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HomeMy WebLinkAbout08/15/2006, BUS 3 - APPROVAL OF AN OPTION AGREEMENT FOR PURCHASE OF AN AGRICULTURAL CONSERVATION EASEMENT ON THE BRUGHE council acEnaa REpoRt 3Q CITY OF SAN L U I S OBISPO FROM: Shelly Stanwyck, Assistant City Administrative Officer Prepared By: Neil Havlik, Natural Resources Managet"n SUBJECT: APPROVAL OF AN OPTION AGREEMENT FOR PURCHASE OF AN AGRICULTURAL CONSERVATION BASEMENT ON THE BRUGHELLI RANCH ON BUCKLEY ROAD CAO RECOMMENDATION Authorize the Mayor to sign an agreement with Ercole and Naomie Brughelli for an option to purchase an Agricultural Conservation Easement covering the 390 acre Brughelli Ranch on Buckley Road at a below-market price of$750,000. DISCUSSION Agricultural properties south of the Airport and in the Edna Valley have long been a high priority for easement acquisition by the City of San Luis Obispo. Unfortunately, few landowners have shown any willingness to involve themselves in conservation transactions, and efforts in this area have been challenging. The interest in such a transaction by the Brughelli family is therefore a significant breakthrough in this regard. The 390-acre Brughelli Ranch on Buckley Road is one of the largest single properties in the area south of the Airport (Attachment 1). It consists of prime soils, about 50 acres of which are currently farmed, and rolling hills used for livestock grazing. It seems probable that more land was dry-farmed in the past, as was the case on many properties in that area. The Brughellis have repeatedly stated their interest in preservation of the property, and about four years ago entered into formal negotiations with City staff about purchase of an agricultural conservation easement. The matter has gone through several iterations since we first began discussions. The Brughellis have stayed with the effort, and continuing discussions have taken place to explore a concept covering the entire property(rather than a portion), and limiting the property to uses consistent with agricultural zoning in the County. After considerable further negotiation, we have reached a new agreement for which staff recommends Council approval (Attachment 2). The Planning Commission reviewed the easement purchase concept in December 2004, and found the acquisition of an agricultural conservation easement on the property to be consistent with the City's General Plan (Attachment 3). The current effort includes more of the property; however, staff feels that the concept is unchanged and the 2004 Planning Commission finding remains valid. G/Havlik/Councilagenda/Brughelli open Brughelli Easement Acquisition August 15,2006 Page 2 The Agricultural Conservation Easement would: a. Cover the entire 390 acres of the property; b. Restrict land in perpetuity to uses permitted in the County's current agricultural zone, as that zone exists today; c. Allow no more than 18 dwelling units on the property, which is the theoretical maximum allowed under current zoning, with a requirement for clustering and subject to the-review and approval of both the City of San Luis Obispo and the County of San Luis Obispo; and d. Restrict agricultural land uses to those directly connected to agricultural production from the property. This would still allow, for example, a vineyard and winery,but not a church or agricultural services.such as equipment repair or storage, etc. This proposal is an excellent opportunity to "lock in" almost 400 acres very close to the city into agricultural uses in perpetuity. The option agreement commits the Brughellis to the transaction and allows the City a period for public fundraising. A fundraising effort will begin upon Council approval of the option agreement. For tax reasons, the Brughellis wish to close escrow on the transaction by the end of this year(i.e., December 29, 2006). Staff has worked diligently on this project over several years, and it has evolved into a different project than first imagined. It is however, it is comparable to the John Guidetti easement which restricted that property to agricultural uses, including up to six residential lots. The Guidetti easement has become a showcase for the City. The Brughelli property has significantly more development potential than the Guidetti Ranch, and the opportunity to retain the property in open space use in perpetuity by restricting that potential is worthy both of City funding support, and of creative efforts to close the gap through added fundraising(including private fundraising and an effort to engage other agencies in providing funding support to the project). FISCAL IMPACT- The purchase price of the easement is $750,000. This is 76.9% of the easement's appraised value ($975,000): the balance - represents a charitable contribution on the part of the Brughellis. Currently the City has approximately$550,000 in General fund monies and Airport Area open space impact fees to contribute to the project, leaving a gap of$200,000. City staff therefore are gearing up for a public fundraising campaign following Council authorization in order to raise the additional funds. We are confident that we will be able to raise these funds through a mix of public and agency efforts. However, if funds are still needed as we approach the end of the option period, we will return to Council for further direction on the project. There are only minor ongoing costs, since,as an easement, the only costs are annual monitoring of conditions on the property. These costs can be funded out of the existing Natural Resources program budget. 1 1 Brughelli Easement Acquisition August 15,2006 Page 3 Attachments: 1. Location Map 2. Option Agreement and Agricultural Conservation Easement (w/o Exhibits) 3. Minutes of Planning Commission Meeting of December 1, 2004 � -3 Meadow: S Ht ;aiier Dark Irw Johmi, arki ower. .0o.. 0 V Sinsheimer;; Park �80I )/WVale' T, r xy Sch Trik "P 0 lorr, kl 1134' \1E .396 _�4 3191 SM 2 UL ark ...... ------ 'Drive-i C9 I C\\L\ '-`Well I peate ra.. �Ii II, 2.?o Thiler .Sewagli,. ..... 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BRUGHELLI and NAOMIE BRUGHELLI, Trustees of the ERCOLE and NAOMIE BRUGHELLI TRUST dated July 19, 1999 (collectively, "Seller"), pursuant to the following RECITALS WHEREAS, Buyer is a California Charter Municipal Corporation; and WHEREAS, Buyer, acting through its City Council and through adopted public procedures, has determined that certain lands surrounding the city of San Luis Obispo are important to the scenic character, healthy natural environment, and economic and social well being of the community and its citizens; and WHEREAS, Buyer seeks to preserve and conserve characteristics such as visual quality, wildlife habitat, and other community attributes where appropriate surrounding the City; and WHEREAS, Seller is owner of certain lands adjacent to the City which are of scenic and agricultural value to the City and County of San Luis Obispo; and WHEREAS, Seller wishes to preserve,protect and restore the scenic and agricultural values which exist or may exist on the Property, and WHEREAS, the purchase of an agricultural conservation easement on said land in the judgment of Buyer would act to preserve the values indicated above and serve an important municipal purpose;and WHEREAS, both Buyer and Seller recognize that time will be required to secure the funds necessary for the transaction, and for other matters related thereto. NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: 1. OPTION; OPTION TERM; AND EXERCISE OF OPTION. (a) Grant of Option. Seller, for valuable consideration, hereby grants to Buyer an exclusive Option to purchase the conservation easement described in the Open 1 `� Space and Agricultural Conservation Easement Agreement attached as Exhibit A hereto: covering Seller's property located at 485 Buckley Road, San Luis Obispo, California; consisting of approximately 390 acres;identified as San Luis Obispo County APN 076- 061-002; and described more particularly in Exhibit B attached hereto ("the Property'). The open space and agricultural conservation easement described in Exhibit A is hereafter referred to as the "Agricultural Conservation Easement." (b) Term of Option. Buyer and Seller agree that the term of this Option shall commence on the date of execution of this Option Agreement, and continue until December 28, 2006. (c) Exercise of Option. Buyer may exercise the Option at any time within the applicable option period by giving written notice of exercise of the Option to Seller and Escrow Holder(as described below) to consummate the transfer. 2. OPTION PAYMENT; REFUND OF OPTION PAYMENT. (a) Option Payment. As consideration for the grant of the Option, Buyer shall pay Seller the sum of Ten Thousand Dollars ($10,000) as an Option consideration on the execution hereof. Such sum shall not be refundable, except as described in paragraph .2(b) next. If the Option is timely exercised by Buyer, the amounts paid to Seller as Option consideration shall apply to and be credited against the purchase price. (b) Refund of Option Payment(s). If Seller is unable to deliver clear title to the Property to Buyer, and Buyer elects not to purchase the Agricultural Conservation Easement then Seller shall refund the full Option payment to Buyer less the amount of any damages described in paragraph 5(b) below when the obligation of Buyer. 3. PURCHASE PRICE The total purchase price for the Agricultural Conservation Easement shall be $750,000.00, payable in cash at the close of escrow. The parties hereby acknowledge that the market value of the Agricultural Conservation Easement is $975,000 determined as of May 15, 2006, by an independent appraisal procured by Buyer. The parties intend that Seller will sell the Agricultural Conservation Easement for less than its fair market value. 4. CONVEYANCE Title to the easement shall be conveyed by recordation of the Agricultural Conservation Easement in the form of Exhibit A attached hereto and shall be insured by a CLTA (or at Buyer's election, an ALTA) owners' policy of title insurance in the amount of the purchase price, showing recordation of the Agricultural Conservation Easement, subject only to those exceptions listed in the Preliminary Title Report and/or Supplemental Report approved or deemed approved by Buyer. 2 � � 5. CONDITIONS PRECEDENT FOR BENEFIT OF BUYER Buyer's obligation to purchase the Property is expressly conditioned upon the satisfaction, deemed approval, or Buyer's waiver of each of the following conditions, each of which is deemed exclusively for the benefit of Buyer: (a) Supplemental Title Report. Buyer hereby approves the condition of title and all exceptions thereto set forth in the First American Title Preliminary Report of Title dated by June 23; 2006 and attached as Exhibit C hereto. Buyer's shall have the right to approve any new changes or exceptions to Exhibit C furnished by First American Title in a Supplemental Title Report on exercise of the Option (the "Supplemental Title Report"). Buyer shall have ten (10) calendar days after the receipt of the Supplemental Title Report and copies of all documents referenced therein, to provide to Seller and Escrow Holder written notice of Buyer's disapproval of any specific title exception not shown on Exhibit C. Any new title exception not so disapproved shall be deemed approved. If Buyer disapproves any new title exception, Seller shall have no obligation to cure the same, but Seller may elect, by written notice given to Buyer within ten (10) calendar days after receipt by Seller of Buyer's notice of disapproval, to attempt to cure or remove such disapproved item or to ignore it. If Seller is unable within a reasonable time to accomplish such cure or removal, or elects not to attempt to cure or remove a disapproved exception, then Buyer may elect to (i)terminate its obligations under this Agreement, (ii) waive its objections to such exception, or(iii) elect to correct any such disapproved exception itself, in which case Seller will provide reasonable assistance to Buyer to cure the same. (b) Inspection and Approval of Property and any Testing Thereon. Buyer's inspection and approval of the Property and all improvements thereon, including (at Buyer's option and expense) any surveys or studies deemed necessary in Buyer's sole judgment. Access to the property shall be given to Buyer, its agents and authorized representatives during normal business hours, at their own cost and risk, upon at least one (1)business day's notice to Seller for any purpose relating to Buyer's conditions. Buyer shall indemnify and defend Seller against and hold Seller harmless from all losses, costs, damages, liabilities, and expenses, including, without limitation, reasonable attorney fees arising out of Buyer's entry onto the Property or any activity thereon by Buyer or its agents, or authorized representatives, except to the extent any such losses, costs, damages, liabilities, and expenses arise out of the gross negligence or willful acts of Seller. If Buyer discovers any defect on the Property or improvements thereon which Buyer disapproves, Seller shall have no obligation to correct such defect, but Seller may elect, by written notice to Buyer within ten (10)calendar days after receipt by Seller of such notice of disapproval, to attempt to correct such defect or to ignore it. If Seller is unable within a reasonable time to complete such correction, or if Seller elects not to attempt to correct the same, Buyer may elect to (i) terminate its obligations under this Agreement, (ti) waive its objections to the defect, or(iii) elect to correct the same itself, in which case Seller will provide reasonable assistance to Buyer to correct the 3 J—/ same. The parties may also enter into additional negotiations, as may be mutually acceptable, concerning adjustment of the purchase price, allocation of risk, or contribution to the costs to cure or other matters, and the Escrow shall be extended for a reasonable time to effect such negotiations. 6. ESCROW (a) Escrow Holder. Buyer and Seller will establish an escrow ("'Escrow") with First American Title Insurance Company, 899 Pacific Street, San Luis Obispo, California 93449 ("Escrow Holder") within ten (10) business days of execution of this Agreement, subject to the provisions of the standard conditions for acceptance of escrow and the terms and conditions in this Agreement, with a signed counterpart of this document to be delivered as escrow instructions to Escrow Holder. In the event of any conflict between the terms of this Agreement and the standard conditions for acceptance of escrow, the terms of this Agreement shall control. (b) Proration and Fees. All escrow fees and costs shall be allocated according to custom in San Luis Obispo County. (c) Closing Date. Escrow shall close on or before December 29, 2006 ("Close of Escrow"). 7. REPRESENTATIONS, WARRANTIES,AND AGREEMENTS (a) Authorized Representative. Buyer and Seller hereby represent and warrant to each other that the persons who sign this agreement and any other documents required to be executed by such party to perform its obligations hereunder, shall have all requisite power and authority to have entered into this Agreement, and that all authorizations required to be obtained by or on the part of such party to execute and perform this Agreement have been obtained. (b) Proof of Citizenship. Seller is not a foreign person as such term is used in Section 1445 of the Internal Revenue Code. Prior to the Close of Escrow, Seller shall deposit in Escrow a non-foreign affidavit as provided under said Section 1445. Failure to do so shall entitle Buyer to withhold from the purchase price such sums as are required by said Section 1445. (c) Legal Actions. Seller represents and warrants to Buyer that there are no actions, suits, or legal proceedings related to the ownership, use, operation or sale of the Property to which Seller is a party nor has Seller received any notice that any such actions are pending or threatened. (d) -Seller-'s Knowledge-of Environmental Conditions of the Property. To the best of Seller's knoledge, there are not now nor have there been any hazardous or toxic wastes (as said terms are defined in applicable Federal, State, or County laws or 4 3-r i regulations) located on or within any portion of the Property;nor have there been any enforcement, cleanup, removal or other governmental or regulatory actions instituted, contemplated, or threatened pursuant to any applicable Federal, State, or local laws or regulations relating to any hazardous materials and affecting the Property: nor have there been any claims made or threatened by any third party against Seller or the Property, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any hazardous materials. 8. NOTICES All notices, communications, consents, approvals and disapprovals required or permitted hereunder must be in writing and shall be delivered by personal delivery, facsimile, or deposited in the United States mail, postage prepaid and addressed as follows: TO BUYER: City of SanLuis Obispo Dr. Neil Havlik, Natural Resources Manager 990 Palm Street San Luis Obispo, CA 93401 TO SELLER: Ercole and Naomie Brughelli 485 Buckley Road San Luis Obispo, CA. 93401 With a copy to: Richard N. Racouillat Duggan Smith and Hutkin LLP 979 Osos Street, Suite F San Luis Obispo, CA 93401 The foregoing may be changed by written notice. If served personally, or by facsimile, service shall be conclusively deemed made at the time of service. If served by mail, service shall be conclusively deemed made seventy-two (72) hours after deposit thereof in the United States mail. 9. BROKERS Neither party to this transaction has employed a real estate broker in this transaction and each party hereby indemnifies and holds harmless the other party for any commission claimed through a third party. 10 SURVIVAL The warranties, representations, and agreements made in this Agreement shall survive the close of escrow. 5 11. MISCELLANEOUS (a) Entire Agreement. This Agreement, and the exhibits hereto, contain the entire agreement between the parties hereto. No modification or addition to any term or provision hereof shall be effective unless made in writing and signed by both parties hereto. The captions and headings in this Agreement are for reference only and shall not be deemed to define or limit the scope or intent of any of the terms, covenants; conditions or agreements contained herein. (b) Attorneys' Fees.. If an action or proceeding is commenced between the parties, the prevailing party shall be entitled to recover from the non-prevailing party its reasonable attorney fees and costs. (c) Successors. This Agreement shall inure to the benefit of and shall be binding upon the parties to this Agreement and their respective heirs, successors, and assigns. (d) Governing Law. This Agreement shall be governed and construed in accordance with California law. (e) Time of Essence. Time is of the essence in this Agreement. (f) Offer and Acceptance. This Agreement shall be of no force or effect whatsoever until signed by authorized representatives of both Buyer and Seller. (g) Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be deemed an original. "Seller" ERCOLE and NAOMIE BRUGHELLI TRUST dated July 19, 1999 " By: �J_h. _- I e& B - — --- ERCOLE C. BRUGH LI, Trustee NAOMIE BRUGHELLL Trustee DATE: August 3, 2006 DATE: August 3, 2006 6 �v `Suver" CITY OF SAN LUIS OBISPO By: DATE`: DAVID F. ROMERO, MAYOR ATTEST: APPROVED AS TO FORM: Audrey Hooper, CMC Jonathan Lowell City Clerk City Attorney 7 �� STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) On _ 2006, before me, a Notary Public for the State of California, personally appeared DAVID F. ROMERO personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument,and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)acted, executed the instrument. WITNESS my hand and official seal. Notary Public STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) On August 3, 2006, before me, SANDRA V. HAILEY, a Notary Public for the State of California,personally appeared ERCOLE C. BRUGHELLI and NAOMIE BRUGHELLI personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s)or the entity upon behalf of which the person(s)acted, executed the instrument. WITNESS my hand and official seal. SANM v KAM Ems,#1ea3M otary Public Notary P"c-Caftoft San LUIS Obwo COW* AtrrCMm EVW0ec bi, 8 �2 { EXHIBIT_A RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of San Luis Obispo Office of the City Clerk 990 Palm Street San Luis Obispo, CA 93401-3249 OPEN SPACE AND AGRICULTURAL CONSERVATION EASEMENT AGREEMENT This Open Space and Agricultural Conservation Easement Agreement ("Agreement") is made and entered into this day of , 200_, by and between ERCOLE C. BRUGHELLI and NAOMIE BRUGHELLI, Trustees of the ERCOLE and NAOMIE BRUGHELLI TRUST dated July 19, 1999 (the "Grantor"), and the CITY OF SAN LUIS OBISPO, a municipal corporation of the State of California(the "City"). WITNESSETH A. Grantor owns that certain real property located at 485 Buckley Road in the unincorporated area of the County of San Luis Obispo, California(Assessor Parcel Number 076-061-002), consisting of approximately 390 acres of land and improvements (the "Subject Property"). The Subject Property is more particularly described in Exhibit A attached hereto. Grantor wishes to place the Subject Property under the protective covenants of this Open Space and Agricultural Conservation Easement Agreement. The easement granted in this Agreement is hereafter described as the "Agricultural Conservation Easement" B. The existing buildings and improvements located on the Subject Property are depicted in Exhibit B attached hereto. The Subject Property also includes open farmland and grazing land, approximately 60 percent of whose soils have been classified as prime farmland by the Natural Resource Conservation Service, U.S. Department of Agriculture, and by the California Department of Conservation Farmland Mapping and Monitoring Program, because this land has a soil quality, growing season, and moisture supply needed for sustained agricultural production. C. The agricultural and other characteristics of the Subject Property, its current use and state of improvement are described in a Present Conditions Report prepared by the City with the cooperation of Grantor, and acknowledged by both parties to be reasonably complete and accurate as of the date of this.Agreement. A copy of such report is on file at 1 S-13 i the offices of City and is incorporated herein by this reference. Such report is intended to serve as an objective baseline for monitoring compliance with the terms of this grant. D. The market value of the Agricultural Conservation Easement granted to City by this Agreement has been determined by independent appraisal. A copy of the Appraisal Report of the Subject Property dated as of May 15, 2006, prepared by Schenberger, Taylor, McCormick and Jecker, Inc., and approved by City and Grantor, has been provided to City and Grantor. The Appraisal Report concludes that the market value of the Agricultural Conservation Easement provided for in this Agreement is $975,000.00. Grantor is willing to convey this Agricultural Conservation Easement for less than fair market value, namely $750,000.00, to preserve the Subject Property's natural character and existing openness by voluntarily restricting Grantor's use of and activities on the Subject Property through the imposition of a perpetual open space and agricultural conservation easement on the terms and conditions set forth in this Agreement. E. City will acquire this Agricultural Conservation Easement through a substantial investment intended to qualify under Internal Revenue Code §170(h) applicable to a qualified conservation contribution. The funds paid represent a substantial investment by the People of the State of California in the long-term conservation of valuable agricultural land, and the retention of agricultural land in perpetuity. The Subject Property and this Agricultural Conservation Easement have met the California Farmland Conservancy Program's mandatory eligibility criteria and certain selection criteria. The Subject Property and this Agricultural Conservation Easement also have multiple natural resource conservation objectives. The rights vested herein arise out of the State's statutory role in fostering the conservation of agricultural land in California and its role as contributor of,, and fiduciary for, the public investment represented here. F. Grantor grants this Agricultural Conservation Easement to the City for valuable consideration and for the exclusive purpose of assuring that, under the City's perpetual stewardship, the Subject Property will be conserved and maintained in accordance with the terms of this Agreement, and that uses of the Subject Property that are inconsistent with this purpose will be prevented or corrected. The concern of the Grantor and City is that, but for this grant, the agricultural attributes and uses of the Subject Property will be compromised by increasing pressure from neighboring agricultural properties that have been converted to more intensive residential density. G. The conservation purposes of this Easement are recognized by, and the grant of this Easement will serve, the following clearly delineated governmental conservation policies: Section 815 of the California Civil Code, which defines perpetual conservation easements; California Constitution Article XIII, section 8, and Revenue and Taxation Code sections 421.5 and 422.5, under which this Agricultural Conservation Easement is an enforceable restriction, requiring that the Subject Property's tax valuation be 2 J /Y consistent with restriction of its use for purposes of food and fiber production and conservation of natural resources. Division 10.2 (sections 10200, et seq.) of the California Public Resources Code, which creates the California Farmland Conservancy Program: Section 51220 of the California Government Code, which declares a public interest in the preservation of agricultural lands; The San Luis Obispo County General Plan, as amended in December 1996, which includes as one of its goals to protect all viable farmlands designated as prime, of statewide importance, unique, or of local importance from conversion to and encroachment of non-agricultural uses; and Resolution No. 2003-26, approved by the Board of Supervisors of San Luis Obispo County on the 28th day of January, 2002, which expresses support for the acquisition of an agricultural conservation easement on the Subject Property, and finds that such protection is consistent with the County's General Plan. H. City is a California municipal corporation, and, as certified by a resolution of its City Council, accepts the responsibility of enforcing the terms of this Easement. Now, therefore, for the reasons given, and in consideration of their mutual promises and covenants, terms, conditions and restrictions contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Grantor voluntarily grants and conveys to the City, and City voluntarily accepts, a perpetual Conservation Easement, as defined by Section 815.1 of the Civil Code of California, and of the nature and character described in this Agreement, and agree as follows. 1. GRANT OF EASEMENT. Grantor hereby grants to City in perpetuity an open space and agricultural conservation easement on the terms and conditions of this Agreement over the Subject Property as described in Exhibit A. Said grant of an agricultural conservation easement conveys to City an estate and interest in the Subject Property. The purpose of this Agricultural Conservation Easement is to allow continuation of historical agricultural activities on the property and such other activities as are consistent with the restrictions set forth herein, and to otherwise restrict the use of the Subject Property as hereinafter set forth. 2. CONDITIONS OF EASEMENT. The restrictions hereby imposed upon the use of the'Subject Property, and any portion thereof, by Grantor and the acts which Grantor shall refrain from doing upon the Subject Property are, and shall be, as follows: (a) General Plan Amendments. Amending the General Plan to a land use category that would allow a higher density of development than that which is allowed on July 1, 2006, (namely,a maximum of 18 residential units) based on the 3 �/S- General Plan of San Luis Obispo County is prohibited. A certified copy of such General Plan shall be maintained by City. (b) Prohibited Uses. All activities or uses that are not permitted under the General Plan of the County of San Luis Obispo, including its Land Use Ordinances related to property classified as "Agriculture" as of July 1, 2006, are prohibited. A certified copy of such General Plan and such Land Use Ordinances shall be maintained by City. In addition, the following activities or uses that are defined and authorized in land classified as"Agriculture" by such General Plan are prohibited: (1) Airfields or Landing Strips except as may be necessary in support of agricultural activities. (2) Bed and Breakfast facilities except those whose primary purpose is in support of agricultural tourism. (3) Caretaker Residence except as may be necessary in support of agricultural activities. (4) Churches. (5) Concrete, Gypsum, or Plaster Products. (6) Food and Kindred Products when food processing and manufacturing establishments. (7) Indoor Amusement and Recreation Facilities except when permitted under subparagraphs (c) - (f) of this Paragraph 2. (8) Libraries and Museums except when permitted under subparagraphs (c) (f)of this Paragraph 2. (9) Membership Organization facilities except when permitted under subparagraphs (c) - (f) of this Paragraph 2. (10) Surface Mining. (11) Mobile Homes unless a caretaker's residence or when permitted under subparagraphs (c) - (f) of this Paragraph 2. (12) Paving Materials. (c) Subdivisions. Subdivision of the Subject Property into more lots than are permitted for agricultural zoning is prohibited. Any proposed subdivision of the Subject Property shall be subject to the reasonable review and approval of the City of San Luis Obispo and, if applicable, the approval authority of the County of San Luis Obispo. The parties acknowledge that the intent of this restriction is to keep the property in productive agricultural use and that any permitted residential development shall be located or clustered in such a manner as to protect the productive agricultural use of the Subject Property. 4 �-�� (d) Residential Structures Construction and placement of any residential structures, and associated infrastructure shall be subject to the reasonable review and approval of the City of San Luis Obispo and, if applicable, the approval authority of the County of San Luis Obispo. (e) Large Agricultural Structures Large structures associated with agricultural production, such as winery facilities, may be constructed on the Subject Property subject to the reasonable review and approval of the City of San Luis Obispo and, if applicable, the approval authority of the County of San Luis Obispo. Any such large structures must be clearly associated with agricultural production from the Subject Property. (f) Other Improvements Except as provided in subparagraphs (b), (c), (d), and (e) above, no other buildings or other structures may be constructed or installed on the Subject Property, except structures and improvements permitted in an agricultural zone for agricultural production on the Subject Property. Such other permitted improvements include, for example, barns, equipment sheds, irrigation systems, fencing, and improvements for agricultural production purposes and the sale of farm products predominately grown or raised on the Subject Property. All such structures and improvements, individually and combined, must be consistent with the provisions of this Agricultural Conservation Easement and Public Resources Code § 10262. Any such structures proposed to be built or placed on the Subject Property shall be subject to the reasonable prior review and approval of the City of San Luis Obispo and, if applicable, to the approval authority of the County of San Luis Obispo. (g) Advertisements. No signs, billboards, or similar structures or devices or advertising of any kind or nature may be located on the Subject Property, except for reasonable identifying signage associated with any approved activity. (h) Natural Resources. No extraction of surface or subsurface natural resources (except water resources) may be allowed on the Subject Property. Subsurface oil and gas resources, if found to be present, may be extracted by proper technological methods. (i) Impervious Surfaces. Impervious surfaces shall be minimized, and in no case shall such surfaces exceed five percent (5%) of the area of the Subject Property. 3.' GRANTOR TO RETAIN.ALL WATER RIGHTS. Grantor shall retain and reserve all water rights of any kind or nature on the Subject Property. 4. EASEMENT TO BE PERPETUAL. This Agricultural Conservation Easement shall remain in effect in perpetuity. 5. TERMS BINDING ON SUCCESSORS. The terms and conditions contained herein shall be binding on the parties hereto and their heirs, successors and assigns. 6. ALL OTHER RIGHTS RETAINED BY GRANTOR. Grantor retains the right to perform any act on the Subject Property not specifically prohibited or limited by this Agreement. Such ownership rights include, but are not limited to, the right to exclude any member of the public from trespassing, and the right to sell, lease, or otherwise transfer the Subject Property, or properly subdivided portions thereof, to anyone they choose. 7. NO OTHER LEGAL OBLIGATIONS IMPOSED ON CITY. Other than as specified herein, this Agreement is not intended to impose any legal or other responsibility on the City of San Luis Obispo, or in any way to affect any existing obligation of the Grantor as owner of the Subject Property. Among other things, this shall apply to: (a) Taxes. Grantor shall be solely responsible for payment of all taxes and assessments levied against the Subject Property including the Easement Area. If the City ever pays any taxes or assessments on the Subject Property, or if the City pays levies on Grantor's interest in order to protect City's interests in the Subject Property, Grantor will reimburse the City for the same. (b) Upkeep and Maintenance. Grantor shall be solely responsible for the upkeep and maintenance of the Subject Property to the extent required by law. City shall have no obligation for the upkeep or maintenance of the Subject Property, except as specifically provided in this Agreement. (c) Liability and Indemnification. In consideration of City's negative rights, limited access to the land, and lack of active involvement in the day-to-day management activities on the Subject Property, Grantor shall indemnify,protect, defend and hold City, its officers, directors, members, employees, contractors, legal representatives, agents, successors and assigns harmless from and against all liabilities costs, losses, orders, liens, penalties, damages, expenses, or causes of action, claims, demands, or judgments, including without limitation reasonable attorney's fees, arising from or in any way connected with injury or the death of any person, or physical damage to any property, or any other costs or liabilities resulting from any act, omission, condition, or other matter related to or occurring on or about the Subject Property, regardless of cause, unless due to the negligence or willful misconduct of City or any of its officers, directors, members, employees, contractors, legal representatives, agents, successors, and assigns. City shall be named additional insured on Grantor's general liability insurance policy. City shall indemnify, protect, defend and hold Grantor, its trustees, officers, directors, employees, contractors, legal representatives, agents, successors and assigns harmless from and against all liabilities costs, losses, orders, liens, penalties, damages, expenses, or causes of action, claims, demands, or judgments, 6 /e including without limitation reasonable attorney's fees. arising from or in any way connected with injury or the death of any person. or physical damage to any property, or any other costs or liabilities resulting from any act, omission, condition, or other matter related to or occurring on or about the Subject Property due to the negligence or willful misconduct of City or any of its officers, directors, members, employees, contractors, legal representatives, agents, successors, and assigns. 8. CITY MONITORING OBLIGATIONS. City shall manage its responsibilities for the Subject Property, including, but not limited to, annual monitoring, such additional monitoring as circumstances may require, record keeping, and enforcement, for the purposes of preserving the agricultural productive capacity and open space character of the Subject Property consistent with the terns of this Agreement in perpetuity. City shall maintain a record of annual monitoring, describing the method of monitoring, condition of the Subject Property, stating whether any violations were found during the period, describing any corrective actions taken, and the resolution of any violation. 9. ENFORCEMENT AND COSTS. City shall have the right to prevent and correct violations of the terms of this Agreement. With reasonable advance notice to Grantor, the City may enter the Subject Property for the purposes of inspection. If the City finds what it believes is a violation, it may at its discretion take appropriate action, including legal action, subject to the provisions of Section 10, Arbitration. Except when an ongoing or imminent violation could irreversibly diminish or impair the open space character and agricultural productivity of the Subject Property, City shall give Grantor written notice of any such violation and thirty (30) days to correct it, before filing any legal action. If a court with jurisdiction determines that a violation may exist or has occurred, City may obtain an injunction to stop it, temporarily or permanently. A court may also issue an injunction requiring Grantor to restore the Subject Property to its condition prior to the violation. The failure of City to discover a violation or to take immediate legal action shall not bar it from doing so at a later time. Without limiting Grantor's liability therefore, City shall apply damages recovered to the cost of undertaking any corrective action on the Subject Property. Should the restoration of lost values be impossible or impractical for whatever reason, City shall apply any and all damages recovered to furthering the City's mission, with primary emphasis on agricultural easement acquisition and enforcement. Nothing contained in this Agreement shall be construed to entitle City to bring any action against Grantor for any injury to or change in the Subject Property resulting from causes beyond Grantor's control, including, without limitation, fire, flood, storm, earth movement or from any prudent action taken by Grantor under emergency conditions to prevent, abate, or mitigate significant injury to the Subject Property resulting from such causes. In any case where a court finds that a violation has occurred and City is not in default hereunder, Grantor shall reimburse City for all its expenses incurred in stopping and correcting the violation, including but not limited to reasonable attorney's fees. If Grantor prevails m any action or proceeding to enforce the terms of this Agreement, Grantor's costs of suit, including, without limitation, attorneys' fees, shall be borne by City. 10. ARBITRATION. Any eontroversv arising from this Agreement or its breach, except an imminent violation that could irreversibly diminish or impair the open space character and agricultural productivity of the Subject Property that requires immediate action under Section 9, shall be determined by arbitration as follows: (a) Within thirty (30) days after a notice by either party to the other requesting arbitration and stating the basis of the party's claim, one arbitrator shall be appointed by each party. Notice of appointment shall be given by each party to the other party when made. If a party fails to appoint an arbitrator within such 30- day period, the arbitrator selected by the other party shall decide the matter. (b) If two arbitrators are timely appointed, they shall immediately choose a third arbitrator to act with them. If they fail within fourteen (14) days of their appointment to select a third arbitrator, on application by either party, a third arbitrator shall be appointed by the then presiding judge of the Superior Court of the State of California in and for the County of San Luis Obispo. The party making the application shall give the other party fourteen (14) day's notice of the application. (c) The arbitration shall be conducted under the Code of Civil Procedure (CCP Sections 1280-1294.2) and be held in San Luis Obispo, California. Both parties agree by signing this Agreement that they are agreeing to have any dispute arising from the matters relating to this Agreement, except for imminent violations subject to Section 9, decided by neutral arbitration as provided by California law and that each party is giving up rights to have the dispute litigated in a court or by jury trial. By signing this Agreement, each party is giving up judicial rights to discovery and appeal unless such rights are specially requested in the notice requesting Arbitration oras permitted by CCP 1280 et. seq. If either party refuses to submit to arbitration, they may be compelled to arbitrate under the authority of the California Code of Civil Procedure. 11. TRANSFER OF EASEMENT BY CITY. If the City should desire to transfer the Agricultural Conservation Easement created by this Agreement to another qualified party, City must first obtain written permission from the Grantor, which permission shall not be unreasonably withheld. The request shall state the name of the qualified party to which the transfer is proposed, the reasons therefore, and such other information as Grantor may reasonably request. If written consent is given for the proposed transfer, City may transfer the Easement created by this Agreement to: (1) a private nonprofit organization that, at the time of transfer;.is a"qualified organization" under Section 170(h) of the U.S. Internal Revenue Code and under Section 815.3(a) of the Civil Code of California and has similar purposes to preserve open space and farmland, as well as agreeing to assume the responsibilities imposed by this Agreement; (2) if no such private nonprofit organization is willing to assume the responsibilities imposed by this Agreement, then the Agricultural Conservation Easement created by this Agreement may be transferred to any public agency authorized to hold interests in real property as provided in section 815.3(b) of the Civil Code of California. Such a transfer may proceed only if the 8 3—,2 d organization or agency expressly agrees to assume the responsibility imposed on City by this Agreement. If City ever ceases to exist or no longer qualifies under Section 170(h) of the U.S. Internal Revenue Code, or applicable state law, a court with jurisdiction shall, upon consultation with the California Department of Conservation, transfer this Agricultural Conservation Easement, pursuant to the California Public Resources Code Section 10235(b), to another qualified organization, as defined in Section 815.3 of the Civil Code of California, and having similar purposes that agrees to assume the responsibility imposed by this Agreement. 12. VOLUNTARY TRANSFER OF TITLE BY OWNER. Any time the Subject Property itself, or any interest in it, is transferred by the Grantor to any third party, Grantor shall notify the City in writing at least 30 days prior to such transfer, and the document of conveyance shall expressly incorporate by reference this Agreement. Any document conveying a lease of the Subject Property shall expressly incorporate by reference this Agreement. Failure of the Grantor to do so shall not impair the validity of this Agreement or limit its enforceability in any way. The purpose of this section is to ensure that new parties to the Agreement or affected by this Agreement are notified of, and are aware of, its existence. 13. AMENDMENTS MUST BE IN WRITING. This Agreement may be amended only with the written consent of Grantor and City. Any such amendment shall be consistent with the purposes of this Agreement and with City's easement amendment policies, and shall comply with Section 170(h) of the Internal Revenue Code, or any regulations promulgated in accordance with that section, and with Section 81.5 et seq. of the Civil Code of California, or any regulations promulgated thereunder. 14. TERMINATION OF EASEMENT. Termination of this Agricultural Conservation Easement shall be governed by Sections 10270-10277 of.the Public Resources Code of California. 15. TERMINATION BY CONDEMNATION. Termination of this Agricultural Conservation Easement or any portion thereof through condemnation is subject to the requirements of Section 10261 of the Public Resources Code. If all or any portion of the Subject Property is acquired by eminent domain, or by purchase in lieu of eminent domain by any public entity other than City, City shall be paid by the condemnor (or purchaser), 76.9% value of the Agricultural Conservation Easement at the time of condemnation (Public Resources Code Section 10261(a) 2). Should this easement be condemned or otherwise terminated on any portion of the Subject Property, the balance of the Subject Property shall remain subject to this Agreement. In this event, all relevant related documents shall be updated and re-recorded by the City to reflect the modified Subject Property subject to this Easement. 16. INTERPRETATION. References to authorities in this Agreement shall be to the statute, rule, regulation, ordinance or other legal provision that is in effect at the time this easement becomes effective. This Agreement shall be interpreted under the laws of California, resolving any ambiguities or questions of the validity of specific provisions so as to give maximum effect to its conservation purposes. 17. NO APPROVALS EXPRESS OR IMPLIED. No provision of this Agreement shall constitute governmental approval of any improvements, construction or other activities that may be permitted under this Agreement. The easement created by this Agreement pursuant to Civil Code section 815.1 shall run with the land in perpetuity. Every provision of this Agreement that applies to Grantor or City shall also apply to their respective agents, heirs, executors, administrators, assigns, and all other successors as their interests may appear. No merger of title, estate or interest shall be deemed effected by any previous, contemporaneous, or subsequent deed, grant, or assignment of an interest or estate in the Subject Property, or any portion thereof, to City, or its successors or assigns, it being the express intent of the parties that this Agricultural Conservation Easement not be extinguished by, or merged into, or any other interest or estate in the Subject Property now or hereafter held by City or its successors or assigns. 18. NOTICES. Any notices to Grantor and City required by this Agreement shall be in writing and shall be personally delivered or sent by first class mail,to the following addresses, unless a party has been notified by the other of a change of address: To Grantor: Ercole and Naomie Brughelli 485 Buckley Road San Luis Obispo, CA 93401 To City: City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 19. GRANTOR'S HAZARDOUS MATERIALS WARRANTY. Grantor warrants that Grantor has no actual knowledge of a release or threatened release of hazardous substances or wastes on the Subject Property and hereby promises to defend and indemnify City against all litigation, claims, demands, penalties and damages, including reasonable attorneys' fees, arising from or connected with any release of hazardous waste or violation of federal, state or local environmental laws. Notwithstanding any other provision herein to the contrary, the parties do not intend this Agreement be construed such that it creates in or gives the City: (a) the obligations or liability of an "owner_" or"operator" as those words are defined and used in environmental laws; as defined below, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,as amended (42 USC section 9601 et seq. And hereinafter"CERCLA"); (b) the obligations or liability of a person described in 42 USC section 9607 (a)(3) or(4); 10 c � (c) the obligations of a responsible person under any applicable Environmental Laws, as defined below, (d) the right to investigate and remediate any Hazardous Materials, as defined below, associated with the Subject Property: or (e) any control over Grantor's ability to investigate, remove, remediate, or otherwise clean up any Hazardous Materials associated with the Subject Property. The term "Hazardous Materials" includes, without limitation, (a) material that is flammable, explosive, or radioactive; (b) petroleum products; and (c) hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the CERCLA (42 USC section 9601 et seq.), the Hazardous Materials Transportation Act(49 USC section X101, et seq.), the Hazardous Waste Control Law (California Health and Safety Code section 25 100 et seq.), and in the regulations adopted and publications promulgated pursuant to them, or any other applicable federal, state, or local laws, ordinances, rules, or regulations now in effect or enacted after this date. The term "Environmental Laws" includes, without limitation, any federal, state or local or administrative agency statute, regulation, rule, ordinance, order or requirement relating to pollution, protection of human health, the environment or Hazardous Materials. 20. GRANTOR'S TITLE WARRANTY. Grantor represents and warrants that Grantor has good fee simple title to the Subject Property, free from any and all liens or encumbrances, except those set forth in Exhibit C, all of which have been subordinated to this Agricultural Conservation Easement, and hereby promises to defend the same against all claims that may be made against it. Grantor represents and warrants that the Subject Property is not subject to any other conservation easement whatsoever. Grantor may grant subsequent conservation easements on the Subject Property, provided that such subsequent easements are for the purpose of wetland, wildlife habitat or biological resource creation, enhancement or preservation, or for the protection and enhancement of agricultural productivity of the Subject Property. City shall be notified in advance, in writing, of any proposed conservation or other easement on the Subject Property; and shall have the right of reasonable review and approval of any such new easements. 21. INVALIDATION. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid. void, or unenforceable, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated. 22. CITY AGREEMENT. As attested by the signature of its Mayor affixed hereto, in exchange for consideration, City hereby accepts without reservation the rights and responsibilities conveyed by this Agreement. 11 26 l ( IN WITNESS WHEREOF. the parties hereto have executed this document on the day and year first written above. GRANTOR ERCOLE and NAOLMIE BRUGHELLI TRUST dated July 19, 1999 By By Ercole Brughelli, Trustee Naomie Brughelli, Trustee CITY CITY OF SAN LUIS OBISPO By David F. Romero, Mayor 12 � h/ Exhibit A Description of Subject Property f Exhibit B Buildings and Improvements on the Subject Property Exhibit C Encumbrances on the Subject Property STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) On , 200_, before me, , a Notary Public for the State of California, personally appeared DAVID F. ROMERO personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) On , 200_, before me, LEE Notary Public for the State of California, personally appeared ERCOLE C. BRUGHELLI and NAOMIE BRUGHELLI personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public Planning Commission Minute_, '-._, December 1, 2004 Page 2 ATTACHMENT 3 PUBLIC COMMENTS: Jodi Bennett, SLO, expressed support for this request and suggested it move along as quickly as possible. There were no further comments made from the public.. COMMISSION COMMENTS: Commr. Loh moved to determine and report to the City Council that_the proposed Property acquisition conforms with the General Plan. Seconded by Commr.._Miller. AYES: Commrs. Loh, Miller, Osborne, Aiken, Christianson, and Vice-Chair Boswell NOES: None ABSENT: Commr. Caruso ABSTAIN: None The motion carried on a 6:0 vote. 2. 485 Buckley Road. GPC 198-04: Acquisition of an agricultural conservation easement over a 159-acre portion of the Brughelli Ranch; City of San Luis Obispo, applicant. (Neil Havlik) Natural Resource Manager Neil Havlik presented the staff report requesting that the Planning Commission determine and report to the City Council that the proposed acquisition conforms to the General Plan. PUBLIC COMMENTS: Pam Heatherington, SLO, supported these types of projects and encouraged the Commission to add these properties to the Green Belt. There were no further comments made from the public. COMMISSION COMMENTS: Commr. Aiken moved the staff recommendation to determine and report to the City Council that the proposed conservation easement acquisition conforms to the General Plan. Seconded by Commr. Loh. AYES: Commrs. Aiken, Loh, Miller, Osborne, Christianson, and Vice-Chair Boswell NOES: None ABSENT: Commr. Caruso ABSTAIN: None The motion carried on a 6:0 vote. RED FILE -` RECEIVED MEETING AGENDA � S�ITEM #� AUG 15 1006 ffliffimemolzan� SLO CITY CLERK of san Luis osis o, a0mmkstoation 0eaRtment gJA 7EHq L 7_219(ja�� DIP DATE: August 14, 2006 IR CHIEF IR TO: City Council �' CE CHF DIRFROM: Neil Havlik, Natural kescurces Manager_ DIRIR SUBJECT: General Plan Rational and Funding for the Brughelli Transaction 0z&,r_G In response to interest in the Brughelli transaction, I have outlined certain language in the City's General Plan Conservation and Open Space Element,_(COSE) and Airport Area Specific Plan (AASP) that provide the rationale for the easement acquisition, and discussion about the City funding for the project. General Plan Rationale The COSE outlines the community desire for protecting a greenbelt around the City, and the manner in which this goal can be achieved. Policy 8.21.1 states that the City will preserve open space or agricultural land outside the urban reserve and encourage other individuals, organizations, and agencies to do likewise. To carry out this policy, Program 8.30.1(D) states that the City will acquire land or interest in land (i.e., easements) for open space , pursuant to Council-approved priorities. Appendix B of the COSE identifies those priorities, first as to the values that the site must have. This includes the following: ■ Valuable natural resources; ■ Scenic quality, ■ Proximity to land already protected; ■ Productive or potentially productive agricultural land; and ■ Individually or cumulatively forming an important part of the City's Greenbelt. The Brughelli Ranch meets all of these tests. The second guideline identifies the priority of the project, including: • Having timely or attractive purchase considerations; • Being of sufficient size that resources are likely to remain intact even if adjacent properties are developed; and • Purchase of the site would maximize the effectiveness of acquisition procedures. The Brughelli Ranch meets these tests,justifying a high priority for the project. Finally, the rationale for acquisition of an easement is supported by the following: • Easement acquisition is preferred where the cost of development rights is significantly less than fee ownership; • Easement acquisition is preferred where continuation of the private use is compatible with the open space designation and management by the City is not required; and • Easement acquisition is preferred to protect scenic resources involving little or no public access. The Brughelli Ranch meets these tests. Airport Area Specific Plan (RASP) Policies In addition to the standards and guidelines presented by the COSE, the City's Airport Area Specific Plan makes very definitive recommendations about the use of the Airport Area Open Space Impact Fee. AASP Policy 3.2.18 requires mitigation for the loss of agricultural and open space lands within the Airport Area by securing interest in lands to the south and east of the Airport, and Policy 3.2.20 places highest priority on acquiring interest in land along Buckley Road between Vachell Lane and Broad Street. The policy states that "easements to secure development rights and maintain scenic character would be the primary focus of this effort, and easement acquisition is the preferred strategy". In short the Brughelh Ranch is an excellent example of the use of City funds to carry out a project at a very favorable cost, well below the cost of full acquisition, in full compliance with City policy directives, and providing multiple benefits to the community. Funding The City of San Luis Obispo currently has $550,000 available for this purchase, which is $200,000 short of the total needed. It should be pointed out that these funds include $300,000 of General fund monies made in 2001-2003, augmented by an additional $100,000 made in 2003- 2005. The final $150,000 is the amount of Airport Area Open Space Impact fees collected and not yet spent on an Airport Area project. (The total amount collected to date by this fund is approximately $275,000, and $125,000 has been expended in support of two projects: the Filipponi property acquisition, and the second Guidetti Ranch easement acquisition, both of which occurred in 2000.) General Fund allocations to the open space program were suspended after 2003 and have not been resumed, so the current amount represents the total amount of funding left in the program. That is why we are hoping to secure private and other outside agency funding support for the Brughelli Ranch project.