HomeMy WebLinkAbout20 CITY REMEDIES FOR MATERIAL DEFAULT UNDER THE DDA AGREEMENT BETWEEN TLCP~
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MEETING DATE: JUNE 15, 2010
Agenda Item 20
Reviewed:
City Manager
Finance Director
TO: WILLIAM A. HUSTON, CITY MANAGER & EXECUTIVE DIRECTOR TUSTIN PUBLIC
FINANCING AUTHORITY
FROM: REDEVELOPMENT AGENCY STAFF
SUBJECT: CONSIDER ACTIONS WITH RESPECT TO CITY REMEDIES FOR MATERIAL
DEFAULT UNDER THE DISPOSITION AND DEVELOPMENT AGREEMENT
BETWEEN TUSTIN LEGACY COMMUNITY PARTNERS, LLC., THE CITY OF TUSTIN,
AND TUSTIN PUBLIC FINANCING AUTHORITY.
SUMMARY
The City and Tustin Public Financing Authority ("Authority") previously entered into a
Disposition and Development Agreement (Master Development) ("DDA") with Tustin
Legacy Community Partners, LLC ("TLCP" or the "Developer"). The DDA established the
parameters of development and conveyance of certain property at Tustin Legacy to
TLCP. TLCP has not performed under the terms of the DDA. As a result, the City
found the Developer in Material Default under the DDA. Since the Material Defaults
have not been cured by TLCP or the Developer's Permitted Mortgagee, the City and
Authority are being asked to consider certain actions in response to the uncured
Material Defaults. A Termination Agreement has been prepared which would permit
TLCP to consensually terminate its obligations under the DDA and Development
Agreement 06-01 and to voluntarily re-convey 335.76 acres of land back to the City.
Absence execution of the Termination Agreement by TLCP, certain additional actions in
response to the uncured Material Defaults with regards to the DDA and Development
Agreement 06-01 are identified for City Council and Tustin Public Financing Authority
consideration.
RECOMMENDATION
The following are two altemative optional approaches available for City Council and Tustin
Public Finance Authority consideration depending on TLCP's response to the City's offer
of a consensual Termination Agreement:
O tp ion 1
It is recommended that the City Council and Tustin Public Finance Authority, as applicable:
June 15, 2010
Page 2
1. Approve a Termination and Settlement Agreement, Joint Escrow Instructions, and
General Release Agreement (the "Termination Agreement") which indicates the terms
under which the City would offer TLCP a consensual termination of the DDA, and
authorize the City Manager and Executive Director of the Tustin Public Finance Authority,
to execute the Termination Agreement and take all actions necessary to implement the
Termination Agreement including the execution of all related documents and instruments,
subject to any non-substantive modifications as may be determined necessary as may be
recommended by the City Attorney or City's special counsel. Pursuant to the Termination
Agreement, the Phase I Property would be re-conveyed to the City in lieu of exercise by
the City of its Right of Reverter and foreclosure of an existing Notice of Deliquency and
Claim of Lien (the "Lien") recorded against the Phase 1 Property by the City on April 6,
2010.
In the event that City staff and legal counsel are unable to obtain agreement from TLCP to
the Termination Agreement within seven (7) days, City staff and legal counsel are
authorized to pursue actions identified under Option 2.
2. Issue to TLCP a written Notice of Non-Compliance under Section 4.2 of the Tustin
Legacy Development Agreement ("DA") 06-02 specifying the grounds and facts
demonstrating TLCP's non-compliance with the terms of the Development Agreement
and all other non-compliance procedures contained in the Development Agreement.
Option 2
It is recommended that the City Council and Tustin Public Financing Authority, as
applicable:
1. Terminate the DDA and license granted to TLCP pursuant to Section 5.2 of the DDA
with respect to any and all portions of the Developer Parcels as defined in the DDA (the
"DDA Termination"), effective immediately, and inform TLCP and TLCP's mortgagee,
KeyBank, in writing of the DDA Termination. The foregoing termination shall not be
deemed to terminate or to effect any rights or obligations of Permitted Mortgagees
under the DDA, including, without limitation, Article 16 thereof.
2. Instruct the City Attorney to take such steps as are necessary to cause the City to re-
enter the 335.76 acres that have been previously conveyed to TLCP (the "Phase I
Property") and to revest title thereto in the City (the "Right of Reversion", as described
in the DDA), such title to be subject to the lien of any Permitted Mortgage, , but also
subject to any provisions of the DDA which take precedence over the rights of a
Permitted Mortgage.
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3. Instruct the City Attorney to pursue on behalf of the City recovery of the amount of the
Developer's deficit in the Fair Share Contribution to the City in the amount of
$269,479,445, and certain attorney fees and consultant fees in the amount of $39,532
due and owing to the City contained in the Lien recorded against the Property, including
recovery of any additional costs associated with such Lien recovery, including
authorization to foreclose on such Lien.
4. Instruct the City Attorney to exercise the City's rights under its performance bonds
for certain work not yet completed within the Project, including, but not limited to:
a. A$353,000 Faithful Performance Bond for required Tract 17144, Warner Avenue
Storm Drain improvements from Red Hill Ave. to Armstrong Avenue (Safeguard
Insurance, No. 5034354).
b. A$176,500 Labor and Materials Bond for the required Tract 17144, Warner Avenue
Storm Drain Improvements from Red Hill Ave. to Armstrong Avenue (No. 5034254).
c. A$500,000 Faithful Performance Bond for required Tract 17144, Neighborhood E,
Phase 1 Local Storm Drain Improvements (Safeguard Insurance, No. 5034271).
d. A$250,000 Labor and Materials Bond for the required Tract 17144, Neighborhood E,
Phase 1 Local Storm Drainage Improvements (No. 5034271).
e. A$50,000 Maintenance Bond for required Tract 17144,Neighborhood E, Phase 1
Loca Storm Drain Improvements not completed (Safeguard Insurance, No. 5034272).
f. A$3,435,500 Faithful Performance Grading Bond for mass grading for Tract 17026
(Safeco Insurance Company of America, No. 6409181).
g. A$1,020,400 Faithfull Performance Grading Bond for rough grading for Tract 17144,
Neighborhood E( Safeco Insurance Company of America, No. 6409186)
5. Instruct the City Attorney to review and, as appropriate, exercise all other rights and
remedies under the DDA for non-performance and report back to the City Council to
ensure adequate recovery from TLCP of all damages incurred by the City due to
Developer's failure to perform its obligations under the DDA.
B. It recommended that the City Council issue to TLCP a written Notice of Non-
Compliance under Section 4.2 of the Tustin Legacy Development Agreement (DA) 06-
02 specifying the grounds and facts demonstratging TLCP's non-compliance with the
June 15, 2010
Page 4
terms of the Development Agreement, and all other non-compliance procedures
contained in the Development Agreement.
BACKGROUND
DDA Overview
On May 3, 2006, the City of Tustin, and Tustin Public Financing Authority entered into
the Tustin Legacy DDA with TLCP, a Delaware limited liability company as it affected
approximately 820 acres (the "Property") at the former MCAS Tustin ("Tustin Legacy").
Members of TLCP, at that time, included Centex Homes (as to a 50% interest), Shea
Homes Limited Partnership (as to a 25% interest) and Shea Properties, LLC (as to a
25% interest). The Agency and TLCP subsequently entered into the First and Second
Amendments to the DDA dated March 29, 2007 and June 5, 2007, respectively.
The First Amendment to the DDA provided for clarification of certain provisions of the
DDA and also included modifications to the Developer's Scope of Development and
Performance Schedule. The Second Amendment to the DDA authorized the withdrawal
of Centex Homes from the TLCP partnership and from any future contractual obligations
under the DDA and the reconfiguration of the ownership of the TLCP entity. As part of
the TLCP ownership reconfiguration, Shea Homes retained a 25% interest and Shea
Properties II, LLC (a new entity) was admitted to TLCP as a member and assumed
Centex's original 50% interest as well as replacing Shea Properties, LLC and assuming
its 25% interest (for a total 75% interest for Shea Properties II, ~LC).
TLCP was selected as the Master Developer based largely on the representations,
warranties and evidence it provided to the City that the entity had sufficient equity
capital, internal financial resources and access to external credit sources to fund all
costs related to developing the 820 acre Master Development site ("Project"), with the
development acumen to address and ride out the market cycles that would inevitably
occur, particularly recognizing that the project was anticipated to take more than twenty
(20) years to build-out.
In drafting the DDA, extra care was taken by the City to ensure that this last
undeveloped large scale site in Tustin would be a significant enhancement to Tustin
and Orange County. To ensure that the community's vision and the public objectives
for the Project were realized, an integral part of the DDA and its preparation process
incorporated the results of a cqllaborative planning process between the City and TLCP.
This included the preparation of a Master Development Plan. In April of 2006,
significant modifications to the MCAS Tustin Specific Plan and an Addendum update to
June 15, 2010
Page 5
the Final Program Environmental Impact Statement/Environmental Impact Report for
the Reuse and Disposal of MCAS Tustin (the "FEIS/EIR") were made by the City to
facilitate TLCP's development of the Project. Provisions of the DDA were also a
product of ineeting and fulfilling the City "vision" for the Project ("City Objectives") which
assisted the City in framing its relationship with the Developer related to the Project.
City Objectives are summarized in Attachment 1.
The primary purpose of the DDA was to effectuate the MCAS Tustin Specific Plan in
accordance with the terms and conditions of the Navy Conveyance Agreement and
federal Quitclaim Deeds. The DDA provided for the Developer's phased purchase of a
large portion of the Master Development site (the "Property"), with certain public
property to be retained and other property to be dedicated to the City, leaving
approximately 420 acres ultimately for private development.
Under the DDA, TLCP was to act in the role of the Master Developer, the land
development entity that would entitle the Property, build out certain defined Tustin
Legacy Backbone Infrastructure, and then sell finished development parcels to third
party residential builders for construction of vertical improvements (homes) in
Neighborhood D and rough graded parcels to builders for construction of vertical
residential and non-residential (commercial) development in Neighborhoods B, D and E.
TLCP indicated its associated entities (Shea Properties, Shea Homes, and Centex at
the time, and now Shea Properties II and Shea Homes) would also act as vertical
builders for a large portion of the Project.
The DDA established certain key terms, including but not limited to, the phasing and
conditions precedent to the City's obligation to sell and convey each phase of the
Property to TLCP. The key terms included the Scope of Development, the purchase
price for the property, obligations of the Developer for deconstruction of remaining
military facilities and antiquated infrastructure, and development of the Property under
the established Schedule of Performance, including obligations for construction of
Tustin Legacy Backbone Infrastructure and Local Infrastructure.
A summary of the Scope of Development and various other TLCP obligations under the
DDA regarding the Project are outlined in more detail in Attachment 2. One of the key
DDA terms was that the Property would be conveyed to TLCP in four (4) phases, based
on the Developer's performance, as depicted in Attachment 3 and summarized as
follows:
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Page 6
DDA Conveyance Phases
Phase Acres Closing Date Base Purchase Price
1 160 acres September 15, 2006 No Cash Payment; TLCP to
construct Phase 1 Tustin Legacy
Backbone Infrastructure and Local
I nfrastructu re
2 190 acres September 15, 2009 $150 Million and 3% escalation for
an annual delay.
3 54 acres July 1, 2011 $86 Million and 3% escalation for
up to 1 ear dela .
4 15 acres Contingent on ability to To be determined by subsequent
conve Han ar 29 appraisal
As noted above, the City's conveyance of approximately 160 developable acres to
TLCP at no cost in Phase 1 was contingent upon TLCP's constructing all of Developer's
Phase 1 Tustin Legacy Backbone Infrastructure and Local Infrastructure by September
15, 2009 in lieu of TLCP providing a land payment to the City. The land payments were
deferred to later phases after phased development activity would occur on the Property.
Development Agreement Overview
On June 19, 2007, the City adopted Ordinance 1336 approving Development
Agreement 06-02 ("DA") between the City and TLCP. The purpose of the Development
Agreement was to give TLCP certain assurances that in return for its commitment to a
comprehensive plan for the Property as required by the DDA and the Specific Plan, the
City would remain committed to the DDA and the Specific Plan and provide a vesting
right to TLCP to carry out and develop the Property in accordance with the DDA,
Development Plan, Existing Land Use Regulations and the provisions of the DA.
At any time during the term of the DA, either Party may declare that the other party has
not complied with the terms of the Agreement. Based on the facts contained in this
report, specific direction from the City Council will be requested with regards to the non-
compliance provisions under the DA.
June 15, 2010
Page 7
Status of the Project and DDA Performance /ssues
The City worked cooperatively with TLCP in the early initial planning stages of the
Project. A chronology of many of the earlier DDA implementation efforts are chronicled
in Attachment 4, "A Summary Chronology of DDA Implementation Actions/Issues".
Initially, TLCP proceeded with the preparation of certain plans for construction of both
Tustin Legacy Backbone Infrastructure and Local Infrastructure, largely associated with
Neighborhood E. However, the majority of its plan submittals and diligent pursuit of
Entitlements was suspended in early 2008. As of April 2010, the following is a synopsis
of the current status of the project:
• Mass grading of the Master Developer site was initiated but not completed.
Completion was required as a condition precedent to a Phase 2 escrow closing,
or September 15, 2009, unless extended per the DDA.
• Rough grading for Neighborhood E was initiated but not completed. Completion
was required as a condition precedent to a Phase 2 escrow closing, or
September 15, 2009, unless extended per the DDA.
• Required Phase I Tustin Legacy Backbone Infrastructure and Local Infrastructure
has not been completed and plans have not been submitted as complete nor
approved by the City with only two exceptions:
o TLCP made its required financial contribution pursuant to the DDA to the
Tustin Library project, a project the City constructed.
o The Developer has constructed interim storm drain improvements to
accommodate its drainage concerns during the rainy season until the
improvements can be connected to more permanent connections.
Completion of the above items were precedent to a Phase 2 escrow closing, or
September 15, 2009, unless extended per the DDA.
• Concept Plans and Tentative Maps for Neighborhoods G and D have not been
completed. Submittal of complete Concept Plan required for Neighborhood G by
March 27, 2007 and Neighborhood D by May 13, 2007. Complete Tentative
Tract maps were required to be submitted within 30 day of receipt of City
comments on preliminary submittals.
June 15, 2010
Page 8
• No Final maps have been recorded to date to create vertical builder parcels in
Neighborhoods E, D, or G nor has TLCP conveyed to the City any of the
Dedication Parcels required under the DDA. Submittal of complete Final Maps
were required within 75 calendar days following City Council approval of
Tentative Map for each neighborhood.
In early April 2008, with the commencement of the economic recession, TLCP met with
representatives of the Tustin City Council and key City management staff and indicated
that TLCP had cash flow concerns regarding the Project and was desirous of discussing
potential DDA amendments to mitigate these issues. City staff and its full team of
supporting consultants on the Business Plan and infrastructure matters subsequently
committed significant time and cost and continued to cooperatively meet and attempt to
respond to TLCP's concerns, albeit consistent with the City's goals and objectives for
the Project and subject to regular briefings and policy direction provided by the Tustin
City Council.
By the summer of 2008, TLCP's position had moved away from its initial
representations that it needed assistance for "cash flow" issues to representations that
the Project was no longer financially feasible and that the approximate 420 developable
acres in the Project had a negative land value. A summary of many of the activities
during this time frame are outlined in Attachment 4, "A Summary Chronology of DDA
Implementation Actions/Issues". In fact, in a proposal to the City dated September 18,
2008, TLCP put forth a financial business plan for the 420 developable acres (the entire
developable portion of the Project) in which the land was valued at $0. No definitive
guaranteed land payment to the City was offered but future participation payments to
City were offered based on TLCP's potential profit thresholds that might be achieved
many years in the future. Neither City staff, nor its team of financial consultants could
support this TLCP position based on the City's risks and financial analysis.
Subsequently on September 26, 2008, TLCP transmitted a letter to the City indicating
that it would be preparing for possible withdrawal from the Project, including orderly
termination of the DDA and the wind down of the Project itself.
Despite inconsistent and changing business plans, proposals, and positions from TLCP,
the City continued through the fall of 2008 and early 2009 to meet and discuss with
TLCP potential amendments to the DDA. These discussions included, but were not
limited to, DDA provisions that would provide the Developer with additional land value,
deferrals and additional time to complete Tustin Legacy Backbone and Local
Infrastructure obligations, and modifications to the phasing of development. In these
discussions, TLCP was also informed of certain broad overriding goals or principles that
June 15, 2010
Page 9
the Tustin City Council instructed staff to communicate to TLCP in our discussions,
including, but not limited to:
• The Developer needed to begin complying with the performance obligations
under the DDA and maintain momentum on the Project, particularly in
undertaking construction of Phase 1 Tustin Legacy Backbone and Local
Infrastructure.
• The vision and quality of the Project, as originally proposed, was to be
maintained.
• The Developer should focus any development to achieve a defined neighborhood
or sense of a master planned community.
• The City's original DDA City Objectives needed to be respected (see Attachment
1).
During this time frame, TLCP was reminded that the initial conveyance of the 335 acres
was contingent upon the installation of Phase 1 Tustin Legacy Backbone and Local
Infrastructure and that the City would entertain potential time extensions for certain
improvements provided TLCP made progress on installation of a mutually agreed upon
portion of the Phase 1 Tustin Legacy Backbone Infrastructure. Further, TLCP was
reminded that it was the City's desire for the Developer to maintain momentum on its
performance under the DDA. Nonetheless, beginning in early 2008, TLCP staff and
consultants informed the City that they were instructed by TLCP management to halt
work efforts and delay progress on the Project, including a majority of the required
entitlement and infrastructure plan and design submittals.
As a result of this lack of progress and Developer's failure to continue to perform its
obligations under the DDA, including completion of required Phase 1 Entitlements,
Tustin Legacy Backbone Infrastructure and Local Infrastructure plan completion and
construction, the City was required to take a number of actions against TLCP under the
DDA between December 2008 and March of 2009 as noted below and in Attachment 4.
• On December 12, 2008, the City issued a Notice of Potential Default to TLCP for
failure to perform certain Schedule of Performance obligations under the DDA
(see Attachment 5).
• On January 13, 2009, the City provided a thirty day time extension for TLCP to
identify specific measures it was taking to commence and complete cure of
June 15, 2010
Page 10
Potential Default items contained in the December 12, 2008 letter (or until
January 16tn)
• On January 20, 2009, the City notified TLCP that it had determined that TLCP's
letter of January 16, 2009 was unresponsive to the December 12, 2008 Notice of
Potential Default letter and direction of January 13th. Nonetheless, the City
provided an additional time extension through January 28, 2009 for TLCP to
respond as requested in the City's letter of January 13th and the Notice of
Potential Default letter of December 12, 2009.
• On March 4, 2009, the City issued a subsequent Notice of Default letter to TLCP
for failure to pay its required property taxes on the 335 acres of Property within
the Project (Attachment 6).
In both correspondence and meetings with TLCP responding to the December 2008
and March 2009 Notices of Potential Default, TLCP's explanation for its non-compliance
with the terms of the DDA was a result of economic and market conditions, and TLCP
asserted that the Project was no longer financially feasible. During this period, TLCP did
not attempt to cure the Potential Defaults or otherwise to demonstrate a~n r momentum
or progress on the Project.
To facilitate discussions in an attempt to put the Project back on track, the City entered
into a Forbearance Agreement ("FA") and Pre-Negotiation Agreement ("PN") with the
Developer on April 14, 2009, despite its lack of any demonstrated momentum on the
Project (Attachment 7). Pursuant to the FA, the City agreed to forbear from enforcing
the remedies afforded to it under the DDA, and particularly as they related to the
December 12, 2008 and March 4, 2009 Notices of Potential Default in an effort to
identify potential future DDA modifications on a cooperative rather than adversarial
basis without jeopardizing the interests of the City or subjecting the City to any
unreasonable risks.
The FA and PN Agreements confirmed that neither party had any obligation to modify,
amend or restructure the DDA nor was there any commitment by the City in the
Agreements to any proposed solution for outstanding issues between the parties.
Guiding principles were utilized by the City and presented to TLCP as a framework for
negotiations in its discussions with TLCP and in the City's responses to TLCP proposals
during the FA negotiations. These guiding principles included:
June 15, 2010
Page 11
• The quality of the Project provided in the DDA would not be compromised from
that originally adopted. The present value land price to be paid to the City would
not be less than the amount set forth in the DDA.
• Modifications would be considered to the Schedule of Performance, the location
and phasing of development, the required housing tenure, the timing and
phasing of infrastructure and the land conveyance schedule. The proposed
modifications would not impact the MCAS Tustin Final EIS/EIR thresholds.
• Alternative mechanisms of providing for construction of backbone infrastructure
would be explored.
• There would be a commitment of senior management to participate in the
negotiation process.
During this forbearance period under the FA, it was agreed that the City would not
exercise its rights and remedies with respect to the matters described in the December
2008 and March 2009 Potential Default letters, so long as:
• No other Potential Default or Material Default by the Developer under the DDA
occurred.
• Developer did not advise the City in writing that it was unwilling or unable to
perform any or all of its performance obligations under the FA ("Performance
Obligations").
• Developer did not fail to perform the Performance Obligations in accordance with
the FA.
• The Performance Obligations included the following:
o Submittal for approval of certain Phase 1 Sector B Neighborhood
Tentative and Final Maps and certain Phase 1 Tustin Legacy Backbone
and Local Infrastructure by specific identified time frames agreed upon by
the parties (only a portion of their obligations under the DDA were
stipulated).
o With respect to mass grading, demolition and interim drainage, submittal
of certain verifications and completion and approval of modifications to
certain grading and interim drainage plans by certain time frames.
June 15, 2010
Page 12
o To bring current, payment of a certain minimum property tax to the County
Assessor's office within 5 days of the date of the Agreement, based on an
assumed assessed value of the Property not less than $43 million, subject
to any subsequent assessment appeals board decision which would
require TLCP to pay all additional real estate taxes.
Once the FA and PN were executed, the parties proceeded to have a number of face to
face meetings. As was the case during the summer and fall of 2008, TLCP's position
continued to move further away from potential DDA modifications that were acceptable
to the City. Rather than TLCP positively responding to specific City identified
negotiating principles, TLCP's position was solidified very early in the process with its
presentation to the City of a Term Sheet dated June 9, 2009. The City staff carefully
reviewed the TLCP Term Sheet proposals, briefed and obtained specific policy direction
from the City Council and provided several detailed responses to TLCP's letters and
proposal clarifications. While the City offered several project modifications that were
embraced by TLCP, it could not agree with others offered by TLCP because certain of
the requested modifications were not in the City's interest and were not consistent with
the negotiating principles. .
Of course, the fact that the City did not agree with specific terms and proposals offered
by TLCP was not evidence of a lack of good faith, as neither the City nor the Developer
under the terms of the FA or PN Agreements were required to modify, amend, or
restructure of the DDA documents. That being clarified, the City was amenable to
considering specific DDA modifications consistent with the negotiation principles
indentified in the FA, which were in the City's best interest.
The City's good faith and willingness to negotiate potential modifications is further
identified in the chronology of activities during this time frame contained in Attachment
4. A summary of the proposed DDA modifications and revenue enhancements that the
City suggested to TLCP are provided in Attachment 8. While certain of these
enhancements would significantly assist in cash flow to TLCP, other enhancements
could have resulted in up to a$352 million dollar positive revenue impact on the Project.
Perhaps the greatest evidence of the City's good faith and willingness to negotiate
modifications to the DDA, was the City's consistent forbearance of its rights and
remedies under the DDA while a negotiated solution was sought, despite TLCP's
continuous failure to perform its obligations under the DDA and FA and make any
significant headway towards satisfaction of its obligations. It was entirely within the
City's rights to strictly enforce the terms of the DDA; instead, the City willingly agreed to
June 15, 2010
Page 13
forbear its rights pursuant to the FA in an attempt to negotiate mutuall acceptable
modifications to the DDA. No agreements were reached with TLCP and TLCP
nonetheless breached the FA during negotiations.
During the same time frame under the FA negotiations period, and then subsequently
upon termination of the FA, the following additional actions occurred:
• On July 13, 2009, a Notice of Potential Default was issued to TLCP based on its
failure to perform certain Performance Obligations under the FA including, but
not limited to, certain grading construction and submittaf requirements of
Backbone Infrastructure and Local Infrastructure Plans (Attachment 9). In
addition, the Notice of Default included Developer's failure to perform other
obligations under the DDA, particularly reimbursement of City incurred expenses.
• On July 27, 2009, a Notice of Potential Default was issued informing the
Developer that it was not in compliance with certain Performance Obligations
under the FA and other DDA requirements (Attachment 10).
• On August 18, 2009, TLCP informed the City by letter that it was unwilling to
perform certain of its obligations under the Forbearance Agreement and DDA.
• On September 10, 2009, a Notice of Material Default was issued to TLCP for its
failure to cure the Potential Defaults identified in letters of July 13th and July 27th
related to its performance of certain Performance Obligations under the
Agreements and other DDA obligations. (Attachment 11).
• Based on TLCP's failure to perform its obligations under the Forbearance Period
despite City notice and the Forbearance Period ending on October 1, 2009, the
Forbearance Agreement automatically terminated on October 1, 2009.
• October 19, 2009, TLCP representatives appeared before the Orange County
Assessor's Appeal Board providing written and oral testimony appealing the
Assessor's assessed valuation of the Property, arguing that the Assessor should
value the Property at zero.
• October 30, 2009, a Notice of Potential Default was issued informing TLCP of its
obligations to perform under the DDA related to the Schedule of Performance
and the failure to pay taxes (Attachment 12).
June 15, 2010
Page 14
• On December 7, 2009, a Notice of Monetary and Non-Monetary Material Defaults
under the DDA was issued providing KeyBank with the right to cure Material
Defaults contained in City letters of July 13, 2009, July 27, 2009 and September
10, 2009 (Attachment 13).
• On March 9, 2010, the right of KeyBank, to cure the Material Defaults identified
above expired. No formal or written response was received from KeyBank.
City Offer to TLCP of Termination and Notice of Consideration of Actions
Proposed
By letter of March 11, 2010 to TLCP and KeyBank, the City informed TLCP of its
intention to seek formal authorization by the City Council to terminate the DDA and
reenter the affected Property and revest title in the City. However, before embarking on
the formal process, the City offered TLCP an opportunity to request on its own
termination of the DDA and a written agreement to deed back the Property previously
conveyed to TLCP to the City.
During March, several notices were provided to TLCP and KeyBank regarding the
anticipated DDA termination and the City's exercise of its rights under the DDA,
including but not limited to the Right of Reversion of the 335 acres previously conveyed
to TLCP. The anticipated agenda item was subsequently delayed at the request of
TLCP to provide additional time to negotiate a consensual termination. Subsequent
letters were sent to TLCP, its members and KeyBank, on May 28, 2010 and June 1,
2010 notifying each party of its right to speak regarding the potential Termination of the
DDA, the City's exercise of its Right of Reverter and other City remedies identified in the
DDA.
By way of letter dated March 24, 2010 and April 13, 2010, TLCP indicated its
willingness to terminate the DDA, under specific conditions including, but not limited to
release of its existing DDA obligations (Attachment 14 and Attachment 15). A
discussion of some of the implications related to cost and liability of the specific
conditions that TLCP has identified for its termination of the DDA, and the City's
response with terms and conditions contained in the Termination Agreement which has
been offered to the Developer, are discussed under the Fiscal Impacts section of this
report.
June 15, 2010
Page 15
FISCAL IMPACT
The City has offered TLCP terms and conditions for termination of the DDA (Option 1).
However, exercise by the City and Authority of either Option 1 or 2 will result in additional
costs and risks to the City for the Tustin Legacy project. Some of these costs and risks are
known and others are unknown and/or difficult to quantify at this time. A discussion of
some of these costs and risks follow:
1. Permitted Mortqaqee Riqhts. If KeyBank is determined to be a Permitted Mortgagee,
the existence of its lien on the Property, would survive termination of the DDA or
reversion of the Property to the City under provisions of Section 14.4.4 (b) of the DDA,
regardless of whether Option 1 or 2 is selected. It is believed that the current bank lien
secures a debt of approximately $53 million, with interest accruing. Pursuant to Section
14.4.4 of the DDA, the lender's loan would be required to be paid off from any future land
sale proceeds. As additional protection for the City under Option 1, the City has requested
that the Developer represent and warrant that it has incurred no debt other than the debt
under KeyBank's loan documents and that the Developer indemnify, defend and hold the
City harmless from any future breach of this representation. The City has agreed to
acknowledge that KeyBank is a Permitted Mortgagee and to further acknowledge a
Permitted Mortgagee's rights under the DDA subject to certain lender certifications which
are identified in Exhibit F of the Termination Agreement.
2. Environmental Clean-up. TLCP, in initiating mass grading and rough grading within
the Project, discovered environmental contamination created by former military activities
on the Project site. Remediation activities on these contamination sites have begun under
supervision of the California Department of Substance Control (DTSC) with the costs and
expenses associated with such remediation being provided by proceeds from claims filed
under existing Indian Harbor Pollution and Remediation Legal Liability Policy
Environmental Insurance Policy No. PEC0010756 ("Environmental Policy") obtained by
the City of Tustin, also naming TLCP as additional insured.
Under Option 1, TLCP would be responsible for remediation at its sole cost and expense
after termination and until re-conveyance of the Phase 1 Property to Tustin and would be
able to access the Environmental Policy for eligible costs and expenses while it retains
ownership. However, upon re-conveyance of the Property, the City may be determined to
be a responsible party by DTSC for subsequent required remediation activities regardless
of whether Option 1 or 2 is selected. Under Option 1, the City is asking TLCP to notify the
insurance carrier that any and all claims after re-conveyance shall be paid to the City
directly. Any involuntary foreclosure or actions to re-convey the Property to Tustin in lieu
of foreclosure may result in the City not being a responsible party under the federal
June 15, 2010
Page 16
Comprehensive Environmental Responses Compensation and Liability Act ("CERCLA").
However, the City may still indirectly or directly incur liability or cost for environmental
remediation activities it is required to complete if such are not covered by Environmental
Policy proceeds or if the City is determined to be responsible for subsequent remediation
activities under CERCLA. These costs would be eligible MCAS Tustin Redevelopment
Project Area expenditures.
In consideration of the terms and conditions of the Termination Agreement, if close of
escrow occurs on the 335.76 acres previously conveyed to TLCP, Tustin would agree that
the Developer's obligation to indemnify, protect, defend and hold harmless Tustin from
Hazardous Materials and other environmental contamination issues would be limited to the
issues caused, created or exacerbated by the Developer. TLCP would be responsible for
any Hazardous Materials that it created, caused or exacerbated within the Project. In
addition, under Option 1 TLCP will be required to provide full disclosure of all
environmental information collected by Developer, or its agents, consultants, employees,
etc., including but not limited to remediation contracts, documents, reports, samplings, and
other information regarding the environmental condition of the Developer Parcels, Phase I
Property, and/or the Project.
If the Developer fails to accept the offer of a Termination Agreement, and the City Council
terminates the DDA, the environmental indemnification provisions in Section 10 of the
DDA will survive the termination of the DDA. However, since the TLCP entity is a limited
liability company whose only asset appears to be the Tustin Legacy property, it would
appear to have few resources to make good on its obligations to the City under the DDA .
3. Performance Deposit Return. The City holds a Five Hundred Thousand Dollar
($500,000) Performance Deposit. The purpose of the performance deposit was to
reimburse the City for expenses and damages incurred by the City in the event that TLCP
defaulted under the DDA. In conjunction with discussion on the Termination Agreement,
TLCP has requested that the City return $373,747 of the $500,000 Performance Deposit,
subject to the City retaining $126,253 for certain reimbursements the City has previously
demanded of TLCP. Under the Termination Agreement, the City would return the balance
of the performance deposit to TLCP, upon satisfactory termination and re-conveyance of
the Phase I Property to Tustin. If TLCP fails to perform its obligations under the
Termination Agreement and/or the City is forced to exercise Option 2, the forfeiture of the
Performance Deposit will be one remedy available to the City.
The Developer also owes the City a number of other expenses incurred by the City in
administration and implementation activities under the DDA. Pursuant to Section 8.10.5 of
the DDA, the City has also placed a Lien on Phase I Property to recover Developer's
June 15, 2010
Page 17
required contribution towards the Tustin Legacy Backbone Infrastructure Program in the
amount of $269,479,445 since Developer has not constructed its required Backbone
Infrastructure under the DDA and paid a previously owed administrative reimbursement
cost owed to the City of $39,432. This lien will remain on the property, until released by
the City.
4. Miscellaneous Terms of the DDA to Survive Termination. Without a Termination
Agreement, certain provisions of the DDA would survive any termination, including, but not
limited to, the following provisions:
• Section 2.1 - TLCP's representations and warranties.
• Section 3.8.3(b) - TLCP's obligation to pay taxes. Property taxes are potential
future liens on the Property that if not paid when due and prior to the Property
reverting back to the City, become the City's liability. TLCP has not offered to
pay property taxes currently owed as part of its willingness to a"consensual"
termination of the DDA. TLCP currently owes the County approximately $2.4
million dollars..
• Section 3.10.3 - Developer's release obligations.
• Section 8.17.4 - Developer's indemnification obligations regarding Peters
Canyon Channel Improvements.
• Article 10 - Indemnification provisions, including general and environmental
indemnities by TLCP.
• Section 14.3.3 - City's right of reversion in Section 14.4 of the DDA.
• Section 15 - TLCP's indemnification obligations regarding the license in Section
5.2.
However, as noted above, since the TLCP entity is a limited liability company it will likely
have few assets to make good on its obligations to the City.
Under Option 1, the City would agree to a broad mutual release of claims including, but not
limited to, release of TLCP from many of the DDA terms which normally survive
termination. In many cases, the expected costs/risk exposure to the City are currently
unknown or difficult to quantify. The largest potential cost would be taxes currently due on
the Property which currently are $2,360,072. According to the County Tax Collector, the
City may be responsible to cure any past due property taxes if the Property is re-conveyed
to the City. However, there is a legal position on this matter that is still being researched by
June 15, 2010
Page 18
the City Attorney's office. The City has attempted to manage other liabilities by requiring in
the Termination Agreement that TLCP: (1) maintain any environmental liability for
environmental contamination that it may have created, caused or exacerbated; (2) waive
any rights it has under Section 14.4.4 of the DDA (its rights to recover its project costs from
future land sale proceeds); (3) acknowledge that the Termination Agreement is a result of
its Material Default under the DDA; and (4) agree that any claims released under the
Agreement not include any claim by the City in the event of a breach by Developer of
obligations under the Termination Agreement.
5. Return of Performance Bonds. TLCP requests that all performance bonds currently
held for the Project be released as a condition to its re-conveyance of the Property to the
City. Upon inspection of the site condition of the Project and the status of specific work
for which performance bonds were required by the City, the City's Public Works staff has
determined, subject to Developer's execution of the Termination Agreement (Option 1),
that applicable bonds can be released. The performance bonds currently held by the City
have a value of $5,785,400.
Under Option 2, TLCP will not be released from performance obligations under the
applicable performance bonds held by the City. Since improvement work under the bonds
has been abandoned and not completed, the City would look to performance from the
bonding companies.
5. Return to City of Plans and Certain Other Information. Sections 14.8.1 and 14.8.2 of
the DDA require upon termination that TLCP provide to the City all its due diligence
information and all architectural and other products, surveys, plans, reports, tests, studies,
and investigations (the "Transferable Products") with respect to the Property and Tustin
Legacy Project. Under Option 1, the Developer would provide all current copies of the
above information prior to escrow closing. In the event that the Termination Agreement is
not executed by TLCP, the Developer would still have the obligation to produce the
documents to the City. However, if TLCP did not produce the documents, the City would
have to pursue legal remedies to obtain them. This would result in costs associated with
pursuit by the City of any legal remedies necessary to obtain the documents and costs for
any replication by the City or future developers of the Project of studies and preliminary
work already completed on the Project, particularly for priority infrastructure.
6. Cost of Property Manaqement. Under the DDA, TLCP was responsible for caretaker,
maintenance and security responsibilities (collectively, "Property ManagemenY') for the
Project. Upon termination under either Option 1 or 2, property management
responsibilities would transfer back to the City for portions of the Project that are owned
by the City and Navy (approximately 470 acres). Upon re-conveyance of the approximate
June 15, 2010
Page 19
335 acres of Phase I Property, the City would also assume responsibilities on these
portions of the Project in the event KeyBank does not exercise certain of its rights and
obligations under the DDA. It is recommended that property management services at
least over a short period of time, in the interim, be accomplished by the current TLCP
contractor on the site, Bistline, Inc., until such time as the City solicits professional services
for long term property management. At this time, although subject to subsequent
negotiations with Bistline, it is estimated that the interim costs for services would not
exceed more than approximately $56,000 per month recognizing that these costs may still
be able to be reduced further. Property Management expenses are an eligible MCAS
Tustin Redevelopment Project expense and were previously financed in that manner.
7. Future Planninq and Disposition of the Proiect. The City will incur expenses for any
future activities to revise the City's disposition strategy for the Project site, including but not
limited to, necessary financial analysis, legal consultation, real estate surveys, subdivision
mapping, land use planning and design services, title reports, and appraisals. It is not
known at this time what the anticipated cost exposure for such expenses will be.
The above costs and potential solutions/outcomes will be further evaluated and will include
a proposed Transition Plan for maintaining the Property during the pre-disposition phase
and any preparation of a subsequent disposition strategy for the Project.
As the current owner of the majority of the Property and the future owner of the 335.76
acres of the Property to be reinvested in the City under either a consensual termination or
City exercise of its Right of Reverter in the DDA, the City will need to continue to recognize
the complex structure of the Project. Financial benefits and costs will be closely evaluated
in any future actions brought forward to the City Council and Tustin Community
Redevelopment Agency on the Project.
Conclusions
The City and Authority have several options to consider:
Option 1.
TLCP has indicated its willingness to terminate the DDA, subject to certain conditions.
The City has responded to TLCP's request and proposed a specific Termination
Agreement to TLCP for City and Authority consideration (Attachment 16. Should the
City and Authority approve the proposed Termination Agreement, TLCP's execution (if
June 15, 2010
Page 20
not already obtained by release of this Agenda Report), will be required within seven (7)
days.
Option 2
In the event that a Termination Agreement cannot be agreed upon by City and TLCP,
Option 2 would be available for Council and Authority consideration. Based on the
current TLCP Material Default under the DDA which has not been cured either by TLCP
or KeyBank, the following remedies would be available to the City Council and
Authority:
• Terminate the DDA as it relates to TLCP rights and obligations. The foregoing
termination shall not be deemed to terminate or to effect any rights or obligations of
Permitted Mortgagees under the DDA, including, without limitation, Article 16
thereof.
• Exercise the Right of Reverter in the DDA subject to provisions of Section 14.4.1 of
the DDA. In particular, pursuant to Section 14.4.1 (c) , the Material Default of
December 7, 2009 specifically provides that the City may exercise its rights of
reversion based on the following condition:
"14.4.1 (c) Abandonment or Substantial Suspension of Construction. The
Developer abandons or substantially suspends (subject to Force Majuere Delay)
construction of the Project and/or its diligent pursuit of Entitlements necessary to
construct the Project for a period of one hundred eighty (180) consecutive days,
and such Potential Default becomes a Material Default in accordance with the
notice and cure provisions of Section 14.2. "
In a Potential Default letter of October 30, 2009 (Attachment 12), evidence is
pr.ovided demonstrating that Developer has abandoned and substantially suspended
construction of the Project and/or its diligent pursuit of Entitlements necessary to
construct the Project for a period of one hundred eighty (180) consecutive days and
such failure became a Material Default by letter dated December 7, 2009
(Attachment 13).
• Sue for Damages.
June 15, 2010
Page 21
• Seek specific performance.
• Enforce Bonds by retaining and enforcing any bonds and exercising rights to draw to
pursue a claim under any security provided by Developer.
• Exercise any other rights at law or equity.
After providing TLCP and KeyBank with the reasonable right to be heard, it is
recommended that the City Council and Tustin Public Financing Authority take one of
the alternative action options identified in this staff report.
Upon termination of the DDA as to Developer's rights and obligations, provisions of
Article 16 would require the City, if requested by a Permitted Mortgagee, to enter into a
new disposition and development agreement with the Permitted Mortgagee provided
that such party is the then-owner of the Property, upon the same terms, provisions,
covenants and agreements set forth in the DDA. At this time, KeyBank has not been
confirmed to be a Permitted Mortgagee, nor is it the owner of the Property, nor has the
City been informed by KeyBank that it intends to foreclose on the Property.
The City Attorney and City's special real estate counsel have reviewed this report and
provided legal guidance.
.'2~°°
~
Christine Shingleton
Assistant City Manager
Attachments
1. Summary of City Objectives and Requirements for Tustin Legacy Master
Development Site
2. Summary of Key Developer Obligations under the DDA Including the Scope of
Development
3. Phased Conveyance Map
4. A Summary Chronology of DDA Implementation Actions/Issues
5. December 12, 2008 Notice of Potential Default
June 15, 2010
Page 22
6. March 4, 2009 Notice of Potential Default
7. Forbearance Agreement and Pre-Negotiation Agreement
8. Summary of Potential DDA Modifications and Enhancements Offered by Tustin's
9. July 13, 2009 Notice of Potential Default
10. July 27, 2009 Notice of Potential Default
11. September 10, 2009 Notice of Material Default
12 October 30, 2009 Notice of Potential Default
13. December 7, 2009 Notice of Material Default and lender notice of right to cure
14. TLCP letter of March 24, 2010 Termination of DDA -terms and conditions
15. TLCP letter of April 13, 2010 Termination of DDA-terms and conditions
16. Termination and Settlement Agreement, Joint Escrow Instructions and General
Release
ATTACHMENT 1
SUMMARY OF CITY OBJECTIVES AND REQUIREMENTS
FOR TUSTIN LEGACY MASTER DEVELOPMENT SITE
SOURCE: EXCLUSIVE AGEEMENT TO NEGOTIATE BETWEEN CITY AND TLCP
AND REQUEST FOR QUALIFICATIONS FOR MASTER DEVELOPMENT SITE
PLANNING AND COMMUNITY OBJECTIVES
Development plans will be required to conform to the program of uses and
development envelopes entitled in the Specific Plan and EIS/EIR and the following
1. Establish a New Center of Activity in the City and Region;
2. Create a Unique Sense of Place;
3. Establish a Complementary Relationship to the Surrounding Community;
4. Create Livable Communities.
URBAN DESIGN OBJECTIVES
In addition to the urban design guidelines in the Specific Plan, seven principles
shall guide the urban design of the new district:
1. Sociable Neighborhoods
2. Integration with Public Uses
3. A Mixed Use Core
4. Interconnected Open Spaces
5. Lively Multi-Modal Streets
6. Human Scale
7. Sustainable Design
BUSINESS AND FINANCIAL OBJECTIVES
1. Maximize Land Value
Land value can be enhanced through effective positioning and marketing of the
property, quality development and value creation strategies, market driven infrastructure
investment, and other development strategies. Additionally, the City can enhance value
by holding the land for successive take-down by the developer, facilitating entitlement
and approvals, providing public financing where appropriate, and expediting other public
agency functions.
2. Reinvest Pro~ect Proceeds for Lonq Term Value Creation
3. Minimize Citv Risk
While the City can help create value in the project, the City is not in a position to
take on development risks. Risks associated with market timing, cost increases,
financing terms, construction performance, litigation, environmental issues, and other
aspects of development must be born entirely by the Developer. In this vein, the City
will not guarantee the Developer a minimum financial return or make other
commitments that will render it vulnerable in the event of negative cash flow by
Developer.
4. Citv Participation
Because the City has invested substantial time and resources in the project, and
will help to create value in the development as it goes forward, it expects to participate
in upside profits. In no event shall the City be required to share or reimburse developer
for negative cash flow.
RISK MANAGEMENT OBJECTIVES
1. Performance Based Transaction
The City will reduce its risk and prevent "cherry picking" by developer of easiest
parcels to develop by requiring land take down based on performance with specific
requirements laid out before Developer is authorized to proceed to next phase
including, but not limited to:
a. requiring progress and completion of infrastructure in each phase.
b. requiring sufficient land sales in each phase.
c. requiring sufficient construction of vertical improvements.
2. Completion Guarantv
The City expects the Developer to guarantee project completion with corporate
guarantees, perFormance bonds or other security, as appropriate, as well as a deposit
insuring against any breach of contract that is not otherwise secured.
The City also wishes to ensure against partial project completion, and will require
that development of the most profitable land uses are phased in with development of
less profitable land uses. Conveyance of the Development Site will take place in
phases based on performance measures, such as the timely construction of public and
private improvements, and other measures to be further defined in the DDA. In
addition, the City may retain a right of reverter for portions of the property until
completion of defined improvements by phase.
3. Completion of Public Facilities
The City wishes to ensure that all backbone infrastructure and public facilities
planned to support the Master Development Site are completed in a timely manner, and
are integrated with improvements necessary outside of the Master Development Site.
To accomplish this, the City will require that necessary infrastructure improvements be
provided as necessary to fully serve new development within a defined schedule of
performance. The Developer may also be required to oversize improvements as
needed to maintain acceptable levels of service. The City will also require completion of
park improvements in addition to any on-site recreational improvements constructed by
merchant builders. Finally, the City expects the Developer to facilitate and participate in
other community-wide objectives, such as construction of a new Tustin Branch Library,
potential development of an aquatics center, and other projects providing public benefit.
4. Environmentallndemnification
The Developer shall covenant responsibility for compliance with all environmental
laws and regulations and that they will not use property directly or indirectly for use,
generation, treatment, release or disposal of hazardous materials. The Developer will
be responsible for all liability related to asbestos remediation and lead based paint with
no liability to City.
Although the Navy has responsibility for the remediation of certain substances as
described later in this document, the Developer shall provide environmental insurance
naming the City as an additional insured, and shall indemnify, defend and hold harmless
the City from liability against all claims, judgments, suits, costs or expenses including
attorney costs arising out of the release, existence, presence, or disposal of hazardous
substances in, on, under, about or adjacent to the property after conveyance of property
to the Developer.
FISCAL OBJECTIVES
1. Protection and Enhancement of General Fund
The City is prepared to work with the Developer to explore the potential for
various financing mechanisms and the reinvestment of land sale proceeds. However,
the City expects development of the Development Site to result in a positive fiscal
impact for the General Fund, and the terms of the disposition transaction will need to
protect the City's General Fund from any financial obligations that cannot be met from
the proceeds of the project itself.
2. Citv Cost Recove
The City's predevelopment costs, after selection of the Developer, will be paid by
the Developer. The City's predevelopment costs will include staff time, consultants,
outside counsel and any other legitimate expenditures required to complete the Master
Development Plan and negotiate the DDA.
3. Propertv Maintenance and Securitv Responsibility
The Developer will be required to cover all costs for maintenance and security of
property for the Master Development Site during the negotiation period.
4. Judicious Use of Public Fundinq
City sponsored tax exempt instruments (e.g. COP's, revenue bonds), and tax
exempt land-secured funding (e.g., Mello-Roos or other special assessments) may be
used as appropriate for backbone infrastructure and public facilities subject to meeting
the requirements of these public finance mechanisms at the discretion of the City.
However, these financing mechanisms may not be used for in-tract improvements. In
instances where tax exempt vehicles are appropriate, they will be used in combination
with private financing to lower borrowing costs and enhance the value of the land,
ensuring that costs are allocated among land uses in proportion to benefit received.
The City expects to participate in the value creation resulting from investment of public
funds.
ATTACHMENT 2
SUMMARY OF KEY DEVELOPER OBLIGATIONS UNDER THE DDA
INCLUDING
THE SCOPE OF DEVELOPMENT
The DDA provided for the phased development of the site by the Developer to consist of
the following development program, as more specifically defined in the DDA Scope of
Development (Attachment 28 to the DDA):
• Site Preparation and Demolition. Site preparation (including demolition, decon-
struction of existing structures on the property, and removal and abandonment of
existing utilities), and mass grading of the property.
• Residential Uses. Development of up to 2,105 dwelling units, including (regardless
of the total number of units constructed) a minimum of 453 Affordable Housing Units
on approximately 185 acres of land. Of the 453 units restricted to below market
rates, 126 units will be restricted for Very Low Income households, 95 units for Low
Income Households, and 232 Units for Moderate Income Households.
• Non-Residential Uses. Development of up to approximately 6.7 million square feet
of non-residential uses on approximately 234 acres. In the event that the City is not
able to convey the southerly hangar site (Hangar 29 parcel) to the TLCP, the revised
square footage will be 6.4 million square feet of non-residential uses. Non-
residential uses include:
o Approximately 494,604 square feet of retail space on 29 acres;
o Approximately 4,724,324 square feet of office space on 145 acres.
o Approximately 299,074 square feet on the 15 acre Hangar 29 Parcel;
o Approximately 627,046 square feet of industrial space on approximately 32
acres;
o Approximately 158,994 square feet for a congregate care facility on
approximately 7 acres;
o The development of a minimum of 500 hotel rooms which may be developed
in one or more hotel projects with not less than 250 hotel rooms in at least
one hotel project, and not less than 100 units in other hotel projects.
Conference facilities are required in at least one hotel project. A Health Club
is also required in the Community Core.
o Other uses, including, without limitation, development of a minimum 25,000
square foot theater.
• Master Block (Main Street) and Community Core: A key planning and community
objective for the project was to establish a new center of urban activity in the City
and create a unique sense of place. To accomplish this objective, the DDA
established a fundamental requirement for development of a mixed-use Community
Core in Neighborhood D. There are a number of principles and working
assumptions in the Scope of Development which will governed the development of
this mixed-use portion of the Community Core.
• Public and Private, Open Space, and Other Uses. A total of 403 acres were
required to be devoted to a variety of private and public open space uses, greenbelt
areas, trails, schools, local rights-of-way and public infrastructure as follows:
0 50 acres are to be devoted to educational uses including a 40 acre high
school site and a 10 acre elementary school site. The 10 acre site may be
expanded by an additional 5 acres, based on negotiations between the City
and the Tustin Unified School District.
o A minimum of 170 acres are required to be developed as parks and
recreational facilities, open space, and greenbelt areas, with approximately 86
acres to remain in public ownership and 84 acres to be privately owned.
Public owned park space are to be in the form of the following facilities: a 10.4
acre detention sports field facility in Neighborhood E; a 46 acre community
park to include a tennis facility and aquatic facilities; an adjacent 8.7 acre
linear park in Neighborhood D, and; in Neighborhood G, a 8.8 acre
neighborhood park, an adjacent 3.9 acre community linear park, and a 5.3
acre neighborhood park (which may be reduced if an additional 5 acres is
needed for the school site) and an adjacent 3.1 acre portion of the community
linear park.
o Approximately 101 acres are to be devoted to rights-of-way areas to
accommodate backbone roadways as part of the Tustin Legacy Backbone
Infrastructure Program and approximately 81 acres to accommodate Local
Infrastructure Work.
• Infrastructure and Public Facilities. Consistent with the DDA, the Developer was
to install all necessary Tustin Legacy Backbone Infrastructure and Local
Infrastructure which include mass grading, local and backbone road improvements,
backbone storm drain and flood control facilities, backbone and local dry utilities,
local water and sewer improvements, landscaping and public and private park
facilities, and other on-site and off-site required environmental mitigation and
community facilities. Many of these facilities are public improvements, the cost of
which the City or other public entities would otherwise have to incur. The Tustin
Legacy Backbone Infrastructure costs are currently estimated at approximately $407
million (of which the Developer's 2008 fair share obligation is approximately $280
million) and Local Infrastructure Costs in 2008 were estimated at approximately $
160 million (100% Developer's obligation). To the extent that other Tustin Legacy
developers are responsible for certain portions of the Tustin Legacy Backbone
Infrastructure Improvements under the City's Tustin Legacy Backbone Infrastructure
Program, estimated reimbursements from these contributions to offset the
Developer's costs or obligations were discussed in the DDA.
In-tract infrastructure, or infrastructure that is required within each future
development parcel, was not a Master Developer cost for this project since the
Developer will be selling development parcels (super pads) to vertical builders (this
includes vertical builders that are developer affiliates as well as non-affiliates). The
cost of in-tract infrastructure is a cost of the vertical builders and was factored into
the estimate of development parcel sale revenue in the Developer's final DDA pro
forma.
• Phasing. To achieve City objectives, the conveyance of the property was to be in
phases, with stringent performance requirements associated with each phase. The
underlying rationale for this approach was absent such requirements, as could occur
with a bulk sale, the City would have much reduced ability to ensure that the
property is developed on a time schedule and in a manner that furthers public
objectives.
There were four phased conveyances identified in the DDA. Phase 1, in September
2006; Phase 2, in September 2009; Phase 3, in 2011, and: potentially Phase 4, as it
relates to the Hangar 29 Parcel.
Other Key Business Terms of the DDA:
• City and Other Governmental Approvals. The DDA required TLCP and Vertical
Builders to secure all required land use entitlements from the Tustin Planning
Commission and City Council as defined by the Schedule of Performance (DDA
Attachment 17). A concept plan, design review and subdivision maps pursuant to
governmental requirements will be required by or Planning Commission and City
Council, as applicable. The DDA also provided for review of more detailed
construction plans at later stages of design development to assure conformity with
DDA requirements and entitlements that may be granted by the City.
• Completion of Tustin Legacy Backbone Infrastructure, Local lnfrastructure
Work and In-tract infrastructure. All infrastructure was to be constructed in
compliance with all provisions of the DDA, including the schedule of performance
and with all "Conditions of Approval" stipulated by the Planning Commission, City
Council, and other applicable governmental agencies with jurisdiction.
• Development Costs. The DDA required the Developer to fund all project
development costs, including but not limited to, the acquisition of the site,
construction of on-site and off-site Tustin Legacy Backbone Infrastructure and Local
I nfrastructure.
• Completion of Construction. Vertical Builder improvements were expected to be
constructed within stipulated time frames. Progress on this construction was a
precondition to phased conveyances.
• Purchase Price/Fair Market Value. There was no purchase price for conveyance of
property in Phase 1 due to the DDA requirement for the Developer to construct
significant Tustin Legacy Backbone Infrastructure and Local Infrastructure in this
Phase. The purchase price required in Phase 2 was to be $150 million and $86
million in Phase 3, to be paid in cash at each closing. In the event of a decision at a
later time to convey Phase 4 to TLCP, the DDA provided for completion of an
appraisal to determine value at that time.
The purchase price to be paid by the Developer in Phase 2 and 3 was not less than
the fair market value of the site based on an independent appraisal and the project
does not require any public subsidy.
ATTACHMENT 3
PHASED CONVEYANCE MAP
TUSTIN LEGACY DDA 06-01 (MASTER DEVELOPMENT)
[INSERTED AFTER TITLE SHEET]
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ATTACHMENT 4
SUMMARY CHRONOLOGY
OF MAJOR DDA IMPLEMENTATION ACTIONS/ISSUES
TUSTIN LEGACY PARTNERS
[Note that not all actions are included, this is meant as a summary only]
Date Action
4/03/2006 City Council and Tustin Public Financing Authority approves Tustin Legacy
DDA 06-01, subject to non-substantive modifications deemed necessary by
the City Council.
4/03/2006 Addendum to Final EIS/EIR for the Disposal and Reuse of MCAS Tustin
and Proposed MCAS Tustin Specific Plan Amendments requested by TLCP
adopted by City Resolution No. 06-43
4/17/2006 MCAS Tustin Specific Plan Amendments requested by TLCP adopted by
Council by Ord. 1311
5/03/2006 DDA execution date
8/2006 Conveyance Tentative Tract Map 17026 approved
9/2006 Final Conve ance Tract Map 17026 approved and recorded
9/05/2006 Mass Gradin permit issued
2/06/2007 Rough Gradin permit issued for Nei hborhood E
3/2007 Final Design Guidelines for Legacy Park approved
3/20/2007 First Amendment to DDA approved
3/29/2007 First Amendment to DDA executed
6/05/2007 Second Amendment to DDA approved and executed
6/19/2007 Conveyance of 335.76 acres (approx. 160 developable acres) to TLCP
11 /2007 Concept Plan for Nei hborhood E approved.
12/2007 Tentative Tract Map 17144 for Neighborhood E approved.
12/21/2007 City comments on incomplete submittal of Neighborhood G Sector B
Tentative Tract Map and Concept Plan; no comments received back from
TLCP as of this date.
1/2008 Site Plan and Design Review for Phase 1 Neighborhood E Technology Park
development approved.
Early TLCP met with two representatives of the Tustin Cit Council and key City
4/2008 management staff and indicate cash flow issues related to the project and
need for minor help from City in providing opportunities for revenue
enhancements
4/20/2008 TLCP met with key management staff and City consultants indicating they
now anticipated a 486 million negative cash flow before any required land
payment to City. TLCP argued that with land payment, total cash flow for
the project would be a$322 million negative profit return on project for
them.
8/22/2008 City comments on incomplete submittal of Sector B Tentative Tract Map for
Neighborhood D; no comments back from TLCP as of this current date.
9/18/2008 TLCP met with key management staff and City consultants and presented a
proposed transaction structure to City whereby land should be conveyed to
TLCP at $0 with potential future payments to be at a later time frame
coinciding with development or at end of project (with time frames
unknown). Payments were not proposed to be upfront to City, but only
provided if and when TLCP met and received certain minimum unspecified
profit thresholds. TLCP provided another cash flow analysis indicating a
$283.1 million negative cash flow without City assistance or land payments.
9/18/2008 TLCP submits a proposal and summary pro forma to City indicating a$284
million ne ative profit return on the Project.
9/26/2008 TLCP submits letter to City indicating that it would be preparing for possible
withdrawal from project, including orderly termination of the DDA and wind
down of the Project.
10/08/2008 TLCP submits a letter to City which make the following statements and
revision proposals to the DDA: (1) value of land owned by City to be
conveyed to TLCP has a value of $0; (2) land would be conveyed to TLCP
when vertical builders are ready to build portions of the Project; (3) the City
should undertake a reappraisal of the land.
10/08/2008 City letter to TLCP
10/29/2008 TLCP submits a letter with a revised TLCP pro form indicating a negative
$288 million profit.
11 /20/2008 TLCP submits a revised pro form indicating a negative $322 million return
when land payments are considered.
11/26/2008 TLCP submits a revised pro form indicating a negative $314 million cash
flow when land payments are considered.
12/9/2008 TLCP submits a revised TLCP pro form indicating a negative 4314 million
cash flow when land payments are considered.
12/12/2008 TLCP met with key management staff and City and recommended
modifications to design of the community core and land use changes to
Neighborhood E including areas north of Warner to permit industrial product
(80% warehouse and 20% office).
12/12/2008 Notice of Potential Default issued to TLCP for failure to perform certain
schedule of performance obligations, including but not limited to entitlement
processing, grading, and Tustin Legacy Backbone Infrastructure and Local
I nfrastructure.
1/5/2009 TLCP letter requests that City rescind its Notice of Potential Default.
1/6/2009 City by letter rejects TLCP request to rescind 12/12/2008 Notice of Potential
Default.
1/13/2009 City provides to TLCP a 30 day time extension to identify measures they
are taking to commence and complete cure of 12/12/2008 Notice of
Potential Default or until January 16, 2009).
1/15/2009 TLCP met with key management staff and two representatives of the City
Council and offered the following proposal: (1) project to be split into 2
segments; one segment east of Tustin Ranch Road and the second
segment to be west of Tustin Ranch Road; (2) TLCP would not proceed
with any portion of the Project if its costs of money exceeded 8%; (3) City
should convey all of remaining portions of Neighborhood B, D and E to
TLCP at $0 cost, with TLCP willing to share with City backside profits over a
minimum profit threshold; (4) City would modify the Tustin Legacy
Backbone Infrastructure allocation to relieve TLCP of any increases
exceeding amounts in original DDA, 2008 increase of $52.9 million would
be paid by Redevelopment Agency, any future cost overruns would also be
City's responsibility, and City would be responsible for financing and
constructing on its own the community park, aquatic and tennis facilities, all
Neighborhood G parks, the pedestrian bridges at Warner and Tustin Ranch
Road, the lineal park and the Tustin Ranch Road extension; (5) City to
completely subsidize all affordable housing development required by TLCP
utilizing Redevelopment Agency funds; (6) TLCP would consider
concentrating development in Neighborhood E with supporting
infrastructure; (7) TLCP would not pay all property taxes due on property
City has conveyed to it.
1/16/2009 TLCP letter responds to City letter of 1/13/2009 but does not address efforts
it is taking to commence and complete cure of Potential Defaults of
12/12/2008.
1/20/2009 City by letter to TLCP informs them and determines that TLCP's 1/16/2009
letter was unresponsive to the 12/12/2008 Notice of Potential Default and
direction from City in its letter of 1/13/2009. Nonetheless, City provides
TLCP with an additional time extension to January 28, 2009 to respond to
letter of 1/13/2009 and 12/12/2008 Notice of Potential Default.
1/28/2009 City waives by Section 8.74 of the DDA and Confirms Three Proposed
Hotel Products proposed in Neighborhood D
3/04/2009 City issues a Notice of Default due to TLCP not paying its required property
taxes on the 335 acres conveyed by City to TLCP.
4/14/2009 City enters into a Forbearance Agreement and Pre-Negotiation Agreement
with TLCP, agreeing to forbear the enforcement of the 12/12/2009 and
3/04/2009 Notices of Potential Default in an effort to identify potential future
DDA modifications on a cooperative basis without jeopardizing interests of
City. The Agreements identifying certain negotiating principles and also
required during the Forbearance Period through 10.01/2009 that TLCP not
incur any further DDA Potential or Material Defaults, TLCP agrees to
perform certain performance obligations including submittal and approval of
certain Phase 1 Entitlement applications, submittal and approval of certain
Phase I Backbone and Local Infrastructure plans; completion of
modifications to mass grading and interim drainage plans and confirmation
of operational grading activities on the site, and payment of a certain level
required of propert taxes.
5/03/2009 TLCP and City management staff meet in negotiations on DDA
amendments
5/11/2009 TLCP and City management staff meet in negotiations on DDA
amendments
5/26/2009 TLCP and City management staff meet in negotiations on DDA
amendments
6/9/2009 TLCP and City management staff meet in negotiations on DDA
amendments
6/23/2009 TLCP and City management staff meet in negotiations on DDA
amendments
6/24/2009 TLCP and City management staff meet regarding infrastructure phasing
and proposed methods and alternatives for financing infrastructure using
CFD's, etc. Mapping and information to be provided by TLCP, agreed to at
the meetings, still not provided to City
7/13/2009 City issues a Potential Notice of Default to TLCP for their failure to perform
certain obligations under the Forbearance Agreement and other obligations
under the DDA that were not held in forbearance under the Forbearance
A reement.
7/21/2009 Tustin City Council reviews and discusses 6/09/2009 TLCP Proposal to
modify DDA and City staff and consultant analysis, and provide policy
direction to City management staff to respond.
7/23/2009 City provides a written response to TLCP 6/09/2009 Proposal to City and a
written counter-proposal.
7/27/2009 City issues a Notice of Potential Default to TLCP for their failure to perform
certain additional obligations under the Forbearance Agreement and other
obligations under the DDA that were not held in forbearance under the
Forbearance Agreement.
8/13/2009 TLCP provides minor modifications to their 6/09/2009 Proposal.
8/18/2009 TLCP provides a response to City's Notice of Potential Default letters of
7/13/2009 and 7/27/2009 which does not lay out measures to cure its failure
to perform and ar ues that the City has not been ne otiatin in ood faith
9/1 /2009 Tustin City Council review and discusses the TLCP 8/18/2009 letter and
8/18/2009 letter and City staff and consultant analysis, and provide policy
direction to City management staff to respond.
9/10/2009 City provides a response to TLCP letter of 8/18/2009 and reinforces all of its
attempts to negotiate in good faith with TLCP. In addition, with regards to
the Notices of Potential Default based on TLCP's failure to cure, the City
declares Material Default on items in the 7/13/2009 and 7/27/2009 Notices
of Default letters.
9/11/2009 City responds to 8/18/2009 TLCP letter and Proposal and indicates the
Tustin Counter Proposal that it believes is reasonable and the various
Project enhancements it was prepared to support, reinforcing its efforts at
good faith negotiations (despite the fact that the parties don't agree), and
voicing concern about TLCP's inconsistent and reactive negotiations and
failure to perform under the DDA and even its obligations under the
Forbearance Agreement.
10/1 /2009 Forbearance Agreement and Pre-Negotiation Agreement automatically
terminate.
10/19/2009 TLCP appears at an Assessor's Appeal Hearing and its consultants and
representatives provide testimony that the TLCP property should be valued
at "0"
10/30/2009 City issues Notice of Potential Default based on TLCP failure to perform
additional DDA obligations.
12/07/2009 City issues Notice of Monetary and Non-Monetary Defaults pursuant to the
DDA to TLCP given their failure to cure Potential Defaults contained in
City's Notice of Default letters of 7/13/2009, 7/27/2009 and 9/10/2009 within
the time frames required and informs both TLCP and their lender, KeyBank
of its intention to terminate the DDA and/or exercise its Right of Reverter
on the Property under the DDA unless the lender cured the monetary and
on-monetary Material Defaults within the time frames required under the
DDA.
12/17/2009 TLCP letter responds to City letters of 9/10/2009 and 9/11/2009 and
indicates Project remains structured to not be economically feasible now or
in the foreseeable future; indicate what they believe to be
mischaracterizations in City's 9/10/2009 and 9/11 /2009; refute some of the
Potential Defaults and Material Default items; state that City enhancements
proposed for the Project do not go far enough and that the City overstates
the value of these enhancements; that City has negotiated in bad faith. No
measures or evidence provided by TLCP for cure of any Material Default
items identified in 9/10/2009 or 10/30/2009 Material letters.
12/17/2009 TLCP letter restates that Project as structured is not economically viable, if
TLCP proceeds under City proposal letter of 9/11/2009 it would generate a
$300 million loss to TLCP; informs the City that economic realities (now and
in the foreseeable future) prevent it from continuing development of Tustin
Legac under the DDA.
1/19/2010 City receives copy of TLCP letter to County of Orange withdrawing from its
participation and financial obligations for the Nitrogen and Selenium
Management Program and terminatin its a reement with the Count .
3/09/2010 Material Default letter of 12/07/2009 expire and no formal response from
lender indicating that they would cure TLCP Material Defaults under the
DDA.
3/11/2010 City provides by letter to TLCP and its lender, KeyBank, the opportunity to
transmit to the City its own DDA termination letter and written agreement to
deed back to City the Developer parcels previously conveyed to TLCP as a
"consensual" parting of the ways before the City embarks on a formal legal
process.
3/15/2010 City provides a Demand Notice to TLCP for them to pay the Fair Share
Contribution Deficit which is due and payable and other miscellaneous
expenses owed the City under the DDA since they are in Material Default
and have not constructed the required Tustin Legacy Backbone
Infrastructure. Failure to pay in full by March 29, 2009 will result in the City's
filin of a notice of delinquency.
3/17/2010 City notice to TLCP and the lender, KeyBank of City's intention to consider
termination of DDA, exercise of City's right of reverter, and other legal
remedies under the DDA based on TLCP's Material Defaults under the
DDA at a City Council meeting on April 6, 2009.
3/24/2010 TLCP indicates the terms under which it would be willing to consider a
consensual termination of the DDA.
3/30/2010 City revises notice to TLCP and the lender of City's intention to consider
termination of DDA, exercise of City's right of reverter, and other legal
remedies under the DDA at a City Council meeting of April 20,2010
4/10/2010 TLCP requests continuation of any public meeting on termination to provide
additional time for negotiation of a consensual termination a reement.
4/13/2010 TLCP letter in response to City's consensual termination letter of April
8,2010, identif ing specific terms for TLCP consensual termination.
4/13/2010 TLCP letter indicating the condition that the site will be in upon re-
conveyance of the Property to the City under a consensual termination.
4/14/2010 City notice to TLCP and KeyBank that scheduled April 20, 2010 public
meetin before City Council was pulled off the calendar.
5/28/2010 City notice to KeyBank of City's intention to consider termination of DDA.
Exercise of City's right to reverter, and other legal remedies under the DDA
on June 15, 2010 and request of lender to execute certain lender
representations in the form of a certificate.
6/1 /2010 City notice to TLCP and Lender of City's intention to consider Termination
Agreement for termination of DDA, exercise of City's right of reverter, and
other legal remedies under the DDA based on TLCP's Material Defaults
under the DDA at a City Council meeting on June 15, 2010.
ATTACHMENT 5
DECEMBER 12, 2009 NOTICE OF POTENTIAL DEFAULT LETTER
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
December 12, 2008
Simon Whitmey, General Manager
Tustin Legacy Community Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, CA 92656
Re: Notice of Potential Default
Dear Simon:
TUSTIN
The Disposition and Development Agreement (DDA), between the City and Tustin Legacy
Partners, LLC ("Developer") establishes certain Developer obligations. More specifically,
Section 8.2.1 of the DDA requires the Developer to promptly begin and thereafter diligently
prosecute to completion all tasks required by the Schedule of Performance (Attachment 17 to the
DDA) on or before the time established therein for such completion. As you are aware, the DDA
was amended on March 29, 2007 at the request of the Developer to, among other things, modify
and extend certain requirements and dates in the Schedule of Performance. Following such
amendmerrt, the Developer bec~ine contractually obligated to perform its obligations under the
DDA in accordance with the revised Schedule of Performance.
The Developer has failed to timely perform, in whole or in part, certain of its obligations
required to be performed under the DDA, and such failures constitute Potential Defaults pursuant
to Sections 14.1(c) of the DDA. This letter constitutes written notice of such Potential Defauhs
pwsuant to the DDA. In declazing the existence of Potential Defaults pursuant to this letter, the
City is aware that the Developer has voiced concerns regarding the economic viability of the
project and its desire to negotiate modifications to the DDA to respond to current market
conditions. However, Section 17.8 of the DDA does not pernut a force majeure delay of any
Developer DDA obligations due to market conditions. While the City has been willing to
discuss potential modifications and/or amendments to the DDA that ere rea9onable and
consistent with original agreed upon goals and objectives for the project, the City has
consistently voiced concerns to tbe Developer regarding delays by the Developer in proceeding
with its obligations under the DDA. The City has also continued to stress that the Developer
needs to fully and timely satisfy and comply with its obligations under the curtent DDA
regardless of the status of any further continuing discussions with City staff on potential DDA
amendments.
Further, in correspondence &om the City dated October 27, 2008, the City also voiced concems
regarding statements from the Developer that it will not oontinue with the project unless the City
agrees to modifications and amendments to the DDA that meet its expectations. Given concern
regarding Developer performance issues under the DDA, the City requested that the Developer
provide a written commitment to proceed with the pmject back to the City by December 2, 2008.
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (714) 838-1602 • www.nistinca.org
BUILD-NG OUR FUTURE
HONORING OUR PAST
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 2.
Instead, the Developer in a written response to the City dated November 19, 2008 stated that it
"cannot make written commitments in the absence of a final and documented agreement that
results in a financially feasible project structure." In an e-mail from Developer's general
manager dated December 2, 2008, the Developer also stated that it will not devote further ei~rts
and resources on the project until a resolution of the issues of economic viability referred to in its
letter of November 19, 2009 are resolved. These statements by the Developer anticipate further
breach of the DDA and aze thus unacceptable. Indeed, the City has made its position related to
the current DDA quite clear to the Developer in writing several times over the last several
months-the City expects the Developer to continue to perform its obligations under the DDA
regardless of any continuing discussions on the potential for DDA amendments.
Pursuant to the DDA, the City will detail below the particulazs of the above-referenced Potential
Defaults; providefl, t~wever, that the following shall not be deemed to oonstitute an e~austive
list of any and all Potential Defaults and Material Defaults that cwrently exist, and thus shall not
be deemed to constitute a waiver of any other Potential Defaults and/or Material Defaults. T'he
Potential Defaults referenced in this letter arise by virtue of the Developer's failure to meet its
obligations in connection with four major tasks: 1) Concept Plans and Sector `B' Tentative Tract
Maps, 2) Mass Grading, Demolition and Interixn Drainage Plans and Construction, 3)
Developer's Backbone Infrastructure Plans and Construdion, and 4) Local Infrastrudure Plans
and Construction. These failures are as follows:
• Concept Plan and Sector `B': The Developer has not submitted all required Concept Plans
and Sector `B' Tentative Tract Maps. The failure to timely submit these documerrts has
delayed the project at least 18 months. The last submission to the City was a Concept Plan
application with related drawings and documents for Neighborhood `D' on July 23, 2008.
The table below shows the applicable provisions of the Schedule of Performance and
compares it to the actual submission dates by the Developer. The italicized comments in the
fourth column on the right, reading "currently not in cornpliance" indicate where the
Developer is in Potential Default under the DDA.
il 1'lusac l- Conccpt Plnn nnd
Sector'Ei' Maps ~3..2.5(c)~
I)~YClopcf suUitul52tn Nh: Juu 19, LU(Hi NF: lun~ ?U, _'iHlh ~t:: eubnutlal
in~~i.~l t'onc:.;pi Picu, ~vU: Ik;c Is, 2o~~e nc~: r~ac i~~. _'nuc, nc.~~ suhmincd
a~pli~~tilion wiih rcl;iled Nl): FebS. 2.(8Y7 ~~~: PGt, i ~~ri~7 Nf): ,uhmrti~d
Jr:;evh~gs ~i~d d<v~uin.•ms
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 3.
L)cvcliipe:rSUb~u~is S
cumpleti~ c:'nnccpi Plan
applic,ation with rclatcd
drawings anJ Ju, umcids
(3) [)cvclu~>er ~ubmits a
prclnninwy Scr.tor'U'
Taniativc Pract fvlap
apPiicartiun
NE: Fct~ lo, ZOql
N(i: M18r 23, ?lNl l
ND: May 13. 20U7
NE:Oct l.'+.2onG
NG: Mar 2.5, 2(Nl7
Ni~: Niay 13. 2UQ7
~f 1i~g 14. 2(10?
V(J: til~{)Yi71f1A~ :Yf
Novcmhrr 'i1. 2p(~7
n~d ~Icli~rniiueil
cumpli t<•.
N(~: submit[sl o(
Juiy??. Zt}NIX titA
~ Iclc•t m in.:tl
NG: Aug 14, 2007
ND: Jan 30, 2008
NE: w6ile not submitted within
ICQUIICd [IID6 tl'SIDCS, SU~11tt81S
determined complete
NG: ewruU[y not in canpliance
ND: cwrenrly na in canp/lance
NE: completed
NG: preliminary submittal made
but did not comply with time frame
ND: preliminary submittal made
but did not comply with Nme fcame
ll~•YCIO~ICY 511lliTlll~ N
cuinplelr ticclc~r'R'
TuicnUati' Prac~ Map
apnlicafian 4eith related
drat~iugs, dixumatts
aitid inli~rmatiir~
deienniucd nu~essary i~y
tlie C ily includin~, but
nrn lirniiecltu, 1'rafiic
Siudics. Il i~~ 13udget
dx!t~. HytL•~~lu~y+tudi4~,
aud nlher suppudiug
intixmntii~n.
fidlowing Ihr
Ck,vcluFxi's rcccipt of
uommenis li•om d~r
City ~x~ .i ~x'climioaiy
Sc~~tor ' R' l enYativc
Map
NE: City responded
to comments on
3-29-2007;
••complete„
comments not
submitted until
8-14-2007
NG: City
responded to
comments on
]2-21-2W7;
"complete"
comments have not
been submitted to
date
ND: City responded
to comments o0
8-22-2008;
•~complete"
comments have na
been submitted to
date
NE: while not submitted within
reqaited time &ame, submittals
were determined complete.
NG: c~rrrtndy nd in conipGanct
ND: cwr~edy not in compltonce
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 4.
(S) U~xu~ City d~Kenninaticui
ihal 1~. vclu{~er h3c
submiltcd a anripictc
Cnnc•cpi Plan xnd Sec~or
R. fciil'ativeTiartNlip
applicatiai, apprcwecl bv
thc: Navy ~~~ i; al~ecl~
LIFOC Pareclsand
~omplc:linn oi~all
cnviu~nmcntal
.kx:um4utatiun, Cirv
tak.sactic~n rni the
C'cmc,cpt Pi1n .•u~d Scci«r
'R' ~cntxtiveTrdct L1ap.
(61 ncvciu~x:r subm~ts H
crnnplrtc Suctor'R'
l~inttl Ma~~ +t~ilh r:lalcd
drnu°utgs t~nd
dik~uiuaniz, iucluJin~~
hle~stcr A,xKialiou
I~a•umcntc to ('ity.
llay~.
f)aYS foll~~wing City
Cc~uncil appr~w.~l of tite
tiucun"U' IonWtiev
'Iracl hfap.
"js r~
a.~:~~ ~~
NE: Dac 04, 2007 NE: approved by
(approved by City 12-04-2007
as required upon
detertnination of
completion ;~
NG: Developer has
not submitted
••complete~~
submittal of Se~tor
`B' TIM
ND: Develaper has
not submitted
••complete„
submittal of Sector
•B, TIM
of City Council
approvalon
12-04-2007 the
Developer; the lest
date for submiual
was 2/19/2008;the
Developer
submissia~ was
3-10-08 and has not
been determined
mmplete
on
NG: currendy nd iw canptiance
ND: currtntly not ur canplianee
not
NG: Developer has ° NG: currukly not in canpliance
not submitted to I Developer must complete prior
date tasks in order to submit
ND: Developer has ND: currsntly not in canpliance
not submitted to Developer must complete prior
date tasks in orderto submit
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 5.
---..._..- lil...._._ ~
I , ~ ;,~~ ! ~ ~ ~ . ;l ~ -.
~ ~, ~ '
~
(7i
a
`
l~
,
~ _.----
~ hi n:u C:d.~ndau
I _
NE: City cannot - ___._....._._.._--
NE: cunenNy not in canPlianc~
'~ 4 ;
i ~~~v
l
,i Setckir
1
B' >nv
; , fr~! ioa~ing i he take action undl Developer must complete prior
T'inal Mil~l, Nil(I (VIii~Yt.i I .ucr ol ( c~) fh:vclo~~r's Developer hes made tasks in order to submit
As.ticiai ion p~r~umeuts. cxnvplering all City, corrections to Final
C'ciunt.y. ,irxl Tract Map and
res~x~sihle T~cy incomplete
reyur~tcd coiTeUions. submittals; City
tir (f+) all couditi~ms ol' iC3pOpdCd to
appruve~I ~,f ~he Sectnr I Developer on
~B~ r~~,~~<<~~ r~,~~ I a-o2.2oos.
Map.
NG: Devaloper has NG: currently nat iw c~anpliancu
not sutunitted to Developer must complefe prior
date tasks in order to submit
ND: Develaper has ND: ewrently nd iw canplianca
not submitted to Developer must mmplete prior
_ date
.
: _
___ _ ta~cs in order to submit
-
-
(3) [?evcln~~er cRUSrs the W itinn )D Cal~ndar .
NE: Developer NE: currextly not ir conipltancG
Rectiirdinc ot the Secmr Days following cannot record FIM Developer must complete prior
' B' F it~~+l Mar. xnd ap~irrnwl nl' ihe Sector until conedions tasks m ader to submit
Ma.sccr Axsikialioii ' B' I'Inal Ma~~. h8ve been made as
lkxumcnr~ requested by the
City o0 402-2008
NG: Developer NG: cwnently nd ie canp/iance
cannot record FTM Developer musc canplete prior
until prior tasks tas~.c in ader to submit
have baen
completed including
submitting a
`•complete" Secta
'B' T"IM, as noted
above.
ND: Developer ND: curnnNy nat iw canpliance
cannot iecord F1'M Developer must complete prior
until prior rasks casks in order co submit
have been
completed including
submitting a
"complete" Sector
`B' TIM, as noted
~
y _. above.
Simon Wlutmey
Tustin I,egacy Community Partners, LL.C
December 12, 2008
Page 6.
• Mass Grading, Demolition, and Interim Drainage Plans and Construction: The
Developer submitted mass grading plans in September 2006, the City approve~ the plans in
September 2007, and the Developer started construction. According to the City's Building
Division, the mass grading operations stoppefl on June 6, 2008 and there has not been
subsequent activity on the site. Further, the Developer's contractor Reed Thomas reported to
the City on June 6, 2008 that they were pulling off the construction site that day. The DDA
requires compliance with all Governmental Requirements. Under the Building Code
Administrative Code, as amended and adopte~ locally by the City of Tustin, a permit is
active for one hundred and eighty days from the date of issuance and extends provided
continued activity with respective inspections are wmpleted. Further, under Section 8.3.1 of
the DDA, the Developer is required to process, secure and maintain any and all City
Government Permits in accordance with all Governmental Requirements. As you are aware,
the delay in the mass grading operation will impact the ability of the Developer to meet
Backbone Infrastructure and Local Backbone Infrastrudure obligations.
• Developer's Backbone Infrastructure Plsns and Construction: Of the 76 segments listed
as Backbone Infrastructure projects in Phase 1, the Developer has submitted plans for initial
review of 21 segments. Initial plans for 55 segments remain to be submitted. Plans for 76
seQments were to be submitted by October 31, 2007: failure to meet the schedule resulted in
the Develover not being in compliance with the DDA. The tabte which follows shows the
overall status of the Backbone Infrastructure Plans and Construction A supplemental table is
also attached to this letter prepazed by the Public Works Department which provides
additional details. In summary, a breakdown of the initial plans by Neighborhood is as
follows: 9 out of 9 segments remain to be submitted for Neighborhood D, 7 of 13 segments
remain to be submitted for Neighborhood E, 15 of 16 segments remain to be submitted for
Neighborhood G, and 25 of 38 segments remain to be submitted for the combined
Neighborhoods D, E, and G(general benefit).
Simon Whitmey
Tustin Legacy Community Parmers, LLC
December 12, 2008
Page 7.
a >
ry `% .+v .,',.~ ~' r ii~t~'~• nJ~'..
(1) Ckveloper aubmits ini[iat
F3ackhn;ir fntia;tni~~ture
Plans ancl dccumo7its
1 uutc: submiuals will lx: in
.e~naents).
initial submiitals no later
than•
NL: August 3I.'Z007
NG~ Octubar 31, 20Q7
ND: Sep~embu 3Q, 20Q7
Line~r Park: Oct 31,
200?
NE: 8-29-200~ (1 segment ~ NE: carrcnfly not in compliance;
submission) total of 13 segments (item 6a, 6b,
3l, 34a, 346, 34c, 34d, 49, 50, 86,
123, 126, 129); 1 segnent (item
~ 123) submitted by deadline; 7
se~ments after the deadline (items
6a, 6b, 31, 34a, 34b, 34c, 34d); 6
se~ents have not baen eubmitted
(items 31, 49, 50, 86, 126, 129).
NG: 3-11-08 (1 segment NG: cunendy not ix eanp/iaxce;
submission) total of 16 segments (items 12,13,
14, I5, 18, 19, 37, 55, 56, 60, 65,
88, 115, 116, 121, 1?A); 1 segnent
(item 15) submitted to daYe sod
that submission was after t6e
deadline; 15 se~ents have not
been submitted (items 12, 13, 14,
18, 19, 37, 55, 56, 60, 65, 88, 115,
116, 121, 124).
ND: No submittal to date ND: cumntly nd in caxp/iance;
total of 9 se~ents (items 11, 23,
29, 42, 53, 54, 122,125,127); 0
segnent submitted to date.
Linear Park: 8-29-2007, Linear Park: canently not in
submittal included in NE canpliante; total of 3 segments
(items 122, 1?3, 121), 1 se~ent
(item 123) in NE submitted by
deadline, 2 se~ents (items 122,
121) not submitted by deadline for
NG and ND.
NE/NG/ND (non- NFJNG/ND: currently nd in
exclusive to specific canpliance; taral of 38 segments
neighborhood deemed to that impact Neigt~borhoods E, G,
be of "Cma~ecal BenefiP~ and D; 5(items 79, 80, 82a, 826,
87) af the 38 segments were
submitted by 1Q31-2007, t6e
deadline; 8 segments (8, 9a, 96,
9c, 9d, 28a, 28b, 28c) were
submitted after the deadline; 25 of
the 38 segments (9A, 62, 63, 64,
65, 65b, 68, 77, 78, 83, 89, 90, 91,
92, 94, 96, 100, 104, 108, 112,
1] 2a, 117, 132, 133, 81 A) have
not bee.vi submittecl.
__ _
_ __....__..__
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 8.
P::" ^
~~ ~~Cf=a^~"Z ~ ~~ile
(2) [xvelopu'suhmi[s
complc~c BnckUonr
Inf'rnsiructurc Pl;~nc,
+~xxil icatiims r~od hiil
d~wuructits (nete:
suhn~iftal~ will bc in
se~meu U. )
N G: OGolx r3 l. 2t)0)
Nl~: 1.)cx'cmlxt' 31. 21~7
ND: C)ctohcr 31.'_Op7
I.incar Park: D~c 31.
20(17
Cocn~~lere submittals ai~e
Cfl[1U0~,Cilt ll~lOtt ~'ity
t{il~?YOY.II nfarpliwble
tiector'H' 'fenlative
Tracr. Mups whcre such
im{ir<wctn~rtn ar~ to {ie
loutcd. ccyntpl~ti~in nf
Hycirolu~.~y Siudies and
any Trai'fic StuJir. as arc
dc~crmincd ncccssary and
av yp~iruveJ by nc~ ('iry.
NE: no c~nplete plans
submitted to date
NG: no complete plans
submitted to date
ND: no complete plans
submitted to date
Linear Park: no complete
plans submitted to date
NFJNG/ND (non-
exclusive to specific
neighbarhood deemed to
be of "Cenetal BenefiY'):
4/11/2007 (2 segnent
submissions)
NE: eurrently not in complfance,
total of 13 segments, 0 segnents
are complete.
NG: currendy not in aanpliance;
total of 16 se~ents, 0 segments
are completa
ND: cumatly nd irt co~np/lance;
total of 9 se~ents; 0 segnents are
complete.
Linear Park: currently not in
cawpliance; total of 3 segments, 0
segments in NE submitted by
deadline.
NFJNG/ND: currenlly not in
co~pliawca; totel of 38 segments
that aee of general ba~efit to
Neighborhoods E, G, and D; 2
segments (items 82a, Amistrong
Storm Ihain and 82b, Wamer
Storm Ihain) are cAtnplete and
were approved by the City, 36 of
the 38 segnnents have oot baen
submitted as complete.
venl : Of the 76 segmeots in
Phase 1, tbe developer has
submitted 21 segments for initial
deemed complete. 7a se v~enta
OCC~ [O ~ISVC COmDICtC D~HD
SUbR119S10~9.
respuri~iblr agc.nci~:.~
constder and c~dter
~C1cCt. rcquesl Ch~ngc;,~
to ur approvs Ih..
Rackhone Inlr,9.sUtii:iuie
Plans. s~x.tiliu~iion. and
bid cliu umenls.
Gdluwing stthmilfrJ tu
C'i~v nf Plans within Citv
res>>onsibitity. Within
res{x>nGC iimc fremw
d~.l incxl hy ot I~cr
responsiblc agcaicica.
Of the 21 segments
submitted to date, the City
has respcwded to all
se~ent submittals in a
timely manner, within the
allotted 30 days of initial
Plan submission.
DDA
Simon Whitmey
Tustin Legacy Community Partners, LI,C
December 12, 2008
Page 9.
(a) I)cvcln~wr ch:ill
cumpl~tr any
mai it~ca i ion s ur~
u~n'ectiun, li, thc
13.~ckbnne Infra~trucmre
(~IHns. spc~~ificationsand
biJ ducume~ils xs Ciiy.
~tl~er racr;mtiilsiz
cjgencic. m:ry request.
anJ written appmvul, af
Int'r,~stru~Kure aiter
consultalic~n with Il~u
Nava~ un any LII~OC'
Rircels or o~lxr ari~nz
imE~c.~~Yl by ~'(~S'i ur
F(.)S1 NavV inatitational
um~n,{::, :is mav lie
rcyuin~d.
lnfra>n•ucan'c Pl.ans,
sp~eitica4ion.e and biJ
documenis, and i;,uance
ui na~csYary
construrhor ~nnni(s or
en:r<sachm.mts pcrrniis.
„'~ .
~~~f ~.:rl: :7i
. ~ :a
~ .:~1 _'l. ~_~~
.~.~..~. ~. ~. ~, _ __ ___ ___ __
s ~~~av~ ~ ~ ~ ~-
,`4+~ F<.t+.rrr ~ n~i':~ ~ n ~; h.M,.~.:.
t'~~f K 9'tl",~i41i~1~J R%.iti '~' ~~ il s~~)~~ j~ -
~ ~ ~ 4' ~ ~`
.. - _ _
~i~cl~~i~ u c', irnd E~ I~.~r. .. .. _
NE: no complete plans .. . . . _. _
NF.: currenUy nof in comp/iance;
fiiil<r~t iug submiual ~o submi[ted to date tofal of 13 se~ents, 0 se~ents
Ueveloper of r,:quesied aie complete.
m~xliriuttions or
a~rrca irsis. NG: no camplete plaus NG: curre+~Ny wd In canpliancr,
submittad to date total of 16 segneata, 0 segments
are complete.
ND: no complete pians ND: currenUy not in canpliance;
submitted to date total of 9 segments; 0 segnents are
complete.
Liaear Pazk: no complete Linear Pazic cYrrartly nd in
plana submitted to date co~pliancc, total of 3 segments, 0
segments are comptete.
NEING/ND (non- NFJNG/ND: currendy not ia
exclusive to specific co~pliance; total af 38 segments
neighborhood deemed to that impad Neighborhoods E, G,
be of "Geae~al Benefit'~: aod D; 2 of the segments l~ve
4/11/2W7 (2 segnent been approved, ttrese 2 segnents
submissions) were not submitted as complete
by the deadline; 36 of the 38
SC$fI1CI1tS ~18VC OOI ~2C0 SllbIll1~I0~
as oomplete plaoa
~vitliin .iU c:alrnaar Days NE: no complete plans NE: curre~(y not tn compl~anca
following a~mplc~ion of submitted to date. Prior task nol completed by
tdl City:uul respousibte Developer.
agcucy ca recdonc i~r
~xrwi ~,. N(i: no canplete plans NG: currar!!y nd !n co~npliance.
submitted to date Prior task not completed by
Developer.
ND: no complete plans ND: currently nd in co~pliance.
submitted to date Prior task not campleted by
Developer.
Linear Park: no complete Lin~r Park currailly aot in
plans submittad to date cawpUance. Prior task nd
completed by Developer.
NEJNG/ND (non- NElNG/ND: currenHy nd ir
exclusive to specific canpltance; 2 of the 38 segments
neighborhood deemed to have baen canpleted end
6e of "Ge~etal BenefiY'): approved by the Ciry.
no complete plans
submitted to date.
Simon Whitmey
Tustin Legacy Community Partners, LL.C
December 12, 2008
Page 10.
Request ti~r f~ids I I'rame: fi~r ~iutil ic hid has not completed prior
con~pliance. Prior tasks not 1
aclvetti~xn~et~ts(if ~
tasks. completedbyDeveloper.
mquir.^.d f<~r CFD (unded
~ n ojccts).
i
l I.....
7) llevclo ~,i i~eicw [iid Wrthin 3U da s of rcc~.i
Y' !~ NFJNG/ND: Devel
~' NF~NG/ND: current/ nd in ~
Y
resuits witli Ci~y xnei i~f Eiicl,. has not completed prior con-plianc~ Prior tasks not
up~tin City con.:un•en~ tsslca completed by Developer. I
~wards ihc Bid to itic I
lowesl iLS~xmsil~le
bidcter.
I
~
~._..~-- ' - ---
(3) Ckv~l~ijxrcouimences : :_ _-~ __ _.:.. _:-
Wilhin3~lCnlendarDavx _ ... .---_-~--
( 'VP/NC~~NI):Ilevrln~~rr . . . ~-
\l ~Uiv~~ <<nr<~nrh ~., ,;;
uomtru~linr~ uI' from naxicc to prixocd. ha, no~ r~~m~d~iu! ~tirwr
I cnnryrtiaare P~ior t nt ,i I
Backtx~nc lufrasfnicture ta.k~. ~.ou,~,lef~ii by I.h-ve!<;~ ~.
i mprix~cmcnis. ~ ~
~
(9) Ih velurcr u~iu~rletzs
Prinr tc~ thc con~~cyance
Developer has not ~ _... _ __.
,
~ Phase 2 prope[ties cannot be
Phace; I ne~rliyier's uf I'hssc 2 cir as the comple6ed p[iar tasks. canveyed to Developer uotil
E3a~kirmi~ lufrasvui•.tu,x• Cily', Couditi~~n Conditi~s Precedmt have been
Imprwcments. Prcccd~ni tu Cluu af fulfilled.
li..crciw an Pha~ti :? per
UI)A Scction 3.~.5.
unles. alherwisc waiv~d
;w u, in~iviJus~l
imprrne.+ncnts Fxr DDA
S~oli~xi ;.:3,5
• Local Infrastructure Plans and Construction: Plans for 34 se~znents listed as Local
Backbone Infrastructure projects in Phase 1 were to be submitted for initial review bv no
later than December 31, 2007. The Developer has submitted for initial review only 4 such
segments. Plans for the remaining 30 segments have not been submitted. Failure to meet the
schedule resulted in the Developer not being in compliance with the DDA. The table which
follows shows the status of the Backbone Infrastructure Plans and Construction. A
supplemental table is also attached to this letter prepared by the Public Works Department
which provides additional schedule information on infrastructure submittals to the City. In
summary, a breakdown of the initial plans by Neighborhood is as follows: 7 out of 8
segments remain to be submitted for Neighborhood D, 6 of 9 segments remain to be
submitted for Neighborhood E, 12 of 12 segments remain to be submitted for Neighborhood
G, and 5 of 5 plan segments remain to be submitted for the combined Neighborhoods D, E,
and G (general benefit).
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 11.
_ __ _ _ _ __
,~ r
,
.. ; . . .. .. _ ..
.. I. . . . .';~~'. "' . ~ ~~.~,J'i .'..~:~ _'(!; ~~ ~ r:~~`e.'
, ~.
~ . ~ . ~ . . . .';ir. ~ i ~ J ~Z,'~
initial I_a:,al
lu linstructurc Pl~ns :md
do, um~nl8.
mmai cumm~[ais nn ~aief
than:
N[ .4ugust ?I. 2007
NG: DeCenlber ? I, 21X17
NE)~ Oct~~ticr 31. 20t)7
NE: Developor submits 3 NE: cwrrently no~ in conrplianc~
initial plana on 8-28-07 3 of 9 se~ents have been
submitted to date by the Developer
and 1 plan has received City
approval.
NG: Initial plans have not NG: turrenfly nd in coinpliancG
been submitted by No~e of the 12 segmcrots d~ have
Developer. been submitted by the Developer.
ND: Initial plans have nd ND: cunadly not in canpliance
been submitted by 1 of 8 segments due have been
Devaloper. submitted by the Developer.
NF/Nd/NG (genetal NE/N(3/NG (general lxnefit):
tICOCfIf~: lllltlH~ ~805 I18VC CYl~BN~,q llOf tA CODIp~lAMC4
not been submitted by None of the 5 se~ments have bee~
Developer. submitted.
Overvlew: A total of 34 se~nenta
were to have bcen by submitted
December 31, 2007. Only 4 af the
34 se~ents have bew submitted
to date; 30 plans remain far
Developer submission (6 plans for
NE, 12 plans for NG, 7 plans for
ND, end 5 plans asaociated with
General B~efit). Only lof 34
segments l~as received approval
from the City.
Simon Whitmey
Tustin Legacy Community Partners, LI,C
December 12, 2008
Page 12.
~~
f-') [kvrloprrsuinnit~
:.oniplete I c~ul
!n 6rastructurc 1'lans anJ
ci~x:umctits.
N6: Novembe~ 30, 20(17
NG: fehruary 2N,
200'7t R)
nn: i~;;~~»t~~ 3 i. ~cx~7
G~anplete ,uhunt(als are
contin~cnt upcin City
apprc>val oi'applicttble
Su~ur'fi' "~cnrativc
Tracx Maps whc,~e ~uch
im~rovcmrnts arc to he
hx:alcil, u,mple~ion ot~
Ilydroloqy tiwdies and
any ITaffic S~u~1ie. a. an-
dewnnincd to hie
nccc~cjry hy il~cCiry.
NE: Developer submits 3
plans fa initiai review on
8-28-07
NG: Initial plans heve not
been submitted by
Developer.
ND: Initial plans have not
been a~bmitted by
Developer.
NE/NGlNG (genecal
benefit): Initial plans have
not been submitted by
Developer.
~ ~'~~ s!j`~',~ ~: ~~ai:?ij..,...
NE: CIf17LMHy IIOt 01 CO/IIpI{0I/CG ~
3 of 9 segnents ffive been
submitted to date by the
Developer; 1 plan l~as received
City approval.
NG: currenlly nd in compltanca
None of tbe 12 se~ents due have
been submitted by the Developer.
ND: cwradly nd in canp/ianc~
1 of 8 segments due have been ,
submitted by the Developer. ~
NE/NG/NG (genecal benefit): ~
CKRCIIfIf MO~ UI COMIPIIOACG
None of the 5 segments have beea
submitted.
Overvlew: A total of 34 segments
were to have been by submitted
February 28, 2008. Only 1
complete plan has been submitted
of the 34 segments.
rispnnsihle ~~rncics
umsidcr and ciihcr
rc,jci•I, r~yuesl chunges
to or approvc ~lic L_ocei!
lufi~,vucturc f'lans anJ
~i~ritleu appruval, frum
~I~c Navy aitrr
consulia~iuri on L.If~O('
Parc~l, ot uther areas
im~',ncFc~ci hy PUSL+~r
t~tlST Navy institWiuncil
controls, as mav be
~r;i~uittd.
u,~~,ri~~u: ,~~,~
moditiialio3i. ur
u>ncctio~iz tu ifi¢ Lcx'&f
Inl'rasuucture Plans:u
City or olhcr n:.sponsihie
agctiicies m;3y Reyuetii.
tidl~nving submnCSil to
C'ilv ~~F Plans witliin
Citys respon~ihility and
~vithin ravicw ~imr
1'i~mes Jelincd bv uiher
~cspcmiblr aeencirs.
fnll<nving s~l6mittal to
pcvelupcr ~,{'
m~uiific~~i~xi „r
lXNT4l'd IUti fC'(~UC5tS.
-- - _ _ ._.:.
Of the 4 segments
submitted to date, the City
has msponded to all
segmatt submittals in a
timely manner, within the
allotted 30 days of initial
Plan submission.
tuic coirrplotc plau tu datc.
for this task
CwrenNy xo! in cawpliancw
Developer hes submitted 1
cotnplete plan segnent wt of 34
segments.
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, Z008
Page 13.
~!~)
InGascruciuro a Plann fillowing complctiun of
and issu~nce nf all t'i~y:md r~.spun+ihlc~
ci~nsirut'tion Ex;rmits or `sgerry ~r.~rrc~tiiais Cily.
cncrunchmcn~ pcrroils
cumtruciiun uf I.oc;il ~ app~n~,il nf I cx~l
h~fraatnicture. I3.~ckLcmc Plxns.
Developer cannM CurrenUy nof in canplianca
comcnence construdion on Developer wnnot complete until
all segments unril C,ocal prior tasks have been completed.
Backbone plans are
completed and pennits are
issued.
Developer canna ~ Curreiuly na !n canplianca
commence oonsWdion on Developer cannot complete until
all segnents until [.ocai pria tasks have been completed.
Backbone plans aze I
completed and peemits are
issued.
{71 Urvclopcr .hall hav~: 1'rior lo lhu umvcy<u~~ti:
cumpleted all Vhau: I of Phuse ? ur as t(ic
I .~~c;~l Intro-~.fructwr. ( iry'~ CcxiJiti~m
Pm~dau lo C'losa of
Escrc>w un I'hasc 2 Pcr
PDA Scction 33.5,
unlcss othu•wisc waivc:d
as tc, indivi<lunl
imprnvemcnfti per DDA
Sccti~ui 3.3.5
Developer must have made
substantial progress on oompleting
ail Phase I I.ocal Infrastructure
P~'o.lects idendfied.
Pursuant to Section 14.2.2 of the DDA, such Potential Defaults shall become Material Defaults if
not cured, at the Developer's expense, (a) within thirty (30) calendar days after receipt of this
letter, or (b) if such cure cannot be reasonably accomplished within such thirty (30) calendar day
period, within an additional one hundred fifty (150) calendar days from the expiration of such
thirty (30) day period, but orily if the Developer has commenced such cure within such thirty
(30) calendar day period and diligently pursues such cure to completion. In addition, Section
14.2.2(c) provides that the City may grant a longer period within which the Developer may cure
the Potential Defaults in the City's sole discretion, taking into acoount the nature of the Potential
Defaults and whether Developer is exercising diligence and using commercially reasonable
efforts to cure such Potential Defaults. The City is willing to consider any pmposal which is
made by the Developer during the thirty (30) day period commencing on the date this letter is
received pursuant to which the Developer intends to cwe such Potential Defaults, provided that
(i) cure is commenced during such thirty (30) day period and diligently pursued thereafter, and
(ii) the Developer explains in writing how substantial progress can be made toward completing
the Concept Plans and Sector `B' maps as required in the DDA, how the mass grading operation
will be remedied to malce substantial progress and not delay related infrastr~cture impmvements,
how the Developer will make substantial progress toward the cotn}~letion of Backbone
Simon Whitmey
Tustin Legacy Community Partners, LLC
December 12, 2008
Page 14.
Infrastructure Work by September 2009 as required in the DDA, and how the Developer will
make substantial progress towazd the completion of the Local Backbone Infrastructure Work by
September 2009 as required in the DDA.
Developer's failure to timely cure the Potential Defaults enumerated above will resuk in the
occurrence of a Material Default, whereupon the City shall have al] of the rights and remedies set
forth in the DDA. City staff representatives are available to discuss your approach and plan in
more detail.
Nothing in this agreement is intended or shall operate to modify the DDA. The City's
willingness to participate in discussions regarding the Project and/or the Potential Defauhs
disc,~ssed above shall not be deemed to indicate a commitment to modify the DDA or to waive
any Potential Default. No such modification or waiver shall be effective unless embodied in a
written agreement signed by the City and the Developer. The enumeration of Potential Defauhs
contained in this letter is not exclusive. Neither the failure, nor delay by the City to exercise any
of its rights or remedies or any provision of this letter will amend, modify, supplement, extend,
delay, renew, tetminate, waive, release or othetwise limit or prejudice the Lender's rights and
rernedies or the Developer's obligations under the DDA, and no such amendment, modificatioq
supplement, extension, delay, renewal, termination, waiver, release or limitation shall be
effective unless in writing and executed and delivered by the City and the Developer. In
particular, nothing referred to above shall operate to cure any existing default or to pmtnbit,
restrict or otherwise inhibit the City from exercising any right or remedy it may have under the
DDA.
Sincerely,
`% "~ % ~?' f'~~~'~ '~
William A. Huston
City Manager
Attachment: Schedule of Plan Submissions by TLCP for Backbone Infrastructure
and Local Infrastructuro-Phase I
cc: Christine Shingleton, City of Tustin
Tim Serlet, City of Tustin
Elizabeth Binsack, City of Tustin
Doug Andesson, City of Tustin
John Buchanan, City of Tuatin
Doug Holland, City Auorney
Clay Gantz, Special Real Estate Counsel
~
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ATTACHMENT 6
NOTICE OF POTENTIAL DEFAULT LETTER OF MARCH 4, 2009
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
REVISED
March 4, 2009
VIA EMAIL AND FEDEX
Simon Whitmey, General Manager
Tustin Legacy Community Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, CA 92656
RE: Notice of Potential Default
Dear Simon:
TUSTIN
The Disposition and Development Agreement (DDA), between the City and Tusrin Legacy Partners,
LLC ("Developer") establishes certain Developer obligations. More specifically, Section 8.9 states as
follows:
`8.9 Taxes, Assessments. Encumbrances and Liens. Developer shall pay when due
and prior to delinquency all real estate taxes and assessments assessed and levied on
or against all portions of Developer's Parcels subsequent to the conveyance of fee
thereta by the City to the Developer. The Developer shall not place, or allow to be
placed, on its interests in the Property, or any Portion thereof, any mortgage or
encumbrance of lien not authorized by this Agreement The Developer shall remove,
or shall have removed, any levy or attachment made on interests in the Properry or
any portion thereof, or shall assure the satisfaction thereof within a reasonable time
but in any event prior to Foreclosure. Nothing contained in this Agreement shall be
deemed to prohibit the Developer from contesting the validity or amount of any tax,
assessment, encumbrance or lien, or limit the remedies available to the Developer in
respect thereto."
According to the Orange County Treasurer-Tax Coilector, the Developer has real estate taxes on its
property which have not been paid as identified on the attached Exhibit A. The Fiscal year 2007-08
Secured Property Tax First Installment Payment was originally due December 10, 2008, but a
revised assessment provided the property owner with an additional grace period until january 26,
2009 to pay such taxes (the "Supplemental Property Tax"). The First Installment of the
Supplemental Tax for Fiscal Year 2007-08 (as revised) has not been paid, and penalties have been
assessed. The Second Secured Property Tax Supplemental Installment Payment for Fiscal Year
2007-08 due on February 1, 2009 has not been paid, with penalties to commence on April 10, 2009.
The First Installment Payment for Fiscal Year 2008-09 was originally due on December 10, 2008,
but the revised assessment provided the property owner with an addirional grace period until
January 23, 2009. The First Installment of the Property Tax for Fiscal Year 2008-09 has not been
paid and penalties have been assessed. Further, the Second Installment Payment of the Secured
Property Taxes (as revised) for Fiscal Year 2008-09 due February 1, 2009 has not been paid, with
penalries to commence on April 10, 2009.
30~ Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (7l4) 838-1602 • www.tustinca.org
BUILDWG OUR FUTURE
HONORWG OUR PAST
Simon Whitmey, General Manager, TLCP
March 4, 2009
Page Two
Pursuant to Section 14.1 (a) of the DDA, Developer has failed to timely pay a sum required to be
paid. This letter constitutes written notice of a Potential Default under Section 14.1 (a) of the DDA.
Pursuant to Section 14.2.1 of the DDA, such Potential Defaults shall become Material Defaults if not
cured, at the Developer's expense, within fifteen (15) business days after receipt of this Notice of
Potential Default (or by March 25, 2009). ln declaring the existence of Potential Defaults pursuant
to this letter, the City is aware that the Developer has voiced concerns regarding the economic
viability of the project and its desire to negotiate modifications to the DDA to respond to current
market conditions. Nevertheless, the foregoing cure period for Potential Default under Section
14.1(a) may not be extended by force majeure. Pursuant to Section 17.8 of the DDA, the occurrence
of adverse market conditions is not an event that permits a force majeure delay of any Developer
DDA obligations.
Developer's failure to timely cure the Potential Defaults enumerated above will result in the
occurrence of a Material Default, whereupon the City shall have all of the rights and remedies set
forth in the DDA.
The enumeration of a Potential Default under the DDA contained in this letter is not exclusive.
Neither the failure nor delay by the City to exercise any of its rights or remedies nor any provision
of this letter will amend, modify, supplement, extend, delay, renew, terminate, waive, release or
otherwise limit or prejudice the City's rights and remedies or the Developer's obligations under the
DDA, and no such amendment, modification, supplement, extension, delay, renewal, termination,
waiver, release or limitation shall be effective unless in writing and executed and delivered by the
City and the Developer. In particular, nothing referred to above shall operate to cure any existing
default or to prohibit, restrict or otherwise inhibit the City from exercising any right or remedy it
may have under the DDA.
Sincerely,
~ _
v v'V ~'
William Huston
City Manager
Attachment: Exhibit A
cc: Tustin City Council
Christine Shingleton, City of Tustin
Tim Serlet, City of Tustin
Elizabeth Binsack, City of Tustin
Doug Anderson, City of Tustin
John Buchanan, City of Tustin
Doug Holland, City Attorney
Clay Gantz, Special Real Estate Counsel
EXHIBIT A
Developer Property Tax Payments for Fiscal Year 2007-08 and 08-09
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ATTACHMENT 7
FORBEARANCE AGREEMENT AND PRE-NEGOTIATION AGREEMENT
[INSERTED AFTER THIS TITLE PAGE]
FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT (this "Agreement") is made as of April
14, 2009, by and between TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a Delaware
limited liability company ("Developer"), and the CITY OF TUSTIN (the "City") and the
TUSTIN PUBLIC FINANCING AUTHORITY (the "Authority" and together with the City,
collectively referred to herein as "Tustin").
RECITALS
A. Tustin and Developer entered into that certain Tustin Legacy Disposition and
Development Agreement (Master Development) dated as of May 3, 2006, as amended by that
certain First Amendment to Tustin Legacy Disposition and Development Agreement (Master
Developer) dated as of March 29, 2007 and by that certain Second Amendment to Tustin Legacy
Disposition and Development Agreement (Master Developer) dated as of June 5, 2007 (as
amended, the "DDA") pursuant to which, among other things, the City agreed to sell and
Developer agreed to purchase the Property (as defined in the DDA) and the Parties agreed to a
scope of development of the Property and a schedule of performance far such development
("Project"). Initially capitalized terms not defined herein shall have the respective meanings
assigned to such terms in the DDA.
B. Tustin alleges that Developer failed to timely perform, in whole or in part, certain
of its obligations required to be performed under the DDA, as detailed in the letter dated
December 12, 2008 from the Office of the City Manager to Developer (the "December 12
Letter") and failed to pay property taxes as detailed in the letter dated March 4, 2009 (the
"March 4, 2009 Letter"), and alleges that such failure constitutes a Potential Default pursuant to
Section 14.1(c) of the DDA.
C. Developer believes that the Project as set forth in the DDA is no longer
commercially reasonable or economically feasible and has requested that Tustin forbeaz from
exercising its rights and remedies it may have for a period of time as set forth herein. Tustin is
willing to do so on and subject to the terms and conditions contained herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as
follows:
1. Forbearance. Tustin agrees to refrain during the Forbeazance Period (as
hereinafter defined) from exercising any of its rights and remedies under the DDA with respect
to any Potential Default or Material Default arising as a result of the matters described in the
March 4 Letter and the December 12 Letter or any Potential Default or Material Default which
arises as a result of the failure of Developer to diligently prosecute to completion all steps
required by the Schedule of Performance on or before the time established therein for such
completion, except to the extent expressly required by Paragraph 4(a) of this Agreement (the
"Forbearance Default"). As used in this Agreement, the term "Forbearance Period" means
the period commencing on the date of this Agreement and ending on the soonest to occur of (i)
6?AOI4.I
October 1, 2009, (ii) the date on which a Potential Default or Material Default other than the
Forbearance Default occurs under the DDA and the City has delivered notice of the same if and
as required under the DDA, (iii) the date on which Developer advises Tustin in writing that it is
unwilling or unable to perform any or all of the Performance Obligations (as hereinafter defined)
or (iv) the date on which Tustin has delivered written notice to Developer that Developer has
failed to perform the Performance Obligations in accordance with this Agreement provided that
Developer had not cured such failure within the cure period provided in the DDA (the soonest to
occur of the dates set forth in clauses (i) through (iv) above being hereinafter referred to as the
"Forbearance Termination Date").
2. Condition Precedent to Forbearance. As a condition precedent to the
effectiveness of this Agreement, Developer and Tustin shall have each execnted and delivered to
the other a Pre-Negotiation Agreement in mutually satisfactory form and substance.
3. MOU. Tustin and Developer agree to use their good faith efforts to, on or before
October 1, 2009, execute and deliver a Memorandum of Understanding setting forth the essential
terms on which they would be willing to modify the DDA and waive the Forbeatance Defaults
(the "MOU"). Should Tustin and Developer fail, for any reason or no reason, to execute and
deliver the MOU, then on October 1, 2009, the Forbearance Period and this Agreement shall
immediately terminate. The MOU will include without limitation and address in an appropriate
manner the following "guiding principles:"
a. The quality of the Project as provided in the DDA shall not be
compromised and the price of the Property to be paid to the City shall be
at least the amount set forth in the DDA.
b. In recognition of current economic conditions, the parties agree that
modifications will be included to the schedule of performance, location
and phasing of development of the Project, required housing tenure in the
Project, including the timing and phasing of installation of infrastructure
and modification to the land conveyance schedule , so long as such
adjustments do not adversely affect MCAS Tustin Final EIS/EIR
thresholds.
In further recognition of current economic conditions, the parties agree to
consider alternative methods of providing for the construction of backbone
infrastructure facilities.
d. The parties will commit senior level management to the negotiation of any
amendment to the DDA as provided in tttis Section 3 of this Agreement.
4. Developer's Agreements. To induce Tustin to make the agreements set forth
above, and in reliance on Tustin's covenants herein, Developer hereby represents, warrants,
certifies, covenants, acknowledges and agrees as follows:
a. The obligations of Developer hereinafter set forth in this Paragraph 4(a)
are referred to herein as the "Performance Obligations":
6zaoia.i 2
(i) During the Forbearance Period, Developer will perform or cause to
be performed the acts set forth on Attachment I to this Agreement, relating
to the Concept Plans and Sector B Maps by the time (including any
interim or incremental time identified) established therein for
performance, and in any event in good faith and with diligence.
(ii) With respect to mass grading, demolition and interim drainage
plans and construction, during the Forbearance Period, Developer will by
the time frames established herein for performance and in any event in
good faith and with diligence:
(1) Provide written and field verification by April 19, 2009 that
the grading operations and contract have been reviewed and are
active and written verification from the City's Community
Development Department that the cunent approved mass grading
pemut is active.
(2) By June 19, 2009, submit complete revised mass grading
plans at an approval stage for City action (only pending any
required Department of the navy PERF approvals); continue to
quickly respond within fourteen (14) working days to any
Department of the Navy PERF comments; and obtain any revised
mass grading pernuts to allow construction of Tustin Ranch Raad
as soon as Navy PERF approvals are obtained.
(3) Continue to maintain the Project site including any
necessary interim drainage facilities and have active permits to
continue mass grading activities under any existing or revised mass
grading permit by June 19, 2009.
(iii) During the Forbearance Period, Developer will perform or cause to
be performed the acts set forth on Attachment II to this Agreement,
relating to the Developer's Backbone Infrastructure plans and
construction, by the time (including any interim or incremental time
identified) established therein for performance, and in any event in good
faith and with diligence. Developer agrees that complete plan submittals
for design of Tustin Legacy Backbone Infrastructure Improvements shall
include comprehensive plans, specifications, bid documents and estimates
necessary to conduct a public bid process and include, but are not limited
to, the following: streets, bikeways, street lighting, traffic lights, bus turn-
outs, domestic water lines, gas, storm drainage, telephone, electricity,
cable TV, sewage and reclaimed water, telemetry and any necessary
telecommunication systems. The scope of work for design also includes
any necessary right-of-way acquisition, surveying, rough and precise
grading, and full improvements, including sidewalks, concrete curb and
gutter, landscaping and landscaping medians, dry and wet utilities, all
6zaoia. ~ 3
traffic control, striping and signage and other necessary work to comply
with City standards.
(iv) During the Forbearance Period, Developer will perform or cause to
be performed the acts set forth on Attachment III to this Agreement,
relating to the Developer's Local Infrastructure plans and construction, by
the time (including any interim or incremental time identified) established
therein for performance, and in any event in good faith and with diligence.
Complete plan snbmittals for roadway reaches shall include all mast
planned systems including streets, bikeways, street lighting, traffic Iights,
bus turn-outs, domestic water lines, gas, storm drainage, telephone,
electricity, cable TV, sewage and reclaimed water, telemetry and any
necessary telecommunication systems. The scope of work for design also
includes any necessary right-of-way acquisition, surveying, rough and
precise grading, and full improvements including sidewalks, concrete
curb and gutter, landscaping and landscaping medians, dry and wet
utilities, all traffic control, striping and signage and other necessary work
to comply with City standards.
(v) Developer has filed an appeal of the County assessor's
determination of the assessed value of the Property owned by Developer
within the Project. Within five (S) days of the date of this Agreement,
Developer shall pay to the County all real estate taxes and assessments and
all governmental charges assessed and levied on or against the Developer,
or any portion of the Property owned by Developer then due, including
any and all penalties and interest thereon, predicated on the assumption
that the value of such interests is $43,000,000.00. In the event the
assessment appeals board (or such other agency, entity, or person with the
administrative authority to determine the Developer's appeal) deternunes
that the assessed valuation of the Property is an amount that is greater than
$43,000,000.00, the Developer shall pay to the County all additional real
estate ta~ces and assessments and all governmental charges assessed and
levied on or against the Developer, or any portion of the Property owned
by Developer within the Project, that are then due and payable within five
(5) days of such determination, and regardless of whether the Developer
appeals or in any way contests or seeks review of such deternunation.
Developer shali provide the City with written notice of all assessment
hearings, at least ten (10) days in advance of such hearings or within three
(3) business days of Developer's receipt of a notice of such hearing if such
receipt was within ten (10) days of the hearing and a copy of all
documents that Developer or its representatives submit to the County in
support of Developer's appeal. Nothing herein shall preclude Developer
from appealing or contesting the validity or amount of any tax,
assessment, or levy nor limit the remedies available to Developer with
respect thereto.
6zaoia. t 4
b, Developer acknowledges that from and after the Forbearance Termination
Date, Tustin shall have the immediate right to exercise all of its rights and
remedies it may have under the DDA and all other written agreements
among Tustin and Developer (the "DDA Documents").
c. The DDA Documents aze in full force and effect and Tustin and
Developer have not waived any of their rights or remedies under any of
them, except as expressly provided regarding Tustin's agreement to
forbear during the Forbearance Period as set forth in this Agreement.
d. Developer acknowledges that time is of the essence with respect to each of
Developer's obligations and agreements contained in this Agreement.
Developer acknowledges that the agreements of Tustin set forth above are
given in material reliance on the representations, warranties, certifications,
covenants, acknowledgements and agreements made by Developer herein.
f. Except for the Forbearance Defaults, as to which forbearance has been
given on the terms and conditions set forth in this Agreement, Developer
agrees to timely pay and/or perform all of its obligations arising under or
in connection with the DDA Documents during the Forbearance Period.
5. Waiver; Amendment. The terms of this Agreement may not be amended,
modified or otherwise changed except by a writing signed by Developer and Tustin. Waiver by
either party of any covenant, term or condition contained herein shall not be effective unless the
same shall be in writing signed by the waiving party and shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition. The consent or approval by
either to or of any act or omission by the other requiring further consent or approval shall not be
deemed to waive or render unnecessary the consent or approval to or of any subsequent similar
act or omission. No waiver by either party of any default or breach by the other hereunder shall
be implied from any omission by such party to take action on account of such default or breach if
such default or breach persists or is repeated, and no express waiver shall affect any default or
breach other than the default or breach specified in the waiver and such waiver shall be operative
only for the time and to the extent therein stated.
6. Entire Agreement. This Agreement constitutes the entire agreement concerning
the subject matter hereof and supersedes any prior or contemporaneous representations or
agreements not contained herein concerning the subject matter of this Agreement, whether
written or oral.
7. Binding Effect; Governing Law. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns, and shall be
governed by and construed in accordance with the laws of the State of California.
8. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which
taken together shall constitute but one and the same instrument.
6zaoia.t 5
9. Headings. The headings of paragraphs of this Agreement are intended for
convenience only and shall not in any way affect the meaning or construction of any provision of
this Agreement.
10. Effectiveness. This Agreement shall become effective upon the satisfaction of
the condition precedent set forth in Paragraph 2 above contained herein and execution and
delivery hereof by each of the parties.
11. Limitations on Agreement to Forbear. The agreement by Tustin to forbear as
provided above shall be strictly limited as provided herein. If, subject to applicable notice and
cure periods, Developer shall fail at any time to perform and observe all of its obligations and
agreements under this Agreement as and when required hereunder, time being of the essence,
then Tustin's agreement to forbear as provided herein shall immediately terminate and Tustin
shall have the right then or at any time thereafter to exercise all of its rights and remedies, if any,
under the DDA Documents.
12. No Admission of Liability or Default. Nothing in this Agreement constitutes an
admission of liability or default or of any fact by any persbn or entity.
[Signatures Begin on Next Page]
6zaoia.i 6
IN WITTIESS WHEREOP, the parties hcreto have caused this Agrecmcnt to be
exacutcd as of the date first written above.
~ s o~
Dated;
"CITY"
CCTY OF TUSTIIV, CALIFORNIA
gy. G/~2lZiI~Gv~~G~d~~
William Huston, City Manager or
Christine Shingleton, Assistant City Manager
"AUTHORITX"
TUST[N PUBLIC FINANCiNC3 AUTHORTTY
D /`/~ ;~,,~~
Dated: ~ ~~ ~ By: ~~~7~1 ~~ -~-~' '
William Huston, Executave Director
or Christine Shingleton, Assistant City Manager
ATTEST;
.
BY: ~~~
~/Pamola Stolcer
(~ City Clerk
Dated:
/
APPRQVED A ORM
. > >~/l,~ ~.~
BY= , ~ ~
6240I9.1
"DEVELOPETt"
TUSTIN LEG}AC'Y COMMUNITY PAR'1'N~RS,
LLC,
a 17elaware limited liabiiity company
By: Shea Properties I[, LLC,
a Delaware limitod liability company, Managing
Member
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'~N ~831
PRE-NEGQTXA~ION AGREEMENT
This Pre-Negot~ation Agreement ("Agreament") is made as of Aprill~-~, 2009,1oy and among
TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a Delawara limited liability company
("Developer"), and tlie CITY OF TUS'TYT7 (the "City") and the TUSTIN PUBLIC FINANG7NG
AUTS~OXtIT'Y (the "Authority" and together with the City, collectively referred to herein as
"~s~in"), ~
RECITALS
A. Tustin and Developer entered into that certain Tustin Legacy Dispositian and
Develo~ment Agreement (Master Development) dated as of May 3, 2006, ~s amended by that
certain First Amendrnent to 'Ititsttn Legacy I3lsposition and Deveiopme~t A.greement (Master
Developer) dated ae of March 29, 2007 and by that cet~tain Second Amendment to Tustin Legaey
Disposi~ion and Developmcnt ~1.greement (Master X7eveloper) dated as of June 5, 2U47 {as
amanded, the "bDA"} pursuant to which, among other things, the City agreed to s~Il and/or lease
ot~ sublease, and Developer agreed ta purchase and/or lease or subloasa, tho S'rop~rty (as defined
in the DDA) aiut the Paities agreed to a~cope of development af the Property and a schedule of
performance far such development, In~ttally capitalized terms not de~ned herein sha11 havc the
respective rrxeanings assigned to such tesrns in the DDA.
B. 'l~stin aUeges that Developer failed to #imely perfarrn, in whole or in pa~t, certain of its
oblig~tians required to ba parformed under the DDA, as detailed in the letter dated ~7ecember 12,
2008 from the Officc of the City Manager to Developer (the "December 12 Letter"), and a~leges
such failure constitutes a Potsntial Default pursuant #o Section 14.1(c) of the DDA,
C. Tus~in and Developer have entered into a Forbea~anr.e A~reament dated as of even date
llorewith (the "FarbeRr~nce A~'cement'~.
I7. Developer be}iaves thst the Project as set forth in the DDA is na longer eommerciaJly
xeasona6le or economically feasible, and Tustin and Developer would like to commence
discussions and communications {collectively, and as may hereafte~r be continued, the
"Discussian~"} regarding (i) ~.he Praject and ~4s aurrent and projected ~na,ncial perfoirnance, (ii)
#he DDA az~d all other documents and agreements executed pursuant to or in cot~necrion with the
DDA {collectively, #he "DDA Docnrnents"), and {iii) as dcemed relevant by peveloper or
Tustin, other anatters related to the DDA Documents and/or fhe Project (collectively, the
"UuEstant~~ng Issue~"). Such Discussions may also explore potential sOlutions t4 the
Outstanding Tssues with 'Ibstin and Developer,
~, As a condiFion to such Discussions, Developer aad 'Ilcstin desire to enter into this
Agreement. ~
AC3REEMENT
NOW, '~'H~.REFqRE, Dcvaloper and 'Ilastin hareby agre,e as follows;
1, '~ustin and 17eveloper acknowledge and a~ree that as af the date of this agreement, the
DDA Documents are in ~ull farce and effect tuxd have not been amanded or supplemented other
G34006.L
than pursuant to written amenctments or supplements, if any, which have been executed by all
relevant parties thereto, and by the Forbearance Agreement. Nothing in this agreement is
inte~ded or shall operat~ to modify an~ of the DDA Docum~nts.
2, Notwi~thstanding anythuxg in this agreement that may be construed to ths contrary,
Developer and Tustin ackaowledge and agree that holding tha Discussions, or any
ooxrespondence between at~y of Developer and'l~astin, relating thereto or ~~s agreement, shall
not affect or impair at~y rights or remedies that Tustin or llevelaper may have under any of the
Dl)A Documents, at law or in equity, nor shall thts agreement or any oP the foregoing (with the
exception of the Forbearar-ce Agreement) preclude Tustin ar Developer fram commencing the
exercise of such rights or ramed~es {before, during or afler the Discussions), Furthermore,
Developer and Tustin ack~nowledge and agree that the Discussions shatl not operate (i} to relieve
Developer or'I~stin of their raspective obligations to fully and timely cornply with any and all of
thei~ respective obligations under the bDA Doeuments (monetary or not monetary), nor (ii) as a
waiver by Tustin or Developer of their respective rights to demand full and timely performance
of all obligatiox~s under the DDA Documenta, Develaper and Tustin further agree that each party
may bill for and accept payments on account of the ~ther's oblI~tlvns under the DDA
Docut~ents without prejudicS to its xeseivation af rights expressed above. Nothing in this
Agreement shall affect the rights and obligations of 'I~tsiin or Develaper as parties to the
Forbearanc~ Agreement.
3, Aleithar 'z'ustint n.or J~avcloper has any abligation to modify, amand or restructure any of
the DDA Documents as a result of the Discussions or pursuant to tbis Agreemes~t, '~ustin's
participation in the D'xscussions does not indicate arty commitment by Tustin to any proposed
solution to any Outstandfng Issues. Similarly, Deve~oper's par~icipation in tha Discussions does
not indicate any commitment by Developer to any proposed solutian to the Outstanding Isspes,
4. While Tustin and Develbper ma~- reacii an understandin~ on one or more of the
Outstanding Issues, nei#her Tustin nor Developer will6e bound, and nv obEigations will~ arise an
the part of Tustin or De;veloper, unless and until Tustin and such Developer execute a binding
written agreement tc~ that effect. Any agreement with regard to any of the Qutstanding Issues
aha11 be within the sole dieeretion of Tustin and Devalopar, and neither Tuafiin nor Developar
aha11 have any liability for failing to reach agreemetxt over the Outstanding Issues.
5. Developer and Tustin hereby a.cknowledge and agree that each flf them has retained its
own Legal counsel~ and they will continue to cansult with their own lawyers rsgarding the terms
of this Agreement, t~ie Discussions and any subsequent written ~greement betwe~n Tustin and
Developer. Developer understands and agrees that Tustin is represented by the law firms of
'9l~'oodru~, Smart and Sptadlin, LLN and Manatt, X'h~lps & Phillips LLP ("Tustin Guunacls") 'sn
this mat~er, and that Ttrstin Counsels represent ~xstin's interests in this matter and do not
ropres~nt the interests o€Developcr.
5. If there is ever any,yudicial ar eimilar proceeding between Develaper and Tustin relating
ta the DDA Doauments andlor any the Oatstanding Issues, neither Tustin nor Developer may
present in such pxocceding svidenca resulting from conduct by either o€ them (verbal or
nanverbal, or express or implied) in conneotion with the Discussions, the coznmuniCations
describcd above or relating to possible modification of the DDA Documents {except to tho extent
2
aaaoos.t
snch modi~cation was made pursuant to written amendments or supplemente, if any, which have
been executed by all relevant parti~s thereto). The. faregoing sentencs is intended to be broader
than ihe restz•ictions on admissibility contained 'm Rulc 408 of the Fedexsl Kuies of ~vidence,
This patagraph does not apply to the admissibility of this Agreement.
'7. IIeveloper ar'I~zstin may in their xespective sole and absoiuts discretion, unilaterally
discantinue or texminate a11 or any portion of the D~scus~ions at an~ time for any i~eason or no
raasan without any liability whatsoever to the other by reason of an~ such disoontinuation or
termination. The provisians of this agreement shall survive any discontinuation or tercnination of
the Discussians,
$, The tarms of this Agxeernent con~titute the entira agre~mont between Develaper and
Tustin c4z~cexnirig the spoaific subjeet matter hareaf and, with respect to sueh subject mabter,
supersedes ~tty prior or contemporaneoua repr~sentations or agreements aot oontained herein.
This agreement may anly be amended or modified by aa agreement in writing executed by
Developer and Tustin.
9, This Agreement may be executed in counterparts, eaeh af which shall be deemed an
ori~inal and all of whick~ together shall be deemed one instrument. This Agreemant shall be
binding upon and inura to the benefit of Developar and Tustin and their respective successoxs
and assigns. This A~reemant ehall be governed by arid construed in ~ccordance wilh Caljfornia
law, without giving effect ta the principias of eonfliats of law. In the eve~t of any dispute
~ca~cexx~ing the terma of this A.greement, the prevail~ng party shall b~e entitlad to recover all
•reasonable costs and attoxneys' fees from the nan-prevailing party. Fach pa-~ty io this Agreement
represerrts and warrants that the person or peisons executing this Agre~ment on its behalf have
the fult a~ithority and legal power to do so and to bin~ the party on whoss bahalf such person vr
persnns have executed this agreement.
[Signattsres Begtn an NBxt Page]
3
suoos.i
EXECUTBI? as of the date first set forkh above.
Datied• '7 "/~~ 0
na~a: y- / .~~ 0
ATTEST;
"CITY"
CITY OF TUSTIN, CALIFORNYA
B ~~ ~ ,~~yy~%I~`
Y~
William I~ustan, City Manager or
Christane Shingleton, Assist~nt Gity Manager
"AUTHORITY"
TUSTIN PUBX.TC FINANCINGf AUTHORITY
G~i~ ~~~~,~r,-
ay:
'V{Tilliam ~-Tuston, Executive Director
or Christine Shingleton, Assistant City Managcr
$y: "/~' /~~ ~ f~l/'~~'-~%
~Pamela Stoker
City Clerk
Dated:
APPROVEI7~A O FORM
B~: ~ ~ ~~.___-
b24008.1
"DE'VELOPER"
TUSTTI~ LE(3ACY' COMMIJI~ITY PARTNERS,
LLC, a Delaware Iimited liability company
By: Shea Properiies II, LLC,
a Delawara lim~tied lfability company, Managing
Member
. By, G~/ ~~~'G~'~
Nama• Colm M~k~
It~: V'
By:
N~~, tl S u zan
Its: ~ n ecre ary
90a~8787.3
62A008.1
ATTACHMENT 8
SUMMARY OF POTENTIAL DDA MODIFICATIONS AND
ENHANCEMENTS OFFERRED BY TUSTIN
A summary of a few of the City's proposed enhancements to the project offered to
TLCP during negotiations are as follows:
• Delay Land Payment and Phase 2 Conveyance Dates. Offered relief to TLCP by
pushing out Phase 2 and Phase 3 Conveyance Dates and Land Payment Schedule
from September 2009 and July 2011 to September 2013 and July 2015,
respectively.
• Extend Phase 1 and Phase 2 Infrastructure Performance Schedule. Offered relief to
TLCP by pushing out the obligations to construct Phase 1 and Phase 2
Infrastructure from September 2009 and July 2011 to September 2013 and July
2015, respectively.
• Provide for Limited Land Exchange/Transfer Opportunities. Offered relief to TLCP
by providing opportunities for limited Exchange Opportunity Parcels that would be
conveyed to TLCP under any earlier conveyance schedule provided that certain
Phase 1 properties of equal or greater value would be conveyed back to the City in
order to consolidate development activity, subject to specific conditions.
• Neighborhood D Changes: Offered relief to TLCP by increasing the total permitted
number of apartments in the Specific Plan, reducing the number of affordable for
sale products and replacing those units with affordable apartments, modifying
bedroom counts, and changing out podium products originally proposed to a Texas
Wrap product.
• Neighborhood G Changes: Offered relief to TLCP by reducing the number of
affordable for sale products and replacing those units with affordable apartments,
modify bedroom counts, fixing the number of single family detached single story
dwelling units at a cap of 80 units versus the application of the current DDA 15%
standard to calculated against all single family detached products as required in the
DDA.
• Density Bonus. Offering relief to TLCP by supporting a one-time density bonus in
Neighborhood D. This would be based on TLCP's accommodation under the DDA of
affordable housing and would also authorize a transfer of 10% of units in
Neighborhood G to Neighborhood D thereby permitting up to an additional 432
residential units in Neighborhood D. The current DDA prohibits TLCP from applying
for a density bonus.
• CFD Financial Assistance. Offering relief to TLCP by considering the creation of a
Community Facilities District and subsequent issuance of bonds to assist in partially
financing of Tustin Legacy Backbone Infrastructure and City services for the project.
• Housing Set Aside Funds Financial Assistance. Offering relief to TLCP by providing
Redevelopment Agency Housing Set Aside funds during the building process
towards any future increases in Level II TUSD school impact fees for affordable
housing products.
• Modification of Master Block Financial Gap. Offering relief to TLCP by permitting
modification within the master block by reducing the amount of retail square footage
required, permitting Type 5 instead of Type 1 construction, and reducing the portion
of initial parking structures being constructed to the minimum parking count in the
original approved Master Block Implementation Plan.
ATTACHMENT 9
JULY 13, 2009 NOTICE OF POTENTIAL DEFAULT
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
July 13, 2009
CERTIFIED MAIL
RETURN RECEIPT REQ UESTED
Colm Macken
Shea Properties, as Managing Member
Tustin Legacy Community Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, CA 92656
Re: Forbearance Agreement Obligations
Notice of Potential Default
Dear Colm:
TUSTIN
H~STORY
BUILDING OUR FUTURE
HONORlNG OUR PAST
Pursuant to the Forbearance Agreement, Tustin Legacy Community Partners, LLC (the
"Developer") has agreed to undertake certain Performance Obligations during the
Forbearance Agreement including, but not limited to, performing certain grading
construction and submitting certain Backbone Infrastructure and Local Infrastructure
Plans. It should be noted that nothing contained in the Forbearance Agreement relieved
the Developer of other obligations in the DDA.
Pursuant to Section 4(a)(ii)(1) of the Forbearance Agreement, Developer was responsible
for providing written and field verification by April 19, 2009 that (1) the grading
operations and contract had been renewed and were active; and (2) written verification
from the City's Community Development Department that the current approved mass
grading permit was active. The City has verified that the current grading permit is active.
However, despite several requests by the City, the Developer has not provided field
verification that grading operations are active. In fact, the Developer provided a letter, a
copy of which is attached to this correspondence as Exhibit A, which states specifically
that the Reed Thomas Co, Inc. is prepared to mobilize and commence grading operations
on the Legacy Park Project in accordance with the contract as soon as the Developer
authorizes and issues a Notice to Proceed. However, at meetings on May 11, 2009, May
26, 2009 and June 9, 2009, Developer stated that it had no intention of undertaking any
grading operations on the site during the Forbearance Period. This refusal to commence
active gading operations is in direct contradiction to the intent and the terms of the
Forbearance Agreement which required grading operations to resume on April 19, 2009.
300 Centennial Way, Tustin, CA 92780 • P: (7t4) 573-3010 • F: (714) 838-1602 • www.tustinca.org
Mr. Colm Macken
Tustin Legacy Community Partners
Notice of Potential Default
July 13, 2009
Page 2.
Pursuant to Section 4(a)(iii) and (iv) of the Forbearance Agreement, Developer agreed to
provide certain plan submittals, including initial plans and "complete" plan submittals on
certain Backbone and Local Infrastructure by specified dates. Complete plan submittals
were to specifically include comprehensive plans, specifications, bid documents, and
estimates necessary to conduct a public bid process. The Forbearance Agreement did not
relieve Developer of its obligation to pay any required plan review fees stipulated in the
City's Fee Resolution. Pursuant to the City's June 18`h letter to the Developer, a copy of
which is attached hereto as Exhibit B, the City still has not received complete submittals
for Item Numbers 34, 35, 35A & 86 ("Performance Obligations") to the Forbearance
Agreement. While the City received certain other plans required under the Forbearance
Agreement to be submitted on June 15, 2009, the City did not receive the plan check fees
of $17,000 for these submittals. In addition, Developer did not submit bid documents,
specifications and cost estimates as required for a complete submittal. Since the
Developer has not submitted the required fee deposits, plan checking cannot progress, nor
can plans be considered officially accepted for plan review.
Per Section 1.12.2 of the Tustin Legacy Disposition and Development Agreement
("DDA"}, the City in its letter dated May 11, 2009 informed the Developer that the City
incurred expenses of $26,743.84 (see Exhibit C). Pursuant to the provisions of Section
1.12.2 of the DDA, Developer was required to pay the City this amount within thirty (30)
days of the City's letter of May 11, 2009. As of this date, the Developer has not remitted
the required payment.
As outlined above, the Developer is not complying with the terms of the Forbearance
Agreement. Pursuant to Section 1(iv) of the Forbearance Agreement, this letter should
be considered notice that the Developer has failed to perform all of its obligations under
the Forbearance Agreement. Pursuant to Section 14.1 (a) of the DDA, Developer has
also failed to timely pay sums required to be paid. Therefore, consistent with the
provisions of Section 1(ii) of the Forbearance Agreement, this letter will serve as written
notice of a Potential Default under Section 14.1 (a) of the DDA and Section 14.1 (c) of
the DDA.
Pursuant to Section 14.2.1 of the DDA, the Developer's requirement to pay any sum due
shall becorne a material default if not cured at Developer's expense within fifteen (15)
days after receipt of this Notice of Potential Default. Further, pursuant to Section 14.2.2,
Developer's failure to perform obligations specifically identified under the Forbearance
Agreement within thirty (30) days from receipt of this written Notice of Potential Default
shall become a Material Default.
Upon an occurrence of Material Default, the City shall have all rights and remedies set
forth in the DDA and Forbearance Agreement, as applicable.
Mr. Colm Macken
Tustin Legacy Community Partners
Notice of Potential Default
July 13, 2009
Page 3.
The enumeration of a Potential Default under the DDA and Forbearance Agreement as
contained in this letter is not exclusive. Neither the failure, nor delay by City to exercise
any of its rights or remedies, nor any provision of this letter, may amend, modify,
supplement, extend, delay, renew, terminate, waive, release or otherwise limit or
prejudice the City's rights and remedies or the Developer's obligations under the DDA,
and no such amendment, modification, supplement, extension, delay, renewal,
termination, waiver, release or limitation shall be effective unless in writing and executed
and delivered by the City and Developer. In particular, nothing referred to above shall
operate to cure any default or prohibit, restrict, or otherwise inhibit the City from
exercising any right or remedy it may have under the DDA or Forbearance Agreement.
Sincerely,
~ ~~~~
Williarn A. Huston
City Manager
Attachments: Exhibit A
Exhibit B
Exhibit C
cc: City Council
Christine Shingleton, Assistant City Manager
Douglas Holland, City Attorney
Exhibit A
reeo cHomas co., inc.
Generai Engineering Contractor
UC A470548 iQ25 NO. SRNTIAGO $TREET, SANTA ANA. CA 92707 ~714} 558-7891 . FAx f?7a~ 558-736t
May I 2, 2Q09
Mr. Brian Man~ano
Tusiin I.egacy C'ommunity Partners, LLC
15991 Red l~ill f1ve., Suite 2n5
Tustin, CA 92780
L~ar Mr. Mangano,
This letter is to infarm you that we are pee}'~rc~d to mobiliz~ ~sui commer~ce ~rading aperations on the
Legacy Pstrk Project in accordance with the contract between us dated Mxrch 3`~ 2009 as xx~n as ~I~CLP
autl~orizxs and issues a Notice to Prc~ceed co us. If [ can t~ c>f fuRher assistance piease ciun't hesitate to cal).
Sincerely,
~ ~
._ --_._..._.~..
Bruce Taylar
Project Manager
Reed'fhomas Co., Inc.
Exhibit B
.
Public Works / Eri~ineering ADMINISTRATION~
JUN 2 3 1009
June 18, 2009
~ECEIVED
Mr. Ken Nishikawa,. Director of Engineering
Tustin Legacy Community Partners
c/o Shea Properties
130 Vantis, Suite 200
Aliso V'~ejo, CA 92656
SubJec~ Status of Plans and Document 3ubmittals Pursuant to the Forbearance
Agreement
Des~ Mr. Nishikawa:
In compliance with provisions of the Forbearance Agreement between the City and Tustin
Legacy Community Partners (Developer), numerous ptans and supporting documents have
been submitted to the City since May 8, 2009. As you are aware, deposit fees for checking
the plans and documents submitted on May 8"' and on June 5"' were not submitted to the
City until June 15~'. Consequentfy, the City could not begin plan checking activities until the
deposit fees were received. In addition the City will only be checking plans where required
deposits have been paid and plan submittals are deemed complete submittals with all
information required per Section 4a.(iii) of the Forbearance Agreement. Your obligations
under the Forbearance Agreement require these fuN submittals by the dates noted in the
Forbearance Agreement.
The following information has been compiled to identify the status of the required plans and
documents received to date. The item numbers correspond to the infrastructure items listed
in the attachments to the Fort~earance Agreement.
Mav 8. 2009 Subrnittals
Attachment II:
Item #8. Tus~n Ranch Road-North end of bridge to Walnut: Submittal did not include
the required cost estimates. Any City plan checking will not commence until
required submittals are received.
Item #31. Barranca Roadway Plans-Tustin Ranch Road to Red Hill: Incomplete,
nothing submitted.
Item #87. Barranca Channel-Red Hill to South of Tustin Ranch Road: Submittal did not
include the required cost estimates.
ltem #48. Wamer/Armstrong Traffic Signal: Submittal complete; plan checking has
commenc~d.
ttem #49. Armstrong/South Loop Traffic Signal: Submittal complete; plan checking has
commenced.
Item #56. Tustin Ranch RoadNalencia Traffic Signal: Submittal complete; plan
checking has commenc:ed.
Item #62. Tustin Ranch Road/Ramp Traffic Signal: Submittal complete; plan checking
has commenced.
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3150 • F: (714) 734-8991 ~ www.tustinca.org
Mr. Ken Nishikawa
Status of Plans and Document Submittals Pursuant to the Forbearanve Agreement
June 18, 2008
Page 2
Item #63. Tustin Ranch Road/Walnut Traffic Signal: Submittal complete; plan checking
has commenced.
Item #64. EdingedRamp Traffic Signal: Submittal complete; plan checking has
commenced.
Attachment tll:
Item. Local Park, D/E Barranca OCFCD ROW Trails Area and Greenbelt: Submittal
complete; plan chedcing has commenced.
Item. Local Infrastructure-Phase 1-E, Storm Drain Improvement Plans: Submitta!
compiete; plan checking has commenoed.
June 5. 2009 Submittala
Attachment 1:
Item #6. Sector "B' Final Tract Map 17144 Neighbort~ood E: Submittal complete; plan
checking has c;ommenoed.
Attachment II:
Item ~6. Armstrong Roadway Improvements (Barranca to Wamer): Submittal did not
include the required cost estimates. Any City plan chedcing witl not
commence untif required submittals are received.
Item #11. N. Valenc~a Loop-Kensington to Tustin Ranch: Submittal complete; plan
chedcing haa commenced.
ftem #22. Warner- Red Hill to Armatrong: Submiftal did not include the required cost
est~netes. Any City plan checking will not commence until all required
submittals are received.
Item # 128. Pedestrian Bridge Armstrong/Linear Park: Submittal comp~te; plan checking
has commenced.
Item #42. Barranca/Armstrong Traffic Signal: Submittal compiete; ptan checking has
commenced.
Item #50. WameNArea E SVeets Traffic Signals: Submittal complete; plan checking
has commenced.
Attachment III:
Item. Local Infrastructure - Phase 1-E Street Improvement Pfans: Submittal is
incomplete; plans only received. Plan chedcing will not commence until all
required submittals are received.
Item. Local Infrastructure - Phase 1-E Trafic Signal improvement Plans: Submittal
is incomplete; plans only rec;eived. Plan chedcing will not commence until all
required submittals are received.
Mr. Ken Nishikawa
Status of Plans and Document Submittals Pursuant to the Forbearance Agreement
Juna 18. 2009
Page 3
Item. Local Park, Linear Park Area, OS2, OS3a, OS3b (Concept Plan Lots I 8~ H):
Design review submittal with fees to Communiiy Development Department. A
determination has not yet been made that the submittal is c:omplete.
Item. Local Park, Greenbelt Area E, OS23, OS24a. OS24b (Concept Plan Lots A-
D, G): Submittal is complete; plan checking has commenced.
,J~tte ~, 20~ ~u~n~i~
Attachment II:
Item ~Ki4. East Side Red Hill - Barranca to Wamer: Submittal is incomplete; plans only
submitted. No plan chedc deposit fees received.
Item #35. East Side Red Hill - Wamer to Valencia Loop: Submittal is incomplete; plans
only submitted. No plan chedc depasit feea received.
Iterr~ #35A. East Side Red Hill - Valencia Loop to 1000' north: Submittal is incomplete;
plans only received. No plan chedc deposit fees received.
Item #86. Barranca Detent~on Basin: Submittal is inc~mplete; plans only submitted. No
plan chedc deposit fees reoeived.
The City is cuRentiy checking plans and documents that have been determined as complete
submittala• Please review the above statua and immediately submit the additional required
material to prooeed into plan checking and to ensure your compliance with the Forbearance
Agreement. Please contact me if you have any questions.
Sincerely,
Doug Anderson
Transportatlon S Development Services Manager
C: Christlne A. Shingleton
Tim D. Serlet
Da~g Stadc
John Buchanan
Benny Tenkean
~Y ~
S:1Doup 3 TrafllclTusth 1ACAa^120081Foibsarancs Apreemt Pl~f Statua.dooc
Exhibit C
Office of the City Manager T U S T I N
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Simon Whitmey °`~ ' ~~
H i srokv
Tustin Legacy Community Partners, LLC BUILDWG OUR FUTURE
c/o Shea Properties HONORING OUR PAST
130 Vantis, Suite 200
Aliso Viejo, CA 92656
RE: Expense Reimbursement Invoice
Deaz Simon:
Per Secrion 1.12.2 of the Tustin Legacy Disposition and Development Agreement (Master
Development), the City has incurred expenses in the amount of $24,994.24 plus a 7% overhead
charge in the amount of $1,749.64 for a total of $26,743.84 for TLCP relateci expenses
specifically retated to the DDA and its administration, including Developer's business plan
implementation activities and administrative expenses associated with real estate portions of the
transaction. Attached is an accounting provided by our Finance Department from March 13,
2009 to May 7, 2009.
Total authorized reimbursement for fiscal year 2009 under the DDA (Attachment 21) is
$739,659; Ieaving a balance for calendar yea.r 2009 once the City is in receipt of Developer's
payment of $26,743.84 of $663,505.05.
Please transmit a check for $26,743.84 made payable ta #he "City of Tustin " within thirty (30)
days in reimbursement of the above-referenced expenses. Should you have any questions, please
feel free to contact me.
Sincerely,
.~C%~~~C~ ~
Christine Shingleton
Assistant City Manager
Enclosure
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (7I4) 838• 1602 • www.tustinca.org
ATTACHMENT 10
JULY 27, 2009 NOTICE OF POTENTIAL DEFAULT
Office of the City Manager
July 27, 2009
Ken Nishikawa, Acting General Manager
Tustin Legacy Community Partners, LLC
Shea Properties
130 Vantis Street, Suite 200
Aliso Viejo, California 92656-2624
RE: FORBEARANCE AGREEMENT OBLIGATIONS
AND NOTICE OF POTENTIAL DEFAULTS
Dear Ken:
TUSTIN
Pursuant to the Forbearance Agreement between the City and Tustin Legacy Community
Partners, LLC (the `Developer"), the City agreed that it would re&ain from exercising its rights
and rexnedies under the DDA subject to the Developer timely undertaking and performing certain
specific Performance Obligations of the Developer under the Forbearance Agreement. In
addition, Developer is obligated to timely pay and/or perform all of its obligations arising under
or in connection with the DDA during the Forbearance Period with the exception of the
"Forbearance Defaults" as described in the Forbeazance Agreement.
This letter serves as notice that Developer is currently in non-compliance with certain
Performance Obligations under the Forbearance Agreement and that the Developer is in Potential
Default based on its failure to perform certain requirements under the DDA.
Submittal of Certain Backbone and Local Infrastructure Plans Determined Iucomnlete and
Develoner's Failure to Pav
Pursuant to Section 4(a)(iii) and (iv) of the Forbearance Agreement, Developer agreed to
provide certain plan submittals, including initial plans and "Complete" plan submittals on certain
Backbone and Local Infrastructure by specified dates. Complete plan submittals were to
specifically include comprehensive plans, specifications, bid documents and estimates necessary
to conduct a public bid process. The Forbeazance Agreement did not relieve Developer of its
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (714) 836-]602 • www.tustinca.org
BUILDWG OUR FUTURE
HONORING OUR PAST
Ken Nishikawa
Tusrin Legacy Community Partners, LLC
July 27, 2009
Page 2.
obligation to pay any required plan review fees sripulated in the City's Fee Resolution (a
"Governmental Requirement").
Subsequent to the City's Notice of Potenrial Default letter of July 13, 2009, the City received
certain plans required under the Forbearance Agreement; however, these submittals are not
"Complete" under the Tustin City Code and Council Resolutions and as reasonably determined
by the Community Development Department and Public Works Departments of the City and,
therefore, the submissions are not complete as required in the Forbearance Agreement and the
Developer is in non-compliance with the Forbearance Agreement and in Potential Default.
Further, since the City did not receive the required plan check fee deposits required by the City
Code and Council Resolution, plan checking cannot progress, nor can plans be considered
officially accepted for plan review. Section 8.3.3 of the DDA requires the Developer to pay all
permit fees and other fees and costs normally charged by the City in connection with normal, and
if applicable, expedited review of applications for approval of Entitlements and Development
Permits.
DDA Oblieations-Pavment of Transaction Fees
Per Section 1.12.2 of the DDA, Developer is required to reimburse to the City within thirty (30)
days of presentation of an invoice, costs related to the DDA and its administration. On June 16,
2009, the City informed the Developer that reimbursement of $12,788.64 was owed the City for
TLCP related expenses related to the DDA and its administration which would have been due by
July 15, 2009. A courtesy reminder sent via e-mail was transmitted by the City on July 14, 2009
notifying Developer of the July 15`h payment due. As of this date, The City has not yet received
the required payment.
DDA Obli¢ation-Securitv and Propertv Maintenance
It has just been brought to the City's attention that the Developer terminated all of its security
contracts within the Master Developer footprint effective July 1, 2009. The Developer
abandoned this responsibility and obligarion under the DDA without notice to the City. The City
was neither informed, nor consulted with, on any proposed action to modify or terminate the
Developer's security and maintenance contracts. The uninterrupted provision of security within
the Master Developer footprint is critical to ensure the City of Tustin's, Department of Navy's,
and TLCP's properties are protected, including Improvements already constructed. The lack of
security and property maintenance exposes the City, Navy, and TLCP to liability. The
Department of the Navy, when it became aware of the lack of security, complained to the City.
As you will recall in the spring of 2007, the City spent considerable time and energy in working
with TLCP staff to develop a list of items which were intended to identify the Developer's
Ken Nishikawa
Tustin Legacy Community Partners, LLC
July 27, 2009
Page 3.
primary maintenance and security responsibilities. These details were provided in an April 27,
2007 letter to TLCP, receipt and acknowledgment of which was confirmed by Simon Whitmey,
General Manager of TLCP (attached as Exhibit B). Pursuant to Section 5.1 of the DDA, TLCP
was required to immediately assume responsibility, at its sole cost and expense, for the security
and maintenance of the Master Developer footprint on May 3, 2006 (the execution date of the
DDA), which role Master Developer did not actually commence until June 11, 2007. Provisions
of Section 5.1 state the following:
"S.1 Develoner's Obli~ations. Upon the Effective Date of this Agreement, the Developer
shall immediately be responsible, at its sole cost and expense, to (i) to secure and maintain the
Property and the Dedication Parcels in a clean, safe and secure condition, in compliance with
a/1 applicable laws, (ii) abate weeds and other hazards and nuisances on such portion of the
Property, including the Dedication Parcels, (iii) erect and maintain barricades and fencing, and
provide security, in each case as reasonably necessary to protect the public and the
Improvements already constructed, (iv) maintain (in all events subject to all Environmental
Laws) erosion control, (v) undertake deconstruction of the buildings located on the Property and
the Dedication Parcels (except Hanger 19 Parcel) and rough grading of the Property and the
Dedication Parcels in accordance with the Schedule of Performance, the Scope of Work and the
Governmental Requirements, and (vi) perform a11 other tasks which the Developer is obligated to
perform under this Agreement. From and after the date any portion of the Property is conveyed
or leased to the Developer, the Developer shall keep real property taxes and assessments
current. The Developer must have all permits and approvals necessary for such work and must
have all insurance required by this Agreement prior to entering upon the Property. "
Security and Maintenance provisions of Section 5.1 of the DDA are also directly related to
Section 1.5.1 of the DDA, which requires Developer's compliance with the terms and conditions
of the Federal Documents including, but not limited to, the Navy Economic Development
Conveyance to the City and the terms and conditions of the LIFOC. Provisions of Section 12.2
of the LIFOC require security services on the Property as necessary to assure security and safety
within the Leased Premises of the LIFOC.
The minimum Security and Maintenance Services agreed upon by TLCP determined to be
necessary to protect the public health and safety and Improvements on the Property pursuant to
the April 27, 2007 Security and Maintenance Transition letter, continue to be required and need
to be reinstated immediately. Specific services required and agreed upon by the Developer are
identified in the Apri127, 2007 letter (attached as Exhibit B).
Notice of Potential Defaults under Sections 14.1 (a) and 14.1 (c) of the DDA
Based on the facts, as outlined above, and pursuant to Section 14.1 of the DDA, the City declares
Potential Defaults under the DDA as follows:
Ken Nishikawa
Tustin Legacy Community Partners, LLC
July 27, 2009
Page 4.
1. Pursuant to Sections 833 and 14.1 (a) of the DDA, based on Developer's failure to
pay plan check deposit fees required to be paid pursuant to the DDA for those improvement and
plan submittals shown in Exhibit A.
Pursuant to Section 14.2.1 of the DDA, this Potential Default shall become a Material Default if
not cured within fifteen (15) Business Days of receipt of this Notice of Potential Default. T'he
forgoing cure period may not be extended by force majuere.
2. Pursuant to Sections 1.12.2 and 14.1(a) of the DDA, based on Developer's failure to
pay $12,788.64 owed the City for TLCP related expenses related to the DDA and its
administration. .
Pursuant to Section 14.2.1 of the DDA, this Potential Default shall become a Material Default if
not cured within fifteen (15) Business Days of receipt of this Notice of Potential Default. The
foregoing cure period may not be extended by force majuere.
3. Pursuant to Section 14.1 (c) of the DDA based on Developer's failure to perform, or
delays in performance of, in whole or part, any obligation required to be performed under the
DDA. In this case, Security and Maintenance obligations are a Developer obligation under the
DDA and Developer has terminated these contractual obligations.
Pursuant to Section 14.2.2 of the DDA, this Potential Default shall become a Material Default, if
not cured, at the Defaulting Party's expense, within thirty (30) calendar days after receipt of the
written notice of such Potential Default. Notwithstanding anything to the contrary contained in
the Section 14.2.2 of the DDA, nothing shall extend the time for performance of Governmental
Requirements as defined in the DDA. Further, the City shall hold Developer responsible for all
Security and Maintenance expenses incuned by City due to Developer's lapse in its DDA
performance, including any liability exposure to the City or under the Navy LIFOC.
4. Pursuant to Section 1(iv) of the Forbearance Agreement, the Developer has failed to
perform its obligations under the Forbearance Agreement, specifically by failing to submit
certain complete Backbone Infrastructure and Local Infrastructure Plans and other entitlement
applications. Therefore, consistent with provisions of Section 1(ii) of the Forbearance
Agreement, this letter shall also serve as a written notice of Potential Default under Section 14.1
(c) of the DDA. Pursuant to Section 14.2.2 of the DDA, Developer's failure to perform
obligations specifically identified under the Forbeazance Agreement within thirty (30) calendar
days from receipt of this written Notice of Potential Default shall become a Material Default.
The provision of notice to the Developer of a Potential Default under the DDA is expressly
provided in Section 1 of the Forbearance Agreement. The City's delivery of this Notice of
Potential Default as it relates to Notice of Default items that were not held in forbearance in the
Ken Nishikawa
Tustin Legacy Community Partners, LLC
July 27, 2009
Page 5.
Forbearance Agreement may result in a Forbearance Termination Date being declared by the
City as defined and referred to under the Forbearance Agreement.
Neither failure, nor delay by the City to exercise any of its rights or remedies, nor any provision
of this letter may amend, modify, supplement, extend, delay, renew, temunate, waive, release or
otherwise shall limit or prejudice the City's rights and remedies or the Developer's obligations
under the DDA. No amendment, modification, supplement, extension, delay, renewal,
termination, waiver, release or limitation shall be effective unless in writing and executed and
delivered by the City and Developer. In particular, nothing referred to above shall operate to cure
any default or prohibit, restrict, or otherwise inhibit the City &om exercising any right or remedy
it may have under the DDA or Forbearance Agreement. .
Sincerely,
_ iy~1 "
~~~~
William A. Huston
City Manager
cc: City Council
Doug Holland, City Attorney
Christine Shingleton
John Buchanan
Matt West
Tim Serlet
Elizabeth Binsack
Attachrnents: Exhibit A
Exhibit B
Exhibit C
EXHIBIT A
STATUS OF SUBMITTALS UNDER THE
FORBEARANCF, AGRF,EMENT
Tus6n Legacy - Attachment I
July 21, 2009
~No I Descripdori I
~ Due Dete R~~~~ '. Submittal Stetus i
I Remarks
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~~ .~ ReqWremeMS Itlentlfted in letter of June 18, 2009
C:lDxumentc antl SeltlnpelrwordenlLocal 8eqinge\Temporary IMOmet FlIaelContentOutloolC~2NPRTVW~FOfbearonce Tradclnp Lnp (7•21-OB) 8:74 AM, 7/2y2008
Tustin Legacy - Attachment II
July 21, 2009
~N ^ I Descriptlon I Due Date ~~~~~ ~ Submittal StaNS ', Remarks ~i
Roadway ! Bridye ImprovemoMs
Traiflc Signal
^ac
C:1DOCUmenb and SettlnpaWiordenLLocal SettlnyslTsmporary IMemet Flle~\ContenLOutlookl2NPRTW/~FOrbeennas Tracking Loy (7-21-09) 9:14 AM, 7/22/20pB
Tustin Legacy - Attachment II
July 21, 20D9
C:lDocuments and Setti~s\rwordenll.ocel SeltlngslTemporary Irrtemet Files\Content.OuflooM291PRTVYY~FOrb~rsnce Trackirp Wp (741-09) 9:14 AM, 7)22/2008
Tustin Legacy - Attachment II
July 21, 2009
~No j Desaipdon I Oue Dete I R~~~ed i, Submittel StaWs ~ Remarks
Parks and Communily Facllities
Requiremenfs slnce Jurre 18, 2009
~~ Requlrements Itlentlfletl in Letter ol June 18, 2009
C:\DowmerHS antl Settlnga4~wrdenlLorel Settirgs\Temporary I~ FlIeslContent.0utbokV181PRTV1MFOrbearanca Tradting Lop (7-21-08) g:14 AM, 7/22/2008
Tustin ~egacy- Attachment III
July 21, 2009
Item Description ' Due Date Date I Submfttal Status ' Remarks
No. ! , Recefved ;
Requiremen4s since Juna 18, 2009
.~ Requirements identifled in Letter of Juna 1B, 2009
C:\Documents end Settlngs\rworden\Locel SettingslTemporery intemet Fllee\CoMeM.Outldok1291PRTVYNFabearance Tradcinp Log (7-2~_pg) 9:14 AM, 7/2y2009
EXHIBIT B
CITY LETTER/INVOICE TO DEVELOPER FOR
REIMBURSEMENT OF TRANSACTIONAL EXPENSES
~,
- ' {. ( ,
Office of the City 1Vlanager ~T T c,I, I A T
~' V J 1. ~l
June 16, 2009
Simon Whitmey
Tustin Legacy Community Partners, LLC
c/o Shea Properties
130 Vantis, Suite 200
Aliso Viejo, CA 92656
RE: Eapense Reimbnrsement Invoice
Dear Simon:
Per 3ection 1.12.2 of the Tustin Legacy Disposition and Development Agreement (Master
Development), the City has incurred expenses in the amount of $11,952.00 plus a 7% overhead
charge in the amount of $836.64 for a total of $12,788.64 for TLCP related expenses specifically
related to the DDA and its administratioq including Developer's business plan implementation
activities and administrative expenses associated with real estate portions of the transaction.
Attached is an accounting provided by our Finance Department from May 7, 2009 to June 8,
2009.
Tota1 authorized reimbursement for fiscal year 2009 under the DDA (Attachment 21) is
$739,659; leaving a balance for calendar year 2009 once the City is in receipt of Developer's
payment of $12,788.64 of $650,716.41.
Please transmit a check for $12,788.64 made payable to the "City of Turtin" within thirty (30)
days in reimbursement of the above-referenced expenses. Should you have any questions, please
feel free to contact me.
Sincerely,
Christine Shingleton
Assistant City Manager
Encl.
cc: William A. Huston, City Manager
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-30f0 • F: (714) 838-1602 ~ www.tustinca.org
BUILDING OUR FIJTURE
HONORING OUR PAST
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EXHIBIT C
APRIL 27, 2007 LETTER TO DEVELOPER
REGARDING SECURITY AND MAINTENANCE TRANSITION ON PROPERTY
~.. ~....
•
Office of the City Manager
City of Tustin
300 Centennial Way
Tustin, CA 92780
714.573.3010
Apri127, 2007 FAX 714.838.1602
Simon Whitrney, General Manager
Tustin Legacy Community Partners, LLG
Shea Properties
26840 Aliso Viejo Parkway, Suite 100
Aliso Viejo, California 92656-2624
RE: TRANSITION OF CARETAKER AND SECURITY
RESPONSIBILITIES AT TUSTIN LEGACY
Deaz Simon:
Pursuant to Section 5.1 of the DDA, Tustin Legacy Community Partners, LLC (TLCP) was
required to immediately assume responsibility, at its sole cost and expense, for the security and
maintenance of the Master Developer footprint by May 3, 2006 (the execution date of the DDA).
Despite the City's pressing TLCP to assume these obligations, it has been almost a yeaz and
TI.CP has still not assumed its required obligations. Consequently, the City at significant cost
and cash flow strain on a monthly basis has had to front TLCP expenses for these obligations.
While reimbursement costs have been grovided by TLCP when requested by the City, the City
has been assuming considerable oversight and overhead that should not be our cost or
responsibility. We have continued to point out that a11 TLCP security and maintenance expenses
are not part of the actual security and caretaker transition costs capped and identified in Section
1.12.2 of the DDA. City transition costs on our own property maintenance and seeurity contracts
were never intended to include costs which are the sole responsibility of TLCP under Secdon 5.1
of the DDA.
On May 11, 2007, the City of 'I~stin will be serving 30-day notices to terminate contracts with
the City's existing caretaker and security contractors, ACEPEX and Securitas, respectively, with
an effectivc termination date of June 10, 2007. As a result, 1'LCP will need to ensure that all
necessary maintenance and security measures will be ready to commence on June 11, 2007.
My staff have previously communicated in writing and have discussed at length with TLCP the
need to establish specific policies and procedures for maintenance and security responsibilities.
C
Simon Whitmey
Apri127, 2007
Page 2 of 4.
Ovcr the last few months, the City has spent considerable time and energy in working with
TLCP staff to develop a list of items which were intended to identify the main maintenance and
security responsibilities, with the understanding that the list would likely require further
definition and elaboration with City staff as TLCP assumes its responsibilides and as site needs
change in the future:
Secu '
TLCP has agreed that it will employ a security company to provide the following services to
secure the property and protect the public and improvements under consttuction and already
constructed:
• Staff the entry gate and screen visitors to the "Property" (the Master Developer footprint
under the DDA), patro124 hours a day, and monitor the site fencing. _
• Secure and maintain the Property (including all sub-leased LIFOC parcels) in a clean,
safe, and secure condition, in compliance with all applicable laws and upon special
directions issued by City.
• Erect and maintain barricades and fencing, and provide security in each case as
reasonably necessary to pmtect the public and improvements already constructed as
approved in writing by the City and Department of the Navy (as applicable).
• Provide a guard at the main entry gate area at Red Hill Avenue and Warner Avenue
(unless an alternate location is approved in writing by the City), to allow approved
visitors and monitor their ingress and egress at a minimum during the City's r~egular
working hours from 7:30 a.m: to 5:30 p.m., Monday through Friday, except alternate
Fridays when hours are 8:00 a.m. to 5:00 p.m., when the City o~ces are closed, and
regular local, state, and federal holidays. TLCP will only allow City of Tustin
representatives and licensees, Department of the Navy representadves, TLCP personnel
and contractors working for the partnership, and visitors who have received prior
approval from either the partnership, the Departmont of the Navy (as necessary), or the
City of Tustin. Other visitors will not be allowed on the Property and will exclude access
for any other contractor not working on the site. Entry areas will be provided pursuant
the Fencing and Access Plan approved October 3, 2006.
~ Provide security 24 hours a day for the Property to detect any unwanted visitors. Visitors
and unauthorized trespassers will be asked to leave or detained; if the situation is not
resolved, then the City of Tustin Police will be noti~ed for further enforcement.
• Patrolling personnel will monitor the site fencing for breaches and will enforce the
closing and locking of the entry points. Security will then present any problems to the
Construction Manager for TI,CP for remediation and the City staff will be available for
consultation and advice to enhance security.
~~ ~~
Simon Whitmey
Apri127, 2007
Page 3 of 4.
Site Maintenance
TLCP has a~d that they will ensure the following services are provided:
• Maintain Hangaz 29 & Building 29A, as required under the Navy ground lease, undl such
time as they may be demolished; including security around the structures to minimize
vandalism, periodic cleanup of these buildings for health and safety reasons, and
reasonable fire protection.
• Mowing and removal of invasive weed species, and abaternent of any other hazards and
nuisances on the property site.
• Repair and maintenance of all Lcgacy Pazk installed or adopted perimeter fencing.
• Periodic clean up, including removal of trash and debiis which may accumulate on the
premises.
• Fence and pmtect all jurisdictional wetlands until authorization to remove the wetlands
has been received from all applicable regional agoncies.
• Access road maintenance.
• Maintain erosion control.
• Storm water sampling on an as-needed basis.
• Spill and hazardous materials response (pursuant to the Navy Lease, the responsible
party maintaining the property shall have in place response procedurea~-a copy of which
shall be provided for approval to City. A sample will be provided to assist TL.CP in the
prepararion of their document).
~ F.mergency responses.
• Perform all tasks which the Master Developer is obligated to perform under the
Disposition and Development Agreement (DDA), including all requirements of the
Finding of Suitability To Lease #3 (FOSL #3), dated April 26, 2002, and Lease in
Furtherance of Conveyance.
Please indicate your receipt and acknowledgement of this letter by signing Page 4 and returning
the signed copy by May 3, 2007, including the preliminary list of aforementioned policies and
procedures (which may continue to be refined based on our mutual discussions and your own site
needs), as well as acknowledgement that you shall assume DDA obligations for property
maintenance and security of the Master Developer footprint as of June 11, 2007. Should you
have any questions, please do not hesitate to contact me at (714) 573-3107.
Sincerely,
,
-~ ` .
Chrisdne A. Shingleto
Assistant City Manager
(
Simon Whitmey
Apri127, 2007
Page 4 of 4.
Receiot and Acknowled¢ement
Sirnon Whitmey
General Manager
Tustin Legacy Community Partners, LLC
cc: Elizabeth Binsack
Tim Serlet
Dana Ogdon
Doug Anderson
John Buchanan
Matt West
S:~RDAVVICAS\TLCPIS Whitmey (Cazetaker Transidon) 427-07.doc
ATTACHMENT 11
SEPTEMBER 10, 2009 NOTICE OF MATERIAL DEFAULT
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
September 10, 2009
Colm Macken
Tustin Legacy Coinmunity Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, CA 92656
Re: Forbearance Agreement Obligations
Notices of Potential Default
Dear Colm:
TUSTIN
H ISTOKV
BUILDWG OUR FLITURE
HONORING OUR PAST
In response to the City of Tustin's Notices of Potential Default letters of July 13, 2009
and July 27, 2009, the City has received your letter of response dated August 18, 2009.
Unfortunately, Tustin Legacy Community Partners, LLC ("TLCP") has not cured its
failure to perform obligations under the Forbearance Agreement ("FA") and Disposition
and Development Agreement ("DDA") as specifically required under the City's letters of
July l 3 and July 27, 2009.
Good Faith Negotiations
TLCP argues that the City has not been negotiating in good faith under the FA and Pre-
Negotiation Agreement ("PNA") and during negotiations/discussions, TLCP implies that
the City should not exercise any of its rights under either the FA or DDA. Provisions of
Sections 1 and 4 of the FA require TLCP's performance of certain obligations
("Performance Obligations") as a condition to maintaining the Forbearance Period.
Furthermore, Section 2 of the PNA makes it clear that the PNA shall not operate (i) to
relieve Developer or Tustin of their respective obligations to fully and timely comply
with any and all their respective obligations under the DDA Documents (monetary and
not monetary), nor (ii) as a waiver by Tustin or Developer of their respective rights to
demand full and timely performance of all obligations under the DDA Documents.
The City's good faith in negotiating a Memorandum of Understanding ("MOU") setting
forth the essential terms on which the City would be willing to modify the DDA and
waive the Forbearance Defaults has been demonstrated by the following:
Negotiations and discussions between senior management staff at City and TLCP
senior management staff on May 3, 2009, May 11, 2009, May 26, 2009, and June 9,
2009.
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (714j 838-1602 • www.tustinca.org
Colm Macken
September 10, 2~09
Page 2.
• City provided outline and discussion with TLCP identifying the City's negotiating
principles related to development phasing of the TLCP footprint.
• Receipt, review, and consideration of TLCP's proposed Term Sheet of June 9, 2009.
• Staff briefing of Tustin City Council members on the TLCP Proposal and City staff
receipt of specific policy direction from the City Council.
• Thoughtful review, analysis and response by the City to TLCP's proposed Term
Sheet and counter-proposal by City dated July 23, 2009.
Your letter ignores the considerable revenue and cash flow enhancements the City
identified and offered in its letter of July 23`d as assistance to TLCP in partial response to
TLCP's June 9th proposaL While certain enhancements would significantly assist in cash
flow, other enhancements could have anywhere between a$140 million to $352 million
dollar positive revenue impact on the project. More specifically, the City's counter
proposal to TLCP was~ entirely consistent with the "guiding principles" contained in
Section 3 of the FA including:
• Not compromising the quality and price of the Property to be paid to the City which
shall be at least the amount set forth in the DDA.
• Modifications to the schedule of performance, location and phasing of development,
required housing tenure in the Project, including the timing and phasing of
installation of infrastructure and the modification to the land conveyance schedule
that will not affect the MCAS Tustin Final EIS/EIR thresholds.
• Alternative mechanisms of providing for construction of backbone infrastructure
• Commitment of senior level management to the negotiation.
A short summary of a few of the City's proposed specific enhancements to the project are
as follows:
~ Extension of Phase 2 and Phase 3 Conveyance Dates and Land Payment Schedule
from September 2009 and July 2011 to September 2013 and July 2015.
• Extension of delivery dates for Developer's obligations to construct Phase 1 and
Phase 2 Infrastructure from September 2009 and July 2011 to September 2013 and
July 2015
~ Provision of opportunities for limited Exchange Opportunity Parcels to be conveyed
earlier to TLCP in order to consolidate development activity, subject to specific
conditions.
Colm Macken
September 10, 2009
Page 3.
• Provide for additional density bonuses in Neighborhood D and a transfer of 10% of
units in Neighborhood G to Neighborhood D which would permit up to 432
additional residential units to be built in Neighborhood D.
~ Provide significant development changes in Neighborhood D to reduce affordable
for-sale products and increase affordable apartments, modify bedroom counts, etc.
• Provide for significant development changes in Neighborhood G to reduce affordable
for-sale products and increase affordable apartments, modify bedroom counts, etc.
• Provide for housing set-aside funds towards any Level II TUSD school impact fees
for affordable housing products.
• Offers relief to TLCP by considering the creation of a Community Facilities District
and subsequent issuance of bonds to assist in partially financing of Tustin Legacy
Backbone Infrastructure and City services for the project.
• Permit modification of master block economic gap by reducing amount of retails
square footage, permitting Type 5 instead of Type 1 construction, and reducing the
portion of initial parking structures being constructed to the minimum parking count
in the original Master Block Implementation Plan.
The City has used its good faith efforts and has met on several occasions with TLCP,
exchanged information, and identified potential MOU terms and concepts under which it
would be willing to modify the DDA and waive the Forbearance Defaults.
Notwithstanding the City's efforts to negotiate in good faith, TLCP has assumed
negotiating tactics that have pushed the parties apart.
TLCP, in executing the FA and PNA, acknowledged and agreed to specific obligations in
exchange for the City during the Forbearance Period, agreeing to defer the exercise of its
rights and remedies under the DDA with respect to Potential or Material Defaults arising
as described in the City's March 4, 2009 and December 12, 2008 Letters of Potential
Default. TLCP, in exchange for the City's deferral of its rights and remedies, agreed to
certain Performance Obligations including without limitation to (1) ensuring grading
operations would be active and under contract, (2) completion of revised mass grading
plans, (3) continuation of maintenance of the site, (4) submittal of certain complete
backbone and local infrastructure plans, and (5) payment of current owed taxes. As we
outlined in our earlier conespondence, TLCP has not fully performed its obligations
under the FA and PNA. In addition, based on TLCP's August 18, 2009, it appears that
the Developer does not intend to cure its breaches of the FA Performance Obligations or
to cure its failure to perform its DDA obligations as identified in the City's letters
regarding FA Performance Obligations and Notices of Potential Default. We will
reaffirm the following as an outline of the facts that support our determination that the
Developer is in default of its obligations:
Colm Macken
September 10, 2009
Page 4.
Forbearance Agreement Obligations
1. Grading.
As expressed in correspondence dated July 13, 2009, a breach of the Developer's FA
Obligations and Potential Default was declared by the City for TLCP's failure to
demonstrate that grading operations and contract were renewed and active pursuant to
Section 4a) (ii)(1) of the FA. The obligation to provide this evidence under the FA was
not a condition that is required upon conclusion of DDA negotiations, but a pre-condition
to TLCP maintaining the Forbearance Period under the FA.
While Developer, at a meeting on May 11, 2009 represented to the City Manager and
Assistant City Manager that it had no intention resuming grading operations or activating
its grading contractor, the City representatives indicated that the mere issuance of a
permit did not fully satisfy the obligation required in the FA. TLCP's letter of August 18,
2009 incorrectly asserts that the City Manager at the May l lth meeting confirmed that a
grading permit met this requirement. The City Manager agreed to clarify the
requirements of the FA. In subsequent meetings on May 26, 2009 and June 9, 2009 the
issue was again discussed and the City representatives confirmed with TLCP that written
verification that grading operations and the grading contract were active. TLCP's failure
to provide such written verification resulted in the City's letter of July 13, 2009. The
City provided the Developer thirty (30) days to cure this Potential Default. TLCP did not
cure and its failure to cure its Potential Default of this Forbearance Agreement Obligation
is a Material Default.
2. Submittal of Certain Backbone and Local Infrastructure Plans
Developer's response of August 18, 2009 indicates that it is unreasonable to expect TLCP
to expend more than it has already spent for the purpose of preparing submittals for what
TLCP describes as an economically infeasible project. The parties did not agree on a cap
or maximum amount that TLCP was required to expend to make the submittals required
under the FA. Thus, pursuant to the City's letters of July 13, and July 27, 2009, the City
reaffirmed that TLCP, consistent with its commitments under the FA, was required to
submit certain complete plan submittals on certain Backbone and Local Infrastructure by
specified dates with any required plan review fees as required under the DDA.
Developer was provided a thirty (30) day period to cure its failure to meet the submittal
requirements as identified in both the July 13`h and July 27'h letters.
Colm Macken
September 10, 2009
Page 5.
DDA Obligations
3. Payment of Plan Check Fee and Application Submittal Fees and Deposits.
As indicated in the City's July 27th letter, pursuant to Sections 8.3.3 and 14.1 (a) of the
DDA, Developer is required to pay plan check and application and/or deposit fees
required to be paid for certain improvement and plan submittals and applications. This
requirement was not deferred under the FA. Developer was provided with fifteen (15)
business days to cure this Potential Default. TLCP has not cured this Potential Default;
therefore, failure to cure is a Material Default.
4. DDA Obligations-Payment of Transactional Fees
As discussed in the City's letters of July 13, 2009 and July 27, 2009, Developer is
required to reimburse the City for certain transactional fees identified and required
pursuant to Section 1.12.2 of the DDA. As detailed in the letters noted, Developer owes
the City a total of $39,532.48. Developer was provided fifteen (15) business days to
cure. TLCP has failed to cure these Potential Defaults; therefore, failure to cure is a
Material Default.
5. DDA Obligations-Security and Property Maintenance
As noted in the City's letter af July 27, 2009, the City was informed that the Developer
terminated all security contracts within the Master Developer footprint effective July 1,
2009. The Developer's response in its letter of August 18th claimed that only a fence and
locked gates are required at the project. Developer also asserted that it will not pay or
reimburse Tustin for additional security or maintenance measures or related costs.
TLCP's obligations to provide security is not limited to the installation of barricades and
fencing. Section 5.1 of the DDA makes it clear that TLCP's development operations
includes the provision of security and maintenance as reasonably necessary to protect the
public and improvements. Further, Section 1.5.1 of the DDA requires the Developer's
compliance with the terms and conditions of the Federal Documents including, but not
limited to the terms of the Navy LIFOC. Provisions of Section 12.2 of the LIFOC require
security services (not just fencing) as necessary to assure the security and safery within
the Leased Premises of the LIFOC. The Navy has contacted the City and indicated its
concerns regarding the lack of security as it affects the LIFOC property within the Master
Developer footprint. The minimum and reasonable level of both security and
maintenance required on the project site was determined after several meetings between
Colm Macken
September 10, 2009
Page 6.
the City and Developer and was also based on City's consultation with the Department of
the Navy. These arrangements were agreed upon in a letter of April 27, 2007, receipt of
which was acknowledged by Simon Whitmey, General Manager of TLCP. The
Developer is not just merely obligated to the protection and maintenance of property
which it owns, but property owned by the Federal Government including active
environmental remediation sites.
Pursuant to the City's letter of July 27, 2009, Developer was provided thirty (30) calendar
days to cure this Potential Default. The minimum level of required security and
maintenance deternuned to be required for the project were specifically agreed upon and
attached to the Potential Default letter of July 27, 2009. Developer has not cured the
Potential Default. Therefore, failure to cure is a Material Default.
Conclusion
The fact that the City does not agree with the specific terms and proposals offered by
TLCP is not a lack of "good faith" negotiations on the City's part. Neither the City nor
Developer is required to agree to modify the DDA. Provisions of Section 3 of the Pre-
Negotiation Agreement, state the following:
"Neither Tustin nor Developer has any obligation to modify, amend, restructure, any of
the DDA Documents as a result of the Discussions or pursuant to this Agreement.
Tustin's participation in the Discussions does not indicate any commitment by Tustin to
any proposed solution to any Outstanding Issues. Similarly, Developer's participation in
the Discussions does not indicate any commitment by Developer to any proposed solution
to the Outstanding Issues.
The City and TLCP have an existing agreement. Any amendments to that agreement
require the consent and approval of both parties. The City remains willing to entertain
mutually acceptable terms for a DDA amendment and the City has demonstrated its
willingness to explore and endorse reasonable DDA amendments while performing the
City's obligations under the existing agreements.
Unfortunately the same cannot be said for TLCP. We would note that TLCP is
proceeding in treacherous waters. Pursuant to Section 1 of the FA, Developer has failed
to p~erform certain of its Performance Obligations as identified in the City's letters of July
13` and July 27`" and has not cured such failure within the cure periods provided in the
DDA. Developer has also been notified by letters of July 13`h and July 27, 2009 of the
occurrence of Potential Defaults other than the Forbearance Defaults. Additionally,
Developer in its letter of August 18, 2009 has also informed the City that it is unwilling
to perform certain of its Performance Obligations under the FA.
Colm Macken
September 10, 2009
Page 7.
The Forbearance Period was defined as meaning: "the period commencing on the date of
the Agreement and ending the sooner to occur of (i) October 1, 2009, (ii) the date on
which a Potential Default or Material Default other than the Forbearance Default occurs
under the DDA and City has delivered notice of the same if and as required under the
DDA, (iii) the date on which Developer advises Tustin in writing that it is unwilling or
unable to perform any or all of the Performance Obligations (as herein defined) or (iv)
the date on which Tustin has delivered written notice to Developer that Developer has
failed to perform the Performance Obligations in accordance with this Agreement
provided that Developer has not cured such failure within the cure period provided in the
DDA (the soonest to occur of the dates set forth in clauses (i) through (iv) above being
hereinafter referred to as the Forbearance Ternunation Date.)" Thus, pursuant to the
terms of the FA the City has the discretion at this time to declare that the FA is
terminated by reason of the actions of TLCP. The City declines to do so and intends to
provide TLCP with the opportunity to fully comply with the terms of the FA and PNA
and the opportunity to continue to negotiate with the City's representatives through the
termination date identified in the FA and PNA.
However, since TLCP has failed to cure Potential Defaults identified in the City's letters
of July 13t" and July 27th, TLCP is hereby informed that each of the Potential Defaults
identified in the above letters have been determined to be Material Defaults upon the
effective expiration of the applicable cure periods identified in each letter. Given the
declaration of Material Default, the City hereby informs the Developer and Permitted
Mortgagee of its intention to terminate the Disposition and Development Agreement
(DDA) with respect to all of the Developer Parcels and within ninety (90) calendar days
after delivery of this letter, if the Permitted Mortgagee fails to cure the Monetary Defaults
and Non-Monetary Defaults consistent with provisions contained in Section 1692 and
16.9.3 of the DDA.
Upon occunence of a Material Default, the City may also elect any other remedies set
forth in Section 14.3.2 of the DDA. The enumeration of a Potential Default or Material
Default event under the DDA as contained in this letter is not exclusive. Neither the
failure nor delay by the City to exercise any of its rights or remedies nor any provision of
this letter will amend, modify, supplement, extend, delay, renew, terminate, waive,
release or otherwise limit or prejudice the City's rights and remedies or the Developer's
obligations under the DDA.
Sincerely,
/~/~'~~6/ ( ,
U"
William A. Huston
City Manager
Colm Macken
September 10, 2009
Page 8.
cc: City Council
Doug Holland, City Attorney
Christine Shingleton, Assistant City Manager
Key Bank National Association
1200 Abertnathy Road, Suite 150
Atlanta,Georgia 30328
Attention: Meredith H. Houseworth, Vice President
J. F. Shea Co, Inc.
655 Brea Canyon Road
Walnut, California 91789
Attention: Treasurer
ATTACHMENT 12
OCTOBER 30, 2009 NOTICE OF POTENTIAL DEFAULT
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
October 30, 2009
Colm Maclcen
Tustin Legacy Community Partners, LLC
c/o Shea Properties
130 Vantis, Suite 200
Aliso Viejo, CA 92656
Re: Notice of Potential Defaults Pursuant to the Disposition and Development
Agreement Between Tustin Legacy Partners, LLC and the City of Tustin
Dear Mr. Macken:
As you are aware, pursuant to a Forbearance Agreement entered into on April 14, 2009 between
the City of Tustin and Tustin Legacy Partners, LLC ("TLCP" or "Developer"), the City agreed to
refrain from exercising its rights and remedies under the Disposition and Development
Agreement ("DDA") with respect to any Potential Default or Material Default arising as a result
of matters, as detailed in the letters dated December 12, 2008 and March 4, 2009 to the
Developer from the City, subject to Developer timely undertaking and performing certain
specific Performance Obligations of the Developer under the Forbearance Agreement. During
the Forbearance Period under the Forbearance Agreement, in letters to the Developer from the
City dated July ] 3, 2009, July 27, 2009, and September 10, 2009, the Developer was informed
that it also failed to perform the Performance Obligations under the Forbearance Agreement.
With Developer's failure to subsequently cure such failures to perform its Performance
Obligations under the Forbearance Agreement as identified in the previous letters and the
Forbearance Period under the Forbearance Agreement ending on October 1, 2009, the
Forbearance Agreement automatically terminated on October l, 2009.
Accordingly, this letter constitutes written notice of Potential Defaults by Developer pursuant to
the DDA and is, in addition to previous correspondence to Developer from City dated September
10, 2009, providing written notice that developer was in Material Default of other provisions of
the DDA.
The Developer has failed to timely perform, in whole or in part, certain of its obligations
required to be performed under the DDA as more specifically defined below, and such failures
constitute Potential Defaults pursuant to Sections 14.1 (a) and 14.1(c) of the DDA. In declaring
the existence of Potential Defaults pursuant to this letter, the City is awaxe that the Developer has
voiced concerns regarding the economic viability of the project. However, Section 17.8 of the
DDA does not permit a force majeure delay of any Developer DDA obligations due to market
conditions. While the City has been willing to discuss potential modifications and/or
amendments to the DDA that are reasonable and consistent with original agreed upon goals and
objectives for the project, the City has consistently voiced concerns to the Developer during the
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-30t0 • F: (714) 838-1602 • www.tustinca.org
Colm Macken
Tustin Legacy Community Partners, LLC
October 30, 2009
Page 2.
last year or more regarding delays by the Developer in proceeding with its obligations under the
DDA. The City has also continued to stress to Developer that it needs to fully and timely satisfy
and comply with its obligations under the current DDA.
Accordingly, this letter sha11 serve as notice to Developer of additional Potential Defaults under
the DDA as more specifically defined below:
Potential Default-Failure to Pav Taxes.
Section 8.9 of the DDA states as follows:
"8.9 Ta~es, Assessments, Encumbrances and Liens. Developer shall pay when
due and pYior to delinquency all real estate taxes and assessments assessed and
levied on or against all po~tions of Developer's Parcels subsequent to the
conveyance of fee thereto by the City to the Develope~. The Developer shall not
place, or allow to be placed, on its interests in the Property, or any Portion
thereof, any mortgage o~ encu~nbrance of lien not authorized by this Agreement.
The Developer shall Nemove, or shall have Nemoved, any levy oY attachment made
on interests in the P~operty or any portion thereof, shall assure the satisfaction
thereof within a reasonable time but in any event prior to Foreclosure. Nothing
contained in this Ag~eement shall be deenzed to prohibit the Developer from
contesting the validiry o~ amount of any tax, assessment, encumbrance or lien, or
limit the ~emedies available to the Developer in Nespect thereto. "
According to the Orange County Treasurer-Tax Collector, 2007-08 and 2008-09 taxes on certain
portions of Developer's Property under the DDA are currently due and have not been paid as
identified on the attached Exhibit A. Taxes were not paid on one property in 2007-08 in the
amount of $525,243.86 (with current delinquencies) and on three properties in 2008-09 in the
amount of $642,217.60 (with current delinquencies), for total t~es due on Developer's Property
in the amount of $1,167,461.46.
Pursuant to Section 14.1 (a) of the DDA, Developer has failed to timely pay a sum required to be
paid pursuant to the DDA. This letter constitutes written notice of a Potential Default under
Section 14.1 (a) of DDA.
Pursuant to Section 14.2.1 of the DDA, failure to pay taxes when due is a Potential Default
which shall become a Material Default if not cured, at the Developer's expense, within fifteen
Business (15) Davs after receipt of this notice of Potential Default.
Potential Defaults -- Schedule of Performance (DDA Attachment 17 Obli~ations).
Section 8.2.1 of the DDA requires the Developer to promptly begin and thereafter diligently
prosecute to completion all tasks required by the Schedule of Performance (Attachment 17 to the
Colm Macken
Tustin Legacy Community Partners, LLC
October 30, 2009
Page 3.
DDA) on or before the time established therein for such completion. As you are aware, the DDA
was amended on March 29, 2007 at the request of the Developer to, among other things, modify
and extend certain requirements and dates in the Schedule of Performance. Following such
amendment, the Developer became contractually obligated to perform its obligations under the
DDA in accordance with the revised Schedule of Performance.
Pursuant to the DDA, the City will detail below and in attached materials the particulars of the
above-referenced Potential Defaults; provided, however, that the following shall not be deemed
to constitute an exhaustive list of any and all Potential Defaults and Material Defaults that
currently exist, and thus shall not be deemed to constitute a waiver of any other Potential
Defaults and/or Material Defaults.
The Potential Defaults referenced in this letter arise by virtue of the Developer's failure to meet
its obligations in connection with the Schedule of Performance in the DDA (Attachment 17) and
more specifically its obligations under Phase 1 and Phase 2. Under Phase l, Developer has
failed to perform four major tasks pursuant to the Performance Schedule including: 1) Phase 1-
Concept Plans and Sector "B" Tentative Tract Maps; 2) Phase 1- Mass Grading, Demolition and
Interim Drainage Plans and Construction; 3) Phase 1- Developer's Backbone Infrastructure
Plans and Construction; and 4) Phase 1- Local Infrastructure Plans and Construction. Under
Phase 2, Developer has failed to perform three tasks under the Performance Schedule including:
1) Phase 2- Concept Plans and Tentative Tract Maps; (2) Phase 2- Developer's Conditions
Precedent to Close of Escrow and Phase 2 Closing Date; and (3) Phase 2- Developer's
Backbone Infrastructure Plans and Construction.
The Potential Defaults and Developer's failure to perform are summarized below. Exhibit B
which is attached to this letter shows the applicable provisions of the Schedule of Performance
and compares it to the actual submission dates by the Developer, specifically identifying items
pursuant to Attachment 17 that are Developer Obligations that have not been performed and are
currently in non-compliance pursuant to the DDA. Exhibit C also provides additional supporting
schedule information on the status of infrastructure plans and construction.
Phase 1 Concept Plan and Sector `B' Maps [2 a) ix), page 6 of Attachment 17, as
amended]: The Developer has failed to submit all required and complete Phase 1 Concept
Plans and Sector "B" Tentative Tract Maps for Phase 1 portions of Neighborhoods D and G.
The last submission to the City was a Concept Plan application with related drawings and
documents for Neighborhood D on July 23, 2008.
The Developer has also not submitted a complete Sector "B" Final Map for Phase 1 portions
of Neighborhood E.
• Phase 1 Mass Grading, Demolition, and Interim Drainage Plans and Construction [2 a)
x), page 7 of Attachment 17, as amended]: The Developer submitted mass grading plans in
September 2006 which the City approved in September 2007, and the Developer started
construction. Further, the Developer's contractor, Reed Thomas, reported in a letter to TLCP
Colm Macken
Tustin Legacy Community Partners, LLC
October 30, 2009
Page 4.
dated May 12, 2009 that they would not mobilize and commence grading operations until
TLCP authorized and issued a Notice to Proceed to them. The City has previously requested
that the Developer provide verification that a Notice to Proceed has been issued subsequently
to Reed Thomas; no such verification has been provided.
The delay in the mass grading operation has significantly impacted the ability of the
Developer to meet Backbone Infrastructure and Local Backbone Tnfrastructure obligations.
• Phase 1 Developer's Backbone Infrastructure Plans and Construction (2 a) xi), page 8-9
of Attachment 17, as amended): Of the 76 segments listed as Baclcbone Infrastructure
projects in Phase l, the Developer has submitted plans for initial review of 21 segments.
Initial plans for 55 segments remain to be submitted. Plans for 76 se~ments were to be
submitted by October 31 2007; failure to meet the schedule resulted in the Developer's non
compliance with the DDA. Exhibits B and C attached to this letter, prepared by the City's
Public Works Department, provide additional details. In summary, a brealcdown of the initial
plans by Neighborhood is as follows: 9 out of 9 segments remain to be submitted for
Neighborhood D, 7 of 13 segments remain to be submitted for Neighborhood E, 15 of 16
segments remain to be submitted for Neighborhood G, and 25 of 38 segments remain to be
submitted for the combined Neighborhoods D, E, and G.
Phase 1 Local Infrastructure Plans and Construction [page 9-11, item 2 a) xii) of
Attachment 17, as amended]: Plans for 34 se~ments listed as Local Backbone
Infrastructure ~rojects in Phase 1 were to be submitted for initial review by no later than
December 31, 2007. The Developer has submitted for initial review only 4 such segments.
Plans for the remaining 30 segments have not been submitted. Failure to meet the schedule
results in the Developer not bein~ in compliance with the DDA. Exhibits B and C provide
additional schedule information on infrastructure submittals to the City. In summary, a
breakdown of the initial plans by Neighborhood is as follows: 7 out of 8 segments remain to
be submitted for Neighborhood D, 6 of 9 segments remain to be submitted for Neighborhood
E, 12 of 12 segments remain to be submitted for Neighborhood G, and 5 of 5 plan segments
remain to be submitted for the combined Neighborhoods D, E, and G(general benefit).
Phase 2 Concept Plan and Sector "B" Maps [page 13-14, item 2 b) i]: The Developer
failed to submit all required and complete Phase 2 Concept Plans and Sector "B" Tentative
Tract Maps for Phase 2 portions of Neighborhoods D and G by October 6, 2008 as required.
The last submission to the City was a Concept Plan application with related drawings and
documents for Neighborhood D on July 23, 2008.
The Developer has also not submitted a complete Sector "B" Final Map for Phase 2 portions
of Neighborhood E as required within 75 Calendar Days following City Council approval of
the Sector "B" Tentative Tract Map which was December 4, 2007. Exhibit B provides
additional schedule information.
Colm Macken
Tustin Legacy Community Partners, LLC
October 30, 2009
Page 5.
Phase 2 Developer's Conditions Precedent to Close of Escrow and Close of Escrow
[pages 14 and 15, items 2 b) ii) and iv)]: The Developer was to have closed escrow
September 15, 2009 subject to completion of all conditions precedent to escrow closing
which have not been completed.
• Phase 2 Developer's Backbone Infrastracture Plans and Construction [page 15, item 2
b) v) of Attachment 17, as amended]: The Developer was to have made initial submittals
of complete Backbone Infrastructure Plans, specifications and bid documents by October l,
2009 which have not been submitted. Exhibits B and C provide additional schedule
information on Phase 2 Backbone Infrastructure submittals to the City.
Pursuant to Section 14.1 (c) of the DDA, Developer has failed to perform and delayed in its
performance of specific obligations under the DDA (including failure to perform within the time
periods for performance in the DDA). This letter constitutes written notice of a Potential Default
under Section 14.1 (c). Pursuant to Section 14.2.1 of the DDA failure to perform obligations of
Section 14.1 (c) shall become Material Defaults if not cured, at the Developer's expense, (a)
within thirty (301 calendar days after receipt of this letter, or (b) if such cure cannot be
reasonably accomplished within such thirty (30) calendar dav period, within an additional one
hundred fiftv (150) calendar davs from the expiration of such thirty (30) dav period, but onlv if
the Developer has commenced such cure within such thirtv (30) calendar da~period and
diligentl~pursues such cure to completion.
Developer's failure to timely cure the Potential Defaults enumerated above will result in the
occurrence of a Material Default, whereupon the City shall have all of the rights and remedies set
forth in the DDA. In particular, as clearly evidenced from the above summary and the supporting
materials (Exhibits B and C}, the Developer has substantially suspended the diligent pursuit of its
Entitlements necessary to construct the Project for a period of more than one hundred eighty
(180) consecutive calendar days, and if such Potential Default is not cured in accordance with the
cure provisions noted above, the City may exercise the Right of Reversion pursuant to Section
14.4.1 of the DDA and other applicable provisions of the DDA.
Conclusion
The enumeration of two specific categories of Potential Defaults contained in this letter is not
exclusive. As you are aware the City previously identified specific items in which the Developer
was in Material Default pursuant to the DDA on September 10, 2009 which have not yet been
cured.
Neither the failure, nor delay by the City to exercise any of its rights or remedies or any
provision of this letter will amend, modify, supplement, extend, delay, renew, terminate, waive,
release or otherwise limit or prejudice the Lender's rights and remedies or the Developer's
obligations under the DDA, and no such amendment, modification, supplement, extension,
delay, renewal, termination, waiver, release or limitation shall be effective unless in writing and
Colm Macken
Tustin Legacy Community Partners, LLC
October 30, 2009
Page 6.
executed and delivered by the City and the Developer. In particular, nothing referred to above
shall operate to cure any existing default or to prohibit, restrict or otherwise inhibit the City from
exercising any right or remedy it may have under the DDA.
Sincerely,
~i~' ~t ~ik%~-~ • {~iar~v~
William A. Huston
City Manager
Exhibit A: Property Tax not paid and Balance Owing
Exhibit B: Attachment 17, Schedule of Performance in DDA, Potential Defaults
Exhibit C: Schedule of Plan Submissions by TLCP for Baclcbone Infrastructure
and Local Infrastructure-Phase I
cc: Tustin City Council
Christine Shingleton, City of Tustin
Doug Stack, City of Tustin
Elizabeth Binsack, City of Tustin
Doug Anderson, City of Tustin
John Buchanan, City of Tustin
Doug Holland, City Attorney
Clay Gantz, Special Real Estate Counsel
Attention: Meredith H. Houseworth, Vice President
Key Bank National Association
1200 Abernathy Road, Suite 150
Atlanta, Georgia 30328
Attention: Treasurer
J. F. Shea Co., Inc.
655 Brea Canyon Road
Walnut, California 91789
EXHIBIT A
Property Tax Not Paid and Balances Owing
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EXHIBIT B
ATTACHMENT 17 OF DDA
SCHEDULE OF PERFORMANCE
POTENTIAL DEFAULTS
The italicized comments in the fourth column on the right, reading "eurrently not in
comp/iance" indicate where the Developer is in Potential Default under the DDA.
• Phase 1 Conceat Plan and Sector "B" Maps
ii ~ ~ ~i ~ ~ ~~ :, ~ ~
~ ~~ ~ ~ ~i•
i) Phase 1- Concept Plan anJ
Sector `B' Maps [3.3.~(c)]
(l) Developer submits an NE: Jun 19, 2006 NE: June 20, 2006 NE: submitted
initial Concept Plan
applicaCion with related
NG: Dec l8, 2006
NG: Dec 19, 2006
NG: submitted
drawings and documents ND: Feb 5, 2007 ND: Feb ~, 2007 ND: submitted
(2) Developer submits a NE: Feb 16, 2007 NE: Aug 14, 2007 NE: while not submitted within
complete Concept Plan NG: Mar 23
2007 NG: submittal of required time frames, submittals
application with related ,
November 20
2007 determined complete
drawin s and documents
B NU: May 13, 2007 ,
not determined NG: currentlv not in compliance
complete
ND: current/y not in compliance
ND: submittal of
July 23, 2008 not
deterrnined
com lete
(3) Developer submits a NE: Oct 13, 2006 NE: Oct 13, 2006 NE: completed
preliminary Sector'A'
Tentative Tract Map
NG: Mar 23, 2007
NG: Aug 14, 2007
NG: preliminary submittal made
a lication
pP
ND: May 13, 2007
ND: Jan 30, 2008 but did not comply with time frame
ired
requ
ND: preliminary submittal made
but did not comply with time frame
required
Phase 1 Concept Plan and Sector `B" Maps -(Continued)
~~ ~ ~o~ ,~ e ~
,. , ,,,:„.
--- ~ ~~ ~ ~~ ~
~ ~ , ~ ~~~
KI_: ~ahilu nol subn,it~~d ~cithin
(4) Uevclopcr submits a Within 30 days of NIS: City respondcd reyuircd time framr. submittals
comple[e Sector 'B' following the to comments on Were determined complete.
Tentative Tract Map Developer's receipt of
3-29-2007;
application wiYh related comments from the "complete"
drawings, documents City on a preliminary
and information Sector 'B' Tentative comments not
submitted until
detern~ined necessary by Map
the City including, but 8-14-2007
not limited to, Traffic
NG: currently not in compliance
SYudies, Trip Budget NG: City
data, Hydrology studies, responded to
and other supporting comments on
information. 12-21-2007;
"eomplete"
comments have not
been submitted to
date
ND: currentlv not in complianee
ND: City responded
to comments on
8-22-2008;
"complete"
comments have not
been submitted to
date
(5) llpon City determination Within 60 Calendar NE: Dec 04, 2007 NE: approved by City Council on
that Developer has Days. (approved by City 12-04-2007
submitted a complete as required upon
Concept Plan and Sector determination of
'B' Tentative Tract Map completion
application, approved by
the Navy as it affects NG: Developer has NG: cu~rent/v not in compliance
LIFOC Parcels and not submitted
eompletion of all "complete"
environmental submittal of Sector
documentation, CiTy 'B' TTM
takes action on the
Concept Plan and Sector ND: Developer has NU: currentlV not in comp[iance
'B' Tentative Tract Map. notsubmitted
°complete"
submittal of Sector
`B' TTM
Phase 1 Concept Plan and Sector "B" Maas -(Continued
(6) Developer submits a Within 75 Calendar NE: Within 75 days NE: currentlv not in compliance
complete Sector `B' Days tollowing Ciry of City Council
Final Map with related Council approval ofthe approval on
drawings and Sector 'B' Tentative 12-04-2007 the
documents, including Tract Map. Developer, the last
Master Association date for submittal
Documents to Ciry. was 2/19/2008; the
Developer
submission was
3-10-08 and has not
been deterniined
camplete
NG: Developer has NG: currentlv not in compliance.
not submitted to Developer must complete prior
date tasks in order to submit.
ND: Developer has ND: currentlv not in comp[iance.
not submitted to Developer must complete prior
date tasks in order to submit.
(7) City takes action on the Within 30 Calendar NE: City cannot NE: currentlV not in comp/iance.
approval of Sec[or `B' Days following the take action until Developer must complete prior
Final Map, and Master later of (a) Developer's Developer has made tasks in order to submit.
Association Documents. completing all City, corrections to Final
County, and Tract Map and
responsible agency incomplete
requested corcections, submittals; City
or (b) all conditions of responded to
approvalofthe Sector Developeron
'B' Tentative Tract 4-02-2008.
Map.
NG: Developer has NG: currentlv not in compliance.
not submitted to Developer must complele prior
date tasks in order to submit.
ND: Developer has ND: currentlv not in compliance.
not submitted to Developer must complete prior
datc tasks in order to submit.
Phase 1 Concept Plan and Sector "B" Maps -(Continued
(8) Developer causes the Within 90 Calendar NE: Developer NE: currentlv nol in comp[iance
Recording ofthe Sector Days following canno[ record FTM Developer must complete prior
`B' Final Map, and approval ofthe Sector until corrections tasks in order ro submit.
Master Association 'B' Final Map. have been made as
Documents. requested by the
City on 4-02-2008
NG: Ueveloper NG: currentlv not in compliance
cannot record FTM Developer must complete prior
until prior tasks tasks in order to submit.
have been
completed including
submitting a
"complete" Sector
'B' TTM, as no[ed
above.
ND: Developer ND: current(v not in compliance
cannot record FTM Developer must complete prior
until prior [asks tasks in order to submit.
have been
completed including
submitting a
"complete" Sector
'B' TTM. as noted
above.
• Phase 1-Developer's Backbone Infrastructure Plans and Construction
-
'~ ~ ~~' ---
~ ~ -~• -
~ ~ i. - -
~ ~
~~~
~ ~ ~
~~ ~ ~~
(I) Developer submits initial ~
Initial submittals no later
N~: 8-29-2007 (I segment
NG: currentlv not in comp[iance:
[3ackbone Infrastructure than: submission) total of 13 segments (item 6a, 6b,
Plans and documents 31, 34a, 34b, 34c, 34d, 49, 50, 86,
(note: submittals will be in NE: Au~ust 31, 2007 123, 726, 129); 1 segment (item
segments). NG: October 31, 2007 123) submitted by deadline; 7
ND: September 30, 2007 segments after the deadline (items
Linear Park: Oct 31, 6a. 6b, 31, 34a, 34b, 34c, 34d); 6
2007 segments have not been submitted
(items 31, 49, 50, 86, 126, 129).
NG: 3-11-08 (1 segment NG: current[V not in compliance;
submission) total of 16 segments (items 12, 13,
14, l~, 18, 19, 37, ~5, 56, 60. 65,
88, I l~, I l6, 121, 124); 1 segment
(item 15) submitted to date and
that submission was after the
deadline; 15 segments have not
been submitted (items 12, 13, 14,
18, 19, 37, 55, 56, 60, 65, 88, 115.
l l6. 121. 124).
ND: No submittal to date ND: currentlv not in compliance;
total of 9 segments (items 1 l, 23,
29, 42, 53, 54, 122, 125, 127); 0
segment submitted to date.
Linear Park: 8-29-2007, Linear Park: currentlv not rn
submittal included in NC comp[iance; tofal of 3 segments
(items 122, 123, 121), 1 segment
(item 123) in NE submitted by
deadline, 2 segments (items 122,
121) not submitted by deadline for
NG and ND.
NEMG/ND (non- NE/NG/ND: currentlv not in
exclusive to specitic compliunce: total of 38 segments
neighborhood deemed to that impact Neighborhoods E, G,
be of "Ge~eral BenefiP') and D; 5(items 79, 80, 82a, 82b,
87) ofthe 38 segments were
submitted by 10-31-2007,the
deadline; 8 segments (8, 9a. 9b.
9c, 9d. 28a, 286, 28c) were
submitted after the deadline: 25 uf
the 38 segments (9A, 62, 63, 64,
65, 65b, 68, 77, 78, 83, 89, 90, 91,
92, 94, 96, 100, 104, 108, 1]2,
1 12a, 117, 132, 133, 81 A) have
nat been submitted.
Phase 1-Develooer's Backbone Infrastructure Plans and Construction (Continuedl
;. ~~ ~ ~
~ ~
, ~~
(2) Developer submits NB: Octobcr3l, 2007 NI:: no complete plan; NE: currentli~ not i~i co~npliance;
complete l3ackbone NG: December 31, 2007 submitted to date total of 13 segments, 0 segments
Infrastructure Plans, ND: October 31, 2007 are complete.
specifications and bid Linear Park: Dec 31,
documents (note: 2007 NG: no complete plans NG: currentlv not in rompliance;
submittals will be in submitted to date total of' 16 segmen[s, 0 segments
segments.) Complete submittals are are complete.
contingent upon City
approval of applicable ND: no complete plans ND: currently not in compliance;
Sector 'B' Tentative submitted to date total of 9 segments; 0 segments are
Tract Maps where such complete.
improvements aze to be
located, completion of Linear Park: no complete Lineaz Park: currently not in
Hydrology Studies and plans submitted to date compliance; total of 3 segments, 0
any Traffic Studies as are segments in NE submitted by
determined necessary and deadline.
as approved by the Ciry.
NH/NG/ND (non- NE/NG/ND: currentlv not in
exclusive to specitic comp[iance; total of 38 segments
neighborhood deemed to that are of general benefit to
be of `General Benefit"): Neighborhoods E, G, and D; 2
4/11/2007 (2 segment segments (items 82a, Armstrong
submissions) Storm Drain and 826, Warner
Storm Drain) are complete and
were approved by the City; 36 of
the 38 segments have not been
submitted as complete.
Overall: Ofthe 76 segments in
Phase L the developer has
submitted 21 segments for initial
review. Onlv 2 of the olans were
deemed comnlete. 74 se~ments
need to have comolete plan
submissions.
(3) City and other Within 30 Calendar Days Ofthe 21 segments City is in compliance with the
responsible agencies following submittal to submitted to date, the City DDA.
consider and either City of Plans within City has responded to all
reject, request changes responsibility. Within segment submittals in a
to or approve the response time frames timely manner, within the
Backbone Infrastructure defined by other allotted 30 days of initial
Plans, specifications and responsible agencies. Plan submission.
bid documents.
Phase 1-Developer's Backbone Infrastructure Plans and Construction (Continued
(4) Developer shall Within 30 Calendar Days NE: no complete plans NE: currently not in compliance;
complete any following submittal to submitted to date t~tal oY 13 segments, 0 segments
moditications or Developer of requested
are complete.
corrections to the modifieations or
Backbone lnfrastructure corcections. NG: no complete plans
NG: currently not in compliance;
Plans, specifications and submitted to date total of 16 segments, 0 segments
bid documents as City, are complete.
other responsible
agencies may request, ND: no complete plans ND: currently not in compliance;
and written approvals of submitted to date
total of 9 segments; 0 segments are
lnfrastructure after complete.
consultation with the
Navy on any LIFOC Linear Pazk: no complete
Linear Park current[v not in
Parcels or other areas plans submitted to date comp[iance; total of 3 segments, 0
impacted by FOST or segments are complete.
FOSL Navy institutional
controls, as may be NE/NG/ND (non- NF./NG/ND: currentlV not in
required. exclusive to specific comp[iance; total of 38 segments
neighborhood deemed to
'
"
that impact Neighborhoods E, G,
General BenefiP
):
be of and D; 2 ofthe segments have
4/11/2007 (2 segment
submissions) been approved, these 2 segments
were not submitted as complete
by the deadline; 36 ofthe 38
segments have not been submitted
as complete plans.
(5) Approval of Backbone Within 30 Calendar Days NE: no complete plans NE: current/v nn7 in comp/iance
Infrastructure Plans, following completion of submitted to date. Prior task not completed by
specifications and bid all City and responsible Developer.
documents, and issuance agency corrections or
of necessary pennits. NG: no complete plans NG: currentlv not in comp[iance.
construction permits or submitted to date Prior task not completed by
encroachments permits. Developer.
ND: no complete plans ND: currently not in compliance.
submitted to date Prior task not completed by
Developer.
Lineaz Pazk: no complete Lineaz Park currentlV no! in
plans submitted to date compliance. Prior task not
completed by Developer.
NE/NG/ND (non- NE/NG/ND: current[v not in
exclusive to specific compliance; 2 of the 38 segments
neighborhood dcemed to have been completed and
be of "General Benefit"): approved by the City.
no complete plans
submitted to date.
Phase 1-Developer's Backbone Infrastructure Plans and Construction (Continuedl
. ~. .,,.
e. ~~ ~i• ~ ~ i. ~ ~
ii
~ ~ ~ ~ ~
(6) Developer Advertises
Within normal timc
NENG/ND: Developer -
NE/NG/ND: currentlti~ no/ii:
Request for Bids frames for public bid has not completed prior compliance. Prior tasks not
advertisements (if tasks. completed by Developer.
required for CFD funded
projects).
(7) Developer review Bid Within 30 days of receipt NE/NG/ND: Developer NEMG/ND: current[v not in
results with City and of Bids. has not completed prior compliance. Prior tasks not
upon City concurrence tasks. completed by Developer.
awards the Aid to the
lowest responsible
bidder.
(8) Developer commences Within 30 Calendar Days NE/NGMD: Developer NE/NGMD: currentlv not in
construction of from notice to proceed. has not completed prior comp[iance. Prior tasks not
Backbone Infrastructure tasks. completed by Developer.
improvements.
(9) Developer completes Prior to the conveyance Developer has not Phase 2 properties cannot be
Phase 1 Developer s of Phase 2 or as the completed prior tasks. conveyed to Developer until
Sackbone Infiastructure City's Condition Conditions Precedent have been
Improvements. Precedent to Close of fulfilled.
Fscrow on Phase 2 per
DDA SecCion 3.3.5,
unless otherwise waived
as to individual
improvements per DDA
Section 3.3.5
• Phase 1-Local Infrastructure Plans and Construction
~I' 1
1 ' 1 1' ~ ~ 1 1 ~. I 1 ~ 1
1 1 1 I 1 ~ ~
I I
( I) I)eceloper submiU Ini~ial submiuuls nu later NI~:: l~cvclopcr submits > NI`.: current[V not in compliance.
initial Local than: initial plans on 8-28-07 3 of 9 segments have been
InfrasYructure Plans and NE: August 31, 2007 submitted to date by the Developer
documents. and 1 plan has received City
NG: December 31, 2007 approval.
ND: October 31, 2007
NG: Initial plans have not NG: currentlv not in compliance.
been submitted by None of the 12 segments due have
Developer. been submitted by the Developer.
ND: Initial plans have not ND: cunently no! in compliance.
been submitted by 1 of 8 segments due have been
Developer. submitted by the Developer.
NEMG/NG (general NE/NG/NG (genera] benefit):
benefit): lnitial plans have current/v not in compliance
not been submitted by None of the 5 segments have been
Developer. submitted.
Overview: A total of 34 segments
were to have been by submitted
December 31, 2007. Only 4 of the
34 segments have been submitted
to date; 30 plans remain for
Developer submission (6 plans for
NE, 12 plans for NG, 7 plans f'or
ND, and 5 plans associated with
General Benefit). Only 1of34
segments has received approval
from the City.
Phase 1-Local Infrastructure Plans and Construction (Continued
(2) Developer submits NE: November 30, 2007 NE: Developer submits 3 NE: currently no1 in compliance.
complete Local plans for initial review on 3 of 9 segments have been
[nfrastructure Plans and NG: February 28, 8_2~_07 submitted to date by the
documents. 2007~8~ Developer; 1 plan has received
ND: December 31, 2007 City approval.
Complete submittals are NG: currentlv not in compliance
contingent upon City NG: Initial plans have not None ofthe 12 segments due have
approval of applicable been submitted by been submitted by the Developer.
Sector B" Tentative Developer.
Tract Maps where such ND: currentlv not in comp[iance.
improvements are to be ND: Initial plans have not 1 of 8 segments due have been
located, completion of been submitted by submitted by the Developer.
Hydrology Studies and Developer.
any Traffic Studies as are NE/NG/NG (general benefit):
determined to be NE/NG/NG (general currentlv not in comp/iance
necessary by the City. benefit): [nitial plans have None of the 5 segments have been
not been submitted by submitted.
Developer.
Overview: A total of 34 segments
were to have been by submitted
February 28, 2008. Only 1
complete plan has been submitted
of the 34 segments.
(3) City and other Within 30 Calendar Days Of [he 4 segments City is in compliance with
responsible agencies following submittal to submitted to date, che City Schedule for this task.
consider and either City of Pla~~s within has responded to all
reject, reques[ changes City's responsibiliTy and segment submittals in a
to or approve the Local within review time timely manner, within the
Infrastructure Plans and frames defined by other allotted 30 days of initial
written approvals from responsible agencies. Plan submission.
the Navy after
consultation o~~ LIFOC
Parcels of other areas
impacted by FOSL or
FOST Navy institutional
controls, as may be
required.
(4) Developer shall Within 30 Calendar Days Developer has submitted Curren[!V not in compliance.
complete any following submittal to one complete plan to date. Developer has submitted I
modifications or Developer of complete plan segment out of 34
corrections to the Local modification or segments.
lnf'rastructure Plans as correction requests.
City or other responsible
agencies may Request.
(5) Approval of I,ocal Within 30 Calendar Days Developer cannot Currentlv not in comp[iance.
lnfrastructure a Plans following completion of commence construction on Developer cannot complete until
and issuance of all City and responsible all segments until Local prior tasks have been completed.
construction permits or agency corrections City. Backbone plans are
encroachment permits. completed and permits are
issued.
Phase 1-Local Infrastructure Plans and Construction (Continuedl
-
~~
~ ~
(6) Duccluper commences
ii
~ Within 60 Calendar I~ays
~ ~ ~.
Devcloper cannot
~ ~ ~
~ ii
Currently nnt in cnn:plionce.
construction of Local approval of Local cummence construction on Developer cannot comple[e until
Infrastructure. Backbone Plans. all segments until Local prior tasks have been completed.
Backbone plans are
completed and permits are
issued.
(7) Developer shall have Prior to the conveyance Developer has not made
compleTed all Phase i of Phase 2 or as the substantial progress on completing ',
Local Infrastructure. City's Condition all Phase 1 Local Infrastructure
Precedentto Close of projectsidentified.
F,scrow on Phase 2 Per
DDA Section 3.35,
unless otherwise waived
as to individual
improvements per DDA
Section 3.3.5
• Phase 2 Conceat Plan and Sector "B" Maps
iii) Phase 2- Concept Plan and
Sector `B' Maps (3.3.5(c)~
(1) Developer submits a No later than October NE: August 14, NE: submitted
comolete Concept Plan 6, 2008 2007 NG: currently not in compliance ND:
and Tentative Tract Map NG: no submittal currentlv not in comp[iance
application with related complete
drawings and documents ND: no submittal
determined
complete
~
(2) Upon City determination
Within 60 Calendar
NE: Dec 04, 2007
NE: approo~ed by Ciry Council on 12-
that Developer has Days. (approved by City 04-2007
submitted a complete as required upon
application, approved by the determination of
Navy as it affects LIFOC completion
Parcels and completion of
all environmental NG: Developer has NG: currentlv not in compliance
documentation, Ciry takes not submitted
action on the Concept Plan "complete"
and Sector `B' Tentative submittal of Sector
Tract Map. `B' TTM
ND: Developer has ND: current[v not in compliance
not submitted
"comple[e"
submittal of Sector
~ B' TTM
(3) Developer submits a Within 7~ Calendar NE: Within 75 days NE: currently not in comp[iance
complete Sector 'B' Final Days following City of City Council
Map wi[h related drawings Council approval ofthe approval on
and documents, induding Sector'B' Tentative 12-04-2007 the
Master Association Tract Map. Developer has not
Docwnents [o City. submitted a
complete Sector "B"
Final Map with
related drawings
and documents
including Master
Association
Documenu to Ciry.
The last date for NG: curren!!v not in compliance
submittal was Developer must complete prior tasks in
2/19/2008; the order to submit.
Developer has not
submitted a ND: currentlp not in compliance
complete submittal. Developer must complete prior tasks in
To date. order to submit.
NG: Developer has
not submitted to
date
ND: Developerhas
not submitted to
date
__~
(4) City takes action on the
Within 30 Calendar ~~
NF.: Ciry cannot
NE: currentlv not in compliance.
approval of Sector `B' Final Days following the take action until Developer must complete prior tasks in
Map, and Master later of (a) Developers Developer has made order to submit.
Association Documents. completing all City, corrections to Final
County, and Tract Map and
responsible agency corrected
requested corrections, incomplete
or (b) all conditions of submittals;
approval of the Sector
'B' Tentative Tract NG: Developer has
Map. not submitted to
date NG: currentlv n~~ in compliance
Developer must complete prior tasks in
order to submit.
ND: Developer has
not submitted to
date ND: currentlv not in c~mp[iance
Developer must complete prior tasks in
order to submit.
• Phase 2-Developer's Conditions Precedent to Close of Escrow and
Phase 2-Closin~ Date
~ . ~
September 15, 2009 Developer has not Currenth not in compliance.
Provided escrow shall met any of
not close until preconditions to
Developer comple[ion escrow closing and
of all required CiTy and parties
conditions precedent have not agreed to
to escrow closing in any extension of
DDA, and escrow closing time
requirements of frame pursuant to
iv) Phase 2- Closing Date Section 3.3.3, except Section 3.3.1 of the
that such date may be DDA
extended per DDA
Section 3.3.1
• Phase 2- Develoner's Backbone Infrastructure Plans and Construction
~ ~~
~ i~ ~ ~ i.• ~ ~
;. ~ ~
~ ~ ~ ~i
~ ~
( I) Devcloper submits initial Initial submittals no later currently not !n compliance;
And last submittal of than October l, 2009 and No initial submittals to
complete Backbone last submittals no later date
Infrastructure Plans and than October l, 2010. :
documents (note: submittals
will be in segments).
EXHIBIT C
SCHEDULE OF PLAN SUBMISSIONS BY TLCP
FOR BACKBONE INFRASTRUCTURE AND LOCAL
INFRASTRUCTURE
Tustin Legacy
Project Stetus as of October 19, 2009
Z
='
Descnptlon 25
~~
~? ? ~
a N
c a;
oao ~
a~
~ E
^' n w
o~o ~
o
~
o ~ ~
°
a° a
~~' v
~~o ~
o
-
°
a°
SuDmlttal Status
BACKBONEIMPROYEMENTS-PHASEI
11 Va~encia N. Velencie lao - Kensi ton Park l0 7ustin Rancn D 09i06/0& Iniliel Plen Gom ele
23 Warnet - Mmsiro ~o Tuslin Rancn D 07I20/09 Iniliel Plen Cqm lote
29 Soulh Loo ~ TusUn Rench to Nmsvo i Leros D
42 Berrerice /lumsvo U fBCO D O6/GS/09 Iftiliei Plan Com ele
53 Tustin Rancn / Wer~wr Soul~ New D
t22 L~near Perk'. Mestel DaralO Area O includi welerv.•e . iMS D Plan Nol Pcw latl
725 Otl~e` PuClk-owned O n S e Mesla DevNO Area 0 U P~en Nol Acce leq
127 Petleslrien Brid • Werrxr / L~naer Perk 0 Plan Nol Acce I/
128 Pedexbien Brid a- Armstron / Lnav Pxk D
B Amstro -BerrentabWarner enlHeetli E
6e SUeel Im o menl Plens E 10/09.'% D2126~08 142 D3/11/OB SN Plon Check
0D Le~u,e Im rovemenlPlarw E ~O109'0] 03/t0108 153 Od/Oi/OB 2ndPlenCM1eck
22 we~ner-RadniC~aMmsnon Incor e(adrnfollem23 Raech'48 menlNeetl~ E
22a Sbeef Im o ment Pbns E Ofl/31/07 Q22T/OB tB0 O.Y17/08 2ntl Plen G~eck
72D LaMlsCe Im o mentPlens
V e E Ofl31/07 02i1V09 1B9 OV01/OB InOP'anCheck
21c 7re7 5' nellm
manl Plans E 0fl~31/07 01107/OB iB0 07/INDB 2n0 Pbn CMCk
31 Barrarce - Tus[in Rsrch Rtl. Io Ratllvll E Plen Noi Recaivetl
34 Eesl SMe ReEhili - Benance to Werner mant H9etli E
34e SVae1 Im o dneM Planb E 03114/OB ~4/09108 1sl Plon CMCk
34b Stotm Dtain Im o manl PIBnS E 03/14/OB 04/PB/08 15i Pkn ClieCk
34c LeMace ~m oVemBM Ple t E 03/14I00 04/09/DB 1st %en CMtk
34d TreKC Si rel Im oVemanl Plero - Non Beckbone E 03/iGOB 04/09/OB is1 Poan Check
35 Eesl Sde HedhM - Wmnar to Vabncia L E
3S4 Eest Side Rednp-Vekncie L lo f000' Naih lncar ated mlo Item 35 Reach 7B2 E
45 RedhiO / Warrer E
48 Wainer i Armstro New E
48 Armslro /SOW~ loo NBw E OS/Ofl~09 Iniliel Plen Com eto
50 Warner/Mee E Straol New ~ No(e: TBD TLCP Lend Pien E OBi05/0B Irntiel Glsn Com ete
86 BNtente CMnnal DeteNbn BeBin / S ns Fieltls et ReC~ill / Warner E Plan NOt Acce letl
123 Linoer Perk, Master Develo Mee E inclutli weterwa , Ma E 0&~2&07 OBR5/OB 301 07123~08 4~n Pian Chec~
126 Olher Pu~lk-ownetl O n S Mesta Deveb Aree E E Gten No~ Accc letl
129 BrM e Tustin Rant~ oVa Llnaar PeM Petlestrian Crossi E
12 Ees1 Conrsc~w ~ VelenCie N. Valancie Loo to WaslaM of Bri e G
13 Brid Eeal Connattor ovar Sanla Atu Senle Fe Ctbnl~e! 1o Etl~i G
1 a Mafleu - Nonn Loo ~o west entl o1 Brb c
15 &id - Mo%atl over Pelus Cen on Channal G 03/11/]B 04~'23~G0 1s~ Plen Cneck
1B Valencia N Velercie Loo - Tuctin Raro~ lo Moflatl G
16 NOfth Loo - Moffet~ ~o Jemboree Ram Incor rate0 in~o I~nm 18. Rtath 11a, 122` G
37 Edi ar / Eesl Connaclor U reda C
55 Tus~in Relwh / Nqlfail New G
50 T~Siin RBnchl VelenGie New G 05/08/09 lnniel Plan C m ale
80 MoffeU ! NoRh Loo NeN G
65 Eaz~ Conrnctor / Nort~ Loo New G
88 SeMe Ana Sente Fe CMnnal EmGankmnnl Incaf fete0 iNO Item 13. Re9Cn 204 G
t 15 Ne hbornootl Perk; MestBt DevBlo Nea G Perk Ot G
116 Nel nborhood Ferk: Master ~eve~o Aree G Pe~k 02
121 ~inaer Park, Mes(e~ Develo Pfae C inclutl'i Weierwa , Ms
12d Olher PuMK-ownatl O n S ce Mester Davalo Mee G G
B BriO e- Tuslin Rencn - Vele~cia N. Vnlencla Loo lo Norlh erM ot Bri inciWi ftam Gererat Benefil 12~07107 ts1 Plan GMCk
9 Tustin Perich Routl - No~~h anG ol Bntl a[o Weln.n inca eied into iiam B. Raech ~40 Generel Banefii 06~0&oe Iru~iel Pien Com a~e
9e Slrea~ Im ovement Plans Gen&el 3onefit 12l07/07 01/id'08 is~ Plen Check
Bb Stwm D~ein Im ovamen~ Plans Generel Benefii 11107J07 O7/18/OB 1zl Plen Check
Gc LcnCUa Im oVament Plans Genaral 8ereli~ 12/07/07 01/1~08 1s1 P~en CMck
Btl Tra~ Si Im ovemenl Plans - Non BaCkOpre GanMel Benafit 1207/0] Ot/ifl~OB 1sl Plun Check
BA Tuslin ReMh Roed I Welnul Non~ EeSt Corn6f W itlani Ganeral BenBfil Plen Noi AGte latl
28 Tus~in Renc~ - Velercie N. Velenc~e Loo to Warrer North Incor reted into Itam B, Reach 140 General Benatit 05~Ofl~08 ini~el Plen com e~s
28a Streal Im ovemenl Plans Generat Bere~il 02/11/OB 022&Od ts~ Plan Check
28b Tfsflic S~~ nel Im ovamarn Plens Generel BBnefll 02n 1/OB 022&OB 1sI Plan Cnack
28c lendsca Im ovemintPlans GenxalBanefil 04/16/OB 06/11/OB 1st%anCheck
B2 Tuslin Rench l Rem New Gerpral 8ane/1t OSIOfl~00 inilbl P1an Cam ete
83 Tuslin RancM1 / WeInN U retle Generai Berefil OS/08~09 Innul Plen Com ete
B4 Etli / Rem Na.v General Banefi! 05/C8~09 Iniliel Plen Com ele
BS S~ rel INarconnacl S atem Nola cosla aro incw reled IMO the various VaKc si rel buo Is GenBfel BOnefii
- BS 5 Controla Nols eoilc rs apq Inb Eie w~puc tralfic GeMfel BBf~Bfil
66 New t/ Ed M- ' re /G - 7ustn ATMS Poe Pe nf Ge~e! BerielR
8l Re0~:5 / Etln ei - F' ura 1B - Tusfin ATMS Fee Pe ni Generel8eneln
68 Tuslin RanCh / Walnul - F~ ute 19- TusUn Addi~ion lo Ilams B& B(Irvina ConV:bulqn Ger~ernl Benelll 05i0&OB Iniliel Plan Cqm eta
79 Palera Cen on CAemN from Radroetl Treck to Edi ar Generel Bemfil 10i0ti07 t0/10/07 's! Pten Check
BO Pelers Cen n Chenrol hom Edi Io Cil Limit Incor e~ed inlo I~am 70, Faec~ SOa Genersl Rene(il 10~01!07 10/10/D7 tst Plen Cl~ack
82 Beckbone Storm Drein Overell ment Heetli Generel Benefll
B2e Armslro - Berrenca lo Warnar Stam Orain Im ovemanl Plans General 8enef~~l 70/08/07 0?J07/OB 121 02/2&08 02/28/08 H ovad
B2n VVarrw - Retln111 to ArmsUo S~orm Drein lm ovemenl Platis Generel 8anafil 0&31l07 12/21l07 112 O1IOB/OB Ot/OB/OB A ovad
93 Gretli Abd~cetion lo Blimirete Pum Stel~on GBnerel Befrefit ale
B7 Barranca C~ennd - Rad~tll ~o souih ol Tustin Rerich No( irclutla Irvine CIP Pro'ecll Gererel Berbfil 66/11/07 JY10/08 339 3r0 P~i n Gneck
BB Selanium Treetmern Fecllll PMw 1 BeckDOM Fecilit Generol Beneft
BO W eler Ouelll Trea~menf 5 atem5 Phese 1 BeckDOne Fetilil Gemrel Beneti~
B1 Rasources A MII ation Im ovemanis - Feters Cen on! RailroeC to Eai Genmel Benefit
89 Resource9 A anc M~I albn Im o ments - Mesler Davalo Generel Benefi~
98 BeckCOne Pl~pso 1 Bxkbor~e ~ ConVac~a GMr ~ ReNnOS Ge~rel Beneli~
100 BackOOne Ptuse 1 Backboro ~ CoNracior CMr es . Ra(uMS Generel Benellf
104 BackEOm Plase 1 BackDOne ~ ConlfaClol Ch6f s- RefunUS Genarel Berolll
108 BeckUOrp ph95g i BeckbonB ~ Cqntrecbr Cher as . Re(uMs Ge~rel Barwfil
112 Beckbone Fhsee i Beck~one ~ Contractor Cher es ~ Retuiws Gmwel Benefit
111~ Ulilit BecMGOro All Pheees WI Ulilitiea Generel Berefil
117 Communil Perk, AAas~er DevNO lvea 46 Acres Genarel Benefl
t3.^ C~~ of Twtin LiGr : Tus~in Civic Centn~ Generei Benefit o~re~ meni recelveA
153 Communit EMr Si Genoral Borwlit
u:\LEGAL~TLCP~TLCP Parlorme~a Sletua 10-2&OB.~cis~ . 8:15 AM. 10I3012009
Tustin Legacy
Project Status as of October 19, 2009
ti
z
~
escnptlon
~
~
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~~
~ ~
y=
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~ao m
a
o E
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~~o ~.'
O
~
~
o' m
~ ~
a-° ~,
=~>
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O
-
°`n
a°
ubmitta~ Status
BACKBONEIMPROVEMENTS-PHASE2
fi4 Tw~in Rerch / Werner North Ne'w D Plen Nol Acc eE
118 A uatk Cenlm in Mmlx Devdo Communi( Park D
1 iG TcmiS CEnler in Mealpr Devela r Gommu~ui Peik ~
70 FeEMiI l W elnai Senle Ana E
35B SMIPPOStutl Genare18anefll
36C $ound MII elion - Wernet hom Harvafd lo CuWer Gerorel Ber'~afil
84 RedlNll / Meln - Fi ure 22 - Irviiw General Bemfl
70 Mitl~lson / Van Narman ~ Gi ra 23 - Irvrtq Gererel Berefil
71 JemDOrea / Pllon ~ f~ ure 24. IrviM General Benef'il
72 Harvutl / Nlon - f ura 25 - Irvlne Ganerel Benafl
73 CWVer / Wernar - F' ufe 28 - IrviM Geiwrel Benafit
75 Barrance ~ Jamborec in~asaction im ovamenls Potenaiel TSiA Generel Beneli~
77 Grend/0 -SanlaAne Tu9MShKe=10% Gensrel9ene(4
78 Grend/Ed,n a-SenieMe TuslinShb'Y=56Y. GanaralBorro(d
d7A PetsreCqn /Tredl ovsms~lt GenerelBene(R Intdn fe
BB Selen+um Teaalment FBCWI PMSa 2 Baekbore Faeillt Genarel Banelil
90 Water Oueln T~aetmeM S stams PMae 2 6eckEOne Facilit Generel Benefil
V2 ReaourcesAec MM~e(ion;m o menl9-Pefa~sCen /EtlnailoCR Lm1 Geiro/alBonBfA
IOCALINFRASTRUC7URE
loce~ PMSe 1-D Nonh O
Locel InfreaVUCNre - Pliase t-D Soul~ D
Ptase 1-p Soulh S' ~ Plen NOt AGCe BO
Locel Park. South Lireel - Park Nae D Lol A O&5 D Pien Nol Acce ed
LOCeI Park Focel Park Aree D O Plan Nol Acto ed
Local INnsW cWro - Pheae 2•0 North 0
Locat InhealrucWre Na hOOrMOE D Ptiese 3 D
Phase &D Armsvo Io Werner ment NaeGl O
TreBic Si rol Im o ment Plans D 11/13/07 02/2B/OB 105 03111lOB 2nC Plan C~eck
Lxel Perk Focel Pork PMSe 3 Nea D 0
Lxel IMrosirucWre • PMae 1-E mont Meutli E
S~iaellm ovemantP~env E o&2&07 04/25/OB 24'~ OSi0Y00 4lhvbnCheck
Sbrm Orain im ovement aian+ E ofl~2Bi07 OR~7a08 35a OB~271o8 oB/27ioe ovea
Trailk S' nal Im ovemeM %ans E OB/2&07 04/25/08 241 OS/07'OB 4nt Plen Check
Pheae 1- E S ne E
Locel Park, Linmr Perklvea E 1.ot I 052, 053e. OS3b E Plen n~ot ncca ee
Laal Pw~k, Greanboll Aree E. OS23. 0524e. 0529b E O6/OS/09 Ini:~iel Plan com ele
Lxel Inha9UUClura Na hlbrlwOd E Ph ~ E
Local PF~a 2E RedAill W~ North of Velencie E
Lotel INreslrucWre N' ~borMOO G Phasa 1 O
('Mx 1•G Si ne e G
Lacal, aee G MOA Racrealian Cenlar OS1B G
Lotel Perk. Unaef Pefk Nea G OS7a. 058, OS9 G
Locei Gefk, Foca1 Pxk Nee O OS17, 0516 G
Lxel Park, Conrectl Perk tvoe G 0520, 0521 G
locel E e/ O n 5 e Treil Ptiese 1-G OS2B. OS27. OS28 G
LocellnfreslNCture Ne' ~borhootl G PhBae 2 G
PMSe 2G SI G
Lotel Perk, Focel Perk Arae G Phase 2 0515, OS16 0
locei Pert, Connectl Perk Area G Phase 2 0522 G
Locel Treds Phese 1 Aree G 0525 G
locel InlrsstrucWra - Overall Ge~rerel Benefli
Locai Pne¢e 2~DE Lineaf Pafk OS3A. 3b Generel Bana(I
Loca1 Pneae 2•DE Barranca OCFCD ROW Tieils Mea Geriarol Be~l
Lacal Perk. Focel Perk P.rae D!E OS'2 General Benalit
u:LLEGAL\TLGP\TLCP Pertormer~ce SbWS 1G-2B-D9.dsz 2 B'15 AM. 10~302000
ATTACHMENT 13
DECEMBER 7, 2009
NOTICE OF MATERIAL DEFAULT
[INSERTED AFTER THIS TITLE SHEET]
Office of the City Manager
December 7, 2009
Colm Macken
Tustin Legacy Community Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, CA 92656
Re: Notice of Monetary and Non- Monetary Material Defaults
Pursuant to a Disposition and Development Agreement
The City of Tustin (the "City") has advised Tustin Legacy Community Partners, LLC
("TLCP" or "Developer") of failures by TLCP to perform certain of its obligations under
the Disposition and Development Agreement between TLCP and the City dated May 3,
2006, as amended by First Amendment dated March 29, 2007 and a Second Amendment
dated June 5, 2007 (collectively, the "DDA"), which failures constitute Potential Defaults
under the DDA.
The City advised TLCP of these Potential Defaults, with copies to KeyBank National
Association, as Permitted Mortgagee ("KeyBank"), pursuant to letters dated July 13,
2009 and July 27, 2009. Consequently, the Potential Defaults described in the July 13,
2009 and July 27, 2009 letters have become Material Defaults in accordance with the
DDA as indicated in the City's letter of September 10, 2009. Additionally, KeyBank had
the right to cure those Material Defautts identified in the September l0, 2009 letter and
has not done so.
The City subsequently identified certain additional Potential Defaults in its letter of
October 30, 2009, a copy of which was also provided to KeyBank. TLCP has failed to
cure the monetary Potential Defaults described in the October 30, 2009 letter (inciuding,
without limitation, the failure to pay property taxes described in such letter, also see
Attachment 1, Status of Property T~es as of November 23, 2009) within the fifteen (15)
day time period set forth in Section 14.2.1 of the DDA. TLCP also failed to cure the
non-monetary Poteniia] Defaults described in the October 30, 2009 letter (including,
without limitation, those related to the Schedule of Performance (DDA Attachment 17
Obligations)). Indeed, TLCP did not respond to the October 30, 2009 letter, and has not
commenced such cure within the thirty (30) calendar day time period or diligently
pursued such cure. Thus, any additional time for cure of the non-monetary Potential
Default items beyond the initial thirty (30) day time period is not applicable.
Additionally, KeyBank, which has the right to cure both the monetary and non-monetary
Potential Defaults under the DDA and the letter of October 30, 2009, has not done so.
Thus, such monetary and non-monetary Potential Defaults have become Material
Defaults under Section 14.2.1.
300 Centennial Way, Tustin, CA 92780 • P: (714) 573-3010 • F: (714) 838-1602 • www.tustinca.org
Colm Macken
Tustin Legacy Community Partners, LLC
December 7, 2009
Page 2
Given the City's declaration of Material Defaults herein, the City hereby informs
TLCP and KeyBank of its intention to terminate the DDA and/or exercise its right
of reverter with respect to all of the Developer Parcels as de5ned in the DDA unless
KeyBank cures the monetary and non-monetary Material Defaults described in the
preceding paragraphs in accordance with the DDA, including, without limitation,
Section 16.9.3 thereof.
Upon occurrence of a Material Default, the City may also elect any other remedies set
forth in Section 14.3.2 of the DDA. The enumeration of those Material Default events
under the DDA as contained in this letter is not exclusive. Neither the failure nor delay
by the City to exercise any of its rights or remedies nor any provision of this letter will
amend, modify, supplement, extend, delay, renew, terminate, waive, release or otherwise
limit or prejudice the City's rights and remedies or TLCP's obligations under the DDA.
Sincerely,
1/Z~rf~/'.~i't ;_.~/.! / ~'~'~~~~
William A. Huston
City Manager
cc: City Council
Doug Holland, City Attorney
Clay Gantz
Christine Shingleton, Assistant City Manager
KeyBank National Association
1200 Abernathy Road, Suite 150
Atlanta,Georgia 30328
Attention: Meredith H. Houseworth, Vice President
Attachment 1
Attachment 1
To letter dated December 7, 2009
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ATTACHMENT 14
TERMINATION LETTER
FROM
TLCP DATED MARCH 24, 2010
[INSERTED AFTER THIS TITLE SHEET]
L~GACY PA~ K
Tustin Legacy Community Partners, LLC
ADMINISTRATION
MAR 2 6 2010
4~ECEIVED
VIA EMAIL AND U.S. MAIL
Christine Shingleton, Assistant City Manager
City of Tustin
300 Centennial Way
Tustin, California 9278U
Re: Tustin Legacy Community Partners, LLC ("TLCP')
Dear Christine:
Thank you for meeting with me last Friday. As we discussed, due to the severity
of the problems facing the real estate and capital markets, the Tustin Legacy project, as
currently structured, is not economically feasible now or in the foreseeable future. Given
this, TLCP would be willing to consider a"consensual `parting of the ways"' and
termination of the DDA, as suggested in your letter of March 11, 2010, under certain
circumstances, including:
1. There must be a mutual release of claims, including those against each
party's agents, employees, members, partners, affiliates and the like,
provided that such releases would not affect any rights or obligations of any
party arising under or in connection with Section 14.4.4 of the DDA;
2. This will confirm that we agreed that KeyBank is a Permitted Mortgagee and
that the lien of its Deed of Trust is a Permitted Mortgage which will survive
any City exercise of its right of reversion or TLCP's quitclaim of its right,
title and interest in the property;
3. All bonds with respect to Legacy Park must be released in full including the
following:
a. Demolition, IRWD underground facilities, TR 17026, Grading Permit ~
Subdivision Grading Bond, Safeco Insurance Company of America,
No. 6545547, $325,680;
b. Grading, Tustin Legacy, Tract 17026, Grading Bond, Safeco
Insurance Company of America, No. 6409181, $3,435,500;
CS
Tustin Legacy Community Partners, LLC I 130 Vantis, Suite 200 I Afiso Viejo, California 92656 ~ t: 949.389.7000 f: 949.389.7188
L~EGACY PA~ K
Tustin Legacy Community Partners, LLC
c. Tustin Legacy, Tract 17144, N-E Grading, Grading Bond, Safeco ~
Insurance Company of America, No. 6409186, $1,020,400;
_ ll WarnPr AvPI]Ue at0~-~~~~t11~ b~6.,~,~~.~ T«~..• 1 71 Ai;-Q~in,._..t i/ _.._...
Improvement Bond, Safeguard Insurance, No. 5034254, $353,000;
e. Neighborhood E, Phase I Local Storm Drain, Maintenance Bond, V
Safeguard Insurance, No. 5034272, $50,000; and
f. Neighborhood E, Phase I Local Storm Drain, Subdivision, Safeguard ~
Insurance, Na. 5034271, $500,000.
4. TLCP would have no continuing obligations or liabilities, under the DDA or
otherwise, with respect to Legacy Park, except that TLCP would agree to
coordinate the ongoing THP clean-up under XL Insurance Claim No.
08108623 02, Policy No. PEC0010756 (the "Claim") to the extent the clean-
up is covered by the Claim and paid for by XL Insurance, provided that such
coordination would be at no cost, expense or liability to TLCP and that
TLCP's obligation to coordinate would terminate on the earlier of completion
of the clean-up under the Claim or June 30, 2010;
5. TLCP would transfer the Legacy Park land to the City via quitclaim deed on
an As-Is, Where-Is Basis;
6. The City would return $425,243.97 of the $500,000 Performance Deposit to
TLCP, retaining $74,756.03 on account of certain City costs described in
letters from the City to TLCP dated May 11, 2009, July 27, 2009, and
November 11, 2009; and
7. To the extent that the City does not already have them and they are in
TLCP's possession, TLCP would deliver to the City certain plans and
drawings for the local and backbone infrastructure related to the Tustin
Legacy project.
To say that TLCP is disappointed that it will not be the master developer for the
Tustin Legacy project is an understatement, but we agree with you that a consensual
parting of the ways under the circumstances best serves the interests of the City, TLCP
and the community. As we discussed, we will prepare the documentation to reflect the
contents of this letter and will forward a draft of it to you. We wish you luck in the future
with the project.
2
Tustin Legacy Community Partners, LLC
L~EGACY PAf~ K
Tustin Legacy Community Partners, LLC
This letter is non-binding, and TLCP hereby reserves all of its rights and remedies
and does not waive any of the forgoing.
Colm Macken
Executive Committee Member
Tustin Legacy Community Partners, LLC
cc: Jerry Amante, Mayor
John Nielsen, Mayor Pro Tem
Doug Davert, Councilmember
Jim Palmer, Councilmember
Deborah Gavello, Councilmember
William Huston, City Manager
3
Tustin Legacy
ATTACHMENT 15
TLCP LETTER OF APRIL 13, 2010
DDA TERMINATION
[INSERTED AFTER THIS TITLE SHEET]
~aMiN~srRAr~
L~GACY PA~K n ~r
Tustin Legacy Community Partners, LLC Ar~ ~ 4 ZQ~O
~~~~r~E~~
April 13, 2010
VZA EMAIL AND U.S. MAIL
Christine Shingleton, Assistant City Manager
City of Tustin
300 Centennial Way
Tustin, California 92780
Re: Tustin Legacy Community Partners, LLC ("TLCP')
Dear Christine:
TI.CP has received your letter of April 8, 2010 (the "April Letter") outlining the
City's demands in connection with a consensual parting of the ways. TLCP's letter to
you of March 24, 2010 (the "March Letter") sets forth TLCP's bottom line, and TLCP
is not open to most of the additional terms in the April Letter. The idea is a clean break
for both sides-~ontinuing ties, obligations and liabilities aze generally not acceptable.
That being said, TLCP's response to each numbered section in the April Letter is as
follows:
l. Section 1.1.
a. The schedule in the April Letter (both in this Section and in the last
paragraphs) is too aggressive. While TLCP also wants to conclude this in
a timely manner, it is in each party's interest to be thoughtful and to part
ways carefully and correctly. TLCP suggests that you update the council
on Apri120`h but continue the actual hearing until TLCP and the City have
come to terms,
b. Though TLCP will discuss this matter with the Permitted Mortgagee,
TLCP cannot control whether or not the Permitted Mortgagee consents to
the termination of the DDA. This cannot be a condition to any agreement
between the City and TLCP
2. Section 1.2. Acceptable.
3. Section 2.
Tustin Legacy Community Partners, LLC I 130 Vantis, Suite 200 I Aliso Viejo, California 92656 I t: 949.389.7000 f: 949.389.7188
L~EGACY PAf~ K
Tustin Legacy Community Partners, LLC
a. The quitclaim deed will be a standard form with no representations or
warranties by TLCP, and the transfer shall be on an AS-IS, WHERE-IS
basis.
b. All documents, plans, funds and other materials related to the matters
discussed in this letter should be placed in an escrow and delivered to the
appropriate party once certain specified conditions have been satisfied
("Escrow").
c. There will be no TLCP obligations or liabilities that survive delivery of
the quitclaim deed.
d. Any transfer of tangible personal property pursuant to a bill of sale will be
on an AS-IS, WHERE-IS basis without representation or warranty by
TLCP. TLCP will retain the filtration system currently located on the
property.
4. Section 3.1.
a. TLCP will not make any representations or warranties regarding Project
debt or otherwise.
b. Neither the DDA nor the Assignment and Subordination Agreement
expressly require TLCP to provide copies of amendments to the loan
documents to the City, and, at any rate, they are not relevant to our current
discussions. TLCP will tell you, however, that as of the date of this letter,
it has not increased the maximum principal amount of the loan and the
principal amount outstanding is approximately $50,449,439.
c. TLCP will not indemnify the City for any matters referenced in this
Section or otherwise.
5. Section 3.2. TLCP will expressly reserve its rights under Section 14.4.4 of the
DDA as a condition to any quitclaim of the Tustin Legacy property to the City.
6. Section 4. To the extent in its possession and control and not privileged,
confidential or proprietaiy, TLCP will deliver copies of the plans, specifications
and engineering studies regarding to the horizontal improvements that it
contracted and paid for to the City without representation, warranty, guaranty or
liability of any nature. Such delivery shall be accomplished through Escrow.
7. Section 5.1. No indemnification obligations of TLCP, including those related to
environmental matters, will survive the quitclaim. TLCP would have no
continuing liability for any Hazardous Materials or otherwise with respect to
environmental concerns.
Tustin Legacy Community Partners, LLC' 130 Vantis, Suite 200 I Aliso ~ejo, California 92656 I t: 949.389.7000 f: 949.389.7188
L~GACY PA~-? K
Tustin Legacy Community Partners, LLC
8. Section 52. During the pendency of these discussions, TLCP will continue to
coordinate certain environmental remediatian activities pursuant to XL Insurance
Claim No. 08108623 02, Policy No. PEC0010756 (the "Claim") to the extent
such remediation is covered by the Claim and paid for by XL Insurance.
9. Section 5.3. To the extent in its possession and control and not privileged,
confidential or proprietary, TLCP will deliver copies of environmental reports
prepared by its consultants that it contracted and paid for to the City without
representation, warranty, guaranty or liability of any kind. Such delivery sha11 be
accomplished through Escrow.
10. Section 5.4. In order for TLCP to assign any portion of its Environmental Policy
to the Ciiy, in addition to the full release contemplated by this letter, the City
would have to indemnify TLCP against any and all future claims, demands, costs,
liabilities, etc. related to environmental matters. Also, depending on the timing of
any quitclaim of the property to the City, TLCP may be reimbursed after it has
quitclaimed the property for certain expenditures in furtherance of the Claim
made by TLCP before the quitclaim.
11. Section 6.1.
a. The balance of the Performance Deposit, in an amount acceptable to
TLCP, will be paid in full to TLCP through Escrow as a condition to the
delivery of the quitclaim deed to the City. The City would have no further
rights to the Performance Deposit. Note that TLCP is still reviewing your
latest correspondence regarding the City's offset as to the Performance
Deposit and will respond separately on that matter if there are any issues.
b. TLCP will have no continuing obligations or liabilities that survive
delivery of the quitclaim deed. So TLCP will not agree that the City may
pursue remedies against it. The mutual releases will be full releases,
except for TLCP's and the City's respective rights under Section 14.4.4 of
the DDA.
12. Section 6.2. All bonds must be released in full.
13. Section 7. Again, the mutual releases will be full releases, except for the parties'
respective rights under Section 14.4.4 of the DDA. Any obligations of TLCP that
would have otherwise survived termination of the DDA will be released.
TLCP still agrees with you that a consensual parting of the ways under the
circumstances best serves the interests of the City, TLCP and the community, and TLCP
wants to work with the City toward that end. But I need to reiterate that this must be a
clean break. The continuing ties and liabilities are not acceptable and are not what we
have been discussing over the last few weeks (except for both parties retaining their
respective rights under Section 14.4.4 of the DDA), and I refer you again to the March
3
Tustin Legacy Community Partners, LLC I 130 Vantis, Suite 240 I Aliso Viejo, California 92656 ~ t: 949.389.7000 f: 949.389.7188
L~GACY PAf~ K
Tustin Legacy Community Partners, LLC
Letter, which clearly sets forth TLCP's position. As we agreed, TLCP will forward to
you shortly a draft of a Settlement Agreement that reflects the terms set forth in the
March Letter.
As we have discussed, I am travelling this week. Perhaps we should schedule a
conference call to keep this moving while I am gone. Please give me some times when
you and Doug Holland are available to talk to Julie Guizan and me, and we will
coordinate the call.
This letter is non-binding, and TLCP hereby reserves all of its rights and remedies
and does not waive any of the forgoing.
Sincerely,
1.~~~~..~.-
Colm Macken
Executive Committee Member
Tustin Legacy Community Partners, LLC
cc: Jerry Amante, Mayor
John Nielsen, Mayor Pro Tem
Doug Davert, Councilmember
Jim Palmer, Councilmember
~6orah Gavello, Councilmember
William Huston, City Manager
4
Tustin Legacy Community Partners, LLC I 130 Vantis, Suite 200 I Aliso ~ejo, California 92656 I t: 949.389J000 f: 949.389J188
ATTACHMENT 16
TERMINATION AND SETTLEMENT AGREEMENT, JOINT
ESCROW INSTRUCTIONS AND GENERAL RELEASE
[INSERTED AFTER THIS TITLE SHEET]
TERMINATION AND SETTLEMENT AGREEMENT. JOINT ESCROW
INSTRUCTIONS AND GENERAL RELEASE
THIS TERMINATION AND SETTLEMENT AGREEMENT, JOINT ESCROW
INSTRUCTIONS AND GENERAL RELEASE (this "Agreement"), dated as of _,
2010 (the "Effective Date"), is made by and among the CITY OF TUSTIN (the "Citv"), the
TUSTIN PUBLIC FINANCING AUTHORITY (the "Authoritv", and together with the City,
collectively referred to as "Tustin") and TUSTIN LEGACY COMMUNITY PARTNERS, LLC,
a Delaware limited liability company ("Developer"). The City, the Authority and Developer are
each referred to herein as a"Partv" and collectively as the "Parties."
RECITALS
A. Tustin and Developer are parties to that certain Tustin Legacy Disposition and
Development Agreement (Master Development) dated as of May 3, 2006, as amended by
that certain First Amendment to Tustin Legacy Disposition and Development Agreement
(Master Developer) dated as of March 29, 2007, and that certain Second Amendment to
Tustin Legacy Disposition and Development Agreement (Master Developer) dated as of
June 5, 2007 (collectively, the "DDA"), pursuant to which, among other things, the City
agreed to sell and/or lease or sublease, the Property (as defined in the DDA) to Developer
and Developer agreed to perform its obligations under the DDA.
B. Tustin and Developer are parties to that certain Memorandum of Tustin Legacy
Disposition and Development Agreement, dated as of May 3, 2006, which was recorded
in the official records of Orange County, California ("Official Records") on May 8, 2006
as Instrument No. 200600308658.
C. The City and Developer are parties to that certain Declaration of Special Restrictions,
dated as of June 19, 2007 ("Special Restrictions No. 1"), which was recorded in the
Official Records on June 19, 2007 as Instrument No. 2007000390805 and that certain
Declaration of Special Restrictions, dated as of January 31, 2008 ("Special Restrictions
No. 2 and, together with Special Restrictions No. 1, sometimes collectively referred to
herein as the "Special Restrictions"), which was recorded in the Official Records on
January 31, 2008 as Instrument No. 2008000047364.
D. The City and Developer are parties to that certain Tustin Legacy Development
Agreement dated as of June 5, 2007 (the "Development Agreement"), which was
recorded in the Official Records on July 23, 2007 as Instrument No. 2007000460073, and
pursuant to which under Section 658652 of the California Government Code the City
provided Developer with certain zoning and development assurances at Tustin Legacy in
return for Developer's commitment to the scope of development and performance
obligations of Developer under the DDA and MCAS Tustin Specific Plan. City has
informed Developer that City intends to notify Developer through a Notice of Non-
Compliance that Developer has not complied with the terms of the Development
Agreement.
1
E. Developer executed that certain Construction Deed of Trust and Fixture Filing (With
Assignment of Rents and Security Agreement) dated as of December 14, 2007 (the "Deed
of Trust"), in favor of First American Title Insurance Company, a California corporation,
as "Trustee" for the benefit of KeyBank National Association, a national banking
association, as administrative agent ("Administrative Agent") for all of the "Lenders" (as
defined in the Deed of Trust) then or thereafter existing under that certain $70,000,000
Secured Credit Facility Agreement dated as of December 14, 2007 (the "Loan
Agreement"), between Developer, Administrative Agent and the Lenders, under which
the Lenders made a loan of $70,000,000 to Developer (the "Loan"), and the Deed of
Trust was recorded in the Official Recards on December 27, 2007 as Instrument No.
2007000753417. The Deed of Trust, Loan Agreement, and the other documents and/or
agreements evidencing and/or securing the Loan are collectively referred to as the "Loan
Documents".
F. Developer and Administrative Agent are parties to that certain Collateral Assignment and
Subordination Agreement dated as of December 14, 2007, attached to which was an
Acknowledgement, Consent and Agreement by City of Tustin, executed by the City on
December 21, 2007 (collectively, the "Assignment, Subordination and City Consent"),
which were recorded together in the Official Records on December 27, 2007 as
Instrument No. 2007000753418.
G. Pursuant to the Assignment, Subordination and City Consent, among other things:
(1) Developer collaterally assigned to Administrative Agent, and granted it a lien and
security interest, as security for the payment and performance of all of Developer's
obligations with respect to the Loan, all of Developer's right, title and interest under the
"City Agreements" (as defined in the Assignment, Subordination and City Consent), to
the extent relating to the Conveyed Parcels, (2) Administrative Agent subordinated the
lien of the Deed of Trust and other security documents to the DDA, the Special
Restrictions and the Development Agreement, and (3) the City acknowledged, consented
and agreed (a) to the Loan and Deed of Trust, (b) that Administrative Agent and the
Lenders were each a"Permitted Mortgagee" (as defined in the DDA), with rights of a
"Permitted Mortgagee" under the DDA and of a"Mortgagee" under the Development
Agreement, and (c) that the Deed of Trust was a"Permitted Mortgage" under the DDA
and Special Restrictions. Developer, Administrative Agent and the I.enders have
subsequently amended the Deed of Trust and other Loan Documents on at least six
occasions, and Tustin's consent to such amendments andlor confirmation that, in light of
such amendments, the Deed of Trust remained a"Permitted Mortgage" and the
Administrative Agent and the Lenders remained "Permitted Mortgagees" was neither
sought nor obtained.
K The City executed a Notice of Delinquency and Claim of Lien (the "Claim of Lien")
against the Phase I Conveyance Property dated Apri15, 2010 pursuant to Sections 8.10.5,
1.12.2, 14.2.3, and 14.5 of the DDA, which was recorded in the Official Records on April
6, 2010 as Instrument No. 2010000160007.
2
I. Developer has delivered to the City certain payment and performance bonds, as more
particularly set forth on Exhibit A attached hereto.
J. Developer is currently in Material Default under the DDA and Developer has determined
that it is unable to perform its obligations pursuant to the DDA. As a result, Tustin is
entitled to foreclose the Claim of Lien and exercise its Right of Reversion to cause the
Phase I Conveyance Property to revest in Tustin.
K The Parties desire to avoid the risks, expenses and uncertainty of continuing a legal
process otherwise necessary for the City to exercise its remedies (including foreclosure of
the Claim of Lien and exercise of the Right of Reversion) under the DDA, and therefore
in lieu of foreclosure of the Claim of Lien and exercise of the Right of Reversion the
Parties are entering into this Agreement to provide for (1) the execution by Developer,
and the recordation in the Official Records, of a Reversion Quitclaim Deed in the form of
that attached hereto as Exhibit B(the "Reversion Quitclaim Deed") whereby Developer
quitclaims all rights and interest in and to the Tustin Legacy Project, the Property, and
the Phase 1 Conveyance Property to the City in lieu of foreclosure of the Claim of Lien
and exercise of the Right of Reversion; (2) termination of the DDA and Development
Agreement; and (3) approval of the settlement and release agreements and the other terms
and provisions of this Agreement, all as set forth below.
AGREEMENT
For and in consideration of the foregoing recitals and of the promises and terms and
conditions contained herein, the Parties, intending to be legally bound, agree as follows:
1. Definitions. All capitalized terms defined herein shall have the meanings given to
such terms in this Agreement. Without limitation of the foregoing, any capitalized terms used
herein but not otherwise defined in this Agreement shall have the meanings ascribed to such term
in the DDA.
2. Quitclaim of Developer's Interest in the Propertv; Bill of Sale and Delivery of
Materials.
2.1 Conveyance Instruments. Developer shall deliver the following to First
American Title Insurance Company ("Escrow Holder"), in escrow, to be released, delivered
and/or recorded in the Official Records upon the Close of Escrow (as defined below) upon the
terms and subject to the conditions of this Agreement:
(a) Reversion Quitclaim Deed. In lieu of fareclosure of the Claim of
Lien and exercise of the Right of Reversion, the Reversion Quitclaim Deed, whereby Developer
shall revert to City and quitclaim all of Developer's right, title and interest in and to the Property,
the Developer Parcels, the Phase I Conveyance Property and any rights, interests of Developer
that benefit and are an appurtenant to the Property under the DDA and Development Agreement
which the City hereby agrees to accept from Developer. As more specifically provided in
Section 2.2 Developer's conveyance of the Property pursuant to the Reversion Quitclaim Deed
(and the City's acceptance thereo~ shall be on an AS-IS, WHERE-IS basis without
representation, warranty, guaranty, or liability of any nature by or to Developer, except that,
3
upon the Effective Date, the Property shall be in the condition set forth in Developer's April 13,
2010 letter to the City, which is attached hereto as Exhibit C. The release of the Reversion
Quitclaim Deed from Escrow Holder to the City or to be recorded in the Official Records shall
be conclusive evidence that the forgoing has been satisfied.
(b) Bill of Sale. A Bill of Sale in the form attached hereto as Exhibit
D(the `Bill of Sale" and together with the Reversion Quitclaim Deed, the "Convevance
Instruments"), whereby Developer shall, also in lieu of foreclosure of the Claim of Lien and
exercise of the Right of Reversion, transfer to the City all of Developer's rights, title, and interest
in and to any tangible personal property located on the Property, the Developer Parcels and the
Phase I Conveyance Property (the personal property to be transferred pursuant to the Bill of Sale
is referred to herein as the "Transferred Personal PropertX"); provided, however, Developer shall
retain ownership of the two "Pure Effect" ground water treatment systems located on the
Property, each system consisting of a train of holding tanks, sand filters, weir tanks, and granular
activated carbon filters, and which systems are expressly excluded from the Transferred Personal
Property and shall not be transferred pursuant to the Bill of Sale. As more specifically provided
in Section 2.2, such trans~er shall be on an AS-IS, WHERE-IS basis without representation,
warranty, guaranty or liability of any nature by or to Developer.
2.2 As-Is, Where-Is Transfer; Release.
(a) As-Is, Where-Is Transfer. Tustin acknowledges and agrees that,
except as expressly set forth herein, Developer makes no representations or warranties
whatsoever, whether express or implied or arising by operation of law, with respect to the
Property or the Transferred Personal Property (collectively the "Assets"). TUSTIN AGREES
THAT THE ASSETS WILL BE TRANSFERRED AND CONVEYED TO (AND ACCEPTED
BY) THE CITY AT THE CLOSE OF ESCROW IN THEIR THEN-EXISTING CONDITION,
AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT ANY WRTTTEN OR VERBAL
REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR
IMPLIED OR ARISING BY OPERATION OF LAW, other than representations and warranties
of Developer expressly set forth in this Agreement. All representations and warranties, other
than those expressly contained in this Agreement, are hereby disclaimed by Developer and
waived by the City and the Authority, including but not limited to any warranty of
merchantability or fitness for a particular purpose.
2.3 Developer Production of Due Dili~ence and Other Materials. Developer
shall deliver the following to Escrow Holder to be released from Escrow to the City at the Close
of Escrow upon the terms and subject to the conditions of this Agreement (collectively, the
"Additional Developer Deliveries"):
(a) Due Diligence Information. All written Due Diligence
Information with respect to the Property, the Developer Parcels, the Phase I Conveyance
Property, and/or the Project; provided, however, that the Developer shall not be obligated to
return Due Diligence Information prepared by the Developer or its counsel which are privileged
or confidential under attorney-client privilege. The Developer's obligation to return Due
Diligence Information to the City is without representation or warranty of any kind by the
Developer.
4
(b) Plans, Specifications, Etc. The most current version of all
architectural, engineering and construction plans and other engineering studies, reports, and
products, surveys, plans, specifications and bid documents, tests, studies, investigations and
entitlement documents ( the "Transferable Products," as defined in Section 14.8.2 of the DDA)
to the extent that (i) they are in Developer's possession or control and (ii) they are not privileged,
confidential, or proprietary; provided that Developer shall provide such materials without
representation, warranty, guaranty, or liability of any nature. Tustin upon acquiring rights to the
Transferable Products shall be permitted to use, grant, license, or otherwise dispose of such
Transferable Products to any person or entity for development of the Project or any other
purpose.
(c) Materials Related to Environmental Condition of the Property and
Environmental Claims. To the extent that (i) they are in Developer's possession or control and
(ii) they are not privileged, confidential, or proprietary, all environmental information collected
by Developer, or its agents, consultants, employees and the like including , but not limited to,
remediation contracts, documents, reports, samplings, and other information on the
environmental condition of the Property, Developer Parcels, the Phase I Conveyance Property,
and/or the Tustin Legacy Project and any other documents and information related to the
environmental contamination claims on the Project including bills, invoices to the underwriter,
existing remediation contracts, documents and reports, and samplings and written
communications with State and Federal environmental regulators on the environmental claim
sites pursuant to XL/Indian Harbor Insurance Co. Policy No. PEC0010756 (the `Bnvironmental
Insurance Policy"), Claim Nos. 08108623 02, 10101432 and 08114309 (the "Environmental
Claims").
2.4 Re ug latory Permits. Effective as of the Close of Escrow Developer
hereby in writing assigns to the City all of Developer's rights pursuant to the following
regulatory permits which pertain to the Property: (i) the California Department of Fish and
Game ("CDFG") 1600 Permit, effective as of July 25, 2007; (ii) the Army Corps of Engineers
(the "Corps") Section 404 Permit, effective as of July 11, 2007; and (iii) Regional Water Quality
Control Board ("RWQCB" and together with CDFG and the Corps, the "Agencies") Permit,
effective as of July 4, 2007 (collectively, the "Assigned Permits"). The Parties acknowledge and
agree that the Assigned Permits are hereby assigned without any representation, warranty,
guaranty or liability of any nature by or to Developer including without limitation any
representation or warranty by Developer as to (x) the validity or effectiveness of the Assigned
Permits, (y) whether the respective Agencies will accept or recognize the respective Assigned
Permits, or (z) whether the Agencies will require the City to accept Developer's obligations
under the Assigned Permits as a condition precedent to such Agency's recognition of such
Assigned Permit. City makes no representation, warranty, guaranty whether it is prepared to
accept the obligations under such Assigned Permits.
3. Environmental Indemnitv and Insurance.
3.1 Environmental Indemnification. Developer acknowledges and agrees that
the indemnification provisions in Article 10 of the DDA, including without limitation the
environmental indemnification provisions of Section 102, would normally survive termination
of the DDA. However, in consideration of the terms and conditions of this Agreement, if Close
5
of Escrow occurs, then Tustin agrees that the Developer's obligation to indemnify, protect,
defend, and hold harmless Tustin from and against any and all Claims resulting or arising from
or in any way connected with the existence, Release, threatened Release, presence, storage,
treatment, transportation and/or disposal of any Hazardous Materials at any time on, in, under,
from, about or adjacent to any portion or portions of the Property, Developer Parcels, the Phase I
Conveyance Property, and/or the Tustin Legacy Project, or any improvements thereon, shall be
limited to Releases, threatened releases, presence, storage, treatment, transportation and/or
disposal that were caused, created or exacerbated by the Developer whether any such condition
is known or unknown now or subsequent to termination of the DDA and Close of Escrow.
3.2 Continued Covera~e. Developer shall continue to be named as an
additional named insured with a dedicated sublimit as provided for by Endorsement #033 on the
Environmental Insurance Policy through its current term and the extended reporting period
established under endorsement #O15 (it being agreed that Developer may purchase its own
additional extended reporting periods at its own discretion), subject to the coverage extension
sublimit established by endorsement #016. City agrees that it shall take no action and that it
shall not cause any action to be taken that would result in the modification or termination of the
City's existing insurance coverage without Developer's prior written consent, which shall not be
unreasonably be withheld by Developer.
3.3 Notice to Insurer. Upon the Close of Escrow, Developer shall in writing
notify the City and underwriter for the Environmental Insurance Policy (Indian Harbor) that any
and all amounts for environmental remediation paid pursuant to the Environmental Claims
previously filed by the Developer (Claims 08108623, 10101432, and 08114309) after the Close
of Escrow shall be paid to the City directly, except for (1) reimbursements to Developer for
certain expenditures in furtherance of the Claims made by Developer before the Close of
Escrow, and (2) payments to Developer for insured losses of Developer related to the Claims, if
any.
4. Termination of Developer Obligations and Return of Developer Deposit.
4.1 Termination of Developer Obli at~. The Parties hereby agree that,
upon the Effective Date, and without the need for further action on the part of the parties, the
DDA, the Memorandum of DDA, Special Restrictions, the Development Agreement, the license
granted pursuant to Section 5.2 of the DDA and any other agreement entered into in furtherance
of any of the foregoing are hereby terminated and that Developer has and shall have no
continuing obligation or liability under any of the foregoing or the Bonds, and no continuing
obligation or liability otherwise in favor of Tustin, except for those obligations of the Parties
under this Agreement and any obligations of the Developer under the DDA which by the
provisions of this Agreement survive termination; provided, however, that the foregoing
termination shall not be deemed to terminate or to effect any of the rights or obligations of
Permitted Mortgagees under the DDA, including, without limitation, Article 16 thereof.
4.2 Return of Developer Devosit. The City shall return to Developer
$373,747 of the $500,000 Performance Deposit previously made by Developer pursuant to the
DDA (such amount, the "Returned Deposit"). The Parties agree that the remaining $126,253
shall be applied by the City as described in those certain letters from the City to Developer dated
6
May 11, 2009, July 27, 2009, November 11, 2009 and March 29, 2010. The City shall deliver
the Returned Deposit to Escrow Holder to be paid to Developer upon the Close of Escrow.
5. Bonds.
5.1 Release. As of the Effective Date, City hereby releases TLCP and (a)
Safeco Insurance Company of America of and from any and all liability under Bond Nos.
6409181, 6409186 and 6545547 and (b) Bond Safeguard Insurance Company from any and all
liability under Bond Nos. 5034254, 5034271 and 5034272. For the avoidance of doubt, all such
bonds described in the preceding sentence as well as the bonds described on Exhibit A to this
Agreement are referred to collectively as the "Bonds."
5.2 Original Bonds. City shall deliver each of the original Bonds to Escrow
Holder to be delivered to Developer upon the Close of Escrow.
6. Title Insurance. The City may, in its discretion, and at its sole cost and expense,
request and obtain an ALTA extended coverage owner's policy of title insurance, including those
endorsements it deems necessary; provided however that neither such policy nor such
endorsements shall be a condition to or extend the time for the Close of Escrow. Developer
agrees that it will cooperate, in a commercially reasonable manner, with the City in the City's
efforts to obtain such title insurance. If title work discloses title exceptions that appear to be in
error to Tustin, the Developer shall agree to cooperatively work with Tustin to have the title
exceptions removed, released or insured against.
7. Permitted Mort~a~ee. In the event that Administrative Agent delivers the
Certificate and Agreement attached hereto as Exhibit F and effective only upon such delivery
(the delivery of such Certificate and Agreement being a condition precedent to Tustin's
obligations under this Agreement, which condition precedent is not for the benefit of Developer
and which condition precedent may be waived by Tustin in its sole and absolute discretion), then
in reliance upon the representations and warranties contain in the Certificate and Agreement,
Tustin agrees that Administrative Agent and Lenders are each a Permitted Mortgagee under the
DDA and a Mortgagee under the Development Agreement and that the Deed of Trust is a
Permitted Mortgage under the DDA and the Special Restrictions.
8. Escrow.
8.1 Escrow Holder. Escrow Holder's duties hereunder shall be limited to the
safe keeping of the documents, materials, and funds delivered to it by the Parties and for the
disposition of the same in accordance with the terms of this Agreement. Each of the Parties may
execute and deliver to Escrow Holder any additional or supplemental escrow instructions as may
be reasonably necessary or convenient to implement the terms of this Agreement; provided,
however, that any such additional or supplemental instructions shall be approved in writing by
all parties first before execution and said instructions shall not alter the substantive obligations of
the Parties hereunder and in the event of any conflict between such additional or supplemental
instructions and the provisions of this Agreement, this Agreement shall control. The Parties
acknowledge that Escrow Holder is acting solely as a stakeholder at their request and for their
convenience, that the Escrow Holder shall not be deemed to be the agent of either of the parties,
7
and the Escrow Holder shall not be liable to either of the parties for any act or omission on its
part, other than for its gross negligence or willful misconduct.
8.2 Close of Escrow and Conditions Precedent. The term "Close of Escrow"
means the date upon which all of the conditions precedent set forth in Section 8.3 and 8.4 (the
"Closing Conditions") have been satisfied or waived by the party with the authority to waive
such conditions, at which time the Escrow Holder will promptly undertake the actions set forth in
Section 8.8, provided that such Close of Escrow shall be within thirty days of the Effective Date
of this Agreement.
8.3 City Conditions Precedent to Closing. The obligation of Tustin to accept
reconveyance by Developer to Tustin of Developer's interest in and to the Property, the
Developer Parcels, and the Phase I Conveyance Property in lieu of foreclosure of the Claim of
Lien and exercise of the Right of Reversion pursuant to this Agreement and to Close Escrow is
subject to and conditioned upon the satisfaction or the City's written waiver as to each of the
following Developer conditions to the Close of Escrow on or before Closing:
(a) Developer in writing warrants and represents the following to
Tustin, each of which shall be true and correct as of the date of execution of this Agreement and
be true and correct as of the Closing Date:
(i) Authority. Developer is a validly existing limited liability
company in good standing under the laws of the State of Delaware and in good standing in the
State of California, and Developer has duly authorized, executed and delivered this Agreement.
(ii) Debtor Relief Actions. No attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships, voluntary or involuntary
proceedings in bankruptcy or actions pursuant to any other debtor relief laws are pending or
threatened against Developer or the Property.
(iii) No Leases. There are no leases or other occupancy
agreements or arrangements relating to the Property, and there are no rents, profits, or security
deposits being generated by, or applicable to, the Property.
(iv) Consideration. This Agreement is entered into without
force or duress, of the free will of Developer, and in consideration of the receipt of reasonably
equivalent value, and the transfer of all rights, title and interest in the Property to Tustin is fair,
just and equitable. The decision of Developer to enter into this Agreement is a fully informed
decision, and Developer is aware of all legal and other ramifications of such decision and that
this Agreement provides for the absolute and irrevocable sale and transfer of all of Developer's
legal and equitable rights, title and interest in the Property.
(v) Advice of Le~al Counsel and Accountants. Developer has
consulted extensively with, and has been represented by, legal counsel and accountants of their
own choice in connection with the meaning, interpretation, negotiation, drafting and effect of this
Agreement, and Developer is fully satisfied with its legal counsel and accountants and the
advice, which it has received from each of them. Further, Developer understands, and has been
fully advised by such legal counsel and accountants, that the consequences of Developer's sale
8
of the Property under this Agreement may result in income tax liability, federal and state, and
that together with the other legal effects of this Agreement, Developer has taken all of these
factors into consideration in its decision to enter into and perform its obligations under this
Agreement.
(vi) Loan Documents. Developer acknowledges and agrees that
its Loan Documents are in full force and effect, that Tustin has been provided with all documents
and agreements and any amendments evidencing and/or securing that loan and that Developer
does not have any offsets, claims, or other defenses to the enforcement of its obligations under
the loan. The Developer further agrees that it has no offsets, claims or other defenses to the
enforcement of its obligations under the DDA,
(vii) No Claimants. To the best of Developer's knowledge, there
are no mechanics' liens, stop notices, or mechanics' liens claimants relating to the Property.
(viii) Deliveries. There is nothing false, misleading, incorrect,
incomplete, or omitted in or from any of the Property documents, information or any other
materials which have been, andlor will be delivered to Tustin prior to Closing and such
documents, information and/or other materials are the complete and correct copies or originals of
such documents, information and/or other materials; provided, however, that with respect to any
such documents, information and/or other materials prepared by third parties other than
Developer, and/ar its partners, members, officers, employees and agents, Developer makes no
representations or warranties of any kind regarding the accuracy of the information contained in
such documents, information or other materials.
(b) There shall have been be no material breach by Developer of any
of the representations, warranties, covenants and conditions set forth in this Agreement.
(c) Developer shall have executed and delivered to Tustin, five (S)
calendar days priar to Close of Escrow, the certificate in the form of Exhibit F attached to this
Agreement.
(d) Developer shall have delivered to Tustin, the Administrative
Agent's consent to this Agreement, and the termination of the DDA, the Memorandum of DDA,
Development Agreement, and Special Restrictions and any other agreement entered into in
furtherance of the foregoing and/or pursuant to this Agreement.
(e) The Developer's delivery to the Escrow Holder, and execution
where required of the following documents, which documents Developer shall deliver to the
escrow no later than two (2) business days prior the Closing.
(i) A Reversion Quitclaim Deed in the form attached as
Exhibit C, executed by Developer, acknowledged and in recordable form.
by Developer.
(ii) The Bill of Sale in the farm attached as Exhibit D, executed
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(iii) A Memorandum of Termination of the DDA and
Memorandum of DDA, Development Agreement and Special Restrictions, in a form attached as
Exhibit E, executed by Developer, acknowledged and in recordable form.
(iv) A federal FIRPTA Affidavit executed by Developer.
(v) Proof of Developer's authority and authorization to enter
into this Agreement and consummate the transactions contemplated hereby, and such proof of
the power and authority of the individuals executing and/or delivering any instruments,
documents or certificates on behalf of Developer to act for and/ar bind the Developer as may be
reasonably required by the Title Company and/or the City.
(vi) A Certificate and Agreement of KeyBank National
Association in the form attached hereto as Exhibit F.
the City:
(vii) Delivery of the following information to the satisfaction of
(aa) Debt information required under Section 8.3 (a)(vi),
8.3(c), and 9.1 to satisfaction of the City.
Products required under Section 2.3.
the Project.
(bb) Developer Due Diligence and Other Transferable
(cc) A list from Developer of all contractors working on
(dd) A declaration and list of any listing, brokerage,
leases, license agreements or rights of occupancy on the Project disclosed by or on behalf of the
Developer.
Project.
(ee) Copies of all construction contracts for work on the
(f~ Copy of written notice to Indian Harbor from
Developer indicating that any future reimbursements on Environmental Claims under the
Environmental Insurance Policy to be made to Tustin rather than Developer.
(viii) Such other documents or instruments as Escrow Holder and
City may reasonably request to consummate the transaction contemplated in this Agreement.
( fl Escrow Holder shall have delivered at least two (2) business days
prior to Closing a statement of costs to each of the City and Developer.
(g) No later than one (1) Business Day prior to Closing, Developer
shall have delivered to Escrow an amount equal to any Developer Closing costs.
10
(h) The Developer and City shall have prepared and approved any
supplemental escrow instructions as may be needed.
(i) Develop and City shall have delivered to Escrow Holder a fully
executed copy of this Agreement with original signatures and initials, where appropriate, of the
Developer and City.
The foregoing conditions are solely for the benefit of City and may be waived by City in its sole
and absolute discretion.
8.4 Developer Conditions Precedent to Closing. The obligation of Developer
to convey its interests in the Tustin Legacy Project, including but not limited to the Property, the
Developer Parcels, and the Phase I Conveyance Property pursuant to this Agreement and to the
Close of Escrow is subject to and conditioned upon the satisfaction or Developer's written
waiver as to each o the following conditions to the Close of Escrow on or before closing.
(a) There shall have been be no material breach by City of any of the
representations, warranties, covenants and conditions set forth in this Agreement.
(b) City Document Deliveries. The City's delivery to the Escrow
Holder, and execution where required, of the following documents, which documents City shall
deliver to the escrow no later than two (2) business days prior the Closing.
(i) A Reversion Quitclaim Deed in the form attached as
Exhibit C, executed by City, acknowledged and in recordable form.
by City.
(ii) The Bill of Sale in the form attached as Exhibit D, executed
(iii) A Memorandum of Termination of the DDA, Development
Agreement and Special Restrictions in a form attached as Exhibit E, executed by the City and
Authority as applicable, acknowledged and in recordable form.
(iv) The City shall provide the original bonds performance
bonds identified in Section 5,1 with a written statement of release of Developer of bond
obligations.
(v) The City shall have delivered to Escrow Holder within 2
(two) business days prior to Closing the Returned Deposit.
(vi) Proof of City's authority and authorization to enter into this
Agreement and consummate the transactions contemplated hereby, and such proof of the power
and authority of the individuals executing and/or delivering any instruments, documents or
certificates on behalf of City to act for and/or bind the City as may be reasonably required by the
Title Company andlor the City.
11
(c) Such other documents or instruments as Escrow Holder and
Developer may reasonably request to consummate the transaction contemplated in this
Agreement.
(d) Escrow Holder shall have delivered at least two (2) business days
prior to Closing a statement of costs to each of the City and Developer.
(e) No later than one (1) Business Day prior to Closing, the City shall
have delivered to Escrow an amount equal to City's Closing costs.
( fl The Developer and City shall have prepared and approved any
supplemental escrow instructions as may be needed.
(g) Develop and City shall have delivered to Escrow Holder a fully
executed copy of this Agreement with original signatures and initials, where appropriate, of the
Developer and City.
8.5 Closing Certificate. Prior to Close of Escrow, Tustin and Developer shall
each submit to Escrow Holder a certificate stating that all Closing Conditions for its benefit have
been satisfied or waived.
8.6 Costs, Fees and Expenses. Tustin shall pay the cost of (i) any
documentary transfer tax due in connection with the recording of the Reversion Quitclaim Deed,
except to the extent that Tustin as a public agency is exempt from such applicable taxes,
assessments, fees and charges; (ii) the cost of recording the Reversion Quitclaim Deed, except to
the extent that Tustin as a public agency is exempt from such applicable taxes, assessments and
charges; and (iii) all premiums, endorsement fees or other expenses associated with any policy of
title insurance. The Parties shall each pay one-half of all fees of Escrow Holder.
8.7 Prorations.
(a) Taxes and Assessments. City shall not require the Developer to be
responsible for any taxes, assessments, fees and charges imposed by any Governmental
Authority with respect to the applicable Phase I Conveyance Property currently due as a
condition to Closing and the City shall be responsible for all taxes, assessments, fees and
charges imposed by any Governmental Authority with respect to the applicable Phase I
Conveyance Property from and after the Closing but subject to any invoicing providing by a
Governmental Authority and not as a condition to Closing, except to the extent that the City as a
public agency is exempt from such applicable taxes, assessments, fees and charges. The
provisions of this Section 8.7 (a) shall survive the termination of this Agreement and each Close
of Escrow and shall not merge into any Reversion Quitclaim Deed or the Ground Lease.
(b) Method of Proration. All prorations shall be made in accordance
with customary practice in Orange County, except as otherwise expressly provided in this
Agreement. The Developer and the City agree to cause a schedule of prorations to be prepared
prior to the applicable Closing. Such prorations, if and to the extent known and agreed upon as
of the applicable Closing Date, shall be paid by the Developer to the City (if the prorations result
in a net credit to the City) or by the City to the Developer (if the prorations result in a net credit
12
to the Developer) by increasing or reducing the cash to be paid by the Developer at such Close of
Escrow. Any such prorations not determined or not agreed upon as of the applicable Close of
Escrow shall be paid by the Developer to the City, or by the City to the Developer, as the case
may be, in cash as soon as practicable following such Close of Escrow. A copy of the schedule
of prorations as agreed upon by the Developer and the City shall be delivered to Escrow Holder
at least three (3) Business Days prior to the Closing Date. All prorations provided for in this
Section shall be on an "actual day" basis and a three hundred sixty-five (365) day year. If one or
more of the conveyed Developer Parcels is part of a larger tax parcel, which as of the applicable
Close of Escrow remains unsegregated on the County Tax Assessor's Roll for the coming fiscal
year, Escrow Holder shall charge the Developer and credit the City for taxes and assessments
allocated to the Phase 1 Property on an acreage basis compared to the acreage for the entire
larger unsegregated parcel, which acreage figures for allocation purposes shall be fairly and
equitably determined and supplied to Escrow Holder by the City and reasonably approved by the
Developer. The Parties shall cooperate in good faith to cause the Phase 1 Conveyance Property
to be separately assessed and segregated in the Tustin's name on the current tax roll at the
earliest possible time.
8.8 Action by Escrow Holder Upon Close of Escrow. At the applicable Close
of Escrow and subject to the satisfaction or waiver by the benefited party of the conditions to
closing described above, Escrow Holder shall promptly undertake all of the following in the
manner indicated below:
(a) Prorate Items. Debit or credit all matters addressed in this
Agreement, as adjusted by the foregoing debits, credits and prorations deposited with Escrow
Holder.
(b) Record Documents. Cause to be Recorded any documents which
the Developer and the City may mutually direct, or which may be required by the terms of this
Agreement to be recarded, obtain conformed copies thereof and distribute same to the Developer
and the City.
(c) Issue Policy. Direct the Title Company to issue City's Title Policy
to the City, at City's sole cost and expense. Concurrently with the issuance of the Developer's
Title Policy, the Title Company shall provide such endorsements as may be requested by the
City.
(d) Returned Deposit. Deliver the Returned Deposit to Developer.
(e) OriQinal Bonds. Deliver the Original Bonds to Developer.
( fl Notice of Payment of Claims. Deliver to City written notice of
payment of Environmental claims by Indian Harbor to City rather than Developer.
(g) Deliver Counterparts. Deliver to the Developer and the City
original counterparts (and conformed copies, if applicable) of the Reversion Quitclaim Deed, the
Bill of Sale, The Memorandum of Termination of the DDA, the Development Agreement, and
Special Restrictions, each California Form 593-W and any other documents (or copies thereo fl
13
deposited into Escrow by the Developer or the City pursuant hereto, and deliver to the Developer
and the City a certified copy of their respective Escrow closing statements.
(h) Other Actions. Take such other actions as the Developer and the
City direct pursuant to mutually executed supplemental Escrow instructions.
8.9 Notice. All communications from the Escrow Holder shall be directed to
the addresses and in the manner established in Section 20 for notices, demands and
communications between the Parties.
9. Developer Warranties and Representations, Mutual Releases and Waiver of
Rights of Recovery under Section 14.4.4 of DDA.
9.1 Debt. Developer hereby represents and warrants that it has incurred no
debt with respect to the Project (including, without limitation, debt to third parties, such as
lenders or mechanics or labor lien claimants) and debt to affiliates other than the Loan by
KeyBank National Association, as administrative agent ("Agent") for various lenders (each a
"Lender"), in the amount $70,000,000 (the "Loan"). Attached hereto as Schedule 1 is a full and
complete list of all documents and agreements evidencing and/or securing the Loan (collectively,
the "Loan Documents"). Neither the DDA, nor the Property, nor any portion thereof, is cross-
collateralized with any other contract or real or personal property, nor does the DDA or the
Property (or any portion thereo fl serve as additional security for any other loan by Agent or any
of the Lenders, nor any other debt of Developer. Each Lender is an Institutional Lender (as
defined in the DDA). As of the date of this Agreement, the aggregate unpaid indebtedness
evidenced and/or secured by the Loan Documents is $ , and interest is accruing
at the rate of _% per annum. Developer shall provide copies of all of the Loan Documents as
a condition of this transaction. Developer shall indemnify, defend and hold Tustin harmless
against any loss occasioned by a breach of this representation and against any loss occasioned by
the assertion of any mechanics or labor liens, or other miscellaneous liens against the Phase I
Conveyance Property.
9.2 Waiver of Ri~hts under Section 14.4.4 of the DDA. Developer hereby
waives any and all offsets, defenses, claims, causes of action, proceedings, and other rights
and/or remedies, arising from or with respect to Section 14.4.4 of the DDA that it currently has
or may have in the future. Without limitation of the foregoing, Tustin shall have no obligation
under subsection (d) thereof for reimbursement of Developer for any costs incurred for the
development ar in conjunction with construction of the Improvements required by TLCP under
the DDA.
9.3 Mutual Release and Waiver. Except as expressly set forth in this
Agreement, each Party hereby agrees to and does forever waive, release, acquit and forever
discharge the other Party and such Party's parent, subsidiary and affiliate corporations, and their
officers, directors, shareholders, agents, employees, their successors, heirs, and assigns, and each
of them, of and from any and all claims, demands, obligations, liabilities, indebtedness, breaches
of contract, disclosures, breaches of confidentiality (if any), breaches of duty or any relationship,
acts, omissions, misfeasance, cause or causes of action, debts, sums of money, accounts,
compensations, contracts, controversies, promises, damages, costs, losses and expenses of every
14
kind, nature, description of character, and irrespective of how, why or by reason of what facts,
whether heretofore, now existing or hereafter arising, or which could, might, or may be claimed
to exist, or whatever kind or name, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, each as though fully set forth herein at length, which in any way arise
out of, are connected with or relate to the DDA, Development Agreement, Special Restrictions,
the Bonds, and/or Project, except for any obligations pursuant to this Agreement (all of the
Claims released under this paragraph collectively referred to as the "Released Claims"). Each
Party each hereby covenants and agrees not to sue or assert, or to cause or assist any other person
or entity to sue or assert, any claim or cause of action which is released by the Released Claims
or which is based upon the Released Claims. The releases provided under this Section 9.3 shall
be effective on the Effective Date.
In this connection, each Party agrees that it realizes and acknowledges that factual
matters now unknown to it may have given or may hereafter give rise to causes of action, claims,
demands, debts, controversies, damages, costs, losses and expenses which are presently
unknown, unanticipated and unsuspected, and it further agrees that this release has been
negotiated and agreed upon in light of that realization and that it nevertheless hereby intends to
fully waive, release, discharge and acquit the parties set forth herein-above from any such
unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and
expenses which are in any way related to the matters referred to hereinabove. In furtherance of
this intention, each Party hereby expressly waives any and all rights conferred upon it by the
provisions of California Civil Code Section 1542, and expressly consent that this release shall be
given full force and effect according to each and all of its express terms and provisions. Section
1542 provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDTI'OR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT
TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR."
City Initials: Authority Initials: Developer Initials:
Each Party hereby understands and acknowledges the significance and consequences of such
release and specific waiver of Section 1542 and has been advised by independent legal counsel
concerning the same.
Initials:
This Agreement is intended as a settlement of certain claims regarding the Parties'
liabilities under the DDA, the Development Agreement, and Special Restrictions and all
15
applicable federal, state, local laws, rules and regulations. Except to the extent the DDA
expressly provides for survival of any obligations of the Parties thereto or other obligations set
forth in the Agreement, Tustin and Developer would each waive, release, hold harmless and
forever discharges the other party, its officers, employees, agents, and representatives from any
and all current or future claims, costs, or damages, whether known or unknown, which either
party ever had, or now has, under the DDA, Development Agreement, or Special Restrictions or
arising out of or in connection with the Project. In addition, each party shall bear all of its own
costs, expenses and attorney fees in connection with the Project and the Agreement.
9.4 Acknowled~ement Concerning Releases. Notwithstanding anything in
Sections 9.1, 9.2, or 9.3 above, each Party acknowledges and agrees that (a) the Claims released
under this Agreement do not include any claim seeking to enforce or obtain a remedy for a
breach of obligations created by this Agreement, and (b) nothing in this Agreement is intended to
or does negate, release, undermine, amend, affect, modify, or impair any rights of Administrative
Agent, the Lenders, and/or their respective successors and assigns as "Permitted Mortgagees"
under the DDA and the Special Restrictions, or as "Mortgagees" under the Development
Agreement.
10. Additional Agreements. The Parties further agree:
10.1 The settlement and resolution embodied in this Agreement is in good faith
and is equitable;
10.2 This Agreement and the releases set forth herein have been carefully read
in their entirety by each of the Parties, each of which has had the benefit and advice of counsel of
its choosing;
10.3 In entering into this Agreement and the settlement and releases set forth
herein, each of the Parties is acting freely and voluntarily and without influence, compulsion or
duress of any kind from any source, including, but not limited to, any other party or parties, their
attorneys, representatives or anyone acting or purporting to act on behalf of any Party;
10.4 Each Party to this Agreement represents and warrants that it has not
heretofore assigned, transferred, encumbered or purported to assign, transfer or encumber, in
whole or in part, any claim, right or other matter transferred or released under this Agreement;
10.5 Each Party to this Agreement represents and warrants that it has obtained
and has the requisite legal authority to enter into this Agreement and that the person(s) signing
this Agreement on the party's behalf has the requisite legal authority to sign on behalf of said
party and to bind said party to the terms and obligations imposed by and under this Agreement;
and
10.6 This Agreement is the product of negotiation and preparation by each of
the Parties hereto and their respective attorneys. This Agreement shall not be construed for or
against any Party.
ll. Termination. In the event that (a) Developer fails to fulfill its obligations
hereunder or fails to timely perform its obligations under this Agreement (or any escrow
16
agreement entered into in connection with this Agreement), (b) any of the conditions precedent
to Escrow Close are not met on or before the Closing Date, (c) a bankruptcy case is commenced
by or against the Developer, ar a receiver appointed as to some or all of its property, ar(d) for
any reason other than the default by Tustin hereunder, the Escrow fails to Close on or before the
Closing Date, Tustin shall have the right to terminate its obligations under this Agreement and
thereafter, Tustin may pursue all rights and remedies available hereunder, under the DDA,
Development Agreement and Special Restrictions, at law and/or in equity.
12. Survival. All agreements, covenants, obligations, indemnities, representations
and warranties by the respective Parties contained in or made in writing pursuant to this
Agreement shall be deemed to be material and shall survive the execution of this Agreement, the
execution, delivery and/or recording of the Reversion Quitclaim Deed andlor the Closing
Documents, and the Closing. All statements contained in any certificate or other instrument
delivered at the Close of Escrow by Developer to Tustin in connection with the transactions
contemplated by this Agreement shall constitute representations and warranties hereunder. All
Closing Documents, and the release contained in Section 9.3 hereof (the "Release"), shall
survive the execution of this Agreement, the execution, delivery and/or recarding of the
Reversion Quitclaim Deed and/or the Closing Documents, and the Closing.
13. Preference.
13.1 Notwithstanding anything to the contrary in this Agreement, if and to the
extent that any transfer of assets agreed upon herein between Developer and Tustin is later
determined to have been a voidable preferential transfer, a fraudulent transfer or a fraudulent
conveyance, under either state or Federal law, and as a result thereof either:
(a) Additional consideration for the transfer and any additional
amounts of fees, expenses, interest or other affirmative damages (the "Additional Payments")
become due and owing to the estate of Developer, or
(b) The transfer must be undone and all or a portion of the assets must
be returned to the estate for any reason whatsoever, then notwithstanding anything to the
contrary in Section 9.3 hereof:
(i) Any and all rights and/or obligations owed to Tustin, any
and all liens, security interests or other benefits, and any and all remedies available to Tustin
under the terms of the DDA, Development Agreement, or Special Restrictions or in law or
equity against Developer, any other person, and/or the Property shall be automatically revived
and reinstated, including the City's rights to foreclose the Claim of Lien and exercise its "Right
of Reversion" under the DDA;
(ii) The provisions of Section 9.3 to the extent that the same
constitutes a release by Tustin of the Developer shall be void and of no further force or effect;
andlor
(iii) Tustin shall be entitled to file a proof of claim against the
estate to have the City exercise its "Right of Reversion" under the DDA for the Phase I
Conveyance Property and to also recover either: (x) the amount of the Additional Payments or
17
(y) if the transfer has been undone and the assets returned in whole or in part to the estate, the
value of the consideration paid to or received by Developer for the initial asset transfer, plus in
each case any deferred interest from the date of the disgorgement to the date of distribution to
Tustin in any bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent
transfer proceeding, and any costs and expenses due and owing. The parties acknowledge and
agree that the provisions in this Section shall be independent of the indemnification obligations
contained in Section 14 of this Agreement.
(c) The provisions of this Section shall survive execution, delivery
andlor recordation of the Quitclaim Deed and/or the Closing Documents, and the Close of
Escrow.
14. Indemnification.
Each Party hereby indemnifies the other Party from any and all claims, suits, demands,
losses, liabilities, expenses, damages, penalties and costs (including, without limitation,
attorneys' fees and disbursements) arising from:
14.1 Any breach by such party of any of its representations, warranties,
covenants, agreements and/or obligations under this Agreement and/or the Closing Documents;
and
14.2 Any losses, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in connection with or arising out of clause (a) above.
The provisions of this Section 14 shall survive execution, delivery and/or recordation of
the Quitclaim Deed and/or the Closing Documents, and the Closing.
15. Enforcement and Attorney's Fees. In the event any Party hereto fails to perform
any of its obligations under this Agreement or in the event of a dispute arising concerning the
meaning or interpretation of any provision of this Agreement, or if any action or proceeding is
commenced to enforce the terms of this Agreement, the prevailing party shall be entitled to
recover all of its reasonable fees, costs and expenses incurred in prosecuting such action or
proceeding, including without limitation, reasonable attorneys' fees and costs. Further, the
Parties agree that any legal action shall only be brought in a court of competent jurisdiction in
the State of California, County of Orange.
16. Entire AQreement. This Agreement represents the sole, full, complete, only and
entire agreement among the Parties and is the complete expression thereof respecting the subject
matter of this Agreement. No other statements, promises or representations have been made or
are relied upon between the City and the Authority, on the one hand, and Developer, on the
other; and no consideration has been or is offered, promised, held out or expected between the
City or the Authority, on the one hand, and Developer, on the other, other than as may be
expressly provided herein. This Agreement may not be amended or modified except in writing
and signed by each of the Parties.
17. Waiver. No waiver of any breach or any covenant or provision contained herein
will be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant
18
or provision contained herein. No extension of time for performance of any obligation or act
will be deemed an extension of the time for performance of any other obligation or act except
those of the waiving Party, which will be extended by a period of time equal to the period of the
delay. Any such waiver or extension must be in writing and signed by the waiving/extending
Party (except for any extension to the waiving/extending Party for delay).
18. Governin~. All questions relating to the validity, construction,
interpretation, enforceability andlor performance of any of the terms or provisions of this
Agreement or of any of the parties' rights or obligations under this Agreement shall be governed
by and construed in accordance with the substantive internal laws of the State of California
without reference to choice of law or conflicts of law provisions.
19. Counter~arts. This Agreement may be executed in any number of counterparts
confirmed by signatures transmitted by facsimile or email, each of which shall be deemed a
duplicate original.
20. No Third Partv Beneficiaries. There shall be no third party beneficiaries,
expressed or implied to this Agreement.
21. Successors and Assi~. Subject to the terms hereof, this Agreement shall be
binding upon and shall inure to the benefit of the Parties hereto and their respective successors,
or assigns.
22. Fees, Costs and Expenses. Each of the parties hereto agrees to pay the fees, costs
and expenses incurred by it in connection with the negotiation, preparation, execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the fees and expenses of counsel to such party.
23. Descriptive Headin~. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of the terms contained herein.
24. Notices. All notices, statements, instructions or other documents required to be
provided or given hereunder shall be in writing and shall be given in accordance with the
following:
Developer:
Tustin Legacy Community Partners, LLC
130 Vantis, Suite 200
Aliso Viejo, California 92656
Attention: Colm Macken
Facsimile: (949) 389-7188
19
City and Authority:
City of Tustin
300 Centennial Way
Tustin, California 92780
Attention: Christine Shingleton
Facsimile:
[Signatures on Following Page]
20
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the date first written above.
Developer:
TUSTIN LEGACY COMMUNITY PARTNERS, LLC,
a Delaware limited liability company
By: Shea Properties II, LLC,
a Delaware limited liability company,
its managing member
By: _
Name:
Its:
By:
Name:
Its:
By: Shea Homes Limited Partnership, a California limited
partnership, a Member
By:
Name:
Its:
By:
Name:
Its:
[Additional Signatures on Following Page]
S-1
City:
CITY OF TUSTIN, CALIFORNIA
By:
Name:
Its:
Authority:
TUSTIN PUBLIC FINANCING AUTHORITY
By: _
Name:
Its:
AT"TEST:
By:
Pamela Stoker, City Clerk
APPROVED AS TO FORM
By:
Doug Holland, City Attorney
[Consent on Following Page]
S-2
EXHIBIT A
Rnncls
1. Grading, Tustin Legacy, Tract 17026, Grading Bond, Safeco Insurance Company of
America, No. 6409181, $3,435,500;
2. Tustin Legacy, Tract 17144, N-E Grading, Grading Bond, Safeco Insurance Company
of America, No. 6409186, $1,020,400;
3. Warner Avenue Storm Drain, Legacy Park, Tract 17144, General Improvement Bond,
Safeguard Insurance, No. 5034254, $353,000;
4. Neighborhood E, Phase I Local Storm Drain, Maintenance Bond, Safeguard
Insurance, No. 5034272, $50,000; and
5. Neighborhood E, Phase I Local Storm Drain, Subdivision, Safeguard Insurance, No.
5034271, $550,000.
A-1
EXHIBIT B
Form of Reversion Quitclaim Deed
CITY OF TUSTIN OFFICIAL BUSINESS REQUEST DOCUMENT TO BE RECORDED
AND TO BE EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE 6103 AND
27383.
Recording requested by and
when recorded mail to:
Assistant City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
(space above for recorder's use only)
REVERSION QUITCLAIM DEED
Recitals
A. The City of Tustin (the "City") and the Tustin Public Financing Authority (the "Authority
and together with the City, collectively referred to as "Tustin") and Tustin Legacy
Community Partners, LLC ("Developer") are parties to that certain Tustin Legacy
Disposition and Development Agreement (Master Development) dated as of May 3, 2006, as
amended by that certain First Amendment to Tustin Legacy Disposition and Development
Agreement (Master Developer) dated as of March 29, 2007, and that certain Second
Amendment to Tustin Legacy Disposition and Development Agreement (Master Developer)
dated as of June 5, 2007 (collectively, the "DDA" to which reference is made for the
meaning of each capitalized term used, but not otherwise defined, herein), pursuant to which,
among other things, the City agreed to sell and/or lease or sublease, the Property to
Developer and Developer agreed to perform its obligations under the DDA.
B. The City executed a Notice of Delinquency and Claim of Lien (the "Claim of Lien") against
the Phase I Conveyance Property dated Apri15, 2010 pursuant to Sections 8.10.5, 112.2,
14.2.3, and 14.5 of the DDA, which was recorded in the Official Records on Apri16, 2010 as
Instrument No. 2010000160007.
C. Developer is currently in Material Default under the DDA and Developer has determined that
it unable to perform its obligations pursuant to the DDA. Certain of these Material Defaults
are Material Defaults for which the Right of Reversion applies pursuant to Section 14.4.1,
and as a result, pursuant to the DDA the City has the right, pursuant to Section 14.4 of the
DDA, (a) to terminate the DDA and the Ground Lease as to the Developer Parcels or any
portion thereof and/or Improvements thereon and (b) thereafter to re-enter the affected
Developer Parcel(s) and/or Improvements and revest title thereto in the City, such title to be
B-1
subject to any Permitted Mortgage (but not to any other Mortgage). As a result, Tustin is
entitled to foreclose the Claim of Lien and exercise its Right of Reversion to cause the Phase
I Conveyance Property to revest in Tustin.
D. Tustin and the Developer desire to avoid the risks, expenses and uncertainty of continuing a
legal process otherwise necessary for the City to exercise its remedies (including foreclosure
of the Claim of Lien and exercise of the Right of Reversion) under the DDA, and therefore in
lieu of foreclosure of the Claim of Lien and exercise of the Right of Reversion are, among
other things, entering into this Reversion Quitclaim Deed whereby Developer quitclaims all
rights and interest in and to the Tustin Legacy Project, the Property, and the Phase 1
Conveyance Property to the City in lieu of foreclosure of the Claim of Lien and exercise of
the Right of Reversion.
Reversion Quitclaim
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, receipt of which is
hereby acknowledged, TUSTIN LEGACY COMMiJNITY PARTNERS, LLC, a Delaware
limited liability company Delaware limited liability company ("Grantor"), hereby REMISES,
RELEASES AND FOREVER QUITCLAIMS to the CITY OF TUSTIN, CALIFORNIA, a
municipal corporation of the State of California ("Grantee"), all of Grantor's right, title and
interest in and to that certain real property comprising approximately 335,769 acres, more
or less, as more particularly described on Exhibit A attached hereto and incorporated
herein by reference; Together with all improvements located thereon, the following
described real property in the City of Tustin, County of Orange, State of California (the
"Property"):
See Exhibit A attached hereto and incorporated herein by this reference.
The property which is the subject of this Reversion Quitclaim Deed is subject to all covenants,
conditions, restrictions, easements, rights-of-way, reservations, rights, agreements and
encumbrances of record, which are covenants running with the land and binding upon Grantee
and to which the conveyance by Grantee to Grantor pursuant to that certain City Quitclaim Deed
and Restrictions, including Environmental Restriction Pursuant to Civil Code Section 1471 was
subject recorded June 19, 2007 as instrument no. 2007000390804 in the Official Records of
Orange County, California was subject.
B-2
IN WITNESS WHEREOF, the Grantor has caused this Quitclaim Deed to be executed on the
day first above written.
Dated: _, 2010 GRANTOR:
TUSTIN LEGACY COMMUNITY PARTNERS, LLC,
a Delaware limited liability company
By: Shea Properties II, LLC,
a Delaware limited liability company,
its managing member
By: _
Name:
Its:
By: _
Name:
Its:
By: Shea Homes Limited Partnership, a California limited
partnership, a Member
By:
Name:
Its:
By:
Name:
Its:
B-3
ACKNOWLEDGEMENT OF GRANTEE'S COVENANTS
To indicate Acknowledgement and Acceptance of this Quitclaim Deed and the covenants which run
with the land, the Grantee has executed this document on the date written below.
Dated: _, 2010 GRANTEE:
CITY OF TUSTIN, CALIFORNIA
By: _
Name:
Its:
B-4
EXHIBIT A TO QUITCLAIM DEED
Legal Description of the Property
Lots 2, 5, 6, 36, 15, and 23 of Tract Map 17026, located in the City of Tustin, County of Orange,
State of California, recorded on September 27, 2006, as Instrument No. 2006000644310, Book
884, Page 1-14, inclusive of Miscellaneous maps, Official Records of Orange County,
California.
B-2-
EXHIBIT C
April 13, 2010 Letter
[to be attached]
C-1
L~GACY PA~R K
Tustin Legacy Community Partners, lLC
April 13, 2010
YL4 EMArL AND U.S. MAIL
Mr. Doug Anderson
City of Tustin
300 Centennial Way
Tustin, California 92780
Re: Tustin Legacy Community Parlners, LLC (~`TLCP")
Dear Daug:
Thank you for meeting with Mr. Mangano and me last Thursday, along with
representatives fiom the City's RDA and Building Departments. As discussed, the
following is what TLCP anticipates the condition of the site will be upon any conveyance
of the same to the City. As you know, any such conveyance shall be in exchange for the
release of all bonds with respect to Legacy Park and upon the other terms and conditions
set forth in TLCP's previous correspondence to the City dated March 24, 2010.
o Fill of approximately 41,000 cubic yards within the soil remediation areas in
Neighborhood E as contemplated by XL Insurance Claim No. 08108623 02,
Palicy No. PEC0010756 and as required by the current SWPPP Plan.
o Project site will be in materia[ compliance with the current SWPPP Plan.
a Bisdine Construction trailers and equipment and the existing filtration
system will be denaobilized and vacated from the site.
o All other site conditions will be, in all material respects, as you find them
today, normal wear and tear excepted.
In additian to the foregoing, TLCP shall provide the follawing the City;
o An as built ~eld SWPPP drawing per current conditions.
o An "as bnilt" on-site storm drain plan as previously installed by TLCP.
o An "as built" utility demolition plan per current conditions.
Please note that the City of Irvine may have access and be mobilized on the site in
accordance with the Permit to Enter and Construct agreement for work related to
Barranca Parkway improvements.
Tustin Legacy Community Partners, LlC I t30 Vantis, Suite 200 I Aliso Yejo, Californla 92656 I t: 949.389.7000 f: 949.389.7188
TLCP will make no representation, warranty or any or covenant or commitment
of any nature regarding of the condition of the site or otherwise. Any such transfer of the
site ta the City shall be on an AS-IS, WHERE-IS basis.
This letter is non-binding, and TLCP hereby reserves all of its rights and remedies
and daes not waive any of the forgoing.
Sancerely,
_.--
Elizabeth A, Cobb
Director of Development
Tustin Legacy Cornmunity Partriers, LLC
CC: Christine Shingleton, Assistant City Manager
Colm Macken
Bob Yoder
2
EXHIBIT D
Bill of Sale
BILL OF SALE
FOR PERSONAL PROPERTY
LOCATED WITHIN THE
TUSTIN LEGACY PROJECT,
TUSTIN, CALIFORNIA
This Bill of Sale ("Bill of Sale") dated as of , 2010 is made by and between the
CITY OF TUSTIN, a municipal corporation organized under the laws of the State of California
(the "City"), acting in its capacity as the Local Redevelopment Authority for the disposition and
conveyance of portions of the former Marine Corps Air Station Tustin, and TUSTIN LEGACY
COMMUNITY PARTNERS, LLC, a Delaware limited liability company (the "Developer").
RECITALS
A. The City, the Tustin Public Financing Authority and the Developer entered into that
certain Tustin Legacy Disposition and Development Agreement (Master Development) dated as
of May 3, 2006, as amended by that certain First Amendment dated as of March 29, 2007, and
that certain Second Amendment dated as of June 5, 2007 (collectively, the "DDA"), pursuant to
which, among other things, the City agreed to sell/ and or lease or sublease, the Property (as
defined in the DDA) to Developer and Developer agreed to perform its obligations under the
DDA Those portions of the Property within Phase 1 of the Project as identified in the DDA are
referred to herein as the Phase 1 Conveyance Property. The Phase 1 Conveyance Property
consists of Lots 2, 5, 6, 36, 15, and 23 of Tract Map 17026, located in the City of Tustin.
Initially capitalized terms used and not otherwise defined in this Bill of Sale shall have the
meanings set forth in the DDA.
B. Pursuant to the DDA, the City transferred to the Developer pursuant to a Bill of Sale
dated June 19, 2007, (1) all tangible personal property appurtenant to the Phase 1 Conveyance
Property under the DDA ("Miscellaneous Personal Property"), and (2) all Transferred Utility
Systems (as defined below) located on the Phase 1 Conveyance Property. The Transfened
Utility Systems together with the Miscellaneous Personal Property are collectively referred to
herein as the "Personal Property".
C. The City executed a Notice of Delinquency and Claim of Lien (the "Claim of Lien")
against the Phase I Conveyance Property dated Apri15, 2010 pursuant to Sections 8.10.5, 1.12.2,
14.2.3, and 14.5 of the DDA, which was recorded in the Official Records on April 6, 2010 as
Instrument No. 2010000160007.
D. Developer is currently in Material Default under the DDA and Developer has determined that
it unable to perform its obligations pursuant to the DDA. Certain of these Material Defaults are
Material Defaults for which the Right of Reversion applies pursuant to Section 14.4.1, and as a
result, pursuant to the DDA the City has the right, pursuant to Section 14.4 of the DDA, (a) to
Page 1 Memorandum of Termination
terminate the DDA and the Ground Lease as to the Developer Parcels or any portion thereof
andlor Improvements thereon and (b) thereafter to re-enter the affected Developer Parcel(s)
and/or Improvements and revest title thereto in the City, such title to be subject to any Permitted
Mortgage (but not to any other Mortgage). As a result, Tustin is entitled to foreclose the Claim
of Lien and exercise its Right of Reversion to cause the Phase I Conveyance Property to revest in
Tustin.
E. Tustin and the Developer desire to avoid the risks, expenses and uncertainty of
continuing a legal process otherwise necessary for the City to exercise its remedies (including
foreclosure of the Claim of Lien and exercise of the Right of Reversion) under the DDA, and
therefore in lieu of foreclosure of the Claim of Lien and exercise of the Right of Reversion are,
among other things, entering into this Bill of Sale whereby Developer quitclaims all rights and
interest in and to the Miscellaneous Personal Property and the Transferred Utility Systems to the
City in lieu of foreclosure of the Claim of Lien and exercise of the Right of Reversion.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other consideration
set forth herein, it is mutually agreed as follows:
1. Transfer. The Developer, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in lieu of foreclosure of the Claim of Lien and
exercise of the Right of Reversion, does hereby remise, release and forever revert back to and
quitclaim to the City, all of its right, title and interest in (a) the Miscellaneous Personal Property
and (b) the Transferred Utility Systems.
2. Definition of Transferred Utilitv Svstems. Far purposes of this Bill of Sale the
following terms shall have the meanings set forth below:
2.1 "Utility Systems" shall mean all utility distribution systems transferred by the
City to the Developer located on the Phase 1 Conveyance Property and shall include the
following: (a) all current Developer-owned electrical, gas, telephone and cable television
systems, including distribution lines, pad mounted and overhead distribution poles and/or
transformers located on the Phase 1 Conveyance Property; (b) all current Developer-owned
conduits and duct banks from outlet or master meters or connection points to end usage points
located on the Phase 1 Conveyance Property; and (c) all water, sewer, and storm drain systems,
including distribution lines and pipelines from outlet or master meters or connection points
outside the Phase 1 Conveyance Property to end usage points located on the Phase 1 Conveyance
Property.
2.2 "Transferred Utility Systems" shall mean those Utility Systems on the Phase 1
Conveyance Property which were or will be transferred from the City to the Navy.
3. Former Military Property; No Warranty. The Personal Property conveyed under this
Bill of Sale was acquired by the City from the Developer by reason of the Developer's Material
Defaults under the DDA and in lieu of foreclosure and the City's exercise of its legal rights and
remedies under the DDA. City hereby agrees and acknowledges that the Developer makes no
representations as to the accuracy of the description of the Transferred Utility Systems or the
Personal Property's fitness, adequacy or safety for any particular purpose. The Personal
Memorandum of Termination
Property is delivered to City on an "AS-IS-WHERE-IS, WITH ALL FAULTS" basis, and the
City acknowledges that the Developer has made no representations or warranties of any kind
whatsoever, either express or implied in connection with any matters with respect to the Personal
Property or any portion thereof.
4. Miscellaneous.
4.1 Modification. No amendment, change, modification or supplement to this Bill of
Sale shall be valid and binding on the parties unless it is represented in writing and signed by
each of the parties.
4.2 Applicable Law. This Bill of Sale shall be governed by, interpreted under,
construed and enforced in accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
4.3 Bindin E~ct. This Bill of Sale and the terms, provisions, promises, covenants
and conditions hereof shall be binding upon and inure to the benefit of the Parties hereto and
their respective heirs, legal representatives, successors and assigns. By acceptance of this Bill of
Sale, the City hereby acknowledges and assumes all responsibilities placed upon the City under
the terms of this Bill of Sale.
4.4 Counterparts. This Bill of Sale may be executed in two or more separate
counterparts, each of which, when so executed, shall be deemed to be an original. Such
counterparts shall together constitute and shall be one and the same instrument. This Bill of Sale
shall not be effective until the execution and delivery by the parties hereto of at least one set of
counterparts. The parties hereby authorize each other to detach and combine original signature
pages and consolidate them into a single identical original. Any one of such completely
executed counterparts shall be sufficient proof of this Bill of Sale.
[signature page follows]
Memorandum of Ternunation
IN WITNESS WHEREOF, the parties hereto have, on the respective dates set forth
below, duly executed this Bill of Sale.
Memorandum of Termination
"DEVELOPER"
TUSTIN LEGACY COMMUNITY PARTNERS, LLC,
a Delaware limited liability company
By: Shea Properties II, LLC, a Delaware limited liability
company, its Managing Member
By:
Name:
Its:
By:
Name:
Its:
By: Shea Homes Limited Partnership, a California limited
partnership, a Member
By:_
Name:
Its:
By:_
Name:
Its:
"CITY„
Memorandum of Termination
CITY OF TUSTIN, CALIFORNIA
Dated: By:
William Huston, City Manager or
Christine Shingleton, Assistant City Manager
ATTEST:
By:
Pamela Stoker
City Clerk
Dated:
APPROVED AS TO FORM
By:
Doug Holland, City Attorney
Memorandum of Termination
EXHIBIT E
CITY OF TU5TIN OFFICIAL
BUSINESS REQUEST
MEMORANDUM OF TERMINATION
DOCUMENT TO BE
RECORDED AND TO BE
EXEMPT FROM RECORDING
FEES PER GOVERNMENT
CODE 6103 AND 27383.
Recording requested by and
when recorded mail to:
Assistant City Manager
The City of Tustin
300 Centennial Way
Tustin, CA 92780
MEMORANDUM OF TERMINATION OF TUSTIN LEGACY DISPOSITION AND
DEVELOPMENT AGREEMENT (MASTER DEVELOPMENT), TUSTIN LEGACY
DEVELOPMENT AGREEMENT AND CERTAIN DECLARATIONS OF SPECIAL
RESTRICTIONS
This MEMORANDUM OF TERMINATION OF THE TUSTIN LEGACY
DISPOSITION AND DEVELOPMENT AGREEMENT (MASTER DEVELOPMENT) ,
TUSTIN LEGACY DEVELOPMENT AGREEMENT AND CERTAIN DECLARATIONS OF
SPECIAL RESTRICTIONS ("Memorandum of Termination") is made as of , 2010
(the "Effective Date") by and between the CITY OF TUSTIN (the "City"), the TUSTIN
PUBLIC FINANCING AUTHORTTY (the "Authority", and together with the City, collectively
referred to herein as "Tustin") and TUSTIN LEGACY COMMUNITY PARTNERS, LLC, a
Delaware limited liability company (the "Developer") to (i) confirm that Tustin and the
Developer have entered into a Termination and Settlement Agreement dated as of ,
2010 which terminates that certain Tustin Legacy Disposition and Development Agreement
(Master Development) dated as of May 3, 2006, as amended by that certain First Amendment
dated as of March 29, 2007, and that certain Second Amendment dated as of June 5, 2007
(collectively, the "DDA") and the Memorandum of the Tustin Legacy Disposition and
Development Agreement (the "Memorandum of DDA") dated as of May 3, 2006, which was
recorded in the Official Records of Orange County ("Official Records") on May 8, 2006 as
Instrument No. 200600308658, the Tustin Legacy Development Agreement dated as of June 5,
2007 (the "Development Agreement"), that certain Declaration of Special Restrictions dated as
of June 19,2007 ("5pecial Restrictions No.l), which was recorded in the Official Records on
Memorandum of Termination
July 23,2007 as Instrument No. 2007000390805, and that certain Declaration of Special
Restrictions dated as of January 31, 2008 ("Special Restrictions No. 2"), which was recorded in
the Official Records on January 31, 2008. Tustin and the Developer are sometimes referred to
herein individually as a"Party" and collectively as the "Parties." Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to such terms in the DDA.
NOW, THEREFORE, the Parties certify as follows:
1. This Memorandum of Termination covers and applies to the following Property
Affected by the DDA, Development Agreement and Special Restrictions No. 1 and Special
Restrictions No. 2
1.1 The "DDA Property" and "Memorandum of DDA Property", consists
of (a) the land legally described on Exhibit A attached hereto and incorporated herein by this
reference, together with (b) all existing improvements, if any, presently located on the land
legally described on Exhibit A and (c) all Personal Property associated with the foregoing.
1.2 The "Development Agreement Property" consists of the land legally
described on Exhibit B attached hereto and incorporated herein by reference.
1.3 The "Special Restrictions No. 1 Property" consists of the land legally
described on Exhibit C attached hereto and incorporated herein by reference.
1.4 The "Special Restrictions No. 2 Property" consists of land legally
described on Exhibit D attached hereto and incorporated herein by reference.
2. Public Documents. The documents constituting the DDA, the Memorandum of
DDA, the Development Agreement and Special Restrictions No. 1 and Special Restrictions No.
2 are public documents and may be reviewed at the official offices of the City.
3. Interpretation; Notice. This Memorandum of Termination is prepared for
recordation and notice purposes only and in no way modifies the terms, conditions, provisions
and covenants of the Termination and Settlement Agreement between the Parties. In the event of
any inconsistency between terms, conditions, provisions and covenants of this Memorandum of
Termination and the Termination and Settlement Agreement, the terms, conditions, provisions
and covenants of the Termination and Settlement Agreement shall prevail.
4. No Effect on Permitted Mort~~. The termination of the DDA or the
Memorandum of DDA as to the Developer shall not be deemed to be a terminate or to effect any
of the rights or obligations of Permitted Mortgagees under the DDA, including, without
limitation, Article 16 thereof.
5. Exhibits. The Exhibits attached to this Memorandum of Termination are hereby
incorporated by this reference into fhis Memorandum of Termination as though fully set forth in
this Section.
[signature page followsJ
Memorandum of Termination
IN WITNESS WHEREOF, the City, the Authority and the Developer have executed this
Memorandum of Termination as of the date first set forth above.
Dated:
Dated:
ATTEST:
"CITY"
CITY OF TUSTIN, CALIFORNIA
By:
William Huston, City Manager or
Christine Shingleton, Assistant City Manager
"AUTHORITY"
TUSTIN PUBLIC FINANCING AUTHORITY
By:
William Huston, Executive Director
or Christine Shingleton, Assistant City
Manager
By:
Pamela Stoker
City Clerk
Dated:
APPROVED AS TO FORM
Special Counsel for the City
MANATT, PHELPS & PHILIPS, LLP
By:
Clayton B. Gantz
Memorandum of DDA
18403:6479671.10
"DEVELOPER"
TUSTIN LEGACY COMMUNITY
PARTNERS,LLC,
a Delaware limited liability company
By: Shea Properties II, LLC, a Delaware
limited liability company, its Managing
Member
By:
Nar
Its:
By:_
Name:
Its:
By: Shea Homes Limited Partnership,
a California limited partnership, a Member
By:
Name:
It's:
By:
Name:
Its:
Memorandum of Termination
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On , before me, , a Notary Public
in and for said state, personally appeared
, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said
State
(SEAL)
Memorandum of Termination
STATE OF CALIFORNIA )
) ss.
COUNTY OF ORANGE )
On , before me, , a Notary Public
in and for said state, personally appeared
, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public in and for said State
(SEAL)
Memorandum of Termination
EXHIBIT A
LEGAL DESCRIPTION OF THE DDA PROPERTY AND MEMORANDUM OF DDA
PROPERTY
All lettered and numbered Lots, inclusive within Tract Map 17026, located in the City of Tustin,
County of Orange, State of California, recorded on September 27, 2006, as Instrument No.
2006000644310, Book 884, Page 1-14, inclusive of Miscellaneous Maps, Official Records of
Orange County, California.
EXHIBIT B
DEVELOPMENT AGREEMENT PROPERTY
All lettered and numbered Lots, inclusive within Tract Map 17026, located in the City of Tustin,
County of Orange, State of California, recorded on September 27, 2006, as Instrument No.
2006000644310, Book 884, Page 1-14, inclusive of Miscellaneous Maps, Official Records of
Orange County, California.
EXHIBIT C
SPECIAL RESTRICTIONS NO. 1 PROPERTY
Lots 2, 5, 6, 36, 15, and 23 of Tract Map 17026, located in the City of Tustin, County of Orange,
State of California, recorded on September 27, 2006, as Instrument No. 2006000644310, Book
884, Page 1-14, inclusive of Miscellaneous maps, Official Records of Orange County,
California.
EXHIBIT D
SPECIAL RESTRICTIONS NO. 2 PROPERTY
Lots 16, 17 and 18 of Tract Map 17026, located in the City of Tustin, County of Orange, State of
California, recorded on September 27, 2006, as Instrument No. 2006000644310, Book 884, Page
1-14, inclusive of Miscellaneous maps, Official Records of Orange County, California.
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EXHIBIT F
Certificate of KeyBank
CERTIFICATE AND AGREEMENT
Pursuant to Section 7 of the Termination and Settlement Agreement, Joint Escrow Instructions
and General Release (the "Termination Agreement") dated as of , 2010 among the
City of Tustin (the "City"), the Tustin Public Financing Authority (the "Authority," and together
with the City, collectively referred to as "Tustin") and Tustin Legacy Community Partners, LLC
(the "Developer"), and undersigned hereby certifies and agrees, as of , 2010, as
follows:
(a) Attached hereto as Schedule 1[Schedule 1 to be supplied by
Administrative Agent] is a full and complete list and set of all documents and agreements
evidencing and/or securing the revolving credit facility (collectively, the "Loan Documents")
extended by KeyBank National Association , as administrative agent ("Administrative Agent")
for various lenders (each a"Lender"), in the amount $70,000,000 (the "Loan") .
(b) As of the date of this Certificate, the aggregate unpaid
indebtedness evidenced and/or secured by the Loan Documents is $ , and
interest is accruing at the rate of _% per annum.
(c) Neither that certain Tustin Legacy Disposition and Development
Agreement (Master Development) dated as of May 3, 2006, as amended by that certain First
Amendment to Tustin Legacy Disposition and Development Agreement (Master Developer)
dated as of March 29, 2007, and that certain Second Amendment to Tustin Legacy Disposition
and Development Agreement (Master Developer) dated as of June 5, 2007 (collectively, the
"DDA"), nor the Property (as defined in the DDA), nor any portion thereof, is cross-
collateralized with any other contract or real or personal property, nor does the DDA or the
Property (or any portion thereo fl serve as additional security for any other loan by Agent or any
of the Lenders, nor any other debt of Developer.
(d) Each Lender is an Institutional Lender (as defined in the DDA).
(e) The undersigned agrees not to foreclose the lien of deed of trust
encumbering the Tustin Legacy Project.
(~ The undersigned consents to the Termination Agreement,
including without limitation, the termination of the DDA, Development Agreement and Special
Restrictions referenced therein; provided, however, that the termination of the DDA shall not be
deemed to terminate or to effect any of the ri_ghts or obligations of Permitted Mortgagees under
the DDA, including, without limitation, Article 16 thereof.
(g) Administrative Agent, for itself and the Lenders, reaffirms its
obligations under the Collateral Assignment and Subordination Agreement between Developer
and Administrative Agent, and reaffirms and confirms its obligations thereunder, including
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without limitation Paragraph 8, concerning the release of City Dedication Parcels (as defined
therein). Because the City, as a public agency, is exempt from the Subdivision Map Act,
Administrative Agent agrees that as the City legally defines each of the City Dedication Parcels
(as defined in the DDA), Administrative Agent will release them from the lien of the Loan
Documents.
In witness whereof, and with knowledge that Tustin has relied on the foregoing
certifications in making the representations and agreements contained in Section 7 of the
Termination Agreement, the undersigned as caused this Certification and Agreement to be
executed as of the date first written above.
KEYBANK NATIONAL ASSOCIATION, as agent
By:
Its:
300105707.1
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