Resolution Number 22-11-14-011 11/14/2022
RESOLUTION NO. 22-11-14-01
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, APPROVING A DISPOSITION AND
DEVELOPMENT AGREEMENT WITH THE CITY OF SAN JUAN
CAPISTRANO AND 26874 ORTEGA HIGHWAY LLC FOR THE SALE
OF APPROXIMATELY 0.38 ACRES OF CITY-OWNED PROPERTY
LOCATED AT 31776 EL CAMINO REAL (ASSESSOR PARCEL
NUMBERS: 124-160-55) AND FINDING THAT APPROVAL OF THIS
RESOLUTION IS EXEMPT FROM CEQA UNDER STATE CEQA
GUIDELINES SECTION 15332
WHEREAS, the San Juan Capistrano Redevelopment Agency was dissolved
effective February 1, 2012, in accordance with state law. The Redevelopment Agency
held certain properties at the time it was dissolved that were subsequently transferred to
the Successor Agency to the San Juan Capistrano Redevelopment Agency.
WHEREAS, the Successor Agency, in accordance with the statutes governing
the dissolution of redevelopment agencies, prepared a Long Range Property
Management Plan (LRPMP) addressing the disposition of the properties, including the
Parking Structure (Playhouse) property (APN 124-160-55) (Property).
WHEREAS, pursuant to the LRPMP the Property was transferred to the City to
be held for future development; and
WHEREAS, on October 17, 2017, the City entered into an exclusive right to
negotiate agreement with 26874 Ortega Highway LLC (Frontier Real Estate
Investments), for the potential acquisition and development of the Property; and
WHEREAS, on October 18, 2022, the City adopted Resolution No. 22-10-18-01
declaring the property exempt surplus land pursuant to the Surplus Land Act and the
City’s intention to sell the Property and setting time for a public hearing to consider the
sale of the property; and
WHEREAS, the City and Developer required additional time to finalize the
Disposition and Development Agreement and continued that hearing to November 14,
2022; and
WHEREAS, Developer’s proposed acquisition of the Property is in the public
interest and convenience of the City and the community, and the health, safety and
welfare of the City’s taxpayers and residents, is in the best interests of the Affected
Taxing Entities, and will further the goals and objectives of the City’s general plan by: (i)
strengthening the City’s land use and social structure, and (ii) alleviating economic and
physical blight on the City Property and in the surrounding community.
2 11/14/2022
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN JUAN
CAPISTRANO, CALIFORNIA, DOES HEREBY RESOLVE AND FIND AS FOLLOWS:
Section 1. Recitals. The Recitals set forth above are true and
correct and are incorporated into this Resolution by this reference.
Section 2. Findings. The City Council intends to sell the City
Property to Developer and, based upon the Recitals and all other
information and testimony provided, finds that the public interest and
convenience require the sale of the Property to Developer.
Section 3. Hearing. Pursuant to California Government Code
section 37423, a duly noticed public hearing was held by the City on
November 14, 2022.
Section 4. CEQA Compliance. The City Council of the
City hereby finds and determines that the DDA and resulting proposed
project are categorically exempt from further environmental review under
State CEQA Guidelines, Section 15332, In-Fill Development Projects
(Class 32). The entire Project (which includes the project approvals given
on October 4, 2022, as well as the action on the purchase agreements
that are the subject of this Resolution) is exempt per Section 15332
because the Project meets the required conditions for Class 32. The City
filed and posted a Notice of Exemption for the Project on October 7, 2022,
with the Orange County Clerk-Recorder.
As explained in the October 4, 2022, staff report on the El Camino Specific
Plan, the Project is consistent with the applicable General Plan
designation and all applicable General Plan policies as well as with
applicable zoning designations and regulations outlined in the El Camino
Specific Plan; in all respects where the El Camino Specific Plan does not
specify a development standard, the Project is consistent with the San
Juan Capistrano General Plan and Title 9 of the Municipal Code, Land
Use. The Project occurs within city limits on a project site of less than five
acres and is substantially surrounded by urban uses. Specifically, the
Project is located at 31776 El Camino Real in the City of San Juan
Capistrano, consists of 1.68 acres, and is surrounded by Town Center
(commercial), Community Park (public), and Town Center Edge
(commercial) zoning to the north, south, and east, respectively, and Town
Center (commercial) zoning to the west. The Project site has no value, as
a habitat for endangered, rare, or threatened species because the majority
of the Project site has already been developed and is currently improved
with a commercial building, parking lot, and associated improvements on
the parcels. Therefore, the site is not habitat for endangered, rare, or
threatened species.
3 11/14/2022
Approval of the Project would not result in any significant effects relating to
traffic, noise, air quality, or water quality. Analysis has been conducted to
ensure the Project does not result in any significant effects relating to
traffic and water quality, including the following: a Traffic Sensitivity
Analysis accepted by the City Traffic Engineer and the Preliminary Water
Quality Management Plan approved by the Public Works Department.
Further, there is no evidence that the Project would result in significant
effects relating to air quality or noise. The site can be adequately served
by all required utilities and public services; the Project site is currently
serviced by all required utilities, including but not limited to electricity, gas,
garbage, water, and sewer and therefore would remain adequately
serviced.
None of the exceptions to the categorical exemptions identified in CEQA
Guidelines, section 15300.2 apply. There is nothing unusual about the
Project site or the Project itself that would lead to a potentially significant
impact. And, even if an unusual circumstance did exist (one does not),
based on the studies performed, there is no reasonable possibility that the
Project would have a significant effect on the environment. The Project
site is already developed with a commercially operating playhouse, the
Project’s Traffic Sensitivity Analysis concluded that the Project would not
result in a significant increase of inbound and outbound traffic, would
provide adequate access, and would provide adequate off-street parking.
Further, the Project will not result in damage to scenic resources within a
highway officially designated as a state scenic highway; the closest
officially designated state scenic highway is located near Anaheim and
therefore the Project will not result in damage to scenic resources within or
near such highway. Further, the Project is not located on a site which is
included on any list compiled pursuant to Government Section 65962.5;
the Project site has not been designated as a hazardous waste site.
Further, the Project will not cause a substantial adverse change in the
significance of a historic resource; specifically, there would be no
substantial adverse change in the significance of the Blas Aguilar Adobe
for the reasons outlined in this report and staff’s presentation. Thus, the
exceptions are not triggered, and the Class 32 categorical exemption
applies to the Project as a whole, including the City Council’s approval of
this Resolution.
Section 5. Approval of Agreement. The City hereby approves
the Agreement, in substantially the form attached to this Resolution as
Exhibit “A” and incorporated herein by this reference, subject to any non-
substantive revisions approved by the City Attorney and authorizes the
City Manager to sign and enter into the Agreement and directs the City
Manager to perform the obligations of the City pursuant to the Agreement
and to take any such actions as are reasonably necessary to meet the
intent of this Resolution.
4 11/14/2022
Section 6. Severability. If any provision of this Resolution or the
application of any such provision to any person or circumstance is held
invalid, such invalidity shall not affect other provisions or applications of
this Resolution that can be given effect without the invalid provision or
application, and to this end the provisions of this Resolution are severable.
The City declares that the City would have adopted this Resolution
irrespective of the invalidity of any particular portion of this Resolution.
Section 7. Certification. The City Clerk of the City of San Juan
Capistrano shall certify to the adoption of this Resolution.
Section 8. Effective Date. This Resolution shall become
effective immediately upon its adoption.
APPROVED AND ADOPTED THIS 14th day of November 2022.
________________________________
HOWARD HART, MAYOR PRO TEM
ATTEST:
________________________________
MARIA MORRIS, CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, Maria Morris, appointed City Clerk of the City of San Juan Capistrano, do hereby
certify that the foregoing Resolution No. 22-11-14-01 was duly adopted by the
City Council of the City of San Juan Capistrano at an Adjourned Regular meeting
thereof, held the 14th day of November 2022, by the following vote:
AYES: COUNCIL MEMBERS: Bourne, Farias, and Mayor Pro Tem Hart
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: Mayor Reeve
RECUSED: COUNCIL MEMBERS: Taylor
____________________________
MARIA MORRIS, CITY CLERK
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property Property)
between
THE CITY OF SAN JUAN CAPISTRANO
a California municipal corporation
and
26874 ORTEGA HIGHWAY LLC
a California limited liability company
(Playhouse Property Property)
EXHIBIT A DRAFT
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This 2022 DISPOSITION AND DEVELOPMENT AGREEMENT (Playhouse Property
Property) (“Agreement”) is dated as of __________, 2022 (“Date of Agreement”), for reference
purposes only, and is entered into by and between the City of San Juan Capistrano, a California
municipal corporation (“City”), and 26874 Ortega Highway LLC, a California limited liability
company (“Developer”). The City and the Developer are sometimes referred to in this Agreement,
each individually, as a “Party,” or collectively, as the “Parties.”
RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”)
that City and Developer believe to be true as of the Effective Date of this Agreement:
A. The City is the owner of that certain real property located at 31776 El Camino Real
(APN 124-160-55), in San Juan Capistrano, more specifically described in Exhibit A attached
hereto and incorporated herein by this reference (“Property”). B. Assembly Bill 1X 26, enacted
as part of the 2011-2012 State of California budget bill, and as modified by the Supreme Court of
the State of California in the matter of California Redevelopment Association, et al. v. Ana
Matosantos, et al., Case No. S194861 dissolved and set out procedures for the wind-down of all
redevelopment agencies throughout the State effective February 1, 2012, and in June 2012, the
California Legislature adopted Assembly Bill 1484 (Assembly Bill 1X 26 and Assembly Bill 1484
are collectively referred to herein as the “Dissolution Act”) further modifying some of the
procedures set form in Assembly Bill 1X 26, and adding certain other procedures and requirements
for the dissolution and wind-down of redevelopment agencies.
C. The Successor Agency to the San Juan Capistrano Community Redevelopment
Agency (“Agency”) is the successor entity to the RDA and, pursuant to the Dissolution Act, upon
the RDA’s dissolution, the Property automatically transferred to the Agency.
D. Pursuant to Health and Safety Code section 34177(e), the Agency is responsible for
disposing of the assets and properties of the former RDA, as directed by the Oversight Board to
the Agency, expeditiously and in a manner aimed at maximizing value.
E. Pursuant to Health and Safety Code section 34191.5, the Long Range Property
Management Plan and Amended Long Range Property Management Plan identified the property
located a 31776 El Camino Real (Site 8) to be conveyed to the City for development.
F. City and Developer desire to enter into this Disposition and Development
Agreement dated [DATE] (“Disposition and Development Agreement”) for the sale of the
Property to Developer. To ensure the Property is disposed expeditiously and in a manner aimed at
maximizing value, a condition precedent to the close of escrow is that City and Developer enter
into the “Project.”
G. On October 18, 2017, the City and Developer entered into an exclusive negotiation
agreement for potential development of the Property (“Exclusive Negotiation Agreement”). On
October 15, 2018, the City and Developer entered into the First Amendment to that Exclusive
Negotiation Agreement, extending the time for Developer to submit Property-related documents
to the City. On September 22, 2021, the City and Developer entered into the Second Amendment
to that Exclusive Negotiation Agreement. The Developer proposed the acquisition and DRAFT
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redevelopment of the Property as a part of the “Project” (as defined in Section 1.1.57), including
140 on-grade and structured parking stalls on the Property.
H. The Developer’s proposed acquisition of the Property and subsequent construction
and completion of the Project on the Property pursuant to the terms of this Agreement is in the
best interest of the City and the health, safety and welfare of the City’s taxpayers and residents and
is in accordance with the public purposes set forth in applicable law. Implementation of this
Agreement will further the goals and objectives of the City’s general plan by: (i) strengthening the
City’s land use and social structure, and (ii) alleviating economic and physical blight on the
Property and in the surrounding community. D. The City desires to sell the Property to the
Developer for the development of the Project and the Developer desires to purchase the Property
from the City for the same purpose.
NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which is acknowledged
by City and Developer, the Parties agree as follows:
TERMS AND CONDITIONS
ARTICLE I
DEFINITIONS; REPRESENTATIONS AND WARRANTIES;
EFFECTIVE DATE
1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement
shall have the following meanings:
1.1.1 “Additional Insureds” has the meaning ascribed to such term in
Section 5.10.
1.1.2 “Affiliate” means and refers to any person or entity, directly or
indirectly, Controlling or Controlled by or under common Control with the Developer, whether by
direct or indirect ownership of equity interests, by contract or otherwise.
1.1.3 “CEQA” means the California Environmental Quality Act, Public
Resources Code Sections 21000, et seq.
1.1.4 “Certificate of Completion” means the written certification of City that
the construction of the Project has been completed in compliance with the terms and conditions of
this Agreement, substantially in the form of Exhibit G attached to this Agreement.
1.1.5 “City” means the City of San Juan Capistrano, California, a California
municipal corporation.
1.1.6 “City Manager” means the City Manager of the City or his or her
designee or successor in function. DRAFT
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1.1.7 “City Requirements” has the meaning ascribed to the term in Section
2.6.1.
1.1.8 “City’s Title Notice Response” means the written response of the City
to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the
Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions
to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice,
or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in
Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy
that were objected to in the Developer’s Title Notice.
1.1.9 “Close of Escrow” or “Closing” means the recording of the Grant Deed
for the Property in the Official Records of the Recorder of the County, and completion of each of
the actions set forth in ARTICLE III by the Escrow Holder for the City to sell the Property to the
Developer and the Developer to purchase the Property from the City.
1.1.10 “Completion of Construction” means the issuance of a Certificate of
Completion has been issued.
1.1.11 “Construction Costs” means the total cost incurred by Developer in
acquiring the Property and constructing the Project in accordance with this Agreement.
1.1.12 “Construction Lender” means a Lender(s) that provide(s) a
Construction Loan to the Developer to pay the Construction Costs of all or a portion of the Project.
1.1.13 “Construction Loan” means a Loan obtained by Developer from a
Construction Lender to finance all or part of the Construction Costs in conformity with the
Financing Plan.
1.1.14 “Construction Loan Deed of Trust(s)” means the Lien(s) required by
a Construction Lender to secure the Developer’s performance under the associated Construction
Loan.
1.1.15 “Control” means and refers to possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a person or entity, whether
by ownership of equity interests, by contract or otherwise.
1.1.16 “Controlling” and “Controlled” mean and refer to exercising or
having Control.
1.1.17 “County” means the County of Orange, California.
1.1.18 “Developer’s Title Notice” means a written notice from the Developer
to the City indicating the Developer’s acceptance of the state of the title to the Property, as
described in the Preliminary Report, or the Developer’s objection to specific matters shown in
Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy
for the Property, describing in suitable detail the actions that the Developer reasonably believes
are indicated to cure or correct each of the Developer’s objections. DRAFT
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1.1.19 “Developer’s Title Notice Waiver” means a written notice from the
Developer to the City waiving the Developer’s previous objection in the Developer’s Title Notice
to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under
the proposed Title Policy for the Property.
1.1.20 “Due Diligence Investigations” means the Developer’s due diligence
investigations of the Property to determine the suitability of the Property for development and
operation of the Project, including, without limitation, investigations of the environmental and
geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the
Developer, all at the sole cost and expense of the Developer.
1.1.21 “Due Diligence Investigation Conclusion “Approval Notice” means
a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of
the Due Diligence Period, indicating the Developer’s acceptance of the condition of the Property
or indicating the Developer’s rejection of the condition of the Property and refusal to accept a
conveyance of fee title to the Property, describing in reasonable detail the actions that the
Developer reasonably believes are indicated to allow the Developer to accept the condition of the
Property.
1.1.22 “Due Diligence Period” means the date commencing on the Effective
Date and ending at 5:00 p.m. on the thirtieth (30th) day following the Effective Date.
1.1.23 “Earnest Money Deposit” means Fifty Thousand Dollars ($50,000.00)
payable in cash or other immediately available funds. The Earnest Money Deposit shall include
the remaining balance of the Initial Deposit, as such term is defined and funds provided pursuant
to the ENA.
1.1.24 “Effective Date” has the meaning ascribed to the term in Section 1.3.
1.1.25 “ENA” means the Exclusive Negotiation Agreement (Downtown
Properties), dated October 3, 2017, by and between City and 26874 Ortega Highway, LLC, and
any executed Amendments, including the First Amendment to the Exclusive Negotiation
Agreement (Downtown Properties), dated October 10, 2018.
1.1.26 "Entitlements” means all land use approvals and entitlements required
by the City (in the exercise of its governmental power) and any other Governmental Authority
with jurisdiction over the Property in connection with the development of the Property, subject to
conditions of approval acceptable to Developer in Developer’s sole discretion.
1.1.27 “Entitlements Condition” means, that (a) the Entitlements have been
issued by all applicable Governmental Authorities, (b) all applicable appeal periods with respect
to such issuance have expired without appeal having been filed or, if an appeal is filed, such appeal
has been denied, and no legal action has been instituted against Developer or the City alleging the
invalidity of such entitlements, and (c) the Entitlements remain in full force and effect.
1.1.28 “Environmental Claims” has the meaning ascribed to the term in
Section 5.9. DRAFT
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1.1.29 “Environmental Laws” means all federal, state, local, or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any
government authority regulating, relating to, or imposing liability of standards of conduct
concerning any hazardous substance (as later defined), or pertaining to occupational health or
industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws,
ordinances, or regulations relate to hazardous substances on, under, or about the Property,
occupational or environmental conditions on, under, or about the Property, as now or may at any
later time be in effect, including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the
Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the
Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC
Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.];
the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the
Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC
Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste
Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30
USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC
Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657];
the California Underground Storage of Hazardous Substances Act [California Health & Safety
Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health
& Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement
Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality
Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations
promulgated under the statutes cited above and any other federal, state, or local law, statute,
ordinance, or regulation now in effect or later enacted that pertains to occupational health or
industrial hygiene, and only to the extent the occupational health or industrial hygiene laws,
ordinances, or regulations relate to hazardous substances on, under, or about the Property, or the
regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater,
surface water, or land use.
1.1.30 “Environmental Matters” has the meaning ascribed to the term in
Section 5.9.
1.1.31 “Escrow” has the meaning ascribed to the term in Section 2.1.
1.1.32 “Escrow Closing Date” has the meaning ascribed to the term in Section
3.6.
1.1.33 “Escrow Holder” means Fidelity National Title Company.
1.1.34 “Escrow Opening Date” has the meaning ascribed to the term in
Section 3.1.
1.1.35 “Event of Default” has the meaning ascribed to the term in Section
7.1.1. DRAFT
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1.1.36 “Financing Commitment” means (a) one or more commitment(s) from
one or more Construction Lender(s) agreeing to provide sufficient funds which, when combined
with the Developer’s equity contribution and the financial assistance to be provided by the City
pursuant to this Agreement, is sufficient, as determined by the City in its reasonable discretion, to
fully fund the Project’s Construction Costs, or (b) a letter from one or more Construction Lender(s)
indicating approval of a loan to the Developer for the development of the Property.
1.1.37 “FIRPTA Affidavit” means an affidavit complying with Section 1445
of the United States Internal Revenue Code.
1.1.38 “Grant Deed” means a deed in the form of Exhibit D to this Agreement,
conveying all of the City’s interest in the Property to the Developer.
1.1.39 “Governmental Agency” means any and all courts, boards, agencies,
commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city, or otherwise) whether now or later in existence.
1.1.40 “Governmental Requirements” means all codes, statutes, ordinances,
laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental
Agency.
1.1.41 “Hazardous Substances” means, without implied limitation,
substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid
waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the Toxic
Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of
Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as
hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in
Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section
25316 of the California Health and Safety Code; other substances, materials, and wastes that are,
or become, regulated or classified as hazardous or toxic under federal, state, or local laws or
regulations and in the regulations adopted pursuant to said laws, and shall also include manure,
asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum
products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321
or listed pursuant to 33 USC Section 1317.
1.1.42 “Indemnified Parties” has the meaning ascribed to the term in Section
5.9.
1.1.43 “Lender” means any state or federally chartered bank, savings and loan,
capital investment group, or other third -party financial institution which routinely makes Loans
to developments and developers such as the Project and the Developer in the normal course of
business and which has been approved by the City pursuant to Section 6.3, and such entities
successors and assigns. DRAFT
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1.1.44 “Lien” means any mortgage, deed of trust, or other security instrument
encumbering Developer’s fee interest in the Property and/or Project, or any part thereof, or any
pledge or other agreement given as security for the repayment of a Loan and by which a Lender
would be able to acquire any interest in the Developer upon the Developer’s breach of any
obligation under the Lender’s Loan Documents.
1.1.45 “Loan” means any loan or third-party equity/capital contribution (e.g.
mezzanine financing) for the Project other than that provided by the City.
1.1.46 “Loan Documents” means the various documents and instruments
made by and between the Developer and a Lender that evidence a Loan and the security for
repayment of such Loan.
1.1.47 “Maintenance Deficiency” has the meaning ascribed to the term in
Section 5.3.1.
1.1.48 “Normal Business Hours” means the normal business hours of the
City. As of the Effective Date, the City’s normal business hours are Monday through Thursday,
between the hours of 7:30 a.m. and 5:30 p.m. Pacific Time.
1.1.49 “Notice of Agreement” means the notice in the form of Exhibit E to
this Agreement to be recorded against the Property at the Close of Escrow to provide constructive
record notice of the existence and application of this Agreement to the Property.
1.1.50 “Party” means, individually, the City or the Developer, as applicable.
1.1.51 “Parties” means, collectively, the City and the Developer.
1.1.52 “PCO Statement” means a preliminary change of ownership statement
provided for in California Revenue and Taxation Code Section 480.3.
1.1.53 “Permitted Exceptions” means (i) any and all items shown in Schedule
B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the
Developer accepts, pursuant to Section 2.4; (ii) any exceptions from coverage under the proposed
Title Policy resulting from the Developer’s activities on the Property; (iii) non-delinquent property
taxes and assessments; (iv) this Agreement; or (v) the Grant Deed.
1.1.54 “Permitted Transfer” means and refers to any of the following types
of Transfers by the Developer, where the person or entity to which such Transfer is made expressly
assumes the obligations of the Developer under this Agreement in a written instrument satisfactory
to the City.
1.1.54.1 Any Transfer of stock or equity of the Developer that does not
change management or operational Control of the Property or the Project;
1.1.54.2 Any Transfer of any interest in the Developer or the Property or
Project or any portion thereof irrespective of the percentage of ownership (i) to any other owner
of any interest in the Developer; or (ii) to any Affiliate, or (iii) to any other person or entity in DRAFT
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which any holder of an interest (including any beneficial interest) in the Developer is a manager,
officer or partner or in which any of the aforementioned is a shareholder, member or partner
(including a beneficial owner), provided that with respect to any transfer of any interest in the
Property or Project, the person or entity to which such Transfer is made expressly assumes the
obligations of the Developer under this Agreement; and
1.1.54.3 Any Lien given to Lender in connection with a Loan approved
by the City pursuant to Section 6.3.
1.1.55 “Plans and Specifications” has the meaning ascribed to the term in
Section 2.6.1.
1.1.56 “Preliminary Report” means a preliminary report issued by the Title
Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of
all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title
Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for
each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and
objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply
separately to each Preliminary Report associated with a parcel or a group of parcels.
1.1.57 “Project” means the construction and redevelopment of the Property
with 140 on-grade and structured parking stalls; and including all required or associated on-site
and off-site improvements, all hardscape and all landscaping, all as specifically described in the
Scope of Development, and all to be developed in accordance with the Plans and Specifications to
be approved by the City and any conditions imposed by the City in its approval of the Plans and
Specifications.
1.1.58 “Project Completion Date” means that date set forth therefor by which
a Certificate of Completion shall be issued for the Project, as more particularly provided in the
Schedule of Performance. The Project Completion Date shall be no later than the date which is
five (5) years after the Close of Escrow.
1.1.59 “Property” means that real property, and all current and future
improvements thereon (including, without implied limitation, the Project), legally described in
Exhibit A.
1.1.60 “Property Transfer” means and refers to any “change in ownership,”
as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property.
1.1.61 “Purchase Price” means the amount of One Million Three Hundred
Thirty Thousand Dollars ($1,330,000), in cash or immediately available funds.
1.1.62 “Record”, “recorded”, “recording” or “recordation” each mean and
refer to recordation of the referenced document in the official records of the Recorder of the County
of Orange, California.
1.1.63 “Schedule of Performance” means the schedule for the performance of
certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C. DRAFT
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1.1.64 “Scope of Development” means the detailed description of the Project
attached to this Agreement as Exhibit B.
1.1.65 “Title Company” means Fidelity National Title Company.
1.1.66 “Title Policy” means an ALTA (2021) standard owners’ policy of title
insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and
insuring fee title to the Property, subject only to the Permitted Exceptions. However, at
Developer’s option, Developer may require that the Title Policy be issued with ALTA extended
coverage. City shall pay for the premium associated with standard coverage; Developer shall pay
for any additional premium for ALTA extended coverage and any survey required in connection
therewith.
1.1.67 “Transfer” means any of the following:
1.1.67.1 Any total or partial sale, assignment, conveyance, trust, power,
or transfer in any other mode or form, by the Developer of more than a 49% interest in the
Developer’s interest in this Agreement, the Property, or a series of such sales, assignments and the
like that, in the aggregate, result in a disposition of more than a 49% interest in the Developer’s
interest in this Agreement, the Property or the Project; or
1.1.67.2 Any total or partial sale, assignment, conveyance, or transfer in
any other mode or form, of or with respect to any interest in the Developer or a series of such sales,
assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest
in any interest in the Developer; or
1.1.67.3 Any merger, consolidation, sale, or lease of all or substantially
all of the assets of the Developer or a series of such sales, assignments and the like that, in the
aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets
of the Developer; or
1.1.67.4 Any Property Transfer; or
1.1.67.5 The recordation of any deed of trust, mortgage, Lien or similar
encumbrance against all or any portion of the Property or the Project.
1.1.68 “Unavoidable Delay” means any delay that is caused by the exclusively
by the other party or that is beyond the control of the City or the Developer, including delay caused
by strikes, acts of God, weather, epidemics or pandemics (including any governmental orders,
restrictions or regulations issued in connection therewith, inability to obtain labor or materials,
inability to obtain governmental permits or approvals, governmental restrictions, civil commotion,
fire, third -party lawsuits, or similar causes, but excluding circumstances subject to Section 8.7.2.
1.2 Representations and Warranties.
1.2.1 City Representations and Warranties. The representations and
warranties of City contained in this Section 1.2.1 shall be based upon the actual knowledge of the
City Manager as of the Effective Date. All representations and warranties contained in this Section DRAFT
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1.2.1 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach
of warranty, representation or covenant, wherever contained in this Agreement, shall survive the
execution and delivery of this Agreement and the Closing. City hereby makes the following
representations, covenants and warranties and acknowledges that the execution of this Agreement
by Developer has been made in material reliance by Developer on such covenants, representations
and warranties:
1.2.1.1 City is a California municipal corporation, duly formed and
operating under the laws of the State of California. City has the legal power, right and authority
to enter into this Agreement and to execute the instruments and documents referenced herein, and
to consummate the transactions contemplated hereby.
1.2.1.2 The persons executing any instruments for or on behalf of City
have been authorized to act on behalf of City and this Agreement is valid and enforceable against
City in accordance with its terms and each instrument to be executed by City pursuant hereto or in
connection therewith will, when executed, shall be valid and enforceable against City in
accordance with its terms. No approval, consent, order or authorization of, or designation or
declaration of any other person, is required in connection with the valid execution and delivery of
and compliance with this Agreement by City.
1.2.1.3 City has taken all requisite action and obtained all requisite
consents for agreements or matters to which City is a party in connection with entering into this
Agreement and the instruments and documents referenced herein and in connection with the
consummation of the transactions contemplated hereby. The City shall transfer the Property to
Developer at Closing free and clear of any leases or tenancies by or through the City, and in
connection therewith shall terminate any leases or occupancy agreement affecting the Party to
entered into or assumed by the City or any of its agencies, except for the License Agreement with
South Orange County Community Theatre which will remain in operation on the property until
such time Developer receives authorization, pursuant to this agreement, for demolition of the
Playhouse structure. City has evaluated the Project in accordance with CEQA. City has
determined that the Project, including the City’s action on this Agreement, is exempt from
environmental review pursuant to Title 14, California Code of Regulations, section 15332. City
has further determined that none of the exceptions to the categorical exemptions applies. City filed
a Notice of Exemption memorializing this determination on October 7, 2022.
1.2.1.4 Except as set forth in the materials delivered to Developer by the
City, to the best of the City Manager’s knowledge, with no duty to investigate: (a) the has not used,
stored, transported, generated, disposed of or released (or caused to be used, stored, transported,
generated, disposed of or released) on, within, under, about or from the Property any Hazardous
Substances; (b) the City has not installed, operated or maintained any underground storage tanks
on or adjacent to the Property; (c) the City has not received any written notice of any violation of
the Property of any Environmental Laws; (d) the Property is not currently under investigation for
the violation of any Environmental Laws; I the Property has not been subject to a deposit of any
Hazardous Substances in material violation of any Environmental Laws; (f) there has been no
discharge, migration or release of any Hazardous Substances from, into, on, under or about the
Property in material violation of Environmental Laws; and (g) there is not now any asbestos-
containing materials or any polychlorinated biphenyls used in hydraulic oils, electrical DRAFT
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transformers other equipment in violation of Environmental Laws. City makes no representation
regarding the actions of third parties or the state of the Property except as expressly disclosed
herein.
1.2.1.5 If the City becomes aware of any act or circumstance that would
change or render incorrect, in whole or in part, any representation or warranty made by the City
under this Agreement, whether as of the date given or any time thereafter, whether or not such
representation or warranty was based upon the City’s knowledge and/or belief as of a certain date,
the City will give immediate written notice of such changed fact or circumstance to the Developer.
1.2.2 Developer Representations and Warranties. The representations and
warranties of Developer contained in this Section 1.2.2 shall be based upon the actual knowledge
of Dan Almquist as of the Effective Date. All representations and warranties contained in this
Section 1.2.2 are true and correct as of the Effective Date. Developer’s liability for
misrepresentation or breach of warranty, representation or covenant, wherever contained in this
Agreement, shall survive the execution and delivery of this Agreement and the Closing. Developer
hereby makes the following representations, covenants and warranties and acknowledges that the
execution of this Agreement by City has been made in material reliance by City on such covenants,
representations and warranties:
1.2.2.1 Developer is a California limited liability company, lawfully
entitled to do business in the State of California and the City. Developer has the legal right, power
and authority to enter into this Agreement and the instruments and documents referenced herein
and to consummate the transactions contemplated hereby. The persons executing this Agreement
and the instruments referenced herein on behalf of Developer hereby represent and warrant that
such persons have the power, right and authority to bind Developer.
1.2.2.2 Developer has taken all requisite action and obtained all requisite
consents in connection with entering into this Agreement and the instruments and documents
referenced herein and the consummation of the transactions contemplated hereby, and no consent
of any other party is required for Developer’s authorization to enter into Agreement.
1.2.2.3 Neither the execution of this Agreement nor the consummation
of the transactions contemplated hereby shall result in a breach of or constitute a default under any
other agreement, document, instrument or other obligation to which Developer is a party or by
which Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or
any writ, injunction, order or decree of any court or governmental body applicable to Developer
or to the Property.
1.2.2.4 This Agreement is, and all agreements, instruments and
documents to be executed by Developer pursuant to this Agreement shall be, duly executed by and
shall be valid and legally binding upon Developer and enforceable in accordance with their
respective terms. No approval, consent, order or authorization of, or designation or declaration of
any other person, is required in connection with the valid execution and delivery of in compliance
with this Agreement by Developer. DRAFT
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1.2.2.5 If the Developer becomes aware of any act or circumstance that
would materially change or render materially incorrect, in whole or in part, any representation or
warranty made by the Developer under this Agreement, whether as of the date given or any time
thereafter, whether or not such representation or warranty was based upon the Developer’s
knowledge and/or belief as of a certain date, the Developer will give prompt written notice of such
changed fact or circumstance to the City.
1.3 Effective Date. This Agreement is dated _______, 2022 for reference purposes
only. This Agreement shall not become effective until the date on which all of the following are
true (“Effective Date”): (i) this Agreement is approved and executed by the appropriate authorities
of Developer and delivered to City; (ii) has delivered to City a certified copy of the official action
taken by all of the members of the Developer approving this Agreement, in the form attached to
this Agreement as Exhibit F; (iii) following all legally required notices and hearings, this
Agreement is approved by the City Council; and (iv) this Agreement is executed by the authorized
representatives of City.
1.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement.
Each of the Exhibits is incorporated by this reference into the text of this Agreement.
Exhibit A Legal Description of Property
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Grant Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
ARTICLE II
PROPERTY DISPOSITION
2.1 Purchase and Sale. In exchange for the Purchase Price and the Developer’s other
covenants and undertakings set forth in this Agreement, the City shall sell the Property to the
Developer and the Developer shall purchase the Property from the City pursuant to the terms and
conditions of this Agreement. For the purposes of exchanging funds and documents to complete
the sale from the City to the Developer and the purchase by the Developer from the City of the
Property pursuant to the terms of this Agreement, the City and the Developer agree to open an
escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint
escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale
of the Property, as contemplated by this Agreement. The Developer and the City shall execute
such further escrow instructions, consistent with the provisions of this Agreement, as may be
reasonably requested by the Escrow Holder. In the event of any conflict between the provisions
of this Agreement and any other escrow instructions requested by the Escrow Holder, the
provisions of this Agreement shall control.
2.2 Payment of Purchase Price. The Developer shall deposit the Purchase Price into
Escrow, subject to credit to the Developer for the Earnest Money Deposit. DRAFT
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2.3 Earnest Money Deposit. Concurrent with its opening of the Escrow, the
Developer shall deposit into Escrow the Ernest Money Deposit. The Escrow Holder shall deposit
the Earnest Money Deposit into an interest -bearing account. All interest earned on such funds
shall be added to the original principal amount of the Earnest Money Deposit and be considered
part of the same. The Earnest Money Deposit shall be nonrefundable upon the conclusion of the
Due Diligence Period. Upon the Close of Escrow, the Earnest Money Deposit shall be credited to
the Developer toward the Purchase Price and paid to the City as part of the Purchase Price. Should
Escrow fail to close, the Earnest Money Deposit shall be forfeited by Developer and shall be paid
to the City upon the cancelation of Escrow in accordance with Section 3.10.
2.4 Title Approval. As soon as practicable following the opening of the Escrow, the
City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary
Report to the Developer. Within thirty (30) days following the Developer’s receipt of a
Preliminary Report for the entire Property, the Developer shall deliver the Developer’s Title Notice
to the City. If the Developer fails to deliver the Developer’s Title Notice to the City within thirty
(30) days following the Developer’s receipt of the Preliminary Report, the Developer will be
deemed to disapprove the status of title to the Property and refuse to accept title to the Property, in
which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and
terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any
other person, by delivery of a written notice of termination to the Developer and Escrow Holder.
Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City
shall serve City’s Title Notice Response. The City acknowledges that the Developer disapproves
of the Covenant and Agreement to Provide Required Parking recorded on June 18, 1969 in Book
8994, at Page 60, of Official Records (the “Pacific T&T Parking Covenant”) and the Developer
need not include the Pacific T&T Parking Covenant in the Developer’s Title Notice. The City
shall execute and record a document terminating the Pacific T&T Parking Covenant at or prior to
the Close of Escrow (the “Termination Document”). If Developer’s Title Notice does not object
to any matter in the Preliminary Report in addition to the Pacific T&T Parking Covenant, the City
shall not be required to serve City’s Title Notice Response. If the City does not serve City’s Title
Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title
Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title
Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to
cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary
Report, the City shall cause the removal of each such objectionable matter from the Preliminary
Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response
or such other period of time that may be agreed to in writing by both the City and the Developer.
If the City is unwilling or unable to cause the removal of any matter objected to in Developer’s
Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s
receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the
removal of any matter objected to in Developer’s Title Notice or upon the expiration of the above
sixty (60) day time period during which the City elected to remove such objectionable matters
from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept
the title to and conveyance of the Property, in which case the Parties shall have the right, subject
to Section 2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party
or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2)
waive its objection to any items set forth in Developer’s Title Notice by delivering Developer’s
Title Notice Waiver to the City. Failure by the Developer to deliver Developer’s Title Notice DRAFT
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Waiver, where City’s Title Notice Response or the City’s failure to serve City’s Title Notice
Response indicates the City’s election not to cause the removal of any matter objected to in
Developer’s Title Notice from the Preliminary Report, for the City to deliver City’s Title Notice
Response under this Agreement, will be deemed the Developer’s continued refusal to accept the
title to and conveyance of the Property, in which case the City shall have the right, subject to
Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion,
without liability to the Developer or any other person, by delivery of a written notice of termination
to the Developer and Escrow Holder.
2.4.1 If at any time prior to the Close of Escrow the Title Company issues an
updated Preliminary Report containing any previously undisclosed matter affecting title to the
Property, or the City becomes aware of any previously undisclosed matter affecting title to the
Property, following the delivery of the Developer’s Title Notice, the City shall provide written
notice to the Developer of such matter, together with any updated Preliminary Report related to
such matter. The City and the Developer shall have such rights and obligations with respect to
such previously undisclosed title matters as they did with respect to any title matters set forth in
the original Preliminary Report as set forth in Section 2.4.
2.4.2 Before exercising any right a Party may have under this Section 2.4 to
cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating
Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request,
which must be delivered, if at all, within three (3) days following its receipt of the terminating
Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a
period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested
by any Party to negotiate, in good faith, methods and means by which the objectionable title matter
may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or
warranty by any Party that an acceptable resolution of the objectionable title matter will be
achieved, nor shall any Party be obligated to expend any funds or undertake any other action
whatsoever with respect to such title matter unless such agreement is reduced to a writing which
is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30)
day period, the Parties have not been able to agree on a mutually acceptable method of resolving
such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow
shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties
shall proceed pursuant to Section 3.10.
2.5 Developer Investigations.
2.5.1 The Developer shall have until the expiration of the Due Diligence
Period to complete all of its Due Diligence Investigations with respect to the entirety of the
Property. The Developer shall complete all of its Due Diligence Investigations within the Due
Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and
expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence
Investigations of the Property, including, without limitation, investigations regarding geotechnical
soil conditions, compliance with applicable laws pertaining to the use of the Property by the
Developer and any other matters relevant to the condition or suitability of the Property for the
Project, as the Developer may deem necessary or appropriate. City makes no representation or
warranty to the Developer relating to the condition of the Property or suitability of the Property DRAFT
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for any intended use or development by the Developer. The Developer shall deliver a Due
Diligence Investigation Conclusion Notice to the City and the Escrow Holder prior to the end of
the Due Diligence Period. If the Developer does not unconditionally accept the condition of the
Property by delivery of its Due Diligence Investigation Conclusion Notice indicating such
acceptance prior to the end of the Due Diligence Period, the Developer shall be deemed to have
rejected the condition of the Property and refused to accept conveyance of title to the Property. If
the condition of the Property is rejected or deemed rejected by the Developer, then the City shall
have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the
City’s sole discretion, without liability to the Developer or any other person, by delivery of a
written notice of termination to the Developer and Escrow Holder. The Developer shall accept all
conditions of the Property, without any liability of the City whatsoever, upon the Developer’s
acceptance of the condition of the Property indicated in its Due Diligence Investigation Conclusion
Notice, subject to the City’s express representations and warranties set forth in this Agreement and
the documents delivered by the City at Closing. The Developer’s delivery of its Due Diligence
Investigation Conclusion Notice indicating the Developer’s unconditional acceptance of the
condition of the Property shall evidence the acceptance of the condition of the Property by the
Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition,
as of the last day of the Due Diligence Period, subject to the City’s express representations. In its
sole discretion, the Developer may accept the Property in its “AS IS,” “WHERE IS” and
“SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period.
The Developer shall conduct during the Due Diligence Period such environmental assessment(s)
of the Property as the Developer deems appropriate, subject to the City’s express representations
and warranties set forth in this Agreement and the documents delivered by the City at Closing.
Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt
any then existing use or occupancy of the Property or the operations of the City. The Developer
shall be liable for any damage or injury to any person or property arising from the acts of the
Developer, its employees, agents or representatives during the course of any Due Diligence
Investigations on the Property and the Developer shall indemnify, defend with counsel reasonably
acceptable to the City and hold harmless the City and its elected officials, officers, directors,
attorneys, contractors, agents and employees from any and all actual or alleged liens, claims,
demands or liability arising from any Due Diligence Investigations by the Developer on the
Property, other than any liabilities or claims arising from either (a) the mere discovery of any pre-
existing conditions or (b) the negligence or willful misconduct of City or any employees, officers,
elected officials or agents of the City. Prior to its initial entrance upon the Property, the Developer
shall deliver copies of policies or certificates of insurance to the City evidencing compliance by
the Developer with the insurance requirements of Section 5.10.2 (other than 5.10.2.1.4 [Casualty]).
2.5.2 Before exercising any right a Party may have under this Section 2.5 to
cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating
Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request,
which must be delivered, if at all, within three (3) days following its receipt of the terminating
Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a
period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested
by any Party to negotiate, in good faith, methods and means by which the objectionable Due
Diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement,
representation, or warranty by any Party that an acceptable resolution of the objectionable Due
Diligence matter will be achieved, nor shall any Party be obligated to expend any funds or DRAFT
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undertake any other action whatsoever with respect to such Due Diligence matter unless such
obligation is reduced to a writing which is approved by all Parties, in their sole and absolute
discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on
a mutually acceptable method of resolving the objectionable Due Diligence matter, or if any
proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this
Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant
to Section 3.10.
2.6 Developer to Obtain all Project Entitlements.
2.6.1 Pursuant to the ENA, Developer has developed and presented to City
staff and the City Council for review, and Council has approved, a proposed conceptual
development plan for the Project on the Property that describes and depicts: (1) the location and
placement of proposed improvements; (2) the architecture and elevations of the proposed
improvements; (3) the location of the Replacement Parking Spaces and the Additional Parking
Spaces (collectively, the “Plans and Specifications”).
2.6.2 The City’s zoning, building and land use regulations (whether contained
in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere)
(collectively, the “City Requirements”), shall be applicable to the use and development of the
Project on the Property by the Developer. The Developer acknowledges that all Plans and
Specifications and any changes to the Plans and Specifications shall be subject to the City
Requirements. No action by the City with reference to this Agreement or any related documents
shall be deemed to constitute a waiver of any City Requirements regarding the Property, the
Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to
the Property. The City Requirements may only be changed or waived by modification or variance
approved by the City and consistent with this Agreement. No entitlement, permit or other approval
from the City for development of the Project on the Property shall attach to any portion of the
Property or otherwise become effective to allow the Developer to develop the Project on the
Property until after the Developer owns fee title to that portion of the Property to which such
entitlement, permit or other approval pertains. Under no circumstances shall the Developer
commence construction of any portion of the Project on the Property prior to the Developer owning
fee title to the Property.
2.6.3 The approval of the Scope of Development shall not be binding on the
City Council or the Planning Commission of the City regarding any approvals of the Project
required by such bodies. The Developer obtains no right to develop the Project on the Property or
any portion of the Property by virtue of this Agreement, except that following the Close of Escrow,
the Developer shall possess the same rights as any other owner of property within the Property that
desires to develop its property in a manner consistent with the City’s General Plan. If any revisions
of the Scope of Development are required by a Governmental Agency (other than the City) having
jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions
that are generally consistent with the Scope of Development.
2.6.4 Notwithstanding any provision to the contrary in this Agreement,
following the Close of Escrow, the Developer agrees to accept and comply fully with any and all
conditions of approval applicable to all approvals, permits and other governmental actions DRAFT
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regarding the development or operation of the Project on the Property, so long as such conditions
of approval are consistent with the Scope of Development and this Agreement in all material
respects.
2.6.5 Developer to Pay All Costs and Expenses. The Parties agree that the
City shall not provide any financial assistance to the Developer in connection with the Project
except as may be expressly set forth in this Agreement. The Developer shall be solely responsible
for paying for the costs of all design work, construction, labor, materials, fees and permit expenses
associated with the Project. The Developer shall pay any and all fees pertaining to the review and
approval of the Project by the City, any other Governmental Agency and utility service providers,
including the costs of preparation of all required construction, planning and other documents
reasonably required by a Governmental Agency pertinent to the development or operation of the
Project on the Property, including, but not limited to, specifications, drawings, plans, maps, permit
applications, land use applications, zoning applications, environmental review and disclosure
documents and design review documents. The Developer shall pay for any and all costs, including,
but not limited to, the costs of design, construction, relocation and securing of permits for sewer
or utility improvements and connections, that may be required in development of the Project,
whether located on or off of the Property. The Developer shall obtain any and all necessary
approvals, prior to the commencement of applicable portions of construction, and the Developer
shall take reasonable precautions to ensure the safety and stability of surrounding properties during
said construction. In accordance with this Section 2.6.5, Developer shall be responsible for the
costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the
following:
2.6.5.1 All fees or expenses of engineers, architects,
financial consultants, legal, planning or other consultants or contractors, retained by the Developer
for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning
and/or design activities, drawings, specifications or other activity or matter relating to the Property
or the Project or the negotiation of this Agreement that may be undertaken by the Developer; and
2.6.5.2 All fees, charges and costs, make all deposits and
provide all bonds or other security associated with the submission to and processing by the City
of any and all applications and other documents and information to be submitted to the City by the
Developer pursuant to this Agreement or otherwise associated with the Project.
2.6.6 The Developer shall obtain all entitlements, permits and other approvals
for use and development of the Project on the Property from each Governmental Agency, within
the time period for such actions specifically set forth in the Schedule of Performance, subject to
any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable
Delay.
ARTICLE III
ESCROW INSTRUCTIONS
3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall
be the first date on which a fully executed copy of this Agreement and Earnest Money Deposit are DRAFT
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deposited with Escrow Holder (“Escrow Opening Date”). The Developer shall cause the Escrow
to be opened within five (5) days following the Effective Date. Escrow Holder shall promptly
confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III
shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for
conduct of the Escrow to complete the purchase and sale of the Property between them, as
contemplated in this Agreement.
3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied
or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the
Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow.
3.2.1 Developer’s Conditions to Close of Escrow. The Developer’s
obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to
the satisfaction of the following conditions precedent, each of which can only be waived in writing
by the Developer:
3.2.1.1 The Developer agrees to accept the title to and conveyance of the
Property, pursuant to Section 2.4;
3.2.1.2 The Developer delivers its Due Diligence Investigation
Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional
acceptance of the condition of the Property, prior to the expiration of the Due Diligence Period;
3.2.1.3 The Termination Document has been recorded;
3.2.1.4 The Title Company is unconditionally committed to issue the
Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;
3.2.1.5 The City has deposited the items into the Escrow required by
Section 3.4;
3.2.1.6 The representations, warranties and covenants of the City set
forth in Section 1.2.1 are true and correct in all material respects on the Effective Date and on the
Escrow Closing Date;
3.2.1.7 The Entitlements Condition has been satisfied; and
3.2.1.8 The City has completed all of its material obligations required by
this Agreement to be completed prior to the Close of Escrow.
3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell
the Property to the Developer on or before the Escrow Closing Date shall be subject to the
satisfaction of the following conditions precedent, which can only be waived in writing by the
City:
3.2.2.1 The Developer has deposited the Purchase Price less the Earnest
Money Deposit into Escrow; DRAFT
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3.2.2.2 The Developer agrees to accept the title to and conveyance of the
Property, pursuant to Section 2.4;
3.2.3 The Developer has timely delivered its Due Diligence Investigation
Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional
acceptance of the physical condition of the Property, prior to the expiration of the Due Diligence
Period;
3.2.4 The Title Company is unconditionally committed to issue the Title
Policy for the Property, subject to any Permitted Exceptions, to the Developer;
3.2.5 The City’s Planning Commission finds, pursuant to Government Code
Section 65402, that the Project is consistent with the City’s General Plan;
3.2.6 The Entitlements Condition has been satisfied;
3.2.7 The Developer has completed all of its material obligations required by
this Agreement to be completed prior to the Close of Escrow;
3.2.8 The representations, warranties and covenants of the Developer set forth
in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow
Closing Date; and
3.2.9 The Developer deposits the funds and items into the Escrow required by
Section 3.3 for the Escrow.
3.3 Developer’s Escrow Deposits. Following satisfaction or waiver of each of the
Developer’s conditions to Close of Escrow set forth in Sections 3.2.1, as applicable, the Developer
shall deposit the following funds and documents into Escrow at least two (2) business days prior
to the Escrow Closing Date in a writing delivered to the Parties:
3.3.1 Purchase Price and Other Funds. The Purchase Price, less the
amount of the Earnest Money Deposit, plus any additional funds required to be deposited into
Escrow by the Developer under the terms of this Agreement to close the Escrow, all in immediately
available funds.
3.3.2 PCO Statement. A PCO Statement executed by the authorized
representative(s) of the Developer.
3.3.3 Acceptance of Grant Deed. The Certificate of Acceptance of the Deed,
in the form attached to the Grant Deed, executed by the authorized representative(s) of the
Developer in recordable form.
3.3.4 Notice of Agreement. The Notice of Agreement executed by the
authorized representative(s) of the Developer in recordable form. DRAFT
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3.4 City’s Escrow Deposits. Following satisfaction or waiver of each of the City’s
conditions to Close of Escrow set forth in Sections 3.2.2, as applicable, the City shall deposit the
following documents into Escrow at least two (2) business days prior to the Escrow Closing Date:
3.4.1 Grant Deed. The Grant Deed executed by the authorized
representative(s) of the City in recordable form.
3.4.2 FIRPTA Affidavit (City). The FIRPTA Affidavit completed and
executed by the authorized representative(s) of the City.
3.4.3 Notice of Agreement. The Notice of Agreement executed by the
authorized representative(s) of the City in recordable form.
3.4.4 Termination Document. The Termination Document executed by the authorized
representative(s) of the City in recordable form if not previously recorded.
3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as
set forth in Section 3.3, and each of the City’s Escrow required deposits, as set forth in Section
3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the
City and the Developer that each of their respective conditions to the Close of Escrow, as set forth
in Section 3.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation
from both the City and the Developer that each of their respective conditions to the Close of
Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the Property by
doing all of the following:
3.5.1 Recordation of Documents. File the following with the Office of the
Recorder of the County, for recordation in the order set forth in Section 3.7, (i) the Grant Deed,
with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, (iii) the
Termination Document, if applicable, and (iv) if applicable, the Construction Loan Deed of Trust.
3.5.2 Distribution of Recorded Documents. Distribute each recorded
document to the Party or person designated for such distribution in Section 3.7.
3.5.3 PCO Statement. File the PCO Statement with the Office of the
Recorder of the County.
3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States
Internal Revenue Service.
3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer.
3.5.6 Purchase Price. Deliver the Purchase Price to the City, less the City’s
share of Escrow closing costs, and less any other charges to the account of the City, and return any
remaining funds held by Escrow Holder for the account of the Developer to the Developer, less
the Developer’s share of Escrow closing costs, and less any other charges to the account of the
Developer, all set forth in preliminary closing statements prepared by the Escrow Holder and
approved by each party prior to Closing. DRAFT
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3.6 Close of Escrow. Close of Escrow shall occur no later than the later of: (1) the
tenth (10th) business day following Escrow Holder’s receipt of written confirmation from both the
City and the Developer of the satisfaction or waiver of all conditions precedent to the Close of
Escrow for the Property, or (2) thirty (30) days from the end of the Due Diligence Period (the
“Escrow Closing Date”). If for any reason the Close of Escrow has not occurred by the Escrow
Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and
terminate this Agreement, subject to the notice and cure provisions of Section 7.1 (to the extent
applicable), without liability to any other Party or any other person for such termination and
cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder
and, thereafter, the Parties shall proceed pursuant to Section 3.10 if the non-terminating Party is
not in default or pursuant to Section 7.2 or 7.3 (as applicable) if the non-terminating Party is in
default. Without limiting the right of any Party to terminate this Agreement, pursuant to the
preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party
has exercised its contractual right to cancel Escrow and terminate this Agreement before such time,
then Escrow shall close as soon as reasonably possible following the first date on which Escrow
Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.
Notwithstanding the foregoing, Escrow shall close no later December 31, 2022.
3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall
cause the following documents to be recorded in the official records of the Recorder of the County
in the following order of priority at the Close of Escrow: (i) the Grant Deed, with the Developer’s
certificate of acceptance attached, (ii) the Notice of Agreement, and (iii) the Construction Loan
Deed of Trust and related loan documents, if applicable, and (iv) any other documents to be
recorded through Escrow upon the joint instructions of the Parties. All recorded documents shall
provide that they are to be returned to Escrow Holder after recordation. When originals of such
recorded documents are returned to Escrow Holder, Escrow Holder shall deliver: (i) the original
Grant Deed, with the Developer’s original certificate of acceptance attached, to the Developer and
copies to the City, each showing all recording information, (ii) the original of the Notice of
Agreement to the City, with copies to the Developer, each showing all recording information, (iii)
the Construction Loan Deed of Trust and related loan documents to the Construction Lender for
the Project, with copies to the Developer and the City, each showing all recording information,
and (iv) the original of any other document recorded at the close of Escrow to the Party or other
person designated in the joint escrow instructions of the Parties for such recordation and a copy of
each such document to the other Party or Parties, each showing all recording information.
3.8 Escrow Closing Costs, Taxes and Title Policy Premium. The City and the
Developer shall each pay one-half (1/2) of the Escrow fees and such other costs as Escrow Holder
may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer and the City
of the costs to be borne by each of them at the Close of Escrow by delivering the Escrow Holder’s
estimated closing/settlement statement to both the City and the Developer at least four (4) business
days prior to the Escrow Closing Date. The City shall pay the premium charged by the Title
Company for the standard Title Policy for the Property, exclusive of any endorsements or other
supplements to the coverage of such Title Policy that may be requested by the Developer, as well
as documentary transfer taxes and any and all other charges, fees and taxes levied by a
Governmental Authority relative to the conveyance of any portion of the Property through the
Escrow transaction contemplated in this Agreement. The Developer shall pay any and all DRAFT
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recording fees relative to the conveyance of any portion of the Property through the Escrow
transaction contemplated in this Agreement.
3.9 Escrow Cancellation Charges. If the Escrow fails to close due to either the City’s
material default under this Agreement and the Escrow is cancelled and this Agreement is
terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation
charges. If the Escrow fails to close due to the Developer’s material default under this Agreement
and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary
and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any
reason other than the material default of either the Developer or the City and the Escrow is
cancelled and this Agreement is terminated, the Developer and the City shall each pay one-half
(1/2) of any ordinary and reasonable Escrow and title order cancellation charges.
3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled
pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement
and cancel the Escrow, other than due to the material default of another Party, the Parties shall do
each of the following:
3.10.1 Cancellation Instructions. The Parties shall, within three (3) business
days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation
instructions requested by Escrow Holder.
3.10.2 Return of Funds and Documents. Within ten (10) days of receipt by
the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow
Holder: (i) the Developer or Escrow Holder shall return to the City any documents previously
delivered by the City to the Developer or Escrow Holder; (ii) the City or Escrow Holder shall
return to the Developer all documents previously delivered by the Developer to the City or Escrow
Holder; (iii) Escrow Holder shall return to the Developer any funds deposited by Developer into
Escrow, including the Earnest Money Deposit, less the Developer’s share of customary and
reasonable Escrow and title order cancellation charges, if any; and (iv) Escrow Holder shall return
to the City any funds deposited by City into Escrow if it has already been deposited, less the City’s
share of customary and reasonable Escrow and title order cancellation charges, if any.
3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which
such report is required to be filed with the Internal Revenue Service, if such report is required
pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gross
proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099-
B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to
Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow
Holder shall deliver a copy of the filed form to the City and the Developer.
3.12 Holdback Pending Property Characterization. No later than the third
anniversary of the Close of Escrow, Developer shall cause this Property and the adjacent
Downtown Property to be graded in accordance with grading plans approved by the City. If an
underground storage tank is discovered in the Project, City shall reimburse Developer the actual
reasonable costs to handle and manage (and if required, remove and lawfully dispose of) such
underground storage tank in the manner approved by Government authorities with jurisdiction up DRAFT
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to the amount of One Hundred Thousand Dollars ($100,000) in total for this property and the
adjacent Downtown property. If Developer is required to remove the underground storage tank
from the Property and dispose of the same, any permit needed for such removal, transport and/or
disposal shall list City as the hazardous materials “generator.” As part of City’s obligation to
reimburse Developer the costs for handling and managing any such underground storage tank,
Developer shall submit to City Manager invoices and other reasonable documentation supporting
Developer’s request for a disbursement. City shall have thirty (30) days to review and approve
the reimbursement, and such approval shall not to be unreasonably withheld, conditioned or
delayed. Upon approval of the invoices, City shall disburse the approved funds to
Developer. After all excavation has been completed in the course of grading the Property to its
approximate rough grade, and prior to any final or post-grading excavations for foundations,
underground utilities, or other underground facilities or structures, if an underground storage tank
has not been discovered in the Property, the City shall have no additional obligations related to the
presence, removal or disposal of the underground storage tank. Any costs above the $100,000
shall be borne exclusively by Developer.
ARTICLE IV
PROJECT DEVELOPMENT
4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself,
its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall
commence and complete the development of the Project on the Property within the time period for
such actions set forth in the Schedule of Performance. The Developer covenants and agrees for
itself, its successors, and assigns, that the Property shall be improved and developed in substantial
conformity with the terms and conditions of this Agreement, the Scope of Development, the
Schedule of Performance, any and all plans, specifications and similar development documents
required by this Agreement, except for such changes as may be mutually agreed upon in writing
by and among the Parties, and all applicable laws, regulations, orders and conditions of each
Governmental Agency with jurisdiction over the Property or the Project. The covenants of this
Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the
Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow.
4.2 Developer Changes to Plans and Specifications During Course of
Construction. The Developer shall have the right during the course of construction of the Project
to make “minor field changes,” without seeking the approval of the City, if such changes do not
affect the type of use to be conducted within all or any portion of a structure. “Minor field
changes” shall be defined as those changes from the approved Plans and Specifications that have
no substantial effect on the Project or are made in order to expedite the work of construction in
response to field conditions. The Developer shall submit all other changes, i.e. those changes
which are not “minor field changes”, to the City for its review and approval no less than fifteen
(15) days prior to the date that the Developer intends to implement such changes. The City shall
have ten (10) days from its receipt of such proposed changes to review the same and advise the
Developer in writing whether such changes are acceptable to the City in its reasonable discretion;
provided that, with respect to any proposed change that is disapproved by the City, the City shall,
concurrent with its disapproval of such change provide Developer with written notice identifying
in detail the grounds for the City’s disapproval of such change and any portion of such disapproved DRAFT
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change that is acceptable to the City as proposed or modifications to such proposed changed
required for it to be acceptable to the City. Any proposed changes which are not disapproved by
the City within such ten (10) day period shall be deemed approved. Nothing contained in this
Section 4.2 shall be deemed to constitute a waiver of or change in the City Requirements governing
“minor field changes” or other changes or in any approvals by the City otherwise required for
“minor field changes.” or other changes. Notwithstanding the foregoing, Developer shall not
make any changes which are inconsistent with the Entitlements without the approval of the City.
4.3 Construction Start and Completion of Project. The Developer shall commence
construction of the Project in accordance with the Schedule of Performance and, thereafter, shall
diligently proceed to complete the construction of the Project in a good and workmanlike manner
in substantial conformity with the approved plans, specifications, and conditions for the Project
approved by the City and the Schedule of Performance. Developer shall seek approval from the
City Manager prior to demolishing the existing Playhouse structure. Developer shall be in a
position to pull the required demolition permit prior to requesting authorization from the City
Manager. Additionally, Developer shall allow the South Orange County Community Theatre to
continue to operate within the existing Playhouse structure until 30 days prior to demolition.
Developer shall commence demolition of the existing Playhouse structure no later than the 3rd
anniversary of the Effective Date of this agreement. The Developer shall obtain a Certificate of
Completion on or before the Project Completion Date, subject to Unavoidable Delays. The
Developer will, promptly upon completion of construction of the Project, cause the Project to be
inspected by each Governmental Agency with jurisdiction over the Project required to inspect the
Project in accordance with this Agreement, shall correct any defects and deficiencies that may be
disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and
other licenses, permits and authorizations necessary for the operation and occupancy of the
completed Project. The Developer shall do and perform all of the foregoing acts and things and
cause to be issued and executed all such occupancy certificates, licenses, and authorizations for
the Project on or before the date set forth therefor in the Schedule of Performance as the completion
date for the Project. After commencement of the work of improvement of the Project, the
Developer shall not permit the work of improvement of the Project to cease or be suspended for a
time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays.
4.4 Compliance with Laws. All work performed in connection with the development
of the Project shall comply with all Governmental Requirements.
4.5 Schedule of Performance. The Schedule of Performance establishes various dates
and times for the accomplishment of various tasks assigned to the City and the Developer and the
satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is
of the essence in the performance of such tasks and the satisfaction of conditions precedent, in
view of the large investment of resources that all Parties recognize will be required for assembly
of the Property and the undertaking of the Project. If the date or time for the performance of a task
or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule
of Performance, is reasonably likely not to be achieved, then prior to such date or time set forth in
the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a
modification to the text of this Agreement or to the Schedule of Performance is indicated. Any
decision to approve a modification to a time or date established in either the text of this Agreement
or the Schedule of Performance shall be subject to the discretion of each Party, not to be DRAFT
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unreasonably withheld, conditioned or delayed. Any modification of a time or date for
performance of a particular task or satisfaction of a particular condition that does not result in a
change of more than one hundred eighty (180) days may be approved on behalf of the City by the
City Manager, in his or her reasonable discretion. A modification of a time or date for performance
of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate
change of more than one hundred eighty (180) days shall be subject to the approval of the City
Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition
in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for
completion of such task or satisfaction of such condition shall be extended by the period of such
Unavoidable Delays.
4.6 Developer Attendance at City Meetings. The Developer agrees to have one or
more of its employees or consultants who are knowledgeable regarding this Agreement and the
development of the Project, such that such person(s) can meaningfully respond to City questions
regarding the progress of the Project, attend City Council meetings, when requested to do so on
not less than ten (10) days prior written notice by City staff.
4.7 City’s Right to Inspect Project and Property. Officers, employees, agents and
representatives of the City shall have the right of reasonable access to the Property upon at least
twenty-four (24) hours’ prior notice to Developer, without the payment of charges or fees, during
normal construction hours, during the period of construction of the Project. Such officers,
employees, agents or representatives of the City shall be those persons who are designated by the
City Manager. Any and all officers, employees, agents or representatives of the City who enter
the Property shall identify themselves at the construction management office on the Property, upon
their entrance on to the Property, and shall at all times be accompanied by a representative of the
Developer, while on the Property. The Developer shall have the right to have a representative of
the Developer available for this purpose at all times during normal construction hours. The City
shall indemnify and hold the Developer harmless from injury, property damage or liability arising
out of the exercise by the City of the right of access to the Property provided in this Section 4.7,
other than injury, property damage or liability arising from the negligence or willful misconduct
of the Developer or its officers, agents or employees. The City shall inspect relevant portions of
the Property, prior to issuing any written statements reflecting adversely on the Developer’s
compliance with the terms and conditions of this Agreement pertaining to development of the
Project. If in the City’s reasonable judgment it is necessary, the City shall have the further right,
from time to time, to retain a consultant or consultants to inspect the Project and verify compliance
by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees
that any such inspections are for the sole purpose of protecting the City’s rights under this
Agreement, are made solely for the City’s benefit, that the inspections may be superficial and
general in nature, and are for the purposes of informing the City of the progress of the Project and
the conformity of the Project with the terms and conditions of this Agreement, and that the
Developer shall not be entitled to rely on any such inspection(s) as constituting an approval,
satisfaction or acceptance of any materials, workmanship, conformity of the Project with this
Agreement or otherwise. The Developer agrees to make its own regular inspections of the work
of construction of the Project to determine that the quality of the Project and all other requirements
of the work of construction of the Project are being performed in a manner satisfactory to the
Developer. The Developer also agrees to immediately notify the City in writing should the
Developer’s inspections show any matters that will prevent the entire Project from being DRAFT
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completed by the Project Completion Date set forth therefore in the Schedule of Performance.
Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to
examine and copy all books and account records and other papers relating to the Property and the
construction of the Project. The Developer will use commercially reasonable efforts to cause all
contractors, subcontractors and materialmen to cooperate with the City to enable such
examination.
4.8 Cost of Construction. The cost and expense of undertaking and completing the
Project, including, without limitation, constructing all legally imposed on-site and off-site
improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost,
expense and liability. Developer shall be solely responsible for payment of all City land use,
construction, inspection, plan check and development impact fees (collectively, “Development
Fees”) imposed by the City with respect to the development of the Project. Developer shall bear
all costs and expenses associated with the processing and obtaining of the entitlements and shall
bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement),
associated with any and all terms, conditions, requirements, mitigation measures and other
exactions imposed on, or required in connection with, the entitlements.
4.9 Prevailing Wages.
4.9.1 The Developer acknowledges that the City has not made any
representation, express or implied, to the Developer or any person associated with the Developer
regarding whether or not laborers employed relative to the construction of the Project must be paid
the prevailing per diem wage rate for their labor classification, as determined by the State of
California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that
the Developer shall assume the responsibility and be solely responsible for determining whether
or not laborers employed relative to the construction of the Project must be paid the prevailing per
diem wage rate for their labor classification.
4.9.2 The Developer, on behalf of itself, its successors, and assigns, waives
and releases the City from any right of action that may be available to it pursuant to Labor Code
Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542
relative to the waiver and release contained in this Section 4.9, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 4.9.2.
_________________
Developer’s Initials DRAFT
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4.9.3 Additionally, in accordance with Section 7.7,
the Developer shall indemnify, defend with counsel acceptable to the City and hold the
City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising
from this Agreement or the construction or operation of the Project.
4.10 Certificate of Completion.
4.10.1 Following the substantial completion of construction of the Project, and
upon written request from the Developer for issuance of a Certificate of Completion for the Project,
the City shall inspect the Project to determine whether or not the Project has been substantially
completed in compliance with this Agreement. As used herein, completion of the Project (or
substantial completion of the Project, as the case may be) shall be deemed to mean substantial
completion of construction of the parking structure in the Project as well as all parking areas, and
landscaping areas. If the City determines that the Project is complete (or substantially complete,
as the case may be) and in compliance with this Agreement, the City Manager shall furnish the
Developer with a Certificate of Completion for the Project. If the City determines that the Project
is not in compliance with this Agreement, the City Manager shall send written notice of each non-
conformity to the Developer. Upon issuance of the final certificate of occupancy for the
development of the Project, based on the plans submitted by the Developer to the City, the City
shall furnish the Developer with a Certificate of Completion for the Project if a Certificate of
Completion was not previously issued.
4.10.2 Upon the Developer’s substantial completion of the Project, the
Developer shall request and be entitled to receive a Certificate of Completion, including the right
of the City Manager to issue the Certificate of Completion, except that the Certificate of
Completion, upon issuance, shall be evidence of the City’s conclusive determination of
satisfactory substantial completion of the entirety of the Project pursuant to the terms of this
Agreement. A Certificate of Completion shall be evidence of the City’s conclusive determination
of satisfactory completion of the Project to which it pertains pursuant to the terms of this
Agreement. After the recordation of a Certificate of Completion for the Project, any person then
owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property
improved with the Project shall not (because of such ownership, purchase, lease or acquisition)
incur any obligation or liability under this Agreement regarding construction or installation of the
Project except that such person shall be bound by any reservations, covenants, conditions,
restrictions and other interests recorded against the Property pursuant to this Agreement and the
Grant Deed.
4.10.3 If the City fails or refuses to issue a Certificate of Completion following
written request from the Developer, the City shall, within fifteen (15) calendar days of the
Developer’s written request or within three (3) calendar days after the next regular meeting of the
City Council, whichever date occurs later, provide the Developer with a written statement setting
forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement
shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate
of Completion from the City. If the reason for the Developer’s failure to complete the Project is
confined to the immediate unavailability of specific items or materials for construction or DRAFT
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landscaping at a price reasonably acceptable to the Developer or other minor building “punch-
list” items, the City may issue its Certificate of Completion upon the posting of a bond or
irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City
in an amount representing the fair value of the work on the Project remaining to be completed, as
reasonably determined by the City. If the City fails to provide such written statement, within the
specified time period, the Developer shall be deemed conclusively and without further action of
the City to have satisfied the requirements of this Agreement with respect to the Project, as if a
Certificate of Completion had been issued by the City pursuant to this Agreement. A Certificate
of Completion shall not constitute evidence of compliance with or satisfaction of any obligation
of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned
to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to
constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act
to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or
any other instruments recorded against the Property pursuant to this Agreement. A Certificate of
Completion is not evidence of the compliance of the Project with any City Requirements or any
building code, conditions of approval, land use, zoning or other requirements of the City or any
Governmental Agency with jurisdiction over the Property, other than the City.
ARTICLE V
DEVELOPER COVENANTS
5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its
successors and assigns to all or any part or portion of the Property and/or Project, covenants and
agrees that:
5.1.1 The entire Property shall remain on the County
secured real property tax rolls for twenty (20) years from the date of issuance of a
Certificate of Completion for the Project.
5.1.2 The Developer shall pay all property tax bills
with respect to the Property and all improvements thereon on or before the last day for the
timely payment of each property tax installment on each December 10 and April 10 during
such time period and to timely pay all supplemental tax bills regarding the Property issued
by the County. The Developer further covenants and agrees to provide to the City, on or
before July 31 of each year, commencing in the calendar year following the calendar year
in which a Certificate of Completion is recorded and in each calendar year, thereafter, for
the full term of this covenant: (i) a true and correct copy of all property tax assessment
notices, property tax bills and property tax assessment correspondence by and between the
Developer and the County regarding the Property and all improvements thereon, with
respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the
Developer in payment of all property tax payments that are made to the County regarding
the Property and all improvements thereon (or other reasonably acceptable evidence of
such payment), with respect to the preceding County fiscal year. DRAFT
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5.1.3 The covenants of this Section 5.1 shall run with
the land of the Property, shall be enforceable against the Developer and its successors and
assigns, and shall be covenants set forth in the Grant Deed.
5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors and
assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.2.1 The Developer shall not use or otherwise sell,
transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any
portion of any of the foregoing to any entity or person, or for any use of the Property, the
Project, or any portion of any of the foregoing, that is partially or wholly exempt from the
payment of real or personal property taxes or that would cause the exemption of the
payment of all or any portion of real or personal property taxes otherwise assessable
regarding the Property, the Project, or any portion of any of the foregoing, without the prior
written consent of the City, which may be withheld in the City’s sole and absolute
discretion for a period of twenty (20) years from the date of issuance of the certificate of
completion for the Project by the City.
5.2.2 If the Property, or any portion of the Property,
shall be conveyed, transferred or sold to any entity or person that is partially or wholly
exempt from the payment of real or personal property taxes otherwise assessable against
the Property, or any portion thereof, without the prior written consent of the City, then, at
the City’s election and in addition to all other remedies available to the City under this
Agreement or at law or in equity, the Developer shall pay to the City a fee in lieu of
payment of such taxes each year in an amount determined by the City to be one percent
(1%) of the “full cash value” of the Property, or portion thereof, as may be subject to such
exemption from payment of real or personal property taxes. The City’s determination of
“full cash value” for in-lieu payment purposes under this 5.2.2 shall be established by the
City each year, if necessary, by reference to the real or personal property tax valuation
principles and practices generally applicable to a county property tax assessor under
Section 1 of Article XIIIA of the California Constitution. The City’s determination of “full
cash value” and that an in-lieu payment is due shall be conclusive on such matters. If the
City determines that an amount is payable as an in-lieu payment under this Section 5.2.2
in any tax year, then such amount shall be paid to the City for that tax year within forty-
five (45) days following transmittal by the City to the Developer of an invoice for payment
of the in-lieu amount.
The covenants of this Section 5.1 shall run with the land of the Property, shall be
enforceable against the Developer and its successors and assigns, and shall be covenants set forth
in the Grant Deed.
5.3 Maintenance Condition of the Property. The Developer for itself, its successors
and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.3.1 The areas of the Property that are subject to
public view (including all existing and future improvements, paving, walkways,
landscaping, exterior signage and ornamentation) shall be maintained in good repair and a DRAFT
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neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence
of an adverse condition on any area of the Property that is subject to public view in
contravention of the general maintenance standard described above (a “Maintenance
Deficiency”), then the City shall notify the Developer in writing of the Maintenance
Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the
Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance
Deficiency, the City shall have the right to enter the Property and perform all acts necessary
to cure the Maintenance Deficiency, or to take any other action at law or in equity that may
then be available to the City to accomplish the abatement of the Maintenance Deficiency.
Any sum expended by the City for the abatement of a Maintenance Deficiency on the
Property pursuant to this Section 5.3.1 shall become a lien on the Property, as applicable.
If the amount of the lien is not paid within thirty (30) days after written demand for payment
from the City to the Developer, the City shall have the right to enforce the lien in the
manner provided in Section 5.3.1.
5.3.2 Graffiti, as this term is defined in Government
Code Section 38772, that has been applied to any exterior surface of a structure or
improvement on the Property that is visible from any public right-of-way adjacent or
contiguous to the Property, shall be removed by the Developer by either painting over the
evidence of such vandalism with a paint that has been color-matched to the surface on
which the paint is applied, or graffiti may be removed with solvents, detergents or water,
as appropriate. If any such graffiti is not removed within ninety-six (96) hours following
the time of the discovery of the graffiti, the City shall have the right to enter the Property
and remove the graffiti, without notice to the Developer. Any sum reasonably expended
by the City for the removal of graffiti from the Property pursuant to this Section 5.3.2, shall
be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after
written demand to the Developer from the City, the City shall have the right to enforce its
lien in the manner provided in Section 5.3.2.
5.3.3 The Parties further mutually understand and
agree that the rights conferred upon the City under this Section 5.3 expressly include a
grant by the Developer of a security interest in the Property with the power to establish and
enforce a lien or other encumbrance against the Property or any portion thereof, in the
manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the
obligations of the Developer and it successors under Section 5.3.1, 5.3.2 or Section 5.3.3,
including the reasonable attorneys’ fees and costs of the City associated with the abatement
of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding
sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the
salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of
the City Attorney.
5.3.4 The provisions of this Section 5.3, shall be a
covenant running with the land of the Property, shall be enforceable against the Developer
and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing
in the foregoing provisions of this Section 5.3 shall be deemed to preclude the Developer
from making any alteration, addition, or other change to any structure or improvement or DRAFT
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landscaping on the Property, provided that any such changes comply with applicable
zoning and building regulations of the City.
5.4 Obligation to Refrain from Discrimination. The Developer for itself, its
successors and assigns to all or any part or portion of the Property and/or Project, covenants and
agrees that:
5.4.1 There shall be no discrimination against or segregation of any person,
or group of persons, on account of sex, marital status, race, color, religion, creed, national origin
or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Property nor shall the Developer, itself or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or
vendees of the Property. The covenant of this Section 5.4 shall run with the land of the Property
and shall be enforceable against the Developer and its successors and assigns in perpetuity and be
a covenant in the Grant Deed and the Notice of Agreement.
5.4.2 The covenant of this Section 5.4 shall run with
the land of the Property in perpetuity, shall be enforceable against the Developer and its
successors and assigns, and shall be covenants set forth in the Grant Deed.
5.5 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for
itself, its successors and assigns to all or any part or portion of the Property and/or Project,
covenants and agrees that:
5.5.1 The Developer, such successors and such assigns shall refrain from
restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the
Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed,
ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property
shall contain or be subject to substantially the following non-discrimination or non-segregation
covenants:
5.5.1.1 In deeds: “The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race, color,
creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land.”
5.5.1.2 In leases: “The Lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is made and
accepted upon and subject to the following conditions: That there shall be no discrimination
against or segregation of any person or group of persons, on account of race, color, creed, religion,
sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, DRAFT
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occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or occupancy,
of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.”
5.5.1.3 In contracts: “There shall be no discrimination against or
segregation of any person or group of persons on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person
claiming under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use, or occupancy, of tenants,
lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing
provision shall be binding upon and shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the instrument.
5.5.2 The covenant of this Section 5.5 shall run with the land of the Property
in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall
be covenants set forth in the Grant Deed.
5.6 Prohibited Uses. The Developer for itself, its successors and assigns to all or any part
or portion of the Property and/or Project, covenants and agrees that:
5.6.1 Notwithstanding uses allowed in the applicable specific plan, no portion
of the Property shall be used for a junkyard, adult entertainment, adult movie theater, adult
bookstore, massage parlor, pawn shop, dollar store, check cashing center (the foregoing shall in
no event prohibit banking facilities within a grocery store or a walk up ATM), payday loan or other
similar business, laundromat (not including full service dry cleaners), marijuana dispensary, tattoo
parlor or fortuneteller, or for the sale of narcotics paraphernalia, or for the long term treatment,
storage or disposal of Hazardous Materials.
5.6.2 The covenant of this Section 5.4.2 shall run with the land of the Property
in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall
be covenants set forth in the Grant Deed.
5.7 Survival of Special Development Covenants. All of the covenants set forth in 0,
inclusive, shall be a covenant running with the land of the Property and each such special
development covenant shall survive the Close of Escrow, execution and recordation of the Grant
Deed, and issuance and recordation of any Certificate of Completion for the time period
specifically set forth in each such special development covenant. The Parties acknowledge that
although the special development covenants apply to the entirety of the Property, portions of the
Project and Property may, in accordance with the Permitted Transfer requirements, be sold or
otherwise transferred to various successors and assigns of the Developer. Accordingly, the City
agrees that with respect to enforcement of any of the special development covenants, it is
understood and agreed that, in the event of a breach of any of the special development covenants,
the City will seek to enforce those covenants only against the then-current owner(s) of that portion
of the Property which is not in compliance with any one or more the special development
covenants. No owner of any portion of the Property which is in compliance with the special DRAFT
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development covenants shall be liable for the breach of any of the special development covenants
by any other owner of any other portion of the Property; provided, however, that the foregoing
shall not preclude City from seeking damages against any prior owner of any portion of the
Property if, during the tenure of such owner’s ownership, such owner’s portion of the Property
was not in compliance with any one or more of the special development covenants.
5.8 Developer Covenant to Defend this Agreement. The Developer acknowledges
that the City is a “public entity” and/or “public agency” as defined under applicable California
law. Therefore, the City must satisfy the requirements of certain California statutes relating to the
actions of public entities and public agencies including, without limitation, CEQA. Also, as a
public body, the City’s action in approving this Agreement may be subject to proceedings to
invalidate this Agreement or mandamus. The Developer assumes the risk of delays and damages
that may result to the Developer from any third-party legal actions related to the City’s approval
of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event
that an error, omission or abuse of discretion by the City is determined to have occurred. If a third-
party files a legal action regarding the City’s approval of this Agreement or the pursuit of the
activities contemplated by this Agreement, either the City may terminate this Agreement on thirty
(30) days written notice to the Developer of the City’s intent to terminate this Agreement,
referencing this Section 5.8, without any further obligation to perform the terms of this Agreement
and without any liability to the Developer resulting from such termination, unless the Developer
unconditionally agrees to indemnify and defend the City, with legal counsel acceptable to the City,
against such third-party legal action, as provided in the next sentence. Within thirty (30) days of
receipt of the City’s notice of intent to terminate this Agreement, as provided in the preceding
sentence, the Developer may offer to defend the City, with legal counsel reasonably acceptable to
the City, in the third-party legal action and pay all of the court costs, attorney fees, monetary
awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of
any and all financial or performance obligations resulting from the disposition of the legal action.
Any such offer from the Developer must be in writing and reasonably acceptable to the City in
both form and substance, which acceptance by the City shall not be unreasonably withheld,
conditioned or delayed. Nothing contained in this Section 5.8 shall be deemed or construed to be
an express or implied admission that the City is liable to the Developer or any other person or
entity for damages alleged from any alleged or established failure of the City to comply with any
statute, including, without limitation, CEQA. The Developer’s defense of such third -party actions
as described in this Section 5.8 shall constitute an Unavoidable Delay.
5.9 Environmental Indemnity of the City by the Developer. The Developer agrees,
at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel
selected by the Developer and approved by the City) the City and its commissions, agents,
attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified
Parties”), from and against any and all claims, demands, damages, losses, liabilities, obligations,
penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and
expenses, including, without limitation, attorney fees, disbursements and costs of attorneys,
environmental consultants and other experts, and all foreseeable and unforeseeable damages or
costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may,
at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the
Indemnified Parties, directly or indirectly relating to or arising from any of the following DRAFT
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“Environmental Matters” existing or occurring during or arising from the Developer’s ownership
of the Property or construction or operation of the Project:
5.9.1 The presence of Hazardous Materials on, in, under, from or affecting all
or any portion of the Property or the Project.
5.9.2 The storage, holding, handling, release, threatened release, discharge,
generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under,
from or affecting the Property or the Project.
5.9.3 The violation of any law, rule, regulation, judgment, order, permit,
license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or
contractors, relating to or governing in any way Hazardous Materials on, in, under, from or
affecting the Property or the Project.
5.9.4 The failure of the Developer, its agents or contractors, to properly
complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations,
covenants and the like in connection with the Developer’s activities on the Property or regarding
the Project.
5.9.5 The implementation and enforcement by the Developer, its agents or
contractors of any monitoring, notification or other precautionary measures that may, at any time,
become necessary to protect against the release, potential release or discharge of Hazardous
Materials on, in, under, from or affecting the Property or the Project.
5.9.6 The failure of the Developer, its agents or contractors, in compliance
with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any
Hazardous Materials existing, stored or generated on, in, under or from the Property or the Project.
5.9.7 Any investigation, inquiry, order, hearing, action or other proceeding by
or before any governmental agency in connection with any Hazardous Materials on, in, under,
from or affecting the Property or the Project or the violation of any Environmental Law relating to
the Property or the Project.
5.9.8 The Developer shall pay to the Indemnified Parties all costs and
expenses including, without limitation, reasonable attorneys' fees and costs, incurred by the
Indemnified Parties in connection with enforcement of the aforementioned environmental
indemnity.
5.10 Insurance. In order to protect the City and its commissions, agents, attorneys,
officers, employees and authorized representatives (collectively, “Additional Insureds”) against
any and all claims and liability for death, injury, loss and damage resulting from the Developer’s
actions in connection with this Agreement, the Property, and the Project, the Developer shall
secure and maintain the insurance coverage, described in and required by this Section 5.10. The
City shall not have any obligation to allow Developer to access the Property under this Agreement
until the Developer provides the required policies and/or certificates evidencing the insurance
required by this Section 5.10 to the City and the City approves such evidence of insurance. The
Developer shall pay any deductibles and self-insured retentions under all insurance policies DRAFT
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obtained by Developer in satisfaction of the terms of this Agreement. Developer shall retain all
insurance policies as set forth in this Section 5.10 while this Agreement is in effect and, if the
Closing occurs, until recordation of the Certificate of Completion.
5.10.1 Workers’ Compensation Insurance Requirement. If the Developer
has any employees, the Developer shall submit written proof that the Developer is insured against
liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor
Code. By executing this Agreement, the Developer makes the following certification, required by
Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code
which require every employer to be insured against liability for
workers’ compensation or to undertake self-insurance in accordance
with the provisions of that code, and I will comply with such
provisions before commencing the performance of the work of the
Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to
provide workers’ compensation coverage for all of such contractor’s or sub-contractor’s
employees, unless the contractor’s or sub-contractor’s employees are covered by workers’
compensation insurance provided by the Developer. If any class of employees engaged in work
or services performed in connection with the Project is not covered by Labor Code Section 3700,
the Developer shall provide and/or require each contractor or sub-contractor to provide adequate
workers’ compensation insurance covering such employees. Each workers’ compensation policy
procured pursuant to this Section 5.10.1 shall contain a full waiver of subrogation clause in favor
of the Additional Insureds.
5.10.2 Liability and Permanent Insurance Requirements.
5.10.2.1 The Developer shall maintain in full force and effect, until the
issuance of the Certificate of Completion, subject to Section 5.10.2.6, the following insurance
coverage:
5.10.2.1.1 Commercial General Liability Insurance coverage,
including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically
covering all indemnity obligations of the Developer pursuant to this Agreement), Products-
Completed Operations Hazards, Personal Injury (including bodily injury and death), and Property
Damage for liability arising out of the construction of the Project and/or the Developer’s operations
concerning the Property or the Project. The commercial general liability insurance coverage shall
have minimum limits for Bodily Injury and Property Damage liability of TWO MILLION
DOLLARS ($2,000,000) each occurrence and FOUR MILLION DOLLARS ($4,000,000)
aggregate.
5.10.2.1.2 Automobile Liability Insurance against claims of
Personal Injury (including bodily injury and death) and Property Damage covering all owned,
leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily
Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and DRAFT
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TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall be provided by a
business or commercial vehicle policy.
5.10.2.1.3 If the Developer hires a consultant to provide design
services, such as architectural or engineering services in connection with the Project, or any portion
of the Project, the Developer shall require each such consultant to provide Professional Liability
(Errors and Omissions) Insurance, for liability arising out of, or in connection with, the
performance of such design services, with limits of not less than ONE MILLION DOLLARS
($1,000,000).
5.10.2.1.4 Upon acceptance of the Project or any portion
thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance
on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100%
of the replacement value of all portions of the Project so accepted. During the construction of the
Project, the Developer shall require that each contractor performing work on the Project maintain
the following insurance coverage, as specified below, at all times during the performance of said
work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at
all times during the performance of said work:
5.10.2.1.5 The Developer shall maintain Builder’s Risk
Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to
100% of the completed insurable value of the Project or portion of the Project on which such
contractor is performing work.
5.10.2.1.6 Each general contractor and each sub-contractor
shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION
DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate
to protect the Developer during the construction of the Project from claims involving bodily injury
and/or death and damage to the property of others.
5.10.2.1.7 Each general contractor and each sub-contractor
shall maintain Automobile Liability Insurance against claims of personal injury (including bodily
injury and death) and property damage covering all owned, leased, hired and non-owned vehicles
used in the performance of the contractor’s obligations with minimum limits for bodily injury and
property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO
MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be
provided by a business or commercial vehicle policy.
5.10.2.2 The insurance required in Section 5.10.2.1.1 and Section
5.10.2.1.2 above shall include, endorsements naming the Additional Insureds as additional insured
for liability arising out of this Agreement and any operation related to this Agreement.
5.10.2.3 Any insurance coverage required under this Agreement shall not
be written on a “claims made” basis. The applicable certificate of insurance must clearly provide
that the coverage is on an “occurrence” basis. The requirements of this Section 5.10.2.3 shall
survive any expiration or termination of this Agreement and the recordation of the Grant Deed and
any Certificate of Completion. DRAFT
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5.10.2.4 Receipt by the City of evidence of insurance that does not comply
with the above requirements shall not constitute a waiver of the insurance requirements of this
Agreement.
5.10.2.5 Subject to Section 5.10.2.3, all of the insurance coverage required
under this Section 5.10 shall be maintained by the Developer or its contractors, as required by the
terms of this Agreement, until the issuance of the Certificate of Completion and shall not be
reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the City.
Also, phrases such as “endeavor to” and “but failure to mail such notice shall impose no obligation
or liability of any kind upon the company” shall not be included in the policies of insurance in the
cancellation wording of any certificates of insurance or any coverage for the Additional Insureds.
The Developer shall promptly obtain replacement coverage for any insurance policy that is
terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of
the insurer that issued the policy.
5.10.2.6 insurance to be obtained and maintained by the Developer under
this Section 5.10 shall be issued by a company or companies listed in the then current “Best’s Key
Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct
business in the State of California by the State of California Department of Insurance or otherwise
approved by the City.
5.10.2.7 The City will not accept self-insurance in satisfaction of the
insurance requirements of this Section 5.10.
5.10.2.8 All insurance obtained and maintained by the Developer in
satisfaction of the requirements of this Agreement shall be primary to and not contributing to any
insurance maintained by the Additional Insureds.
5.10.2.9 Insurance coverage in the minimum amounts set forth in this
Section 5.10 shall not be construed to relieve the Developer of any liability, whether within,
outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that
issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as
are available to them under any other provision of this Agreement or otherwise at law.
Failure by the Developer to maintain all insurance coverage required by this Section 5.10 in effect
shall be an Event of Default by the Developer. The City, at its sole option, may exercise any
remedy available to them in connection with such an Event of Default. Alternatively, the City
may, at its sole option, purchase any such required insurance coverage and the City shall be entitled
to immediate payment from the Developer for any premiums and associated costs paid by the City
for such insurance coverage . Any election by the City to purchase or not to purchase insurance
otherwise required to be carried by the Developer shall not relieve the Developer of its obligation
to obtain and maintain the insurance coverage required by this Agreement.
DRAFT
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ARTICLE VI
PROJECT FINANCING
6.1 Intentionally Omitted.
6.2 Unauthorized Liens. Except as provided in Section 6.3, until recordation of the
Certificate of Completion, the Developer shall not record, and shall not allow to be recorded,
against the Property, or any portion thereof, any Lien not expressly authorized by this Agreement.
Until recordation of the Certificate of Completion, the Developer shall remove, or shall have
removed, any unauthorized Lien made or recorded against the Property or any portion of the
Property, or shall bond over or otherwise assure the satisfaction thereof to the reasonable
satisfaction of the City. After one hundred twenty (120) calendar days prior written notice to the
Developer, the City shall have the right, but not the obligation, to satisfy any unauthorized Lien
made or recorded prior to recordation of the Certificate of Completion to the extent not bonded
over or otherwise cured as permitted pursuant to the preceding sentence, and receive
reimbursement from the Developer for any amounts paid in satisfying any such Lien, within thirty
(30) days of the City’s delivery to the Developer of written demand therefore together with
reasonable supporting evidence thereof. Nothing in this Section 6.2, though, shall require the
Developer to pay or make provisions for the payment of any tax, assessment, lien, or charge that
the Developer is in the process of contesting the validity or amount thereof, in good faith, and so
long as such contest shall not subject the Property, or any portion thereof, to forfeiture or sale.
6.3 Rights of Lenders and City Regarding Permitted Loans and Liens.
6.3.1 Intentionally Omitted.
6.3.2 Whenever the City delivers any notice or demand to the Developer
regarding any breach or default by the Developer under this Agreement that, if not timely cured
by the Developer, would entitle the City to terminate this Agreement, the City shall send a copy
of such notice to each affected Lender of which the City has received notice and a contact address
for transmittal of such notices. Whenever the City delivers any notice or demand to the Developer
regarding any breach or default by the Developer under this Agreement that, if not timely cured
by the Developer, would entitle the City to exercise its power of termination of the fee estate of all
or any portion of the Property pursuant to Section 7.6, the City shall at the same time send a copy
of such notice or demand to each affected Lender of which the City has received notice and a
contact address for transmittal of such notice. Each affected Lender receiving a copy of any such
notice shall have the right, at its option, to commence the cure or remedy of any such default of
the Developer and to diligently proceed with such cure or remedy, within one hundred eighty (180)
calendar days following its receipt of notice of the default, subject to Unavoidable Delays. If a
default of the Developer under this Agreement cannot, with diligence, be remedied or cured, or
the remedy or cure of such default cannot be commenced, within such one hundred eighty (180)
calendar day period, the Lender shall have such additional time as is reasonably necessary to
remedy or cure such default of the Developer, but in no event beyond three hundred sixty five
(365) calendar days following its receipt of notice of the default, subject to Unavoidable Delays.
If such default of the Developer can only be remedied or cured by the Lender upon obtaining
possession of the Property, the Lender shall seek to obtain possession of the Property with DRAFT
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diligence and continuity through a receiver or otherwise, and shall remedy or cure such default of
the Developer within one hundred eighty (180) calendar days after obtaining possession of the
Property, subject to Unavoidable Delays. Nothing contained in this Agreement shall be deemed
to permit or authorize any Lender to undertake or continue the construction of any portion of the
Project (beyond the extent necessary to conserve or protect improvements or construction already
made), without expressly assuming the Developer’s obligations under this Agreement by written
agreement approved by the City, in which the Lender agrees to complete, in the manner provided
in this Agreement, the improvements to which the Lien or title of the Lender relates, which
approval shall not unreasonably be withheld, delayed, or conditioned by the City.
6.3.3 In any case where, one hundred eighty (180) calendar days after delivery
of notice of a default of the Developer under Section 6.3.2, such default remains uncured and the
affected Lender has not exercised the option provided in Section 6.3.2 to construct the applicable
portions of the Project, or has exercised the option, but has not proceeded diligently in accordance
with Section 6.3.2 above, the City shall have the option, in the City’s sole and absolute discretion,
to purchase the Loan of such Lender and any security interest of such Lender under its Loan
Documents by payment to the Lender of the amount of the unpaid Loan that remains outstanding,
including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts
payable to the Lender by the Developer under its Loan Documents.
6.3.4 After expiration of the one hundred eighty (180) calendar day period
provided for in Section 6.3.3, any affected Lender may demand, in writing, that the City act to
exercise or forego the option granted in Section 6.3.3. If the City fails to exercise the right granted
in Section 6.3.3 within sixty (60) calendar days from the date of the City’s receipt of such written
demand from a Lender, the City shall be conclusively deemed to have waived its right of purchase
of that Lender’s interest pursuant to Section 6.3.3.
6.3.5 In the event of an uncured default or breach by the Developer under any
Loan Documents, where the Lender has not exercised its option to complete the Project under
Section 6.3.2, the City may cure the default of the Developer under the applicable Loan
Documents, but is under no obligation to do so, prior to completion of any sale or foreclosure of
the Property or any portion thereof under the applicable Loan Documents. The City shall be
entitled to reimbursement from the Developer of all reasonable costs and expenses incurred by the
City in curing any default of the Developer under any Loan Documents.
6.3.6 In any case where a Lender has acquired title to all or any portion of the
Property or Project through foreclosure, deed in lieu of foreclosure, or any other means, and such
Lender proposes to enter into an agreement to transfer the Property and/or Project, or any portion
thereof, to a third party transferee, the Lender shall provide the City with written notice thereof,
which notice shall include a reasonably detailed description of the terms and conditions of the
proposed transaction. The City shall have the option, but not the obligation, to purchase the
Property and/or Project on substantially the same terms as described in the Lender’s notice, which
option, if ever, shall be exercised by written notice from the City to the Lender within twenty (20)
days following the City’s receipt of the Lender’s notice. If the City elects not to exercise its option,
then, subject to Section 8.2.1, the Lender may complete the transaction described in its notice,
provided that such transaction is closed on materially identical terms and conditions as those
described in the Lender’s notice to the City. If the Lender and third-party transferee desire to DRAFT
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materially amend the terms of their proposed transaction, the Lender shall give the City written
notice of the proposed modifications and the City shall once again have the right to elect to acquire
the Property and the Project (or portion thereof) on terms and conditions substantially similar to
those modified terms. If, for any reason, the proposed transaction between the Lender and third-
party transferee fails to close within one (1) year following the date on which the City first receives
notice of the proposed transaction (or notice of the proposed modified transaction, whichever is
later), then the City once again have the right to elect to acquire the Property and/or Project
pursuant to this Section 6.3.6.
6.3.7 The restrictions set forth in this Section 6.3 shall remain in effect only
until the recordation of the Certificate of Completion for the Project.
ARTICLE VII
DEFAULTS, REMEDIES AND TERMINATION
7.1 Defaults - General.
7.1.1 Subject to any extensions of time provided for in this Agreement, failure
or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event
of Default” under this Agreement; provided, however, that if a Party otherwise in default
commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt
of written notice from the injured Party specifying such default, and shall diligently prosecute such
cure, correction or remedy to completion (and where any time limits for the completion of such
cure, correction or remedy are specifically set forth in this Agreement, then within said time limits),
such Party shall not be deemed to be in default under this Agreement and no Event of Default shall
be deemed to have occurred.
7.1.2 The injured Party shall give written notice of default to the Party in
default, specifying the default complained of by the non-defaulting Party. Delay in giving such
notice shall not constitute a waiver of any default nor shall it change the time of default.
7.1.3 Any failure or delays by any Party in asserting any of their rights and/or
remedies as to any default shall not operate as a waiver of any default or of any such rights or
remedies. Delays by any Party in asserting any of its rights and/or remedies shall not deprive that
Party of its right to institute and maintain any actions or proceedings that it may deem necessary
to protect, assert or enforce any such rights or remedies.
7.1.4 In addition to other acts or omissions of the Developer that may legally
or equitably constitute a default or breach of this Agreement, the occurrence of any of the following
specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute
an “Event of Default” under this Agreement and shall not be subject to the notice and cure
provisions of Section 7.1.1:
7.1.4.1 Intentionally Omitted.
7.1.4.2 Any representation, warranty or disclosure made to the City by
the Developer regarding this Agreement or the Project is materially false or misleading, whether DRAFT
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or not such representation or disclosure appears in this Agreement, if not promptly corrected after
Developer’s receipt of notice of same.
7.1.4.3 The Developer fails to make any payment or deposit of funds
required under this Agreement or to pay any other charge set forth in this Agreement, following
seven (7) business days’ written notice to the Developer from the City of such failure reasonably
documenting the City’s calculation of any such charge the amount of which is not stated in this
Agreement.
7.1.4.4 The construction of the Project is delayed or suspended for a
period in excess of that permitted under Section 4.3 or the Developer has not been issued, or
entitled to be issued, a Certificate of Completion by the Project Completion Date.
7.1.4.5 There occurs any event of dissolution, reorganization or
termination of the Developer that adversely and materially affects the operation or value of the
Property or the Project, and such event is not corrected within five (5) business days following
written notice of such event from the City to the Developer.
7.1.4.6 The Developer Transfers its interest in this Agreement, the
Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation
of law, in violation of the terms and conditions of this Agreement and such action is not cured
within the period prescribed in Section 8.2.1.
7.1.4.7 A receiver is appointed to conduct the affairs of the Developer
under state or federal law.
7.1.4.8 The Developer’s legal status as authorized by the Secretary of
State of the State of California to transact business in California is suspended or terminated.
7.2 LIQUIDATED DAMAGES TO THE CITY. UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO
THE CLOSE OF ESCROWTHE CITY MAY CANCEL THE ESCROW PURSUANT TO
SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE CITY SHALL BE
RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO SELL OR CONVEY
THE PROPERTY OR ANY PORTION THEREOF AND ANY SUCH ESCROW
CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE CITY TO THE
DEVELOPER OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE CITY
AND THE DEVELOPER ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL, IF NOT IMPOSSIBLE, TO ASCERTAIN THE AMOUNT OF DAMAGES
THAT WOULD BE SUFFERED BY THE CITY IN THE EVENT OF A CANCELLATION OF
THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE
DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW. HAVING
MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
DAMAGES THE CITY WOULD SUFFER IN THE EVENT OF A CANCELLATION OF THE
ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE
DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW, THE
CITY AND THE DEVELOPER AGREE THAT A REASONABLE ESTIMATE OF THE DRAFT
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CITY’S DAMAGES IN SUCH EVENT IS THE TOTAL SUM OF FIFTY THOUSAND
DOLLARS ($50,000) (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON
THE CANCELLATION OF THE ESCROW BY THE CITY DUE TO THE OCCURRENCE OF
AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO
THE CLOSE OF THE ESCROW, ESCROW HOLDER SHALL IMMEDIATELY CANCEL
THE ESCROW AND PAY THE LIQUIDATED DAMAGES AMOUNT TO THE CITY, IN
PART, FROM THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) DAYS OF ESCROW
CANCELLATION. RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL BE
THE CITY’S SOLE AND EXCLUSIVE REMEDY UPON THE CANCELLATION OF THE
ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE
DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW.
CITY’S INITIALS: _____ DEVELOPER’S INITIALS: _____
7.3 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF
AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND
LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW.
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE
CONVEYANCE OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR
TO CLOSE OF ESCROW, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE
REMEDY, HAVE THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES
DESCRIBED IN SECTIONS 7.3 AND 7.3.2. THE DEVELOPER’S ELECTION, ONCE MADE,
SHALL BE IRREVOCABLE
7.3.1 WAIVER OF RIGHT TO SPECIFIC
PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES. THE
DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.3.2 AND
MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON
CANCELLATION OF THE ESCROW, THE DEVELOPER SHALL BE RELIEVED OF
ANY OBLIGATION UNDER THIS AGREEMENT TO PURCHASE OR ACCEPT
TITLE TO THE PROPERTY AND ANY SUCH ESCROW CANCELLATION SHALL
BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY
OTHER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER SHALL BE
LIMITED TO RECOVERING ANY AMOUNTS ACTUALLY EXPENDED BY THE
DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT PRIOR TO
THE DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE CITY,
NOT TO EXCEED FIFTY THOUSAND DOLLARS ($50,000). THE DEVELOPER
WAIVES ANY RIGHT TO RECOVER ANY OTHER SUMS FROM THE CITY
ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE
OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF
CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE
CONTAINED IN THIS SECTION 7.3, WHICH CIVIL CODE SECTION READS AS
FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING DRAFT
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THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY
WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE
WAIVERS AND RELEASES OF THIS SECTION 7.3.
DEVELOPER’S INITIALS ____________
IN CONNECTION WITH THE WAIVERS OF THIS SECTION 7.3, THE
DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY
OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT
DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION WITH ANY SUIT FOR
SPECIFIC PERFORMANCE PERMITTED HEREUNDER IN THE EVENT DEVELOPER
ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER
SECTION 7.3.2.
7.3.2 SPECIFIC PERFORMANCE. THE DEVELOPER MAY WAIVE
THE REMEDIES SET FORTH IN SECTION 7.3 AND, IN ACCORDANCE WITH CIVIL
CODE SECTION 3384, ET SEQ.,INSTITUTE AN ACTION AGAINST THE CITY FOR
SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
WHICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO THE CLOSE OF
ESCROW.
7.4 Legal Actions.
7.4.1 Except as otherwise provided by Section 7.3, any Party may institute
legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain
any other remedy available to that Party under this Agreement or at law or in equity. Such legal
actions must be instituted in the Superior Court of the State of California in and for the County of
Orange, California, in any other appropriate court within the County of Orange, California.
7.4.2 The procedural and substantive laws of the State of California shall
govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws
principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully
performed in and relates to real property located in the City of San Juan Capistrano, County of
Orange, California.
7.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in
this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII are non-
exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies
shall not preclude the exercise by it, at the same or different times, of any other rights or remedies
for the same default or any other default by the other Party(ies). DRAFT
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7.6 City Power of Termination Regarding the Property.
7.6.1 The City hereby reserves a power of termination pursuant to Civil Code
Sections 885.010, et seq., exercisable by the City, in its sole and absolute discretion, upon thirty
(30) calendar days written notice to the Developer referencing this Section 7.6, to terminate the
fee interest of the Developer in the Property and/or any improvements to the Property and revest
such fee title in the City and take possession of all or any portion of such real property and
improvements, without compensation to the Developer, upon the occurrence of an Event of Default
by the Developer following the Close of Escrow and prior to the issuance of the Certificate of
Completion.
7.6.2 The thirty (30) calendar day written notice specified Section 7.6.1 shall
specify the Event of Default by the Developer triggering the City’s exercise of its power of
termination. The City shall proceed with its remedy set forth in Section 7.6.1 only if the Developer
continues in default for a period of sixty (60) calendar days following such notice or, upon
commencing to cure such default, fails to diligently and continuously prosecute said cure to
satisfactory conclusion.
7.6.3 The rights of the City under this Section 7.6 shall be subject and
subordinate to, shall be limited by and shall not defeat, render invalid or limit:
7.6.3.1 Each Lien recorded against the Property and specifically
authorized by this Agreement as a Permitted Transfer;
7.6.3.2 Any leases, declarations of covenants, conditions and
restrictions, easement agreements or other recorded documents or interests applicable to the
Property and specifically authorized by this Agreement as a Permitted Transfer.
7.6.4 Upon the City’s exercise of its power of termination pursuant to this
Section 7.6, the Developer or its successors or assigns shall convey by grant deed to the City title
to the Property, as specified in the City’s notice pursuant to Section 7.6.1, and all improvements
thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be
amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by
the Developer and a notary in a manner suitable for recordation. The City may enforce its rights
pursuant to this Section 7.6 by means of an injunctive relief or forfeiture of title action filed in any
court of competent jurisdiction.
7.6.5 Upon the revesting in the City of title to the Property, whether by grant
deed or court decree, the City shall exercise its reasonable good faith efforts to resell the Property
at its then fair market value, as soon and in such manner as the City shall, in its sole discretion,
find feasible and consistent with the objectives of the City’s General Plan, to a qualified and
responsible person or persons (as reasonably determined by the City) who will assume the
Developer’s obligations to begin and/or complete and/or operate that portion of the Project located
on the Property, or such other replacement development acceptable to the City, in its sole and
absolute discretion. Upon any such resale of the Property (or any portion thereof), the proceeds to
the City from such sale shall be applied as follows: DRAFT
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7.6.5.1 First, to pay any and all amounts required to release/reconvey any
Lien recorded against all or any portion of the Property; and
7.6.5.2 Second, to reimburse the City on its own behalf or on behalf of
the City for all actual internal and third-party costs and expenses previously or currently incurred
by the City related to the Property, the Project, or this Agreement, including, but not limited to,
customary and reasonable fees or salaries to third-party personnel engaged in such actions, in
connection with the recapture, management and resale of the Property or any part thereof; all taxes,
assessments and utility charges paid by the City with respect to the Property or portion thereof;
any payment made or necessary to be made to discharge or prevent from attaching or being made
any subsequent encumbrances or liens due to obligations incurred by the Developer with respect
to the acquisition of the Property or the construction of the Project; and amounts otherwise owing
to the City by the Developer or its successors or assigns pursuant to the terms of this Agreement;
and
7.6.5.3 Third, to the extent that any proceeds from such resale are,
thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse
the Developer, or its successors in interest to the equal to the sum of: (1) the Purchase Price; and
(2) the third-party costs actually incurred and paid by the Developer regarding the development of
the Project located on the Property, including, but not limited to, pro rata costs of carry, taxes, and
other items as set forth in a cost certification to be made by the Developer to the City prior to any
such reimbursement, which certification shall be subject to the City’s reasonable approval;
provided, however, that the Developer shall not be entitled to reimbursement for any expenses to
the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the
City pursuant to the provisions of sub-sections 7.6.5.1 or 7.6.5.2 above.
7.6.5.4 Any portion of the proceeds from the resale of the Property
remaining after the foregoing applications shall be retained by the City as their sole and exclusive
property.
7.6.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD
SPECIFIED IN SECTION 7.6.1, ABOVE, THE CITY, ITS EMPLOYEES AND AGENTS
SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY
AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR
COMPENSATION TO THE DEVELOPER. BY INITIALING BELOW, THE DEVELOPER
HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY
AND ALL RIGHTS THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL
CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162,
AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR
SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES
OF SIMILAR EFFECT.
DEVELOPER’S INITIALS ____________
7.6.7 THE DEVELOPER ACKNOWLEDGES AND AGREES THAT THE
CITY’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY
PURSUANT TO THIS SECTION 7.6 MAY WORK A FORFEITURE OF THE ESTATE IN THE DRAFT
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DEFAULTED PORTION OF THE PROPERTY CONVEYED TO THE DEVELOPER
THROUGH THE GRANT DEED. THE DEVELOPER HEREBY EXPRESSLY WAIVES, TO
THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL EQUITABLE AND
LEGAL DEFENSES THAT THE DEVELOPER MAY HAVE TO SUCH FORFEITURE,
INCLUDING, BUT NOT LIMITED TO, THE DEFENSES OF LACHES, WAIVER,
ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE
DEVELOPER FURTHER EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED
BY LAW, ANY AND ALL RIGHTS AND DEFENSES THAT THE DEVELOPER MAY HAVE
UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR
COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE DEVELOPER ACKNOWLEDGES
THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT REFLECT THE
POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE CITY’S POWER
OF TERMINATION PROVIDED IN THIS SECTION 7.6 AND FURTHER ACKNOWLEDGE
THAT IT HAS RECEIVED INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS
WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO
SECTION 7.6.6. AND THIS SECTION 7.6.7.
DEVELOPER’S INITIALS ____________
7.7 Developer Indemnification of the City. In addition to any other specific
indemnification or defense obligations of the Developer set forth in this Agreement, the Developer
agrees to indemnify, defend (upon written request by the City and with counsel reasonably
acceptable to the City and hold harmless the Indemnified Parties, from any and all losses,
liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and
expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the
Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or
nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole
or in part, through any act, omission, fault or negligence, whether active or passive, of the
Developer or the Developer’s officers, agents, employees, independent contractors or
subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by
the Developer related to this Agreement, the Property, or the Project, or any authority or obligation
exercised or undertaken by the Developer under this Agreement. Without limiting the generality
of the foregoing, the Developer’s obligation to indemnify the Indemnified Parties shall include
injury or death to any person or persons, damage to any property, regardless of where located,
including the property of the Indemnified Parties or their agents or employees or representatives,
any workers’ compensation or prevailing wage determination, claim or suit or any other matter
arising from or connected with any goods or materials provided or services or labor performed
regarding the Project or the Property on behalf of the Developer by any person or entity.
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ARTICLE VIII
GENERAL PROVISIONS.
8.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement
are true and correct and are incorporated into this Agreement in their entirety by this reference.
8.2 Restrictions on Transfers.
The Developer acknowledges that the qualifications and identity of the Developer are of particular
importance to the City. The Developer further recognizes and acknowledges that the City has
relied and is relying on the specific qualifications and identity of the Developer in entering into
this Agreement with the Developer and, as a consequence, Transfers are permitted only as
expressly provided in this Agreement. The Developer shall promptly notify the City in writing of
any and all changes whatsoever in the identity of the business entities or individuals either
comprising or in control of the Developer, as well as any and all changes in the interest or the
degree of control of the Developer by any such person, of which information the Developer or any
of its partners, members or officers are notified or may otherwise have knowledge or information.
8.2.1 Except as expressly permitted in this Agreement, the Developer
represents to the City that it has not made and agrees that it will not make or create, or suffer to be
made or created, any Transfer other than a Permitted Transfer. In deciding whether to approve or
disapprove any proposed Transfer, the City may consider the proposed transferee’s financial
strength and the experience of the proposed transferee and its senior management in undertaking
and successfully completing projects of a similar type and size as the Project or that portion of the
Project proposed to be transferred. Any Transfer made in contravention of this Section 8.2 shall
be voidable at the election of the City and this Agreement may be terminated by the City or the
City may exercise any other remedy available to the City under the terms of this Agreement,
provided, however, that (i) the City shall first notify the Developer in writing of its intention to
terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty
(20) calendar days following its receipt of such written notice to commence and, thereafter,
diligently and continuously proceed to cure the default of the Developer and submit evidence of
the initiation and satisfactory completion of such cure to the City, in a form and substance
reasonably satisfactory to the City.
8.2.2 The Developer shall provide the City no less than thirty (30) days prior
written notice of any proposed Permitted Transfer which the Developer desires to enter into prior
to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than
a Permitted Transfer for which no notice shall be required. The Developer shall have the burden
of demonstrating to the City’s reasonable satisfaction that the proposed Permitted Transfer meets
the conditions and requirements of this Agreement with respect to Permitted Transfers.
8.2.3 In connection with the City’s review of any request for approval of any
proposed Transfer under this Section 8.2, the Developer agrees to reimburse the City for those
third party costs and expenses incurred by the City in connection with its review of the Developer’s
request for approval, including, without implied limitation, the reasonable fees and costs of those DRAFT
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outside consultants and legal counsel retained by the City to assist it in its review of the
Developer’s request, including the City Attorney.
8.2.4 Anything in this Agreement to the contrary notwithstanding, the
restrictions and prohibitions on Transfers contained in this Section 8.2 shall terminate upon
issuance of a Certificate of Completion for the Project.
8.3 Notices, Demands and Communications Between the Parties.
8.3.1 Any and all notices, demands or communications submitted by any
Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing
and dispatched by messenger for immediate personal delivery, by a nationally recognized
overnight courier service or by registered or certified United States Mail, postage prepaid, return
receipt requested, to the principal office of the City or the Developer, as applicable, as designated
in Section 8.3.2. Such written notices, demands or communications may be sent in the same
manner to such other addresses as either Party may from time to time designate. Any such notice,
demand or communication shall be deemed to be received by the addressee, regardless of whether
or when any return receipt is received by the sender or the date set forth on such return receipt, on
the day that it is delivered by personal delivery, one (1) business day after it is deposited for
delivery with a nationally recognized overnight courier service or three (3) calendar days after it
is placed in the United States Mail, as provided in this Section 8.3.
8.3.2 The following are the authorized addresses for the submission of
notices, demands or communications to the Parties:
TO DEVELOPER: 26874 ORTEGA HIGHWAY LLC
31791 Los Rios Street
San Juan Capistrano, CA 92675
Attn: Dan Almquist
(T) 949-302-1389
Email: dan@frontierrei.com
REQUIRED COPY TO: Michael Burnett
7321 Veering Circle
Huntington Beach, CA 92648
Email: mwb@frontierrei.com
Rutan & Tucker, LLP
18575 Jamboree Road, 9th Floor
Irvine, CA 92612
Attention: John A. Ramirez
DRAFT
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TO CITY:
REQUIRED COPY TO:
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, California 92675
Attention: City Manager
(T) 949-493-1171
(F)
Best Best & Krieger, LLP
18101 Von Karman Ave, Suite 1000
Irvine, CA 92614
Attention: Elizabeth Wagner Hull
(T) 949-263-2600
(F) 949-260-0972
8.4 Conflict of Interest. No member, official or employee of the City, having any
conflict of interest, direct or indirect, related to this Agreement, the Property, or the development
or operation of the Project shall participate in any decision relating to this Agreement. The Parties
represent and warrant that they do not have knowledge of any such conflict of interest.
8.5 Warranty Against Payment of Consideration for Agreement. Each party
warrants to the other that it has not paid or given, and will not pay or give, any third party any
money or other consideration for obtaining this Agreement. Third parties, for the purposes of this
Section 8.5, shall not include persons to whom fees are paid for professional services, if rendered
by attorneys, financial consultants, accountants, engineers, architects and the like when such fees
are considered necessary by the Developer.
8.6 Non-liability of City, Officials and Employees. No member, official or employee
of the City shall be personally liable to the Developer, or any successor in interest of the Developer,
in the event of any default or breach by the City under this Agreement or for any amount that may
become due to the Developer or to its successor, or on any obligations under the terms of this
Agreement, except as may arise from the gross negligence or willful acts of such member, official
or employee.
8.7 Unavoidable Delay; Extension of Time of Performance.
8.7.1 Subject to specific provisions of this Agreement, performance by any
Party under this Agreement shall not be deemed, or considered to be, in default where any such
default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an
extension of time to perform. An extension of time for any Unavoidable Delay shall be for the
period of the Unavoidable Delay and shall commence to run from the date of occurrence of the
Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the
other Parties with written notice of the occurrence of the Unavoidable Delay, within ten (10)
business days of the noticing Party becoming aware of such asserted Unavoidable Delay.
Otherwise, the extension of time for an Unavoidable Delay shall commence on the date of receipt
of written notice of the occurrence of the Unavoidable Delay by the Parties not requesting an
extension of time to perform due to such Unavoidable Delay. DRAFT
61147.20021\32812677.5
-50-
8.7.2 The Parties expressly acknowledge and agree that changes in either
general economic conditions or changes in the economic assumptions of either of them that may
have provided a basis for entering into this Agreement and that occur at any time after the
execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party
with grounds for asserting the existence of an Unavoidable Delay in the performance of any
covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that
changes in general economic conditions or changes in such economic assumptions relating to the
terms and covenants of this Agreement could impose an inconvenience or hardship on the
continued performance of such Party under this Agreement.
8.8 Binding on Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective heirs, executors, administrators, legal
representatives, successors, and assigns.
8.9 Entire Agreement.
8.9.1 This Agreement shall be executed in three (3) duplicate originals, each
of which shall be deemed to be an original, but all of which together shall constitute one and the
same instrument. This Agreement includes pages (exclusive of signature pages)
and exhibits, that constitute the entire understanding and agreement of the
Parties regarding the Property, the Project, and the other subjects addressed in this Agreement.
8.9.2 This Agreement integrates all of the terms and conditions mentioned in
this Agreement or incidental to this Agreement, and supersedes all negotiations or previous
agreements between the Parties with respect to the Property, the Project, and the other subjects
addressed in this Agreement.
8.9.3 None of the terms, covenants, agreements or conditions set forth in this
Agreement shall be deemed to be merged with any deed conveying title to the Property and this
Agreement shall continue in full force and effect before and after such conveyances.
8.9.4 All waivers of the provisions of this Agreement and all amendments to
this Agreement must be in writing and signed by the authorized representative(s) of all Parties.
8.10 Execution of this Agreement. Following execution of three (3) originals of this
Agreement by the authorized representative(s) of the Developer and delivery of such originals
prior to consideration by the City Council, to the City, accompanied by an official action of the
governing body of the Developer authorizing the individuals executing this Agreement on behalf
of the Developer to execute and perform this Agreement, in form and substance acceptable to the
City, this Agreement shall be subject to the review and approval by the City Council, in their sole
and absolute discretion, no later than forty-five (45) calendar days after such date of delivery to
the City. If the City have not approved, executed, and delivered an original of this Agreement to
the Developer within the foregoing time period, then no provision of this Agreement shall be of
any force or effect for any purpose. DRAFT
61147.20021\32812677.5
-51-
8.11 Survival of Indemnity Obligations. All general and specific indemnity and
defense obligations of the Parties set forth in this Agreement shall survive the expiration or
termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance
and recordation of any Certificate of Completion.
8.12 Time Declared to be of the Essence. As to the performance of any obligation
hereunder as to which time is a component thereof, the performance of such obligation within the
time provided is of the essence.
[Signatures on Following Pages] DRAFT
61147.20021\32812677.5
SIGNATURE PAGE
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property)
CITY:
THE CITY OF SAN JUAN CAPISTRANO
a California municipal corporation
Dated:_________________, 2022 By:
City Manager
ATTEST:
____________________________
City Clerk
APPROVED AS TO LEGAL FORM:
BEST BEST & KRIEGER LLP
By: _______________________
City Attorney DRAFT
61147.20021\32812677.5
SIGNATURE PAGE
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Downtown Properties)
(Playhouse PropertyProperty)
DEVELOPER:
26874 ORTEGA HIGHWAY LLC, a California
limited liability company
Dated:_____________________ By:
Dan M. Almquist, Manager
DRAFT
61147.20021\32812677.5
EXHIBIT A
EXHIBIT A
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Downtown Properties)
(Playhouse PropertyProperty)
Legal Description of the Property
The land situated in the City of San Juan Capistrano, County of Orange, State of California,
described as follows:
PARCEL 7:
THE NORTHERLY 75.00 FEET OF THE SOUTHERLY 94.00 FEET OF LOT 3 IN BLOCK
10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3,
PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY,
CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID
LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF
ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS.
APN: 124-160-55
DRAFT
61147.20021\32812677.5
EXHIBIT B
EXHIBIT B
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property)
Scope of Development
Developer to construct the project substantially in conformance with the El Camino Specific Plan
project plans and specifications approved by the City Council on October 4, 2022. The project
includes an approximately 27,457 square foot retail, restaurant, and office building, and an
approximately 196 space, four-story parking structure with approximately 2,600 square feet of
retail space.
Approved Project Plans and Specifications are available at the City Clerk’s Office incorporated by
reference. DRAFT
61147.20021\32812677.5
EXHIBIT C
EXHIBIT C
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property)
Schedule of Performance
Action Date Action to be
Completed By
1. Effective Date See Section 1.3
2. Developer to open Escrow and, concurrently, deposit Earnest
Money Deposit into Escrow
Within 5 days
following the
Effective Date
3. Due Diligence Period commences The date of the
Escrow Opening
Date
4. N/A
5. Developer to deliver Developer’s Title Notice to Agency Within 30 days
following date of
the Escrow
Opening Date
6. City to deliver City’s Title Notice Response to Developer, if
appropriate
Within 20 days
following City’s
Receipt of
Developer’s Title
Notice
7. Developer to deliver Developer’s Title Notice Waiver, if
appropriate
Within 10 days
following
Developer’s receipt
of City’s Title
Notice Response
8. Developer to deliver its Due Diligence Investigation Conclusion
Notice
On or before the
end of the Due
Diligence Period
9.
Due Diligence Period ends On the 30th day
following the
Escrow Opening
Date DRAFT
61147.20021\32812677.5
EXHIBIT C
Action Date Action to be
Completed By
15. Escrow Closing Date 10 business days
after Escrow
Holder’s receipt of
confirmation from
the City and the
Developer of the
satisfaction or
waiver of all
conditions
precedent to the
close of escrow or
30 days from end
of due diligence
period.
Notwithstanding
the foregoing, no
later than 12/31/22.
16. Developer to commence construction of the Project; Developer
to transmit Project Commencement Notice to City
No later than the
3rd anniversary of
the Close of
Escrow
17. Developer to complete construction and installation of the
Project (issuance of Certificate of Completion for the entire
Project by the City)
No later than the 5th
anniversary of the
Close of Escrow
DRAFT
61147.20021\32812677.5
EXHIBIT D
EXHIBIT D
TO 2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property)
Form of Grant Deed
[Attached Behind This Page]
DRAFT
61147.20021\32812677.5
EXHIBIT D
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
_____________
THE CITY OF SAN JUAN CAPISTRANO
GRANT DEED
PART ONE
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
THE CITY OF SAN JUAN CAPISTRANO, a California municipal corporation
(“Grantor” or “City”),
hereby grants to
26874 ORTEGA HIGHWAY LLC, a California limited liability company (“Grantee”),
that certain real property located in the City of San Juan Capistrano, County of Orange,
State of California, specifically described in Exhibit “A” attached to this Grant Deed (“Property”)
and made a part of this Grant Deed by this reference.
PART TWO
The conveyance of the Property by the Grantor to the Grantee in Part One is subject to the
following community development terms, conditions, covenants and restrictions:
Section 1. Conveyance Subject to Terms of a Disposition and Development
Agreement. The Property is conveyed subject to that certain 2022 Disposition and Development
Agreement) (Playhouse Property), dated as of _______, 2022, between the Grantor and the
Grantee (the “Agreement”). The provisions of the Agreement are incorporated into this Grant
Deed by this reference and are deemed to be a part of this Grant Deed, as though fully set forth in
this Grant Deed.
Section 2. Condition of Property. The Grantee acknowledges and agrees that the
Property is conveyed by the Grantor to the Grantee in its “AS IS,” “WHERE IS” and “SUBJECT
TO ALL FAULTS CONDITION,” as of the date of recordation of this Grant Deed, with no
warranties, expressed or implied, as to the environmental or other physical condition of the
Property, the presence or absence of any patent or latent environmental or other physical condition
on or in the Property, or any other matters affecting the Property, except as expressly set forth in
the Agreement.
Section 3. Obligation to Refrain from Discrimination. The Grantee for itself, its
successors and assigns to all or any part or portion of the Property and/or Project, covenants and
agrees that: DRAFT
61147.20021\32812677.5
EXHIBIT D
3.1 There shall be no discrimination against or segregation of any person, or
group of persons, on account of sex, marital status, race, color, religion, creed, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property
nor shall the Grantee, itself or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property.
The covenant of this Section 3 shall run with the land of the Property and shall be enforceable
against the Grantee and its successors and assigns in perpetuity and be a covenant in the Grant
Deed and the Notice of Agreement.
3.2 The covenant of this Section 3 shall run with the land of the Property in
perpetuity, shall be enforceable against the Grantee and its successors and assigns, and shall be
covenants set forth in the Grant Deed.
Section 4. Form of Non-Discrimination and Non-Segregation Clauses. The Grantee
for itself, its successors and assigns to all or any part or portion of the Property and/or Project,
covenants and agrees that:
4.1 The Grantee, such successors and such assigns shall refrain from restricting
the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or
any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or
national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain
or be subject to substantially the following non-discrimination or non-segregation covenants:
(a) In deeds: “The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race, color,
creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The
foregoing covenants shall run with the land.”
(b) In leases: “The Lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is made and
accepted upon and subject to the following conditions: That there shall be no discrimination
against or segregation of any person or group of persons, on account of race, color, creed, religion,
sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use,
occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or occupancy,
of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.”
(c) In contracts: “There shall be no discrimination against or
segregation of any person or group of persons on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or DRAFT
61147.20021\32812677.5
EXHIBIT D
enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person
claiming under or through it, establish or permit any such practice or practices of discrimination
or segregation with reference to the selection, location, number, use, or occupancy, of tenants,
lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing
provision shall be binding upon and shall obligate the contracting party or parties and any
subcontracting party or parties, or other transferees under the instrument.
4.2 The covenants of this Section 4 shall run with the land of the Property in
perpetuity.
Section 5. 5.1 Covenant to Maintain Property on Tax Rolls. The
Developer for itself, its successors and assigns to all or any part or portion of the Property and/or
Project, covenants and agrees that:
5.1.1 The entire Property shall remain on the County secured real property tax rolls for
twenty (20) years from the date of issuance of a Certificate of Completion for the Project.
5.1.2 The Developer shall pay all property tax bills with respect to the Property and all
improvements thereon on or before the last day for the timely payment of each property
tax installment on each December 10 and April 10 during such time period and to timely
pay all supplemental tax bills regarding the Property issued by the County. The Developer
further covenants and agrees to provide to the City, on or before July 31 of each year,
commencing in the calendar year following the calendar year in which a Certificate of
Completion is recorded and in each calendar year, thereafter, for the full term of this
covenant: (i) a true and correct copy of all property tax assessment notices, property tax
bills and property tax assessment correspondence by and between the Developer and the
County regarding the Property and all improvements thereon, with respect to the preceding
fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of
all property tax payments that are made to the County regarding the Property and all
improvements thereon (or other reasonably acceptable evidence of such payment), with
respect to the preceding County fiscal year.
The covenants of this Section 5.1 shall run with the land of the Property, shall be
enforceable against the Developer and its successors and assigns, and shall be covenants
set forth in the Grant Deed.
5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors and
assigns to all or any part or portion of the Property and/or Project, covenants and agrees
that:
5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease,
leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing
to any entity or person, or for any use of the Property, the Project, or any portion of any of
the foregoing, that is partially or wholly exempt from the payment of real or personal
property taxes or that would cause the exemption of the payment of all or any portion of
real or personal property taxes otherwise assessable regarding the Property, the Project, or
any portion of any of the foregoing, without the prior written consent of the City, which DRAFT
61147.20021\32812677.5
EXHIBIT D
may be withheld in the City’s sole and absolute discretion for a period of 20 years from the
date of issuance of the certificate of completion for the Project by the City.
5.2.2 If the Property, or any portion of the Property, shall be conveyed, transferred or
sold to any entity or person that is partially or wholly exempt from the payment of real or
personal property taxes otherwise assessable against the Property, or any portion thereof,
without the prior written consent of the City, then, at the City’s election and in addition to
all other remedies available to the City under this Agreement or at law or in equity, the
Developer shall pay to the City a fee in lieu of payment of such taxes each year in an
amount determined by the City to be one percent (1%) of the “full cash value” of the
Property, or portion thereof, as may be subject to such exemption from payment of real or
personal property taxes. The City’s determination of “full cash value” for in-lieu payment
purposes under this Section 5.2.2 shall be established by the City each year, if necessary,
by reference to the real or personal property tax valuation principles and practices generally
applicable to a county property tax assessor under Section 1 of Article XIIIA of the
California Constitution. The City’s determination of “full cash value” and that an in-lieu
payment is due shall be conclusive on such matters. If the City determines that an amount
is payable as an in-lieu payment under this Section 5.2.2 in any tax year, then such amount
shall be paid to the City for that tax year within forty-five (45) days following transmittal
by the City to the Developer of an invoice for payment of the in-lieu amount.
The covenants of this Section 5.2 shall run with the land of the Property, shall be
enforceable against the Developer and its successors and assigns, and shall be covenants
set forth in the Grant Deed.
5.3 Maintenance Condition of the Property. The Developer for itself, its successors and
assigns to all or any part or portion of the Property and/or Project, covenants and agrees
that:
5.3.1 The areas of the Property that are subject to public view (including all existing and
future improvements, paving, walkways, landscaping, exterior signage and ornamentation)
shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear
and tear excepted. If there is an occurrence of an adverse condition on any area of the
Property that is subject to public view in contravention of the general maintenance standard
described above (a “Maintenance Deficiency”), then the City shall notify the Developer in
writing of the Maintenance Deficiency. If the Developer fails to cure or commence and
diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt
of notice of the Maintenance Deficiency, the City shall have the right to enter the Property
and perform all acts necessary to cure the Maintenance Deficiency, or to take any other
action at law or in equity that may then be available to the City to accomplish the abatement
of the Maintenance Deficiency. Any sum expended by the City for the abatement of a
Maintenance Deficiency on the Property pursuant to this Section 5.3.1 shall become a lien
on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days
after written demand for payment from the City to the Developer, the City shall have the
right to enforce the lien in the manner provided in Section 5.3.4. DRAFT
61147.20021\32812677.5
EXHIBIT D
5.3.2 Graffiti, as this term is defined in Government Code Section 38772, that has been
applied to any exterior surface of a structure or improvement on the Property that is visible
from any public right-of-way adjacent or contiguous to the Property, shall be removed by
the Developer by either painting over the evidence of such vandalism with a paint that has
been color-matched to the surface on which the paint is applied, or graffiti may be removed
with solvents, detergents or water, as appropriate. If any such graffiti is not removed within
ninety-six (96) hours following the time of the discovery of the graffiti, the City shall have
the right to enter the Property and remove the graffiti, without notice to the Developer.
Any sum reasonably expended by the City for the removal of graffiti from the Property
pursuant to this Section 5.3.2, shall be a lien on the Property. If the amount of the lien is
not paid within thirty (30) days after written demand to the Developer from the City, the
City shall have the right to enforce its lien in the manner provided in Section 5.3.4.
5.3.3 The Parties further mutually understand and agree that the rights conferred upon
the City under this Section 5.3 expressly include a grant by the Developer of a security
interest in the Property with the power to establish and enforce a lien or other encumbrance
against the Property or any portion thereof, in the manner provided under Civil Code
Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it
successors under Section 5.3.1, 5.3.2 or Section 5.3.3, including the reasonable attorneys’
fees and costs of the City associated with the abatement of a Maintenance Deficiency or
removal of graffiti. For the purposes of the preceding sentence the words “reasonable
attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of
the City Attorney and the lawyers employed in the Office of the City Attorney.
5.3.4 The provisions of this Section 5.3, shall be a covenant running with the land of the Property,
shall be enforceable against the Developer and its successors and assigns, and shall be covenants
set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.3 shall be deemed
to preclude the Developer from making any alteration, addition, or other change to any structure
or improvement or landscaping on the Property, provided that any such changes comply with
applicable zoning and building regulations of the City. Section 8 Grantor Power of
Termination Regarding the Property.
8.1 The Grantor hereby reserves a power of termination pursuant to Civil Code
Sections 885.010, et seq., exercisable by the Grantor, in its sole and absolute discretion, upon thirty
(30) calendar days written notice to the Grantee referencing this Section 8.1, to terminate the fee
interest of the Grantee in the Property and/or any improvements to the Property and revest such
fee title in the Grantor and take possession of all or any portion of such real property and
improvements, without compensation to the Grantee, upon the occurrence of an Event of Default
by the Grantee following the Close of Escrow and prior to the issuance of the Certificate of
Completion for Property.
8.2 The thirty (30) calendar day written notice specified Section 8.1 shall
specify the Event of Default by the Grantee triggering the Grantor’s exercise of its power of
termination. The Grantor shall proceed with its remedy set forth in Section 8.1 only if the Grantee
continues in default for a period of sixty (60) calendar days following such notice or, upon
commencing to cure such default, fails to diligently and continuously prosecute said cure to
satisfactory conclusion. DRAFT
61147.20021\32812677.5
EXHIBIT D
8.3 The rights of the Grantor under this Section 8 shall be subject and
subordinate to, shall be limited by and shall not defeat, render invalid or limit:
(1) Each Lien recorded against the Property and specifically authorized
by this Agreement as a Permitted Transfer;
(2) Any leases, declarations of covenants, conditions and restrictions,
easement agreements or other recorded documents or interests
applicable to the Property and specifically authorized by this
Agreement as a Permitted Transfer.
8.4 Upon the Grantor’s exercise of its power of termination pursuant to this
Section 8, the Grantee or its successors or assigns shall convey by grant deed to the Grantor title
to the Property, as specified in the Grantor’s notice pursuant to Section 8.1, and all improvements
thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be
amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by
the Grantee and a notary in a manner suitable for recordation. The Grantor may enforce its rights
pursuant to this Section 8.4 by means of an injunctive relief or forfeiture of title action filed in any
court of competent jurisdiction.
8.5 Upon the revesting in the Grantor of the Property, whether by grant deed or
court decree, the Grantor shall exercise its reasonable good faith efforts to resell the Property at its
then fair market value, as soon and in such manner as the Grantor shall, in its sole discretion, find
feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible
person or persons (as reasonably determined by the Grantor) who will assume the Grantee’s
obligations to begin and/or complete and/or operate the Project located on the Property, or such
other replacement development acceptable to the Grantor, in its sole and absolute discretion. Upon
any such resale of the Defaulted Portion of the Property (or any portion thereof), the proceeds to
the Grantor from such sale shall be applied as follows:
(1) First, to pay any and all amounts required to release/reconvey any
Lien recorded against all or any portion of the Property; and
(2) Second, to reimburse the Grantor on its own behalf or on behalf of
the City for all actual internal and third-party costs and expenses
previously or currently incurred by the Grantor, or the City related
to the Property, the Project, or this Agreement, including, but not
limited to, customary and reasonable fees or salaries to third-party
personnel engaged in such actions, in connection with the recapture,
management and resale of the Property or any part thereof; all taxes,
assessments and utility charges paid by the City and/or the Grantor
or authority with respect to the Property or portion thereof; any
payment made or necessary to be made to discharge or prevent from
attaching or being made any subsequent encumbrances or liens due
to obligations incurred by the Grantee with respect to the acquisition
of the Property or the construction of the Project and amounts DRAFT
61147.20021\32812677.5
EXHIBIT D
otherwise owing to the Grantor or authority by the Grantee or its
successors or assigns pursuant to the terms of this Agreement; and
(3) Third, to the extent that any proceeds from such resale are, thereafter, available, taking into
account any prior encumbrances with a claim thereto, to reimburse the Grantee, or its successors
in interest to the equal to the sum of: (1) Purchase Price; and (2) the third-party costs actually
incurred and paid by the Grantee regarding the development of the Project, including, but not
limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be
made by the Grantee to the Grantor prior to any such reimbursement, which certification shall be
subject to the Grantor’s reasonable approval; provided, however, that the Grantee shall not be
entitled to reimbursement for any expenses to the extent that such expenses relate to any loans,
Liens or other encumbrances that are paid by the Grantor pursuant to the provisions of sub-sections
(1) or (2) above.
(4) Any portion of the proceeds from the resale of the Property remaining after the foregoing
applications shall be retained by the Grantor as its sole and exclusive property.
8.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD
SPECIFIED IN SECTION 8.1, ABOVE, THE GRANTOR, ITS EMPLOYEES AND AGENTS
SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY
AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR
COMPENSATION TO THE GRANTEE. BY INITIALING BELOW, THE GRANTEE
HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY
AND ALL RIGHTS THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL
CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162,
AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR
SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES
OF SIMILAR EFFECT.
GRANTEE’S INITIALS ____________
8.7 THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE
GRANTOR’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY
PURSUANT TO THIS SECTION 8.7 MAY WORK A FORFEITURE OF THE ESTATE IN THE
PROPERTY CONVEYED TO THE GRANTEE THROUGH THE GRANT DEED. THE
GRANTEE HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY
LAW, ANY AND ALL EQUITABLE AND LEGAL DEFENSES THAT THE GRANTEE MAY
HAVE TO SUCH FORFEITURE, INCLUDING, BUT NOT LIMITED TO, THE DEFENSES
OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR
COMPENSABLE DAMAGES. THE GRANTEE FURTHER EXPRESSLY WAIVES, TO THE
MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS AND DEFENSES
THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275
OR ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE
GRANTEE ACKNOWLEDGES THAT THE TERMS AND CONDITIONS OF THE
AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE
EXERCISE OF THE GRANTOR’S POWER OF TERMINATION PROVIDED IN THIS
SECTION 8.7 AND FURTHER ACKNOWLEDGE THAT IT HAS RECEIVED DRAFT
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EXHIBIT D
INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS WAIVER AND
RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 8.6 AND
THIS SECTION 8.7.
GRANTEE’S INITIALS ____________
PART THREE
Section 9. Developer Covenant to Undertake Project. The Developer covenants, for
itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer
shall commence and complete the development of the Project on the Property within the time
period for such actions set forth in the Schedule of Performance. The Developer covenants and
agrees for itself, its successors, and assigns, that the Property shall be improved and developed
with the Project in substantial conformity with the terms and conditions of this Agreement, the
Scope of Development, the Schedule of Performance, any and all plans, specifications and similar
development documents required by this Agreement, except for such changes as may be mutually
agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and
conditions of each Governmental Agency with jurisdiction over the Property or the Project. The
covenants of this Section 9 shall run with the land of the Property until the earlier of the date of
recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the
Close of Escrow.
Section 10. Covenants Run with the Land of the Property. Each of the covenants and
agreements contained in this Grant Deed touch and concern the Property and each of them is
expressly declared to be a community development covenant that runs with the land for the benefit
of the Grantor or the City of San Juan Capistrano, as the successor public agency to the Grantor,
and such covenants run with the land in favor of the Grantor for the entire period that such
covenants are in full force and effect, regardless of whether the Grantor is or remains an owner of
any land or interest in land to which such covenants relate. The Grantor, in the event of any breach
of any such covenants, has the right to exercise all of the rights and remedies, and to maintain any
actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach,
as provided in the Agreement or by law. The covenants contained in this Grant Deed are for the
benefit of and are enforceable only by the Grantor or the City of San Juan Capistrano, as the
successor public agency to the Grantor, and shall survive the execution and recordation of this
Grantor Deed and the issuance and recordation of each and every Certificate of Completion, for
the time period set forth above for each covenant.
Section 11. Costs and Attorneys’ Fees for Enforcement Proceeding. If legal
proceedings are initiated to enforce the rights, duties or obligations of any of the covenants set
forth in this Grant Deed, then the prevailing party in such proceeding shall be entitled to collect its
reasonable attorney fees and costs from the other party in addition to any other damages or relief
obtained in such proceedings.
Section 12. Effect of Unlawful Provision; Severability. In the event that any provision
of this Grant Deed is held to be invalid or unlawful by a final judgment of a court of competent
jurisdiction, such invalidity shall not affect the validity of any other provision of this Grant Deed. DRAFT
61147.20021\32812677.5
EXHIBIT D
IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be executed by its
authorized representative(s) on this ____ day of _____________, 2022.
GRANTOR:
THE CITY OF SAN JUAN CAPISTRANO
a California municipal corporation
By: ___________________________
City Manager
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT
61147.20021\32812677.5
EXHIBIT D
EXHIBIT A
TO
GRANT DEED
Property Legal Description
The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as
follows:
PARCEL 7:
THE NORTHERLY 75.00 FEET OF THE SOUTHERLY 94.00 FEET OF LOT 3 IN BLOCK
10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3,
PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY,
CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID
LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF
ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS.
APN: 124-160-55
DRAFT
61147.20021\32812677.5
EXHIBIT D
CERTIFICATE OF ACCEPTANCE OF
GRANT DEED
The undersigned hereby acknowledges acceptance by 26874 Ortega Highway, LLC, a
California limited liability company, the Grantee in the within Grant Deed, of the delivery of the
subject Property described in the within Grant Deed from the City of San Juan Capistrano.
GRANTEE:
26874 Ortega Highway LLC, a California limited
liability company
Dated: _____________________ By: _________________________
Dan M. Almquist, Manager
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT
61147.20021\32812677.5
EXHIBIT E
EXHIBIT E
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Playhouse Property)
Form of Notice of Agreement
[Attached Behind This Page] DRAFT
61147.20021\32812677.5
EXHIBIT F
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
The City of San Juan Capistrano
32400 Paseo Adelanto.
San Juan Capistrano, California 92675
Attn: City Manager
Exempt from Recording fee
pursuant to Gov’t Code § 27383
NOTICE OF AGREEMENT
2022 Disposition and Development Agreement
(Playhouse Property)
TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that 26874 Ortega
Highway, LLC, a California limited liability company (the “Developer”) and the City of San Juan
Capistrano, a California municipal corporation (the “City”) entered into an agreement entitled
2022 Disposition and Development Agreement (Playhouse Property), dated as of ______, 2022
(the “Agreement”). A copy of the Agreement is on file with the City and is available for
inspection and copying by interested persons as a public record of the City at the City’s offices
located at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, during the City’s regular
business hours.
The Agreement affects the real property described in Exhibit A attached to this Notice of
Agreement (the “Property”). The meaning of defined terms, indicated by initial capitalization,
used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the
Agreement.
PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development
covenants running with the land of the Property and other agreements between the Developer and
the City affecting the Property, as set forth below (all section references are to the Agreement):
Section 4.1 of the Agreement provides:
4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself,
its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall
commence and complete the development of the Project on the Property within the time period for
such actions set forth in the Schedule of Performance. The Developer covenants and agrees for
itself, its successors, and assigns, that the Property shall be improved and developed with the
Project in substantial conformity with the terms and conditions of this Agreement, the Scope of
Development, the Schedule of Performance, any and all plans, specifications and similar
development documents required by this Agreement, except for such changes as may be mutually
agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and
conditions of each Governmental Agency with jurisdiction over the Property or the Project. The
covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of DRAFT
61147.20021\32812677.5
EXHIBIT F
recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the
Close of Escrow.
Section 5.1 of the Agreement provides:
5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its
successors and assigns to all or any part or portion of the Property and/or Project, covenants and
agrees that:
5.1.1 The entire Property shall remain on the County secured real property tax rolls for
twenty (20) years from the date of issuance of a Certificate of Completion for the Project. the full
term of this Agreement.
5.1.2 The Developer shall pay all property tax bills with respect to the Property and all
improvements thereon on or before the last day for the timely payment of each property tax
installment on each December 10 and April 10 during such time period and to timely pay all
supplemental tax bills regarding the Property issued by the County. The Developer further
covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the
calendar year following the calendar year in which a Certificate of Completion is recorded and in
each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all
property tax assessment notices, property tax bills and property tax assessment correspondence by
and between the Developer and the County regarding the Property and all improvements thereon,
with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the
Developer in payment of all property tax payments that are made to the County regarding the
Property and all improvements thereon (or other reasonably acceptable evidence of such payment),
with respect to the preceding County fiscal year.
5.1.3 The covenants of this Section 5.1 shall run with the land of the Property, shall be
enforceable against the Developer and its successors and assigns, and shall be covenants set forth
in the Grant Deed.
Section 5.2 of the Agreement provides:
5.2 No Conveyance to Tax Exempt Entity. The Developer for itself, its successors
and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease,
leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any
entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing,
that is partially or wholly exempt from the payment of real or personal property taxes or that would
cause the exemption of the payment of all or any portion of real or personal property taxes
otherwise assessable regarding the Property, the Project, or any portion of any of the foregoing,
without the prior written consent of the City, which may be withheld in the City’s sole and absolute
discretion for a period of twenty (20) years from the date of issuance of the certificate of
completion for the Project by the City.
Section 5.3 of the Agreement provides: DRAFT
61147.20021\32812677.5
EXHIBIT F
5.3 Payment in Lieu of Sales Tax.
5.3.1 Developer and City anticipate that Developer shall be open for business and
generating sales tax collected pursuant to the Bradley-Burns Uniform Local Sales and Use Tax
Law (Revenue and Taxation Code Section 7200, et seq.) (“Sales Tax Law”) in the City by
____________. Developer has anticipated that Developer will generate approximately $____ per
quarter in Sales Tax received by City (“City Sales Tax”). If Developer has not commenced
generating sales tax received by the City by _____________, Developer, its successors or assigns
shall pay to the City, in lieu of payment of such taxes, the City Sales Tax amount per quarter until
such time as City is receiving sales tax from the Project. If the City determines that the City Sales
Tax amount is payable by Developer to the City as an in-lieu payment pursuant to this Section in
any quarter, then such amount shall be paid to the City for that quarter within fifteen (15) days
following transmittal by the City to the Developer of an invoice for payment of the City Sales Tax
in-lieu amount.
5.3.2 If Developer is not open for business and generating sales tax pursuant to the Sales
Tax Law by _____________, Developer shall be in Default under this Agreement.
5.3.3 The covenants of this Section 5.3 shall run with the land of the Property and shall
be enforceable against the Developer and its successors and assigns.
Section 5.4 of the Agreement provides:
5.4 Maintenance Condition of the Property. The Developer for itself, its successors
and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.4.1 The areas of the Property that are subject to public view (including all existing and
future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall
be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear
excepted. If there is an occurrence of an adverse condition on any area of the Property that is
subject to public view in contravention of the general maintenance standard described above (a
“Maintenance Deficiency”), then the City shall notify the Developer in writing of the Maintenance
Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the
Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance
Deficiency, the City shall have the right to enter the Property and perform all acts necessary to
cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be
available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum
expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to
this Section 5.4.1 shall become a lien on the Property, as applicable. If the amount of the lien is
not paid within thirty (30) days after written demand for payment from the City to the Developer,
the City shall have the right to enforce the lien in the manner provided in Section 5.4.4.
5.4.2 Graffiti, as this term is defined in Government Code Section 38772, that has been
applied to any exterior surface of a structure or improvement on the Property that is visible from
any public right-of-way adjacent or contiguous to the Property, shall be removed by the Developer
by either painting over the evidence of such vandalism with a paint that has been color-matched
to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents DRAFT
61147.20021\32812677.5
EXHIBIT F
or water, as appropriate. If any such graffiti is not removed within ninety-six (96) hours following
the time of the discovery of the graffiti, the City shall have the right to enter the Property and
remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City
for the removal of graffiti from the Property pursuant to this Section 5.4.2, shall be a lien on the
Property. If the amount of the lien is not paid within thirty (30) days after written demand to the
Developer from the City, the City shall have the right to enforce its lien in the manner provided in
Section 5.4.4.
The Parties further mutually understand and agree that the rights conferred upon the City
under this Section 5.4 expressly include a grant by the Developer of a security interest in the
Property with the power to establish and enforce a lien or other encumbrance against the Property
or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c,
to secure the obligations of the Developer and it successors under Section 5.4.1, 5.4.2 or Section
5.4.3, including the reasonable attorneys’ fees and costs of the City associated with the abatement
of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence
the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits
and costs of the City Attorney and the lawyers employed in the Office of the City Attorney.
5.4.5 The provisions of this Section 5.4, shall be a covenant running with the land of the
Property, shall be enforceable against the Developer and its successors and assigns, and shall be
covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.4 shall
be deemed to preclude the Developer from making any alteration, addition, or other change to any
structure or improvement or landscaping on the Property, provided that any such changes comply
with applicable zoning and building regulations of the City.
Section 5.5 of the Agreement provides:
5.5 Obligation to Refrain from Discrimination. The Developer for itself, its
successors and assigns to all or any part or portion of the Property and/or Project, covenants and
agrees that:
5.5.1 There shall be no discrimination against or segregation of any person, or group of
persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall
the Developer, itself or any person claiming under or through it, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property.
The covenant of this Section 5.5 shall run with the land of the Property and shall be enforceable
against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant
Deed and the Notice of Agreement.
5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in
perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be
covenants set forth in the Grant Deed. DRAFT
61147.20021\32812677.5
EXHIBIT F
This NOTICE OF AGREEMENT is dated as of _________________, 2022, and has been
executed on behalf of the Developer and the City by and through the signatures of their authorized
representative(s) set forth below. This Notice of Agreement may be executed in counterparts and
when fully executed each counterpart shall be deemed to be one original instrument.
CITY:
THE CITY OF SAN JUAN CAPISTRANO
a California municipal corporation
Dated: _________________, 2022 By: _______________________________
City Manager
ATTEST:
____________________________
City Clerk
APPROVED AS TO LEGAL FORM:
BEST BEST & KRIEGER LLP
By: _______________________
City Attorney DRAFT
61147.20021\32812677.5
EXHIBIT F
DEVELOPER:
26874 ORTEGA HIGHWAY, LLC, a California
limited liability company
Dated: _____________________ By: _________________________
Dan Almquist, Manager
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED] DRAFT
61147.20021\32812677.5
EXHIBIT F
EXHIBIT A
TO
NOTICE OF AGREEMENT
Legal Description of Property
The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows:
PARCEL 7:
THE NORTHERLY 75.00 FEET OF THE SOUTHERLY 94.00 FEET OF LOT 3 IN BLOCK
10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3,
PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY,
CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID
LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF
ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS.
APN: 124-160-55
EXHIBIT F
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
(Downtown Properties)
Form of Official Action of Developer
CERTIFICATION OF LLC AUTHORITY
The undersigned members of 26874 Ortega Highway LLC, a California limited liability
company (the “LLC”), do certify that we are all of the members of the LLC and that there are no
other members.
We further certify that any one (1) of the following named persons, individually:
DAN M. ALMQUIST
be, and they are, authorized and empowered for and on behalf of and in the name of the
LLC to execute and deliver that certain 2022 Disposition and Development Agreement
(Downtown Properties) (Playhouse Property), dated ______, 2022, between the City of San Juan
Capistrano, a California municipal corporation, (“City”) and the LLC (the “Agreement”), to
purchase certain real property located in the City of San Juan Capistrano, California, as specifically
described in the Agreement, and all other documents to be executed by the LLC in connection with
the transactions contemplated in the Agreement, and to take all actions that may be considered DRAFT
61147.20021\32812677.5
EXHIBIT F
necessary to conclude the transactions contemplated in the Agreement and perform the other
obligations of the LLC pursuant to the Agreement.
The authority conferred shall be considered retroactive, and any and all acts authorized in
this document that were performed before the execution of this Certificate are approved and
ratified. The authority conferred shall continue in full force and effect until the City of San Juan
Capistrano, a California municipal corporation shall have received notice in writing from the LLC
of the revocation of this Certificate.
We further certify that the activities covered by the foregoing certifications constitute duly
authorized activities of the LLC; that these certifications are now in full force and effect; and that
there is no provision in any document under which the LLC is organized and/or that governs the
LLC’s continued existence, limiting the power of the undersigned to make the certifications set
forth in this certificate, and that such certifications are in conformity with the provisions of all such
documents.
LLC Members:
____________________________
Dan M. Almquist
____________________________
Michael W. Burnett, Trustee
____________________________
Richard P. Kelter, Trustee
____________________________
Patrick Kent, Trustee
DRAFT
61147.20021\32812677.5
EXHIBIT G
EXHIBIT G
TO
2022 DISPOSITION AND DEVELOPMENT AGREEMENT
Playhouse Property Form of Certificate of Completion
[Attached Behind This Page]DRAFT
61147.20021\32812677.5
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
________________________________
________________________________
________________________________
________________________________
Attention:
Exempt from Recording fee
pursuant to Gov’t Code § 27383
CITY OF SAN JUAN CAPISTRANO
CERTIFICATE OF COMPLETION
(Playhouse Property)
I, Ben Siegel, City Manager of the City of San Juan Capistrano (the “City”) certify
that:
Section 1. The Project described as [______________________] required to be
constructed in accordance with that certain 2022 Disposition and Development Agreement
(Playhouse Property), dated _______, 2022 (“DDA”), between the City and _____________, a
California limited liability company (the “Developer”), on that certain real property specifically
described in the legal description(s) attached to this Certificate of Completion as Exhibit A (the
“Property”), is complete in accordance with the provisions of the Agreement.
This Certificate of Completion constitutes conclusive evidence of the City’s determination
of the Developer’s satisfaction of its obligation under the Agreement to construct and install the
Project on the Property, including any and all buildings, parking areas, landscaping areas and
related improvements necessary to support or meet any requirements applicable to the Project and
its use and occupancy on the Project, whether or not such improvements are located on or off the
Property or on other property subject to the Agreement. Notwithstanding any provision of this
Certificate of Completion, the City may enforce any covenant surviving this Certificate of
Completion in accordance with the terms and conditions of the Agreement and the Grant Deed by
which the Property was conveyed to the Developer by the City under the Agreement. The
Agreement is an official record of the City and a copy of the Agreement may be inspected at the
City’s office located at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, during the
City’s regular business hours.
DATED AND ISSUED this _____ day of ______________, _____.
THE CITY OF SAN JUAN CAPISTRANO DRAFT
61147.20021\32812677.5
a California municipal corporation
By: ___________________________
Benjamin Siegel, City Manager DRAFT
61147.20021\32812677.5
EXHIBIT A
TO
CERTIFICATE OF COMPLETION
Legal Description of the Property
The land situated in the City of San Juan Capistrano, County of Orange, State of California, described as follows:
PARCEL 7:
THE NORTHERLY 75.00 FEET OF THE SOUTHERLY 94.00 FEET OF LOT 3 IN BLOCK
10 OF SAN JUAN CAPISTRANO, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 3,
PAGES 120 AND 121 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY,
CALIFORNIA, AND THE WEST ONE-HALF OF GARCIA STREET ADJOINING SAID
LOT ON THE EAST, ABANDONED BY ORDER OF THE BOARD OF SUPERVISORS OF
ORANGE COUNTY NOVEMBER 16, 1920 IN BOOK 15, PAGE 304 OF MINUTE BOOKS.
APN: 124-160-55
DRAFT
61147.20021\32812677.5
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity
of the individual who signed the document to which this certificate is attached, and
not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF ________________ )
On ________________, before me, , Notary Public,
personally appeared , who proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ______________________________ (Seal)
DRAFT