation to construct these improvements shall be subject to a fair share reimbursement agreement with Developer, with a fair share responsibility being limited to 31 % of the total cost of the improvements. The remaining cost of the improvements shall be reimbursed to Developer pursuant to the terms of the reimbursement agreement, unless prior to the completion of the improvements required under this section, this improvement shall be added to the City's CCFP Program. If this improvement is added to the City's CCFP Program, not more than 69% of the cost of completion of these improvements incurred by Developer shall be credited against Developer's total allocation of CCFP fees required so that the total amount of CCFP fees required to be paid by Developer are reduced on a dollar -for -dollar basis in an amount equal to the total cost of completion of these of these improvements. 23641\City of SJC\Exhibit A GPM CL2 -1- 3. Camino Capistrano & Del Obispo Street: Payment of CUP fees, or satisfaction of Developer's CUP fee obligation, as provided in this Exhibit A, shall be deemed to be full mitigation for and satisfaction of Developer's obligations for any improvements to this intersection that have been identified as necessary due to the roughly proportional impacts imposed on this intersection by the project. Developer shall not be required to construct these improvements. 4. Junipero Serra Road & Proiect Driveway: At this location, Developer shall construct intersection improvements consisting of: a traffic signal, and a westbound left -turn lane. Engineering plans shall be designed to accommodate an eastbound left turn lane. Developer shall complete the above stated work in complete accordance with the plans and specifications for the work prior to student enrollment reaching 501 students. 5. Camino Capistrano & Oso Road/Proiect Driveway: At this location, Developer shall construct intersection improvements consisting of: improving the intersection of Camino Capistrano and Oso Road/Project driveway by completing construction of a traffic signal, widening Oso Road to two through lanes eastbound and westbound and an eastbound left turn lane and a westbound left turn lane, along with the associated railroad crossing modifications and preemption, grading and landscaping. City shall reimburse Developer for 100% of the costs and expenses incurred by Developer in designing and constructing such improvements. Reimbursement of Developer's costs and expenses shall be paid by City to Developer upon completion of the improvements after City's review of reasonable and customary documentation of such costs and expenses as set forth in the reimbursement agreement to be entered into between Developer and City. Developer shall complete the above stated work in complete accordance with plans and specifications for the work prior to student enrollment reaching 671 students. City will use its best efforts to assist Developer in connection with any railroad crossing improvements, including negotiating and/or documenting any necessary agreements with the Southern California Regional Rail Authority ("SCRRA"). 6. Junipero Serra Road from Camino Capistrano along Proiect Frontage: At this location, Developer shall widen Junipero Serra from Camino Capistrano across the project frontage to a four -lane divided roadway with a taper to the existing roadway at the Ultramar Station, which shall be approved by the City Engineer. Dedication of right-of-way required for this improvement, as shown on the approved improvement plans, is required at no cost to the City, prior to completion and acceptance of these improvements. Developer shall complete the above stated work in complete accordance with the plans and specifications for the work prior to student enrollment reaching 501 students. 23641\City of SJC\Exhibit A GPM CL2 -2- 7. Camino Capistrano from Junipero Serra Road to Oso Road/Project Driveway: At this location, Developer shall Widen Camino Capistrano to a four -lane divided roadway. The improvements shall include a five (5) foot Class II on road bike lane on each side of the roadway, including all appurtenant improvements associated with grading and landscaping. Dedication of all required right-of-way to complete such improvements to the City, as shown on the approved improvement plans, is required at no cost to the City, prior to completion and acceptance of these improvements. Developer shall complete the above stated work in complete accordance with the plans and specifications for the work prior to student enrollment reaching 501 students. 8. CUP Fees: Developer shall pay the statutorily -required CUP fee as a private school as follows: Developer shall pay the requisite CUP private school fee for not less than 500 students concurrent with the issuance of the first building permit for the South Campus facilities. Subsequent CUP fees shall be paid in 100 -student increments in advance of student enrollment reaching said thresholds. For example, once enrollment reaches 600 students, CUP fees for 700 students shall be paid within 60 days of enrollment reaching 600 students. There shall be no refund of CUP if enrollment drops. Notwithstanding the above, any CUP fees paid in connection with the development of the North Campus (Sycamore Commons) shall be used as a credit against JSerra's CUP private school fees. Further, notwithstanding the foregoing or anything to the contrary contained herein, the fair value costs incurred by Developer in completing the improvements specified in Table 1 attached hereto and incorporated herein shall be credited against the CUP fees due under this Section 8, so that the total amount of CUP fees required to be paid by Developer are reduced on a dollar -per -dollar basis in an amount equal to the costs to complete the improvements specified on Table 1. In addition, completion of the improvements specified in Table 1 by Developer shall be deemed an accelerated payment of the CUP private school fees set forth above to the extent that such improvement costs exceed the CUP fees that would then be payable by Developer based on student enrollment. For example, if the costs payable by Developer to complete the improvements specified in Table 1 exceed the total CUP fees that would be owed upon student enrollment reaching 2,000 students, no additional CUP shall be due or payable from Developer thereafter upon completion of such improvements even though the actual student enrollment at the time of completion of such improvements may be less than 2,000 students. Further, provided Developer has posted the bond required under Section B hereinbelow, no CUP fees will be due by Developer upon issuance of a building permit and Developer may satisfy the CUP obligations by completion of the improvements specified hereinabove. Prior to Developer commencing construction of any mitigation measures, Developer and City will enter into a reimbursement agreement to provide for CUP reimbursement payments 23841\City of SJC\Exhibit A GPM CL2 -3- and fair share reimbursement payments to Developer, which shall be payable in equal annual installments over a 15 year period. B. Surety Bond Requirements. 1. Developer shall post a Faithful Performance Bond with the City in the total amount of $2.4 million (i.e., 2.4 million as the estimated cost of traffic mitigation improvements) to guarantee performance of the construction of traffic mitigation measures required under this Development Agreement. When construction of specified mitigation measure is completed, the amount of the Faithful Performance Bond shall be reduced, on a dollar by dollar basis, by the total amount of the costs incurred by Developer to construct the completed mitigation improvement. 2. The Surety Bond company shall have a Best Rating of at least B plus. 3. The bond shall be in a form acceptable to the City Attorney. 4. The bond shall be posted within 30 days of the Effective Date of the Development Agreement as specified in section 10.17 of the Development Agreement. Subject to reduction in the amount of the bond as provided above, the bond shall remain in full force and effect until all of the above stated obligations are fulfilled. 2364hCity of SJCIExhibit A GPM CL2 -4-