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