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17-0404_SOUTH COAST FARMS_E7_Agenda ReportTO : FROM : DATE: SUBJECT: City of San Juan Capistrano Agenda Report Honorable Mayor and Members of the City Council JeffreyS. Ballinger, City Attorney vt\ 1M.. ~~ :rf3 April4, 2017 4/4/2017 E7 Consideration of Cure Regarding a Payment Plan Schedule Agreement and Extension of License Agreement (South Coast Farms) RECOMMENDATION: By motion, approve the accompanying Payment Plan Schedule Agreement for outstanding water charges, and extension of the 2008 License Agreement with South Coast Farms by 90 days. EXECUTIVE SUMMARY: On February 7, 2017, the City Council adopted the accompanying Payment Plan Schedule Agreement and Extension of License Agreement (South Coast Farms), as part of the City Council's open session consent calendar. Subsequent to that action, on March 7, 2017, Mr. Clint Worthington sent a written demand to the City, alleging a Brown Act violation and demanding that the City correct and cure the City Council's prior consideration of the payment plan. Although the City Attorney's Office disagrees with Mr. Worthington's legal conclusion, and although the City Council has already "cured" any alleged violation by considering the matter in open session on February 7, 2017, in the interests of transparency, the City Attorney's Office is recommending that the City Council act on this item once more. BACKGROUND : Mr. Worthington's demand letter alleges a violation of the Brown Act based on the fact that there was nothing on the September 6, 2016, or January 12, 2017, City Council agenda regarding the South Coast Farms water payments. However, both agendas properly listed "real property negotiations" on the closed session agendas. The 2008 license agreement for the South Coast Farms states: City Council Agenda Report April 4, 2017 Page 2 of 3 "LICENSEE is required to pay for water at no more then [sic] the current agricultural rate .... " (Sec. 5.) The Brown Act allows for discussion, in closed session, regarding the price and terms of a sale or lease of real property. In fact, the Brown Act specifically states that, for purposes of this closed session exception, the price and terms of a lease includes "renewal or renegotiation" of a lease . Therefore, since one of the express terms of the South Coast Farms license agreement included an express requirement of payment for water by the licensee, it would have been entirely lawful for the City Council to discuss that term of payment in closed session. Therefore, the City Attorney's Office does not believe that there was any violation of the Brown Act. Moreover, following the closed sessions referenced above, the City Council agendized the proposed payment plan on the City Council's open session agenda on February 7, 2017. At that time, the public was afforded the opportunity to view the proposed payment plan, and provide public input should it so desire. Therefore, even though there was no violation of the Brown Act, this process of placing the item on open session provided the cure to any alleged Brown Act violation. Therefore, there was no Brown Act violation, and even if there were, it was cured by the due consideration of this item on the February 7, 2017, open session. However, in the interests of transparency, the City Attorney's office has recommended that this item be placed on the open session agenda one more time. ENVIRONMENTAL ANALYSIS : In accordance with the California Environmental Quality Act (CEQA), the recommended action is exempt from CEQA per Section 15061 (b)(3), the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The approval of the Payment Schedule Agreement and 90 day extension of the License Agreement would not constitute an activity with potential to cause a significant effect on the environment and therefore is exempt from CEQA. PRIOR CITY COUNCIL REVIEW: • On June 15, 1999, the City Council approved the initial Lease Agreement. • On Jun 6, 2000, the City Council approved the revised Lease Agreement. • On April 1, 2008, the City Council approved the current License Agreement. • On September 6, 2016, the City Council discussed the License in closed session. • On January 12, 2017, the City Council discussed the License in closed session. • On February 7, 2017, the City Council heard and approved the accompanying Payment Plan Schedule. City Council Agenda Report April4, 2017 Page 3 of 3 COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: Not applicable. NOTIFICATION: South Coast Farms Clint Worthington ATIACHMENT(S): Attachment 1 -February 7, 2017, Agenda Report, with attachments. Attachment 2-March 7, 2017, letter from Mr. Clint Worthington TO: FROM: PREPARED BY : DATE: SUBJECT: City of San Juan Capistrano Agenda Report Honorable Mayor and Members of the City Council ;rtfe'n Siegel, City Manager Charlie View, Project Manager February 7, 2017 2/7/2017 E12 Consideration of a Payment Schedule Agreement and Extension of License Agreement (South Coast Farms} RECOMM ENDATION: By Motion: 1) Approve and Authorize the City Manager to execute the Payment Schedule Agreement for Outstanding Water Charges with South Coast Farms; and, 2) Authorize the City Manager to extend the 2008 License Agreement with South Coast Farms by 90 days. EXECUTIVE SUMMARY: Mr. George Kibby, owner of South Coast Farms, operates an organic farm and produce sales facility on City-owned land bounded by Alipaz, Camino Del Avian and Via Positiva (portion of AP#121-190-57). While the License Agreement (Agreement) does not expire until May of 2018, there is an outstanding balance of approximately $224,000 owed the City for the water consumed for the operation of the farm. As discussed below, the cost for water to serve the farm has increased substantially over the term of the current Agreement, with the most recent increase resulting from the consolidation of various water rates into a legally defensible, cost-of-service based formula in 2014 . In response to the City's request for a payment plan, Mr. Kibby developed the attached proposal (Attachment 1) which was discussed at the City Council Closed Session meeting of September 6, 2016, and January 12, 2017 . At the direction of the City Council, an Agreement/Payment Schedule has been prepared by the City Attorney's Office for consideration by the City Council (Attachment 2). The information below is intended to provide the City Council with the background information that resulted in the recommended payment agreement. ATTACHMENT 1 City Council Agenda Report February 7, 2017 Page 2 of 3 DISCUSSION/ANALYSIS: The City of San Juan Capistrano owns the approximately 28 acre property known as Kinoshita/South Coast Farm. This property was originally purchased in 1991 by the San Juan Capistrano Redevelopment Agency from the Kinoshita Family as a means to comply with an obligation to Capistrano Unified School District (CUSD) associated with an Agency purchase of CUSD property. In 1998 the Redevelopment Agency and CUSD revised their agreement and the property was purchased from the Redevelopment Agency by the City using proceeds from the Measure D Open Space Bonds. The Zoning and General Plan for the property are Agri-Business, which allows the farm operation. Subsequent to the City purchasing the property, the City and Mr. Kibby entered into a series of agreements to continue the use of the property as a farm. Below is a summary of the agreements: • June 15, 1999 Lease Agreement • June 6, 2000 Lease Agreement replaces 1999 Lease Agreement • May 6, 2008 License Agreement terminated the 2000 Lease (Note: New License Agreement Terminates in May, 2018) At the time of the original Lease Agreement and until 2004, the farm was served with well water and was paying less than agriculture/farm water rates. In 2004, the farm was transitioned off well water and began paying the farm/agriculture rates for water. The well water was discontinued in conjunction with the start-up of the Ground Water Recovery Plant (GWRP). The May 2008 Agreement (Attachment 3) included specific language regarding the provision of water at an Agriculture Rate. At the time the 2008 Agreement was executed, there were specific water rates for farm and agriculture water usage. In 2014, the City adopted new water rates that maintained an "Agriculture" water rate; however, as legally required, the new rate was equal to other rates for domestic water supply, which are significantly higher than the previous rate for farm/agriculture use (Attachment 4). The practical impact of the recent rate changes is illustrated by comparing water charges for the farm immediately before and after the 2014 increase: • April/May 2014: $12,477 (3985 ccf) • June/July 2014: $17,498 (3627 ccf) Although water consumption at the farm varies with seasonal planting and growth cycles, these spring/summer rates represent the higher water consumption period. City Council Agenda Report February 7, 2017 Page 3 of 3 As indicated above, the current License Agreement terminates in May 2018, while the proposed Payment Schedule includes a final payment in July 2018. The proposed Payment Schedule is tied directly to the harvest schedule for South Coast Farms and, as such, Mr. Kibby is requesting an extension of the License Agreement to allow for completion of the 2018 strawberry and cucumber harvest. In the interest of providing South Coast Farms the opportunity to successfully fulfill the payment schedule without undue hardship, staff recommends a 90 day extension to the 2008 License Agreement in conjunction with approval of the Payment Schedule. FISCAL IMPACT: The Water Operations Fund will receive the payments required by the Payment Schedule Agreement. Compliance with the Agreement will result in the Water Operations Fund collecting all amounts due to the City. ENVIRONMENTAL IMPACT: In accordance with the California Environmental Quality Act (CEQA), the recommended action is exempt from CEQA per Section 15061 (b )(3), the general rule that the CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The approval of the Payment Schedule Agreement and 90 Day extension of the License Agreement would not be an activity with potential to cause significant effect on the environment and therefore is exempt from CEQA. PRIOR CITY COUNCIL REVIEW: • On June 15, 1999 the City Council approved the initial Lease Agreement • June 6, 2000 the City Council approved the revised Lease Agreement • On April 1, 2008 the City Council approved the current License Agreement COMMISSION/COMMITIEE/BOARD REVIEW AND RECOMMENDATIONS: Not applicable. NOTIFICATION: South Coast Farms ATTACHMENT(S): Attachment 1-Letter from South Coast Farms Attachment 2 -Agreement Establishing Payment Schedule Attachment 3 -2008 Staff Report and License Agreement Attachment 4-Current Water Rate Schedule South Coast Far ms, In c. 32701 Alipa z Sl. San Juan Capistr ano, CA 9267 5 Tel:949-661-9381 Fax:949-661-9349 www. southcoastfarms. com September 6, 2016 In 1998 South Coast Farms entered in to a lease agreement with the City of San Juan Capistrano to operate a farm on the Kinoshita property. The citizens of San Juan Capistrano had previously purchased the Kinoshita property and Its' water well along with other open space utilizing a ballot approved bond mechanism. Since 1998 South Coast Farms converted the Kinoshita to a 100% certified organic farm. We spray no chemicals and use no chemical fertilizers. We operate the farm as conscientious members of the community recognizing our neighbors are schools, parks and residential neighborhoods. We respect our neighbors and are grateful to be part of their community. The Kinoshita farm had always had and used its own water well previous to the City purchasing the farm. South Coast Farms continued to use the water well as Its sole source of Irrigation water. In 2004 the water well was taken away from the farm to be used in the City's Water Treatment Plant. At that time we were given no choice in the matter and we were forced to go on municipal water. I vividly remember Amy Amarani from the City manager's office telling us that the City did not even have to provide us water and to be happy they decided to let us have municipal water. We had no choice. We were now on City water. Since 2004 South Coast Farms has been asking the City to return the well to the farm where it belongs and from where it came. That has not happened. In the meantime we entered Into our l~st lease in 2008 for a 10 year term. That lease stipulated we were to be given water at an agricultural rate. At that time the ag rate was lower than the residential rate as it still is in every water district in the state. Until now. Today, in San Juan Capistrano, the agricultural rate for water is the same as the residential rate. Nowhere In our wildest nightmares did we ever interpret the agricultural rate to someday be the same as the residential rate. Compounding the water issue is since the City became their own water supplier rates have skyrocketed. The rates are now the highest in the county. south Coast Farms has been pleading with City staff to help us fix this problem for years to as of yet no avail. We ask the City to consider some type of rate relief to the farm, We know there are legal obstacles and considerations but relief In the short term is needed until we find a long term solution. Such relief perhaps could be in the form of a subsidy or yes a return of the farm's well as soon as possible. ATTACHMENT 1 There is no other City in the country that bought a farm and farm well as a commitment to the farming heritage of that city. To have removed that well from the farm and then eliminating ag water rates on that farm in that city is not in the spirit or purpose of the original farm purchase. However, we recognize the bill is due and must be paid. This little bit of history on water and the farm Is merely to say again, paying $2300.00 per acre foot for ag water Is not a tenable situation for a farm in Orange County. We Invite all concerned to compare ag water rates across the county and state to see the huge difference In water rates between everywhere and here. Given that history, South Coast Farms proposes to pay the blllln full by the end of our lease in July 2018. The payment schedule Is built around our seasonal crop and cash flow projections which are based on 20 years of farming here. DECEMBER 312016 $40,000 MAY 15,2017 $40,000 AUGUST 15, 2017 $40,000 DECEMBER 1, 2017 $40,000 MAY 15,2018 JULY, 2018 $40,000 $40,000/BALANCE DUE Again, we wish to convey the need to find a viable long term solution to the cost of water on the Farm. Some of the solutions for City might include returning the water well back to the farm, bringing reclaimed water to the farm maybe even from a closer location like Dana Point? Other solutions might Include the Clty .recognlzing the high cost of water requires a different business model and allowing South Coast Farms to bring value added, farm products in to the retail mix. This might Include a certified kitchen in which to make strawberry jams, sun dried tomatoes and perhaps even meals, sandwiches, pies, soups and a small outdoor dining area located on the farm. Of course these changes would require investment. For that investment to be viable, a new lease would be needed. What we are saying Is now is the time to address the Issues and move forward. We look forward to further discussion. Thank you. Sincerely, $<vc.b.l;;r Ge orge Ki bby AGREEMENT ESTABLISHING A PAYMENT SCHEDULE FOR OUTSTANDING WATER CHARGES BY AND BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND SOUTH COAST FARMS, INC. This Agreement Establishing a Payment Schedule for Outstanding Water Charges ("Agreement") is made and entered into this _day of , 2017, by and between the City of San Juan Capistrano, a California municipal corporation ("City") and South Coast Farms, Inc., a California corporation ("South Coast") with reference to the facts set forth in the Recitals below: RECITALS WHEREAS, City is the owner of the 28.225 acre farm in the City of San Juan Capistrano, California, generally located at the northwest corner of Alipaz Street and Camino Del Avion, San Juan Capistrano, California (the "Property"). WHEREAS, On May 6, 2008, the City and South Coast entered into a ten-year License Agreement ("License Agreement"), granting South Coast a license to conduct farming operations on 27.725 acres of the Property, with 0.50 acres set aside for City use. WHEREAS, Pursuant to Section 5 of the License Agreement, the City is responsible for providing a source of water supply to South Coast, and South Coast is required to pay for water at no more than the current agricultural rate and any costs of keeping the irrigation system operational, regardless of the source of supply. WHEREAS, South Coast currently owes to the City an outstanding balance of $246,971 in unpaid water charges for Account No. 90032. WHEREAS, City and South Coast desire to establish a payment schedule regarding this outstanding balance. AGREEMENT NOW THEREFORE, in consideration of the foregoing, and of the mutual obligations and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Payment Schedule. South Coast shall complete payment of all outstanding charges for Account No. 90032 prior to the expiration of the License Agreement in July 2018. 61147.00310\29255538.1 1 ATTACHMENT 2 Specifically, South Coast shall make payments pursuant to the following payment schedule: December 31, 2016 May 15, 2017 August 15, 2017 December 1, 2017 May 15, 2018 July, 2018 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000/Remaining Balance 2. Payment in Addition to Regular Monthly Charges. Payments made by South Coast pursuant to the Payment Schedule set forth in Section 1 shall be made in addition to the payment by South Coast of regular monthly charges for current water use. 3. Default. If South Coast defaults in the payment of any scheduled payment set forth in Section 1 or defaults in the payment of any regular monthly charges for water use, such action shall constitute a default as described in Section 8 of the License Agreement, and shall authorize the City to take action as described therein. In addition, if South Coast defaults in the payment of any scheduled payment set forth in Section 1, the entire outstanding balance for Account No. 90032 becomes due and owing as a separate obligation under this Agreement. 4. Additional Fees. Provided that South Coast makes payments in accordance with the Payment Schedule set forth in Section 1, the City shall not assess any of the following charges against South Coast regarding Account No. 90032: late fees, courtesy tag fees for nonpayment, disconnection of service fees. 5. Termination. This agreement shall remain in effect until South Coast has completed payment of the outstanding balance for Account No. 90032, unless earlier terminated by mutual agreement of the parties. 6. Notices. Any notice required 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: 61147.00310\29255538.1 2 City of San Juan Capistrano City Manager 32400 Paseo Adelanto San Juan Capistrano, CA 92675 SOUTH COAST: George Kibby South Coast Farms 2268 E. Sandalwood Place Anaheim, CA 92806 7. Attorney's Fees. If either party commences action against the other party arising out of or in connection with this Agreement, the prevailing party shall be entitled to have and recover from the other party reasonable attorney's fees and costs of suit. 8. Indemnity. South Coast shall defend, indemnify, and hold harmless the City, and its elected officials, officers, employees, and agents, from and against any and all actions, claims, demands, losses, costs, expenses, including legal costs and attorney's fees, for death or injury to persons or damage to property, arising out of or related to South Coast's performance under this Agreement, except to the extent of such loss as may be caused by the City's own negligence, including that of the City's officials, officers, employees and agents. 9. Entire Agreement. The terms of this Agreement constitute the entire understanding and agreement between the Parties and supersedes all previous negotiations between them pertaining to the subject matter thereof. IN WITNESS WHEREOF, City and South Coast have caused this Agreement to be executed on the date and year first written above. SOUTH COAST FARMS: By: __________________ _ George Kibby 61147.00310129255538.1 3 CITY OF SAN JUAN CAPISTRANO By: ____________________ ___ Benjamin Siegel, City Manager ATTEST: Maria Morris, CMC, City Clerk APPROVED AS TO FORM: Jeff Ballinger, City Attorney 61147.00310\29255538.1 4 4/1/2008 AGENDA REPORT 06 TO: Dave Adams, City Manager 9-- FROM: Cindy Russell, Interim Public Works Director SUBJECT: Consideration of a license Agreement for the Kinoshita Farm (South Coast Farms) RECOMMENDATION: 1. By motion, approve the license agreement with South Coast Farms for $25,000 annually; and, 2. Authorize the Mayor to execute the agreement on behalf of the City. SITUATION: The City and the San Juan Capistrano Community Redevelopment Agency are owners of a 28.225 acre farm on the corner of Alipaz and Del Avion, which was acquired to be maintained as open space within the City (Exhibit A, Attachment 1 ). South Coast Farms, the current operator of the farm, has renegotiated with the City to continue to farm 27.725 acres, with the remaining acreage set aside for future City use. Please note that the City entered into a separate license agreement on August 8, 2006, with the San Juan Family Farm Museum (an affiliate of South Coast Farms), for the maintenance and use of the Joel Congdon House also at this location. As part of the proposed license agreement (Attachment 1) for farm operations, South Coast Farms shall continue to maintain a fully functioning farm, as well as a fruit and vegetable stand over the 1 0-year term of the license agreement. At the end of the fifth year, the annual license rate of $25,000 may be renegotiated. In addition to the annual license fee, the agreement provides for South Coast Farms to pay the current agricultural rate for water. South Coast Farms shall own all crops produced at the property, and shall continue to provide the supervision and management over the farm operations. There is an antenna site located at the Sports Park field, which is adjacent to the farm. The license agreement specifies that South Coast Farms will allow for use of the access road (Exhibit A, Attachment 1), with the City maintaining the road and gate. In addition, the City will continue to access the property to host the annual Fourth of July Celebration throughout the term of the agreement. Since beginning operations on this property in 1999, South Coast Farms has proven to be a successful farm operator with 100% of its operations being organic. This type of ATTACHMENT 3 AGENDA REPORT Page 2 April 1 , 2008 organic farm means that the residents of San Juan Capistrano are not exposed to any of the herbicides and pesticides that normal farm operations utilize, while being offered healthier foods to enjoy. South Coast Farms is well-known for such produce as strawberries, tomatoes, leafy greens, pumpkins, etc. Additionally, South Coast Farms has become a part of the community providing educational opportunities for our schools and residents as well . Staff recommends that the City Council approve the proposed license agreement with South Coast Farms for continued operation of the farm property. NOTIFICATION: George Kibby, South Coast Farms COMMISSION/BOARD REVIEW, RECOMMENDATIONS: Not Applicable. FINANCIAL CONSIDERATIONS: The proposed license agreement with South Coast Farm provides for a $25,000 per annum payment. The proposed license agreement requires South Coast Farms to pay the current agricultural rate for water. RECOMMENDATION: 1. By motion, approve the license agreement with South Coast Farms for $25,000 annually; and, 2. Authorize the Mayor to execute the agreement on behalf of the City. Respectfully submitted, Prepared by, ~ ~~ CindyR0.$ M~~ Interim Public Works Director Management Analyst Attachments: 1. License Agreement LICENSE AGREEMENT This License Agreement ("Agreement") is made this __ day of __ , 2008, by and between the City of San Juan Capistrano, a municipal corporation, and the San Juan Capistrano Community Redevelopment Agency, a public body, corporate and politic (known jointly hereinafter as the "LICENSOR"), and South Coast Farms. ("LICENSEE"). RECITALS WHEREAS, LICENSOR is the owner of the 28.225 acre farm in the City of San Juan Capistrano, California, generally located at the northwest corner of Alipaz Street and Camino Del Avian, which property was acquired to be maintained as open-space within the City; and WHEREAS, LICENSEE desires to conduct farming operations on 27.725 acres of the property, with 0.50 acres set aside for City use; and WHEREAS, LICENSEE has farming expertise and experience and desires to manage the maintenance and operations of all agricultural activities on the property; and WHEREAS, LICENSEE and LICENSOR had entered into a Lease Agreement dated June 15, 1999 for a term of 10 years, which was subsequently revised by a lease Agreement dated June 6, 2000, which the parties wish to terminate in return for the grant of license and the terms and conditions herein . LICENSE NOW, THEREFORE, LICENSOR and LICENSEE do hereby mutually agree as follows: Section 1. Grant of Licensefferm. (a) G rant of Li cense . LICENSOR hereby grants to LICENSEE a License to manage, maintain, and operate a fruit and vegetable farm on the property, as depicted on the site plan attached hereto as Exhibit "A" and incorporated herein by reference (hereinafter referred to as the "Premises"). Provided, however, that this License does not include the Joel Congdon Residence area as depicted in Exhibit ''A," which is subject to a separate. license. LICENSEE shall provide the expertise, supervision and management over the farm operations, and LICENSEE shall own all crops produced on the Premises. (b). Term. The term of this Agreement with regard to the Premises, shall be for a period of ten (1 0) years, commencing upon the date first above written unless sooner terminated by mutual consent of LICENSOR and LICENSEE. ~~2~13 .1 Page 1 of 9 ATTACHMENT 1 Section 2. License Fee. (a) LICENSOR shall receive from LICENSEE a license fee of twenty-five thousand dollars ($25,000) annually, to be paid on a quarterly basis, based on calendar year quarters and prorated accordingly, for the first full five (5) years of the license term. (b) Ninety days prior to the end of the fifth year of the license term, the license fee shall be renegotiated between LICENSOR and LICENSEE with the intent being that the agreed upon license fee for the subsequent five-year tenn of the license shall match the market rate for similarly situated properties, provided that in no case shall the license fee be reduced as a result of the negotiations. (c) In the event that the parties cannot come to agreement within forty-five (45) days of commencement of license fee negotiations, either party may call for a binding arbitration process wherein each side selects an arbitrator and a third arbitration panel member is then chosen by the two selected arbitrators. The three-person panel shall then conduct an informal hearing to receive evidence and argument regarding the appropriate license fee. The panel shall render a final and binding decision within thirty (30) days of convening the panel. LICENSEE shall continue to pay the license fee in subsection (a) during the pendency of the proceedings subject to retroactive adjustment upon the establishment of the new fee pursuant to this subsection. Section 3. Nature of Uses Permitted Under the License and Maintenance of Premises. (a) Operation of Farm. LICENSEE shall be responsible for the supervision and management of every aspect of running a produce farming operation for human consumption on the Premises in a business like manner. ~~24JJ I The existing retail stand may be utilized by LICENSEE for produce retail sales only. Any expansion, regardless of size or scope, is not permitted under this Agreement unless LICENSOR's written approval is first obtained. LICENSEE's supervision and maintenance shall include, but not be limited to: i. the employment, supervision and direction of all employees engaged in the farming operation; ii. providing for the maintenance of all equipment and supervising its use in a safe and prudent manner; iii. soil preparation, planting, fertilizing, irrigating, pesticide and herbicide applications, and the harvesting of all crops; iv. the marketing and sale of crops; Page 2 of 9 v. maintenance of records and accounting for all revenues and expenditures, including employee payroll and related records; vi. purchasing of all seeds, plants, fertilizers, herbicides, pesticides, and other materials and supplies, such as boxes and packaging materials, required for marketing and sale of the crops; vii. management and maintenance of all on-site improvements, provided that any temporary housing is subject to City's approval based on all applicable provisions of the City's Land Use Code. LICENSEE shall 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's Municipal Code. (b) Maintenance of Premises . LICENSEE agrees to accept the Premises in its present condition as of the date of execution of this Agreement. Except for the Congdon Residence, LICENSEE may use the buildings and existing structures on the Premises for LICENSEE's use in farming 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's maintenance requirements shall include, but shall not be limited to the following: i. Fruit Trees. LICENSEE shall plant fruit trees on the Premises and shall be responsible for properly maintaining them. There is not a restriction regarding the height of the fruit trees; however, LICENSEE shall be consistent and make efforts to keep the trees at a height that will not hinder or disrupt views into the farm or surrounding areas. ii. Shrubs. The shrubs on the Premises block the wind, limit road dust, and reduce the amount of debris entering the Premises. LICENSEE is responsible for sufficiently maintaining the shrubs in.order to keep harmful elements away from the crops. (c) Marketing and Sale of Crops . LICENSEE shall be responsible for the marketing and sale of crops produced on the Premises. Crops will be sold at retail at the retail stand located on the Premises and to commercial produce wholesalers and distributors. LICENSEE shall provide a schedule to LICENSOR of proposed days and hours of operation of the on-site retail location. SS2413,1 i. Importing Items from outside vendors. LICENSEE, in an effort to ensure that business stays consistent, even in particularly bad years, shall have the authority to purchase certain produce items from outside vendors to sell at retail at the Premises. Page 3 of 9 (d) Condition of Premises . LICENSEE accepts the Premises in its present condition upon execution of this License. LICENSOR makes no warranty of the suitability of the Premises for growing crops. LICENSEE agrees, at LICENSEE's expense, to use reasonable care to control all weeds, noxious or otherwise, growing on the Premises, including those growing in drainage ditches. LICENSEE shall furnish all labor and materials required to eliminate and otherwise reasonably control all rodents, insects and other pests on the Premises. LICENSEE agrees to farm the Premises in a manner reasonably calculated to protect the soil and maintain the fertility through the use of fertilizers and chemicals in accordance with good farming practices as generally followed and recognized in Orange County, California. LICENSEE agrees, at LICENSEE's expense, to keep fences, ditches and borders of the Premises in good condition and in repair at all times, reasonable wear and tear excepted. The duly authorized representative of LICENSOR may enter upon the Premises and all structures and buildings thereon, or any portion thereof, at a reasonable time for the purposes of inspection. (e) Access Road . The access road as shown in Exhibit "A," shall be accessible for use by representatives of the wireless phone company to gain access to the antenna site located on the Sports Park field adjacent to the Premises. The foundation of the road shall be comprised of gravel at no cost to LICENSEE. In addition, a gate and corresponding locks shall be added and maintained at no cost to LICENSEE. (f) Fourth of July Celebration . LICENSOR shall have use and access to the Premises in order to host the fireworks celebration for the community from the Premises each July 4th on an annual basis throughout the term of this License. This access shall include, but not be limited to, all set up, coordination, and take-down activities necessary to fire the fireworks from the Premises. Section 4. No Assignments . LICENSEE shall not assign this License or any interest herein, or sublet the Premises or any part thereof, or license the use of all or any portion of the Premises or business conducted therein or thereon, or encumber or hypothecate the Premises or this License, without first obtaining the written consent of LICENSOR. Any assignment, subletting, licensing, encumbering, or hypothecating of the Premises or this license without such prior written consent of LICENSOR, shall be void and shall be cause for cancellation of this License by LICENSOR at its option. Section 5. Water. 552413, I An existing water well and backbone irrigation system may be available to LICENSEE for irrigation uses, with LICENSOR being responsible for the maintenance of the well. The LICENSOR is responsible for providing a source of supply to LICENSSEE, which may include well water, recycled water, or domestic water. LICENSEE is required to pay for water at no more then the current agricultural rate, and any costs required in Page 4 of 9 keeping the irrigation system operational, regardless of the source of supply. LICENSEE will not be obligated to pay for differences in water rate costs. LICENSEE agrees to work cooperatively with LICENSOR to coordinate watering schedules between the Premises and the City Sports Park. LICENSEE shall not be responsible for water costs for the City Sports Park. Section 6. Utilities. Subject to Section 5 above, LICENSEE is fully and solely responsible for providing any utility service required for the farm maintenance and operation. Section 7. Time of the Essence . Time is of the essence of each and every provision, covenant, and condition herein contained and on the part of LICENSEE to be done and performed. Section 8, Defau lt. (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 notice of such default and if LICENSEE does not cure any such default within three (3) days, or such other time period as specified in the notice of default, after the giving of such notice, then LICENSOR may terminate this license on not less than ten (1 0) days' notice to LICENSEE. On the date specified in such notice 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 thereaftenesume possession of the Premises by any lawful means and remov~ 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 Du e to Bankruptcy 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 (1 0} days' notice in writing to LICENSEE, in which event, on the expiration of the ten (1 0) days from mailing of the notice, this License shall automatically terminate. Section 10. Notices . Page 5 of 9 Any notice required 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: LICENSOR: City of San Juan Capistrano/Redevelopment Agency City Manager/Executive Director 32400 Paseo Adelanto San Juan Capistrano, CA 92675 LICENSEE: George Kibby South Coast Farms 2268 E. Sandalwood Place. Anaheim, CA 92806 Section 11. Att o rneys ' Fees . If either party commences action against the other party arising out of or in connection with this License, the prevailing party shall be entitled to have and recover from the other party reasonable attorney's fees and costs of suit. Section 12. 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 13. Insura nce. SS2413 I LICENSEE shall pay for and maintain insurance throughout the life of this License with general liability coverage of one million Dollars ($1,000,000) minimum coverage per occurrence, and fire and all risk property damage insurance, insuring all of LICENSEE's equipment and trade fixtures located on the Premises for full replacement cost. Said policy shall name LICENSOR 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 Page 6 of 9 not occur without thirty (30) days advance written notice provided by the insurer to LICENSOR. Section 14 . Indemnity. LICENSEE shall defend, indemnify, and hold harmless LICENSOR, and their respective elected officials, officers, employees, and agents, from and against any and all actions, claims, demands, losses, costs, expenses, including legal costs and attorney's fees , for death or injury to persons or damage to property or the Premises, or for the pollution thereof and cleanup costs, arising out of or related to LICENSEE's use of the Premises, except to the extent of such loss as may be caused by LICENSOR's own negligence, including that of their respective officials, officers, employees and agents. LICENSOR shall not be held accountable for any preexisting soil contamination, including those identified in the report dated January 28, 1990, prepared by Chern Risk, and the report dated December 18, 1990, prepared by South Coast Geologic~! Services, Inc. Section 15. 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 . Section 16. 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 of this 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. Section 17. Entire Agreement. The terms in this License constitutes the entire understanding and agreement between the Parties and supersedes all previous negotiations between them pertaining to the subject matter thereof. Section 18. Termin ation of Past Leases. Licenses and Agreements. 5~241J.I This License and the terms and conditions hereof supersede and shall terminate the leases entered into by the parties dated June 15, 1999 and June 6, 2000, and Page 7 of9 any other leases, licenses, agreements or understandings pertaining to the subject matter hereof. IN WITNESS WHEREOF, LICENSOR and LICENSEE have caused this License to be executed on the date and year first written above. LICENSEE: ::UT;;~ eorge ibb ATTEST: Margaret R. Monahan, City Clerk APPROVED AS TO FORM: VmfVl/J~ Omar Sandoval, City Attorney LICENSOR: CITY OF SAN JUAN CAPISTRANO, A California municipal corporation By: ____________________ _ Joe Soto, Mayor [ADDITIONAL SIGNATURE PAGE FOLLOWS] Page 8 of 9 552413 I ATTEST: SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic By: ~~~~~~~~------Mark Nielsen, Chairman Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Page 9 of 9 - KINOSHITA FAR ==---===-3 00ft N CityGIS 6.0 Copyright@ 2006 All Rlgtrts Reserved . Tho lntormollon conloint)d horo 1 is lho pr op-iatary f)r f)erty of I he contriiJLrtor supplied llf1der license ond moy not be appraved e:xx::ept !>!: Ucensed by Dlg~ol fvhm Producls. EXHIBIT A City of San Juan Capistrano -Water and Sewer Rate Codes Rates & Allocations Effective as of 07/01/16 ltl!v1Wio..'f ti!'li:tff«IJO~'l fP!1' I fJrf}]!JrnlJfl} .dfm(}...~l·i~' ! ~r:Jr.wfl} ~·~(~_; I ~ Jin:.'!Ym"J'W,: t.i•:.l'iirm:n i•ilG?!I' I' l'l'rln1h~ 11 _,..]ffir .. Essential [9) +Standard Outdo.or WCA Regular Lot $3.77 $5.24 $5.69 $5.69 (2, 700 Sq Ft) .· r Essentiai[9J (x #Units)+ Outdoor by WCB LaJ"2eLot $3.77 $5.24 $5.69 $5.69 SQ It, (concentric) Master-metered Essentlai[9J (x #units)+ Outdoor by wee residential $3.77 $5.24 $5.69 $5.69 Sq Ft Multi With Own Essential [9) + 500 Sq Ft outdoor (I WCD Irrigation 53.77 $5.24 $5.69 $5.69 ccf+)(x #Units) Multi Without Essential [9] + tOO Sq Ft outdoor (1 WCE,WCN Irrigation $3.77 $5.24 $5.69 $5.69 cct) (x #Units) WCF Landscape $3.77 $5.24 $5.69 $5.69 Essentia1)9J + Outdoor by Sq Ft WCG Agriculture $3.77 $5.24 $5.69 $5.69 Essential [91 + Outdoor by Sq Ft Essential [9] +Efficient= winter WCH Commercial $3.77 $5.24 $5.69 $5.69 average use (Jan, Feb, Mar) WCI Construction N/A N/A $5.69 N/A No Allocations, all usc at Tier 3 Non-potable (& WCJ Recycled) $3.53 $3.53 $4.20 $4.20 Essential [9] +Outdoor by SqFt WCL Flrelines N/A N/A $5.69 N/A No Allocations, all use at Tier 3 ~ . no~ ~~:cf'o. ·r . P)ru: . uru.01. . ln .. ~~ tlVI• .Gr..t.~Ilr.!1iT·~ ·ill •T .. r:,., il1!!ID.. 'iJJljUILI'Jif(JJJ..!ili,J9.J~(f1JJtfp){l'0.!J~ 111/1h .":~{ ·"' ~,:t·· ·~~ S• '· ~ _~V,:;:_"r..._ .; '( ~~ alilil! ~~ a~ ~ 1. . ~ ~ .:. •.J ,t,~ ,., :t· 'f·. WSA 5/8" and 3/4" $24.32 WSB 1" $33.90 wsc 1.5" $48.17 WSD 2" $74.24 WSE 3" $222.87 WSF 4" $314.05 WSG 6" $546.82 WSH 8" $933.76 WSM Fireline Up to 6" $71.88 Fireline 8'' and WSN over $153.17 wss I ConstructiOn $222.87 (I.e. $7.34/ day (30 day montbl) sec Residential $24.34 PER UNIT (if multi units) SCD Multi-Residential $18.88 PER UNIT (if multi units) SCE Commercial BY USE• • Average winter water use +$10.82fu:ed cflarge SCF Pool-Small $41.61 I per ccf of winter average ls2.4o Pool -La rgc (over sso SCG 1qfl ••rfnr:e An!A) $103.25 SCQ Mobile Homes $13.42 PER UNIT ATTACHMENT 4 March 7, 2017 Maria Morris City Clerk Benjamin Siegel City Manager City of San Juan Capistrano (Hand Delivered) RECE\VEO 'l.~1J rlRR 7 P\'l 1 02 tt,.Y Ott. R~ SAM JUAM C APn>T R~Me Re: Violation of the Ralph M. Brown Act on February 7, 2017 City Council Meeting Dear Ms. Morris and Mr. Siegel, In reference to the above mentioned meeting, specifically item E 12 on the Agenda, this letter will serve as a DEMAND TO CORRECT AND CURE as provided in the Ralph M. Brown Act. Item E12 was an action item listed on the Agenda of February 7, 2017 as "Consideration of a Payment Plan Schedule Agreement and Extension of License Agreement (South Coast Farms)", with the following summary and recommendation in part: "In response to the City's request for a payment plan, Mr. Kibby developed the attached proposal (Attachment 1) which was discussed at the City Council Closed Session meeting of September 6, 2016, and January 12, 2017." The issue is that there is nothing on either the Agenda date of September 6, 2016 or January 12, 2017 for Closed Session items that indicates a discussion will be held regarding a payment plan for the arrearages of approximately $240,000 in the water bill for South Coast Farms. This is a blatant violation of the Ralph M. Brown Act of the State of California Constitution. as it was not an item listed on the Agenda as required by the Ralph M. Brown Act, and therefore was not properly noticed to allow for public input as required by the Ralph M. Brown Act. I look forward to receiving from you the date that this item will be properly ATTACHMENT 2 listed on the regular Agenda, which will give the public the proper notice and opportunity to provide input to the City Council. In addition, all notes, letters, emails, written communication, copies of water bills or any other documentation that was provided to the City Council will also be required to be disseminated to the public for comment when this Agenda item is re- listed. Sincerely, Clinton R. Worthington 32552 Alipaz 2C San Juan Capistrano, Ca 92675 Cc: Wayne Tate Esq.