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1991-0716_PACIFIC COMMUNITIES BUILDER_AgreementApril 20, 1995 Pacific Communities Builder 1036 South Serrano Avenue Anaheim, California 92808 Javan (� - mm�ra�ailo uuwsxm '� 1961 1776 Re: Conditions for Implementation of Soils Warranty Program Gentlemen: MEMBERS OF THE CITY COUNCIL COLLENE CAMPBELL WYATT HART GILJONES CAROLYN NASH DAVID SWEROUN CITY MANAGER GEORGE SCARBOROUGH At their meeting of April 18, 1995, the City Council of the City of San Juan Capistrano approved the conditions set out in the staff report for implementation of the Soils Warranty Program for Glenfed Area C, with a modification to Condition No. 7. That modification deleted the words "as a result of improper design or construction" from the first sentence. If you have any questions, please contact Tom Tomlinson, Planning Director, at 443-6323. Very truly yours, Cheryl Johnson City Clerk 32400 PASEO ADELANTO. SAN JUAN CAPISTRANO, CALIFORNIA 92675 0 (714) 493-1171 i Mr. Paul Farber Franciscan Plaza Investment Group 31831 Camino Capistrano, Suite 100 San Juan Capistrano, CA 92675 Written Communication: Report dated April 18, 1995, from the Administrative Services Director, recommending that this item be tabled indefinitely at the request of the applicant. Motion to Table Item: It was moved by Council Member Campbell, seconded by Council Member Hart, and unanimously carried that this item be tabled at the request of the applicant. Council recessed at 7:34 p.m. to convene the San Juan Capistrano Community Redevelopment Agency, and reconvened at 8:35 p.m. as the City Council. 1. PROPOSED CONDITIONS FOR IMPLEMENTATION OF SOILS WARRANTY PROGRAM FOR GLENEED AREAS C AND D TRACTS 114W 13437. 13965 AND 13866 (PACIFIC COMMUNITTES RITILDER/TAYLOR-WOODROW HOMES_ INC.I (60030/420"40) Written Commupica 'on. Report dated April 18, 1995, from the Planning Director, recommending that the proposed modifications to the Soils Warranty Program for Lomas San Juan Areas C and D be approved, based on the findings that the modified program provides the same safeguards as the original schedule and will not result in a decrease in the amount of initial funds available to the Homeowners Association The report noted that Area C-1 did not contain slope areas within the subdivision and would not be required to participate in the program. The amount of contributions would not be changed by the exclusion of Area C-1, since contributions were based on the amount of manufactured slopes within the various development areas. The developments required to participate in the program were located within Areas C-2, D-1 and D-2. Mr. Tomlinson gave an oral presentation. He recommended that proposed Condition 47 be modified to delete the words "as a result of improper design or construction" in the first sentence. City Council Minutes -7- 4/18/95 0 0 Approval of Modified Implementation Program for Glenfed Areas C and It was moved by Council Member Hart, seconded by Council Member Jones, and unanimously carried that the modified implementation program for Glenfed Areas C and D be approved, with the modification to Condition #7 deleting the words "as a result of improper design or construction" in the first sentence. 1 1 I IR v I I. 1 I:-- • ,IaI :aII\• • : 1 1 toy" 1 NCO Iml '• • 1.1 Written Communication: Report dated April 18, 1995, from the Public Lands and Facilities Director, recommending that a request to name the tot lot portion of a proposed park at San Juan Creek Road and Camino Lacouague "Honey Tot Lot" in memory of Jack Gottfried's dog, Honey, be approved, and that Mr. Gottfried's donation to the park construction fund in the amount of $5,000 be accepted. Jack Galaviz, Maintenance Superintendent, made an oral presentation. Approval of Name for Tot Lot and Acceptance of Donation: It was moved by Council Member Jones, seconded by Council Member Swerdlin, and unanimously carried that the tot lot portion of a proposed park at San Juan Creek Road and Camino Lacouague be named "Honey Tot Lot" in memory of Jack Gottfried's dog, Honey, and that Mr. Gottfried's donation to the park construction fund in the amount of $5,000 be accepted. �iJ4�'ZK•I�IIII7��l���I,Y[i • : .11 • a. City Building and Facilities Janitorial Services (Saddleback Community Enterprises) b. City Park Restroom Janitorial Services (Saddleback Community Enterprises) C. Sanitary Sewer Line Maintenance (Empire Pipe Cleaning & Equipment) d. City Street Light Maintenance and Repair (C.B. Electric) Written Communication: Report dated April 18, 1995, from the Public Lands and Facilities Director, recommending that the existing contracts for specified janitorial services, sanitary sewer line maintenance and street fight maintenance be extended for a two-year period beginning July 1, 1995, and ending June 30, 1997, at no increase in costs to the City. Approval of Contract Extensions: It was moved by Council Member Jones, seconded by Council Member Hart, and unanimously carried that the following maintenance contracts with the City be extended for a two-year period beginning July 1, 1995, and ending July 1, 1997: City Council Minutes -8- 4/18/95 0 AGENDA ITEM April 18, 1995 TO: George Scarborough, City Manager FROM: Thomas Tomlinson, Planning Director SUBJECT: Tracts 13436, 13437, 13865 and 13866; Proposed conditions for Implementation of Soils Warranty Program for Glenfed "Areas C and D" (Pacific Communities Builder/ Taylor -Woodrow Homes Inc.) RECOMMENDATION By motion, approve the conditions for implementation of the Soils Warranty Program for Lomas San Juan "Areas C and D" (Pacific Communities Builder/ Taylor -Woodrow Homes Inc.) SITUATION A. Applicant (Area Q Applicant (Area D) Pacific Communities Builder Taylor/Woodrow homes, Inc. 1036 South Serrano Avenue 24461 Ridge Route Drive Anaheim, CA 92808 Laguna Hills, CA 92653 B. SUMMARY AND RECOMMENDATION The applicants have purchased Glenfed "Areas C and D" and are currently in the process of developing the parcels. In assuming the responsibilities of the previous developers, including the soils warranty program, the applicants have proposed modifications to both the implementation schedule for the areas covered by the soils warranty program and the time line for depositing funds into the Homeowner's Association restricted accounts. This proposal is intended to reduce the financing cost of depositing the funds far in advance of the association taking over responsibility of the soils warranty program. Staff recommends that the City Council after reviewing the components of the program, approve the agreement for implementing the Soils Warranty Program for Lomas San Juan "Areas C and D", and find that the program provides the same safe guards as the original schedule and will not result in a decrease in the amount of initial funds available to the Homeowner's Association. FOR CITY COUNCIL AGENDA.,. `J 61, 0 0 AGENDA ITEM -2- April 18, 1995 C. BACKGROUND At its meeting of June 6, 1989 the City Council adopted Resolutions 89-6-6-4 approving Vesting Tentative Tract Map 13436, and Resolution 89-6-6-5 approving Vesting Tentative Tract 13437 (Attachment 1). D. STAFF ANALYSIS On several occasions staff has met with representatives of the above mentioned firms to discuss the Soils Warranty Program approved for the subject development areas, and the possibility of excluding Area C-1 which is not impacted by the presence of any natural or manufactured slopes. At this time the applicants wish the City to consider the phasing in of their cash surety in accordance with their build -out schedule for the various phases of the development. The applicants have also requested that the City consider the following in response to their proposal: 1. Area C-1 does not have any slope areas within the subdivision and therefore should not be required to participate in this program. If this area was included, the homeowner's association would be required to collect funds for an item which will not occur within their properly boundaries. 2. The total amount of contributions to the fund would not be changed by the exclusion of C-1, as the amounts to be contributed are based upon the amount of manufactured i slopes created within the various development areas. All these areas are located within G2, D-1 and D-2 (Attachment 2). 3. Deposits would be made prior to issuance of building permits based upon a delineated phasing or development area. These deposits are to be calculated based upon the amount of manufactured slopes located within the specific phasing or development areas. The Developer would agree to be responsible for the repairs of any slopes that are located in the overall development until the project is fully built -out. This will allow the developer to phase in the amount of money deposited in the restricted account, thus reducing a significant upfront cost The intent of the conditions of approval will be satisfied in that the amount to be deposited and available to correct any slippage will be available to the homeowners association at the time that the responsibilities are shifted These funds are not deposited with the City but a separate financial institution with interest on the principle returned to the developers. s AGENDA ITEM -3- April 18, 1995 response to the above representations, staff recommends that the City Council consider modified implementation program that would include the following: 1. Homes located within C-1 will be excluded from participation in the Soils Warranty Program and shall not be subject to its special assessment features. 2. The Soils Warranty Program shall apply to all lots and units located within the areas identified as C-2, D-1 and D-2. 3. The Developer shall submit a construction phasing program to the City for review and approval by the Planning Division. Said areas shall be used to determine the amount of the initial deposit of funds into the Soils Warranty Restricted Account controlled by the Homeowner's Association. 4. The deposit for each area shall be calculated based upon the amount of manufactured slope area that is located within each phasing area. 5. Said deposits shall be paid into the restricted fund prior to the issuance of building permits for any residential units within a phasing area. The only exception is for a model home complex. 6. The developer shall maintain in-place grading bonds to cover any slope subsidence during construction and the subdivision within the phasing area. 7. The developer shall enter into an agreement with the City that they will make or causec to be made all repairs to correct any soils displacement �td rnS3 or-seastractian­at their sole expense for the first three years after the completion of rough grading or the close of escrow for all lots within the entire subdivision whichever is later. The cost for said repairs shall not be drawn from the Soils Warranty Restricted Account. The developer shall submit a surety or bond that will insure the performance of the above provision. Said device to be approved by the City Attorney. S. The initial security shall be in such form and manner as to guarantee and secure the performance of the developer and shall consist of one of the following, at the option of the seller with the approval of the City Council: a. Corporate sureties approved by the City Attorney. b. A deposit, either with a responsible escrow agent or trust company, of money or negotiable bonds of the kind approved for securing deposits of public moneys; or, • AGENDA ITEM 4- April 18, 1995 C. An instrument of credit, from one or more financial institutions subject to regulation by the state or federal government, pledging that the funds necessary to carry out the warranty program are on deposit and guaranteed for payment. In summary, the above provisions will provide the same safe guards as the present arrangements with Glenfed / Lusk while making logical adjustments that will benefit both the future residents and the developer. In the fust instance the cost of borrowing funds to deposit into a restricted account for a multi-year project will ultimately be home by the buyer of the new units. In addition, those portions of the project which have no conditions that would require imposition of a restricted account will not be required to shoulder those monthly costs. Second, the revised deposit system will reduce overall project cost to the developers, which would assist in reducing the cost of the units. Finally, with all these changes, the ultimate program is still retained, and the amount of funds to be on deposit when the homeowner's association takes responsibility for the slopes will be the same as with the present agreement. PUBLIC NOTIFICATION This item does not require a Public Hearing before the City Council. A copy of the April 18, 1995 Agenda and this staff report have been forwarded to the applicants. FINANCIAL CONSIDERATIONS There are no direct financial costs to the City. ALTERNATE ACTIONS Approve the modified program of implementation as recommended by staff. 2. Approve the modified program of implementation with amendments. Maintain the present program implementation. 4. Continue the item and request additional information. AGENDA ITEM -5- April 18, 1995 RECOMMENDATION By motion, approve the conditions for implementation of the Soils Warranty Program for Lomas San Juan "Areas C and D" (Pacific Communities Builder/ Taylor -Woodrow Homes Inc.) Respectfully submitted, Thomas Tomlinson, Planning Director Attachments: 1. Vicinity Map 2. Map of Affected Areas cdsoils CC: Dick Bobertz, Planning Manages C.J. Amshup, Associate Planna .. 19 ATTACHMENT 1 sr kw -j :1. W N NOVIA ATTACHMENT 2 M f-- 91=496385 CECEI'IED RECORDED IN OFFICIAL RECORDS- S`P 30 ZS PN SDI OF ORANGE COUNTY. CALIFORNIA Atld. 4:00 P8�5 3 • _ P.M. SEP 12 1991 Llu -'7l rF SAH � Q• Recofdel .__. JJau .rP i�iggj a" RECORDING REQUESTED BY, AND WHEN RECORDED RETURN TO: Recording es exec City of San Juan Capistrano Code 6103. cumen 32400 Paseo Adelaato- 4NocosideratI nSan Juan Capistrano, CA 92878 Attn: Cheryl Johnson, City Clerk Jo s t San Jug Capi=trrno AG$$SMSNT RSTAB 7 gTN S 21PR DISPL.ACRMRNT wAgRAKM � e to Govt Transfer t< THIS AGREENENT ESTABLISHING SLOPE DISPLACEMENT WARRANTY PROGRAM 1991, ('Agreement-) is entered into as of July 16, 1991 and between THE LIICOMPANYCalifornia corporation ( " city*), on the other hand. THE Californi ("Lusk"), on the one head, an and THE CITY OF SAN JUAN CAPISTRANO 026'5 A. Lusk is the developer of Parcels C and D of the Lomas San Juan residential development located in the City of San Juan Capistrano. B. On June 8, 1989, the City Council of the City Of San Juan Capistrano ("Council") passed, approved and adopted Resolution No. 89-8-8-4, approving Vesting Tentative Tract Map 13438. Pursuant to Said Vesting Tentative Traot Map, Lusk ldocto snddas yseventy-eight 8res ofanlatedithe LomSan JuanPlannedcommunityinto Seventy-Sia (78) lots to provide for the Construction of 288 attached dwelling units. C. The Council approved Vesting Tentative Traot Map 13438 Subject to Certain Conditions, including: 1. 11- warra� : the Municipal Code g e Warrant Ordinance) of Chapter 8-8 of any person, to firm or Corporation Selling oreOffering shall aforysale within the project three or more dwelling unite - not previously occupied for residential purposes - during any 12 -month period. 13. Slmye warren v: The developer Shall participate in the City's Slope Warranty Program. 7/1O/91R12rfl83-5 _1_ D. On June 8, 1989, the City Council of the City of San Juan Capistrano passed, approved and adopted Resolution No. 89-6-68, approving Vesting Tentative Tract Map 13437. E. Pursuant to Vesting Tentative Tract Map 13437, Lusk proposed to subdivide approximately one hundred forty-six (146) acres of land located in the Lomas San Juan planned community into two hundred sixty-six (268) lots. F. The Council approved Vesting Tentative Tract Map 13437, subject to certain conditions, including: 1. Home Warranty: The provisions of Chapter 8-6 of the Municipal Code (Home Warranty Ordinance) shall apply to any person, firm or corporation selling or offering for sale within the project three or more dwelling units - not previously occupied for residential purposes - during any 12 -month period. 13. Slope Warranty: The developer shall participate in the City's Slope Warranty Program. G. By this Agreement, Lusk shall satisfy in full Condition 13 of the above -referenced resolutions. H. By this Agreement, Lusk shall also satisfy its obligations under Section 8-9.04 of the Municipal Code of the City pertaining to financial security with regard to the City's Home Warranty Program. NOW, THEREFORE, in consideration of the premises and promises hereinafter contained, Lusk and City agree as follows: 1.1 Warranty. Lusk warrants for a period of ten (10) years after the date of final grading approval for each tract within Parcels C and D, the manufactured slopes within each such tract against slope displacement, as defined herein. 1.2 Definition. "Slope Displacement" is defined as (a) displacement of soil on a manufactured slope at a depth of two feet (2') or more with vertical movement of one foot (1') or more, regardless of cause, and regardless of the square footage involved, or (b) displacement of soil on a manufactured slope with vertical movement of one foot (1') or more and involving an area of at least nine hundred (900) square feet, regardless of depth and regardless of cause. 1.3 T?xcI"aione. Slope Displacement does not include: 1.3.1 Surface cracking and fissures, including without limitation desiccation cracks. -2- 0 r 1.3.2 Erosion, defined as the wearing away of the surface of the slope, as opposed to movement of the slope, resulting from the force of water, wind, persons or vehicles moving over the surface, unless erosion ultimately results in Slope Displacement. 1.4 Reserved Rights. Lusk reserves the right to assert claims against any person or entity responsible in whole or in part for displacement of soil on the slopes, whether covered by this definition or not. This Agreement also reserves the right of the homeowners associations for tracts within Parcels C and D to assert claims against any person or entity, including without limitation Lusk, responsible in whole or in part for displacement of soil, whether covered by this definition or not. These reserved rights are subject to any applicable statutes of limitation, including without limitation the ten (10) -year limitations period provided by California Code of Civil Procedure Section 337.15. 1.5 Covered Repairs. During the first five (5) years of the warranty program, Lusk will make or cause to be made all repairs to correct Slope Displacement. These repairs will be made at Lusk's sole expense. After the end of the fifth (5th) year of the warranty program, repairs for Slope Displacement will be financed out of the Homeowner Assessment Fund, defined below. If the amount financed out of the Homeowner Assessment Fund is insufficient to cover the cost of such repairs, Lusk shall finance the remainder of said repair work not covered by the Homeowner Assessment Fund out of its assets. In the event Lusk fails to perform as provided herein, the City may draw upon Lusk's security as provided hereinbelow. 1.6 Penalty. If, during the first five (5) years of the warranty, or the second five (5) years as provided in Section 1.5 above, Lusk (or its successor) fails to make reasonably necessary covered repairs, the City Attorney will provide written notice to Lusk of such failure and provide Lusk with an opportunity to cure. "Cure" will be defined as commencement of reasonably necessary covered repairs by or on behalf of Lusk (or its successor) within fifteen (15) calendar days of receipt by Lusk (or its successor) of the notice. If Lusk (or its successor) fails to commence performance of such repair work within fifteen (15) calendar days of Lusk's (or its suooessor's) receipt of written notice of the condition as to which the repair work is to be performed, from the City Attorney, then the Council may, by resolution or other official Council action, after a noticed public hearing, authorize the Director of Engineering and Building ("Director") to draw upon Lusk's Slope Security, as defined herein, to perform such work as is reasonably necessary to remedy the condition as to which the repair work is to be performed (the "Authorized Monies"). Lusk's Slope Security will be vested such that the Director can access the funds after such -3- 0 0 Council action and any judicial reference regarding such action, pursuant to Section 1.8 below. 1.7 Publio Hearing. Lusk (or its successor) will be entitled to reasonable notice of such public hearing, will have the right to appear at the hearing where the Council action is considered, and will be entitled to assert any and all defenses which Lusk (or its successor) may possess as to such Council action, including without limitation a claim that the work proposed to be performed is not within the scope of Lusk's obligations under this Agreement or is not reasonably necessary. 1.8Digpute Reaolution. In the event of a dispute between the City and Lusk (or its successor) involving any aspect of the penalty provided for herein, including without limitation the propriety of the Council action provided for herein, such dispute shall be resolved by a judicial reference pursuant to Section 4.8 below. 1.9 Deem .d R .duction in T,jiq1r's .on .ribution. Lusk agrees and acknowledges that if such Council action is taken properly, pursuant to this Agreement and under the laws of the State of California, then as a penalty for the nonperformance by Lusk (or its successor), Lusk's Slope Security will be deemed (for purposes of the timing of recovery of Lusk's Slope Security only) to have been reduced by an amount equal to the amount of the Authorized Monies. Under those circumstances, Lusk's recovery of its funding from the program will be delayed until the homeowner assessments build sufficiently to compensate for the deemed reduction in Lusk's Slope Security. 2. Security and Funding for the Slope Warrantg Program. Lusk shall secure its slope displacement warranty obligations as provided herein by posting a form of security acceptable to the City in a form approved by the City, in the amount of $484,000, with the City within five (5) days following Lusk's receipt of final grading approval from the City covering all of the tracts located within Parcels C and D. Total funding and security for the slope warranty program will be $984,000, consisting of Lusk's security in the amount of $484,000 ("Lusk's Slope Security") plus $500,000 in anticipated homeowner assessments and interest thereon. The homeowner assessments and interest thereon shall be referred to as the "Homeowner Assessment Fund." The homeowner assessments will commence on a per -lot basis as esorows for the lots close, consistent with the regulations of the California Department of Real Estate. The security described in this Section shall be in addition to the security required by Section 3 of this Agreement. 2.1 Release of Lusk's Slope Se_ purity. Lusk's Slope Security covering the slope warranty program will be immediately released by City upon the expiration of the ten (10) year warranty period. -4- i 0 to reduce the amount of security posted to an amount acceptable to the City prior to the expiration of the warranty period covering the last unit sold by Lusk. The deposit of said cash into the Home Warranty Account or the posting of said security (collectively referred to herein as the "Home Warranty Security"), shall satisfy Lusk's obligations under Section 8-9.04 of the City's municipal Code. The security described in this Section 3 shall be in addition to the security required by Section 2 of this Agreement. 4. 4.1 The slope warranty provided herein will apply only to manufactured slope areas within the boundaries of the final tracts within Parcels C and D, prepared by or on behalf of Lusk. The warranty expressly excludes slope displacement or any other soils movement or failure of slopes, regardless of cause, on or from the ridge line area. 4.2 Appropriate provisions in the Covenants, Conditions and Restrictions ("CCUR's") and in the deeds will grant Lusk an exclusive license and right to enter onto common areas and individually -owned lots so that Lusk or its agents can maintain and inspect all landscaping, irrigation and drainage devices, and all other natural and artificial conditions which affect or might affect the integrity of the slopes which are the subject of the warranty. 4.3 City shall determine the scope of repair work under this Agreement and Lusk shall direct the work. Such work will be performed by an entity selected by Lusk and compensated during the first five (e) years of the slope warranty by Lusk and during years six through ten (8-10) of the slope warranty from the Homeowner Assessment Fund. 4.4 Any proposed alterations by homeowners to the landscaping, grading, irrigation or drainage on their individually -owned property will be subject to review by the board of the appropriate homeowners associations. 4.8 In years six through ten (8-10) of the warranty, an independent claims adjusting service, selected by Lusk and the City and compensated from the Homeowner Assessment Fund, will adjust all claims for work which are claimed to be within the coverage of the warranty. Claims asserted to be within the coverage of the warranty will be processed by forms provided by the board of the homeowners associations and filed with the independent adjuster, who will promptly adjust such claims after obtaining from Lusk an analysis of the scope and cost of necessary repair work. 0 0 2.2 Deposited Funds. The Homeowner Assessment Fund will be maintained with a financial institution mutually agreed upon by Lusk and City. However, the homeowners associations will be permitted to move the Homeowner Assessment to another institution at their option after the homeowners take control of the associations and Lusk's control of the associations has ceased, pursuant to the regulations of the California Department of Real Estate. 3, Security for the City Home Warranty Program. Lusk shall secure its obligation under the City Home Warranty Program, as provided herein, by posting cash or other security acceptable to the City, in amounts equivalent to one percent (1%) of the aggregate valuation used to determine building permit fees of those dwelling units subject to the City Home Warranty Program. More specifically, prior to the City's issuance of a Certificate of Occupancy pertaining to a particular unit, Lusk shall deposit cash equivalent to one percent (1%) of said unit's building permit valuation into an account established with a financial institution selected by Lusk and approved by City ("Home Warranty Account"). Each deposit made into the Home Warranty Account shall remain there for the duration of the three (3) year warranty period of the subject unit. At the termination of the three (3) year warranty period for a particular unit the amount deposited into the Home Warranty Account with regard to said unit shall be immediately released to Lusk, until such time that there are 100 units still within the 3 -year warranty period and covered by the Home Warranty Agreement between Lusk and the respective buyer of each unit, at which time no further money shall be released from the Home Warranty Account until such time as the 3 - year warranty period has expired for all of the remaining units within Lusk's development. The Home Warranty Account shall constitute a revolving fund from which the City may withdraw funds should Lusk default in its obligations pursuant to a "Home Warranty Agreement" entered into by Lusk and each buyer of a unit subject to the City Some Warranty Program. In the event the Home Warranty Account is established as an interest-bearing account, all interest earned shall belong to Lusk. In the event Lusk determines to post security with the City, as opposed to the cash deposits referenced above, said security, which shall be in a form acceptable to the City, shall be posted prior to the issuance by the City of a Certificate or Certificates of Occupancy pertaining to a particular unit or units. The amount of said security shall be equivalent to one percent (1%) of the aggregate building permit valuation of the unit or units to be covered by the security to be posted. Said security shall remain in place until the expiration of the three (3) year warranty period covering all of the units within Lusk's development, unless the City permits Lusk -5- 4.8 Individual purchaser deeds and the CCUR's will reference the slope warranty provided herein. 4.7 During the period of Lusk's control of the homeowners associations, Lusk will be responsible for the collection of assessments and placement of such assessments into the accounts referenced herein. During such period, Lusk will report to the Director of Engineering and Building of the City of San Juan Capistrano the incidence of covered and noncovered claims, as well as the balances in the account containing the Homeowner Assessment Fund as of the date of the report. Lusk will make such reports on or before March 31 and September 30 of each year in which Lusk retains control of the homeowners associations. Thereafter, the collection and reporting responsibilities with respect to the Homeowner Assessment Fund will devolve upon the board of directors of the involved homeowners associations. After Lusk's control of each homeowners association has ceased, the board of each such association will report to Lusk the incidence of covered and nonoovered claims, as well as the balance in the Homeowner Assessment Fund as of the date of the report. Such reports will be made on or before March 31 and September 30 of each year. Each such board will also provide to Lusk at Lusk's request any further information and documentation as is reasonably necessary to effectuate the purposes of this Agreement. 4.8 Dispute Resolution. Any dispute arising out of this Agreement shall be heard by a reference pursuant to the provisions of California Code of Civil Procedure Section 838 etseg., for a determination to be made which shall be binding upon the parties as if tried before a court or jury. 4.8.1 Within five (5) business days after service of a demand by a party hereto, the parties shall agree upon a single referee who shall then try all issues, whether of fact or law, then report a finding and judgment thereon. If the parties are unable to agree upon a referee, either party may seek to have one appointed, pursuant to California Code of Civil Procedure Section 640, by the presiding judge of the Orange County Superior Court. 4.8.2 The compensation of the referee shall be such charge as is customarily charged by the referee for like services. The cost of such proceedings shall initially be borne equally by the parties. However, the prevailing party in such proceedings shall be entitled, in addition to all other attorney's fees and costs, to recover its contribution for the cost of the reference as an item of recoverable costs. 4.8.3 The referee shall apply all California rules of procedure and evidence and shall apply the substantive law of the State of California in deciding the issues to be heard. -7- Ii 4.9 The parties to this Agreement agree to perform such other and further acts and execute such other and further documents as are necessary to effectuate the intent of this Agreement. 4.10 The headings in this Agreement are inserted for convenience and identification only and are in no way intended to describe, define, or limit the scope, intent or interpretation of this Agreement or any provision hereof. 4.11 No party or any agent, employee, representative, or attorney of or for any party has made any statement or representation to any other party regarding any fact relied upon in entering into this Agreement, and no party relies upon any statement, representation or promise of any other party or of any agent, employee, representative, or attorney of any other party, in executing this Agreement, or making this settlement provided for herein, except as expressly stated in this Agreement. 4.12 This Agreement is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. This Agreement may be amended only by an agreement in writing. 4.13 This Agreement is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees. representatives, assigns, heirs, and successors in interest. 4.14 Each party has cooperated in the drafting and the preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party. This Agreement shall be construed under California law. 4.15 This Agreement may be executed in counterparts, and when each party has signed and delivered to the other at least one such counterpart, each counterpart shall be deemed an original, and when taken together with the other signed counterparts, shall constitute one agreement, whioh shall be binding upon and effective as to all parties. 4.16 All notices given pursuant to this Agreement and all documents to be transmitted shall be sent by United States mail, postage prepaid, certified return receipt requested, as follows: 0 9 To Lusk: The Lusk Company 17550 Gillette Avenue P.O. BOY C-19580 Irvine, CA 92713 Attn: David Steffensen Associate General Counsel To City: The City of San Juan Capistrano (Slope Warranty 32400 Paseo Adelanto Program) San Juan Capistrano, CA 92875 Irvine, California 92713 Attn: Director of Engineering and Building To City: The City of San Juan Capistrano (Home Warranty 32400 Paseo Adelanto Program) San Juan Capistrano, CA 92875 Irvine, California 92713 Attn: Director of Administrative Services 5. GubStitutian of Tnsurance Policy. Lusk reserves the right to request, during the term of both the ten-year slope warranty period and the three-year Home Warranty period, substituting an insurance program to meet its slope warranty and/or Home Warranty obligations, as provided herein. Said insurance program shall be subject to the review and approval of City prior to its implementation. IN WITNESS WHEREOF, the parties hereto have executed this Agreement Establishing Slope Displacement Warranty Program as of the date and year first above written. Dated: July 16, 1991 THE CITY OF SAN JUAN CAPISTRANO By Kenneth E. mayor City' Cler APPROVED Dated: July 5, 1991 THE LUSK P LEGAL O=PT. a Cali o p ra n OWNER By: By: ail ` Thomas P. Clark Assistant Secretary