10-1019_THE OAKS FARM_Agenda Report_D11 10/15/2013
3Y)A
D11
City of San Jua Capistrano
Agen. port
TO: Karen P. Brust, City Ma a
FROM: Keith Van Der Maaten, Di ctor, Public Works and Utilitie
cw�k
Prepared by: Cathy Salcedo, Executive Services Manager
DATE: October 15, 2013
SUBJECT: Consideration of Termination of the license Agreement with the Oaks,
Inc., a Delaware Corporation, Doing Business in California as "The Oaks
Farms."
RECOMMENDATION:
By motion, authorize early termination of the License Agreement with the Oaks, Inc., a
Delaware Corporation, Doing Business in California as "The Oaks Farms" ("Oaks, Inc.")
and request for a prorated refund of the annual license fee and, if approved, by motion,
authorize the dissolution of the Agreement and grant request for a prorated refund of
the annual license fee, in the amount of$4,339.13.
EXECUTIVE SUMMARY:
The City currently has a License Agreement (Attachment 1) in force with The Oaks, Inc.
for use of a 2.46 acres portion of property located in the corner of Parcel No. 125-172-
07 for temporary equestrian paddock and arena operations. The term of the Agreement
expires on December 31, 2015, and requires a one year cancellation notification. The
Licensee is requesting an immediate termination of the Agreement due to the recent
sale of their property (Attachment 2). The Oaks, Inc. paid the annual license fee due to
the City on September 1, 2013, for the period of September 1, 2013 through August 31,
2014, as required by the Agreement, but does not wish to continue with the License
Agreement and is requesting a prorated refund of the fee.
DISCUSSION/ANALYSIS:
On October 19, 2010, the City Council approved a License Agreement with The Oaks,
Inc. for use of City owned property for a temporary equestrian paddock and arena
operation for a period of five years. There is a one year notice of termination
requirement in the Agreement; the Licensee did not provide a one year notice before
the sale of the Oaks property, so they are now requesting an early termination be
allowed by the City. The Licensee paid its annual License fee covering September 1,
2013, through August 31, 2014, and is requesting that the City refund the prorated fee.
The Licensee agrees to leave the perimeter fencing and will remove all other
appurtenances on the property that were installed by the Licensee at their own cost.
' City Council Agenda Report
October 15, 2013
Page 2 of 2
FISCAL IMPACT:
The September 1, 2013, License fee payment was $4,959.00, which included the
annual Consumer Price Index increase. The prorated refund of the annual License fee
is $4,339.13, leaving a $619.87 (one and one half month's license fee (September 1 —
October 15, 2013) for this fiscal year to the City, providing the City Council approves the
refund without notice. If the City Council opts not to approve the refund because the
request was not made with the required one year notice on or before August 31, 2012,
the City would retain the $4,959.00 fee paid on September 1, 2013.
The Fiscal Year 2013-14 included $4,500.00 of license fee revenue from this
Agreement. Based on the pro-rated revenue of $619.87, the reduction in revenues to
the Fiscal Year 2013-2014 Adopted Budget will be $3,880.13.
ENVIRONMENTAL IMPACT:
Not applicable.
PRIOR CITY COUNCIL REVIEW:
City Council Meeting — October 19, 2010.
COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS:
Not applicable.
NOTIFICATION:
James I. Swinden, President, The Oafs, Inc.
Joe Rogoff, Esq., representing The Oaks, Inc.
ATTACHMENT(S)-
Attachment 1 — License Agreement
Attachment 2 —Agreement Termination Request
LICENSE AGREEMENT
This License Agreement ("Agreement") is made this day of - r 5910 by
and between the City of San Juan Capistrano, a municipal corporation, and
("LICENSOR"), and The Oaks, Inc., a Delaware corporation, doing business in California
as The Oaks Farms ("LICENSEE").
RECITALS
WHEREAS, LICENSOR is the owner of approximately 118.5 acres of property
generally described as Assessor's Panel Number (APN) 125-172-07, which was '
acquired to be maintained'as open space within the City of San Juan Capistrano; and
WHEREAS, LICENSEE currently maintains equestrian paddocks and arenas on a
portion of APN 125-172-07 pursuant to that certain lease agreement, dated September 1,
1999, by and between the prior property owners and LICENSEE, which lease is
commonly referred to as the "Oaks Paddock Lease"; and
WHEREAS, LICENSEE desires to continue to use an approximately 2,46 acre
portion of property located in the corner of APN 125-172-07 for equestrian paddock and
arena operations; and
WHEREAS, the parties desire to terminate the Oaks Paddock Lease in return for
the grant of license and the terms and c6nd.ifions herein.
LICENSE
NOW, THEREFORE, LICENSOR and LICENSEE do hereby mutually agree as
follows:
Section 1. Grant of License/Term,
(a) Grant of License, LICENSOR hereby grants to LICENSEE a License to establish
and maintain a temporary equestrian paddock and arena operation on the
Premises, as depicted on the site plan attached hereto as Exhibit "A" and
incorporated herein by reference (hereinafter referred to as the "Premises"). The
scope of the License granted herein is more specifically described in Section 3 of
this Agreement. LICENSEE shall provide the expertise, supervision and
management over the activities and uses authorized herein. Except as otherwise
provided in this Agreement, the Premises shall not be used for any other purpose.
Page 1 of 10
73274{).1
ATTACHMENT 1
(b) Term.
i, Original Term, The initial term of this Agreement shall be from the date of
execution of the Agreement through and until December 31, 2015 (the
"Original Term"), unless sooner terminated,
li. Renewal Terms. The term of this Agreement may be extended for up to
three (3) additional five-year periods beyond the Original Term pursuant to
this Section. Each additional:fire-year term shall be referred to herein as a
"Renewal Term." .Upon the expiration of the Original Term and/or the first
two (2) Renewal Terms, the Term of this Agreement shall be automatically
extended for another five-year period, provided that (1) neither party
provides the other party with a prior one-year written notice of its election to
terminate this License; (2) there exist no Default or Event of Default under
the License; and (3) this Agreement has not been terminated in accordance
with terms hereof.
iii. Termination. Notwithstanding the foregoing, during any Renewal Term,
either party may terminate this Agreement without cause by providing the
other party with at least one year written notice.
Section 2. License Fee.
(a) LICENSOR shall receive from LICENSEE a license fee of Four Thousand Eight
Hundred Dollars ($9,800) annually, to be paid on or before September 1 of each
year in the form of a check payable to the.City of San Juan Capistrano.
(b) The license fee shall be adjusted,annually on September 1 at each anniversary of
the Agreement in the amount.eq p 1:p"tl e;percentage increase in the consumer
price index for the Los Angeles_Rivei+slda-Orange County Metropolitan Area, all
wage earners, for the prior 12-mo: nth period (March to March), rounded to the
nearest dollar.
Section 3, Scope of License and Conditions Re uirements and Limitations Thereof.
(a) Permissible Uses. LICENSEE may use the Premises for maintaining a temporary
equestrian paddock and arena operation for the purpose of supplementing
LICENSEE's operations on the adjacent property. LICENSEE may also use the
Premises for placement of above ground (boxed / canned) Oak trees being grown
by The Oaks Farms, which are acorn grown from its grove of old growth Oak
trees. LICENSEE shall maintain equestrian fencing as approved by LICENSOR
along those boundaries of the Premises that are adjacent to other portions of APN
125-17207 or other public right of way, LICENSEE shall be responsible for the
supervision and management of every..aspect of its operations on the Premises.
All improvements to the property shall:be considered temporary and will be subject
to written approval by the City. No permanent or temporary stabling of equines is
allowed on the property. LICENSES shall use and maintain the Premises and
j
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732749.1
perform all operations in a competent manner, consistent with the standards of the
industry and in accordance with all applicable Federal, State and local regulations,
including the City of San Juan Capistrano Municipal Code. LICENSEE shall
obtain, at its sole cost and expense, all governmental permits and authorizations
of whatever nature required by any governmental agencies having jurisdiction over
LICENSEE's use of the Premises.
(b) Southern California Edison Easement. All uses and operations on the Premises
shall be subject to the Southern California Edison easement attached here to as
Exhibit `#B" and incorporated herein by reference (the "Easement").
(c) Condition of Premises. LICENSEE accepts the Premises in its present condition,
"as is", upon execution of this License. LICENSOR makes no warranty of the
suitability of the .Premises for LICENSEE's intended uses and expressly disclaims
any warranty or representation with regard to the condition, safety, security or
suitability for LICENSEE's intended dse,of the Premises, The duly authorized
representative of LICENSOR may enter upon the Premises and all structures and
buildings thereon, or any portion.the're.of, at any time, and from time to time.
(d) Maintenance of Premises. LICENSEE may use the existing structures on the
Premises for LICENSEE's use in equestrian paddock and arena operations.
LICENSEE shall maintain, at LICENSEE's expense, the Premises, including all
existing structures and all equipment owned and furnished by LICENSEE, in a
reasonable state of repair and working order. LICENSEE. agrees, at LICENSEE's
expense, to use reasonable care to control all weeds growing on Premises; keep
the Premises clean of trash, debris and rubbish; and to keep fences, ditches,
landscaping and borders of the Premises in good condition and repair at all times,
reasonable wear and tear expected.
(e) Development of Multi-Use Trail Extension and Trail Restin Area.
i. Pursuant to the grant of such access, LICENSEE shall develop the
extension of the existing multi-u-se trail from its current terminus at the
southwest corner of the Premises approximately ninety(90) feet east along
the southerly border of the Premises to the City's arizona crossing (the
"Crossing) gate on APN 125-172-07. In addition, LICENSEE shall develop
a Trail Resting Area at the cirret'terrninus of the existing multi-use trail to
include a hitching post, water trough and covered bench. The conceptual
alignment of the trail extension is depicted on Exhibit "A." 'The final
alignment of the extension and details of the Trail Resting Area shall be
subject to LICENSOR's approval. LICENSEE shall also be responsible for
providing LICENSOR approved equestrian fencing along the trail extension.
All work shall be completed within ninety (90) days of the effective date of
this Agreement.
ii. For the term of this License, LICENSEE shall be responsible for the
maintenance of the Trail Resting Area and that portion of the multi-use trail
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732749 1
from its current terminus at the southwest corner of the Property
approximately ninety (90) feet east along the southerly border of the
Properly to the Crossing gate on APN 125-172-07. Such maintenance shall
include all improvements constructed thereon in good order and repair, and
to keep said premises in n at Clea°n, orderly, safe, and sanitary condition,
according to the City of San Juan Capistrano established standards. This
includes, but is not limited ta, the prevention of accumulation of any refuse
or waste materials which might constitute a fire hazard or a public or private
nuisance.
iii. LICENSEE shall carry out the development and construction of the trail
extension, Trail Resting Area, and fencing work in conformity with all
applicable federal. and state labor laws (including, without limitation, if
applicable, the requirement under California law to pay prevailing wages).
LICENSEE shall be solely responsible for determining and effectuating
compliance with all applicable public works requirements, prevailing wage
laws, and federal and state labor laws, and LICENSOR makes no
representation as to the applicability or non-applicability of any of.such laws
to the work or any part thereof: LICENSEE hereby expressly acknowledges
and agrees that the LICENSOR, has not previously affirmatively represented
to LICENSEE, in writing or otherwise, that such work is not a "public work,"
as defined in Section 1720 of'the Labor Code. LICENSEE hereby agrees
that LICENSEE shall have the obligation to provide any and all disclosures
or identifications required by L6Qr,Code Section 1781, as the same may
be amended from time tv time, €fir any other similar law. LICENSEE shall
indemnify, protect, defend and hold harmless LICENSOR and its respective
officers, employees, contractors and agents, with counsel reasonably
acceptable to LICENSOR, from and against any and all loss, liability,
damage, claim, cost, expense and/or"increased oasts" (including
reasonable attorneys fees, court and litigation costs, and fees of expert
witnesses) which, in connection with the work required pursuant to this
Agreement, results or arises in any way from any of the following; (1) the
noncompliance by LICENSEE of any applicable local, state and/or federal
labor law (including, without limitation, if applicable, the requirement to pay
State prevailing wages); (2) the implementation of Section 1781 of the
Gabor Code, as the same may be amended from time to time, or any other
similar law; and/or (3) failure by.LICENSEE to provide any required
disclosure or identification as required by Labor Cade Section 1781, as the
same may be amended from time to time, or any other similar law. It is
agreed by the parties that, in connection with the work required pursuant to
this Agreement, LICENSEE shall bear all risks of payment or nonpayment
of prevailing wages under California law and/or the implementation of Labor
Code Section 1781, as the same i-nay be amended from time to time,
and/or any other similar lary "Increased oasts," as used in this section, shall
have the meaning ascribe�'t0 it'in Labor Code Section 1781, as the same
may be amended from time to time. The foregoing indemnity shall survive
termination of this Agreement and shall continue after completion of the
Page 4 of 10
732749.1
construction of the trail extension, Trail Resting Area, and fencing by
LICENSEE,
(f) Liens . LICENSEE will fully and promptly pay for all materials joined or affixed to
the Premises and/or APN 125-172-07 ,under the authority or direction of
LICENSEE, and fully and promptly pay all persons who perform labor upon said
property. Licensee shall not suffer or permit to be filed or enforced against the
Premises and/or APN 125-172-07,..or:any part thereof, any mechanics',
materialmen's, contractors', or suticon ractQrs' liens or stop notices arising from; or
any claim for damage growing out of; any testing, investigation, maintenance or
construction work, or out of any other claim or demand of any kind. LICENSEE
shall pay or cause to be paid all such liens, claims or demands, including sums
due with respect to stop notices, together with attorney's fees incurred by
LICENSOR with respect thereto, within ten (10) business days after notice thereof
and shall indemnify, hold harmless and defend LICENSOR from all obligations and
claims made against LICENSOR for the above described work, including
attorney's fees. LICENSEE shall furnish evidence of payment upon request of
LICENSOR. LICENSEE may contest any lien, claim or demand by furnishing a
statutory lien bond or equivalent with respect to stop notices to LICENSOR in
compliance with applicable California law, If LICENSEE does not discharge any
mechanic's liens or stop notice for works performed for Licensee, LICENSOR shall
have the right to discharge same (including by paying the claimant), and
LICENSEE shall reimburse LICENSOR for the cost of such discharge within ten
(10) business days after billing. The provisions of this subsection shall survive the
termination of this Agreement.
Section 4. No Assignments.
LICENSEE may not assign, subl6t'Qr otherwise transfer its interest under this
Agreement without the prior written consent of the LICENSOR. Any attempted
assignment, sublet or transfer made in violation of this provision shall be null and
void.
Section 5, Water Power and Utilities.
LICENSEE will be solely responsible for providing all water, electricity and other
necessary utilities for the use and operation of the Premises. LICENSEE may
use non-potable water from their own wells on the adjacent parcel, APNs 664-04-
107, 664-04-108, 664-04-109, and 664-04.110, as allowed by its owned water
rights.
Page 5 of 10
73>749.t
Section 6. Time of the Essence.
Time is of the essence of each and every provision, covenant, and condition
herein contained and on the park of LICENSEE to be done and performed.
Section 7, Site Modifications.
Any modifications to the Premises, other than those specifically provided for in this
Agreement will require prior approval of the San Juan Capistrano City Council.
Additionally, any site modifications approved in concept by the City Council will be
subject to all applicable City of San Juan Capistrano design guidelines and
permitting processes.
Section 8. Default.
(a) If LICENSEE defaults in the payment of the license fee, or any additional
applicable license payments, or defaults in the performance of any of the other
covenants or conditions hereof, LICENSOR may give LICENSEE written notice of
such default and if LICENSEE does not cure any such default within thirty (30)
days, or such other time period as specified in the notice of default, after the giving
of such notice, then LICENSOR may immediately terminate this License. The
notice shall specify in reasonable detail the nature and extent of the default. If the
nature of LICENSEE's obligation is such that more than thirty (30) days are
required for performance, then LICENSEE shall not be deemed to be in default if it
shall commence such performance within such thirty (30) day period and
thereafter diligently prosecute the same to completion. If LICENSOR terminates
the License pursuant to this Section, then, on the date specified in the notice of
termination, the term of this License shall terminate, and LICENSEE shall then quit
and surrender the Premises to LICENSOR, but LICENSEE shall remain liable as
hereinafter provided. If this license"shall have been so terminated by LICENSOR,
LICENSOR may at any time thereafter resume possession of the Premises by any
lawful means and remove LICENSEE or other occupants and their effects.
(b) If LICENSEE breaches any covenant or condition of this license, LICENSOR may,
on reasonable notice to LICENSEE.(except that no notice need be given in case of
emergency), cure such breach at the expense of LICENSEE. The reasonable
amount of all expenses, including attorney's fees, incurred by LICENSOR in so
doing shall be deemed additional fees payable on demand.
Section 9. Termination Due to Bankru tt or Insolvency,
In the event proceedings in bankruptcy are commenced by LICENSEE, or
LICENSEE is found to be in a state of insolvency, then in such event, LICENSOR
shall have the right to terminate this Agreement and all further rights and
obligations thereunder, by ten (10) days' notice in writing to LICENSEE, in which
event, on the expiration of the ten (10) days from mailing of the notice, this License
shall automatically terminate,
Page 6'of 10
732749.E
Section 10. E-Veri
If Licensee is not already enrolled in the U,S. Department of Homeland Security's
E-Verify program, Licensee shall enroll in the E-Verify program within thirty (30)
days of the effective date of this Agreement to verify the employment authorization
of new employees assigned to perform work hereunder. Licensee shall verify
employment authorization within three days of hiring a new employee to perforin
work under this Agreement, Information pertaining to the E-Verify program can be
found at http:llwww,uscis.gov, or access the registration page at https:/iwww.vis-
dhs,comlemployerregistration. Licensee shall certify its registration with E-Verify.
and provide its registration number within thirty (30) days of the effective date of
this Agreement, Failure to provide certification will result in withholding payment
until full compliance is demonstrated,
Section 11, Notices,
Any notice rewired to be given under this Agreement shall be in writing and shall
be deemed to have been duly given and received if and when personally served,
or forty-eight (48) hours after being deposited in the united States mail, first class,
postage prepaid, addressed to the intended party at:
.ICEN8OR;
City of San Juan Capistrano
City Manager
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
LICENSEE:
Sheri L. Grady-Merkle, President and General Manager
The Oaks Farms ("The Oaks")
31000 Avenida Siega
San Juan Capistrano, CA 92675
Section 12, Attorneys' Fees,
In the event any legal action or proceeding is commenced to interpret or enforce
the terms of, or obligations arising out of this Agreement, or to recover damages
for the breach thereof, the party pr'evailirig in any such action or proceeding shall
be entitled to recover from.the iron-prevailing party all reasonable attorney's fees,
costs and expenses incurred by the prevailing party.
Page 7 of 10
732749.
Section 13. Surrender of Premises.
LICENSEE shall, at the termination of this License, vacate the Premises in as
good condition as they are in at the time of entry thereon by LICENSEE. Upon
vacating, LICENSEE shall leave Premises free and clear of all rubbish and debris.
Section 14. Insurance.
LICENSEE shall Licensee shall.m ihtain at all times during the term of this
Agreement comprehensivegeneral liability and property damage insurance in the
amount.of not less than Two Million Dollars ($2,000,000) combined single limit.
Said policy(ies) shall name LICENSOR, its officials, officers, employees, and
agents as additional insured by endorsement to the policy and shall be in a form
satisfactory to LICENSOR. LICENSEE will furnish LICENSOR with proof of
insurance issued by an insurer approved by LICENSOR showing the coverage to
be in force. LICENSEE's insurance coverage shall be primary coverage.
LICENSOR and LICENSEE each waive the rights of subrogation that may arise
against the other because of any act covered by insurance. The policy shall
provide that modification or cancellation of the policy shall not occur without thirty
(30) days advance written notice provided by the insurer to LICENSOR. Other
terms and conditions, including cancellation provisions and endorsement farms,
shall be reviewed and approved by the Office of the City Attorney,
Section 15. lndemni ,
Each party shall indemnify and save harmless the other, its successors and
assigns together with its officials, officers, directors, employees, agents and those
for whom it is in law responsible;;:fro.m,and against any and all liabilities, damages,
causes of action, claims; suits,.proceedings, judgments, costs, expenses,
including legal costs and attorney's fees; for death or injury to persons or damage
to property or the Premises, which each party may incur or suffer or be put to by
reason of or in connection with or arising from the other party's use of the
Premises, any breach, violation or nonperformance by the other of any obligation
contained in this Agreement to be observed or performed by the respective party,
or any wrongful act or negligence of the respective party or its agents or
employees which relates to this Agreement, howsoever arising. Each party
acknowledges and agrees that the foregoing mutual indemnity obligation shall
survive any termination of this Agreement.
Section 16, Taxes..
Pursuant to Revenue & Taxation Code §107.7, the property interest created herein
may be subject to property taxation and LICENSEE may be subject to property
taxes levied on such interest. In no event shall LICENSOR be liable for any taxes
owed as a result of this License or LICENSEE's use of the Premises.
Page 8 of 10
732749 1
Section 17, No Relocation Benefits.
This Agreement is not intended to convey a property interest but to permit
LICENSEE to use the Premises as provided for herein. LICENSEE acknowledges
the rights granted by State and/or Federal Relocation Assistance Laws and
regulations and, notwithstanding any ether provision of this Agreement, expressly
waives all such past, present and future rights, if any, to which LICENSEE might
otherwise be entitled from LICENSOR with regard to this License Agreement and
the business operated on the Premises, LICENSEE shall not be entitled to
relocation assistance, relocation benefits, or compensation for loss of goodwill
upon the termination of this Agreement.
Section 18, Entire Agreement.
The terms in this Agreement constitutes the entire understanding and agreement.
between the Parties and supersedes.all previous negotiations between them
pertaining to the subject matter thereof.
Section 19. Termination of Past Leases Licenses and Agreements,
This License and the terms and conditions hereof supersede and shall terminate
the Oaks Paddock Lease and any other leases, licenses, agreements or
understandings pertaining to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
Page 9 of 10
732749.1
IN WITNESS WHEREOF, LICENSOR and LICENSEE have caused this License
Agreement to be executed on the date and year first written above.
LICENSEE:
THE OAKS, INC., a Delaware
corporation, doing business in
:Calliforni -kCg�-Farms
Iheri Ley- le,
President/Gene I Manager
LICENSOR:
CITY OF JUA•' CAPISTRANO,
A Califor is municip I cor oration
F
t
Dr. Londres Uso, Mayor
ATTEST .
l
Maria orr s, ity Cler c
APPROVED AS TO FOR
Omar andda a' , Ofy Attorney
Page 10 of 10
732749.1
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