HomeMy WebLinkAbout08 DISPOSITION PACKAGE 6B (LOT 19) - TUSTIN LEGACY EXCLUSIVE NEGOTIATION AGREEMENTAgenda Item g
Reviewed:
AGENDA REPORT City Manager
Finance Director N A
MEETING DATE: FEBRUARY 21, 2017
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: ECONOMIC DEVELOPMENT DEPARTMENT
SUBJECT: DISPOSITION PACKAGE 6B (LOT 19) — TUSTIN LEGACY
EXCLUSIVE NEGOTIATION AGREEMENT
SUMMARY:
Request for authorization to enter into an Exclusive Negotiation Agreement (ENA) with
CalAtlantic Group, Inc. (Developer) for the disposition and development of Disposition
Package 6B (Lot 19) in Tustin Legacy for the development of for -sale residential units.
RECOMMENDATION:
Authorize the City Manager to execute the Exclusive Negotiation Agreement between the
City of Tustin and the Developer.
FISCAL IMPACT:
Concurrent with the execution of the ENA, the Developer will submit a good faith deposit of
$125,000, this amount will be applied toward third party costs incurred by the City including
the retention of legal counsel associated with the negotiation. In addition to the good faith
deposit, the Developer will also provide a deposit in the amount of $25,000 to offset City
staff costs related to project activities during the initial ENA negotiating period. These costs
are separate from entitlement expenses that will be borne by the Developer. Staff will
negotiate the terms and conditions under which the property will be sold including the
purchase price. If negotiations are successful, staff will present to the City Council a
Disposition and Development Agreement (DDA) for consideration.
CORRELATION TO THE STRATEGIC PLAN:
This action correlates to the City's Strategic Plan for Economic and Neighborhood
Development (Goal A).
Agenda Report— ENA, CalAtlantic Group,.lnc.
February 21, 2017
Page 2
BACKGROUND:
In April, 2011, the City Council adopted a revised Disposition Strategy for the Former
Master Developer Footprint at Tustin Legacy which authorized the marketing and
disposition of identified parcels to potential end users. Underthis Strategy, four properties
have been sold; two apartment sites, one site for single family detached houses, and a
neighborhood shopping center. Execution of a DDA and approval of entitlements for a
fifth property for the development of a creative office campus have been completed.
The approximately 14.45 acres subject property, known as Disposition Package 613, is
comprised of a portion of Lot 19 and a portion of lettered lots KKK and LLL of Tract No.
17404. The subject property is bounded by Tustin Ranch Road on the west, Park Avenue
on the east, future Moffett Drive to the north, and Victory Road to the south.
The Developer proposes to improve the property with approximately 218 for -sale
residential dwelling units comprised of three products with an average density of
approximately 16 dwelling units per acre. The three products would consist of detached
residences, attached townhomes, and stacked flats ranging in square footage from 1,100
to 2,500 square feet and offering from 1 to 4 bedrooms. Common open space, a portion
of which would be publicly accessible, and amenities are proposed to serve the
development.
The City has an existing relationship with the Developer (formerly known as Standard
Pacific Corporation) involving Disposition Packages 1 B and 6A, adjacent to the subject
property, which are currently being developed as the Greenwood Community. A total of
375 single family detached residences are to be developed in Greenwood of which 85
percent of the units have been sold. The remaining units are under construction and
completion of the Greenwood Community is anticipated this year.
In 2012, a Request for Proposal (RFP) was issued for Disposition Package 1 B with which
three qualified residential developers were invited to respond to and each developer
provided a competitive bid proposal. The City Council selected Standard Pacific
Corporation (Developer) as the preferred developer and subsequently added Disposition
Package 6A to the negotiations pursuant to the Disposition Strategy.
The Disposition Strategy allows the City to explore a number of options in the developer
selection process which include the following:
"The City, particularly on the residential Disposition Packages, will also reserve the
flexibility to offer subsequent rolling take -downs or Disposition Packages to
builders based on performance."
"Opportunities for individual developers who demonstrate success on initial
development opportunities within the Project to be provided with rolling take down
options on future phases or segments should also be considered ..."
Agenda Report — ENA, CalAtlantic Group, Inc.
February 21, 2017
Page 3
Standard Pacific Corporation (Developer) was chosen as the proposed developer of
Disposition Parcel 1 B on the basis of the selection process described in the Disposition
Strategy. The Developer has proven to be capable of executing on development within
Tustin Legacy and has demonstrated success in the development of the Greenwood
Community. In addition, the Developer continues to validate its expertise, experience,
and financial capability in undertaking and implementing various residential development
projects within Orange County and across the country. Disposition Package 6B can be
negotiated with the Developer as a "subsequent rolling take-down or Disposition
Package" to the adjacent Greenwood Community.
DISCUSSION:
As proposed, the development will provide needed for -sale housing opportunities within
Tustin and the region. The three product types fill a void in the Tustin Legacy residential
market by providing for -sale residential products with a price points below Greenwood
which will be more accessible to a larger segment of the population. The project site is
contiguous to both the Greenwood and Anton Legacy communities which provides an
appropriate transition in the pattern of development at Tustin Legacy.
The ENA provides for a Negotiating Period of eight (8) months from the Effective Date
which may be extended for two (2) additional periods of sixty (60) days each at the
discretion of the City Manager.
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John .Buchanan
omic Development Director
Ryan Swiontek
Project Manager
Economic Development Department
Attachment: ENA between the City of Tustin and CalAtlantic Group, Inc.
EXCLUSIVE AGREEMENT TO NEGOTIATE
TUSTIN LEGACY (DISPOSITION PACKAGE 611)
THIS EXCLUSIVE AGREEMENT TO NEGOTIATE TUSTIN LEGACY
(DISPOSITION PACKAGE 6B) ("Agreement") is made as of February 21, 2017 (the
"Effective Date") by and between the CITY OF TUSTIN (the "City") and CALATLANTIC
GROUP, INC., a Delaware corporation, d/b/a CalAtlantic Homes ("Developer"), with respect to
certain land referred to herein as the "Property" (defined below). The City and Developer, each
sometimes referred to herein as a "Party" and collectively as the "Parties," hereby agree as
follows:
Introduction.
1.1 Pursuant to the Defense Base Closure and Realignment Act of 1990, (Part A of
Title XXXIX of Public Law 101-510; 10 U.S.C. Section 2687 Note), as amended, the federal
government determined to close the Marine Corps Air Station -Tustin ("MCAS Tustin") located
substantially in the City of Tustin. In 1992, the City was designated as the Lead Agency or Local
Redevelopment Authority for preparation of a reuse plan for MCAS Tustin in order to facilitate
the closure of MCAS Tustin and its reuse in furtherance of the economic development of the City
and surrounding region. The MCAS Tustin Reuse Plan developed in accordance with this
procedure was adopted by the City Council of the City of Tustin (the "City Council") on
October 17, 1996, and amended in September, 1998 (the "Reuse Plan").
1.2 A Final Joint Environmental Impact Statement/Environmental Impact Report for
the Disposal and Reuse of MCAS Tustin (the "Final EIS/EIR") and Mitigation Monitoring and
Reporting Program for the Final EIS/EIR were adopted by the City on January 16, 2001. In March
2001, a record of decision was issued by the Department of the Navy (hereinafter, "Navy")
approving the Final EIS/EIR and the Reuse Plan. Subsequently, a Supplement to the Final EIR/EIS
and an Addendum to the Final EIS/EIR were approved by the City.
1.3 In May 2002, the Navy approved an "Economic Development Conveyance of
Property at MCAS Tustin" and agreed to convey 1,153 acres of MCAS Tustin to the City. On
May 13, 2002, a total of 977 acres, including the Property which is the subject of this Agreement,
was conveyed by the Navy to the City by quitclaim deeds, as further described below, in
accordance with the provisions of that certain Memorandum of Agreement by and between The
United States of America (through the Secretary of the Army or designee) and the City dated May
13, 2002 ("Memorandum of Agreement" or "MOA"). The additional acreage was made subject
to a ground lease by the City from the Navy and portions thereof, including the remaining portions
of the Development Parcels, were subsequently conveyed by the Navy to the City pursuant to
quitclaim deed. The approximately 1,153 acres of MCAS Tustin located within the City of Tustin
and either conveyed by the Navy to the City or subject to ground lease between the Navy and the
City are referred to in this Agreement as "Tustin Legacy".
1.4 On February 3, 2003, the City adopted an ordinance approving the MCAS Tustin
Specific Plan/Reuse Plan setting forth the zoning and entitlement framework for future
development of Tustin Legacy. Since its initial adoption, the City has approved numerous Specific
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Plan Amendments. All references in this Agreement to the "Specific Plan" shall be deemed to
refer to the MCAS Tustin Specific Plan/Reuse Plan, as the same may be amended from time to
time. The Specific Plan conforms to and implements the Reuse Plan and the City's General Plan,
1.5 The City desires to effectuate development of Tustin Legacy through the sale and
development of portions of Tustin Legacy in accordance with applicable federal and local
requirements and the City has previously adopted a disposition strategy to address sale, lease and
redevelopment of land within Tustin Legacy consistent with all City requirements, including,
without limitation, and the Specific Plan.
1.6 Pursuant to its disposition strategy, the City and Developer, formerly known as
Standard Pacific Corp., entered into that certain Tustin Legacy Disposition and Development
Agreement for Disposition Package 113 & 6A dated as of March 11, 2014 as amended, for the
purpose of developing a residential for -sale community at Tustin Legacy and pursuant to such
agreement, the City previously conveyed approximately 74 acres of land comprised of portions of
Disposition Packages 1 and 6, which property is currently being developed as "Greenwood".
1.7 Consistent with the disposition strategy, the City desires to negotiate with
Developer for the sale of certain additional property comprising a portion of Disposition Package
6, referred to herein as Disposition Package 613, located adjacent to the Greenwood community,
which is legally described and depicted on the Site Map attached as Exhibit "A" (the "Property")
and development thereon of the Project (defined below). The Property, which is approximately
14.45 acres, comprises a portion of the land conveyed by the Navy to the City as Parcel I -H-1 in
Navy Quitclaim Deed H and a portion of Parcel II -H-9 in Navy Quitclaim Deed II -G-5 and II -H-
9, as subsequently reparcelized. The Property is located in Specific Plan Neighborhood G,
Planning Area 15 and is referred to in the Navy Reuse Plan as a portion of Parcel 27 and a portion
of Carve -Out 8.
1.8 Developer has proposed to develop the Property with approximately 218 for -sale
residential units comprised of three products at an average density of approximately 16 dwelling
units per gross acre, and with a complete accompanying set of amenities to be constructed by
Developer, including approximately two acres of common open space with a portion of such open
space to be made accessible to the public pursuant to recorded easement. The proposed
development of the Property described above and as further described in this Agreement is referred
to herein as the "Project".
1.9 The City and Developer desire, for the ENA Negotiating Period (as defined below)
set forth herein, to negotiate diligently and in good faith, the terms and conditions of a disposition
and development agreement ("DDA") and development agreement ("DA") which if agreed and
executed will specify the rights, obligations and method of participation of the City and Developer
with respect to the sale and development of the Property and the development thereon of the
Project.
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2. Agreement to Neto i te.
2.1 Terms and Conditions. The City and Developer each desire to negotiate a DDA
and DA, which if agreed upon and executed, shall set forth the terms and conditions pursuant to
which the Property shall be conveyed by the City to Developer and developed by Developer.
2.2 DDA and DA. Notwithstanding that the terms of the purchase and sale and
development of the Property are to be negotiated, Developer and the City have agreed that the
transactional documents to be negotiated to describe the transaction shall be in the form of a DDA
and DA.
2.3 ENA Not a Final Agreement. This Agreement (including all exhibits hereto) is
solely an exclusive right to negotiate and is not a final agreement. The City and Developer do not
intend this agreement to be a purchase, option or similar contract or to be bound in any way by
this Agreement, other than to establish a period of exclusive negotiations during which time each
of the City and Developer shall negotiate with the other in good faith. The City hereby agrees, for
the Initial ENA Negotiating Period (as defined in Section 4.2.1), as the same may be extended
pursuant to Section 4.2.2 or 4.2.4 or earlier terminated pursuant to Section 4.2.5 or 4.2.6 (the Initial
ENA Negotiating Period, as so extended or earlier terminated, the "ENA Negotiating Period"),
that the City shall not market the Property to other interested parties. Developer hereby agrees that
it shall negotiate in good faith with respect to acquisition of the. Property during the ENA
Negotiating Period and that it shall not withdraw any offer made by it pursuant to Section 4.2.4
during the Offer Period.
2.4 Essential Terms Not Agreed. The City and Developer acknowledge that although
the Parties have set forth a framework for negotiation of essential terms of any transaction: (a) they
have not herein agreed upon essential terms of a transaction, including, e.g., price, terms and timing
of transfer of the Property; (b) they do not intend this Agreement to be a statement of essential
terms of the transaction, which shall be the subject matter of their further negotiations; and (c) the
essential terms of the transaction, if agreed to by the City and Developer, shall be set forth, if at
all, in a DDA and DA approved and executed by authorized representatives of each of the City
and Developer
2.5 Effectiveness of Subsequent Agreements. The DDA and the DA shall not exist
and shall not be binding unless and until each is fully executed by Developer and the City,
approved by counsel to each of the City and Developer as to form and approved by the City Council
of the City and by the authorized representatives of Developer, The DDA and DA shall become
effective only after and if the agreements have been considered and approved by the legislative
body of the City and the City Council of the City after noticed public hearing. Nothing in this
Agreement shall supersede or waive any discretionary or regulatory approvals required to be
obtained from the City pursuant to the Tustin City Code or the provisions of any applicable State
or Federal law or regulation.
2.6 Public Hearings and Compliance. If the negotiations hereunder culminate in
Developer and the City's negotiations concurring on the terms and provisions of a DDA and DA,
such DDA and DA will be considered for approval by the City only after all required public
hearings have been held and after compliance with all applicable laws and ordinances. The
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concurrence of the City negotiators with the terms and provisions of a proposed DDA and DA
under any provisions of this Agreement shall not be construed or interpreted as the City approving
or accepting such terms. Such concurrence shall be viewed as nothing more than the willingness
of the City negotiators to recommend to the legislative body of the City and the City Council that
they approve such terms.
2.7 Assumption of Risk. The City and Developer each assume the risk that,
notwithstanding this Agreement and good faith negotiations, the City and Developer may not enter
into any agreement due to their failure to agree upon essential terms of the transaction. Neither
Party will have any liability to the other in the event that the Parties are unable to reach such a
definitive agreement with respect to the. proposed transaction for any reason or no reason.
3. Developer's Representations. Warranties and Agreements. Developer represents,
warrants and agrees as follows:
3.1 Expertise and Financial Qualifications. Developer has the necessary expertise,
experience and financial capability to undertake development of the Property as contemplated by
this Agreement;
3.2 No Speculation in Land Holding. Developer's intended acquisition of the
Property and acquisition and its other intended undertakings pursuant to this Agreement shall be
used for the timely development of the Property, and accompanying infrastructure and amenities
and not for speculation in land holding;
3.3 Experience. Developer is experienced in development and understands the process
and requirements required to make development projects such as the Project described herein; and
3.4 Long -Term Development Financing. Developer is capable of providing
financing for the development of the Property without the necessity of third party financing.
3.5 Release. Except as specifically set forth in Section 4.4, Developer hereby waives
the right to recover from and fully and irrevocably releases the City and its elected and appointed
officials, employees, agents, representatives, attorneys, affiliates, consultants, contractors,
successors and assigns (the "City Parties") with respect to any and all Claims that Developer or
its officers, directors, employees, agents, representatives, tenants, prospective tenants, consultants
or contractors may now or hereafter have or incur relating to or arising from: (a) the process by
which Developer was selected or any modification or defect thereto, or any information set forth
therein, (b) the terms of this Agreement including, without limitation, the information set forth
herein or the termination hereof in accordance with the provisions herein, (c) the breach by the
City of its obligations under this Agreement, (d) the failure of the Parties or either of them to agree
upon the Essential Terms or the terms of the DDA or the DA or any other document, (e) any
disputes, Claims, actions, causes of action, demands or orders arising between Developer and any
third parties, and/or (f) any actions of the City or the City Parties in connection with any of the
foregoing (including, without limitation, the exercise by the City of its discretion, decision,
judgment with respect to the foregoing). This waiver and release includes, without limitation, a
waiver and release with respect to (1) any and all damages and/or monetary relief (whether based
in contract or in tort), including, without limitation, any right to claim direct, compensatory,
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reliance, special, indirect, consequential, expectation, anticipation, exemplary or punitive damages
or losses, (2) any right to payment or reimbursement from the City except as expressly set forth in
this Agreement, (3) the right to protest the terms of this ENA or the selection, or revocation of the
selection of Developer for exclusive negotiations with respect to the Property, including by
termination of the ENA, and (4) except as set forth in Section 4.4, the failure of the City to negotiate
in good faith pursuant to this Agreement or to enter into a DDA and/or DA.
The term "Claim" or "Claims" as used in this Agreement shall mean any and all claims, actions,
causes of action, demands, orders, or other means of seeking or recovering losses, damages,
liabilities, costs, expenses (including, without limitation, attorneys' fees, fees of expert witnesses,
consultant fees and court, arbitration and litigation costs), costs and expenses attributable to
compliance with judicial and regulatory orders and requirements, fines, penalties, liens, taxes or
any other type of compensation whatsoever, direct or indirect, known or unknown, foreseen or
unforeseen.
3.6 Survival of Provisions. The provisions of this Section 3 shall survive the
termination of this Agreement.
4. Negotiations.
4.1 Good Faith Negotiations. The City will prepare a draft of the DDA and DA and
submit the draft documents to Developer for review and comment. The City and Developer agree
for the ENA Negotiating Period to exclusively negotiate with one another diligently and in good
faith to prepare a DDA and a DA and related documents to be entered into between the City and
Developer with respect to the purchase and sale and development of the Property.
4.2 Period of Negotiations; Offer Period; Termination of Agreement.
4.2. l Initial Period. The Parties agree to negotiate for a period of eight (8) months
from the Effective Date (the "Initial ENA Negotiating Period"), subject to extensions as further
provided in this Section 4.2. If at the expiration of the Initial ENA Negotiating Period (or within
any extension of time mutually approved by the City and Developer in accordance with the terms
of the Agreement), Developer has not signed a DDA and DA in form and substance prepared and
approved by the City in its sole discretion, then this Agreement shall automatically terminate.
4.2.2 Request for Extension. Developer may request from the City an extension
of the ENA Negotiating Period. The City will determine whether reasonable and sufficient
progress has been made toward fulfillment of the requirements of this Agreement in its
consideration of any extension. The Initial ENA Negotiating Period may be extended by the
mutual consent of the City and Developer for up to two (2) additional periods of sixty (60) days
each. Any further consent of the City to extend the ENA shall require the approval of the City
Council.
4.2.3 Authority to Extend. The City hereby delegates to the City Manager, or his
or her designated representative, the authority to agree to grant the extensions specified in Section
4.2.2 upon determination by the City Manager or his or her designated representative in their sole
and absolute discretion that Developer has negotiated diligently and in good faith and that
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reasonable and sufficient progress has been made toward fulfillment of the requirements of this
Agreement. No such extension of time shall be effective unless it is in writing.
4.2.4 Offer to Purchase. The execution by Developer of a form DDA and DA
and submittal of same to the City shall constitute an offer to purchase the Property. Developer
hereby agrees that it shall not withdraw such offer to purchase for a period of sixty (60) days
following submittal of the executed DDA and DA to the City. Such offer shall remain in effect
for a period of sixty (60) days to enable the City to (a) determine whether it desires to enter into
such a DDA and DA; (b) take the actions necessary to authorize the City to sign the DDA and DA
if the City desires to do so; and (c) sign the DDA and DA. If the City has not considered and
approved the DDA and DA by such 60th day or, at the end of any extension mutually agreed upon
by the City and Developer in writing, then this Agreement shall automatically terminate.
4.2.5 Rights of the Parties to Earlier Terminate Agreement for Breach. Developer
may terminate this Agreement and the ENA Negotiating Period upon provision of seven (7) days'
prior written notice to the City alleging breach of Section 4.4 by the City, and the City may
terminate this Agreement upon provision of seven (7) days' prior written notice to Developer
alleging breach by Developer of any provision of this Agreement.
4.2.6 Rights of the Parties to Earlier Terminate Due to Infeasibility or Non -
Economic Transaction. Either Party may terminate this Agreement and the ENA Negotiating
Period upon provision of seven (7) days' prior written notice to the other Party if during the course
of negotiations, either Party determines in good faith that based on the terms offered by the other,
that it is unlikely to reach agreement on the terms of the DDA and/or the DA or determines that
the terms offered by the'other Party do not meet its economic requirements.
4.3 Deposits and Costs.
4.3.1 Good Faith Deposit. Prior to the execution of this Agreement by the City,
Developer has submitted to the City a good faith deposit in the sum of One Hundred Twenty Five
Thousand Dollars ($125,000) (the "ENA Deposit") in the form of a check to the City to ensure
that Developer will proceed diligently and in good faith to negotiate and perform all of Developer
obligations under this Agreement and to also be applied to cover any City Transaction Expenses
(defined below) incurred by the City after the Effective Date of this Agreement. The ENA Deposit
shall be deposited in an account in a bank or trust company selected by the City. Interest shall
accrue to any balances in the account for the benefit of Developer and as additional security for
Developer's obligations hereunder. The City shall have the right to expend the ENA Deposit to
pay the City Transaction Expenses, and the ENA Deposit will be depleted accordingly. Each time
the amount of funds in the ENA Deposit account is depleted below Fifty Thousand Dollars
($50,000), Developer shall be required to submit an additional Fifty Thousand Dollars ($50,000)
to the City which shall be credited by the City to the ENA Deposit account.
4.3.2 City Transaction Expenses. From and after the Effective Date, the ENA
Deposit may be used by the City to pay the City's third party predevelopment costs including,
without limitation, third party consultants, outside counsel, and any other expenditures incurred
by the City in connection with the drafting, negotiation and execution of this Agreement, the DDA
and the DA and all other documents required thereby or related thereto, compliance with the terms
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of this Agreement and/or the termination of this Agreement, including any and all third party fees
and costs incurred by the City for legal counsel, financial, appraisal and other consultants ("City
Transaction Expenses"). City Transaction Expenses do not include any fees or deposits required
of Developer for processing entitlement applications or complying with provisions of the
California Environmental Quality Act ("CEQA") or its State CEQA implementing regulations,
which shall be paid by Developer to the City in accordance with the City's normal processing fee
requirements. Determination of costs, expenses, and fees constituting City Transaction Expenses
shall be made by the City in its sole discretion and Developer shall upon request be entitled to
receive summary notices from the City setting forth amounts constituting City Transaction
Expenses to be retained by the City.
4,33 Return of Deposit Under Specified Conditions.
(a) If the Parties enter into a DDA within the ENA Negotiating Period,
the City shall return any remaining unused funds in the ENA Deposit account to Developer or
Developer can apply it to any additional deposit required as security for the performance under the
DDA.
(b) If the Parties fail to enter into the DDA within the ENA Negotiating
Period or this Agreement is earlier terminated as provided herein, the City may retain any
remaining unused portions of the ENA Deposit (after deducting therefrom the City Transaction
Expenses incurred by the City to the date of termination of this Agreement) only if Developer has
not negotiated diligently or in good faith or has not carried out its obligations under this Agreement
and the City has negotiated diligently and in good faith as described in Section 4.4. Developer's
failure to submit to the City plans, reports, studies, investigations, applications and materials
specified in Section 5 and Section 6 within the time periods specified therein, shall be deemed to
demonstrate Developer's failure to negotiate diligently and in good faith and its failure to carry
out its obligations hereunder. If Developer has failed to do so, inasmuch as the actual damages
which would result from a breach by Developer of its obligations under this Agreement are
uncertain and would be impractical or extremely difficult to determine, the City shall be entitled
to retain any remaining unused portions of the ENA Deposit plus interest, if any, which has accrued
thereon, as liquidated and agreed damages.
(c) If this Agreement terminates and Developer has negotiated in good
faith and materially complied with the terms of this Agreement and no breach by Developer is
alleged, the City shall return the ENA Deposit to Developer, provided that the City shall be entitled
to retain from the ENA Deposit all City Transaction Expenses incurred by the City to the
termination date of this ENA.
4.3,4 Not Sole Remedy of City. Subject to Section 10.6, by the initials of their
respective signatories hereunder, the City and Developer acknowledge and agree that forfeiture of
the amount of the ENA Deposit by Developer (together with any interest earned and accrued
thereon) is not in lieu of any other relief, right or remedy to which the City might be entitled by
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reason of Developer's default (other than a default in any obligation to negotiate in good faith
which shall be governed by the preceding paragraph).
CITY'S INITIALS DEVELOPER'S INITIALS
4.3,5 Additional DDA Deposit. Developer acknowledges that it is currently
anticipated that the DDA shall require an additional deposit in an amount to be determined as
security for the performance of Developer's obligations under the DDA.
4.3,6 Costs and Expenses Borne by Developer. Developer acknowledges and
agrees that the City shall have no responsibility to pay or reimburse Developer for costs and
expenses incurred by Developer in connection with this Agreement, the compliance by Developer
with its obligations under this Agreement, the termination of this Agreement or any other matters
unless the City assumes any specific responsibilities in the fully executed DDA. Costs and
expenses for which Developer shall be responsible include, without limitation, all City Transaction
Expenses and all costs and expenses incurred by Developer prior to or following execution of this
Agreement with respect to the Project, the Property, compliance with the terms of this Agreement,
the drafting, negotiation and execution of the DDA and the DA and all other documents required
thereby or related thereto and any and all third party fees and costs incurred by Developer for legal
counsel, financial, appraisal and other consultants in connection therewith and all fees or deposits
required of Developer for processing entitlement applications, pursuing entitlements and
complying with provisions of the CEQA implementing regulations.
43.7 Payment of Outstanding Amounts. To the extent that the ENA Deposit or
other funds provided by Developer to pay City Transaction Expenses are not sufficient to pay all
City Transaction Expenses, Developer shall promptly upon termination of this Agreement fund
the amount remaining unpaid to the City, which amounts shall be refunded by the City to
Developer only upon a determination pursuant to Section 4.4 that the City has failed to negotiate
in good faith with respect to this Agreement.
4.3.8 Staff Costs Deposit. In addition to the ENA Deposit, Developer shall
deposit with the City the amount of Twenty Five Thousand Dollars ($25,000) (the "Staff Costs
Deposit") to offset City staff costs related to Project activities during the Initial ENA Negotiating
Period ("Staff Costs"). The City shall keep a separate .accounting of amounts expended for Staff
Costs. The Staff Costs Deposit will be expended to cover the City's Staff Costs during the Initial
ENA Negotiating Period, and the Staff Costs Deposit will be depleted accordingly. The Staff Costs
Deposit is not required to be replenished by Developer unless otherwise agreed in writing by the
City and Developer, each in its sole discretion; provided however, that City reserves the right not
to extend the ENA Negotiating Period unless there is sufficient funding in the existing Staff Cost
Deposit and/or an additional Staff Cost Deposit made by Developer to pay anticipated Staff Costs
during the period of any extension. If the Parties fail to enter into a DDA and DA within the ENA
Negotiating Period, funds remaining and not allocated by the City to Staff Costs during the term
of this Agreement shall be returned to the Developer upon termination of this Agreement. If the
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Parties enter into a DDA within the ENA Negotiating Period, funds remaining and not allocated
by the City to Staff Costs during the term of this Agreement and the DDA shall, at the discretion
of the City, be applied to Staff Costs during the term of the DDA. The Staff Costs Deposit shall
be deposited in an account in a bank or trust account selected by the City. Interest shall accrue to
any balances in the account for the benefit of Developer and as additional security for Developer's
obligations hereunder..
4.39 Survival of Provisions. The provisions of this Section 4.3 shall survive the
termination of this Agreement.
4.4 Exclusivity; Good Faith Negotiations. During the ENA Negotiating Period, the
City covenants and agrees to negotiate exclusively with Developer and shall not solicit another
party for the Project or enter into any agreement with any other party regarding the development
of the Property or any portion thereof. The City acknowledges and agrees that but for this
exclusivity, Developer would not have entered into this Agreement. In the event a court of
competent jurisdiction determines in a final decision that the City has breached this exclusivity
covenant, the City shall be deemed to have failed to negotiate in good faith. For any breach of the
covenant of good faith by the City, provided a DDA has not been entered into pursuant to this
Agreement, Developer's sole remedy shall be the termination of this Agreement and the return of
the good faith deposit (together with interest accrued thereon) and any other deposits made by
Developer pursuant to this Agreement.
4.5 Inspection; License.
4,5,1 Access License. The City hereby grants to Developer, for use by Developer
and its employees, representatives, agents, contractors and consultants (collectively, the
"Developer Parties"), a license during the term of this Agreement to enter upon the Property for
purposes of conducting a due diligence inspection, provided that Developer shall and shall cause
the Developer Parties to: (a) deliver to the City written evidence that Developer has procured the
insurance required under Section 4.5.2;'(b) give the City twenty-four (24) hours telephonic or
written notice of any intended access which involves work on or may result in any impairment of
the use of the Property; (c) access the Property in a safe manner; (d) conduct invasive testing or
boring only after obtaining the written consent of the City to a work plan for such testing, which
consent shall not be unreasonably withheld; (e) allow no dangerous or hazardous condition created
by Developer and/or the Developer Parties to continue beyond the completion of such access; (f)
comply with all laws and obtain all permits required in connection with such access; and (g)
conduct inspections and testing, subject to the rights of any existing tenants or contractors doing
work on the Property, if any (which inspections and testing, if conducted at times other than normal
business hours, shall be conducted only after obtaining the City's consent, which shall not be
unreasonably withheld). The limited license granted herein is revocable by the City during the
continuation of any breach of this Agreement by Developer and shall be automatically revoked
and terminated, without further action of the City, upon the termination of this Agreement or the
ENA Negotiating Period.
4.5.2 Insurance. Developer shall obtain, or cause the Developer Parties, with
respect to their access and investigative activities, to obtain, at Developer's sole cost and expense
(a) prior to commencement of any investigative activities on the Property, a policy of commercial
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general liability insurance covering any and all liability of Developer and the City, the Tustin
Finance Authority and the Successor Agency to the Tustin Community Redevelopment Agency,
arising out of Developer's investigative activities, in an amount of $2,000,000 per claim and in the
aggregate and issued by a company authorized by the Insurance Department of the State of California
and rated A, VII or better (if an admitted carrier) or A-, X (if offered, by a surplus line broker), by the
latest edition of Best's Key Rating Guide and (b) prior to commencement of any invasive testing or
boring on the Property, shall cause each of the Developer Parties carrying out such testing and/or
boring to obtain a policy of professional liability insurance and a pollution legal liability (PLL)
policy, in each case in an amount of $2,000,0000 per claim and in the aggregate. Such policy of
insurance shall name "the City of Tustin, the Tustin Finance Authority and the Successor Agency
to the Tustin Community Redevelopment Agency, and their respective elected and appointed
officials, agents, representatives and employees" as additional insureds on the policy. Developer
shall provide certificates of insurance and insurer endorsements (or a copy of the signed policy
binder, if applicable), signed by a representative of the carrier evidencing the required insurance.
In addition, Developer shall cause its consultants entering onto the Property to maintain
commercial general liability insurance in an amount of at least $1,000,000. Such policies of
insurance shall be kept and maintained in force during the term of this Agreement and so long
thereafter as necessary to cover any Claims or damages by persons or property resulting from any
acts or omissions of Developer and/or the Developer Parties.
4.5.3 Indemnity. Developer hereby agrees to indemnify, defend protect and hold
the City and its elected officials, employees, agents, representatives, consultants and contractors
free and harmless from and against any and all Claims arising in connection with or resulting from
Developer's or the Developer Parties' access to the Property or its exercise of its rights hereunder,
including, without limitation, any inspections, surveys, tests or studies performed by Developer or
the Developer Parties, save and except to the extent such Claims result from the gross negligence
or willful misconduct of the City or its agents, employees or representatives. Developer shall keep
the Property free and clear of any mechanics', liens or materialmen's liens related to Developer's
inspection of the Property. The indemnification by Developer set forth in this Section 4.5.3 shall
survive the termination of this Agreement and the execution of the DDA and the closing and
transfer to Developer and shall not merge into any deed granted pursuant to the DDA.
5. Proposed Development Concent.
5.1 Compliance with Existing Land Use and Zoning Requirements. The proposed
Project to be negotiated hereunder shall include the development and use of the Property consistent
with the MCAS Tustin Reuse Plan, the General Plan, and the Specific Plan.
5.2 Terms of DDA to be Negotiated. Developer and the City agree that it is their
intent, upon entry into this Agreement, to negotiate a DDA which is anticipated to address the
following terms and conditions and such other terms and conditions as they may agree, and which
will be binding upon the City and Developer and, to the extent provided therein, their successors
and assigns.
5.2.1 Essential Terms. Developer shall acquire the Property from the City in one
phase unless otherwise agreed by the Parties in the DDA. The terms and conditions of the
conveyances, including, but not limited to, the manner of the conveyance, the conditions precedent
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to conveyance and the amount of the purchase price, shall be determined as part of the negotiation
of and detailed in the DDA, provided that Developer acknowledges and agrees that the purchase
price for the Property shall be consistent with the overall site plan attached to the Agreement as
Exhibit `B" and with the Project proforma to be submitted by Developer to the City in accordance
with the requirements of Section 6.6.2.
5.2.2 As -Is Conveyance. While Developer should undertake its own
investigation to determine the presence of hazardous materials and suitability of the Property for
development, Developer acknowledges and agrees that .if the Property is conveyed by the City
pursuant to a DDA, the Property shall be conveyed on an "AS -IS, WHERE -IS AND WITH ALL
FAULTS" basis, and Developer shall be obligated to release, defend, indemnify and hold harmless
the City with respect to its acquisition and development of the Property and the condition of the
Property, including any and all land use, soil and environmental conditions of the Property.
5.2.3 Development. Developer shall design and construct the Project on the
Property at its own cost and expense in accordance with the scope of development and a schedule
of performance to be negotiated as part of the DDA and in accordance with plans and specifications
prepared by Developer, and approved by the City in accordance with such schedule of performance
and in compliance with all, requirements and regulations of the City including, without limitation,
the Specific Plan and applicable zoning.
5.2.4 Product Mix. Developer understands and acknowledges that the product
mix proposed for the Project will be subject to approval by the City, in its governmental capacity,
and any necessary City entitlement approvals requested to carry out development of the Project on
the Property. The actual number of units will be based on compliance with development standards
in the Specific Plan and any requirements contained in the DDA.
5.2.5 Tustin Legacy Backbone Infrastructure Program Costs. In connection with
development of the Property, Developer shall make a Fair Share Contribution to the Tustin Legacy
Backbone Infrastructure Program based on the allocations to the Property in the City's Tustin
Legacy Backbone Financing Program — 2011, as the same may be amended from time to time
("Program"). The City is in the process of amending the Specific Plan and following adoption of
the amendments to the Specific Plan, if any, intends to update the Program to conform it to the
amended Specific Plan. Pursuant to the current Program, the fair share contribution allocated to
the Property is Thirteen Million Three Hundred Ten Thousand Nine Hundred and Sixty Four
Dollars ($13,310,964), but that amount is likely to change upward or downward with the update
of the Program by the City ("Project Fair Share Contribution"). The DDA shall address the
timing of payment of the Project Fair Share Contribution by Developer to the City.
5,2.6 Community Facilities District (CFD). The DDA shall provide for
imposition of a CFD for the Tax A approach used within the Tustin Legacy Project, with CFD
proceeds flowing solely to the City. Developer acknowledges and agrees (a) that the DDA shall
provide for creation and imposition of the CFD, (b) that its development plan will not require use
of CFD proceeds, and (c) that CFD proceeds will not be used to reimburse Developer for its Fair
Share Obligation or Project specific infrastructure costs. Developer acknowledges that a CFD,
including Tax B, has been adopted and affects 'the Property and further, Developer agrees that it
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shall affirmatively support and shall cooperate with the City in formation by the City of a CFD
imposing Tax A upon the Property.
5.2.7 Construction of In -Tract and Off -Site Infrastructure. Other than as provided
in the DDA, Developer will be responsible for all costs of any necessary in -tract improvements
and other off-site improvements identified by the City in the DDA, the DA or the Project
entitlements. The off-site infrastructure work may include modifications to sidewalks, curb and
parking on perimeter streets and will be further defined and described as the planning effort for
the Project evolves.
5.2.$ Applications. Developer shall prepare and process applications for and
obtain from the City and other federal, state and local jurisdictions, all applicable land use,
planning and zoning approvals for the proposed development with the support of the City. These
entitlements will be required to be consistent with the Specific Plan, unless as part of approval of
any application under the Tustin City Code modifications to development standards are granted
by the City.
5,2,9 Project Costs. Project costs and revenues will be separately analyzed and
funding of all Project costs will be the responsibility of Developer, as applicable.
5.2. 10 Development Fees. In connection with its development of the Property,
Developer acknowledges that the Property will be subject to applicable development fees,
including, but not limited to, those required by the City or other jurisdictions such as the
Foothill/Eastern Corridor Fee, the Santa Ana/Tustin Transportation System Improvement Area
(TSIA) fee, school impact fees and school facility bonds by the Tustin Unified School District
("TUSD"), utility meter and connection fees.
5,2.11 Transfer and Assignment Restrictions. Developer acknowledges that the
DDA shall contain limitations on transfer and assignment of the rights of Developer including the
right of the City to approve in its sole discretion all assignments and transfers by Developer of
interests in Developer or in the DDA.
5.2.12 Mortgagee Limitations and Subordination. Developer acknowledges that
the DDA shall impose limitations on mortgages and mortgagees and shall require subordination
of any mortgage to the DDA and DA and other transaction documents as applicable.
5,2,13 Remedies and Termination Ri ts. Developer acknowledges that the DDA
shall contain remedies and termination rights in favor of the City for breach of the DDA, which
shall include without limitation, rights of reverter in conveyed land.
5,2,14 Channel Improvements. The City is a party to that certain Joint Cooperation
Agreement with OCFCD dated March 11, 2003, as amended, relating to improvements to Peters
Canyon Channel, which provides that no more than 1,200 residential units within the former
master developer footprint of Tustin Legacy that drains to Peter's Canyon Channel may be
occupied prior to commencement of additional improvements to Peter's Canyon Channel.
Developer acknowledges and agrees that the DDA, the DA and/or the entitlements shall provide
that from and after issuance of the 67th building permit for residential units at the Property, the
City shall have issued 1,200 residential permits and, accordingly, the City shall be unable to issue
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building permits for further residential units until the following has occurred: (a) a contract has
been let by the City for the Channel Improvements, and (b) construction of the Channel
Improvements have commenced (collectively, the "Initial Channel Condition"). Developer
acknowledges that the City has previously granted rights to develop 1,133 residential units to other
developers within Tustin Legacy that are not restricted by this requirement and nothing herein
shall restrict the rights of developers under agreements previously entered into by the City, from
constructing residential units.
6. DeveloRer's Responsibilities.
6.1 Status Reports. Developer agrees to make bi-weekly oral and/or written reports
advising the City and/or its staff of all matters and studies being made, including Developer's
progress in analyzing the feasibility of the Project as may be requested by the City or its staff.
6.2 Development Team. Developer shall, within ten (10) days following the Effective
Date, submit in writing to the City full disclosure of the names of Developer's agents, authorized
negotiators, professional employees or other associates of Developer who may be participants in
development of the Project and other relevant information concerning the above, such as addresses,
telephone numbers and employers. Developer shall also designate and submit in writing to the
City the names of all Developer's lead negotiators who shall have authority to make decisions on
behalf of Developer.
6.3 Financial Status. Developer shall continue to be responsible for demonstrating to
the City Developer's financial capacity and capability to perform its obligations under this
Agreement and the proposed DDA. Developer shall submit any additional financial information
required to demonstrate Developer's, and any guarantor's, financial capacity and capability to
perform its obligations under this Agreement and the proposed DDA as requested by the City
within fifteen (15) days of a request. Developer shall identify with specificity the documents which
Developer wants the City to maintain as confidential documents and a statement as to why the
request is consistent and complies with the provisions of the Public Records Act of the State of
California. If confidentiality is requested and if nondisclosure under the Public Records Act is
allowed, the documents shall be delivered to and maintained by the City and copies shall not be
disseminated. To the extent permitted by law, the City shall not make public disclosure of the
documents. The City's agents, negotiators and consultants may review the statements as necessary
as long as such parties agree to maintain the confidentiality of such statements. In no event shall
the City'be required to maintain as confidential any materials required by law to be disclosed by
Developer, or otherwise disclosed by Developer in connection with its public filings.
6.4 Assignment. If Developer determines to joint venture or partner development of
the Property, or if Developer determines to form a new legal entity to develop the Property,
Developer shall promptly inform the City of such determination and submit to the City the joint
venture'.s or partner's most recent financial statements and the financial statements of its key
principals. The assignment of Developer's rights under this Agreement to any new entity,
partnership or joint venture may be approved in writing by the City, provided that the City is
satisfied in its sole discretion, that the new entity, partnership, or joint venture has the necessary
expertise, experience and financial capability to undertake development of the Property as
contemplated by this Agreement, to perform under this Agreement and the proposed DA and that
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the proposed Developer has identified a guarantor that will have the financial capacity to guaranty
Developer's obligations under the DDA and the DA.
6.5 Design Review/Entitlements, It is understood and agreed by Developer that the
quality, character and uses proposed for the Project are of particular importance to the City and
that planning and design review approval and other entitlements by the City will be required for
the development of the Property. Developer has conceptually proposed to develop the Property in
accordance with the Site Plan attached as Exhibit B. Developer and the proposed architect and
engineer for the Project shall meet with representatives of the City to review and come to a clear
understanding of the planning and design criteria required by the City. Within twenty (20) days
after the Effective Date; Developer shall submit a schedule for entitlement processing. Within
sixty (60) days after the Effective Date, Developer shall submit for approval of the City preliminary
revised design drawings and related documents containing the overall plan for development of
Developer's Project including the following: preliminary site plan showing building layout and
dimensions, parking, landscaping and access on or related to each individual parcel, floor plans,
preliminary materials call -outs and conceptual building renderings and a development schedule.
6.6 Proiect Financial Pro Forma and Other Required Deliverables. Within sixty
(60) days after the Effective Date, Developer shall submit the following in the business plan format
and schedule format requested by the City:
(a) revised overall cost and revenue estimates;
(b) Project cost and revenue data, including information on Project's financial
return adequate to enable the City to evaluate Developer's business offer and economic feasibility
of the proposed development of the Project, as proposed, on the Property;
(c) an updated comprehensive Project proforma demonstrating the feasibility
of the Project, including a Static Analysis and a Cash Flow Analysis by quarter, that shall reflect
any comments the City provides to Developer on the preliminary site plan;
(d) a Project schedule for land takedown and construction.
The financial proformas for the Project shall reflect any comments the City provides to Developer
on the preliminary site plan.
6.7 Additional Information. Developer understands and agrees that the City's
negotiating team reserves the right at any time to reasonably request from Developer additional
information, including data and commitments to ascertain the depth of Developer's capability and
desire to develop the Property expeditiously. The City's negotiating team will provide a
reasonable time in which Developer may obtain and submit to the City such additional information.
6.8 Contacts During Negotiation. Developer shall only negotiate with the City's
negotiating team as defined in writing by the City Manager or his or her designated representative
and with no other persons unless expressly authorized to do so by the City's negotiating team.
During the ENA Negotiating Period, Developer shall make no statements to the media about the
proposed Project without the approval of the City Manager or his or her designated representative.
Developer's failure to comply with the provisions of this Section shall be conclusive evidence that
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Developer has not "negotiated in good faith."
6.9 Environmental and Other Studies.
b,9,1 Environmental Requirements. Compliance with CEQA is a legal
precondition to any final City action to approve and execute a DDA and DA for the Property.
Developer shall cooperate with the City and abide by the City's environmental compliance
procedures and fee requirements, which include, but are not limited to, the obligation to deposit
funds to pay all of the City's costs of preparing any additional required environmental studies as
may be determined.
6,9.2 Plans, Reports, Studies and Investigations. Developer shall provide the
City, without cost or expense to the City, copies of all plans, reports, studies or investigations
(collectively, "Plans") prepared by or on behalf of Developer for development of the Project on
the Property. All Plans shall be prepared at Developer's sole cost and expense. Plans prepared by
Developer's surveyor, geotechnical consultant(s) and hazardous materials consultant(s) shall be
certified in favor of the City and Developer. If this Agreement is terminated for any reason other
than a material breach or default hereunder by the City, the City may request that Developer, for
consideration to be mutually agreed, transfer Developer's rights to any or all Plans identified by
the City (provided that Developer will not be required to assign its contracts with its consultants),
but in no event shall the cost to the City exceed five hundred dollars ($500.00). Developer has
informed the City that Developer's contracts with its engineers and consultants are master
consulting agreements that apply to more than one project and therefore, such contracts are not
assignable to the City. Therefore, in order to assure that the City shall be able to acquire
Developer's interest in the Plans, the City and Developer agree as follows:
(a) All agreements with consultants and/or engineers shall state that
either (i) such work product is assignable, to the extent such work product is owned by the
applicable consultant or engineer (ii) Developer is the owner of the work product.
(b) Upon request from the City in connection with or following
termination of this Agreement, Developer shall deliver to the City copies of all Plans requested by
the City together with a bill of sale executed by Developer pursuant to which Developer shall
convey to the City all right, title and interest of Developer in and to the Plans requested by the
City, and such Plans shall be free of all claims or interests of Developer or any liens or
encumbrances, provided that Developer makes no representations, warrantee or guarantee
regarding the right to use such Plans or the completeness or accuracy of the Plans, and Developer
does not covenant to convey the copyright or other ownership rights of third parties thereto.
(c) Upon the City's acquiring Developer's rights to any or all of the
Plans, the City shall be permitted to use, grant, license or otherwise dispose of such Plans to any
person or entity for development of the Property only; provided, however, that (i) if the City desires
to re -use the Plans, such Plans shall not identify Developer or, unless the City has separately
contracted with the consultant or engineer preparing the Plans, the preparing consultant or
engineer, as the source of the Plans, (ii) Developer shall have no liability whatsoever to the City
or any transferee of the City holding title to the Plans in connection with the use of the Plans, and
(iii) except with respect to Plans that are certified to the City, the City shall indemnify, defend and
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hold Developer and its consultants harmless from any and all Claims arising or resulting from the
City's re -use of the Plans or any revision or alteration of the Plans.
6,9.3 Hazardous Materials Assessment. Developer acknowledges that, in
accordance with the City of Tustin's acquisition of the Property from the Department of the Navy
by quitclaim, the Navy found and determined that (a) there was no contamination on the portion
of the Property comprised of a portion of Navy Reuse Parcel 27, later conveyed as a portion of
Parcel I -H-1 under Navy Quitclaim Deed H, and issued a Finding of Suitability for Transfer
("FOST") dated April 22, 2002, and (b) there was no contamination on the portion of the Property
comprised of a portion of Carve -Out 8, later conveyed as a portion of Parcel 11-H-9 under Navy
Quitclaim Deed 11-G-5 and II -H-9, and issued a FOST dated December 17, 2002 (collectively, the
"FOSTs"). The City would intend upon approval of a DDA to sell and convey by quitclaim in the
same manner as the parcels were conveyed to the City to include the covenants and warranties as
identified in the Navy's quitclaim deeds.
6.9.4 Insurance. Developer, and any permitted assignee(s), will be responsible in
conjunction with any DDA to provide commercial general liability, workers compensation,
builder's risk property insurance, and environmental insurance as identified in Exhibit C attached
hereto.
7. Developer.
7.1 Nature of Developer. Developer will be CalAtlantic Group, Inc. or such other
business entity (such as a limited liability corporation) as the City may approve for this transaction
in its sole discretion, upon such terms and conditions as the City may request and the City and
Developer may agree, as specified in the DDA and DA. Should another business entity be desired
by Developer, subject to approval of the City, Developer shall submit a copy of the applicable
formation documents relating to Developer and any corporate members of Developer (i.e., as
applicable: articles of incorporation; partnership agreement; and/or limited liability corporation
articles of incorporation, statement of information and operating agreement). Should the business
entity desired by Developer be an entity other than CalAtlantic Group, Inc., Developer
acknowledges and agrees that the financial capacity of such entity shall be of critical importance
to the City. Accordingly, the City shall have the right (a) to review and approve the entity and its
owners, including the financial capacity of each of the foregoing and (b) to require, as a condition
to execution of the DDA and to close of escrow for the Property, security for performance of the
obligations of such entity to be provided by CalAtlantic Group, Inc. or another entity with assets
meeting the requirements of the City and sufficient, in the determination of the City in its sole
discretion, to secure the development, construction and maintenance obligations of Developer
under the DDA and the DA. The foregoing security shall be provided by a completion guaranty
provided by such approved entity in a form acceptable to the City in its sole discretion or by other
instrument approved by the City in its sole discretion, as further described in the DDA. In no event
shall Developer propose as Developer a business entity that is not Controlled by or under common
Control with CalAtlantic Group, Inc. For purposes of this Agreement the term "Control"
"Controlled" or "Controlling", as used with respect to any person or entity, shall mean the
possession, directly or indirectly (including through one or more intermediaries), of the power to
direct or cause the direction of the management and policies of such Person, including through the
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direct or cause the direction of the management and policies of such Person, including through the
ownership or control of voting securities, partnership interests, membership interests, or other
equity interests, acting as the manager of a limited liability company, or otherwise.
7.2 Offices of Developer. The principal offices of Developer are located at 15360
Barranca Parkway, Irvine, California, 92618. The principals of Developer are as follows:
Elliot Mann, President, Southern California Coastal
Michael C. Battaglia, Vice President Project Development
Gary Jones, Vice President, Land Acquisition
7.3 Developer's Consultants and Professionals. Developer is required to make full
disclosure to the City of any changes to its principals, officers, stockholders, partners, joint
venturers, Project employees, and other associates and all other pertinent information concerning
Developer and its associates, as may be requested by the City from time to time. Developer agrees
to substitute or supplement any of its consultants and professionals as reasonably requested by the
City.
8. Developer's Financial Capacity.
8.1 Financial Capacity. Any additional financial information required to demonstrate
financial capacity and capability to perform the obligations under this Agreement of Developer, if
requested, shall be submitted to the City or its consultant as requested by the City for the purposes
of this Agreement.
8.2 Equi . Developer proposes to obtain its equity capital for development of the
Property from in-house financing.
8.3 Construction Financing. Developer proposes to finance Project costs for
development of the Property with 100% equity.
8.4 Long -Term Development Financing. Developer is capable of providing
financing for the development of the Property without the necessity of third party financing.
8.5 Bank and Other Financial References. Developer shall provide the City with
Developer's bank and other financial references as requested by the City from time to time.
8.6 Full Disclosure. Developer will be required to make and maintain full disclosure
to the City of the methods of financing and the financing documents to be used in the development.
9. Ci 's Responsibilities.
9.1 Environmental Requirements. A final Environmental Impact
Statement/Environmental Impact Report ("EIS/EIR") has been prepared and certified for the
MCAS Tustin Reuse Plan. Developer agrees to finance and supply information and otherwise
assist the City as requested to enable the City to determine the environmental impact of the
proposed development of the Project as described by the DDA and DA and to prepare such
additional environmental documents, if any, as may be needed to be completed for the
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development.
9.2 Assistance and Cooperation. The City shall cooperate with Developer by
providing appropriate information and assistance as reasonably requested by Developer.
9.3 Plans and Studies. The City shall, within ten (10) business days following the
Effective Date and at no cost to Developer, provide Developer with copies of all plans, reports,
studies, investigations and other materials the City may have pertinent to disposition of the
Property and/or development of the Project on the Property; provided; however, that the City
makes no representations, warrantee or guarantee regarding the completeness or accuracy of such
plans, reports, studies, investigation's and other materials.
9.4 FOSTs. The City agrees to provide a copy of the FOSTs to Developer within ten
(10) days following the Effective Date.
10. Miscellaneous.
10.1 Assistance and Cooperation. Developer and the City shall reasonably cooperate
with one another to achieve the objectives and purposes of this Agreement
10.2 Real Estate Commissions. The City shall not be liable for any real estate
commission, finder's fee or any broker's fees which may arise from this Agreement. Developer
represents that it has not engaged any broker, agent, or finder in connection with this Agreement
and Developer agrees to hold the City and its representatives harmless from any and all Claims
arising from or in any way related to any claim by any broker, agent, or finder retained by
Developer regarding this Agreement or the sale or development of the Property or any portion
thereof. The provisions of this Section 10.2 shall survive the termination of this Agreement.
10.3 No City Duty. Except as expressly provided above in Sections 4.3.3 and 4.4, the
City shall have no obligations or duties hereunder and no liability whatsoever in the event the City
and Developer fail to agree upon or to execute a DDA and a DA.
10.4 Non -Liability of City Officials and Employees. No member, official,
representative, director, staff member, attorney or employee of the City shall be personally liable
to Developer or any successor in interest in the event of any default or breach by the City or for
any amount which may become due to Developer or to its successor, or on any obligations under
the terms of this Agreement.
10.5 Entire Amement. This Agreement represents the entire agreement of the City
and Developer with respect to the matters set forth herein and supersedes any prior negotiations or
contemporaneous writings or statements. This Agreement may not be amended except in writing
signed by each of the City and Developer hereunder.
10.6 Attorneys' Fees. If either the City or Developer brings an action or files a
proceeding in connection with the enforcement of its respective rights or as a consequence of any
breach by any party of its obligations hereunder, then the prevailing party in such action or
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proceeding shall be entitled to have its reasonable attorneys' fees and out-of-pocket expenditures
paid by the losing party.
10.7 Covenant Against Discrimination. Developer shall not discriminate against nor
segregate, any person or group of persons on account of sex, race, color, age, marital status,
religion, handicaps, creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor shall Developer establish or permit any such
practice or practices of discrimination or segregation in the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property.
10.8 Notices/Submittals. All notices or submittals required or permitted hereunder
shall be delivered in person, by overnight courier, or by registered or certified mail, postage
prepaid, return receipt requested to such party at its address shown below, or to any other place
designated in writing by such party.
City: John Buchanan,
Director of Economic Development
City of Tustin
300 Centennial Way
Tustin, CA 92780
Jeffrey C. Parker, City Manager
City of Tustin
300 Centennial Way
Tustin, CA 92780
Developer: Elliot Mann
President, Southern California Coastal Division
CalAtlantic Group, Inc.
15360 Barranca Parkway
Irvine, CA 92618
Any such notice or submittal shall be deemed received upon delivery, if delivered personally; one
(1) day after delivery to the courier, if delivered by courier; and three (3) days after deposit into
the United States mail if delivered by registered or certified mail.
10.9 Prohibition Against Assignments. This Agreement shall not be assigned by
Developer without the consent of the City in its sole discretion. Any attempted or purported
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assignment by Developer of this Agreement without the consent of the City as aforesaid shall be
void and a breach by Developer of its obligation to negotiate in good faith under this Agreement.
10.10 No Third Party Beneficiaries. Execution of this Agreement is not intended to
create or confirm any third party beneficiary rights in or create any liability on the part of either
the City or Developer to any third parties.
10.11 Effect of Disposition and Development Agreement. Following mutual execution
by the City and Developer of a DDA and DA, this Agreement shall be of no further force or effect,
except that unless otherwise agreed in writing by Developer and the City, the releases set forth in
Sections 3.5, the indemnities set forth in Section 4.5.3 and Section 10.2, and the confidentiality
provisions of and Section 10.13 shall remain in effect with respect to Claims arising or accruing
during the term of this Agreement. In the event of any conflict between the provisions of this
Agreement and any DDA or DA approved by the City and Developer, the provisions of the DDA
and DA shall for all purposes prevail.
10.12 Confidentiality. The City and Developer represent and warrant that each shall
keep this Agreement and all information and/or reports obtained from the other, or related to or
connected with the Property, the other parties, this Agreement, and until presentation to the City
for approval, the DDA and DA or any other documents negotiated by the City and Developer,
confidential and will not disclose any such information to any person or entity without obtaining
the prior written consent of the other parties, except that the City shall have the right to disclose
any information contained in any third party reports obtained by Developer and Developer shall
have the right to make disclosures to Developer's employees and independent contractors,
including, but not limited to, consultants, financial planners, outside counsel, and experts as
necessary in order to determine if the Project is feasible and financeable. Notwithstanding the
foregoing, (i) information which is or becomes in the public domain, or which is required by any
law, rule or regulation to be disclosed shall not be considered confidential, and (ii) this Agreement,
the draft DDA and DA and all other material relating to this Agreement are subject to the
provisions of the California Public Records Act (Government Code Section 6250 et seq.). The
City's'use and disclosure of its agreements and records are governed by this Act. The provisions
of this Section shall survive the termination of this Agreement.
10.13 Governing Law/Exclusive Venue. The Agreement shall be interpreted in
accordance with California law. The Parties agree that in the event of litigation, exclusive venue
shall be in Orange County, California.
10.14 Counterparts. This Agreement may be signed in one or more counterparts, each
of which shall constitute an original and all of which together shall constitute one and the same
agreement.
10.15 Days; Performance of Acts on Business Days. Unless otherwise specifically set
forth herein, all references to "days" in this Agreement shall mean and refer to calendar days,
provided that, in the event that the final date for payment of any amount or performance of any act
ENA Tustin CalAtlantic Parcel 6B City of Tustin/CalAtlantic Group Inc.
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under this Agreement falls on a day on which the City of Tustin City Hall is closed, such payment
may be made or act performed on the next succeeding day upon which City Hall is open.
IN WITNESS WHEREOF, the City and Developer hereto have executed this Agreement as of
the date set opposite their signatures.
Dated:
APPROVED AS TO FORM
By:
David Kendig
City Attorney
Dated:
Dated:
"CITY"
CITY OF TUSTIN
Jeffrey C. Parker
City Manager
"DEVELOPER"
CALATLANTIC GROUP, INC,
a Delaware corporation
IM
Ted McKibbin
Regional President
Elliot Mann,
President, Southern California Coastal
Division
ENA Tustin CalAtlantic Parcel 613 City of Tustin/CalAtlantic Group Inc.
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Exhibit A
Property Legal Description and Site Map
A portion of lots 19, KKK, and LLL of Tract No. 17404 in the City of Tustin, County of Orange,
as per map filed in Book 907, Pages 6 through 42, inclusive, of Miscellaneous Maps, in the
office of the County Recorder of said county.
ENA Tustin CalAtlantic Parcel 6B Exhibit A City of Tustin/CalAtlantic Group Inc.
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Exhibit B
Site Plan Attached
ENA Tustin CalAtlantic Parcel 6B 2- Exhibit B City of Tustin/CalAtlantic Group Inc.
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Exhibit C
DDA Insurance Requirements
Insurance.
1.1. Required Insurance.
Without limiting the City's rights to indemnification, Developer shall procure and
maintain, at its own cost and expense, and furnish or cause to be furnished to the City, evidence of
the following policies of insurance (complying with the requirements set forth below) naming
Developer as insured and, with respect to the general liability and environmental liability insurance
required pursuant to Sections 1.1.1 and 1. 1.4 only, the City and the Successor Agency to the Tustin
Community Redevelopment Agency as additional insured. All insurance required below shall be
kept in force with respect to each such component of the Property, the Project and/or the
improvements until issuance of a final Certificate of Compliance by the City with respect thereto
or for such longer period as is described below.
1.1.1. Liability Insurance. Commencing upon the effective date of the DDA,
Developer shall maintain or cause to be maintained commercial general liability insurance, to
protect against loss from liability imposed by law for damages on account of personal injury,
including death therefrom, suffered or alleged to be suffered by any Person or Persons whomsoever
on or about the Property, the Project and/or the improvements and the business of Developer on
the Property, or in connection with the operation thereof, resulting directly or indirectly from any
acts or activities of Developer or anyone directly or indirectly employed or contracted with or
acting for Developer, or under its respective control or direction, and also to protect against loss
from liability imposed by law for damages to any property of any Person occurring on or about
the Property, the Project and/or the improvements or related to the Project and the business of
Developer on the Property, or in connection with the operation thereof, caused directly or
indirectly by or from acts or activities of Developer or any Person acting for,Developer, or under
its control or direction. Such insurance shall also provide for and protect the City against incurring
any legal cost in defending Claims for alleged loss. Such insurance shall be maintained in full
force and effect until issuance of the Certificate of Compliance and so long thereafter as necessary
to cover any Claims of damages suffered by persons or property prior to issuance of the Certificate
of Compliance, resulting from any acts or omissions of Developer, Developer's employees, agents,
contractors, suppliers, consultants or other related parties. The amount of insurance required
hereunder shall include comprehensive general liability and personal injury with limits of at least
Five Million Dollars ($5,000,000.00) and automobile liability with limits of at least Two Million
Dollars ($2,000,000.00) combined single limit per occurrence. The insurance shall be issued by a
company permitted by the Insurance Department of the State and rated A -NII or better (if an
admitted carrier) or A -/X (if offered by a surplus line broker), by the latest edition of Best's Key
Rating Guide. Such insurance may be provided by an umbrella insurance policy otherwise meeting
the requirements of this Section 1.
An Accord certificate evidencing the foregoing and providing the following endorsements signed
by the authorized representative of the underwriter and approved by the City shall be delivered
within seven (7) Business Days following the Effective Date and annually (upon request from the
City) evidencing renewals of each policy until issuance of a Certificate of Compliance for the
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Project. The endorsements shall provide as follows: (a) designate "the City of Tustin, the Tustin
Finance Authority and the Successor Agency to the Tustin Community Redevelopment Agency,
and their respective elected and appointed officials, agents, representatives and employees" as
additional insureds on the commercial general liability policies; (b) the commercial general
liability insurance coverage shall be primary, and not contribute with any in or self-
insurance maintained by the City; and (c) a waiver of subrogation for the benefit of the City. The
procuring of such insurance and the delivery of policies, certificates or endorsements evidencing
the same shall not be construed as a limitation of Developer's obligation to indemnify the City
Indemnified Parties as set forth herein.
1.1.2. Workers' Compensation Insurance. Commencing upon the effective
date of the DDA, Developer shall obtain, and thereafter maintain or cause to be maintained,
workers' compensation insurance issued by a responsible carrier authorized under the laws of the
State to insure employers against liability for compensation under the workers' compensation laws
now in force in California, or any laws hereafter enacted as an amendment or supplement thereto
or in lieu thereof. Such workers' compensation insurance shall cover all Persons employed by
Developer in connection with the Project and shall cover liability within statutory limits for
compensation under any such act aforesaid, based upon death or bodily injury claims made by, for
or on behalf of any Person incurring or suffering injury or death in connection with the Project or
the operation thereof by Developer. Notwithstanding the foregoing, Developer may, in
compliance with the laws of the State and in lieu of maintaining such insurance, self -insure for
workers' compensation in which event Developer shall deliver to the City evidence that such self-
insurance has been approved by the appropriate State authorities. Developer shall also furnish (or
cause to be furnished) to the City evidence satisfactory to the City that any contractor with whom
it has contracted for performance of work on the Property or otherwise pursuant to the DDA carries
workers' compensation insurance required by law. The insurance policy, and each renewal or
replacement thereof, by endorsement approved by an authorized representative of the underwriter,
shall contain a waiver of subrogation against the City, and its council members, officers,
employees, attorneys and agents. The insurance provided for under this Section 1.1.2 shall be
issued by a company rated B -/VIII or better or by the State Compensation Fund.
1.1.3. Builder's Risk Insurance. Commencing upon the commencement of
construction by Developer of any improvements and continuing until such time as the City delivers
a final Certificate of Compliance, Developer shall obtain, or shall cause its contractor to obtain,
and thereafter maintain a builder's risk policy with respect to such improvements or maintain
comparable coverage through a property policy. Such insurance shall be maintained in an amount
not less than one hundred percent (100%) of the full insurable value of the Building(s) and
improvements. The insurance provided for under this Section 1.1.3 shall be provided by insurer(s)
permitted to do business in the State and with a Best's rating of B/NR or better.
1.1.4. Environmental Insurance. From and after the Close of Escrow,
Developer shall obtain and shall thereafter maintain environmental and pollution legal liability
insurance coverage for the Property, including coverage for loss, remediation expense and legal
defense expenses, and naming the City as a named insured to address pollution risks at the
Property. The terms, policy amount and deductible for environmental insurance will be
determined by the Parties in the DDA. Such policy shall include coverage relating to known pre -
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existing conditions and/or conditions that are discovered during development on the Property.
Such policy shall comply with the following requirements:
(a) The policy shall be written by the insurance company selected by
Developer and approved by the City, which approval shall not be unreasonably withheld, and
which insurer(s) shall have a Best's rating of A -/VII or better;
(b) The policy shall provide not less than Five Million Dollars
($5,000,000) in coverage, subject to a maximum One Million Dollar ($1,000,000) deductible per
claim, to protect against Claims from liability relating to known and unknown conditions on the
Property for a period of not less than 10 years; and
(c) The policy shall be paid for in full at the time of issuance and shall
be endorsed as non -cancelable by Developer without the written consent of the City in its sole
discretion to such cancellation and shall contain a waiver of subrogation for the benefit of the City
and its council members, officers, employees, attorneys and agents. As such, Developer's
obligation to maintain environmental insurance pursuant to this Section 1.1.4 shall survive the
termination of the DDA following the Close of Escrow for the term required for such insurance
policy pursuant to Section 1.1.4(b).
(d) Developer's insurance policies shall name the City as an additional
insured with respect to any additional environmental and pollution legal liability insurance
coverage Developer acquires for the Project, the Property or any portion thereof.
The provisions of this Section 1. 1.4 shall survive the termination of the DDA.
1.2. General Insurance Requirements.
1.2.1. For all policies or certificates, the insurer endorsements (or a copy of the
policy binder, if applicable) shall specifically identify the DDA and shall provide evidence that
either (a) Developer has paid for its premium in full for any policy that is currently in place, or (b)
that said insurance shall not be cancelled except if the City is given at least thirty (30) days advance
written notice of any cancellation or termination of insurance by the insurer.
1.2.2. The term "full insurable value" as used in this Section 1 shall mean the
cost determined by mutual agreement of the Parties (excluding the cost of excavation, foundation
and footings below the lowest floor and without deduction for depreciation) of providing similar
improvements of equal size and providing the same habitability as the improvements immediately
before such casualty or other loss, but using readily -available contemporary components, including
the cost of construction, architectural and engineering fees, and inspection and supervision.
1.2.3. All insurance provided under this Section 1 shall be for the benefit of the
Parties. Developer agrees to timely pay all premiums for such insurance and, at its sole cost and
expense, to comply and secure compliance with all insurance requirements necessary for the
maintenance of such insurance. Developer agrees to submit certificates evidencing the insurance
required by Sections 1.1.1 and 1.1.2 to the City on an ACORD form within seven (7) business
days, following the effective date of the DDA, the insurance required by Section 1. 1.3 on or before
commencement of construction, and the insurance required by Section 1.1.4, at the Close of
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Escrow. Within seven (7) days, after expiration of any such policy, certificates and endorsements
evidencing renewal policies shall be submitted to the City, together with evidence of payment of
premiums.
1.2.4. If Developer fails or refuses to procure and maintain insurance as required
by the DDA, the City shall have the right, at the City's election, and upon ten (10) days' prior
notice to Developer, to procure and maintain such insurance. The premiums paid by the City shall
be treated as a loan, due from Developer, to be paid on the first calendar day of the month following
the date on which the premiums were paid. The City shall give prompt notice of the payment of
such premiums, stating the amounts paid and the name of the insurer(s).
1.2.5. Since the insurance policies required by Section 1. 1.4 will not be effective
until after the Close of Escrow, the evidence of insurance to be delivered by Developer to the City
at the Close of Escrow shall be limited to a binder evidencing that the insurance required by Section
1. 1.4 will become effective following the Close of Escrow.
2. Initially capitalized terms used in this Exhibit "A" and not otherwise defined in the ENA
shall have the meanings set forth below:
2.1. "Certificate of Compliance" shall mean a certificate to be issued with respect to
the Property by the City upon completion by Developer of all of the Buildings and improvements
and satisfaction of all additional conditions precedent thereto with respect to the Property or Phase,
as the case may be, as described in the DDA.
2.2. "Close of Escrow" shall mean the close of escrow for the Property and the transfer
of fee title to the Property by the City to Developer.
2.3. "Governmental Authority" shall mean any and all federal, State, county,
municipal and local governmental and quasi -governmental bodies and authorities (including the
United States of America, the State of California and any political subdivision, public corporation,
district, joint powers authority or other political or public entity) or departments thereof having or
exercising jurisdiction over the Parties, the Project, the Property or such portions of the foregoing
as the context indicates.
2.4. "Person" shall mean an individual, partnership, limited partnership, trust, estate,
association, corporation, Limited Liability Company, joint venture, firm, joint stock company,
unincorporated association, Governmental Authority, governmental agency or other entity,
domestic or foreign.
2.5. "State" shall mean the State of California.
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