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17-0207_THE OAKS FARM_Agenda Report_E11City of San Juan Capistrano Agenda Report TO: Honorable Mayor and Members of the City Council FROM : ,;We'n Siegel, City Manager SUBMITTED BY: Jacob Green , Ass istant City Manager ~ Tom Toman , Assistant Public Works Directo ~ DATE : February 7, 2017 2/7/2017 E11 SUBJECT: Update on The Oaks Transition Process; and, an Appropriation of Funds from the General Fund Reserves RECOMMENDATION: By motion, 1) Receive and file an update on The Oaks transition process and associated letter from the City Manager to The Oaks, LLC; and, 2) Approve an appropriation of funds from General Fund Reserves for The Oaks landscape and maintenance expenses in the amount of $21,400. DISCUSSION/ANALYSIS: On October 10, 2010, the City Council approved a License Agreement with The Oaks, Inc. for use of the 2.25 acre portion of property located in the corner of Assessor's Parcel No. ~ 25-172-27, for a temporary equestrian paddock and arena operation for a period of five years. The City Council took action on October 15, 2013, to authorize early termination of the License Agreement with the Oaks, Inc. due to the sale of the property. On January 21, 2014, the Council authorized a month-to-month License Agreement with The Oaks Farms, LLC, a Delaware Corporation and Davidson Communities LLC, a California limited liability company for same (Attachment 1 ). On December 6, 2016, the Council directed staff to send a notice of termination to the Licensee effective January 31, 2017, and integrate The Oaks parcel into the Reata Park and Events Center. A written notice of termination was sent on December 21, 2016, to the Licensee (Attachment 2). Prior to the termination of the License Agreement, the Licensee is required to, , " ... relocate and/or remove equestrian property fencing currently on the Eastern portion City Council Agenda Report February 7, 2017 Page 2 of 4 of the Property to those boundaries of The Oaks Farms equestrian property ... that are adjacent to City-owned APN 125-172-27 ... Further, Licensee shall relocate and/or remove all equestrian paddocks, prior to termination of License" (Section 1, "Scope of License"). Based on community input and pursuant to Council direction, the City and Licensee have agreed to the following: 1. The Licensee has offered to donate all ten existing paddocks to the City (estimated value of $95,000). 2. The City will install a vegetation hedge to provide a barrier between The Oaks parcel and future Davidson Communities development slated for construction in April 2017. Expenses for installation of the hedge (approximately 160 linear feet of landscaping) and the irrigation system needed to maintain the hedge will be split equally between the City and The Oaks, LLC. 3. The Licensee will bear all costs associated with the removal of a portion of the fencing currently on the Eastern portion of the Property and will install a City- approved wood rail fence on the western property boundary line to separate the property referred to as The Oaks Farms Equestrian Property from The Oaks. 4. Consistent with the Council agenda report of October 19, 2010, the 197 oak trees currently located on the property, as donated by the Licensee, shall remain property of the City. On January 12, 2017, the Council directed staff to proceed with the above modifications and transition expenses as proposed. Therefore, these terms and conditions were communicated to the Licensee in the correspondence dated January 30, 2017 (Attachment 3). The total appropriation of funds from General Fund Reserves for The Oaks landscape and annual maintenance expenses needed to complete the transition is $21 ,400 ($9,500 landscape materials and installation and $11,900 maintenance). The Licensee has already begun transition actions as required in the License Agreement. It is anticipated that staff will complete all necessary landscape improvements by March 1. FISCAL IMPACT: Staff is recommending that the City Council approve an additional appropriation from General Fund Reserves in the amount of $21,400 to fund the additional costs associated with landscape and irrigation improvements and annual maintenance costs as follows: City Council Agenda Report February 7, 2017 Page 3 of 4 ril'irnilltii:lll(' ·~~· 41r:l Hedges 50/50 Split Hedge 50/50 Split Irrigation Donated Oak City Trees Irrigation New Fencing Licensee One-Time Equip & Install Total tmfrrl~~jj $9,000 $4,000 $3 ,000 $4,000 $20,000 FY2016-17 Prope rty Maintenance (5 months x $700/mo .) FY2017-18 Property M aintenance (12 months x $700/m o.) Total Appropriation l!li'j'liml.. $4,500 $2,000 $3,000 $0 $9,500 $3,500 $8,400 $21,400 The General Fund has sufficient reserves to provide this additional funding . ENVIRONMENTAL IMPACT: This project has been reviewed in accordance with the California Environmental Quality Act (CEQA). The City's Environmental Administrator has determined that the project is Categorically Exempt (Section 15304(b ); Class 4 "Minor Alterations to Land") from further review. The project is consistent with Section 15304 because the installation of a drought tolerant landscape hedge and irrigation improvements will involve minor alteration in the condition of the land with no removal of healthy, mature, scenic trees. PRIOR CITY COUNCIL REVIEW: • On October 19, 2010, the Council approved the License Agreement with The Oaks, Inc. for the Oaks Paddock Area of the Lemon Grove Parcel. • On October 15, 2013, the Council authorized early termination of the License Agreement with the Oaks, Inc., a Delaware Corporation, Doing Business in California as "The Oaks Farms" ("Oaks, Inc.") and granted a prorated refund of the annual license fee in the amount of $4 ,339.13 , and authorized the dissolution of the Agreement. • On January 21, 2014, the Council authorized a month-to-month License Agreement with The Oaks Farms, LLC, a Delaware Corporation and Davidson Communities LLC, a California limited liability company, for use of the 2.25 acres portion of property located in the coroner of Assessor's Parcel No. 125-172-27. • On December 6, 2016, the Council directed staff to send a notice of termination to the Licensee effective January 31, 2017, and integrate The Oaks parcel into the Reata Park and Events Center. City Council Agenda Report February 7 , 2017 Page 4 of 4 • On January 12, 2017, the Council discussed the license agreement in closed session, and provided direction to City staff. NOTIFICATION: Parks, Recreation, Senior & Youth Services Commission Trails and Equestrian Commission Sean Kilkenny, Davidson Communities LLC Sheri Merkle, The Oaks Farms LLC ATTACHMENTS: Attachment 1 -License Agreement Attachment 2-Notice of Termination of License Agreement Attachment 3-Transition Letter from City Manager to Licensee LICENSE AGREEMENT This License Agreement is entered into this 21st day of January, 2014, by and between the City of San Juan Capistrano (hereinafter "City"), and The Oaks Farms, LLC (hereinafter "Licensee"). RECITALS WHEREAS, the City is the owner of APN 125-172-27, approximately 18.5 acres located in the City of San Juan Capistrano, which property was acquired to be maintained as open space within the City; and WHEREAS, the Licensee desires to use the approximate 2 .25 acre portion located in the northwest corner of APN 125-172-27 as a paddock area for The Oaks Farms' equestrian operation . · NOW, THEREFORE, City and Licensee hereby mutually agree as follows : Section I. Sco pe of Lice nse . The City hereby grants to Licensee a license to establish and maintain a temporary paddock/arena area for the term as outlined in Section 3, on that certain property located in the City of San Juan Capistrano, California, as depicted on the site plan attached hereto as Exhibit "A" and incorporated herein by reference (the "Property"). This area shall be used solely for the purposes of a temporary equestrian paddock/arena area in conjunction with the Licensee's equestrian operations on the adjacent property. No construction equipment or other storage (of equipment, materials, or supplies of any kind) is permitted on the Property. All uses and operations on the Property shall be subject to the Southern California Edison easement attached here to as Exhibit "B" and incorporated herein by reference (the "Easement"). The Licensee shall relocate and/or remove equestrian property fencing currently on the Eastern portion of the Property to those boundaries of The Oaks Farms equestrian property, as indicated on Exhibit "A", that are adjacent to City-owned APN 125-172-27, prior to termination of License. Further, Licensee shall relocate and/or remove all equestrian paddocks, prior to termination of License . Section 2 . License Fee . Licensee shall pay the City $400 monthly for the use of the property. This payment shall be made on the first day of each month in the form of a check made payable to the City of San Juan Capistrano . This amount shall increase annually on September 1 based on the Consumer Price Index (CPI) -All Urban Consumers for Los Angeles-Riverside-Orange County, CA area from March to March. ATTACHMENT 1 Section 3. License Term . a . Original Term -The term of this Agreement shall be One Calendar Month and become effective from the date of execution of the Agreement through the end of the following Calendar Month . b. Renewal Term -Upon the expiration of the Original Term, the Term of this license shall be automatically extended for another calendar month, provided that (i) neither party provides the other party with a prior thirty (30) day written notice of its election to terminate this License; (ii) there exist rio Default or Event of Default under the License; and (iii) this License has not been terminated in accordance with terms hereof. Upon the expiration of the Renewal Term, this license shall be automatically extended for another calendar month until terminated by either party. Section 4 . Water, power and utilit ie s. Licensee will be responsible for providing all water, electricity and other necessary utilities for the use and operation of the Property. 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 their owned water rights. Section 5. Default. In the event of a default by Licensee, Licensor shall give Licensee thirty (30) days' written notice to cure the default. 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 the default is not cured by Licensee within the time provided by this Section 5, then Licensor may immediately terminate this Agreement. Section 6. Condition of Property. Licensee accepts the Property in its present condition upon execution of this Agreement. Licensee agrees, at Licensee's expense, to use reasonable care to control all weeds growing on Property; keep the Property clean of trash, debris and rubbish; and to keep fences, ditches, landscaping and borders of the Property in good condition and repair at all times, reasonable wear and tear expected. The du'y authorized representative of City may enter upon the Property at a reasonable time for the purposes of inspection and to perform any necessary maintenance or repair. Section 7. Site Modifications . Any modifications to the Property, other than those specifically provided for in this agreement will require prior City Council approval. Additionally, any site modifications approved in concept by the City Council will be required to follow the City's design guidelines and permitting processes. 2 Section 8. Insurance . Licensee shall maintain at all times during the term of this Agreement comprehensive gene ral liability and property damage insurance in the amount of not less than Two Million Dollars ($2 ,000,000) combined single limit. City shall be named as an additional insured on said policies. Section 9. Indemnity. Each party shall indemnify and save harmless the other, its successors and assigns together with its officers , directors, employees , agents and those for whom it is in law responsible , only from and against any and all liabilities , damages , costs , expenses , causes of act ion , claims , suits, proceedings and judgments (collectively "Claims ") wh ich each party may incur or suffer or be put to by reason of or in connection with or arising from any breach , violation or nonperformance by th e other of any obliga ti on contained in this Agreement to be observed or performed by the respective party, or any wrongful act or negl igence of t he resp ective party or its agents or employees which relates to this Agreement , howsoever arising. Each party acknowledges and agrees that this indemnity shall survive any termination of this Agreement. Section 10. No Assignments. Licensee shall not assign its rights under this Agreement to any third party without the written consent of the City. Section 11. Notices. All notices, demands, consents, or other communications required to be given under this Agreement shall be accomplished by first class mail, postage prepaid, and deposited in the U.S. mails, or personally served upon the other party. To Licensor "City": Licensee: City of San Juan Capistrano L. Sheri Merkle 32400 Paseo Adelanto General Manager San Juan Capistrano, CA 92675 The Oaks Farms Attn: City Manager 31000 Avenida Siega San Juan Capistrano, CA 92675 and, Tim O'Grady Executive Vice President Davidson Communities 1302 Camino Del Mar Del Mar, CA 92014 3 Section 12. Attorney's 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 preva iling in any such action or proceeding shall be entitled to recover from the non-prevailing party all reasonable attorney's fees, costs and expenses incurred by the prevailing party. Section 13 . E nt ire A g reem en t. This agreement contains the entire Agreement of the parties hereto with respect to the matters covered hereby, and no other previous agreement, statement or promise made by any party hereto which is not contained herein shall be binding or valid. Section 14. Taxes. Pursuant to Revenue & Taxation Code §1 07.7, the property interest created herein, if any, may be subject to property taxation and LICENSEE may be subject to property taxes levied on such interest on a prorated basis, if any. In no event shall LICENSOR be liable for any taxes owed as a result of this License or Licensee's use of the Premises. Section 15 . No Relocation Benefits . This License 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 other provision ofthis License , expressly waives all such present and future rights, if any, to which Licensee might otherwise be entitled from Licensor or the City of San Juan Capistrano with regard to this License 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 License . [SIGNATURE PAGE FOLLOWS] 4 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written . APPROVED AS TO FORM: ~~- H ns an L1gten, City Attorney 5 CITY OF SAN UAN CAPISTRANO By: THE OAKS FARMS, LLC a Delaware limited liability company By: DAVIDSON COMMUNITIES, LLC, a California limited liability company Its: Sole Member By: ~~\-_Q_.D_.\--__ Name: William A. Davidson President 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493·1171 (949) 493-1053 FAX www.sanjuancapistrano.org TRANSMITTAL TO: L. Sheri Merkle General Manager The Oaks Farms 31000 Avenida Siega San Juan Capistrano, CA 92675 DATE: January 27, 2014 FROM: Manny Ruelas, Office Assistant (949) 443-6308 RE: License Agreement-The Oaks Farms' Equestrian Operation . MEMBERS OF lliE CITY COUNCIL SAM ALLEVA TO ROY L. BYRNES, M.D. LARRY KRAMER DEREK REEVE JOHN TAYLOR Thank you for providing documentation confirming compliance with the terms of the agreement related to insurance. Please keep in mind this documentation must remain current with our office during the term of the agreement. If you have questions related to insurance requirements, please call Christy Jakl, Deputy City Clerk at (949) 443-6310. If you have questions concerning the agreement, please contact Cathy Salcedo, Executive Services Manager at (949) 443-6317. Enclosed is an Original Copy for your records . Cc: Cathy Salcedo, Executive Services Manager San Juan Capistrano: Preserving the Past to Enhance the Future " 't..J' Printed on 100% recycled pape1 32400 PASEO ADELANTO SAN JUAN CAPISTRANO. CA 92675 (949) 493·1171 . (949) 493-1053 FAX www.sanjuancap istrano.org December 21,2016 U.S. Mail, First Class L. Sheri Merkle General Manager The Oaks Fanns 3100 A venida Siega San Juan Capistrano, CA 92675 Tim O'Grady Executive Vice President Davidson Communities 1302 Camino Del Mar Del Mar, CA 921 04 Re: Notice ofTermination ofLicense Agreement dated January 21, 2014 Ms. Merkle and Mr. O'Grady: MEMBERS OF THE CITY COUNCIL SERGIO FARIAS KERRY K. FERGUSON 8RJAN 1... MARY OTI PAM PATTERSON, ESQ. DEREK REEVE As a follow-up to the conversation we had on December 12, 2016, and the site visit City staff conducted with your team on Wednesday, December 14, 2016, this letter serves as the City's official written notice that, pursuant to section 3 (b) of the above-referenced agreement, the City of San Juan Capistrano has elected to terminate said agreement with The Oaks Farms, LLC (The Oaks). Such termination shall be effective January 31, 2017. Pursuant to the License Agreement, and based on the City Council action of December 6, 2016, it is agreed that The Oaks, "shall ... remove equestrian property fencing currently on the Eastern portion of the Property to those boundaries of The Oaks Farms equestrian property ... that are adjacent to City-owned APN 125-172-27, prior to termination of [the] License [Agreement]." Additionally, the City would like to work with The Oaks to install a replacement fence along the western property line between The Oaks and the mmex to Reata Park. Thank you for your cooperation. If you have any questions, please contact Jacob Green, Assistant City Manager, at (949) 443-6321. c: City Council JeffreyS. Ballinger, City Attorney San Juan Capistrano: Preserving the Past to Enh an ce th e Fu ture " t;..J Pdnted 011 1CO% fficycled pepor ATTACHMENT 2 · 32400 PASEO ADELANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493-1171 (949) 493-1053 FAX www.sanjuancapistrano. org January 30, 2017 U.S. Mail, First Class L. Sheri Merkle General Manager The Oaks Farms 3100 Avenida Siega San Juan Capistrano, CA 92675 Tim O'Grady Executive Vice President Davidson Communities 1302 Camino Del Mar Del Mar, CA 92104 MEMBERS OF THE CITY COUNCIL SERGIO FARIAS KERRY K. FERGUSON BRIAN L. MARYOTT PAM PATTERSON, ESQ. DEREK REEVE Re: Transition Agreement -Notice of Termination of License Agreement dated January 21, 2014 Ms. Merkle and Mr. O'Grady : On December 21, 2016, pursuant to City Council direction given to staff on December 6, 2016, written notice terminating the license agreement was served pursuant to section 3(b) of the above-referenced agreement. Such termination shall be effective January 31, 2017. The purpose of this letter is to document a modification to the termination terms outlined in the January 21, 2014 Agreement, Section 1 "Scope of License ." The following is mutually agreed to by the City and Oaks Farms, LLC ("Licensee"): 1. The Licensee shall leave all paddocks in place and the paddocks shall become property of the City. 2. The Licensee and the City will share all costs associated with the purchase and installation of approximately 160 linear feet of landscaping, to include localized irrigation, along the uppermost portion of the west border of the subject property, as depicted on Attachment 1. The City will purchase and install all associated landscaping items and will send Licensee an invoice for 50% of the materials and installation costs upon completion of the project. Reimbursement to the City will be due within 30 days following the mailing of the invoice. San Juan Capistrano: Preserving the Past to Enhance the Futw ... \.t1 Printed on 100% recycled paper ATTACHMENT 3 Transition Agreement January 30, 2017 Page2 3. The Licensee shall, at its sole cost and expense, remove the portion of the fencing currently on the Eastern "portion of the subject property, as depicted on Attachment 1. 4. The Licensee shall, at its sole cost and expense, install a wood rail fence on the western property boundary line to separate the adjacent property referred to as The Oaks Farms equestrian property from the subject property (APN 125-172- 27). 5. Consistent with the City Council Agenda Report of October 19, 2010, the 197 oak trees currently located on the subject property, as provided by the Oaks Farms, shall remain property of the City and all future maintenance costs associated with these donated oak trees will be the responsibility of the City. Thank you for your cooperation. If these terms are agreeable to the Licensee, please sign where indicated below and return a copy of this signed letter to me at your earliest convenience. If you have any questions, please contact Jacob Green, Assistant City Manager, at (949) 443-6321. s;~~s-~1 ~ ~lrege City Manager City of San Juan Capistrano READ AND APPROVED : The Oaks Farms, LLC Attachment -The Oaks Property Map cc: City Council JeffreyS. Ballinger, City Attorney Sean Kilkenny, Forward Planning Director, Davidson Communities