1999-0615_SOUTH COAST FARMS_Lease AgreementC�1
LEASE AGREEMENT
This Lease Agreement is made this/5'4day of June, 1999 (the "Agreement") by
and between the City of San Juan Capistrano, a public body, corporate and politic, and
the San Juan Capistrano Community Redevelopment Agency, a public body, corporate
and politic (known jointly hereinafter as the "Agency"), and South Coast Farms
(hereinafter "Lessee").
RECITALS:
WHEREAS, Agency is the owner of a 28.225 acre farm in the City of San Juan
Capistrano, California, which property was acquired to be maintained as open -space
within the City; and
WHEREAS, Lessee desires to conduct farming operations on the property; and
WHEREAS, Lessee has farming expertise and experience and desires to manage
the maintenance and operations of all agricultural activities on the property;
NOW, THEREFORE, Agency and Licensee do hereby mutually agree as follows:
Section 1. Grant of Lease/Term.
(a) Grant of Lease. Agency hereby grants to Lessee a lease to manage,
maintain, and operate a fruit and vegetable farm on certain property located in the City of
San Juan Capistrano, California, as depicted on the site plan attached hereto as Exhibit
"A", and incorporated herein by reference (hereinafter referred to as the "Premises" or
alternatively the "Property"). Lessee shall provide the expertise, supervision and
management over the farm operations, and Lessee shall own all crops produced on the
Premises. .
(b) Term. The term of this Agreement with regard to the land, excluding
the Congdon House area, shall be for a period of ten (10) years.
With regard to the Congdon House structure and accompanying land
described in Section 4, the lease term shall be for that period of time it
takes Lessee to complete the Congdon House restoration work, but in
any event not longer than five(5) years. When the Congdon House
restoration work is completed the Agency will propose a new lease to
Lessee for the Congdon House. Lessee shall have 30 days to determine
whether to enter into said lease with Agency. If Lessee determines not
to enter into the lease, then the Agency will take possession of the
Congdon House.
Section 2. Lease Rate.
(a) Agency shall receive from Lessee a lease rate of $50,000.00 annually,
to be paid on a quarterly basis to Agency for the first full five years of the Lease term.
(b) At the end of the fifth year of the lease term, the lease rate shall be
renegotiated between Agency and Lessee with the intent being that the agreed upon lease
rate shall match the market rate for similarly situated properties. In no case shall the lease
rate be reduced as a result of the lease rate negotiations.
(c) In the event that the parties cannot come to agreement within 45 days
of commencement of lease rate negotiations, either party may call for a binding
arbitration process wherein each side selects an arbitrator and a third arbitration panel
member is then chosen by the two selected arbitrators. The three-person panel shall then
conduct an informal hearing to receive evidence and argument regarding the appropriate
lease rate. The panel shall render a final and binding decision within 30 days of
convening the panel.
Section 3. Nature of Uses Permitted Under the Agreement
(a) Operation of Farm. Lessee shall be responsible for the supervision
and management of every aspect of mmming a fruit and vegetable farming operation for
human consumption on the Property in a business like manner.
The existing retail stand may be utilized by Lessee for fait and vegetable retail
sales only. Any expansion, regardless of size or scope, is not permitted under this lease
unless Agency written approval is first obtained.
Such supervision and management shall include, but not be limited to:
(i) the employment, supervision and direction of all employees
engaged in the farming operation;
(ii) providing for the maintenance of all equipment and
supervising its use in a safe and prudent manner;
(iii) soil preparation, planting, fertilizing, irrigating, pesticide
and herbicide applications, and the harvesting of all crops;
(iv) the marketing and sale of crops;
(v) maintenance of records and accounting for all revenues and
expenditures, including employee payroll and related
records;
(vi) 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;
(vii) management and maintenance of all on-site improvements,
including temporary housing, for Licensee's employees.
Lessee 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.
(b) Maintenance of Premises and Equipment. Lessee agrees to accept
the Premises and equipment in present condition on the date of execution of this
Agreement. Specified buildings and farm equipment shall be provided to Lessee by
Agency, for Lessee's use in farming operations. Lessee shall maintain, at Lessee's
expense, the Property, including all existing structures and all equipment owned and
furnished by Lessee that is used in farming operations, in a reasonable state of repair and
working order.
With respect to the Congdon House, Lessee shall restore and maintain this
structure under the terms and conditions set forth in Section 4 of this Agreement.
All other equipment to be used in farming operations shall be furnished by
Lessee. Equipment owned and furnished by Lessee shall not be removed from the
Property without the consent of Lessee, except for temporary repairs, after which it shall
be immediately returned. Lessee and the authorized representatives of Lessee shall
inspect all equipment within sixty (60) days of execution of this Agreement and mutually
agree upon the condition of the equipment.
(c) Marketing and Sale of Crops. Lessee shall be responsible for the
marketing and sale of crops produced on the Property. Crops will be sold retail at the
cash stand located on the Property and to commercial produce wholesalers and
distributors. Lessee shall provide a schedule to Agency of proposed days and hours of
operation of the on-site retail location.
(d) Condition of Property. Lessee accepts the Property in its present
condition upon execution of this Agreement. Agency makes no warranty of the
suitability of the Property for growing crops. Lessee agrees, at Lessee's expense, to use
reasonable care to control all weeds, noxious or otherwise, growing on the Property,
including those growing in drainage ditches. Lessee shall furnish all labor and materials
required to eliminate and otherwise reasonably control all rodents, insects and other pests
on the property. Lessee 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. Lessee agrees, at Lessee's expense, to keep fences, ditches and
borders of the Property in good condition and repair at all times, reasonable wear and tear
excepted. The duly authorized representative of Lessee may enter upon the Property and
all buildings thereon, or any portion thereof, at a reasonable time for the purposes of
inspection.
(e) Residential Use of Property. Lessee agrees that no persons or
employees will be allowed to reside upon the Property except for: i) the use of existing
temporary farm labor residences during irrigation periods only, or ii) as otherwise
provided for in this Agreement. Lessee shall obtain all necessary licenses, permits and
approvals, and shall abide by all state, local and national laws for such temporary
residential use.
(f)Use of Herbicides/Pesticides. Lessee shall be responsible for the safe
application of herbicides and pesticides as the premises is in close proximity of
residential, park and school locations. Agency desires that the farm be managed as an
organic farm. However, the parties agree and understand that for the farm to operate
competitively in the market place, use of these substances may at times be necessary.
These substances shall nqt, however, be applied when wind speeds exceed ten
(10) miles per hour. Aerial spraying is prohibited.
(g)Control of weeds, Insects, Rodents. Lessee shall make the premises
free of weeds, insects, and rodents. Lessee is responsible for taking appropriate measures
to prevent rodents and insects from migrating from the premises to surrounding
properties.
Section 4. Restoration of the Congdon House.
(a) Restoration Obligation. Lessee agrees to restore the Congdon in full
conformance with a Scope of Work (the "plans and specifications") to be prepared by a
registered Architect, approved by Agency. Structural plans must be prepared by a
structural engineer, also approved by Agency. The restoration work shall be in
compliance with all applicable City of San Juan Capistrano and State building code
requirements. Costs of the restoration work shall be shared as set forth in subsection (c)
below.
(b) Time frame. Lessee shall complete all of the restoration work by not
later that 5 years from date of execution of this Agreement, except, that, after reviewing
the cost estimates for the proposed renovations, either party may, at their discretion,
determine that it is unable to proceed based upon these costs.
In addition, the following schedule of performance shall be completed by Lessee:
(i) August 1, 1999:
Check.
Lessee has signed a contract with the Architect.
(ii) January 1, 2000:
Lessee has submitted plans and cost estimates to Agency for Plan
(iii) March 1, 2000:
Lessee and Agency to have reviewed cost estimates and have
evaluated commitment to continue with the lease agreement or not.
House from Agency.
(iv) January 1, 2001:
Lessee commences building/restoration construction.
(v) July 1, 2003:
Lessee has obtained a certificate of occupancy for the Congdon
(vi) July 1, 2004:
Lessee has obtained a Notice of Completion for all outbuildings
and grounds from Agency.
(c) Agency's Co -Financial Commitment to Restoration Work. Agency
agrees to financially participate in the restoration of the Congdon House by pledging
lease income, owing from Lessee to Agency, toward the restoration effort. The amount
to be pledged shall be based upon cost estimates prepared from Lessee's approved plans,
and shall be determined prior to commencing construction, as documented previously in
paragraph b of this section of the lease agreement.
Agency shall defer rent as payment to Lessee as the work progresses
providing Agency has certified that the work is consistent with the plans and
specifications for the project. Rent shall not be deferred if work has not progressed.
Section 5 Insurance and Indemnity.
(a) Insurance. Lessee shall maintain comprehensive general liability,
property damage, and fire insurance with a reputable insurance company in amounts of
not less than $1,000,000.00 combined single limit, or other format acceptable to the
Office of the City Attorney.
(b) Indemnity. Lessee shall defend, indemnify and hold harmless
Agency, and its respective officers, employees and agents, and the City of San Juan
Capistrano, its elected and appointed officials, and employees 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 the Property, or for the pollution thereof
and cleanup costs, arising out of or related to Lessee's performance under this Agreement,
except to the extent of such loss as may be caused by Licensor's own negligence,
including that of their respective officers and employees. Agency 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.
Section 6. Access to Premises By Agency.
Agency reserves the right to access the premises at any time to conduct
any desired inspection of any aspect of the farm operation or Congdon house premises.
Section 7. No Assignments.
Lessee shall not assign this Lease or any interest herein, or sublet the Premises or
any part thereof, or license the use of all or any portion of the Premises or business
conducted therein or thereon, or encumber or hypothecate this Lease, without first
obtaining the written consent of Agency. Any assignment, subletting, licensing,
encumbering, or hypothecating of this Lease without such prior written consent shall, at
the option of Agency, be subject to automatic termination of the Lease by Agency.
Section 8. Surto Bond As to Performance of Congdon House Restoration.
Lessee shall post a surety bond in the amount of $250,000, with a surety company
and in a form acceptable to the Office of the City Attorney, to insure completion of the
Congdon House restoration work.
Section 9. Water
An existing water well and backbone irrigation system is available to the
Lessee for irrigation uses. The Lessee will be required to pay for water and any costs
required to keep the irrigation system operational. The Agency is responsible for the well
maintenance. In event of well closure the Agency will be required to provide another
source of water. in this event, the Agency will not be obligated to pay for differences in
water rate costs. Lessee agrees to work cooperatively with Agency to coordinate watering
schedules between the Property and the City Sports Park. Water costs for the City Sports
Park will be the responsibility of Agency.
Section 10. Utilities.
Lessee is fully and solely responsible for providing any utility service required for
the farm operation and Congdon House restoration, maintenance, and operation.
Section 11. Community Gardens
Lessee will be responsible for rodent, weed and pest control and provide professional
input for the nearby Community Gardens. Management of the Community Gardens will
remain under the City of San Juan Capistrano Community Services Department.
Section 12. Time of the Essence.
Time is of the essence of each and every provision, covenant, and
condition herein contained and on the part of Lessee to be done and performed.
Section 13. Default.
(a) If Lessee defaults in the payment of the tease rate, or any additional
applicable lease payments, or defaults in the performance of any of the other covenants or
conditions hereof, including but not limited to the Congdon House restoration scope of
work, Agency may give Lessee notice of such default and if lessee does not cure any
such default within three (3) days, or such other time period as specified in the notice of
default, after the giving of such notice, then Agency may terminate this lease on not less
than ten (10) days' notice to lessee. On the date'specified in such notice the term of this
lease shall terminate, and lessee shall then quit and surrender the premises to Agency, but
lessee shall remain liable as hereinafter provided. If this lease shall have been so
terminated by Agency, Agency may at any time thereafter resume possession of the
premises by any lawful means and remove lessee or other occupants and their effects.
(b) If Lessee breaches any covenant or condition of this lease, Agency
may, on reasonable notice to Lessee (except that no notice need be given in case of
emergency), cure such breach at the expense of Lessee. The reasonable amount of all
expenses, including attorney's fees, incurred by Agency in so doing shall be deemed
additional rent payable on demand, or otherwise subtracted from the security deposit, at
Agency's election.
(c) To the extent waiver is permitted by law, the parties waive trial by jury
in any action or proceeding brought in connection with this lease or the premises.
Section 14. Termination Due to BanknWtcy or Insolvency.
In the event proceedings in bankruptcy are commenced by Lessee, or
Lessee is found to be in a state of insolvency, then in such event, Agency shall have the
right to terminate this Agreement and all further rights and obligations thereunder, by 10
days' notice in writing to Lessee, in which event, on the expiration of the 10 days from
mailing of the notice, this Lease shall automatically terminate.
Section 15. Notices,
Any notice required to be given under this Agreement shall be in writing
and shall be deemed to have been duly given and received if and when personally served,
or forty-eight (48) hours after being deposited in the United States mail, first class,
postage prepaid, addressed to the intended party at:
Agency/City:
City of San Juan Capistrano/
Redevelopment Agency
City Manager
32400 Paseo Adelanto
San Juan Capistrano, Ca. 92675
Any notice required to be sent to the Agency/City shall be addressed as noted above.
Lessee:
George Kibby
South Coast Farms
2268 E. Sandalwood Place
Anaheim, CA 92806
Section 16. Attom-eys' Fees. If either party commences an action against the
other party arising out of or in connection with this Agreement, the prevailing party shall
be entitled to have and recover from the other party reasonable attorney's fees and costs
of suit.
Section 17. Leasehold Taxes.
To the extent that the County of Orange believes any leasehold taxes are
due on this lease, Lessee shall be responsible for said taxes.
Section 18. Surrender of Premises
Lessee shall, at the termination of this Lease, vacate the Premises in as
good condition as they are in at the time of entry thereon by Lessee. Upon vacating,
Lessee shall leave the Premises free and clear of all rubbish and debris.
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
Parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
IN WITNESS WHEREOF, the Licensor and Licensee have caused this
Agreement to be executed on the date and year first written above.
ATTEST:
Cheryl Johns4 Ciq Clerk
APPROVED AS TO FORM:
John R. Shaw, City Attorney
COMMUNITY
public
ATTEST:
Cheryl John ncy Secretary
APPROVED AS TO FOAM:
_ _
John R. Oaw, Agency Counsel
CITY OF
CAPISTRANO,
corpor ld pc
By:
SAN JUAN
public body
Mayor
SAN JUAN CAPISTRANO
REDEVELOPMENT AGENCY, a
body corporate and politic
By: —
—
Wya Hart, Charrman
SOUTH COAST FARI�SS
By: 1
George Kibfjy
EXHIBIT A
(SITE PLAN)
LEGEND
A. Agricultunl Preserve
Al
Farnten AQarhedProduce Stonge
A2
Roadside Produce Stand w Paddng
AD
Intemal Farm Roads
Ai
EquipmenuMachinery Stonge
A5
Farm Labor Residence
A6
Ag iculmn to Remain
E. Historical
Preservation
dl
Joel Congoon Rcmdencc
32
Hutoncai Farm Equipment Display Arcs
A
A6
A -
CAMINO DEL AVION
SIII
I
.r
Dal
A4
CAS B
1 � /
Al /
I
J 32