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HomeMy WebLinkAbout09/02/2008, C5 - APPROVAL OF AMENDED CONSERVATION COVENANTS AND AGREEMENT WITH CHARLES ZANOLI, AFFECTING REAL PROPER council ��- j agenda aEpont CITY OF SAN LUIS OBISPO FROM: Shelly Stanwyck, Assistant City Administrative Officer Prepared By: Neil Havlik,Natural Resources Manager SUBJECT: APPROVAL OF AMENDED CONSERVATION COVENANTS AND AGREEMENT WITH CHARLES ZANOLI, AFFECTING REAL PROPERTY AT 1095 AND 1043 MARSH STREET, SAN LUIS OBISPO CAO RECOMMENDATION 1. Approve an Amended and Restated Declaration of Conservation Covenants in favor of the United States of America, and authorize the Mayor to sign; and 2. Approve a Mutual Property Use, Hold Harmless, and Indemnification Agreement with Charles Zanoli, and authorize the Mayor to sign. DISCUSSION Background In recent years, the repair and stabilization the banks of San Luis Obispo Creek at 1043 Marsh Street has been undertaken by the City and Zanoli Family. However, due to confusing property lines we have performed work on each of the other's property related to such things as the repair of a retaining wall along San Luis Obispo Creek, the replacement of the Santa Rosa Street Bridge, the acquisition of the "John's Batteries" property at 1095 Marsh Street, and the development of Cheng Park. It has been discovered that the property lines in the area are not where they were believed to be, and as a result of this misinformation there have been a series of minor encroachments by the City onto lands of the Zanoli family, and by the Zanoli family onto lands of the City. Specifically, it has been found that: 1. A small portion of Cheng Park is on Zanoli family property; 2. Certain mitigations for the Santa Rosa Street Bridge Replacement Project performed by the City are on Zanoli family property; and 3. Certain mitigations for the retaining wall replacement project performed by or required of the Zanoli family are on, or will be on, City property. G/Havlik/Coancilagenda/Zanoli agreements Zanoli Agreements Page 2 Why Two Agreements are Necessary Mitigations for both the Santa Rosa Creek Bridge project and the wall replacement project involved permitting from the Corps, and Corps requirements place obligations upon the landowner. Because of the property line misunderstandings, the landowners in this situation are not the actual project sponsors, therefore this requirement has the effect of forcing certain obligations onto the landowner for something that the landowner did not do, or had no control over. By entering into two agreements, one with the Corps and one with the Zanolis, we get around this problem. The effect of the two agreements is to allow the City and the Zanolis to mutually recognize and permit their respective encroachments onto each other's property, make each party solely responsible for its own projects including those which encroach onto the other's property, have each party indemnify the other for the consequences of its actions under the agreements, and to provide legal protection for the area where the mitigations were performed (regardless of which party undertook the mitigations), to the satisfaction of the Corps. This is important because both parties are bound by Corps requirements, regardless of where the property lines or the actual mitigations are. The amended and restated declaration of conservation covenants corrects the property description which was incorrectly placed into an earlier version of the covenants approved by the City Council in 2002. A similar declaration in favor of the Corps is also being required of the Zanoli family for property the family owns within the creek area. The indemnification agreement serves to make each party responsible to the Corps for its own mitigations, regardless of which property they are on, and holds the other party harmless from any further requirements or costs imposed by the Corps regarding such mitigations. The indemnification agreement also constitutes legal permission for the use of that portion of Cheng Park that lies on Zanoli family property. . CONCURRENCE The City Attorney's office has been instrumental in developing the proposed (lengthy) legal documents, which was seen as the simplest and most direct means of addressing the issues brought about by the discovery of the correct locations of the property lines. FISCAL IMPACTS None. ATTACHMENTS 1. Vicinity Map 2. Amended and Restated Declaration of conservation Covenants 3. Mutual Property Use, Hold Harmless, and Indemnification Agreement(w/o Exhibits) Reading File:- Given the length and technical nature of the indemnification agreement exhibits, the full indemnification agreement is available in the Council Reading file � ATTACHMENT 1 MAP SHOWING CllI-AND ZANOLI PROPERTIES AND ImITIGATION AREA SUBJECT TO CONSERVATION COVENANTS 'T, , „ . . 8p 133NIS YSON V1NVS 1 011 ' I ism Lu aLu w F- d V � o N '3 z o I � w ®� 01 I J � z Z a a. ATTACHMENT 2 RECORDATION REQUESTED BY AND WHEN RECORDED MAIL TO: Mr. Dave Romero Mayor City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 APN 002-443-005 For Recorders Use Only AMENDED AND RESTATED DECLARATION OF CONSERVATION COVENANTS This AMENDED AND RESTATED DECLARATION OF CONSERVATION COVENANTS ("Conservation Covenant') is made this day of , 2008 by the City of San Luis Obispo (hereinafter "Covenantor"). This Conservation Covenant is an amendment and restatement of, and supersedes and replaces in its entirety for all purposes, that certain Declaration of Conservation Covenant recorded August 7, 2002, as Document No. 2002064366 in the Official Records of San Luis Obispo County, State of California. RECITALS A. Covenantor is the sole owner in fee simple of that certain real property in the City of San Luis Obispo, County of San Luis Obispo, State of California, designated as Assessor's Parcel No. 002-443-005, according to quitclaim deed recorded in Volume 3678, Page 0449 of Official Records in the Office of the County Recorder at said County (the "Real Property"). This Conservation Covenant applies to a smaller area within the Real Property; this smaller area, approximately 0.057 acre in size (the "Mitigation Property"), is more particularly described in Exhibit "A" and depicted on Exhibit"B" attached hereto and incorporated by this reference. B. The Mitigation Property currently is and will remain in a Natural Condition as defined herein and is intended to be preserved in its natural, scenic, open condition to maintain its ecological, historical, visual and educational values (collectively, "Conservation Values"). C. This Conservation Covenant provides protection for compensatory mitigation pursuant to requirements of the United States Army Corps of Engineers' ("ACOE") Section 404 Permit No. 2000-00782-TW issued to Mr. Charles Zanoli ("Section 404 Permit'). D. The ACOE is the federal agency charged with the primary responsibility for regulating activities in waters of the United States, including wetlands, with regulatory authority over discharges of dredged and fill material into such waters pursuant to Section 404 of the Clean Water Act. 1 i ATTACHMENT 2 COVENANTS, TERMS, CONDITIONS AND RESTRICTIONS In consideration of the above recitals and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and pursuant to California law, the Covenantor hereby voluntarily records a conservation covenant in perpetuity over the Mitigation Property. This Conservation Covenant shall run with the land and be binding on Covenantor and Covenantor's heirs, successors in interest, administrators, assigns, lessees, and other occupiers or users of the Mitigation Property or any portion of it. 1. Purpose. (a) The purpose of this Conservation Covenant is to ensure the Mitigation Property will be retained in perpetuity in a Natural Condition, defined below, and to prevent any use the Mitigation Property that will impair or interfere with the Conservation Values of the Mitigation Property ("Purpose"). Covenantor intends that this Conservation Covenant will confine the use of the Mitigation Property to such activities, including without limitation, those involving the preservation and enhancement of native species and their habitat in a manner consistent with the habitat conservation purposes of this Conservation Covenant. (b) The term "Natural Condition" shall initially mean the condition of the Mitigation Property at the time of this grant. However, the intent of Covenantor and ACOE is that certain mitigation activities, as required in Section 404 Permit, and described in the Mitigation Plan, dated August 2002, should occur on the Mitigation Property. The term "Natural Condition" shall be modified once the mitigation plan has been fully and successfully implemented to reflect its successful-implementation. Covenantor further certifies to the ACOE that, to Covenantor's actual knowledge, there are no previously granted easements existing on the Mitigation Property that interfere or conflict with the Purpose of this Conservation Covenant. Covenantor has delivered evidence of the current Natural Condition to the ACOE consisting of (1) a depiction of the Mitigation Property showing all relevant and plottable property lines, and easements; and (2) on-site photographs showing the natural features of the Mitigation Property. If a controversy arises with respect to the Natural Condition of the Mitigation Property, the ACOE shall not be foreclosed from utilizing any and all other relevant documents, surveys, photographs or other evidence or information to assist in the resolution of the controversy. 2. ACOE's rights. To accomplish the Purpose of this Conservation Covenant, Covenantor hereby grants and conveys the following rights to ACOE (but without obligation of the ACOE): (a) A non-exclusive easement on and over the Mitigation Property to preserve and protect the Conservation Values of the Mitigation Property; and (b) A non-exclusive easement on and over the Mitigation Property to enter upon the Mitigation Property to monitor Covenantor's compliance with and to otherwise enforce the terms of this Conservation Covenant; and (c) A non-exclusive easement on and over the Mitigation Property to prevent any activity on or use of the Mitigation Property that is inconsistent with the Purpose of this Conservation Covenant and to require the restoration of such areas or features of the Mitigation 2 ATTACHMENT 2 Property that may be damaged by any act, failure to act, or any use that is inconsistent with the Purpose of this Conservation Covenant; and (d) All present and future development rights allocated, implied, reserved or inherent in the Mitigation Property; such rights are hereby terminated and extinguished, and may not be used on or transferred to any portion of the Mitigation Property, nor any other property adjacent or otherwise; and (e) The right to enforce by means, including, without limitation, injunctive relief, the terms and conditions of this Conservation Covenant. 3. Prohibited Uses. Any activity that does not presently exist on, or use of, the Mitigation Property inconsistent with the Purpose of this Conservation Covenant is prohibited. Without limiting the generality of the foregoing, the following uses by Covenantor, and its respective guests, agents, assigns, employees, representatives, successors and third parties, are expressly prohibited, except as otherwise provided herein or unless specifically provided for in the Section 404 Permit, Mitigation Plan, and any easements and reservations of rights recorded in the chain of title to the Mitigation Property at the time of this grant. (a) Unseasonal watering, use of herbicides, rodenticides, or weed abatement activities, incompatible fire protection activities and any and all other uses which may adversely affect the Purpose of this Conservation Covenant; (b) Use of off-road vehicles and use of any other motorized vehicles except on designated roadway, if any; (c) Grazing or other agricultural activity of any kind; (d) Erecting of any building or other improvement, billboard, or sign (except for signage permitted under Section 7, below); (e) Depositing of soil, trash, ashes, garbage, waste, bio-solids or any other material; (f) Excavating, dredging, drilling or removing of loam, gravel, soil, rock, sand or other material; (g) Otherwise altering the general topography of the Property, including but not limited to building of roads and flood control work; (h) Removing, destroying, or cutting of trees, shrubs or other vegetation, except as required by law for (1) fire breaks, (2) maintenance of existing trails or roads, (3) prevention or treatment of disease, or (4) required mitigation programs; (i) Establishing any easement, for any purpose (without the written consent of ACOE), within the boundaries of the Mitigation Property not in existence, disclosed to and approved by ACOE, as of the date of this Conservation Covenant; and 3 �-Le ATTACHMENT 2 (j) Surface entry for exploration or extraction of minerals. 4. Covenantor's Duties. Covenantor shall (a) Undertake all reasonable actions to prevent the unlawful entry and trespass by persons whose activities may degrade or harm the Conservation Values of the Mitigation Property; (b) Comply with the terms of this Conservation Covenant and cooperate with ACOE in the protection of the Conservation Values; (c) Repair and restore damage to the Mitigation Property directly or indirectly caused by Covenantor, Covenantor's guests, representatives or agents and third parties; provided, however, Covenantor, its successors or assigns shall not engage in any repair or restoration work on the Mitigation Property without first consulting with ACOE; and (d) obtain any applicable governmental permits and approvals for any activity or use permitted by this Conservation Covenant, and any activity or use shall be undertaken in accordance with all applicable federal, state, local and administrative agency statutes, ordinances, rules, regulations, orders or requirements. 5. Reserved Rights. Covenantor reserves to itself, and to its personal representatives, heirs, successors, and assigns, all other rights accruing from its ownership of the Mitigation Property, including the right to engage in or to permit or invite others to engage in all uses of the Mitigation Property not expressly prohibited by, or limited by, and that are consistent with the Purpose of this Conservation Covenant. 6. ACOE Remedies. If ACOE determines that Covenantor or its agents, contractors, or invitees are in violation of the terms of this Conservation Covenant or that a violation is threatened, the ACOE making such determination shall give written notice to Covenantor of such violation and demand in writing the cure of such violation. If Covenantor fails to cure the violation within fifteen (15) days after receipt of said written notice and demand, or said cure reasonably requires more than fifteen (15) days to complete and Covenantor fails to begin the cure within the fifteen (15) day period or fails to continue diligently to complete the cure, either ACOE may bring an action at law or in equity in a court of competent jurisdiction to enforce compliance by Covenantor with the terms of this Conservation Covenant, to recover any damages to which ACOE may be entitled for violation by Covenantor of the terms of this Conservation Covenant or for any injury to the conservation values of the Mitigation Property, to enjoin the violation, ex parte as necessary, by temporary or permanent injunction without the necessity of proving either actual damages or the inadequacy of otherwise available legal remedies, or for other equitable relief, including, but not limited to, the restoration of the Mitigation Property to the condition in which it existed prior to any such violation or injury. Without limiting Covenantor's liability therefore, either ACOE may apply any such damages recovered to the cost of undertaking any corrective action on the Mitigation Property. If ACOE, in its sole discretion, determines that circumstances require immediate action to prevent or mitigate significant damage to the Conservation Values of the Mitigation Property, ACOE may pursue its remedies under this Section 6 without prior notice to Covenantor or without waiting for the period provided for cure to expire. The rights of ACOE under this section apply equally to actual or threatened violations of the terms of this Conservation Covenant. Covenantor agrees that ACOE remedies at law for any violation of the terms of this Conservation Covenant are inadequate and that ACOE shall be entitled to the injunctive relief 4 C.J ATTACHMENT 2 described in this section, both prohibitive and mandatory, in addition to such other relief to which ACOE may be entitled, including specific performance of the terms of this Conservation Covenant, without the necessity of proving either actual damages or the inadequacy of otherwise available legal remedies. The remedies of ACOE described in this section shall be cumulative and shall be in addition to all remedies now or hereafter existing at law or in equity, including, but not limited to, the remedies set forth in California Civil Code Section 815, et seq., inclusive. The failure of ACOE to discover a violation onto take immediate legal action shall not bar the ACOE from taking such action at:a later time. If at any time in the future, Covenantor or any subsequent transferee uses or threatens to use such lands for purposes inconsistent with this Conservation Covenantor, then, appropriate enforcement agencies of the United States have standing to enforce this Conservations Covenant. These rights are in addition to, and do not limit, the rights of enforcement under the Section 404 Permit, or any of the various documents create thereunder or referred to therein. 6.1 Costs of Enforcement. Any costs incurred by ACOE where it is the prevailing party, in enforcing the terms of this Conservation Covenant against Covenantor, including, but not limited to, costs of suit and attorneys' fees, and any costs of restoration necessitated by Covenantor's violation or negligence under the terms of this Conservation Covenant shall be bome by Covenantor. 6.2 ACOE Discretion. Enforcement of the terms of this Conservation Covenant by ACOE shall be at.the discretion of'the ACOE, and any forbearance by ACOE to exercise its rights under this Conservation Covenant'in the event of any breach of any term of the Conservation Covenant shall not be construed to be a waiver by ACOE of such terms or of any subsequent breach of the same or any other term of this Conservation Covenant or of any of ACOE rights under this Conservation Covenant. No delay or omission by ACOE in the exercise of any right or remedy upon any breach by Covenantor shall impair such right or remedy or be construed as a waiver. Further, nothing in this Conservation Covenant creates a non-discretionary duty upon the ACOE to enforce its provisions, nor shall deviation from these terms and procedures, or failure to enforce its provisions give rise to a private right of action against ACOE by any third parties. 6.3 Acts Beyond Covenantor's Control. Nothing contained in this Conservation Covenant shall be construed to entitle ACOE to bring any action against Covenantor for any significant injury to or change in the Mitigation Property resulting from natural causes beyond Covenantor's control, including, but not limited to, fire not caused by Covenantor, flood, storm, and earth movement, or from any prudent action taken by Covenantor under emergency conditions to prevent, abate, or mitigate significant injury to the Mitigation Property resulting from such causes. Such excuse from performance by Covenantor shall only be allowed if such event beyond the Covenantor's control has caused a substantial failure of or degradation of the conservation and environmental values on the Mitigation Property. Notwithstanding the foregoing, even actions undertaken during emergency conditions must receive prior authorization from the Department of the Army (through expedited procedures, if appropriate) if the action involves discharge of dredged of fill material into jurisdictional "waters of the United States". The lack of such authorization may result in an enforcement action by the ACOE. 5 es—OP" I GS I utUfff ENT 2 7. Installation and Maintenance of Signage. Covenantor shall post and maintain appropriate signage identifying the Conservation Covenant. Such signage shall be subject to the prior written approval of ACOE, which shall not be unreasonably withheld. 8. Access. This Conservation Covenant does not convey a general right of access to the public. This Conservation Covenant will allow for access to the Mitigation Property by ACOE and third-parry easement holders of record at the time of this conveyance at locations Mitigation Property at the time of this conveyance. 9. Costs and Liabilities. Covenantor retains all responsibilities and shall bear all costs and liabilities of any kind related to ownership, operation, upkeep, and maintenance of the Mitigation Property. Covenantor agrees that ACOE shall have no duty or responsibility for the operation or maintenance of the Mitigation Property, the monitoring of hazardous conditions thereon, or the protection of Covenantor, the public or any third parties from risks relating to conditions on the Mitigation Property. Covenantor remains solely responsible for obtaining any applicable governmental permits and approvals for any activity or use permitted by this Conservation Covenant, and any activity or use shall be undertaken in accordance with all applicable federal, state, local and administrative agency statutes, ordinances, rules, regulations, orders or requirements. 9.1 Taxes. Covenantor shall pay before delinquency all taxes, assessments, fees, and charges of whatever description levied on or assessed against the Mitigation Property by competent authority (collectively"taxes"), including any taxes imposed upon, or incurred as a result of, this Conservation Covenant, and shall furnish ACOE with satisfactory evidence of payment upon request. 9.2 Condemnation. The Purpose of the Conservation Covenant is presumed to be the best and most necessary public use as defined at California Code of Civil Procedure Section 1240.680 notwithstanding Code of Civil Procedure Sections 1240.690 and 1240.700. 10. Subsequent Transfers. Covenantor agrees to incorporate the terms of this Conservation Covenant in any deed or other legal instrument by which Covenantor divests itself of any interest in all or any portion of the Mitigation Property, including without limitation, a leasehold interest. Covenantor further agrees to give written notice to ACOE of the intent to transfer any interest at least fifteen (15) days prior to the date of such transfer. The failure of Covenantor to perform any act provided in this section shall not impair the validity of this Conservation Covenant or limit its enforceability in any way. 11. Notices. Any notice, demand, request, consent, approval, or communication that any party desires or is required to give to any other party or parties shall be in writing and be served personally or sent by recognized to give to any other party or parties shall be in writing and be served personally or sent by recognized overnight courier that guarantees next- business-day delivery or by first class mail, postage prepaid, addressed as follows: To Covenantor: Mr. Dave Romero, Mayor City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 6 4 '14 - GTT�CHMbVET 2 To ACOE: U.S. Army Corps of Engineers Los Angeles District, Regulatory Branch 915 Wilshire Blvd., Room 1535 Los Angeles, CA 90017 or to such other address as a party shall designate by written notice to the other parties. Notice shall be deemed effective upon delivery in the case of personal delivery or delivery by overnight courier or, or in the case of delivery by first class mail, five (5) days after deposit into the United States mail. 12. Amendment. This Conservation Covenant may be amended by Covenantor only with written approval of the ACOE. Any such amendment shall be consistent with the Purpose of this Conservation Covenant and shall not affect its perpetual duration. Any such amendment shall be recorded in the official records of the San Luis Obispo County, State of California. Covenantor shall record any amendments to this Conservation Covenant approved by ACOE in the official records of San Luis Obispo County, California, and shall provide a copy of the recorded document to ACOE. 13. General Provisions. (a) Controlling Law. The interpretation and performance of this Conservation Covenant shall be governed by the laws of the United States and the State of California. (b) Liberal Construction. Any general rule of construction to the contrary notwithstanding, this Conservation Covenant shall be liberally construed to effect the purposes of this Conservation Covenant. If any provision in this instrument is found to be ambiguous, an interpretation consistent with the purposes of this Conservation Covenant that would render the provision valid shall be favored over any interpretation that would render it invalid. (c) Severability. If a court of competent jurisdiction voids or invalidates on its face any provision of this Conservation Covenant, such action shall not affect the remainder of this Conservation Covenant. If a court of competent jurisdiction voids or invalidates the application of any provision of this Conservation Covenant to a person or circumstance, such action shall not affect the application of the provision to other persons or circumstances. (d) Entire Agreement. This instrument together with the attached exhibits and any documents referred to herein sets forth the entire agreement of the parties with respect to the Conservation Covenant and supersedes all prior discussions, negotiations, understandings, or agreements relating to the Conservation Covenant. No alteration or variation of this instrument shall be valid or binding unless contained in an amendment in accordance with Section 12. (e) No Forfeiture. Nothing contained herein will result in a forfeiture or reversion of Covenantor's title in any respect. (f) Successors and Assigns. The covenants, terms, conditions, and restrictions of this Conservation Covenant shall be binding upon, and inure to the benefit of 7 an His f.4B 2 Covenantor and its respective personal representatives, heirs, successors, and assigns and shall constitute a servitude running in perpetuity with the Mitigation Property. (g) Termination of Rights and Obligations. A party's rights and obligations under this Conservation Covenant terminates upon transfer of the party's interest in the Conservation Covenant or Mitigation Property, except that liability for acts or omissions occurring prior to transfer shall survive transfer. (h) Captions. The captions in this instrument have been inserted solely for convenience of reference and are not a part of this instrument and shall have no effect upon its construction or interpretation. (i) Recordation. Covenantor shall promptly record this instrument in the official records of San Luis Obispo County, California, and provide a copy of the recorded document to ACOE. 0) No Hazardous Materials Liability. Covenantor represents and warrants that it has no knowledge of any release or threatened release of Hazardous Materials (defined below) in, on, under, about or affecting the Mitigation Property. Despite any contrary provision of this Conservation Covenant, the City does not intend this Conservation Covenant to be, and this Conservation Covenant shall not be, construed such that it creates in or gives ACOE any of the following: (1) The obligations or liabilities of an "owner" or "operator," as those terms are defined and used in Environmental Laws (defined below), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.. Section 9601 et seq.; hereinafter, "CERCLA"); or (2) The obligations or liabilities of a person described in 42 U.S.C. Section 9607(a)(3) or (4); or (3) The obligations of a responsible person under any applicable Environmental Laws; or (4) The right to investigate and remediate any Hazardous Materials associated with the Mitigation Property; or (5) Any control over Covenantor's ability to investigate, remove, remediate, or otherwise clean up any Hazardous Materials associated with the Mitigation Property. The Term "Hazardous Materials" includes, without limitation, (a) material that is flammable, explosive or radioactive; (b) petroleum products, including by-products and fractions thereof; and (c) hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in CERCLA; Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.) the Hazardous Materials Transportation Act (49 U.S. C. Section 5101 et seq.); the Hazardous Waste Control Law (California Health & Safety Code Section 25300 et seq.), and 8 ATTACHMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo,CA 93401 SPACE ABOVE THIS LINE FOR RECORDER'S USE APN:002-443-005 and APN:002-443-016 MUTUAL PROPERTY USE, HOLD HARMLESS AND INDEMNIFICATION AGREEMENT THIS MUTUAL PROPERTY USE, HOLD HARMLESS AND INDEMNIFICATION AGREEMENT (the "Agreement") is made on 2008 (the "Effective Date"), by and between THE CITY OF SAN LUIS OBISPO, a municipal corporation and charter city (the "City") and James and Elizabeth Zanoli("Zanoli"), individually, and as owners of the Zanoli Property, defined below. The parties hereto intend for this Agreement to run with the Zanoli Property and the Cheng Park Property, defined below, and to govern owners and uses of both properties as further set forth below, regardless of the owners thereof. RECITALS A. Zanoli is the sole owner in fee simple of that certain real property at 1043 Marsh Street, in the City of San Luis Obispo, County of San Luis Obispo, State of California, designated as Assessor's Parcel No. 002-443-016, according to quitclaim deed recorded in Volume 3678, Page 0449 of Official Records in the Office of the County Recorder at said County (the "Zanoli Property"). The Zanoli Property is more particularly described in Exhibit "A" and depicted on Exhibit`B" attached hereto and incorporated herein by this reference. B. City is the fee owner of certain real property located at 1095 Marsh Street at the corner of Marsh Street and Santa Rosa Street, adjacent to the Zanoli Real Property, designated as Assessor's Parcel No. 002-443-005, on which the City has constructed a City park known as Cheng Park, which property is owned by the City (the "Cheng Park Property"). This area is more particularly described in Exhibit "C" and depicted on Exhibit`B," attached_ hereto and incorporated herein by this reference. C. The Zanoli Property and the Cheng Park Property are adjacent to the San Luis Obispo Creek, which runs through the Zanoli Property and Cheng Park Property ("Creek"). In 1999, the City constructed a new Santa Rosa Street bridge at the intersection of Santa Rosa Street and Marsh Street, located in the vicinity of the Zanoli Property over the Creek between Marsh Street and Pacific Street (`Bridge Project"). As a result of the Bridge Project, the City 1 ATTACHMENT 3 was required by the United States Army Corps of Engineers ("ACOE") under Federal law to perform certain compensatory mitigation measures on the Cheng Park Property ("Mitigation Measures"). D. Upon completion of the Bridge Project and in completing the Mitigation Measures, the City mistakenly, and without Zanoli's consent or knowledge, carried out part of the Mitigation Measures on the Zanoli Property, including within that portion of the Creek located on the Zanoli Property. E. After completion of the Bridge Project, and due to flooding and other causes, a retaining wall located on the Zanoli Property at the south side of the Creek collapsed, resulting in contribution by Zanoli of a new retaining wall on the Zanoli Property, adjacent to the Creek. F. In association with obtaining permits to rebuild the retaining wall, Zanoli was required to obtain a permit from the ACOE, requiring, among other matters, that Zanoli enter into a Conservation Covenant ("Covenant") with the ACOE attached hereto as Exhibit"D" and incorporated by this reference as if fully set forth herein, to carry out mitigation pursuant to requirements of the ACOE Section 404 Permit No. 2000-00782-TW issued to Zanoli ("Section 404 Permit"). The Covenant and its associated Mitigation Plan, dated August 2002, require that certain real property be preserved in perpetuity in its natural, scenic, open condition to maintain its ecological, historical, visual and educational values (collectively, "Conservation Values"). G. As a result of the City's previously described mistaken use of a part of the Zanoli Property, the Zanoli Property has already been used by the City for its Mitigation Measures and all of the Zanoli Property is not available for Zanoli to satisfy the Covenant obligations. H. The City has agreed to allow Zanoli to carry out the Covenant obligations on the Cheng Park Property, including that portion within the Creek, to the extent Zanoli is unable to perform such obligations on the Zanoli Property in a manner consistent with the Covenant. I. The City has agreed to allow Zanoli to complete the mitigation measures required by the Covenant and to allow the ACOE to record the Covenant as a continuing burden on the Cheng Park Property owned by the City on the terms and conditions set forth herein. Based on the forgoing recitals, which the parties acknowledge to be true and correct, the parties hereby enter into this Agreement to permit the parties' respective encroachments into and upon the subject portions of the Zanoli Property and Cheng Park Property and to provide for the preservation and continuation of the City's Mitigation Measures and the completion, preservation and continuation of the mitigation measures required by the Covenant. 2 ATTACHMENT 3 AGREEMENT 1. Permitted Encroachments. a. In n consideration of the above and the mutual covenants,terms, conditions and restrictions contained in this Agreement, and pursuant to the laws of California, Zanoli voluntarily grants and conveys to the City an irrevocable license to use the Zanoli Property for the purpose of maintaining and preserving the City's Mitigation Measures located on the Zanoli Property. b. In consideration for the above and the mutual covenants, terms, conditions and restrictions contained herein, the City grants and conveys to Zanoli an irrevocable license to use that portion of the Cheng Park Property required by Zanoli to complete the mitigation measures required by the ACOE's Section 404 Permit (the "Mitigation Property") to complete, maintain, preserve and enhance the Conservation Values of the Mitigation Property consistent with the requirements of the Covenant and the Mitigation Plan, attached hereto as Exhibit"D," the obligations of the parties under which are incorporated herein by this reference. 2. Term. The term of the grant shall run concurrently with the obligations of the Covenant and the Mitigation Plan. This Agreement shall run with the land and be binding upon the parties and their respective heirs, successors in interest, administrators, assigns and lessees of the subject properties. 3. City's Responsibilities. The City hereby assumes the sole and entire responsibility to protect and prevent the destruction of the Conservation Values completed by it that are located on the Mitigation Property. City agrees to refrain from all Prohibited Uses, as set forth and defined in the Covenant. The City shall permit unrestricted access to the Mitigation Property to Zanoli and the ACOE in furtherance of the purposes of and consistent with the Covenant, Mitigation Plan and/or this Agreement. City reserves to itself all other rights incident to ownership of the Mitigation Property, including, but not limited to, the right to engage in or to permit or invite others to engage in all uses of the Mitigation Property not expressly prohibited or limited by, and that are consistent with, the purpose of the ACOE Covenant and this Agreement and the right to prevent or prohibit any activity that is inconsistent with the stated purposes, terms, conditions or restrictions of the Covenant or of this Agreement. 4. Zanoli's Responsibilities. Zanoli hereby assumes the sole and entire responsibility for performance, and any and all liability relating to performance, of mitigation duties required by the Covenant, and for any and all of Zanoli's activity in, upon or around the Mitigation Property relating to, arising from, or in furtherance of the Covenant and/or Mitigation Plan. 5. Indemnification and Hold Harmless. a. The City agrees to defend, indemnify, protect and hold Zanoli, their agents, officers and employees, harmless from and against any and all claims asserted or liability established for damages or injuries to any person or property, which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of the City its agents, 3 ATTACHMENT 3 officers, employees, contractors or representatives relating to or arising from the City's use or occupation of the Mitigation Property or for City's actions that violate the Covenant related to the mitigation activities on the Cheng Park Property and all expenses of investigating and defending against same. City's duty to hold harmless and indemnify Zanoli shall not extend to any claims or liability arising from the established sole negligence or willful misconduct of Zanoli, his agents, officers or employees. b. Zanoli agrees to defend,indemnify, protect and hold the City, its agents, officers and employees, harmless from and against any and all claims asserted or liability established for damages or injuries to any person or property, which arise from or are connected with or are caused or claimed to be caused by the acts or omissions of Zanoli, their agents, officers,employees, contractors or representatives, or those of the ACOE, its agents, officers, employees, contractors or representatives, and all expenses of investigating and defending against same, relating to or arising from or in furtherance of Zanoli's activities related to work done in furtherance of the Covenant and/or Mitigation Plan. Zanoli's duty to hold harmless and indemnify the City shall not extend to any claims or liability arising from the established sole negligence or willful misconduct of the City, its agents, officers or employees, including the City's breach of any of the Covenant made in favor of ACOE. C. The indemnity and hold harmless obligations and provisions under this Paragraph 5 shall run concurrently with the conservation and mitigation obligations of the parties as set forth in Covenant and the Mitigation Plan. 6. Costs of Enforcement. If any legal proceeding, arbitration or other action is brought or threatened for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, including any attachment or provision incorporated herein, and the prevailing party in any such action(s) should incur any legal fees, including, but not limited to, attorneys' fees, paralegal fees, expert witness fees and other similar costs, the successful or prevailing party or parties to any such dispute or action shall be entitled to recover their reasonable attorneys'fees and additional legal costs incurred, together with any other relief to which they may otherwise be entitled, as determined by an arbitrator,judge at trial, or upon appeal or petition. 7. No Effect on Other Activities of Either Party. Except as specifically set forth herein, this Agreement shall have no effect on other activities or rights of either party with respect to their ownership or other rights related to the Cheng Park Property of the Zanoli Property. Specifically, the Agreement shall have no effect on the City's obligations to inspect, maintain, and/or repair Marsh Street or the Marsh Street Bridge, which crosses San Luis Obispo Creek at this location. 8. Amendment. This Agreement may not be amended, in whole or in part, as to any term, condition, restriction, or covenant without the prior written consent of the City and Zanoli, as may be permitted by applicable California law. 9. Severability. If any provision of this Agreement is found to be invalid, or if the application of this Agreement to any person or circumstance is disallowed or found to be invalid, the remainder of the provisions of the Agreement, or the application of the Agreement to persons 4 ATTACHMENT 3 or circumstances other than those to which its application was disallowed or found invalid, will not be affected and will remain in full force and effect. 10. Controlling Law. This Agreement is to be interpreted,enforced, and performed in accordance with the laws of the State of California. 11. Entire Agreement. This Agreement sets forth the entire agreement of the parties with respect to the matters set forth herein and supersedes all previous conversations, negotiations, understandings, settlements, or agreements related to the encroachments upon or permitted uses of the subject properties. 12. Captions. The captions in this Agreement have been inserted solely for the purpose of convenience of reference and are not to be construed as part of this instrument and do not affect the construction or interpretation of the Agreement. 13. Counterparts. The parties may execute this instrument in two or more counterparts, which shall, collectively, be signed by all parties. Each counterpart shall be deemed an original instrument as against any party who has signed it. In the event of any disparity between the counterparts produced, the recorded counterpart controls. By: Elizabeth Zanoli By: James Zanoli CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter City By: David F. Romero, Mayor APPROVED AS TO FORM: By: �. .. Jona n Lowell, City Attorney 5