HomeMy WebLinkAbout12-13-2011 Agenda Packetcouncil AgcnbA
C I T Y OF S A N L U I S O B I S P O
CITY HALL, 990 PALM STREET
Tuesday, December 13, 2011
6:00 p.m. SPECIAL MEETING Council Hearing Room
990 Palm Street
CALL TO ORDER: Mayor Jan Marx
ROLL CALL: Council Members John Ashbaugh, Andrew Carter and Kathy
Smith, Vice Mayor Dan Carpenter and Mayor Jan Marx
ANNOUNCEMENT OF CLOSED SESSION TOPICS
PUBLIC COMMENT ON CLOSED SESSION ITEMS
CLOSED SESSION
CONFERENCE WITH LEGAL COUNSEL — Existing Litigation
Pursuant to Government Code § 54956.9 (a)
Pacific Mechanical Corp. v. City of San Luis Obispo, CV100030
CONFERENCE WITH LEGAL COUNSEL — Existing Litigation
Pursuant to Government Code § 54956.9 (a)
Secrest v. City of San Luis Obispo
San Luis Obispo County Superior Court Case No. CV 060225
ADJOURN TO A SPECIAL MEETING
City Council regular meetings are televised live on Charter Channel 20. The City of San Luis Obispo is committed to
including the disabled in all of its services, programs, and activities. Telecommunications Device for the Deaf (805) 781 -7410.
Please speak to the City Clerk prior to the meeting if you require a hearing amplification device. For more agenda information, call
781 -7100.
Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for
public inspection in the City Clerk's office located at 990 Palm Street, San Luis Obispo, during normal business hours.
Council Agenda Tuesday, December 13, 2011
7:00 p.m. SPECIAL MEETING Council Chamber
990 Palm Street
CALL TO ORDER: Mayor Jan Marx
ROLL CALL: Council Members John Ashbaugh, Andrew Carter and Kathy
Smith, Vice Mayor Dan Carpenter and Mayor Jan Marx
PLEDGE OF ALLEGIANCE
CLOSED SESSION REPORT. (DIETRICK)
PRESENTATIONS
PROCLAMATION FOR NATIONAL HOMELESS PERSONS MEMORIAL DAY.
MARX- 5 MINUTES)
PROCLAMATION HONORING THE RETIREMENT OF CHIEF OF POLICE DEBORAH
LINDEN. (MARX— 10 MINUTES)
PUBLIC COMMENTS ON AGENDA ITEMS ONLY: You may address the Council on any item described in this agenda by
completing a speaker slip and giving it to the City Clerk prior to the meeting. The Mayor will invite public comments before
the Council takes action on each item. (Gov. Code Sec. 54954.3(a)) Your speaking time is limited to three (3) minutes.
CC &P Sec. 1.3.7)
CONSENT AGENDA
The Consent Agenda is approved on one motion. Council Members may pull consent items to be
considered after Business items. The public may comment on any item on the Consent Calendar.
C1. APPLICATION FOR CERTIFIED LOCAL GOVERNMENT PROGRAM (CHC
103 -11). (JOHNSON /DUNSMORE)
RECOMMENDATION: As recommended by the Cultural Heritage Committee, adopt a
resolution approving the application and authorize the City Manager to sign the
certification agreement for the Certified Local Government program.
C2. AUTHORIZATION OF ACCEPTANCE OF A CONSERVATION EASEMENT ON
A 38 ACRE PROPERTY AT 2877 SOUTH HIGUERA STREET.
CODRON /HAVLIK)
RECOMMENDATION: Approve a resolution authorizing the Mayor to accept an offer to
donate a conservation easement covering approximately 38.3 acres at 2877 South
2
Council Agenda Tuesday, btvicember 13, 2011
Higuera Street, offered by Katherine Foster and Michael Spangler, subject to a finding
by the Planning Commission that acceptance of the conservation easement is
consistent with the City of San Luis Obispo General Plan.
C3. ACCEPT NEW EXTRICATION SYSTEM. (NINES /COX)
RECOMMENDATION: 1) Authorize the Fire Chief to accept new extrication system
valued at $23,300; and 2) Approval for the Fire Chief to sign Memorandum of
Understanding with Cambria Fire Department.
C4. HAZARD MITIGATION PLAN UPDATE GRANT REQUESTS FOR FEMA.
HINES /COX)
RECOMMENDATION: 1) Authorize staff to submit grant applications for $64,712 each
to two FEMA programs for Local Hazard Mitigation Plan Update; and 2) If a grant is
awarded, authorize the City Manager to accept and appropriate the funds to the Fire
Department.
BUSINESS ITEMS
1. UPDATE ON THE CITY'S FISCAL STATUS AND STATUS OF MAJOR CITY
GOALS. (BOURBEAU /MALICOAT —45 MINUTES)
RECOMMENDATION: 1) Review and discuss an update on the City's fiscal status
based on interim 2010 -11 year -end financial results and first quarter trends in 2011 -12;
and 2) Review and discuss status on the City's progress in accomplishing the Major City
Goals adopted by Council for 2011 -13.
2. 2011 CITIZEN SATISFACTION SURVEY RESULTS. (LICHTIG /CODRON — 45
MINUTES)
RECOMMENDATION: 1) Receive a presentation from Richard Maullin of Fairbank,
Maslin, Maullin, Metz and Associates (FM3) on the results of the 2011 City of San Luis
Obispo Citizen Satisfaction Survey; and 2) Consistent with the Council's Major City Goal
for preservation of essential services and fiscal health, direct staff to continue to
evaluate placing the reauthorization of the City's half cent sales tax (Measure Y) on the
general election ballot in November 2012, and return to the City Council during Spring
2012 with an update.
3. LEASE OF 1123 MILL STREET BY THE SAN LUIS OBISPO COUNTY ARTS
COUNCIL. (STANWYCK — 15 MINUTES)
RECOMMENDATION: Give staff direction to finalize the negotiations of a lease
agreement for 1123 Mill Street by San Luis Obispo County Arts Council in the amount of
Council Agenda Tuesday, D,=cember 13, 2011
1,294 for one year and authorize the City Manager to execute the finalized agreement
subject to approval by the City Attorney and receipt by the tenant of a use permit.
4. REFINANCING 2002 WATER REVENUE REFUNDING BONDS. (BOURBEAU
15 MINUTES)
RECOMMENDATION: Adopt a resolution authorizing the issuance of 2012 Water
Revenue Refunding Bonds to refinance the 2002 Water Revenue Refunding Bonds.
5. APPROVAL OF AGREEMENTS FOR THE PURCHASE AND SALE OF
PROPERTY BETWEEN THE CITY OF SAN LUIS OBISPO AND SLO
CHINATOWN= LLC REGARDING THE CHINATOWN PROJECT.
LICHTIG /DIETRICK/CODRON /CLARK — 1 HOUR)
RECOMMENDATION: 1) Approve the Purchase and Sale of Real Property with SLO
Chinatown, LLC (hereinafter "Copeland ") related to the Chinatown project, contingent
upon a finding of General Plan conformity by the Planning Commission; and 2)
Authorize the Mayor to execute agreements, as well as associated leases and other
documents (hereinafter "Agreements ") required to formalize the transactions on the
terms and condition approved, in substantially the form presented to Council, subject to
final approval by the City Attorney of any modifications directed by Council; and 3)
Authorize the City Manager to execute escrow documents on behalf of the City; and 4)
Direct staff to return to Council to consider and take action on the Planning
Commission's determination in the event that the Planning Commission does not find
the transactions conform to the General Plan; and 5) Approve an automatic extension of
the Third Modification to the Option Agreement (hereinafter "Option ") to suspend
expiration of the Option until such time as Council has had the opportunity to consider
and take action on the Planning Commission's determination only in the event that the
Planning Commission does not find the transactions conform to the General Plan.
COUNCIL LIAISON REPORTS (not to exceed 15 minutes)
Council Members report on conferences or other City activities. Time limit -3 minutes.
COMMUNICATIONS (not to exceed 15 minutes)
At this time, any Council Member or the City Manager may ask a question for clarification, make an
announcement, or report briefly on his or her activities. In addition, subject to Council Policies and
Procedures, they may provide a reference to staff or other resources for factual information, request staff
to report back to the Council at a subsequent meeting concerning any matter, or take action to direct
staff to place a matter of business on a future agenda. (Gov. Code Sec. 54954.2)
ADJOURN.
10
i
FROM:
Prepared By:
SUBJECT:
council
AcEnOA nEpov-t
C I T Y OF S A N L U I S O B I S P O
Derek Johnson, Community Development Director
Phil Dunsmore, Senior Planner
Meeting D-
2 / 1
Application for Certified Local Government Program (CHC 103 -11)
RECOMMENDATION
As recommended by the Cultural Heritage Committee, adopt a resolution approving the
application and authorize the City Manager to sign the certification agreement for the Certified
Local Government program.
DISCUSSION
Background
The Certified Local Government (CLG) program is a nationwide program established in 1980 as
an amendment to the National Historic Preservation Act of 1966. It is designed to encourage
direct participation of local governments in the identification, evaluation, registration, and
preservation of historic properties. It achieves this by providing specific guidelines for
preservation programs and by providing funding to support these programs. The CLG program is
a partnership among local governments, the State Office of Historic Preservation (OHP), and the
National Park Service (NPS).
Historic Preservation was identified as a 2011 -2013 Council priority "As Resources Permit" to
Continue to promote historic resource preservation opportunities and update Historic Resource
Inventory." Since adoption of the Historic Preservation Ordinance, the Cultural Heritage
Committee (CHC) has expressed interest in completing the CLG application process. The
ordinance was the final component the City needed to meet the minimum qualifications to
become a CLG. The CHC reviewed and endorsed the CLG application process on November 28,
2011 (Attachments 2 and 3).
What is the CLG Program?
Being certified as a CLG under the National Historic Preservation Act Certification ensures that
the local jurisdiction's historic preservation program is consistent with the National Historic
Preservation Program. Local governments that have achieved CLG status are considered full
partners with OHP in carrying out the protection of cultural resources. There are currently 60
certified local governments in the state. In our region that includes the Cities of Monterey and
Ventura. Once certified, the local government is included in the process of nominating
properties to the National Register of Historic Places and is also eligible to apply for a share of
the state's annual Historic Preservation Fund administered by the OHP. The annual grant
funding can support important activities including completion of a preservation element or plan,
a survey, preparation of a National Register district application, or the update of an ordinance:
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Council Agenda Report
Certified Local Government Paqe 2
When a city decides to become a CLG, it agrees to carry out the intent of the Secretary of the
Interior's Standards. The OHP provides an advisory role by reviewing the structure and processes
of the local preservation program. The OHP may make suggestions about strategies a local
government can use to accomplish its goals and objectives to achieve a good balance between
development and preservation. Beyond that, neither the NPS nor OHP have any regulatory
authority over local governments. Therefore local jurisdictions with CLG status continue to act
autonomously in implementing their historic preservation programs.
General Plan Discussion
The City's Conservation and Open Space Element (LOSE) provides General Plan goals, policies
and programs in support of historic preservation. The following COSE policies support the intent
of the CLG program.
3.3.1 Historic preservation.
Significant historic and architectural resources should be identified, preserved and
rehabilitated.
Staff Response: The CLG program provides technical and financial assistance to assist local
jurisdictions in the identification and preservation methods of historic properties.
3.3.5 Historic districts and neighborhoods.
In evaluating new public or private development, the City should identify and protect
neighborhoods or districts having historical character due to the collective effect of
Contributing or Master List historic properties.
Staff Response: The CLG program can provide technical assistance, training, and funding to
assist with Historic Resource Inventories to help identify the boundaries of historic districts.
3.6 7 Partnering for preservation.
The City will partner with agencies, non-profit organizations and citizens groups to
help identify, preserve, rehabilitate and maintain cultural resources.
Staff Response: The CLG program is a "partnership" with the OHP and the NPS that will assist
with the identification and preservation of cultural resources.
CLG Requirements
The City may be certified to participate in the CLG program by complying with five
responsibilities:
1. Enforce appropriate state and local legislation for the designation and protection of
historic properties;
2. Establish an adequate and qualified historic preservation review commission by local law;
3. Maintain a system for the survey and inventory of historic properties;
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Council Agenda Report
Certified Local Government Page 3
4. Provide for adequate public participation in the local historic preservation program,
including the process of reviewing and recommending properties for nomination to the
National Register of Historic Places; and
5. Satisfactorily perform the responsibilities delegated to it by the State.
Participating cities complete annual reporting to OHP to document properties that have been
evaluated or listed through the city's historic review process, however the OHP does not have
regulatory authority over the city's programs. This level of reporting is already under way at the
city as part of our existing historic preservation program. The recently adopted Historic
Preservation Ordinance completes the picture and codifies the nuts and bolts of San Luis
Obispo's Historic Preservation Program consistent with OHP guidelines. The State Historic
Preservation Officer has reviewed the City's Historic Preservation Ordinance, guidelines and
CHC responsibilities and determined that the City meets the eligibility criteria. The attached
CHC report (Attachment 3) contains additional information and details on the program.
CLG Benefits
Becoming a CLG is a significant tool for achieving community preservation goals. Once
certified, a local government has access to technical and financial assistance with identifying,
evaluating and encouraging preservation of historic resources. Although there are many benefits
of becoming a CLG as listed in the attached OHP summary (Attachment 1), the most substantial
benefits include direct technical assistance from OHP, streamlined CEQA review, and financial
benefits that can be utilized to enhance the historic preservation program.
Technical assistance through the CLG program is offered through an email listsery hosted by the
State Office of Historic Preservation. Membership to the listsery is limited to OHP staff, CLG
coordinators, members of CLG boards /commissions /committees, and other interested staff in the
CLG. It is a communication tool that offers the Office of Historic Preservation and CLGs the
opportunity to submit suggestions or questions to other members of the listserv. OHP staff also
uses the listsery to forward information about training opportunities, publications, grants, and a
variety of technical assistance to CLGs.
Environmental review may be streamlined because a component of the CLG program includes
adopting the Secretary of Interior Standards for the treatment of historic properties. The City
actively follows the Secretary of the Interior's Standards and having CLG recognition will allow
the use of exemptions under the California Environmental Quality Act (CEQA), or in findings of
no adverse effect. Including the National Register criteria and the Secretary of the Interior
Standards in the local ordinance integrates local, state, and federal levels of review. It brings
clarity to the question of what resources are significant when it comes to CEQA and Section 106
of the National Historic Preservation Act.
Perhaps the most visible benefit is the financial assistance. Each state is required to pass through
10% of its annual Historic Preservation Fund grant from the National Park Service to CLGs to
fund preservation activities. The funding available is not a large amount, but it can support
important activities such as completion of a preservation element or plan; survey work;
preparation of a National Register district application; preparation of a context statement; or the
update of an ordinance. Funding is not available for construction or restoration projects. Grants
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Council Agenda Report
Certified Local Government Page 4
are awarded to CLGs on a competitive basis, require a 40 percent local government match and
are used to facilitate the recognition and preservation of local historical resources. CLG projects
are generally funded in amounts from $2,500 - $25,000.
CONCLUSION
Participation in the CLG program has been a goal of the City's Historic Preservation Program for
several years. The City meets the program requirements. Becoming a Certified Local
Government provides resources in the form of technical and financial assistance, thus helping the
City achieve its preservation goals.
FISCAL IMPACTS
There is no cost to the City to participate in the CLG program. Annual reporting required by the
program will not entail additional work efforts by staff. The reports that staff provides on a
quarterly basis for the Mayor's meeting with advisory bodies will meet the program reporting
requirements. The City is already performing all of the required CLG functions, therefore no
additional staff time will be required by becoming a Certified Local Government. If the City
pursues grant funding through the program, a 40% grant match from the City would be required.
Finally, the City may terminate participation in the program at any time.
CONCURRENCES
Becoming a Certified Local Government will assist the City in meeting historic preservation
goals and will provide funding for continued inventory efforts. Application to become a
Certified Local Government is being recommended by the Cultural Heritage Committee and is
supported by staff.
ALTERNATIVES
1. The Council may wish to continue the discussion for additional information on the
program. Specific directional items to staff would be needed. This alternative is not
recommended because action on the CLG application before the end of the calendar year
will ensure the City's application is approved prior to the state grant cycle for CLGs in
2012.
2. The Council could opt not to apply to become a CLG. This alternative is not
recommended because the City is already operating a historic preservation program that
meets the CLG standards without access to the benefits of CLG participation.
ATTACHMENTS
1. State Office of Historic Preservation description of CLG program
2. Draft CHC minutes 11 -28 -11
3. CHC report 11 -28 -11
4. City Council Resolution
TACommunity Development\CARs \CC ipt 12 -13 -11 CLG.doc
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Attachment 1
INTRODUCTION
Preserving important historic properties as reflections of our American heritage became
a national policy through passage of the Antiquities Act of 1906, the Historic Sites Act of
1935, and the National Historic Preservation Act of 1966, as amended (16 1J.S.C. 470)
NHPA). In part, the NHPA instructed the Federal Government to assist local
governments to expand and accelerate their historic preservation programs 'and
activities. Since enactment of the NHPA, the historic preservation expertise and
activities of local governments have significantly increased. The act, however, provided
no opportunity for local governments to be involved formally in the national historic
preservation program. Lack of formal participation by local governments often meant
that historic preservation issues were not considered until development planning was
well underway. This often resulted in preservation /land development conflicts causing
project delays and increasing costs. In addition, opportunities frequently were lost for
preservation- oriented development that could satisfy both preservation and
development goals.
In recognition of the need to involve local governments in historic preservation, the 1980
amendments to the NHPA provided a specific role for local governments in the national
program by establishing the Certified Local Government (CLG) program. A CLG is a
local government whose local historic preservation program has been certified pursuant
to Section 101 (c) of the NHPA. Any local government is eligible to apply for
certification. Once certified, a local government must be included in the process of
nominating properties to the National Register of Historic Places and will be eligible to
apply to the state for a share of the state's annual Historic Preservation Fund (HPF)
allocation.
What is the Certified Local Government Program?
The 1980 amendments to the National Historic Preservation Act of 1966, as amended
16 U.S.C. 470), provided for the establishment of a Certified Local Government (CLG)
Program. The CLG program is a national program designed to encourage the direct
participation of a local government in the identification, registration, and preservation of
historic properties located within the jurisdiction of the local government. A local
government may become a CLG by developing and implementing a local historic
preservation program based on federal and state standards. The CLG program is
administered in California by the State Office of Historic Preservation (OHP).
The CLG program is intended to foster the integration of preservation planning into
other planning processes and ensure that historic resources are identified and
considered in making planning decisions. It is not intended to be another or more
burdensome layer of control, but instead to support good planning practices. The CLG
program encourages the preservation of cultural resources by promoting a partnership
among local governments, the State of California, and the National Park Service (NPS)
4
C1 -6
Attachment 1
which is responsible for the National Historic Preservation Program. Becoming a CLG
can provide local staff and commissions the tools, technical training, and more
meaningful leadership roles in the preservation of the community's cultural heritage.
Local interests and concerns are integrated into the official planning and decision -
making processes at the earliest possible opportunity.
In response to the federal government's 1995 initiative for simplifying the National Park
Service's oversight of the national historic preservation program, the NPS revised 36
CFR 61 to provide each state with greater discretion in carrying out the responsibilities
mandated in the National Historic Preservation Act. Decisions on membership
requirements for local preservation commissions are left entirely to the states. The
requirement that local preservation commissions consult outside professionals in certain
instances is eliminated.
Who Can Apply for Certified Local Government Status?
Any local government is eligible to apply to the State Historic Preservation Officer
SHPO) for certification. A local government is any general purpose political subdivision
of California such as a city, county, or city /county; or any other general purpose political
division of the state with the exception of regional commissions, councils of
governments, and special districts. It is important to be aware that certification pertains
to the entire local government and its agencies, not simply to the preservation
commission that serves the local government.
When Are CLG Applications Accepted?
Local governments may apply for CLG status at any time. However, in order to apply for
grants through the CLG program, a local government must be certified prior to the grant
application deadline which is usually the last week of April. Note that the CLG grant
application process is separate from the certification application and requires
completion of a grant application form.
What are the Procedures for Certification?
Prior to submitting an application or obtaining the elected officials' authorization, OHP
encourages the local government representative to consult with the Local Government
Unit of the California State Office of Historic Preservation and submit a draft application
for a preliminary review to ensure that the local government's preservation program
meets the state requirements and National Park Service CLG program criteria.
Once the draft application has been approved, the chief elected official of the local
government applying for CLG status shall request certification from the California State
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Attachment 1
Historic Preservation Officer (SHPO) in writing. The official request for certification shall
include the Certification Application Checklist, CLG Certification Application Form, and
CLG Certification Application Attachments found in Appendix A.
Within forty -five (45) days of receipt of an adequately documented application, the
SHPO shall review the certification application. If certification is recommended, the
SHPO will forward a Certification Agreement to the local government for signature. The
Certification Agreement shall identify the required responsibilities of the local
government when certified. SHPO concurrence, which shall include a copy of the
signed certification agreement and a signed review checklist, shall be forwarded to NPS
for final review and approval as a CLG. NPS has final approval to certify local
governments as CLGs; their date of approval is the effective date of certification.
Why Become a Certified Local Government?
What does certification mean? What's in it for the local jurisdiction? Why would you
want to associate your local preservation program with state and federal programs?
Does certification create additional state or federal oversight or control over local
programs?
Credibility: The National Historic Preservation Act (NHPA), passed in 1966, built upon
established preservation practices. The NHPA created the National Register of Historic
Places; its criteria are widely recognized and they have been tested legally (reviewed,
refined by adoption into regulations, tested and upheld in courts). Amendments to the
NHPA created the CLG program. The Secretary of the Interior's Standards and
Guidelines for preservation planning and the identification, evaluation, registration, and
treatment of historic properties were published in 1983. Although the California Register
of Historical Resources is much newer (1992), its criteria and procedures parallel the
National Register.
When your local survey program is consistent with the Secretary of the Interior's
Standards and Guidelines for Archaeology and Historic Preservation and your
designation criteria are consistent with the National Register and California Register
criteria, you know you are on safe ground. Similarly, use of the Secretary of the
Interior's Standards for Treatment of Historic Properties provides established criteria for
evaluating projects and granting Certificates of Appropriateness that have stood the
tests of time, reasonableness, and the courts. Consistency with national and state
regulations and established preservation practices insulates the local preservation
program from charges of being arbitrary and capricious. Becoming a CLG provides the
local program the added value of prestige and cachet.
Technical Assistance: OHP provides technical assistance, training, workshops, and
consultation services to CLGs. A perquisite for becoming a CLG is access to a listsery
hosted by the OHP. Membership to the listsery is limited to SHPO staff, CLG
coordinators, members of CLG boards /commission, and other interested staff in the
L":1
Attachment 1
CLG. It is a communication and networking tool that offers the Office of Historic
Preservation and CI-Gs the opportunity to submit suggestions or questions to other
members of the listserv. SHPO staff also uses the listsery to forward information about
training opportunities, publications, grants, and a variety of technical assistance to
CI-Gs.
Streamlining: The use of the National Register /California Register criteria and the
Secretary of the Interior Standards integrates local, state, and federal levels of review. It
brings clarity to the question of what resources are significant when it comes to CEQA
and Section 106 of the National Historic Preservation Act. Adopting the Secretary of the
Interior's Standards will allow the use of categorical exemptions under CEQA, and likely
result of findings of no adverse effect under Section 106. The use of these criteria and
standards make environmental review faster, more efficient, and reduces costs and
delays.
Involvement: The CLG program brings local preservation boards and commissions
into broader local land use planning and project approval processes. CI-Gs have the
responsibility to involve their boards /commissions in the CEQA and Section 106 review
process, as well.
Funding: Each state is required to pass through 10% of its annual Historic
Preservation Fund grant from the National Park Service to CI-Gs to fund their
preservation activities. California has chosen to make this money available to CI-Gs for
a wide variety of preservation planning activities through a competitive grant program.
This funding is not a large amount — grants range between $5000 and $25,000 — but it
can support important activities including completion of a preservation element or plan,
developing a historic context, conducting a survey, preparation of a National Register
district application, or the update of an ordinance. Work funded by a CLG grant is
expected to conform to state and federal standards.
Autonomy: When your local government decides to become a CLG, it agrees to carry
out the intent of the NHPA and the Secretary of the Interior's Standards. Recognizing
that individual local governments and individuals employed by those local governments
often do not have all the background, training, and skills to achieve a good balance
between development and preservation, SHPO reviews the structure and processes of
the local preservation program, and may comment on or make suggestions about
strategies a local government can use to accomplish its goals and objectives. Beyond
that, neither the NPS nor SHPO have any regulatory authority over local governments.
Neither the NPS nor SHPO dictate the content of historic preservation plans or
ordinances; neither the NPS nor SHPO review nor is their approval needed prior to the
selection and appointment of individual local preservation commissioners by local
government officials. In no way is the autonomy of a local government decreased by
becoming a CLG. However, a CLG may be decertified if it establishes policies or adopts
practices that violate the intent of the National Historic Preservation Act.
D
Attachment 1
Economic Benefits: Although there are no direct economic benefits to being a CLG
other than the opportunity to compete for CLG grants, your CLG's commitment to
historic preservation does result in multiple economic benefits to the community. Where
preservation is supported by local government policies and incentives, designation can
increase property values and pride of place. Revitalization of historic downtowns and
adaptive reuse of historic districts and buildings conserves resources, uses existing
infrastructure, generates local jobs and purchasing, supports small business
development and heritage tourism and enhances quality of life and community
character.
Preserve America: Because CLG status indicates a community's commitment to
historic preservation at the local level, it makes the local government a prime candidate
to become a Preserve America community and streamlines the application process.
Preserve America is a national initiative that recognizes and designates communities,
including neighborhoods in large cities that protect and celebrate their heritage, use
their historic assets for economic development and community revitalization, and
encourage people to experience and appreciate local historic resources through
education and heritage tourism programs. In addition to White House recognition and
local signage, Preserve America communities are eligible for federal grants to support
community efforts to demonstrate sustainable uses of their historic and cultural sites
and the economic and educational opportunities related to heritage tourism. OHP does
not administer the Preserve America program. However, Preserve America Applicants
are required to consult with the SHPO as part of the application process.
What are the Requirements for Certification?
FIVE BASIC PROGRAM REQUIREMENTS
The chief elected official of the local government must submit an application to the
SHPO requesting certification. Local governments may be certified to participate in the
CLG program by complying with the five minimum responsibilities of a CLG. Local
governments must:
Enforce appropriate state and local legislation for the designation and protection
of historic properties;
Establish a qualified historic preservation review commission by local law;
Maintain a system for the survey and inventory of historic properties;
Provide for adequate public participation in the local historic preservation
program, including the process of reviewing and recommending properties for
nomination to the National Register of Historic Places; and
Satisfactorily perform the responsibilities delegated to it by the state.
A
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Attachment 1
Enforce appropriate state and local legislation for the designation and protection
of historic properties.
CLGs must enact and enforce a local historic preservation ordinance. State enabling
legislation, found at California Government Code Sections 65850, 25373, and 37361,
provides for local jurisdictions to enact appropriate historic preservation legislation.
Additionally, the local legislation shall be consistent with the intent and purpose of the
National Historic Preservation Act of 1966, as amended (16 U.S.C. 470).
Along with other local governments, CLGs must enforce the California Environmental
Quality Act (CEQA) regulations in relation to historical resources, and participate, as
appropriate, in the environmental review of federally- sponsored projects under Section
106 of the National Historic Preservation Act of 1966, as amended.
Designation refers to the identification and registration of both historic and prehistoric
properties for purposes of protection using criteria established by the local government
Designation requirements and procedures must be consistent with the Secretary of the
Interior's Standards for Identification and Registration. Adoption of criteria that closely
follows the National Register of Historic Places and the California Register of Historical
Resources is encouraged.
Protection refers to the local review process under local law for proposed demolition of,
changes to, or other action that may affect properties that have been designated
pursuant to the local ordinance. This would not include properties listed on or
determined eligible for the national Register of Historic Places or California Register of
Historical Resources unless those properties were also designated under the local
designation process.
The CLG will prepare a comprehensive local historic preservation plan or preferably, a
historic preservation element in the community's general plan. The plan or element will
identify preservation missions, goals, and priorities and will establish preservation
strategies, programs, and time schedules. It will also be used to support and justify CLG
grant applications.
The CLG is encouraged to adopt and implement the Secretary of the Interior's
Standards and Guidelines for Archeology and Historic Preservation relevant to CLG
need and activities (wvvw.nps.gov/history/local-law/arch—stn,ds—r.).htm).
Establish a qualified historic preservation review commission by local law.
A qualified historic preservation review commission means a board, council, committee,
commission or other similar body established by local legislation whose primary
purpose is historic preservation and whose membership includes a minimum of five (5)
individuals, all of who have a demonstrated interest in, competence or knowledge in
historic preservation.
C1 -11
Attachment 1
Members must be appointed by the chief elected official of the jurisdiction, unless
otherwise provided by local legislation. The appointing authority shall make interim
appointments to fill unexpired terms in the event of vacancies occurring during the term
of members of the commission within sixty (60) days.
To the extent available in the community, the CLG will appoint a minimum of two
professional members from the disciplines of architecture, history, architectural history,
planning, archeology, or other historic preservation related disciplines, such as urban
planning, American studies, American civilization, cultural geography, or cultural
anthropology. Local governments can be certified without this minimum professional
qualified membership if they can demonstrate they have made a reasonable effort to fill
those positions.
When a relevant historic preservation discipline is not represented in the commission
membership, the commission shall be encouraged to draw upon such expertise in this
area when considering National Register nominations requiring the application of such
expertise.
The commission must meet a minimum of four times per year and each commissioner
must attend annually at least one training session that meets the requirements of the
CLG program. CLG commissioners and staff should develop training requirements that
meets the needs of local historic preservation programs.
The commission is the local governmental entity responsible for preparing and
submitting an annual report to the SHPO each year. The format and content the most
recent annual report is available on the SHPO's website
www.ohp.parks.ca.gov /?gage id- 21230.
Maintain a system for the survey and inventory of historic properties
Because historical contexts and surveys are the foundation of preservation planning,
CLGs must develop or have in place a system for identifying, evaluating, inventorying,
and registering historical and cultural resources within their jurisdiction,
Upon certification, CLGs will forward to the SHPO copies of all pre- existing survey and
inventory information.
Surveys carried out by or at the direction of a CLG are expected to meet the Secretary
of the Interior's Standards and Guidelines for Identification and Evaluation, and use
State - approved inventory forms (DPR 523 series) and /or electronic data standards to
ensure that the data can be integrated into the statewide California Historical Resources
Information System (CHRIS). (This policy does not apply to survey data produced
before the effective date of CLG certification.)
10
C1 -12
Attachment 1
Evaluative criteria must be consistent with the National Register of Historic Places and
the California Register of Historical Resources, and conform to the Secretary of the
Interior's Standards for Identification and Evaluation. (This policy does not apply to
survey data produced before the effective date of CLG certification.).
Communities which have conducted surveys in the past must periodically update their
survey data as new resources become eligible for consideration, or when older surveys
warrant re- examination over time. CLGs are required to submit survey updates and new
surveys to OHP for inclusion in the statewide database.
The CLG commission shall establish internal procedures to facilitate the use of survey
results in the planning process by the CLG officials and departments. The commission
shall submit survey results to the local government for adoption, then forward to OHP.
Copies of the survey results must be made available to the public, with the exception of
certain sensitive historic and prehistoric sites and should be on deposit at the local
planning department, building and safety office, public works department, and
redevelopment agency. Local libraries, colleges, and historical societies should also
receive copies. SHPO will make copies available for the appropriate CHRIS regional
center.
Provide for adequate public participation in the focal historic preservation
program
Public participation is an integral feature of any preservation program and the CLG shall
provide opportunities for public participation in all CLG programs and activities.
The CLG will encourage public participation at commission meetings. All local
preservation commission meetings must be open to the public and meet the
requirements of the Ralph M. Brown Act for open meetings (California Government
Code Section 54950 et seq.). Meeting agendas and minutes of commission meetings
must be publicly available.
Public participation shall be encouraged in the CLG's survey program at all levels of
responsibility to identify and inventory significant cultural resources. Survey results shall
be a public record and on file at a public institution, with the exception of archeological
and other sensitive sites.
The local government must provide for public participation in the CLG's process for
evaluating properties for nomination to the National Register of Historic Places.
The CLG shall encourage the public to participate in the review of projects and
undertakings subject to the California Environmental Quality Act and Section 106 of the
National Historic Preservation Act.
11
C1 -13
Attachment 1
Satisfactorily perform the responsibilities dele ated to it by the state
The CLG must have the legal authority to fulfill the minimum requirements specified in
this application manual.
At the discretion of the SHPO and with mutual written agreement with the local
government, or by federal mandate from the National Park Service, additional
responsibility may be delegated to the CLG.
ADDITIONAL REQUIREMENTS.
National Reaister Nominations
The CLG has the obligation to participate in the nomination of properties to the National
Register of Historic Places pursuant to Section 101 (c)(2)(A) of the National Historic
Preservation Act: "Before a property within the jurisdiction of the certified local
government may be considered by the State to be nominated to the Secretary [of the
Interior] for inclusion on the National Register, the State Historic Preservation Officer
shall notify the owner, the applicable chief local elected official, and the local historic
preservation commission. The commission, after reasonable opportunity for public
comment, shall [emphasis added] prepare a report as to whether or not such property,
in its opinion, meets the criteria of the National Register."
Annual Reviews
In order to maintain certification, CI-Gs are required to submit reports annually that
detail their historic preservation programs' accomplishments and actions. The annual
reports cover the federal fiscal year, October 1 — September 30. Each CLG is sent a
reminder letter and the annual report format. The CLG must have submitted an annual
report for the previous reporting period in order to be eligible to submit a CLG grant
application. Although the majority of the report format remains fairly constant, some
changes may occur from year to year. The format for the most recent annual report is
posted on SHPO's website (www.ohp.parks.ca.gov /?page id= 21239).
Decertification
In order to remain a CLG the local government must continue to meet the minimal
requirements of the program and to meet the performance standards specified in the
CLG certification agreement.
The SHPO may recommend decertification to the National Park Service if all of the
following conditions have been met:
The SHPO determines that a CLG's performance does not meet the performance
standards specified in the Certification Agreement; and
12
C1 -14
Attachment 1
The SHPO specifies to the CLG in writing ways to improve performance with a
period of time by which deficiencies must be corrected or improvements must be
achieved; and
After the period of time stipulated by the SHPO, the SHPO determines that there
has not been sufficient improvement.
Failure to perform acceptably under a Historic Preservation Fund grant is not in itself
sufficient grounds for decertification. The SHPO must notify the CLG in writing prior to
or at the time of its recommendation to NPS for decertification. The notification must
state the specific reasons for the proposed decertification, describe the SHPO's
technical assistance efforts, and affirm that the SHPO will notify the CLG of the NPS
concurrence with the decertification.
The SHPO may also recommend decertification if a CLG requests in writing to be
decertified. The SHPO must forward a copy of the CLG's letter as an enclosure to the
SHPO's request to decertify the CLG.
If the CLG had been delegated Section 106 responsibilities in its jurisdiction by the
State, and a Programmatic Agreement had been executed by the Advisory Council on
Historic Preservation (ACHP), then the SHPO must notify the ACHP that the CLG has
been decertified.
The effective date of decertification is when the National Park Service concurs in writing
with the SHPO's recommendation to decertify the CLG. If the local government wishes
to become recertified it must reapply for certification.
What about the CLG Grants Program?
OHP is required by federal law to pass through at least 10% of its annual Federal
Historic Preservation Fund (HPF) allocation to Certified Local Governments for historic
preservation planning projects and programs which promote the identification,
evaluation, nomination, and preservation of their communities' significant cultural
resources and are consistent with the Statewide Historic Preservation Plan. Bricks and
mortar projects are not eligible.
The annual grant cycle begins with the notification to all CLGs of the funding availability
in January of each year. Grant applications are due at the end of April and the recipients
are announced by June. Grant funded projects are to begin October 1 and must be
completed by the following September. CLG grants are awarded on a competitive basis
in amounts from $2,500 - $25,000. Cash or in -kind match is required: 60% Federal /40%
applicant.
The CLG grants program manual and grant application is available on OHP's website at
www.ohp.parks.ca.gov/ ?page id= 24493. The grants manual is updated annually to
reflect statewide preservation priorities, Consult the manual for detailed information
13
C1 -15
Attachment 1
about what activities are eligible for funding, the criteria used in awarding the grants,
and the obligations of grant recipients.
Grant - eligible activities include projects such as the following:
Developing or revising general plan historic preservation elements
Ordinance revisions
Developing historic contexts and conducting historic resource surveys
Preparing National Register of Historic Places district nominations or multiple
property submissions
Developing archaeological preservation plans
Developing design guidelines for historic properties
Developing community -based preservation education and outreach programs
including historic homeowner education. OHP will consider joint proposals with
other local governments to fund a circuit rider staff person to provide technical
assistance to a group of local government preservation programs.
Preparing historic structure reports /historic structure preservation plan
Historic Resource information management such as developing a web -based
application to make historic resource information publically available online
CLGs may not use HPF grants for construction or restoration of buildings and
structures, acquisition of historic properties, maintenance or operation of historic
properties, interpretive displays, or purchase of computers or other equipment. CLG
grant funds can not be used as match for any other federal grant or for lobbying
purposes.
Where Can I Get More Information?
If you have any questions about this program, the certification application process, or
the preparation and development of local preservation documents and programs, e.g.,
preparation of a historic preservation ordinance, development of a survey program, etc.,
please contact the Local Government Unit, Office of Historic Preservation, Post Office
Box 942896, Sacramento, CA 94296 -0001, phone (916) 653 -6624, fax (916) 653 -9824.
Information on the Certified Local Government Program is available online at
www.ohp.parks,ca.gov.
Also see Section 101(c)(1) and 9(c)2 of the National Historic Preservation Act of 1966,
as amended (http: / /www.nps.gov /history /history /online books /fhpl /nhpa.pdf) and 36
CFR Part 61.6 of the Procedures for State, Tribal, and Local Government Historic
Preservation Programs
http : / /edocket.access.gpo.gov /cfr 2005 /lulgtr /pdf /36cfr61.6.pdf). .
14
C1 -16
Attachment 2
DRAFT
SAN LUIS OBISPO
CULTURAL HERITAGE COMMITTEE MINUTES
November 28, 2011
ROLL CALL:
Present: Committee Members Hemalata Dandekar, John Fowler, Jaime Hill, Buzz
Kalkowski, Bob Pavlik, Vice -Chair Enrica Costello, and Chairperson Jeff
Oliveira
Absent: None
Staff: Senior Planner Phil Dunsmore and Recording Secretary Allison Zike
ACCEPTANCE OF THE AGENDA:
The agenda was accepted as presented
MINUTES:
Minutes of October 24, 2011 were approved as presented.
PUBLIC COMMENTS ON NON - AGENDA ITEMS:
There were no comments made from the public.
PUBLIC HEARING ITEMS:
1. City -Wide. CHC 103 -1; Review Certified Local Government (CLG) application; City
of San Luis Obispo, applicant. (Phil Dunsmore)
Phil Dunsmore, Senior Planner, presented the staff report, recommending the
Committee endorse the application and certification agreement for the Certified Local
Government program to the City Council based on findings which he outlined.
Chair Oliveira requested clarification on CLG application deadlines.
Phil Dunsmore clarified that the application will be due prior to January 1, 2012,
Vice -Chair Costello asked that staff provide a schedule of CLG grant deadlines at the
January 2012 CHC meeting, pending application approval, and suggested staff also
explore grant options from private organizations.
Committee Member Dandekar asked for clarification about the CEQA waiver.
Phil Dunsmore explained that some historic preservation efforts in compliance with
Secretary of the Interior standards are exempt from CEQA requirements.
C1 -17
Draft CHC Minutes
November 28, 2011
Page 2
PUBLIC COMMENTS:
Attachment 2
Eric Meyer, San Luis Obispo, asked staff if there are any downsides to becoming a
Certified Local Government.
Pierre Rademaker, San Luis Obispo, spoke in support of the City becoming a Certified
Local Government.
There were no further comments made from the public.
COMMITTEE COMMENTS:
Committee Member Hill asked if City Council had seen the list of economic incentives
for the City to become a CLG.
Staff stated that City Council had not yet seen a staff report on the item.
Committee Member Fowler asked what the extent is of required reports on any
properties in the City that have received grant assistance.
Staff stated that current City ordinances allow the City to obtain that information.
Committee Member Fowler stated that becoming a CLG should not drive the addition of
more resources to the Master or Contributing List of Historic Resources.
There were no further comments made from the Committee.
On motion by Committee Member Fowler, seconded by Vice -Chair Costello, to endorse
the application and certification agreement for the Certified Local Government program
to City Council for approval.
AYES: Committee Members Fowler, Kalkowski, Dandekar, Hill, Pavlik, Vice -Chair
Costello, and Chair Oliveira
NOES: None
RECUSED: None
ABSENT: None
The motion passed on a 7:0 vote.
2. City -Wide CHC 134 -11; Review design and location of new signs to identify Old
Town, Chinatown, and Downtown Historic Districts; City of San Luis Obispo,
applicant. (Phil Dunsmore)
Phil Dunsmore, Senior Planner, presented the staff report, recommending the
Committee continue the item with specific direction on design changes, and comments
on sign locations as appropriate and public outreach opportunities.
Committee Member Kalkowski asked what the material of the signs will be.
C1 -18
CITY OF SAN LUIS OBISPO
CULTURAL HERITAGE COMMITTEE STAFF REPORT ITEM # 1
BY: Phil Dunsmore, Senior Planner MEETING DATE: November 28, 2011
FROM: Kim Murry, Deputy Director, Long Range Planning
FILE NUMBER: CHC 103 -11
PROJECT ADDRESS: Citywide
SUBJECT: Application for Certified Local Government Program.
SUMMARY RECOMMENDATION:
Recommend the City Council approve the application and certification agreement for the
Certified Local Government program.
BACKGROUND:
Situation
With adoption of a Historic Preservation Ordinance last year, the City now meets the minimum
eligibility requirements to become a Certified Local Government (CLG). Since adoption of the
Historic Preservation Ordinance, the Cultural Heritage Committee has expressed interest in the
CLG program as a tool for achieving preservation goals. In order to complete the application
process, endorsement by the CHC and a signed resolution by the City Council are required. In
order for the City to be eligible for the next round of grant funding which will occur next spring,
the application and signed resolution need to be completed and delivered to the State Office of
Historic Preservation (OHP) before the end of the year. This item is scheduled to be reviewed by
the City Council on December 13, 2011.
DISCUSSION
What is the CLG Program?
The CLG is a nationwide program established in 1980 as an amendment to the National Historic
Preservation Act of 1966. It's designed to encourage direct participation of local governments in
the identification, evaluation, registration, and preservation of historic properties. It achieves this
by providing specific guidelines for preservation programs and by providing funding to support
these programs. The CLG program is a partnership among local governments, OHP, and the
National Park Service (NPS). A CLG is a local government whose local historic preservation
program has been certified under the National Historic Preservation Act (NHPA). Once
certified, the local government is included in the process of nominating properties to the National
Register of Historic Places and will be eligible to apply to the state for a share of the state's
annual Historic Preservation Fund administered by the California Office of Historic Preservation.
These grants are awarded on a competitive basis and require a 40% match from the CLG.
Attachment 1 provides for a more comprehensive overview of the program as defined by OHP.
C1 -19
CLG program (CHC 103 -1 )
Page 2
A 3
When a city decides to become a CLG, it agrees to carry out the intent of the Secretary of the
Interior's Standards. The OHP provides an advisory role by reviewing the structure and processes
of the local preservation program. The OHP may make suggestions about strategies a local
government can use to accomplish its goals and objectives to achieve a good balance between
development and preservation. Beyond that, neither the NPS nor OHP have any regulatory
authority over local governments. Therefore local jurisdictions with CLG status continue to act
autonomously in implementing their historic preservation programs.
General Plan Guidance
The City's Conservation and Open Space Element (COSE) provides General Plan goals, policies
and programs in support of historic preservation. The following COSE policies support the intent
of the CLG program.
3.3.1 Historic preservation.
Significant historic and architectural resources should be identified, preserved and
rehabilitated.
Staff Response: The CLG program provides technical and financial assistance to assist local
jurisdictions in the identification and preservation methods of historic properties.
3.3.5 Historic districts and neighborhoods.
In evaluating new public or private development, the City should identify and protect
neighborhoods or districts having historical character due to the collective effect of
Contributing or Master List historic properties.
Staff Response: The CLG program can provide technical assistance, training, and funding to
assist with Historic Resource Inventories to help identify the boundaries of historic districts.
3.6.7 Partnering for preservation.
The City will partner with agencies, non-profit organizations and citizens groups to
help identify, preserve, rehabilitate and maintain cultural resources.
Staff Response: The CLG program is a "partnership" with the HPO and the NPS that will assist
with the identification and preservation of cultural resources.
CLG Requirements
The City may be certified to participate in the CLG program by complying with five
responsibilities:
1. Enforce appropriate state and local legislation for the designation and protection of
historic properties;
2. Establish an adequate and qualified historic preservation review commission by local
law;
3. Maintain a system for the survey and inventory of historic properties;
C1 -20
CLG ramro CHC 103 -1 Attachment 3pg
Page 3
4. Provide for adequate public participation in the local historic preservation program,
including the process of reviewing and recommending properties for nomination to the
National Register of Historic Places; and
5. Satisfactorily perform the responsibilities delegated to it by the state.
The City has continuously maintained a historic resources inventory and Cultural Heritage
Committee since the early 1980's thus performing the duties required by the CLG program.
However, the missing component was the recently adopted Historic Preservation Ordinance
which effectively applies the local legislation for the designation and protection of historic
properties.
Annual Reporting
Once the City becomes a CLG, there is an annual reporting requirement that includes items
already tracked by the City. These reporting requirements include the following:
a. How many properties added to Historic Resource inventory?
b. How many properties added to local register historic district?
c. How many properties added to tax incentive program?
d. How many properties assisted with local grants?
e. How many properties reviewed by CHC for historic compliance?
f. Did the City acquire any historic properties?
Benefits
Local governments that have achieved CLG status are considered full partners with the
California Office of Historic Preservation in carrying out the protection of cultural resources.
This partnership includes a series of benefits including the following:
Credibility
The National Historic Preservation Act has been around since 1966. The National Register of
Historic Places and its criteria are widely recognized. The California Register of Historical
Resources was introduced in 1992, and its criteria and procedures parallel the National Register.
The adoption and use of the Secretary of the Interior's Standards provides criteria for project
evaluation which, have stood the tests of time, reasonableness, and the courts.
Having a local survey and designation program consistent with the National Register and
California Register provides credibility for the local program. Similarly, in project review, the
use of the Secretary of the Interior's Standards provides consistent criteria for project evaluation.
It provides the local agency with an accepted standard on which to base the preservation
program.
Technical Assistance
CLG members are provided access to an email listsery hosted by the State Office of Historic
Preservation. Membership to the listsery is limited to OHP staff, CLG coordinators, members of
CLG boards /commission/committee, and other interested staff in the CLG. It is a communication
tool that offers the OHP and CLG's the opportunity to submit suggestions or questions to other
CI-21
CLG program (CHC 103-1.)
Page 4
Attachment 3
members of the listserv. OHP staff also uses the listsery to forward information about training
opportunities, publications, grants, and a variety of technical assistance to CLGs.
Streamlining
The use of the National Register /California Register criteria and the Secretary of the Interior
Standards integrates local, state, and federal levels of review. It brings clarity to the question of
what resources are significant when it comes to environmental review and Section 106 of the
National Historic Preservation Act. Adopting the Secretary of the Interior's Standards will allow
the use of exemptions under the California Environmental Quality Act (CEQA), and likely result
of findings of no adverse effect under Section 106. The use of these criteria and standards make
environmental review more efficient.
Funding
Each state is required to pass through 10% of its annual Historic Preservation Fund grant from
the National Park Service to CLGs to fund preservation activities. The amount of funding is not
large, but it can support important activities such as completion of a preservation element or
plan; surveywork; preparation of a National Register district application; development of a
context statement; or the update of an ordinance. Funding is not available for construction or
restoration projects. Grants are awarded to CLGs on a competitive basis, require a 40 percent
local government match and are used to facilitate the recognition and preservation of local
historical resources. CLG projects are funded in amounts from $2,500 - $25,000. In 2011, OHP
selected ten local governments to receive grants totaling $184,500 for the following projects:
Burbank, $5,000. Develop an education and outreach campaign to provide more
information to the public about Burbank's preservation programs and to engage the
community in on -going preservation efforts.
Elk Grove, $22,500. Prepare a historic context statement for the Elk Grove Historic
District Special Planning Area and surrounding neighborhood.
La Quinta, $10,000. Digitize two City of La Quinta historic properties surveys and
make them available on the City's website as part of its outreach and public education
program.
Los Angeles, $22,500. Expand the Participation and Outreach Implementation Program
for SurveyLA including the development of a social media strategy. It will focus on the
following 12 community plan areas, along with industrial -zoned properties citywide: 1)
Venice; 2) Westwood; 3) Wilshire; 4) Van Nuys -North Sherman Oaks; 5) Chatsworth -
Porter Ranch; 6) Northridge; 7) Reseda -West Van Nuys; 8) Granada Hills - Knollwood;
9) Sylmar; 10) Sun Valley -La Tuna Canyon; 11) Northeast Los Angeles; and 12) the
Los Angeles International Airport.
Monterey, $22,500. Prepare a historic context statement and reconnaissance historic
survey for the New Monterey Residential Neighborhood and the New Monterey
Business District.
Norco, $12,000. Extend the City's historic context statement to address its modern era,
from 1946 through 1966.
Pasadena, $22,500. Prepare a Multiple Property Documentation Form about cultural
landscapes in Pasadena, concentrating on historic designed landscapes from the turn of
the twentieth century through the recent past.
C1 -22
CLG program (CHC 103 -1 .,)
Page 5
Attachment 3
Riverside, $22,500. Prepare a historic context and intensive -level survey for the
proposed Cliffside Historic District which includes a cohesive collection of homes of the
recent past, dating from 1950 -1960.
Sacramento, $22,500. Revise and expand the City of Sacramento's historic context to
provide direction and guidance for future historical and cultural resources surveys.
San Francisco, $22,500. Prepare a historic context and survey of residential tract
developments constructed from 1930 -1950 in the Sunset District.
Economic Benefits
Although there are no direct economic benefits to becoming a CLG other than the opportunity to
compete for CLG grants, the City's commitment to historic preservation does result in multiple
economic benefits. Where preservation is supported by local government policies and
incentives, designation can increase property values and pride of place. Revitalization of historic
downtowns and adaptive reuse of historic districts and buildings conserves resources, uses
existing infrastructure, generates local jobs and purchasing, supports small business development
and heritage tourism and enhances quality of life and community character.
Autonomy
When the City decides to become a CLG, it agrees to carry out the intent of the NHPA and the
Secretary of the Interior's Standards. OHP plays an advisory role in reviewing the local
government's historic preservation program structure and processes to ensure they achieve a
good balance between development and preservation. OHP may also make suggestions about
strategies a local government can use to accomplish its goals and objectives. Beyond that, neither
the NPS nor OHP have any regulatory authority over local governments.
Neither the NPS nor OHP dictate the content of historic preservation plans or ordinances; neither
the NPS nor OHP review nor is their approval needed prior to the selection and appointment of
individual local preservation committee members by local government officials. In no way is the
autonomy of a local government decreased by becoming a CLG. However, a CLG may be
decertified if it establishes policies or adopts practices that violate the intent of the National
Historic Preservation Act. Also, the City is able to opt out of the program at any time.
CONCLUSION
The Cultural Heritage Committee meets all of the features and services required under the CLG
program and the City already has an Ordinance and Guidelines that meet the CLG requirements.
Other than the initial application, maintaining CLG status requires annual reporting to OHP . If
the state recognizes San Luis Obispo as a CLG, the City would become eligible for financial
support for preservation activities, and expedited approval of environmental and Section 106
reports. More importantly, CLG is a tool for achieving community preservation goals.
ATTACHMENTS
1) OHP overview of CLG program
2) CLG application narratives (One of several required components of the CLG application
3) Draft City Council Resolution authorizing CLG application
C1 -23
Attachment 4
City Council Resolution No. (2011 Series)
A RESOLUTION OF THE CITY COUNCIL OF SAN LUIS OBISPO APPROVING THE
APPLICATION AND CERTIFICATION AGREEMENT FOR THE CERTIFIED LOCAL
GOVERNMENT PROGRAM
WHEREAS, The United States Congress under the National Historic Preservation Act of
1966, amended (16 U.S.C. 470), has authorized the establishment of a Certified Local Government
program; and
WHEREAS, the State of California, represented by the State Historic Preservation Officer,
is responsible for the administration of the program within the state and the establishment of
necessary rules and procedures governing the application by local agencies under the program; and
WHEREAS, said adopted procedures established by the State of California require the
applicant to certify by resolution of the local government's elected officials the approval of an
application prior to submission of said application to the state; and
WHEREAS, notices of said public hearing was made at the time and in the manner
required by law; and
WHEREAS, the City Council has duly considered all evidence, including the testimony of
the applicant, interested parties, and the evaluation and recommendations by staff, presented at said
hearing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Luis
Obispo as follows:
1. Approve the filing of an application for certification under the Certified Local
Government Program; and
2. Appoint the Community Development Director or authorized deputy as agent of the city to
coordinate, process, and execute all contracts, agreements, amendments, and ancillary
documents within the scope of the attached application for certification.
On motion of , seconded by , and on the
following roll call vote:
AYES:
NOES:
ABSENT:
C1 -24
Resolution No.[ ]
i
Attachment 4
Certified Local Government Program, December 2011 (CHC 103 -11)
Page 2
The foregoing resolution was passed and adopted this day of , 2011.
Mayor Jan Howell Marx
ATTEST:
Elaina Cano, City Clerk
APPROVED AS TO FORM:
Yne Dietrick, City Attorney
TACommunity Development \CARs \CLG Council Reso 12- 13- 11.docx
C1 -25
Mming Da
Council IAo13111
Ac cnc)A nepoR2t
11 —Numb
dc!'"
CITY OF SAN LUIS OBISPO
FROM: Michael Codron, Assistant City Manager
Prepared By: Neil Havlik, Natural Resources Manager
SUBJECT: AUTHORIZATION OF ACCEPTANCE OF A CONSERVATION
EASEMENT ON A 38 ACRE PROPERTY AT 2877 SOUTH HIGUERA
STREET FROM KATHERINE FOSTER AND MICHAEL SPANGLER
RECOMMENDATION
Approve a resolution authorizing the Mayor to accept an offer to donate a conservation easement
covering approximately 38.3 acres at 2877 South Higuera Street, offered by Katherine Foster and
Michael Spangler, subject to a finding by the Planning Commission that acceptance of the
conservation easement is consistent with the City of San Luis Obispo General Plan.
DISCUSSION
Background
This donation, offered by long -time local residents Michael Spangler and Katherine Foster,
covers a 38.3 acre property at the western end of the South Hills. Of the total acreage, 37.2 acres
is designed as open space and includes a significant communication site (which is a permitted
use in the C /OS zone), and 1.1 acres along South Higuera Street designated for commercial
development which is steep and quite difficult to develop. Continued use and reasonable
expansion of the communication site would be permitted under the easement; however,
development of the commercially zoned area would be prohibited. This is the intent of the donors
and will be discussed further below.
Natural Resource Value of the Property
The property is comprised of a portion of the South Hills, a ridge of serpentine rocks that extends
from South Higuera Street on the west to Broad Street on the east. Approximately 131 acres of
this ridge is currently owned or controlled by the City of San Luis Obispo, which is referred to as
the South Hills Natural Reserve (SHNR). This donation will increase the size of the Reserve by
about 30 %, to 168 acres.
SHNR contains a number of sensitive or otherwise important natural features, and one notable
cultural feature, including:
a. Several wetland seeps or springs at scattered locations within the Reserve;
b. Several plant species of concern, including San Luis Obispo mariposa lily, San
Luis Obispo dudleya, purple spineflower, and adobe sanicle; and
c. A restored rock cistern which once provided water to the agricultural
properties nearby (now developed).
C2 -1
Council Agenda Report — Donation of Conservation Easement
Paize 2
Additionally, a large spring which contains a population of the (Federally - listed) endangered
Chorro Creek bog thistle is located on the subject property.
In 2006 City staff prepared a Conservation Plan for SHNR, which, although it did not include the
subject property, contained policies and programs that guided management of the City owned
and controlled properties, and would apply to the subject property, including:
a. Completion of an improvement program for the access road to the
communication sites located on private property to the west of the Reserve
i.e., the subject property), using Natural Resources Conservation Service
MRCS) standards commonly applied to farm and ranch roads;
b. Development of a formally identified trail system for pedestrians and
bicyclists, including certain routes restricted to pedestrians only;
c. Placement of protective fencing at identified locations within the Reserve,
especially on the southwest, to protect sensitive resources in those locations;
d. Development of interpretive and informational signage to assist visitors;
e. Ultimate removal of livestock grazing on the property; and
f. A wildfire preparedness plan, involving management of fuel loading at the
urban/wildland interface.
The Conservation Plan was adopted by the City Council in December 2006. Acceptance of this
easement donation would serve as an important component of implementation of the
Conservation Plan, especially in the matter of protection and enhancement of the bog thistle
stand, which suffers from heavy grazing pressure by livestock, and in legitimizing public use of
the site which now occurs on a daily basis
Reasons for Acquiring the Easement
The site is within City limits and therefore technically not part of the greenbelt. However, it is an
important part of the City's natural landscape and as such is identified as an important open
space resource, for which fee or easement interest is warranted. The easement grants to the City
the right of public access and would permit City staff to undertake reasonable management and
enhancement efforts thereon. This is supported by Open Space Goal 8.22 and the related Policy
8.22.1, which call for the City to secure and maintain a diverse network of open land
encompassing particularly valuable natural and agricultural resources. The Planning Commission
will again be asked to evaluate these issues and, if it determines there is a General Plan
inconsistency, the Mayor will not be authorized to complete the transaction and the matter will
return to the Council for further consideration.
Permanent protection of the 37.2 acre open space designated portion of the property is fully
consistent with the City's General Plan. Staff also feels that the donation of a conservation
restriction on the 1.1 acre commercially zoned portion of the property is consistent because in the
past site - specific evaluation of similar situations has found that such zoning conflicts with other
protective policies of the General Plan which apply regardless of zoning. The best examples of
this are the two donations of land along San Luis Obispo Creek near Higuera Street and Prado
Road, where commercial zoning was in conflict with the Creek Setback ordinance, and the
Planning Commission therefore found that the offers of donation of these lands (one from John
C2 -2
Council Agenda Report — Donation of Conservation Easement
Paae 3
Kuden and the other from Rob Olson) was consistent with the General Plan based upon site -
specific evaluation of each of those properties.
The subject property falls within a portion of the San Luis Obispo Airport Safety Zone, and as
such is within the jurisdiction of the San Luis Obispo County Airport Land Use Commission.
The 1.1 acre commercially- designated portion of the property is relatively steep and the provision
of reasonable vehicular access is difficult. Although possibly more suited to residential use,
changing the land use designation to residential would be counter to Airport zone rules and
therefore unlikely. Also, any development would require extensive grading and this seems
undesirable for such a highly visible site. The owners have considered these possibilities and
determined that, in their view, the highest and best use of the commercially zoned portion of the
property is in fact as open space. This donation essentially asks the City to confirm its agreement
with that view.
The Planning Commission was originally scheduled to discuss the proposed donation at its
regular meeting of November 16, 2011, but because of delays in negotiations this consideration
was postponed. In order to remain on a schedule that would permit Mr. Spangler and Ms. Foster
to claim tax credit for the transaction this year, staff has condensed the two actions such that the
Council action, if favorable, would be conditioned upon a favorable finding by the Planning
Commission at its meeting of December 14, 2011. Staff has prepared the necessary resolutions
to reflect this special scheduling.
FISCAL IMPACT
This transaction will not have a significant fiscal impact. This is because the major cost
associated with conservation easements is monitoring. Monitoring only involves minor amounts
of staff time, often in conjunction with activities staff is undertaking nearby such as checking site
conditions on adjacent or nearby City -owned properties. In this instance, City Natural Resources
and Ranger staff regularly patrol the adjacent South Hills Natural Reserve and can easily include
brief site visits or even routine surveillance from the City property. This is typical of the City's
3,000+ acre easement holdings. No significant City- instigated improvements such as new trails
are planned. Finally, as a donation there is little cost to the City from the legal transaction;
closing costs and recording fees are expected to total only a few hundred dollars at most, and
there is adequate funding in the Natural Resource Program operating budget to handle this
amount.
ATTACHMENTS
1. Location Map
2. Letter Offer from Michael Spangler and Katherine Foster
3. Deed of Conservation Easement
4. Resolution
G: OaffIHAVLMCounci lagendalSpangler Foster donation acceptance. doc
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ATTACHMENT 2
October 25, 2011
Hon. Jan Howell Marx, Mayor
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA. 93401
Re: South Hills Natural Reserve —Easement Donation Offer
Dear Mayor Marx:
We the undersigned are owners of record of certain real property lying within the city
limits of the City of San Luis Obispo, California. The property's address is 2877 South Higuera
Street (San Luis Obispo County APN 053 -021 -031). The property consists of approximately
38.3 acres of hillside lane( at the western end of the ridge commonly known as the South Hills.
Of this acreage, 37.2 acres is zoned as Conservation /Open Space and 1.1 acre along South
Higuera Street is zoned Commercial.
It is our desire that the property remain in its current largely natural condition. We wish
to do this through the donation of a conservation easement covering the property. The several
communication facilities along the ridge on the property would remain and possibly even
increase in the future with City approval; however, the steeply sloping commercial site would be
permanently retained in its natural condition by this donation. In addition, authority would be
granted to the City of San Luis Obispo to manage the property for its natural resource and
passive recreational values. This includes a large spring on the property which supports a
population of a Federally listed endangered species, the Chorro Creek bog thistle.
We are pleased to be able to make this offer and look forward to thre City's acceptance thereof
Sincerely,
Katherine Foster
Michael Spangler
tl A* /L /,—' -) c C -177. o2 f'
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ATTACHMENT 3
DEED OF CONSERVATION EASEMENT
THIS DEED OF CONSERVATION EASEMENT dated December 13, 2011 by
Katherine Foster and Michael Spangler, 644 Marsh Street, San Luis Obispo, CA. 93401
Grantor "), in favor of the City of San Luis Obispo, a chartered municipal corporation of
the State of California, having an address at 990 Palm Street, San Luis Obispo, CA
93401 ( "Grantee "), is made with respect to the following:
RECITALS
WHEREAS, Grantor is the owner in fee simple of certain real property consisting
of one Assessor's parcel in San Luis Obispo County, California, identified as APN 053-
021 -031, commonly referred to as 2877 South Higuera Street, and shown in Map
Attachment A attached hereto and incorporated by this reference (the "Property "); and
WHEREAS, the Property possesses natural resource values including wildlife
and plant resources, and scenic open space values (collectively, the conservation
values) of great importance to Grantor, the people of the City of San Luis Obispo, and
the people of the State of California; and
WHEREAS, the Property, by virtue of its position, is valuable as a location for a
variety of communication functions, including emergency communications, of
importance to the City of San Luis Obispo and to its citizens, and
WHEREAS, certain other portions of the Property, although indicated for urban
development in the General Plan of the City of San Luis Obispo, would be difficult and
environmentally damaging to develop, and
WHEREAS, in light of the above facts, Grantor desires that the conservation
values of the property be preserved by the continuation of currently existing land use
patterns; and
WHEREAS, Grantee is a chartered municipal corporation of the State of
California that is authorized to accept Conservation Easements; and
WHEREAS, Grantee agrees by accepting this grant to honor the intentions of
Grantor stated herein and to preserve and protect in perpetuity the conservation values
of the Property for the benefit of this generation and the generations to come;
NOW, THEREFORE, in consideration of the above and the mutual covenants,
terms, conditions, and restrictions contained herein, and pursuant to the laws of
California and in particular Sections 815 and 816 of the Civil Code - Conservation
Easements, Grantor hereby voluntarily grants and conveys to the Grantee a
Conservation Easement in gross in perpetuity over the Property, in order to preserve
the values described above.
C2 -6
ATTACHMENT 3
1. Purpose. It is the purpose of this Easement to assure that the property,
subject to the existing uses described herein, will be retained forever in its
predominantly natural, scenic, and open space condition and to prevent
any use of the Property that will significantly impair or interfere with the
conservation values of the Property. The conservation values of
particular importance include the grassland communities existing on the
site and their importance to wildlife, Habitat for a population of the
endangered Chorro Creek bog thistle, the scenic quality of the
undeveloped land that is visible from the surrounding community, and the
value of the land as a watershed providing protection from erosion and
protection of water quality.
2. Rights of Grantee. To accomplish the purpose of this Easement, the
following rights are conveyed to Grantee by this Easement:
a) To manage for the public benefit all activities incidental to
management of the Property involving public access, safety, and
conservation of natural resources. Specifically, Grantor allows non -
motorized public access to the Property consistent with reasonable rules
and regulations established by Grantee. Grantor also allows Grantee to
undertake minor improvements for the purpose of protection of natural
resources or for public safety.
b) To enter upon the Easement Area at reasonable times in order to
monitor Grantor's compliance with and otherwise enforce the terms of this
Easement; provided that such entry shall be upon prior reasonable notice
to Grantor, and Grantee shall not unreasonably interfere with Grantor's
use and quiet enjoyment of the property; and
c) To prevent any activity on or use of the property that is inconsistent
with the purpose of this Easement and to require the restoration of such
areas or features of the property that may be damaged by any
inconsistent activity or use.
3. Prohibited Activities. Any activity on or use of the Easement Area
inconsistent with the purpose of this Easement is prohibited. Without
limiting the generality of the foregoing, the following activities and uses are
prohibited from being established:
a) Subdivision of the land pursuant to the California Subdivision Map
Act.
b) Building or erection of structures, except as permitted by the City of
San Luis Obispo for furtherance of the existing communication sites and
uses.
C2 -7
ATTACHMENT 3
c) Cutting or removal of trees, except as may be necessary for health of
the remaining trees or for public safety.
d) Mining or other mineral exploration or exploitation of the property.
e) The exploration, collection of and delivery of water to any other
property, except as may be permitted by City regulations.
f) Grading, other than for purposes of providing hiking or riding trails on
the site consistent with generally accepted standards, or for the
reasonable maintenance or improvement of communication site which
currently exists on the Property.
4. Access Road to Communication Site. Grantee and Grantor agree to
jointly enforce standards upon the condition of, and use of, the road
currently used for access to the several communication sites on the
Property. Such standards may include, but are not limited to: installing
proper grading, surfacing, drainage facilities and undercrossing for natural
waterway flows, and protection of sensitive resources and natural habitat
that exists alongside said access road. Grantee and Grantor further agree
to require users of said road to provide funding for the improvements
necessary to bring the road to acceptable standards and for ongoing
maintenance. The standards to be applied shall be no less than the
design and construction standards utilized by the Natural Resources
Conservation Service, U. S. Department of Agriculture (NRCS- USDA), in
that agency's private landowner assistance programs.
5. Reserved Rights. Grantor reserves to himself, and to his personal
representatives, heirs, successors, and assigns, all rights accruing from
ownership of the Property, including the right to engage in or permit or
invite others to engage in all uses of the property that are not expressly
prohibited herein or are inconsistent with the purpose of this Easement.
6. Baseline DocrImentation. The parties agree that the specific
conservation values of the property shall be documented in a report ( "the
Baseline Report") that shall be completed within thirty days of the transfer
of this Deed of Conservation Easement, and that both Grantee and
Grantor shall receive true copies of this report. The Report shall consist of
maps, photographs, and other documentation that, the parties must agree
in writing, provide an accurate representation of the Property at the time of
this grant and which is intended to serve as an objective information
baseline for monitoring compliance with the terms of this grant
7. Arbitration. Any controversy arising from this Easement or its breach
shall be determined by three arbitrators appointed as set out below:
WA 1611
ATTACHMENT 3
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 the appointment
shall be given to each party and to the other party when made.
b) The two arbitrators shall immediately choose a third arbitrator to act
with them. If a party fails to select an arbitrator within the time allowed or
if the two arbitrators fail to select a third arbitrator within 14 days after their
appointment, on application by either party the third arbitrator shall be
promptly appointed by the then presiding judge of the Superior Court of
the State of California in and for the County of San Luis Obispo acting as
an individual within 14 days. The party making the application shall give
the other party 14 days' notice of the application.
The arbitration shall be conducted under the Code of Civil Procedures
Section 1280 - 1294.2). Hearings shall be held in San Luis Obispo
County, California.
Both parties agree by signing this Easement that they are agreeing to
have any dispute arising from the matters included in the Arbitration
provisions of this Easement decided by neutral arbitration as provided by
California law and that each party is giving up any rights to have the
dispute litigated in a court or by a jury trial. By signing this Easement,
each party is giving up their judicial rights to discovery and appeal unless
such rights are specially requested in the notice requesting Arbitration or
as 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.
8. Grantee's Remedies. If Grantee determines that Grantor is in violation of
the terms of this Easement or that a violation is threatened, Grantee shall
give written notice to Grantor of such violation and demand corrective
action sufficient to cure the violation and, where the violation involves
injury to the property resulting from any use or activity inconsistent with
the purpose of this Easement, to restore the portion of the property so
injured. If Grantor fails to cure the violation within a thirty (30) days after
receipt of notice thereof from Grantee, or under circumstances where the
violation cannot reasonably be cured within a thirty (30) -day period, fails to
begin curing such violation within the thirty (30) -day period, or fails to
continue diligently to cure such violation until finally cured, Grantee may
bring an action at law or in equity in a court of competent jurisdiction to
enforce the terms of the Easement, to enjoin the violation, ex parte as
necessary, by temporary or permanent injunction, to recover any damages
to which it may be entitled for violation of the terms of this Easement or
injury to any conservation values protected by this Easement, including
damages for the loss of scenic, aesthetic, or environmental values, and to
C2 -9
ATTACHMENT 3
require the restoration of the Property to the condition that existed prior to
any such injury. Without limiting Grantor's liability therefore, Grantee, in
its sole discretion, may apply any damages recovered to the cost of
undertaking any correction action on the Property. If Grantee, in its sole
discretion, determines that circumstances require immediate action to
prevent or mitigate significant damage to the conservation values of the
Property, Grantee may pursue its remedies under this Paragraph without
prior notice to Grantor or without waiting for the period provided for cure to
expire. Grantee's rights under this Paragraph apply equally in the event of
either actual or threatened violation of the terms of this Easement, and
Grantor agrees that Grantee's remedies at law for any violation of the
terms of this Easement are inadequate and that Grantee shall be entitled
to the injunctive relief described in this Paragraph, both prohibitive and
mandatory, in addition to such other relief to which Grantee may be
entitled, including specific performance of the terms of this Easement,
without the necessary of proving either actual damages or the inadequacy
of otherwise available legal remedies. Grantee's remedies described in
this Paragraph shall be cumulative and shall be in addition to all remedies
now or hereafter existing at law or in equity.
9. Costs of Enforcement. Any costs incurred by Grantee in enforcing the
terms of this Easement against Grantor, including, without limitation, costs
of suit and attorneys' fees, and any costs of restoration necessitated by
Grantor's violation of the terms of this Easement shall be borne by
Grantor. If Grantor prevails in any action to enforce the terms of this
Easement, Grantor's costs of suit, including, without limitation, attorneys'
fee, shall be borne by Grantee. If Grantee prevails in any action to
enforce the terms of this Easement, Grantee's costs of suit, including
without limitation, attorneys' fees, shall be borne by Grantor.
10. Grantee's Discretion. Enforcement of the terms of this Easement shall be
at the discretion of Grantee, and any forbearance by Grantee to exercise
its rights under this Easement in the event of any breach of any term of
this Easement by Grantor shall not be deemed or construed to be a waiver
by Grantee of such term or of any of Grantee's rights under this
Easement. No delay or omission by Grantee in the exercise of any right
or remedy upon any beach by Grantor shall impair such right or remedy or
be construed as a waiver.
11. Waiver of Certain Defenses. Grantor and Grantee hereby mutually waive
any defense of laches, estoppel, or prescription.
12. _Acts Beyond Grantor's Control. Nothing contained in this Easement shall
be construed to entitle Grantee to bring any action against Grantor for any
injury to or change in the Property resulting from causes beyond Grantor's
control, including, without limitation, fire, flood, storm, and earth
C2 -10
ATTACHMENT 3
movement, or from any prudent action taken by Grantor under emergency
conditions to prevent, abate, or mitigate significant injury to the Property
resulting from such causes.
13. No Undue Expense to Grantor. Under the express terms of this Deed of
Conservation Easement, Grantor shall not incur any expense with
maintaining the property as open space, except for costs of necessary
annual fire hazard abatement in accordance with City fire regulations and
costs of maintenance of fencing currently used to contain livestock on the
Property. All other expenses associated with specific conservation efforts
Grantee determines to be necessary to preserve the open space
easement shall be borne by Grantee, unless and to the extent Grantor is
in violation of this Deed of Conservation Easement, in which case
provisions herein shall control.
14. Taxes. Grantor shall pay all taxes, assessments, fees, and charges of
whatever description levied on or assessed against the property by
competent authority (collectively "taxes "), including any taxes imposed
upon, or incurred as a result of, this Easement, and shall furnish Grantee
with satisfactory evidence of payment upon request subject to the right to
contest any such taxes.
15. Hold Harmless. Grantor shall hold harmless, indemnify, and defend
Grantee and its directors, officers, employees, agents, and contractors
and their heirs, personal representatives, successors and assigns of each
of them (collectively "Indemnified Parties ") from and against all liabilities,
penalties, costs, losses, damages, expenses, causes of action, claims,
demands, or judgments, including, without limitation, reasonable
attorney's fees, arising from or in any way connected with: (1) injury to or
death of any person; (2) physical damage to any property, resulting from
any act, omission, condition, or other matter related to or occurring on or
about the Property, regardless of cause, unless due to the sole negligence
of any of the Indemnified parties; (3) the obligations specified in paragraph
12; or (4) the existence of this Easement.
Grantee shall hold harmless, indemnify, and defend Grantor and its
directors, officers, employees, agents, and contractors and their heirs,
personal representatives, successors and assigns of each of them
collectively "Indemnified Parties ") from and against all liabilities, penalties,
costs, losses, damages, expenses, causes of action, claims, demands, or
judgments, including, without limitation, reasonable attorney's fees, arising
from or in any way connected with: (1) injury to or death of any person;
2) physical damage to any property, resulting from any act, omission,
condition, or other matter related to or occurring on or about the Property,
regardless of cause, unless due to the sole negligence of any of the
C2 -11
ATTACHMENT 3
Indemnified parties; (3) the obligations specified in paragraph 12; or (4)
the existence of this Easement
16. Extinguishment. If circumstances arise in the future such as render the
purpose of this Easement impossible to accomplish, this Easement can
only be terminated or extinguished, whether in whole or in part, by judicial
proceedings in a court of competent jurisdiction, and the amount of the
proceeds (if any) to which Grantee shall be entitled, after the satisfaction
or prior claims, from any sale, exchange, or involuntary conversion of all or
any portion of the Property subsequent to such termination or
extinguishment, shall be determined as provided by California law.
17. Condemnation. If the Easement is taken, in whole or in part, by exercise
of the power of eminent domain, Grantee shall be entitled to
compensation in accordance with applicable law.
18. Assignment. This Easement is transferable, but Grantee may assign its
rights and obligations under this Easement only to an organization that is
a qualified organization at the time of transfer under Section 170(h) of the
Internal Revenue Code of 1954, as amended (or any successor provision
then applicable), and the applicable regulations promulgated thereunder,
and authorized to acquire and hold conservation easements under state
statue (or any successor provision then applicable).
19. Subsequent Transfers. Grantor agrees to incorporate the terms of this
Easement in any deed or other legal instrument by which they divest
themselves of any interest in all or a portion of the Property, including,
without limitation, a leasehold interest. Grantor further agrees to give
written notice to Grantee of the transfer of any interest at least twenty (20)
days prior to the date of such transfer. The failure of Grantor to perform
any act required by this paragraph shall not impair the validity of this
Easement or limit its enforceability in any way.
20. Certificates. Upon request by Grantor, Grantee shall within twenty (20)
days execute and deliver to Grantor any document, including an estoppel
certificate, which certifies Grantor's compliance with any obligation of
Grantor contained in this Easement and otherwise evidences the status of
this Easement as may be requested by Grantor.
21, Notices. Any notice, demand, request, consent, approval, or
communication that either party desires or is required to give to the other
shall be in writing and either served personally or sent by first class mail,
postage prepaid, addressed as follows:
C2 -12
To Grantor:
To Grantee:
Michael Spangler and Katherine Foster
644 Marsh Street
San Luis Obispo, CA. 93401
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
ATTACHMENT 3
or to such other address as either party from time to time shall designate
by written notice to the other.
21, Recordation. Grantee shall record this instrument in a timely fashion in
the official records of San Luis Obispo County, California, and may re-
record it at any time as may be required to preserve its rights in this
Easement.
22. Monitoring. The Grantee or its designee shall conduct annual monitoring
of the conservation values within the Property. Such monitoring shall be
done in accordance with a systematic and routine checklist designed to
facilitate the identification of trends and changes of the conservation
values over time. A copy of each monitoring report shall be given to the
Grantor.
23. General Provisions.
a) Controlling Law. The interpretation and performance of this
Easement shall be government by the laws of the State of California.
b) Liberal Construction. Any general rule of construction to the
contrary notwithstanding, this Easement shall be liberally construed in
favor of the grant to effect the purpose of this Easement and the policy
and purpose of the Conservation Act of 1979 as described in Sections 815
through 816 of the California Civil Code. If any provision in this instrument
is found to be ambiguous, an interpretation consistent with the purpose of
this Easement that would render the provision valid shall be favored over
any interpretation that would render it invalid.
c) Severabilitv. If any provision of this Easement, or the application
thereof to any person or circumstance, is found to be invalid, the
remainder of the provisions of this Easement, or the application of such
provision to persons or circumstances other than those as to which it is
found to be invalid, as the case may be, shall not be affected thereby.
ATTACHMENT 3
d) Entire Agreement. This instrument sets forth the entire agreement
of the parties with respect to the Easement and superseded all prior
discussions, negotiations, understandings, or agreements relating to the
Easement, all of-which are merged herein.
e) Successors. The covenants, terms, conditions, and restrictions of
this Easement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective personal representatives, heirs,
successors, and assigns and shall continue as a servitude running
perpetually with the Property.
f) 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 construction or interpretation.
g) Counterparts. The parties may execute this instrument in two or
more counterparts, which shall, in the aggregate, be signed by both
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 shall be controlling.
TO HAVE AND TO HOLD unto Grantee, its successors, and assigns forever.
IN WITNESS WHEREOF Grantor has set their hand on the day and year first
written above.
GRANTOR: -
Michael 1ng er atherine Foster
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Foster /Spangler Property
2877 S. Higuera Street
San Luis Obispo, CA. 93401
ATTACHMENT 3
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ATTACHMENT 3
CERTIFICATE OF ACCEPTANCE
THIS IS TO CERTIFY that the interest in real property conveyed by DEED OF
CONSERVATION dated December 13, 2011, by and between Katherine Foster and
Michael Spangler, ( "Grantor "), and the CITY OF SAN LUIS OBISPO, a municipal corporation
Grantee "), is hereby accepted by the undersigned officer on behalf of the City Council
pursuant to authority conferred by Resolution No. 5370 (1984 Series) recorded June 15,
1984, in Volume 2604, Official Records, Page 878, San Luis Obispo County, California, and
Grantor hereby consents to recordation thereof by its duly authorized officer or his agent.
Date:
CITY OF SAN LUIS OBISPO
by:
ATTEST:
Elaina Cano, City Clerk
Jan Howell Marx, Mayor
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ATTACHMENT 4
RESOLUTION NO. (2011 SERIES)
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING ACCEPTANCE OF A CONSERVATION EASEMENT
AFFECTING REAL PROPERTY AT 2877SOUTH HIGUERA STREET
WHEREAS, Katherine Foster and Michael Spangler ( "Grantors ") are the joint
owners of certain real property in San Luis Obispo County, California, within the City of
San Luis Obispo, at 2877 South Higuera Street and described as Assessor's Parcel
Number 053 - 021 -031 (the "Property "); and
WHEREAS, portions of said Property possess significant natural resource values
including wildlife and plant resources, scenic open space values, and passive
recreational uses (the "Conservation Values ") of great importance to Grantors, the
people of the City of San Luis Obispo, and the people of the State of California; and
WHEREAS, Grantors desire, as owners of the Property, to convey to the City of
San Luis Obispo the right to preserve and protect the conservation values of the
Property in perpetuity; and have so proposed in a letter offer dated October 25, 2011;
and
WHEREAS, the City of San Luis Obispo is a chartered municipal corporation of
the State of California that is authorized by law to accept Conservation Easements; and
WHEREAS, the City of San Luis Obispo agrees by accepting this grant to honor
the intentions of Grantors stated herein and to preserve and protect in perpetuity the
conservation values of the Property for the benefit of this generation and the
generations to come.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San
Luis Obispo hereby:
1. Authorizes acceptance of the offer of donation of a Conservation
Easement for Assessor's Parcel Number 053 - 021 -031 as outlined in
the letter offer of January 19, 2006, subject to a finding by the
Planning Commission of the City of San Luis Obispo that the
acquisition of a conservation easement covering the property is
consistent with the City's General Plan; and
2. Authorizes and directs the Mayor to accept said Conservation
Easement on behalf of the City of San Luis Obispo upon the finding
described above.
C2 -17
1 ATTACHMENT 4
Approved and adopted this 13th day of December, 2011.
On motion of , seconded by and
on the following roll call vote:
AYES:
NOES:
ABSENT:
Jan Howell Marx, Mayor
ATTEST:
Elaina Cano, City Clerk
APPROVED AS TO FORM:
ristine Dietrick, City Attorney
304":1
council
acenaa aEpoRt
C I T Y OF S A N L U I S O B I S P O
FROM: Charlie Hines, Fire Chief CH
Prepared By: Julie Cox, Administrative Analyst
SUBJECT: ACCEPT NEW EXTRICATION SYSTEM
RECOMMENDATION
M«tingDa«
12/13/11
Item Number
C3
1. Authorize Fire Chief to accept new extrication system valued at $23,300
2. Approval for Fire Chief to sign Memorandum of Understanding with Cambria
Fire Department
DISCUSSION
The Office of Traffic Safety (OTS) has awarded a regional grant to San Luis Obispo
County Fire Departments, not to exceed $150,000.00, for collision response and
extrication improvement. The Cambria Fire Department will serve as the lead agency for
the regional grant. The extrication equipment will be used by first responders to safely
and efficiently extricate victims trapped in traffic collisions. "Best practice" strategies
will be used to reduce the response time for the arrival of appropriate extrication
equipment to traffic collusion scenes and the time to extricate the victims of traffic
collisions, thus increasing survivability. The regional grant will provide for new
equipment for the fire departments without extrication equipment or replacement
equipment for fire departments that have existing equipment that has reached the end of
its usable lifespan.
The City of San Luis Obispo will receive one extrication system which includes a power
unit, cutter, spreader (aka "Jaws of Life "), and other associated attachments or accessories
to make the system usable. It is valued at $23,300.
For the 2011 -13 Financial Plan, a Capital Improvement Request (CIP) was submitted by
the Fire Department for replacement of Holmatro extrication equipment on the fire truck
for $45,000. However, due to the City's fiscal challenges, it was postponed to FY 2015-
16. This grant will reduce the CIP request by $23,300 and allow the City to replace a
portion of the equipment (the power unit, spreader and cutters). The existing equipment
will serve as backup on Truck 2. The remaining equipment needed to fill out the
extrication unit will be purchased with the CIP funds in FY 2015 -16 unless other grant
sources become available sooner. As certain parts of the extrication system need
replacement at a higher frequency the Fire Department will continue to monitor which
parts need to be replaced as funding becomes available,
C3 -1
2011 Assistance to Firefighters Grant Program
FISCAL IMPACT
Page 2
There would be no additional cost to the General Fund. Equipment will be purchased via
Cambria Fire Department (which will be reimbursed by OTS), and then distributed to
participating fire departments such as ours.
ALTERNATIVE
The Council could decide not to accept the extrication system. This is not recommended
as it is a no -cost item and is necessary equipment for the Fire Department.
T: \Council Agenda ReportTire CARTY 2011 -12 \CAR — Accept new extrication system
C3 -2
council 12/13/1112/13/11
6 4JacEnbanEpont ,temr,m1- -
CITY O F SAN LUIS O B I S P O
FROM: Charlie Hines, Fire Chief CH
Prepared By: Julie Cox, Administrative Analyst
SUBJECT: HAZARD MITIGATION PLAN UPDATE GRANT
REQUESTS TO FEMA
RECOMMENDATION
1. Authorize staff to submit grant applications for $64,712 each to two FEMA
programs for Local Hazard Mitigation Plan Update.
2. If a grant is awarded, authorize the City Manager to accept and appropriate the
funds to the Fire Department.
DISCUSSION
Hazard mitigation planning is the process of determining how to reduce or eliminate the
loss of life and property damage resulting from natural and human - caused hazards. The
Disaster Mitigation Act of 2000 (Public law 106 -390), reinforces the importance of
mitigation planning and emphasizes planning for disasters before they occur. As such,
this Act establishes a pre- disaster hazard mitigation program and requirements for the
national post- disaster Hazard Mitigation Grant Program (HMGP).
Grant funding is requested to update the City of San Luis Obispo Local Hazard
Mitigation Plan. The original plan was approved by FEMA on October 2, 2006 and was
valid for five years. An expired plan prevents the City from applying for Hazard
Mitigation funds for projects which the City has not yet had the need for. However, it is
imperative that the City update the plan in order to be in compliance should the need for
such funding occur. Two grant proposals will be prepared to seek funding for the update.
FEMA's Hazard Mitigation Program has two grant programs that provide funding to
update local hazard mitigation plans. Funding is being sought under both categories,
although if selected the City would receive funding from only one category. A grant
proposal for $64,712 has been submitted for the 2012 PreDisaster Mitigation (PDM)
grant program to meet the grant deadlines and the Hazard Mitigation Grant Program
HMGP) will be submitted upon approval by Council. If the Council does not approve the
grant application submittals to FEMA, the PDM grant application will be withdrawn.
FISCAL IMPACT
If the City were to receive grant funding from FEMA for requested $64,712 it will be
required to match the Federal grant funds equal to 25% of the total project cost. The
C4 -1
Hazard Mitigation Plan Update Grant Requests to FEMA Page 2
matching funds will be covered by funds from the Fire Department budget. There would
be no additional cost to the General Fund.
ALTERNATIVE
The Council could decide not to pursue the grant monies. If the Council does not
approve the grant application submittal to FEMA, the grant application will be withdraw.
This is not recommended as fire service grant opportunities are limited and the grant
funds would provide additional staff or a consultant to update the City's Hazard
Mitigation Plan. An approved plan will allow the City to apply for Hazard Mitigation
Project funding.
TACouncil Agenda ReportTire CARTY 2011 -12 \CAR - Hazard Mitigation Plan Update Grant Requests to FEMA
C4 -2
Al
council
AQenbA Repo12t
C I T Y OF S A N L U I S O B I S P O
Meeting Date 12 -13 -11
Item Number
8
FROM: Charles Bourbeau, Director of Finance & Information Technology
Prepared By: Debbie Malicoat, Finance Manager
SUBJECT: UPDATE ON THE CITY'S FISCAL STATUS AND STATUS OF MAJOR
CITY GOALS
RECOMMENDATION
1. Review and discuss an update on the City's fiscal status based on interim 2010 -11 year-
end financial results and first quarter trends in 2011 -12.
2. Review and discuss status on the City's progress in accomplishing the Major City Goals
adopted by Council for 2011 -13.
REPORT IN BRIEF
This report provides information on three related topics:
2010 -11 interim financial results,
2011 -12 fiscal outlook for the General Fund and the Enterprise Funds,
Update of progress on Major City Goals and Other Important Objectives.
Interim financial results for the 2010 -11 year reflect a mixed bag of positive outcomes and
concerning news. Of concern is the under - realization of revenues. Even though some revenues
recovered from the Great Recession stronger than anticipated, other revenues saw unexpected
declines. Overall General Fund revenues came in $568,400 under budget. A similar pattern of
declining revenues was true in many of the Enterprise Funds as well. The positive outcomes
came in the form of expenditures savings that were higher than anticipated. The reduced
expenditures were primarily due to one -time savings from vacant positions that have since been
filled or eliminated from the budget. Overall, based on the analysis of the General Fund's fiscal
results from 2010 -11 it appears that under - performing revenue sources will continue to lag while
the expenditure savings will not be duplicated in the current budget year.
As for the fiscal outlook in 2011 -12, there is considerable uncertainty in key areas. The
economic outlook for the county is for slow growth but the potential for adverse impacts from
state and federal budget reductions is reason for concern. Additionally, there is uncertainty over
the timing of personnel compensation savings (concessions) that are incorporated in the 2011 -12
budget. Lastly, budget adjustments in anticipation of reduced property tax receipts will need to
be made for 2011 -12. As a result of uncertainties, any discussion of possible use of unallocated
fund reserves above the 20% policy level generated in 2010 -11 would be most appropriate when
a more thorough analysis is available and this analysis can be informed by the City's continuing
efforts to work with labor groups on reaching financial objectives. This is the most prudent
approach given the one -time nature of the savings achieved in 2010 -11, and the uncertainty
facing both revenue and expenditures in 2011 -12.
B1 -1
Update on the City's Fiscal Status and Major City Goals Page 2
The City has an ambitious portfolio of work to be accomplished during 2011 -13. Attachment 4
includes a detailed report on the status of Major City Goals and Other Important Objectives set
by the Council as part of the 2011 -13 Financial Plan. The status is provided as of November 1,
2011.
Some exciting accomplishments since July include:
The City Council approved a public - private partnership with Digital West Networks for
completion of the fiber -optic cable ring around the City and to improve access to high
speed internet for businesses.
Work on the possible renewal of Measure Y has begun with the completion of a new
citizen satisfaction survey.
The Neighborhood Services Specialist job description is complete. The description of
general duties was discussed at a recent Neighborhood Services Team Meeting, and
feedback from the neighborhood advocates was incorporated into the job description.
Curb ramp construction is complete in Pavement Area 5 in preparation for summer 2012
paving work. Sidewalk repairs are also underway in Area 5.
DISCUSSION
Interim 2010 -11 Year -End Results Summary
Attachment 1 contains the interim financial results for the General Fund and the City's enterprise
funds for 2010 -11. While the annual outside audit is not yet complete, staff believes the attached
interim report provides a reasonable basis for assessing the General Fund's financial position at
the end of 2010 -11. However, this information is subject to change once all accruals have been
made and the audit is complete. Final audited financial statements are expected to be issued by
the end of December 2011 and the Comprehensive Annual Financial Report (CAFR) is
scheduled for presentation in January 2012.
As reflected in the attached report, City revenues and other sources for the General Fund were
below budget estimates by $568,400 or 1 %. Expenditures were below budget by $2.5 million or
5 %. This was due largely to one -time savings from "frozen" or vacant positions. In many cases,
the positions that were vacant have either been eliminated in the 2011 -13 Financial Plan, or were
subsequently filled, meaning the City will not see these savings in the future.
As shown in the report, these expenditure savings and related year -end results produce an ending
2010 -11 General Fund balance that is $1.9 million higher than anticipated after adoption of
stopgap measures. These positive results are good news, but are tempered by the one -time
nature of the reduced expenditures and substantial fiscal uncertainties on the horizon.
Anticipated state and federal budget "triggers" can be expected to have an adverse impact on the
local economy and both property tax revenues and utility users tax revenues are vulnerable to
reduction for differing reasons.
The adopted 2011 -12 operating budget of approximately $50 million indicates that $10 million
should be kept in reserve to comply with the City's 20% minimum reserve policy. Based on the
actual results, the City began 2011 -12 with a general fund balance of $12.9 million, exceeding
B1 -2
on the City's Fiscal Status and Major City Goals Page 3
the minimum policy level by $2.9 million. This provides some capacity for the General Fund to
accommodate any unforeseen circumstances.
Consistent with standing fiscal policies, and reaffirmed by the City Council, a sustainable budget
relies on matching ongoing revenues and ongoing costs. One -time or non - recurring increases in
fund balance should only be used for one -time cost or cost associated with the timing of the
City's other budget balancing strategies. Given the continuing uncertainty around both revenues
and expenditures, discussion about any possible use of these additional one -time reserves would
be most appropriate in the context of a thorough review of the General Fund financial position
based on more facts being known. Staff anticipates that this will happen no earlier than the Mid -
Year Budget Review in February 2012.
As displayed in Attachment 1, in general each of the enterprise funds ended the fiscal year in a
positive position; that is, revenues and expenditures were within budget estimates and ending
fund balances are in compliance with policy. The City had five enterprise funds (Water, Sewer,
Parking, Transit and Golf) during 2010 -11. The City Council decided to merge the Golf Fund
into the General Fund beginning in 2011 -12; however, for this report all five enterprise funds are
summarized.
2011 -12 General Fund Revenue Outlook
The current economic cycle continues to struggle in some areas while recovering in others. The
Central Coast Economic Forecast has projected that while the overall trend will continue to be
upward, the area will see some bumps along the road and certain aspects of the economy will
continue to lag for some time to come and declines in key revenue sources are still possible.
The local economy is influenced by a number of government offices and facilities including Cal
Poly, California Men's Colony, Cuesta College, the California Highway Patrol and Cal Trans
District 5, to name a few. As the State and Federal governments face continued revenue
shortfalls there is the potential for budget "triggers" to be pulled, which would lead to reductions
in spending for higher education, health and human services and other state programs with a
heavy presence in the county. This could have an indirect impact on the City's fiscal situation
and the severity of that impact is unknown.
While the City's revenues in total were less than projected, there are some hopeful signs of
economic recovery. As discussed in more detail below, sales tax and transient occupancy tax
TOT) are showing signs of improvement. However, property tax and utility user tax are
anticipated to be below budget estimates.
The City's top five General Fund revenues —sales tax, property tax, TOT, utility users tax, and
property tax in lieu of vehicle license fee (VLF) – account for about 80% of total General Fund
revenue sources. By focusing on them, one can obtain an excellent understanding of the City's
revenue position. Based on year -end results and preliminary information that has surfaced since
then, the following is an initial, high -level assessment of the current outlook for these revenues
in 2011 -12.
O Sales Tax. General sales tax receipts in 2010 -11 were $643,500 (6 %) higher than estimated
due to recoveries in nearly every major business category: new motor vehicles, lumber and
B1 -3
Update on the City's Fiscal Status and Major City Goals Page 4
building materials, home furnishings, and department stores. Similar recoveries were
experienced statewide. Revenues from the local '/z -cent sales tax (Measure Y) were also higher
than expected by $127,300 (2 %).
As shown in the chart below, actual results for 2010 -11 have recovered to 2008 -09 levels. The
2011 -13 Financial Plan assumes that the revenue will grow by 3.6% in 2011 -12 and 2% in 2012-
13. With only the first quarter results available, it is too soon to tell whether these growth
assumptions will be reached, particularly since the holiday sales quarter is the City's most
important quarter for sales tax. In addition, the Financial Plan made certain assumptions about
the sales tax that would be generated by the new Target store and it is too soon to determine if
those estimates are accurate. As illustrated below, sales tax revenues are still well below the pre -
recession levels experienced in 2006 -07. However, first quarter results are higher than the first
quarter of last year (see Attachment 2), so staff is cautiously optimistic that the revenue estimates
for the current year will be met.
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
Sales Tax Revenue
2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11
N. General Sales Tax -, Measure Y Sales Tax
Property Tax. Property tax revenues for 2010 -11 were $358,900 or 4% less than budget
estimates. The City has not been immune from the valuation decreases that have been
experienced county -wide, however the City of San Luis Obispo has not seen the level of property
tax declines that others have. Because of the timing of the tax levy and subsequent collection,
property taxes are a "lagging" revenue and will not return to pre- recession levels as quickly as
other revenue sources. The 2011 -13 Financial Plan assumed that property taxes would remain
flat in 2011 -12. The latest information from the County indicates that assessed valuation
actually decreased by 1.5 %. In addition, there is some vulnerability related to appeals and
commercial property declines. Therefore it will be important to monitor this revenue closely and
return to Council at the Mid -Year Budget Review with a downward revision of the revenue
estimate that could amount to $500,000.
Transient Occupancy Tax (TOT). Results for 2010 -11 were slightly better than the budget
estimate, which reflected an increase of 8.5% from the prior year. Based on the first three months
of 2011 -12 (see Attachment 3), the City continues to see year- over -year increases in this revenue
source. The 2011 -12 budget assumes that TOT revenues will increase by 2% over 2010 -11 and
it appears that the strong start to the fiscal year will position the City to meet or exceed that
target.
B1-4
Update on the City's Fiscal Status and Major City Goals Page 5
O Utility Users Tax (UUT). Results for 2010 -11 were below budget estimates by $267,700 or
6 %. This revenue is based on utilities including water, telephone, cable television, natural gas
and electricity. The decline in revenues is influenced by many factors: changes in
telecommunications technology, household purchasing decisions and an overall change in the
underlying services taxed. In addition, there are statewide lawsuits related to utility users tax
that create vulnerability to this revenue. The 2011 -12 budget anticipated UUT revenue would
remain consistent with the 2010 -11 budget and the first quarter achieved budgeted levels. Given
the recent decline this revenue source, staff will monitor this revenue source closely, but at this
time believes the current projections for 2011 -13 continue to be reasonable, pending further
developments and trend data for the year.
Property Tax in Lieu of VLF. This reflects revenues from the "swap" of VLF "backfill"
revenues from the State in return for an offsetting portion of the property tax revenues. Actual
results for 2010 -11 were on target with estimates. This revenue is projected to remain
unchanged in 2011 -12, based on current assumptions and information from the county.
2011 -12 General Fund Expenditure Outlook
General Fund expenditures are generally on target for the first quarter of 2011 -12. City staff has
a track record of containing costs within the overall approved budget. Plus elements of the
City's Fiscal Health Contingency Plan remain in effect including City Manager review before
filling all vacant positions. These are all signs of prudent fiscal management.
However, there is a significant uncertainty that looms as it relates to expenditures. The adopted
2011 -12 budget anticipated a reduction in General Fund personnel costs of $1.3 million and
proportional amounts in the Enterprise Funds. The $1.3 million recognized that successor
Memorandums of Agreement (MOA) with various employee groups could be in effect no sooner
than January 1, 2012 or half the 2011 -12 fiscal year as most agreements expire on December 31,
2011. The 2011 -12 budget also includes limited one -time savings available in the event total
employee concessions are not fully realized on January 1, 2012. For example if employee
concessions that achieve Council's labor relations objectives are phased -in, these limited, one-
time savings could be used to offset lower than anticipated short-term savings. This contingency
plan was identified in the 2011 -13 Financial Plan as a "glide path ".
In terms of progress to date, a resolution reducing total compensation for unrepresented
management personnel will be voted on by the City Council at its December 6, 2011 meeting.
This resolution exceeds the 6.8% total compensation reduction targeted for this group and will
take effect on January 5, 2012, the first full pay period in 2012. Because the reduction is
immediate and meets the financial reduction parameter set by Council, no glide path funds are
needed for unrepresented management. However, this group's reduction only equates to 22
percent of the $1.3 million in budgeted General Fund reductions assumed in the 2011 -12 budget.
Negotiations with the other represented employee groups are ongoing.
It is noteworthy that the funding for the glide path is from one -time savings. As such, glide path
funding is not a viable option to alleviate the necessity for on -going and sustainable personnel
cost reductions. Moreover, if anticipated concessions are not achieved as defined in the Financial
Plan and /or a longer than anticipated glide path is experienced, budget adjustments may be
necessary to ensure the City has a balanced financial plan. These budget adjustments could
B1 -5
Update on the City's Fiscal Status and Major City Goals Page 6
include: 1) additional allocation of one -time savings to extend the glide path, 2) additional
operating budget reductions, and /or, 3) staffing reductions. Whether or not budget adjustments
may be necessary will be dependent upon progress towards achieving employee concessions.
These budget reduction options could be contemplated as soon as the mid -year budget- review in
February 2012. On the other hand, if employee concessions are achieved as anticipated in the
2011 -13 Financial Plan, the glide path funds could be used to fund one -time projects as
determined by Council.
2011 -12 Outlook for Enterprise Funds
The Water Fund reduced expected revenues during 2010 -11 by approximately $1.4 million due
to lower water sales. The 2011 -12 budget anticipates modest growth from the 2010 -11 amount,
but it will be important to monitor water sales during the year to see if the reduced water use in
2010 -11 continues or if there were unique factors that were one -time in nature. Current year -to-
date results suggest that water sales are on target to meet 2011 -12 projections.
All other enterprise fund indicators are on target to meet 2011 -12 budget estimates for both
revenues and expenditures. However, as previously mentioned, uncertainty in the general
economy could have an unknown impact on enterprise fund revenues. This impact could be
positive and result in additional revenues, for example, if there is increased ridership on the
transit system due to high gas prices. Conversely, it could mean reductions in parking revenues
if fewer cars are using parking garages and meters. All of the enterprise funds will be monitored
closely and any anticipated anomalies will be reported at the mid -year budget review.
MAJOR CITY GOAL UPDATE
The attached report (Attachment 4) details the status of Major City Goals and Other Important
Objectives set by the Council as part of the 2011 -13 Financial Plan. The status is provided as of
November 1, 2011. In general, we are on track in accomplishing the objectives based on the
work programs adopted by the Council. As discussed in the report, there have been changes to
the work programs due to a variety of factors; most of which are related to the timing of
accomplishing tasks rather than the elimination of work program elements. Revised timelines
are reflected in the attached report.
Some exciting accomplishments since July include:
The City Council approved a public - private partnership with Digital West Networks for
completion of the fiber -optic cable ring around the City and to improve access to high
speed internet for businesses.
A new business friendly website (www.openforbusinessinslo.com) was launched through
a joint effort of the City and the Chamber of Commerce.
Work on the possible renewal of Measure Y has begun with the completion of a new
citizen satisfaction survey.
The Neighborhood Services Specialist job description is complete. The description of
general duties was discussed at a recent Neighborhood Services Team Meeting, and
feedback from the neighborhood advocates was incorporated into the job description.
Curb ramp construction is complete in Pavement Area 5 in preparation for summer 2012
paving work. Sidewalk repairs are also underway in Area 5.
i
Update on the City's Fiscal Status and Major City Goals Page 7
The Irish Hills Conservation Plan was approved in July 2011. Staff are undertaking
certain implementation activities now; these include continued jeep road
decommissioning and a major trail workday on November 12th. Two grant requests have
been submitted for continued trail work and for riparian restoration along Froom Creek.
New signage is currently being installed primarily at Irish Hills.
Playground equipment replacement work is ongoing with completion of Meadow Park
anticipated for November 2011.
The Meadow Park Restroom Roof replacement is complete.
Design work is ongoing on the Warden Bridge surface replacement.
Details of each goal's work program and status in achieving the tasks is provided in Attachment
4. Staff will present the next "formal report" to the Council in February 2012 as part of the
2011 -12 Mid -Year Budget Review. In the interim, staff will keep the Council up -to -date on the
status of major projects through agenda reports, Council Notes and other briefing opportunities.
ATTACHMENTS
1. Quarterly Financial Report: Fourth of 2010 -11 (Interim Results for 2010 -11)
2. Sales Tax Newsletter Second Quarter Calendar 2011
3. TOT Report: September 2011
4. Major City Goal Update
T: \Council Agenda Reports \Finance & IT CAR \Finance\201 I \CAR First Quarter Update 11 -15 -1 Ldocx
B1 -7
city0f
san tins osispo
Fourth Quarter of 2010 -11
October 31, 2011
OVERVIEW
Since this report is for the last quarter of the fiscal year,
it serves as an interim financial report for the year.
While the audit is not yet complete, we believe this
interim report provides a reasonable basis for assessing
the General Fund's financial position at the end of 2010-
11. However, this information is subject to change once
all accruals have been made and the audit is completed.
Final financial statements are likely to be issued in
December 2011.
GENERAL FUND FOCUS
The focus of this report is on the General Fund.
However, based on interim results, the enterprise and
other funds generally performed as well or better than
budget projections, although the Water Fund
significantly revised revenue projections downward
during the fiscal year to reflect the actual water sales
experienced.
General Fund Overview
Based on interim results, there is mixed news. Revenues
and other sources were below target by $568,400 but,
due largely to savings from vacant positions,
departments saved $2.5 million in their expenditure
budgets ($1.1 million more than expected).
Based on the actual results, we will have an ending fund
balance that is higher than anticipated in the 2010 -11
budget by about $1.9 million.
As discussed in the 2011 -13 Financial Plan, we
anticipated ending 2011 -12 with the reserve
approximately $214,000 less than the policy level. The
expenditure savings generated in 2010 -11 provides the
opportunity to restore the reserve to policy levels and
provides limited capacity for the General Fund to
accommodate any unforeseen circumstances.
Consistent with our fiscal policies, and reaffirmed by the
City Council, a sustainable budget relies on matching
Attachment 1
ongoing revenues and ongoing costs. One -time or non-
recurring increases in fund balance should only be used
for one -time costs.
As discussed in the Budget Message, these reserves
should address any unforeseen realignment of services
that may occur or any one -time costs associated with the
timing of our other budget balancing strategies.
Therefore, discussion about the use of these additional
one -time reserves would be most appropriate in the
context of a thorough review of the General Fund
financial position at the Mid -Year Budget Review.
How Does This Compare to the Five Year Forecast?
The General Fund Five Year Forecast predicted that we
would end the 2010 -11 fiscal year with about $1.6
million more in fund balance than our reserve policy
requires, of which the Council approved one -time
Significant Operating Program Changes equal to about
700,000 in 2011 -13.
If all of the forecast assumptions remained unchanged
and all other things were equal, we would end 2010 -11
with $2.9 million more than the policy level (the adopted
2011 -12 operating budget of $50 million indicates that
we should keep $10 million in reserve to comply with
OUT policy). However, as discussed in more detail
below, it is unlikely that all forecast assumptions will
remain unchanged; therefore maintaining this one -time
savings in the reserve is prudent at this point.
The forecast will be updated with the actual year -end
results as well as updates to revenue and expenditure
trends and will be presented to the Council at the Mid -
Year Budget Review.
What Does This Mears? The current economic cycle
continues to struggle in some areas while recovering in
others. Economists have projected that while the overall
trend will continue to be upward, we will see some
minor bumps along the road and certain aspects of the
economy will continue to lag for a long time to come.
Recently, there has been increased speculation of a
double dip" recession, where we will again see declines
in key revenue sources.
F
Quarterly Financial Report Fourth Quarter of 2010 -11
While the City's revenues in total were less than
projected, there are some hopeful signs of economic
recovery. As discussed below, sales tax and transient
occupancy tax (TOT) are showing signs of
improvement. However, property tax and utility users
tax were below budget estimates.
Fortunately, the revenue declines are offset by
expenditure budget savings in 2010 -11 of $2.5 million
5 %). However, the expenditure savings are largely one-
time due to staffing savings resulting from "frozen" or
vacant positions. In many cases, the positions that were
vacant have either been eliminated in the 2011 -13
Financial Plan or subsequently filled; therefore we won't
continue to see these savings in the future.
Are We Out of the 6Voods? Do We Still Need to Sate?
Given the one -time nature of the expenditure savings
combined with the continued volatility of ongoing
revenue sources, the City goes into the 2011 -13
Financial Plan with cautious optimism, but the
expenditure reductions identified in the 2011 -13
Financial Plan are still necessary. The stronger year -end
results could provide flexibility in terms of the timing of
achieving the savings identified in the Financial Plan or
could provide a buffer if revenue projections turn out to
be too optimistic, but the City's long term fiscal
sustainability depends upon aligning revenues and
expenses. This alignment involves making fundamental
reductions to operating programs as identified in the
budget.
Revenue and Expenditure Summary
As reflected in the following summary and detailed in
the following pages, overall revenues and sources were
slightly below budget estimates ($568,400) while
expenditures were less than budgeted by 5% ($2.5
million). This results in an ending General Fund balance
that is $1.9 million more than projected.
General Fund Balance Budget
Revenues 50,755,400 50,427,200 328,200) 1%
Expenditures* 47,214,400 44,713,900 2,500,500 5%
Other Sources (Uses) 3,634,400) 3,874,600) 240,200) 7%
Fund Balance, 7 -01 -10 11,114,100 11,114,100
2%
Fund Balance, 6 -30 -11 11,020,700 12,952,800 1,932,100
6%
Includes estimated expenditure savings, reimbursed
expenditures, and encumbrances.
Tap Ten Revenues
Our top ten revenues account for about 90% of total
General Fund revenues. By focusing on these, we can
get an excellent understanding of our revenue position.
As shown below, while there are some variances both up
and down, overall our top ten revenues were $56,700
more than budget estimates.
The following highlights some key revenue results:
Sales Tax. General sales tax receipts were $643,500
6 %) higher than estimated due to recoveries in nearly
every major business category: new motor vehicles,
lumber and building materials, home furnishings and
department stores. Similar recoveries were experienced
statewide.
Revenues from our local '/2 -cent sales tax (Measure Y)
were also higher than expected by $127,300 (2 %).
These results are an indication that the economy was
recovering during the fiscal year. The budget anticipated
an overall increase in sales tax revenues of about
650,000 from 2009 -10 levels. These revenues actually
increased $1.7 million from the prior fiscal year. The
additional $1.1 million above 2009 -10 levels largely
offsets the lower revenues in other areas of the top ten.
Property Tax. Property tax revenues were lower than
expected by $358,900 (4 %). While we have not seen the
level of decline in property taxes that other areas of the
State and County have experienced, we are not immune
from the effects of the housing market downturn.
Because of the timing of the tax levy and subsequent
collection, property taxes are a "lagging" revenue and
will not return to pre- recession levels as quickly as other
revenue sources.
The 2011 -13 Financial Plan assumed that property taxes
would remain flat in 2011 -12. The latest information
from the County indicates that assessed valuation
actually decreased by 1.5 %. In addition, there is some
vulnerability related to appeals and commercial property
declines, therefore it will be important to monitor this
revenue closely and we will return to Council at the
Mid- Year Budget Review with a downward revision of
the revenue estimate by approximately $500,000.
2 B1 -9
Top Ten Revenues
Sales Tax: General
Budget
11,500,000
Actual
12,143,500
Van ance
643,500 6%
Sales Tax: Measure Y 5,489,000 5,616,300 127,300 2%
Property Tax 8,800,000 8,441,100 358,900) 4%
TOT 4,770,000 4,844,200 74,200 2%
Utility Users Tax 4,860,000 4,592,300 267,700) 6%
Property Tax in lieu
of VLF 3,551,000 3,551,100 100 0%
Franchise Fees 2,427,000 2,352,100 74,900) 3%
Business Tax 1,786,700 1,797,800 11,100 1%
Dev Review Fees 1,777,100 1,668,000 109,100) 6%
Recreation Fees 1 1,289,600 1 1,300,700 1 11,100 1%
0% Total 1 46,250,400 1 46,307,100 1 56,700
The following highlights some key revenue results:
Sales Tax. General sales tax receipts were $643,500
6 %) higher than estimated due to recoveries in nearly
every major business category: new motor vehicles,
lumber and building materials, home furnishings and
department stores. Similar recoveries were experienced
statewide.
Revenues from our local '/2 -cent sales tax (Measure Y)
were also higher than expected by $127,300 (2 %).
These results are an indication that the economy was
recovering during the fiscal year. The budget anticipated
an overall increase in sales tax revenues of about
650,000 from 2009 -10 levels. These revenues actually
increased $1.7 million from the prior fiscal year. The
additional $1.1 million above 2009 -10 levels largely
offsets the lower revenues in other areas of the top ten.
Property Tax. Property tax revenues were lower than
expected by $358,900 (4 %). While we have not seen the
level of decline in property taxes that other areas of the
State and County have experienced, we are not immune
from the effects of the housing market downturn.
Because of the timing of the tax levy and subsequent
collection, property taxes are a "lagging" revenue and
will not return to pre- recession levels as quickly as other
revenue sources.
The 2011 -13 Financial Plan assumed that property taxes
would remain flat in 2011 -12. The latest information
from the County indicates that assessed valuation
actually decreased by 1.5 %. In addition, there is some
vulnerability related to appeals and commercial property
declines, therefore it will be important to monitor this
revenue closely and we will return to Council at the
Mid- Year Budget Review with a downward revision of
the revenue estimate by approximately $500,000.
2 B1 -9
Quarterly Financial Report Fourth Quarter of 2010 -11
Transient Occupancy Tax (TOT). As indicated in the
recent TOT newsletter, results for the year were slightly
better than our budget estimate. The strong TOT results
are indicative of two factors: the Central Coast remains a
popular tourist destination and the Tourism Business
Improvement District (T -BID) efforts to market San
Luis Obispo as a destination are working.
Utility Users Tax. This revenue is based on utilities
like water, telephone, cable television, gas and
electricity. The decline in revenues is influenced by
many factors: changes in telecommunications
technology, household purchasing decisions and an
overall change in the underlying services that are taxed.
This is an important revenue source to the City and we
will continue to monitor this in the 2011 -13 Financial
Plan.
Development Review Fees. These are driven by the
timing of private sector permit applications, which are
difficult to project and have seen significant declines in
the past few years. Revenues were below budget
estimates by $109,100 (6 %) and were below the prior
year's results by $126,000 (7 0/.). The 2011 -13 Financial
Plan anticipates that development review fees have
reached the bottom and will begin to see recovery next
year.
Franchise Fees. Revenues from franchise fees were
below estimates by $74,900 (3 %). This is largely due to
lower than anticipated revenues from the cable television
franchise.
Recreation Fees. Revenues from the recreation fees
were on target with budget estimates.
Expenditures
After adjusting for projected expenditure savings,
encumbrances and carryovers, expenditures were 5%
under budget. As a reminder, the Financial Plan assumes
there will be 2% expenditure savings each year. While
savings occurred in all categories, staffing savings
account for about 60% of the total savings. This
primarily reflects positions that were impacted by the
hiring freeze and remained vacant throughout the year.
In most cases, these positions were either eliminated in
the 2011 -13 Financial Plan or have subsequently been
filled; therefore we will not experience ongoing savings
from these vacancies.
By Department. As shown below, all expenditures by
department were below budget.
Expenditures
Administration 2,660,900 2,436,200 224,700 817.
City Attorney 620,000 599,000 21,000 3%
Human Resources 3,088,000 2,877,400 210,600 7%
Finance & IT 4,576,400 3,989,900 586,500 13%
Community Dev 2,664,000 2,399,300 264,700 10%
Parks & Recreation 3,108,000 2,865,400 242,600 8%
Public Works 11,290,900 10,798,700 492,200 4%
Police 15,137,100 14,034,900 1,102,200 7%
Fire 9,874,600 9.488.600 1 386.000 4%
Total Departmental 53,019,900 49,489,400 3,530,500 7%
Reimbursed Expenses 4,436,400) 4,449,900)' 13,500 0%
Estimated Savin s 1.369.500) 1,369,500)
Total Expenditures 47,214,000 1 45,039,500 1 2,174,500 5%
Including encumbrances of $325,900 and unexpended
General Carryover of $492,900.
By Type. Operating expenditures by type were also less
than budgeted as summarized by the following.
Expenditures By Type
Staffing
Budget
41,187,700
Actual'
39,169,700
Variance
2,018,000 5%
Contract Services 4,564,500 4,034,000 530,500 12%
Telecomm & Utilities 1,740,000 1,629,500 110,500 6%
Insurance 1,976,900 1,939,500 37,400 2%
Other Operating Costs 3,503,700 2,705,900 797,800 23%
Minor Capital 47,100 10,800 36,300 77%
Total by Type 53,019,900 49,489,400 3,530,500 7%
Reimbursed Expenses 4,436,400) 4,449;900) 13,500 0%
MOA Adjustments
Estimated Savings 1,369,500) 1,369,500)
Total 47,214,000 45,039,500 2,174,500 50/6
Including encumbrances of $325,900 and unexpended
General Carryover of $492,900.
Other Sources (Uses)
Operating transfers in 2010 -11 are lower than projected,
resulting in a negative variance in Other Sources (Uses)
of $240,200. Several small, one -time variances occurred,
but lower than anticipated gas tax revenues accounts for
the majority of the variance ($123,100). We will
continue to monitor this closely because the 2011 -13
Financial Plan anticipated the higher gas tax revenue.
Therefore, this source of funding for the General Fund
could be overstated and may need to be revised
downward at Mid -Year.
In addition, the budget anticipated transferring 610
Monterey to the Parking Fund for the future Palm -
Nipomo garage at a price of $650,000. Upon appraisal
of the property, the transfer price was $500,000, with an
agreement that in the future when the garage is ready for
construction, any increase in property value will be
realized at that time.
3 B1 -10
Quarterly Financial Report Fourth Quarter of 2010 -11
ENTERPRISE= FUNDS
In general, enterprise fund revenues and expenditures are
in line with budget estimates and in all cases,
expenditures were within budget allocations. Unspent
CIP project budgets reflect the timing of those projects
and will carry forward to the next fiscal year. Year -to-
Date working capital balances are intended for future
capital investments and unrestricted reserves consistent
with policy. In some cases, working capital balances are
accumulating in anticipation of future capital needs.
Water Fund
Working Capital Budget YTD Actual Percent
Revenues* 14,398,200 14,639,600 102%
Expenditures
Operating programs 2,274,400
Operating programs 14,054,200 12,389,200 88%
CIP projects 5,517,900 2,197,400 40%
Debt service 2,341,500 2,373,000 101%
Other Sources (Uses) 814,600 42,700 5%
Balance, Start of Year 15,653,800 15,653,800
Balance Year -to -Date 1 8,953.000 13 376.500
Reflects revised budget
The Water Fund reduced expected revenues by
approximately $1.4 million during the year to reflect
lower water sales that were occurring. It will be
important to monitor water sales during 2011 -13 to see if
the reduced water use continues or if there were unique
factors that resulted in the situation this year.
Sewer Fund
Working Capital Budget YTD Actual Percent
Revenues 13,542,600 13,526,900 100%
Expenditures
Operating programs 2,274,400
Operating programs 7,898,400 7,077,700 90%
CIP projects 6,180,300 2,216,400 36%
Debt service 3,243,700 3,191,500 98%
Other Sources (Uses) 64,600) 17,900) 28%
Balance, Start of Year 9.628.500 1 9.628,500
Balance, Year -to -Date 5,784 100 10,651,900 1 -
Parkinq Fund
Transit Fund
Working Capital Budget
3,730,100 103%
Revenues 5,620,900 4,066,300 72%
Expenditures
Operating programs 2,274,400
Operating programs 2,981,600 2,893,500 97%
CIP projects 2,761,000 1,010,600 37%
Other Sources (Uses) 7,500) 2,100)
98%
Balance, Start of Year 1 838,600 1 838.600
Balance, Year -to -Date 1 709,400 1 998,700
Transit Fund revenues include anticipated grant money
that will reimburse the Transit Fund for capital
purchases, like bus replacements. To the degree that
these purchases have not occurred yet, remaining CIP
budget will carry forward to future years, as will the
associated grant revenue budget for those purchases.
Golf Fund
Working Capital Budget
3,730,100 103%
Revenues 356,000 364,400 102%
Expenditures
Operating programs 2,274,400
Operating programs 697,100 688,200 99%
CIP projects 43,400 32,700 75%
Other Sources (Uses) 346,500 338,700 98%
Balance, Start of Year 38,000 38,000
Balance Year -to -Date 20,200
Beginning in 2011 -12, Golf operations will no longer be
accounted for as an enterprise fund, they will be reported
as an activity in the General Fund. All Golf Fund assets,
liabilities and fund balances will become part of the
General Fund.
Whale Rock Commission
CapitalWorking
3,730,100 103%
Revenues 1,170,000 1,030,700 88%
Expenditures
Operating programs 2,274,400
Operating programs 1,013,400 797,000 79%
CIP projects 573,400 0%
Other Sources (Uses) 8,900)
1,523,000
0%
Balance, Start of Year 932,900 1 932,900
108,100)
Balance, Year -to -Date 507,200 1 1,166,600
7,291,800
Revenues 3,629,600 3,730,100 103% FOR MORE INFORMATION
Expenditures
Operating programs 2,274,400 2,190,200 96% This summary is based on detailed information produced
CIP projects 2,632,600 624,100 24% by the City's financial management system. If you
Debt service 1,483,000 1,523,000 103%
would like additional information, or have any questionsOtherSources (Uses) 23,100) 108,100) 468 °% °
Balance, Start of Year 7,291,800 7,291,800 about the report, please call us at 781 -7128.
Balance, Year -to -Date 1 4,508,300 1 6,576,500
During the year, the General Fund sold property located
at 610 Monterey to the Parking Fund for $500,000 for
the future construction of the Palm - Nipomo parking
garage. This inter -fund transaction resulted in an
expense to the parking fund of $393,900 (the book value
of the property) and a transfer (other use) of $106,100.
Council L qdate on November 15, 2011. We plan to
provide the Council with an update on the City's fiscal
status based on interim year -end results and first quarter
trends at the November 15, 2011 meeting.
Electronic Distribution: All Employees
B1 -11
A"
OVERVIEW
city O
san lui s oBispo
Second Quarter of Calendar Year 2011
For the Quarter. This newsletter covers the City's
sales tax revenues received in September 2011 for sales
occurring from April through June 2011. After adjusting
for apportionment errors and late payments, "point -
of- sale" revenues were up by 9.1% compared with the
same quarter last year. This follows a 10% increase last
quarter.
Sales Tax Receipts Summary
Sales Tax Receipts 2nd Qtr 2011 2nd Qtr 2010 charlge
Reported Point -of -Sale 2,934,856 2,651,802 10.7%
Net Adjustments 50,299) 7,794)
8.6%
Adjusted Point -of Sale 2,884,557 2,644,048 9.1%
Pool Receipts 301,550 300,574 0.3%
Total 3,186,107 1 2,944,582 8.2%
The following summarizes "point -of- sale" revenues by
major business group, after adjusting for late payments,
apportionment errors last year and other adjustments
identified by our sales tax advisor:
Adjusted Sales Tax Receipts 1 i, Type
Point-of-Sale Receipts 2nd Qtr 2011 2nd Qtr 2010 change
Gen Consumer Goods 1,006,822 962,856 4.6%
Autos & Transportation 522,866 481,386 8.6%
Restaurants & Hotels 350,451 337,766 3.8%
Building & Construction 262,415 230,552 13.8%
Fuel & Service Stations 374,799 256,682 46.0%
Business & Industry 174,080 196,884 11.6%
Food & Drugs 193,124 177,881 8.6%
Total 1 2,884,557 2,644,007 9.1%
Consumer Spending Increases. The large increase
for fuel and service stations was due to continued
increases in fuel prices. New automobile sales posted a
large gain, due to pent -up consumer demand and sales
incentives. Strong sales in plumbing and electrical
supplies were a primary factor in the increase in building
and construction.
The business and industry category shows what appears to
be a large decline. However, this is actually due to a
onetime accounting adjustment that falsely inflated
revenues last year.
Measure Y Revenues. Measure Y revenues were up
9.9% from last year, generating $1,492,509 for the
quarter.
Attachment 2
Since this is the 5`h consecutive quarter of recovery, we
remain cautiously optimistic about this trend. However, as
the economic rebound slows and recovers less than
projected, the threat of a double dip recession remains.
NEWSLETTER CONTENTS
This newsletter includes a summary prepared by the City's
sales tax advisor highlighting key trends and sales tax
issues. It also includes the following charts and graphs
about the City's sales tax base:
Major business groups: first
quarter 2011 and 2010
Top 25 sales tax producers
listed alphabetically for this
quarter)
Top 15 business categories:
this quarter compared with
last year
Sales per capita: City
compared with the County and State, last 13 quarters
Major business groups: last 13 quarters
Sales per capita: City compared with six other
agencies in the region, last 13 quarters
Sales tax revenues by geographic area: this quarter
compared with last year
Major business groups: 13 year history (provided at
fiscal and calendar year ends)
A listing of individuals and organizations that routinely
receive this newsletter is provided at the end of the report.
MORE INFORMATION AVAILABLE
The information provided in this newsletter is based on a
detailed database available to the City through our sales
tax advisor. If you require additional information about
the City's retail base, or have any questions about this
newsletter, please contact Mary Bradley, Interim Director
of Finance & Information Technology, at (805) 781 -7125.
B1 -12
A
November 14, 2011
city of
san luis osispo
September 2011
Attachment 3
This report covers the City's transient occupancy tax (TOT) revenues for September 2011 compared with the two
prior years. As reflected below, revenues for the month of September 2011 are up by 12.1% from the same month
last year and up by 8.8%
year to date. Year End TOT Revenues
The September results are
consistent with the fact
that it is one of our most
important TOT months.
Traditionally, tourist
activities increase starting
with the Fourth of July
holiday and continue
through August and
September. According to
the Smith Travel Report, a
leading data source for the
lodging industry,
occupancy rates increased
from 69% in September
2010 to 75.1% in
September 2011. This
means that the increase in
TOT is due largely to an
The revenues shown in this report are prepared on an accrual basis as of the end of the month.
They are based on TOT amounts reported by operators but not necessarily remitted to the
City within the 30 days after month -end required by the City's TOT ordinance.
increase in occupancy rates not an increase in room rates. The September results are encouraging news and a
good indicator that summer travel activities were positively impacted by the City's ongoing campaign as a travel
destination. We remain hopeful that this increased tourism will continue through the traditionally slower winter
months.
Financial Plan. The strong start to the year nicely positions the City to meet or exceed the 2011 -12 Financial
Plan estimate which projects that TOT revenues will increase by 2% over fiscal year 2010 -11. We will closely
monitor our monthly results in 2011 -12 and, if appropriate, update our 2011 -12 projections at the mid -year budget
review.
Trend Analysis. TOT revenues have begun to recover more quickly than other General Fund revenue sources.
They have been steadily increasing for over one year and are expected to reach their annual pre- recession levels in
fiscal year 2012 -13. This upward trajectory is not, however, expected to continue beyond 2012 -13. Once TOT
revenues reach their pre- recession level, their rate of growth is expected to flatten out or grow at a slower, more
sustainable rate.
For More Information. Please call Jennifer Thompson, Revenue Supervisor, at (805) 781 -7129.
DISTRIBUTION: City Council, Budget Review Team, Fiscal Officers, Department Heads, The Tribune, Economic Development Manager, John Lindt,
Dave Kastner, Chamber of Commerce, Verdin Marketing, Pragna Patel, Business Times, New Times, SLO City News, SLO Journal
B1 -13
Increase (Decrease)
Prior Year Last Year This Year Last Year Vs This Year
2009 -10 2010 -11 2011 -12 Amount Percent
July 508,195 541,806 591,184 49,379 9.1%
August 511,564 542,194 574,395 32,201 5.9%
September 400,023 437,543 490,524 52,981 12.1%
Year To Date Total 1,419,783 1,521,543 1,656,103 134,560 8.8%
October 414,870 442,586
November 280,913 330,924
December 246,684 274,417
January 230,279 256,351
February 273,373 302,246
March 326,099 333,783
April 423,158 451,133
May 372,997 433,874
June 490,326 512,542
Year To Date Total 1 4,478,482 1 4,859,398 1 1,656,103
The revenues shown in this report are prepared on an accrual basis as of the end of the month.
They are based on TOT amounts reported by operators but not necessarily remitted to the
City within the 30 days after month -end required by the City's TOT ordinance.
increase in occupancy rates not an increase in room rates. The September results are encouraging news and a
good indicator that summer travel activities were positively impacted by the City's ongoing campaign as a travel
destination. We remain hopeful that this increased tourism will continue through the traditionally slower winter
months.
Financial Plan. The strong start to the year nicely positions the City to meet or exceed the 2011 -12 Financial
Plan estimate which projects that TOT revenues will increase by 2% over fiscal year 2010 -11. We will closely
monitor our monthly results in 2011 -12 and, if appropriate, update our 2011 -12 projections at the mid -year budget
review.
Trend Analysis. TOT revenues have begun to recover more quickly than other General Fund revenue sources.
They have been steadily increasing for over one year and are expected to reach their annual pre- recession levels in
fiscal year 2012 -13. This upward trajectory is not, however, expected to continue beyond 2012 -13. Once TOT
revenues reach their pre- recession level, their rate of growth is expected to flatten out or grow at a slower, more
sustainable rate.
For More Information. Please call Jennifer Thompson, Revenue Supervisor, at (805) 781 -7129.
DISTRIBUTION: City Council, Budget Review Team, Fiscal Officers, Department Heads, The Tribune, Economic Development Manager, John Lindt,
Dave Kastner, Chamber of Commerce, Verdin Marketing, Pragna Patel, Business Times, New Times, SLO City News, SLO Journal
B1 -13
Attachment 4
STATUS OF GOALS AND OBJECTIVES
As of November 1, 2011
city of san tuts oi3ispo
B1 -14
ATTACHMENT 4
STA i US OF GOALS AND OBJECT EVES
As of November 1, 2011
TABLE OF CONTENTS
INTRODUCTION
Overview 1
Report Card: Major City Goals and
Other Important Council Objectives
Report Card: Address as Resources Permit
Action Plan Changes
Next Report
MAJOR CITY GOALS
Economic Development
Preservation of Essential Services and
Fiscal Health
Neighborhood Wellness
Traffic Congestion Relief
OTHER IMPORTANT COUNCIL
OBJECTIVES
1
2
2
2
3
5
8
10
Open Space Preservation 15
Infrastructure Maintenance 17
Planning: Update Land Use and Circulation
Elements 19
Affordable Housing/Homeless Services 20
ADDRESS AS RESOURCES PERMIT
Parks and Recreation 21
Climate Protection 21
Historic Preservation 21
CARRYOVER GOALS AND OBJECTIVES
Other Important Council Objectives
Creek and Flood Protection
Skatepark
Airport Area Annexation
Broad Street Corridor Plan
STATUS OF MAJOR CIP PROJECTS
Status of Major Capital Improvement
Plan (CIP) Projects
23
23
23
23
25
INTRODUCTION
OVERVIEW
This report details the status of Major City Goals
and Other Important Council Objectives set by the
Council as part of the 2011 -13 Financial Plan as of
November 1, 2011. In general, we are on track in
accomplishing these objectives
based on the work programs
adopted by the Council.
Report Card. The following is a
quick "report card" on the status of
Major City Goals and Other
Important Council Objectives based
on the "action plans" approved by
the Council as part of the 2011 -13
Financial Plan.
As a benchmark, at November 1,
2011, we are about 17% through
the two -year Financial Plan period.
ATTACHMENT 4
Most of the goals and objectives are near or exceed
this level, with most showing good progress.
Organization. The "report card" is followed by a
short summary of notable changes from the original
action plan. After this is a more detailed report on
each Major City Goal and Other Important Council
Objective, which shows the
objective, action plan as adopted
Important
Many of these are multi-
year goals that have
activities associated with
them that go beyond the
two -year 2011 -13 time
frame. This status report
is focused on approved
Action Plan" tasks as of
November 1, 2011.
by the Council, any revisions
additions are shown in italics; date
changes are also shown in italics
and highlighted in a separate
column; and deletions are shown in
strikeout) and a brief status
summary as of November 1, 2011.
Shorter reports are provided for
Address as Resources Permit" for
2011 -13 as well as for "carryover
goals" from 2009 -11.
Report Card: 2011-13 Major City Goals & Other Important Council Objectives
Percent Complete as of November 1, 2011 Per Actions Plan Tasks
MAJOR CITY GOALS
Economic Development
Preservation of Essential Services & Fiscal Health
Neighborhood Wellness
Traffic Congestion Relief
OTHER IMPORTANT COUNCIL OBJECTIVES
Open Space Preservation
Infrastructure Maintenance
Planning: Update Land Use & Circulation Element
Affordable Housing /Homeless Services
OWN
I I
I
I
I
I
I
I
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1- B1 -16
MAJOR CITY GOALS
Parks and Recreation
Climate Protection
Historic Preservation
ATTACHMENT 4
Report Card: 2011 -13 Address as Resources Permit
Percent Complete as of November 1, 2011
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
ACTION PLAN CHANGES
As noted above, in general we are on track in
accomplishing these goals and objectives based on
the work programs adopted by the Council.
However, notable changes from the original action
plans include the following.
Major City Goals
Traffic Congestion Relief. Several projects have
been delayed for reasons including project cost
revisions to reduce costs, lengthy Caltrans approval
process, and staff's focus on higher priority projects.
The delivery of traffic signal poles and project
revisions to reduce costs delayed the completion of
intersection work at Madonna /Los Osos Valley
Road as well as at Broad Street /Santa Barbara. The
Los Osos Valley Road Interchange project was
delayed due to a longer than anticipated Project
Approval process through Caltrans. The Tank
Farm/Broad intersection improvements and the mid -
Higuera improvements were slightly delayed due to
higher priority projects consuming the engineering
staff's time. Finally, conversion of the traffic signals
acquired through the relinquishment of Highway
227 from the State has been delayed due in part to
the long -term vacancy from an on-the-job injury of a
Signal Maintenance Technician. Once that vacancy
is filled, staff will resume work on this task.
Other Important Council Objectives
Planning: Update Land Use and Circulation
Elements. This project's start date was delayed
because the grant work program was approved later
than anticipated by the grantor. On September 27,
2011, the Strategic Growth Council provided the
official grant notice to proceed which indicated the
City could begin work on grant- funded activities.
The Request for Proposals has been distributed, and
staff anticipate that consultant interviews will occur
in November with contract signing in December.
Address as Resources Permit
The City is on track in accomplishing these
objectives.
NEXT REPORT
We will present the next "formal report" to the
Council in February 2012 as part of the 2011 -12
Mid -Year Budget Review. In the interim, we will
keep the Council up -to -date on the status of major
projects through agenda reports, Council Notes and
other briefing opportunities.
2 - B1 -17
ATTACHMENT 4
ECONOMIC DEVELOPMENT
Objective. Increase focus on economic development. Support creation of head -of- household jobs through
developing strategies for infrastructure, focusing on promising growth sectors, and expediting desired economic
activity. Expand collaboration with Cal Poly, Cuesta, business community and responsible agencies.
Action Plan
Task Original Revised
Economic Development Strategic Plan
1. Create a Project Plan to guide development of the Economic Development Strategic 944 Complete
Plan.
2. Conduct research and analysis with the assistance of local experts and utilize current 944 Complete
census data to identify the characteristics that will define "head of household jobs" for
the purpose of guiding the Strategic Plan process. Conduct baseline research on
metrics that may be used to evaluate progress towards accomplishment of the Major
City Goal.
3. Create a stakeholder group consisting of residents, business owners, property owners, io/i i Complete
and representatives of the County, Economic Vitality Corporation (EVC), Chamber of
Commerce, Downtown Association and other community groups to provide input on
the scope of work for the request for proposals (RFP).
4. Issue an RFP and scope of work for a contract to develop a City of San Luis Obispo ii/ii Complete
Strategic Plan for Economic Development.
5. Execute the consultant contract, develop strategic plan, and present recommended 6/12
Strategic Plan to Council for consideration including an implementation strategy for
the 2012 -13 fiscal year.
6. Implement the new Economic Development Strategic Plan. Ongoing
Infrastructure in Expansion Areas
1. Develop an RFP for the analysis of infrastructure requirements in the Margarita and 6/12
Airport areas, with a scope of work to include a strategy for phasing and financing of
key infrastructure components needed to move development forward and support
creation of head of household jobs.
2. Develop and present a program for Council consideration based on the 1/13
recommendations in the report.
Collaboration Committee
1. Continue to invest in the goals of the Collaboration Committee as a partner with the Ongoing
County, Cal Poly, and the business community in improving the entrepreneurial
culture of the community in an effort to create head of household jobs. Continue to
work with Cuesta College, the EVC and the business community to increase
opportunities that facilitate job growth.
Status Summary: 15% Complete. The following is a summary of accomplishments and important next steps
for this goal.
3- B1 -18
Awi'TAGH [Vi E NT 4
Activity within the Economic Development Program included several exciting developments during this period
such as:
The City Council approved a public - private partnership with Digital West Networks for completion of the
fiber -optic cable ring around the City and to improve access to high speed internet for businesses.
A City Council Study Session was held regarding a potential development agreement with Chevron to
enable the installation of more than 50% of the public facilities (such as transportation infrastructure,
water distribution lines, and stormwater infrastructure) identified in the Airport Area Specific Plan.
A new business friendly website (www.openforbusinessinslo.com) was launched through a joint effort of
the City and the Chamber of Commerce.
The Economic Development Strategic Plan process is well underway with formation of a Steering
Committee and the completion and dissemination of the Request for Proposals (RFP) for consultant
services associated with development of the Strategic Plan. In preparation for work with the Steering
Committee, staff completed research into background demographics and head -of- household job
definitions used in other communities and by other governmental agencies. This information was
considered by the Steering Committee and factored into review of the Scope of Work for the RFP. The
Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis accomplished by the Steering
Committee also helped to inform the Scope of Work. All background information provided to the
Steering Committee, minutes from meetings, and the SWOT Analysis are available online at
littp:fl www. slocity. orWecononiicdevelopinent /str ,itegicplan/plan.asp.
City staff continues to work with the Collaboration Committee. During this period, the Committee
moved forward with Cal Poly's facilitation of the Small Business Development Center (SBDC) as the
entity to support improvements to the entrepreneurial culture of the community.
4- B1 -19
A,r GACH ML- 4-
PRESERVATION OF ESSENTIAL SERVICES AND FISCAL HEALTH
Objective. Adopt a budget that sustains the city's short and long -term fiscal health, preserves public health and
safety and other essential services in line with residents' priorities, and includes cost reduction strategies.
Action Plan
Task Original Revised
Continue emphasis on effectiveness and efficiency of City organization
I . Identify candidate departments for one structured organizational review. Issue
request for proposals (RFP) for consulting services to systematically address 12/12
operating performance, cost reductions, and opportunities to improve service.
Complete reviews and present to City Manager.
2. Continue to review and implement ideas for savings or increased revenues as
Ongoingrecommendedbystaffandcommunitymembers.
3. Evaluate at least four opportunities for managed competition in City functions as Ongoingidentifiedinpriorandcurrentorganizationalreviews.
4. Perform focused overview of City's organizational structure to identify potential for 12/12
reorganization, combination, or other modifications to improve efficiency and
reduce cost.
5. Using framework set forth in the initial 2006 analysis, benchmark key City financial Q4 i 6112
and outcome measures with comparable communities. Develop a schedule for
updating benchmark analysis on a recurring basis.
6. Determine viability and cost versus savings potential of changes to variable 242 6113
frequency drives of certain large motors in existing facilities, and expanded lighting
control, for possible inclusion in the 2013 -15 Financial Plan.
Continue to develop, review, modify and implement Human Resource policies in
support of fiscal sustainability
1. Develop short term and long term strategy for personnel cost containment and 944 Complete
receive approval from Council prior to labor negotiations.
2. Negotiate cost containment actions through ongoing negotiation process with all 12/11
employee groups.
3. Establish a process to periodically review and monitor personnel costs and the Ongoing
impact of those costs on overall financial health.
Ensure the stability and diversity of the City's revenue sources
1. Examine threats to the City's Utility Users Tax revenue from federal and state 1 6112
legislation. Identify actions and develop plan to address problems as needed.
2. Conduct Business License Tax audit with Franchise Tax Board data. 5/12
3. Conduct Transient Occupancy Tax audits. 12/12
5- B1 -20
ATTACHMENT 4
Task Original
4. Explore the possibility of establishing a storm drain utility and receive Council 2/13
direction.
Work with Council and the community to renew Measure Y
1. Hire consultant to conduct public opinion research. 844 Complete
2. Conduct public opinion research. iO4 i Complete
3. Present survey results and analysis to Council and determine optimal timing of i b/i t 12111
ballot measure.
4. Initiate public information/education program. 1/12
Identify and address long -term liabilities that are important to fiscal sustainability
1. Refine five -year capital improvement program that will responsibly protect the 6/12
City's infrastructure assets, including building facilities, and develop plan for
funding as needed.
2. Update Fleet Management Policy to reflect revised fleet life cycles. Develop long- 6/12
term fleet replacement schedule. Establish Fleet internal service fund if determined
to be appropriate.
3. Evaluate Information Technology replacement needs. Develop long -term 6/13
replacement schedule. Identify appropriate funding strategy, including potential
Information Technology internal service fund.
4. Review liability and workers compensation claims trends and establish a plan of 63 Ongoing
funding if needed.
Continue to closely review and monitor the City's fiscal condition
1. Update General Fund Five -Year Forecast at least twice annually, at mid -year and Ongoing
with recommended budget.
2. Prepare focused reports on areas of interest to city management and Council. Ongoing
Status Summary: 10% Complete. The following is a summary of accomplishments and important next steps
for this goal.
Cost Savings
The 2011 -13 Financial Plan includes an expectation that the City will realize cost savings through efficiency and
effectiveness measures implemented over the two -year financial plan period. These savings measures include
ideas generated by the public through the financial plan process, by staff through the Non - Operating Budget
Balancers (NOBBs) exercise, and by consultants through bi- annual organizational assessments. The amount of
savings that the City is seeking through this effort corresponds to a 3 -to -1 return on investment with respect to the
cost of conducting the organizational assessment. Overall, the City is planning to achieve $50,000 in savings
during 2011 -12, and an additional $100,000 in savings during 2012 -13. City staff has formalized the process
6- B1 -21
ATTACHMENT 4
whereby ideas for cost - savings generated by efficiency measures and organizational assessments will be
measured. Staff has also started the process of implementing and accounting for these ideas.
Personnel Cost Containment
The 2011 -13 Financial Plan also assumes employee concessions to achieve a balanced budget while retaining
General Fund reserves at or near policy levels. Council provided staff with labor relations objectives in September
and these objectives were shared with all employee groups with agreements expiring at year end. The objectives
include a $3.1 million City -wide reduction of total compensation costs and pension cost containment or
reductions. Discussions regarding meeting these objectives occurred with unrepresented employees
Confidential, Managers and Department Heads) and a recommendation will be brought to the City Council
during 2011. Negotiations with the Police Officer's Association, the Firefighters Union, the City Employees
Association (SLOCEA), and the Battalion Chiefs Association are being coordinated and are underway.
Measure Y
Work on Measure Y renewal has begun with the completion of a new citizen satisfaction survey.
Benchmark Study
This project has been delayed due to staffs focus on labor negotiations. A role of the new Finance and
Information Technology Director will be to review the scope of this project and develop a plan for completion.
Utility User Tax (UUT) Analysis and Potential Ballot Measure
Staff explored cost - effective options for a review of the City's UUT practices, and on September 20, 2011,
Council approved such a contract with MuniServices and Donald Maynor. This agreement provides for a UUT
compliance and revenue protection program and will assist the City in identifying and correcting errors or
omissions that cause revenue deficiencies. Additionally, these services include assistance with development of a
ballot measure aimed at updating the City's UUT ordinance language and protecting it against erosion due to new
legislation. The citizen satisfaction survey mentioned above also included questions related to a potential UUT
ballot measure so that Council can decide how to proceed.
Equipment Replacement Funding
Staff have reviewed all fleet equipment assets and completed a comprehensive equipment replacement
spreadsheet which identifies the timing of projected fleet purchases and the replacement funds that will be needed
over the life of the assets. Information Technology (IT) staff are now starting on a similar spreadsheet for IT
hardware and software. Following the completion of these two schedules, the next step will be to assess available
funding, develop a funding plan, and establish an internal service fund for equipment replacement as appropriate.
Business License Tax Audit
After a successful effort to ensure business license compliance from residential rental property owners, staff have
begun a Citywide business license tax audit. With cooperation from the Downtown Association, the effort began
in the Downtown core area. Staff canvassed this area and recorded the names of businesses that did not appear in
the City's business license database, HdL. This list was then reviewed to determine which businesses truly were
not in compliance. Letters were sent to these businesses, notifying them that the City's' Municipal Code requires
all entities conducting business in the City have a business license. The next step in this project will occur when
staff receive data from the Franchise Tax Board. This information will be cross - checked with the data in HdL to
confirm which businesses are not in compliance and are subject to the enforcement process. Staff are also working
with the Attorney's Office to streamline the current collection process to ensure the effectiveness of these
methods.
Departmental Efficiencies
The Utilities Department is exploring funding options for the installation of variable frequency drives (VFD) on
the Return Activated Sludge (RAS) pumps and indoor lighting upgrades as part of the Water Reclamation Facility
energy efficiency project (SST project) with PG &E. Staff will present the project to Council in January with an
estimated completion date in 2013.
7- B1 -22
NEIGHBORHOOD WELLNESS
Objective. Embrace and implement pro- active code enforcement and Neighborhood Wellness Policies.
Action Plan
Task
1. Community coordination on new program elements.
Original
Ongoing
Revised
2. Review City policy regarding voluntary compliance & evaluate Neighborhood
Services Team.
9 4 2112
3. Create new job classification of Neighborhood Services Specialist. io/i )- Complete
4. Develop public outreach program. 11 /11
5. Public outreach campaign. 3/12
6. Hire additional staff. 2/12
7. Train new staff. 3/12
8. Begin "soft start" of program. 4/12
9. Begin full enforcement efforts. 5/12
10. Monitor progress and solicit feedback from external stakeholders. Ongoing
11. Database enhancements and information sharing improvements. Ongoing
Status Summary: 10% Complete. The following is a summary of accomplishments and important next steps
for this goal.
Internal Collaboration
An ongoing effort associated with the Neighborhood Wellness objectives is cross - training staff within several
departments to enhance enforcement and response efforts. Collaboration between Police, Fire, Parking Services
and the Code Enforcement Office has been established so the appropriate enforcement personnel are aware of
existing problems and can handle them efficiently. As an example, during a parking citation appeal one violator
indicated parking was difficult at the house he lived in because there were six residents. The Parking Manager
forwarded the information to the Code Enforcement Officer for follow -up. This type of internal collaboration will
continue as the new positions are filled and increased code enforcement is implemented.
Policy Review
Staff was directed to review practices related to voluntary compliance of the regulations to determine when it is
appropriate to escalate the level of enforcement efforts. As suspected, there were uneven levels of enforcement
efforts between City departments responsible for these activities. For example, some departments escalate
enforcement very quickly while other departments allow ample time for compliance efforts. As a result of the
review of policies and practices, it was determined that strategic escalation of enforcement should occur Citywide.
The process will include three levels: a Notice to Correct (NTC), a Notice of Violation (NOV) and administrative
citations. The Notice to Correct will notify the violator of the code violations, warn of possible fines and establish
a timeline for action by the violator to avoid fines or fees. Based on the City's cost recovery for code enforcement
policies, fees will be doubled for any permit issued to correct code violations. If no action is taken within the
prescribed timeline, a Notice of Violation (NOV) will be sent. The NOV will include an additional cost recovery
charge and an additional warning of impending citations. If the violator remains recalcitrant, staff will begin the
8 - B1 -23
ATTACHMENT 4
administrative citation process. This new process will not apply to the enforcement of noise violations, which are
already subject to the issuance of formal warnings for initial violations and administrative citations for both the
offender and the property owner for subsequent violations within any nine -month period. Additionally, no
changes are necessary for parking violations. There are no warnings for parking in yards or blocking a public
sidewalk. If the violation cannot be corrected immediately, a citation is issued.
There were also concerns regarding repeat offenders. Neighborhood advocates suggested that repeat offenders
should receive immediate fines for subsequent violations at their property. However, staff has reviewed the
practices and determined that second offense violations have been fined the code enforcement fee or issued an
administrative citation. Additionally, case management processes have been enhanced to more accurately track
the repeat offenders and ensure that second offense violations are subject to immediate fines. The repeat violation
must be at the same property that was originally cited. If an owner has many properties and there are similar
offenses at several of them, the City will still need to follow due process for each parcel as a separate action.
Staff has begun evaluating the composition of the Neighborhood Services Team per Council's direction to
consider the future involvement of neighborhood residents. Currently, the Team is comprised of City staff
members from various departments. Staff will evaluate ways to more meaningfully involve neighborhood
residents while preserving the Team's ability to discuss actual cases in a confidential manner. The Team will meet
with the Police Chief and Community Development Director to further discuss this issue and recommend an
approach to address it.
The Neighborhood Services Specialist job description is complete. The description of general duties was
discussed at a recent Neighborhood Services Team Meeting, and feedback from the neighborhood advocates was
incorporated into the job description.
Public Outreach
Staff has begun discussions with the neighborhood and student groups regarding the upcoming public outreach
efforts. These groups have recommended several venues which staff will review. Because this audience will be a
diverse group, efforts will be made to extend outreach through multiple media sources.
Transition of Duties
Staff has discussed the timing for transition of the Neighborhood Enhancement Ordinance (NEO) duties from the
Police Department Student Neighborhood Assistance Program (SNAP) program to the Community Development
Building and Safety Division. Based on the timelines identified in the work plan, duties will be transitioned in late
March to early April. At that time, the new positions will be filled and the training will be sufficient to begin the
soft start of the program.
9- B1 -24
ATTACHMENT 4
TRAFFIC CONGESTION RELIEF
Objective. Continue efforts on projects and programs which relieve traffic congestion (like street modifications,
intersection improvements, pedestrian improvements, bicycle facilities, sidewalks, trip reduction programs, traffic
signal operations, LOVR interchange, Prado Road and public transit).
Action Plan
Task
Transit Service Levels
Original Revised
1. Maintain existing transit levels for local and regional services with uncertain levels of
State and Federal funding.
Ongoing
2. Implement recommendation in the Short Range Transit Plan if funding is available. Ongoing
3. Work with Regional Transit Authority (RTA) and other transit providers to identify
potential cost savings and sharing to reduce costs and improve efficiency. Ongoing
4. Explore alternative fuel and vehicle type to offset operational costs. Ongoing
Transit Improvements
1. Use federal and state capital funding to replace and upgrade transit vehicles. Ongoing
Prado Road Extension
1. Work with west side Margarita area property owners to implement phased improvements to
Prado Road.
Ongoing
Madonna/Los Osos Valley Road Improvements
1. Complete minor intersection widening and restriping as part of Prefumo Creek Commons
Off -Site improvements.
44 1112
Broad Street/South Street Intersection Improvements
1. Begin minor intersection widening, installation of northbound Dual Left Turn Lanes and
restriping as part of Village At Broad improvements.
7/44 Complete
2. Complete Village At Broad improvements on Broad Street. ii4)- 2112
Traffic Safety & Operations Programs
1. Complete and present 2010 Annual Traffic Safety Report to Council for approval. Complete
10- B1 -25
2. Complete and present 2010/11 Biennial Traffic Operations Report to Council for approval. 2/12
3. Implement Safety & Operations Report Recommendations. 442 Ongoing
4. Complete and present 2011 Annual Traffic Safety Report to Council for approval. 11/12
Grand & 101 Traffic Signal Installation
1. Complete design. Complete
2. Acquire Caltrans permit & authorization / Begin construction. 844 10/11
Widening, Signal Reconfiguration, and Railroad Crossing at Foothill & California
1. Complete design. Complete
2. Acquire railroad approvals / Begin construction. T-BB Complete
Conversion of Relinquished Route 227 Traffic Signal Facilities
1. Complete design. Complete
2. Begin construction. 7 14 2112
3. Complete Traffic Signal Timing and Operations Optimization. 442 3112
Mid Iliguera Widening and Signal Upgrades
1. Complete design. 744 11 /11
2. Begin construction. iolli 1 3112
3. Complete construction. 12/12
Los Osos Valley Road (LOVR) Interchange
1. Complete construction plans and specifications. i2/ii 10112
2. Complete right of way acquisition. 124 1 10112
3. Pursue additional funding. Ongoing
4. Implement phased improvements as new development occurs and fees are collected in the
LOVR sub area.
Ongoing
11- B1 -26
5. Complete detailed preparation of Bonded Indebtedness of local funding component. TBD
Pismo & Buchon Neighborhood Traffic Management Improvements
1. Complete design. 544 Complete
2. Begin construction. 44 Complete
3. Complete post project Studies. 6/13
Bicycle Transportation Plan Update
1. Begin Update of the Bicycle Transportation Plan. 64 Complete
2. Update the City's Bicycle Transportation Plan to maintain eligibility for state grant
funding.
12/12
Tank Farm Road Intersection Improvements
1. Complete project design. 644 12111
2. Begin construction. 19/-11 3112
Railroad Safety Trail — Hathway to Taft
1. Complete construction documents. 7/12
2. Pursue additional funding. Ongoing
3. Award contract and begin construction. 6/13
Railroad Safety Trail — Taft to Pepper (Replaces Highway 101 Crossing project)
1. Obtain California Highway Patrol (CHP), Union Pacific Railroad (UPRR), and Public
Utilities Commission (PUC) approvals.
6/12
2. Complete project design. 6/13
3. Pursue additional funding. Ongoing
Bob Jones City-to -Sea Trail Connection to LOVR
1. Pursue outside funding for trail connections. Ongoing
2. Complete construction drawings. T-RD 6112
Bob Jones City -to -Sea Trail Connection to Octagon Barn
12- B1 -27
ATTACHMENT 4
1. Seek/obtain funding for study. Ongoing Complete
2. Complete project study. T4 B 2114
3. Pursue additional funding. Ongoing
4. Complete project design and environmental review. TBD
5. Complete construction drawings. TBD
6. Complete construction. TBD
Other Projects That Reduce Traffic Congestion
1. Complete curb ramps, sidewalks, on- street bicycle facility paving, and striping
improvements in conjunction with City street paving projects.
Ongoing
2. Implement Neighborhood Traffic Management program and projects. Ongoing
3. Conduct bi- annual vehicle, bicycle traffic counts, speed surveys and travel time studies. Ongoing
4. Complete miscellaneous bicycle facility improvements identified in the Bicycle
Transportation Plan, as resources permit.
Ongoing
5. Develop a list, in conjunction with the Bicycle Committee, of streets that would benefit
from increased street sweeping and coordinate with Street Maintenance to use
miscellaneous sweeping hours, when available, to increase frequency.
Ongoing
6. Seek funding for the design and construction of bikeways and pedestrian paths within the
City.
Ongoing
7. Seek funding to educate and promote bicycling, walking and transit as alternative forms of
transportation.
Ongoing
8. Provide more bicycle parking through the City's "Racks with Plaques" program. Ongoing
Status Summary: 10% Complete. The following highlights key accomplishments so far and important next
steps:
The expected completion date for the intersection work at Madonna/Los Osos Valley Road and at has been
delayed until January 2012. The start date for this project, which is being constructed by private development,
was delayed due to the delivery of traffic signal poles and project revisions to reduce costs. The project revisions
reduced the developer costs and included reconfiguring the driveway to the back of Fire Station 4 and reutilizing a
signal pole foundation. The project is now under construction and anticipated to be substantially complete before
year end; however, part of the project will carry over into early 2012.
Similarly, the expected completion date for the intersection work at Broad Street /Santa Barbara has been delayed
until February 2012. The start date for this project, which is being constructed by private development, was
delayed due to the timing of the developer and his selection of a contractor. The project is now under
construction.
13- B1-28
ATTACHMENT 4
Implementation of improvements resulting from the Traffic Safety and Operations report has been changed from
June 2012 to ongoing. The report will make certain recommendations and staff will need to evaluate possible
funding sources and then develop the projects to go out to bid or to be done by the City Street crew, fitting them
in along with existing projects.
The Los Osos Valley Road Interchange project was delayed due to a longer than anticipated Project Approval
process through Caltrans. This delay resulted from a lawsuit against Caltrans by adjacent property owners which
led to Caltrans withdrawal of the environmental determination. Staff worked with Caltrans and, in the summer of
2011, the project report and new environmental determination were released. Staff presented the current status of
the project to Council in September 2011 and are moving forward in the design and right of way acquisition
phases.
The Tank Farm/Broad intersection improvements and the mid - Higuera improvements were slightly delayed due
to engineering staff's focus on higher priority projects. Both projects will be advertised for bids in winter 2012 for
construction in spring 2012.
Curb ramp construction is complete in Pavement Area 5 in preparation for summer 2012 paving work. Sidewalk
repairs are also underway in Area 5.
Conversion of the traffic signals acquired through the relinquishment of Highway 227 from the State has been
delayed due to other higher priority projects and the long -term absence of a Signal Maintenance Technician due to
an on the job injury. Once that vacancy is filled, staff will resume work on this task.
Many of these projects extend beyond the 2011 -13 Financial Plan period. Staff is continuing to track the status of
all projects throughout the various phases and will monitor project status until completion.
14- B1 -29
OPEN SPACE PRESERVATION
Objective. Continue efforts to acquire, preserve, protect, and maintain open space in our greenbelt. Begin
implementation of the master plan for City -owned agricultural lands at Calle Joaquin. Complete and begin
implementation of the updated conservation plan for Irish Hills Natural Reserve. Prepare a Conservation Plan for
Reservoir Canyon Natural Reserve. Create a plan for maintenance of Laguna Lake and Park, including potential
funding.
Action Plan
Task Original Revised
Continued Open Space Acquisition, Preservation and Protection
1. Continue participation in planning and acquisition efforts that at a minimum include: Ongoing
a) the Chevron Tank Farm property and adjacent open space lands; (b) City- or
Land Conservancy -held conservation easements on lands near Camp San Luis
Obispo; (c) Righetti Hill in the Orcutt Specific Plan Area; (d) "Upper Goldtree
Vineyard Tract" lots (King and Filipponi/Twisselman properties) above Johnson
Avenue; and (e) the Filipponi/Denbow and Mountainbrook Church properties at the
end of Calle Joaquin.
2. Support actions to implement the Agricultural Master Plan for the Calle Joaquin Ongoing
Agricultural Reserve.
3. Complete Update of the Conservation Plan for Irish Hills Natural Reserve, and Ongoing
begin implementation activities.
4. Continue implementation of elements of City adopted Conservation Plans for: Ongoing
Johnson Ranch; South Hills; Stenner Springs; and the Bob Jones Trail.
5. Continue efforts to improve signage, trail conditions, and environmental restoration Ongoing
programs.
6. Continue to participate and oversee City- sponsored or directed mitigation projects, Ongoing
including the Los Osos Valley Road interchange, Bob Jones Trail environmental
enhancements, and various private mitigation and enhancement projects throughout
the City.
7. Continue leadership role in management of the City's natural waterways through Ongoing
Zone 9 projects, and provide administrative oversight to the Stormwater
Management Program.
8. Preparation and completion of a Conservation Plan for Reservoir Canyon Natural 6/12
Reserve.
Develop a Plan for Maintenance of Laguna Lake and Park, Including Potential
Funding
1. Conduct and complete research on public and private grant and loan sources. Io/i i 1112
2. Identify interested parties and groups. Begin a series of public workshops to develop io/i i 1112
a community supported maintenance plan for Laguna Lake and for Laguna Lake
Park as it is affected by the maintenance plan. Develop an email group of
participants and provide electronic information updates to this group.
3. Complete public workshops for the maintenance plan. 242 4112
4. Draft the maintenance plan and begin circulation, 6/12
15- B1 -30
ATTACHMENT 4
Task Original
5. Presentations of Draft Plan to: Stakeholders, Parks and Recreation Commission, and 11/12
Planning Commission for review, comment, and recommendations to the City
Council.
6. Adoption of Maintenance Plan by Council. 12/12
Status Summary: 20% Complete. The following is a summary of accomplishments and important next steps
for this goal.
Acquisition, Preservation and Protection of Open Space
1. Staff is participating in several acquisition efforts described above which are advancing satisfactorily.
2. Two grant proposals for the Bob Jones Trail extension and for several riparian enhancement projects have
been submitted to State agencies. Staff continue to work with the Central Coast Agriculture Network
CLAN) to develop a management agreement for the site. In the meantime, another cover crop is
anticipated there. CCAN was successful in securing a grant in the amount of $250,000+ to organize its
activities at the Reserve and begin its own implementation activities under the Master Plan.
3. The Irish Hills Conservation Plan was approved in July 2011. Staff are undertaking certain
implementation activities now; these include continued jeep road decommissioning and preparing for a
major trail workday on November 12. Two grant requests have been submitted for continued trail work
and for riparian restoration along Froom Creek.
4. A mitigation basin was installed at Johnson Ranch and skills area is moving forward at Stenner Springs.
5. New signage is currently being installed primarily at Irish Hills.
6. Projects completed include: Andrews Street stormwater improvements; Park Street sewer line
replacement; silt removal at Hollyhock Lane and Los Osos Valley Road; and new plantings along the Bob
Jones Trail.
7. "Winterization" work was completed and needs for next year identified. A greater effort to obtain
necessary permits will be undertaken for 2012.
8. Reservoir Canyon Conservation Plan is getting underway.
Laguna Lake Maintenance Plan
1. Research is progressing on public and private grant and loan sources for financing of the project.
2 -6. These work program items are expected to be completed on schedule.
16- B1 -31
ATTACHMENT 4
INFRASTRUCTURE MAINTENANCE
Objective. Increase infrastructure maintenance and investment. Sustain an effective level of core existing
infrastructure and proactively protect and maintain physical assets (such as the downtown, streets, bikeways,
sidewalks, flood protection facilities, recreation facilities, City owned historic resources, and the urban forest).
Infrastructure Maintenance is a designated Measure Y priority.
Action Plan
Task
Buildings and Facilities
Original Revised
1. Exterior Painting of Parks and Recreation Building 6/12
2. Police Facility Air Volume Control Modifications 6/12
3. Fire Station #3 Engine Bay Slab Replacement 6/13
4. City Hall Steps 6/13
Creek and Flood Protection
1. Silt Removal 6/13
2. Broad Street Bank Reinforcement Design 6/13
3. Storm Drain Culvert Repair Design 6/13
4. Storm Drain Pipe Replacement — Year 1 & Year 2 6/12 & 6/13
5. Toro Street Bank Stabilization 6/13
Parking Services
1. Marsh Street Parking Structure Painting 6/13
2. Downtown Parking Lot Resurfacing Design 6/13
Parks & Public Places
1. Playground Equipment Replacement 6/13
2. Meadow Park Roof Replacement 642- Complete
3. Warden Bridge Deck/Mission Plaza Walkway Rehabilitation 6/13
Streets
1, Traffic Sign Maintenance Program— Year 1 & Year 2 6/12 & 6/13
2. Pavement Maintenance — Year 1 & Year 2 642 & 6/13 Year 1
Complete
3. Sidewalk Repair — Year 1 & Year 2 6/12 & 6/13
Wastewater
17- B1 -32
ATTACHMENT 4
Task Original Revised
1. Laguna Lift Station 63 12112
2. Calle Joaquin Lift Station Replacement 643 12112
3. Wastewater Collection System Improvements — Year 1 & Year 2 6/12 & 6/13
4. Water Reclamation Facility Major Maintenance —Year I& Year 2 6/12 & 6/13
Water
1. Water Distribution System Improvements — Year 1 & Year 2 6/12 & 6/13
Regular Maintenance
1, Operating program regular maintenance through: Ongoing
Building, Flood Control, Golf Course, Landscape & Parks Maintenance, Natural
Resources Protection, Parking Operations, Ranger Program, Reservoir Operations,
Streets & Sidewalk, Swim Center, Traffic Signals & Lighting, Tree, Vehicle &
Equipment, Wastewater Collection, Water Distribution, Water Reclamation
Facility, Water Treatment
Status Summary: 10% Complete. The following is a summary of accomplishments and important next steps
for this goal.
The Laguna and Calle Joaquin Lift Station Replacement projects are 5% complete. A Request for Proposals
RFP) for design services was approved by Council in August 2011, and a consultant is now under contract for
both lift station projects.
Several Water Distribution System Improvements projects are underway. The trench repair Job Order Contract is
90% complete. Staff will take this to Council for review in early 2012. Completion of the Water Reuse
Automation Improvements is anticipated in July 2012. A consultant is under contract for the Water Reuse
Distribution Analysis and the project is 10% complete.
All project work for the 2011 -12 and 2012 -13 Wastewater Collection System Improvements projects is underway.
Two projects are ready to start construction in November 2011, and two projects are currently in design and 50%
complete.
Playground equipment replacement work is ongoing with completion of Meadow Park Equipment replacement
anticipated for November 2011. The Meadow Park Restroom Roof replacement is complete. Design work is
ongoing on the Warden Bridge surface replacement.
Downtown parking lot resurfacing design work is 50% complete.
18 - B1 -33
ATTACHMENT 4
PLANNING: UPDATE LAND USE AND CIRCULATION ELEMENTS
Objective. Within the scope of the Strategic Growth Council (SGC) Grant, undertake an update of the Land Use
and Circulation Elements; including "Healthy Cities," complete streets, and pedestrian circulation policies.
Action Plan
OriginalTask
1. Develop request for proposals (RFP) for consultant services 744 9111
2. Program initiation — Planning Commission and Council meetings 12/11 2112
3. Task Force formation and public participation plan Q4 i 2112
4. Background report — current program evaluation, demographics, regulatory
framework, interviews, and outreach
442 6112
5. EIR — environmental setting /existing conditions report 442 6112
6. Policy updates — community workshops 842 11112
7. New issues, including neighborhood identification, healthy cities, greenhouse gas
reduction, pedestrian circulation, and complete streets policies and programs —
community workshops
W42 1113
8. Policy document — draft set of goals, policies and implementation measures 243 6113
9. Land use plan recommendations — community workshops 443 6113
10. Circulation plan recommendations — community workshops 6/4:3 8113
11. EIR — project description and impact analysis including a fiscal analysis for the
updated elements underway. Assemble all current downtown design guidelines and
standards.
63 12113
Status Summary: <1% Complete. The following is a summary of accomplishments and important next steps
for this goal.
Council reviewed the work program and authorized release of the Request for Proposals (RFP) on September 20,
2011. The RFP was posted and advertised on September 24. On September 27, the Strategic Growth Council
provided the official grant notice to proceed which indicated the City could begin work on grant- funded activities.
Staff conducted a pre -bid conference on October 5, 2011. Approximately 20 consulting firms attended the
question/answer session and responses to the RFP were due on October 28. Six consultant team proposals were
received and all fit within the project budget. Consultant interviews were held in November and staff is checking
references. Staff anticipates that a contract will be awarded in December.
The shift in dates above reflects the later start date due to the delay in the approval of the grant work program.
Work extending beyond 2011 -2013 is reflected in the chart below.
Action Plan 2013 -2015
Task
12. EIR — Public Review Draft Release
Original
1/14
Revised
13. Draft EIR and General Plan Update 1/14
19- B1 -34
ATTACHMENT 4
Task
14. Public Workshops and Hearings
Original
2/14
Revised
15. DEIR — Response to comments 8/14
16. Final EIR 9/14
17. Final General Plan 11/14
20- B1 -35
ATTACHMENT 4
AFFORDABLE HOUSING /HOMELESS SERVICES
Objective. Continue to facilitate provision of affordable as well as market -rate housing and provide leadership in
implementing the County's 10 -Year Plan to End Chronic Homelessness.
Action Plan
Task Original Revised
1. Seek grants to facilitate affordable housing projects. Ongoing
2. Work with developers to include affordable housing units in projects and to Ongoing
complete housing projects in process.
3. Continue to implement Housing Element programs. Ongoing
4. Look for new opportunities to use Affordable Housing Fund and grant monies to Ongoing
leverage other funds for affordable housing projects.
5. Work with service providers and the Homeless Services Oversight Council (HSOC) Ongoing
director to understand needs of homeless population.
6. Continue HSOC participation to further the implementation of the 10 -Year Plan. Ongoing
Status Summary: 25% Complete. The following is a summary of accomplishments and important next steps
for this goal.
Council approved a grant application to the California Department of Housing and Community Development
HCD) for $973,409 of Building Equity and Growth in Neighborhoods Program (BEGIN) funds for down
payment assistance to 28 qualified low and moderate income homebuyers in the Housing Authority of San Luis
Obispo's ( HASLO) Moylan Terrace project. Staff expect to submit the application in November and are working
with HASLO to craft a complete and competitive application. Staff researched the Housing - Related Parks (HRP)
grant program which is designed to encourage cities and counties to develop new residential housing by
rewarding those jurisdictions that approve housing for low income households. Funds from this grant program can
be used for the creation of or improvements to park and recreation facilities and recreation projects. Based on the
number of new low income housing starts last year, the City did not qualify for the minimum grant amount.
However, the City may meet the minimum grant amount next year due to the number of low income units in the
ROEM Village at Broad project, which received its foundation inspection in January 2011.
Staff met with numerous developers and reviewed development projects for compliance with the City's
Inclusionary Housing Program. Staff completed an affordable housing brochure that includes FAQ's and the steps
involved in purchasing or renting inclusionary dwelling units. The brochure is available on the City's Housing
webpage and at the Community Development Department front counter. Staff has met with Community Action
Partnership of San Luis Obispo (CAPSLO) and County staff on a monthly basis regarding funding opportunities
for the proposed Homeless Services Campus on 3451 South Higuera Street. Staff completed a draft version of the
South Broad Street Corridor Plan and routed the Plan for review and comment to the City's Development Review
Team and planning division staff. Staff met with a subcommittee of the Airport Land Use Commission to provide
an update on project status and receive comments on project consistency with the Airport Land Use Plan. Council
approved an Affordable Housing Fund award for the Housing Trust Fund in the amount of $30,000. This award
improves the City's ability to facilitate affordable housing and provides technical assistance to City staff and
developers of affordable housing in the City. The award leverages significant additional funding from other
sources.
21- B1 -36
The following provides brief status reports on
Address as Resources Permit" objectives for 2011-
13.
Climate Protection
Objective. Implement greenhouse gas reduction
and Climate Action Plan. Conduct energy audits of
all City facilities, increase energy conservation,
invest in infrastructure which will save energy and
funds in the future.
Status Summary: 10% Complete.
The Utilities Department is working on an energy
efficiency project at the Water Reclamation Facility
that partners with PG &E to reduce energy
consumption, operating costs and greenhouse
emissions. Staff will bring this project to Council in
January 2012.
In addition, the Community Development
Department has released the public review draft of
the Climate Action Plan and are conducting outreach
in the form of workshops, Farmers Market
attendance, stakeholder presentations and resident
outreach at grocery stores.
Parks and Recreation
Objective. Increase utilization of Damon - Garcia
Sports Fields,
Status Summary: 50% Complete.
To address this Council objective staff first
established a project team in spring 2011. The
project team consists of staff from Parks and
Recreation and Public Works departments, members
of the Parks and Recreation Commission, and
representatives from both Youth and Adult Turf
Sports. The project team has met monthly since
May of 2011.
The project team's first step was to create a project
plan with four main objectives: determine current
field usage (including maintenance); determine ways
to increase play; identify short term strategies; and
identify longer term strategies. Based on permit
records, the use of the Damon Garcia Sports Fields
during calendar year 2010 was analyzed. For the
calendar year 2010, staff found that 1,395 hours of
ATTACHMENT 4
play by youth was scheduled, 419.5 hours by adults,
5,483 hours were needed for maintenance (including
closures for restoration), and 31 days of play were
rained out. 47,388 people were estimated to have
been on the fields as spectators or participants.
Following the analysis of field usage, the project
team determined that a stand of Bermuda grass
should be planted on a portion of a field to determine
definitively if it could (a) grow successfully in our
cooler climate and (b) determine if it was more
durable and therefore would result in less restoration
time for the facilities longer term. The grass was
planted during this summer's renovation and a final
determination of its success and failure will occur in
spring 2012. Also following the analysis of field
usage, additional hours of play have been scheduled
for 2011 -12. Ultimate Frisbee (for adults) has been
added as has Lacrosse (for adults). Drop in play is
presently being tested with organized drop in play
occurring on Tuesdays from 12 p.m. to 2 p.m. An
average of approximately 30 players are
participating in this opportunity. Beginning in
November 2011, when youth Flag Football is
complete, a Thursday night practice for club soccer
teams will be added as another test for expanded
play. These additional hours of play were based on a
survey of over 125 users and non -users of the
facility who staff sought information from about
their use to better maximize facility usage.
To increase awareness of field uses and to better
serve the public, a Google calendar has been created
for the fields so that users can have ready access to
the scheduled play at the facility. Staff continues to:
monitor field conditions; survey (every other month)
users about field conditions; and expand use of other
facilities in the community for turf sports. As a
result of the additional uses described above for
2011 -12, permitted uses and additional drop in and
practice uses will result in an increase at a minimum
of 246 hours of permitted play (50 hours for youth
and 196 hours for adults). This totals a 13% increase
from the prior year's previously scheduled play.
Historic Preservation
Objective. Continue to promote historic resource
preservation opportunities and update Historic
Resource Inventory.
Status Summary: 10% Complete.
22- B1 -37
In August, the Community Development
Department staff liaison facilitated a training
workshop from the State Historic Preservation
Office for the Cultural Heritage Committee (CHC)
and interested members of the public. This was
followed by development of a work program to
conduct historic survey work of a 10 -block area
adjacent to the Old Town and Railroad Historic
Districts. The CHC sent letters to property owners
and received input at three meetings regarding the
process and how to proceed with the survey.
Detailed workbooks with State Historic Survey
forms, guidelines, architectural details and training
materials have been provided to the sub - committee
members who will be conducting the work.
23 - 1 I
The following summarizes the status of "carryover"
Other Important Council Objectives from the 2009-
11 and 2007 -09 Financial Plans. In several cases,
carryover tasks" have been incorporated into the
Major City Goals (or "Other Important Council
Objectives ") for 2011 -13, and as such, they are not
repeated in this section.
OTHER IMPORTANT COUNCIL
OBJECTIVES
Creek and Flood Protection
Objective. Advance Mid - Higuera flood protection
improvements by seeking Zone 9 funding to
complete design, obtain approvals and make
progress toward construction as resources will allow.
Status Summary: 15% Complete. As
recommended by the Zone 9 committee, the Board
of Supervisors approved additional funding for the
completion of technical studies necessary for the
environmental document. The County
Environmental Division completed the studies early
due to regulatory agency concurrence on species
issues. The preliminary design work for the Mid -
Higuera bypass flood control project, sponsored by
Zone 9, is underway. Staff are currently soliciting a
work plan from a consultant to prepare preliminary
design documents in order to complete the
environmental document. Staff will continue to
move this project forward as resources permit.
Skatepark
Objective. Develop plans and specifications and
seek funding to construct a skate park.
Status Summary: 75% Complete. The skate park
has received all of its discretionary approvals by
City advisory bodies. The project is now in the final
stages and 75% construction ready plans are
presently under review by City staff.
In September 2011, staff submitted grant
applications for Proposition 84 funding (2008
Statewide Park Development and Community
Revitalization Program) in the amount of $1.27
million and to the Stewardship Council
Infrastructure Fund for $200,000. Additionally, staff
continue efforts to raise funds for the project through
a variety of fundraisers including the ongoing "Buy
ATTACHMENT 4
a Brick Build a Dream" campaign for the park and
the Deck it Out Art Project.
Airport Area Annexation
Objective. Annex the Airport Area.
Status Summary: 100% Complete for Phase 1A.
The Local Agency Formation Commission
LAFCO) completed the annexation process for 626
acres associated with Phase IA of the annexation
area. The map and certificate of annexation was
delivered to the State Board of Equalization and the
land was officially added to the City boundary on
July 25, 2008.
Discussion with property owners in the Phase 1B
area was conducted in early 2009. The proposed
development of the Chevron property will result in
an amendment to the Airport Area Specific Plan
RASP). That project is in the Environmental
Impact Report (EIR) preparation stage and City and
County staff are collaborating in the review of the
project. The administrative draft of the EIR, along
with the scope of work for a financing plan, is
underway. Annexation of the Chevron property will
provide another key piece of the Airport Area
annexation. Discussions with LAFCO staff have
indicated that LAFCO would prefer the City pursue
annexation of the entire remaining area including the
San Luis Obispo County Regional Airport, but
would support phased annexations as needed. This
issue is significant because several areas of the
AASP are not contiguous to existing City boundaries
and the only way to bring those properties into the
City will be to address the airport property itself.
Including the airport may significantly alter the
timing anticipated for Phase 1B.
Broad Street Corridor Plan
Objective. Adopt and implement a plan for South
Broad Street corridor planning and improvements.
Status Summary: 80% Complete. The plan has
been significantly revised after further evaluation
revealed that overall densities associated with
reducing development to address traffic impacts,
would result in less development than currently
allowed. Utilities staff worked with Wallace Group
to evaluate waste collection system capacity to
ensure orderly development could occur. Staff
revised the draft plan to achieve the project goal of
mixed use and infill development. An Airport Land
24- B1 -39
Use Commission sub - committee has been assigned
to work with the project planner to assist with
Airport density compliance determination. The infill
densities envisioned appear to trigger significant
traffic impacts at various intersections. Evaluation of
project impacts will occur with the Environmental
Impact Report (EIR) prepared for the General Plan
update. Staff anticipates distributing the revised draft
in winter 2012 for conceptual review by the public
and the Planning Commission.
2s-
ATTACHMENT 4
B1 -40
ATTACHMENT 4
AS OF NOVEMBER 1, 2011
26- B1 -41
Percent Complete
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
C UNDER CONSTRUCTION
Stormdrain Replacements (2011 -12)
Street Reconstruction & Resurfacing (2011 -12)
Bob Jones Bridge Construction - Prado
Andrews Creek Bypass at Conejo
Downtown Sidewalk & Lighting Replacement
UNDER DESIGN
Warden Bridge Repair - Mission Plaza
Tank Farm Widening - Broad
Stormdrain Replacements (2012 -13)
Street Reconstruction & Resurfacing (2012 -13)
Santa Rosa Skate Park
Railroad Safety Trail Construction - Hathway to
Taft
Playground Equipment Replacement - Johnson,
Santa Rosa, Emerson Parks
Marsh Street Garage Painting
Laguna Lift Station Replacement
Gateway Monument - Santa Rosa & Highland
Downtown Directional Signs Installation
City Hall Step Replacement
Calle Joaquin Lift Station & Forcemain
Replacement
Bob Jones Bridge Construction - LOVR
UNDER STUDY
Website Upgrade
Water Reuse Automation Improvements
Water Reclamation Facility Energy Efficiency
Projects
26- B1 -41
council
McetineDa %
1®3111jAc;cnc)A 12Epop-t ,tem Num ier ^
C I T Y OF S A N L U I S Ofo I S P O
FROM: Katie Lichtig, City Manager
Prepared By: Michael Codron, Assistant C fy Manager
SUBJECT: 2011 CITIZEN SATISFACTION SURVEY RESULTS
RECOMMENDATION
1. Receive a presentation from Richard Maullin of Fairbank, Maslin, Maullin, Metz and
Associates (FM3) on the results of the 2011 City of San Luis Obispo Citizen Satisfaction
Survey.
2. Consistent with the Council's Major City Goal for the preservation of essential services and
fiscal health, direct staff to continue to evaluate placing the reauthorization of the City's half
cent sales tax (Measure Y) on the general election ballot in November 2012, and return to the
City Council during Spring 2012 with an update.
DISCUSSION
Overview
FM3 has recently conducted a new citizen satisfaction survey. The results are consistent with
previous survey responses. San Luis Obispo continues to rate extremely high as a place to live. A
majority of residents believe the City is doing a good or excellent job providing services. And,
when asked specifically about Measure Y, the City's half -cent sales tax measure, 59% say that if
renewal were on the ballot today they would vote yes.
rate the
City asa
good or
excellent
place to
I ive.
rate the
job being
done by the
City in
providing
services as
good or
excellent.
would
definitely or
probably
vote "Yes" on
Measure Y if
the vote
were held
today.
B2 -1
Study Session: Citizens Satisfaction Suryey Pay_e 2
The surveys also highlight issues that are a concern to the community. For example, the biggest
issues identified by residents include:
Availability of affordable housing for middle -class families;
Availability of stable, good paying jobs in the local area;
Alcohol related crimes and problems; and
Homelessness and transients.
All of these issues were prioritized by the Council via the 2011 -13 financial planning process.
Specifically, these issues are addressed in the form of Council Goals - Major City Goals, Other
Important Objectives or Address as Resources Permit.
Past Surveys
Previous surveys were conducted in 2005, 2006 and 2010. The survey results have provided
important information regarding citizen satisfaction with key City services, the quality of life in
San Luis Obispo and support for Measure Y, the half -cent sales tax measure approved by voters
in 2006. For example, the 2006 survey specifically gauged citizen support for the concepts that
were later translated into the actual ballot measure. These surveys have also tested arguments for
and against the local sales tax to determine the strength of support. In general, the results of the
recent survey are consistent with past surveys. The top line results of the surveys conducted in
each of the four years are available for the Council to review in the Council Reading File.
Survey Methodology and Trends
The survey was conducted by phone on October 29, 30 and November 1, 2011. Four hundred
randomly selected registered City voters participated,'with 32% reached on their cell phone. The
margin of error is plus or minus 4.9% at the 95% confidence level. In other words, for each
question there is a 95% certainty that the true value lies within 4.9% of the reported result.
Certain survey questions have been asked in each of the four surveys, allowing the City to track
responses over time. The following tables highlight these responses.
How would you rate the job being done by city officials in providing services to
the City's residents?
2005 2006 2010 2011
Excellent 11% 15% 15% 17%
Good 57% 59% 57% 54%
Subtotal: 68% 74% 72% 71%
Only fair, or 27% 20% 22% 22%
Poor job 4% 4% 4% 4%
Don't know 2% 2% 2% 2%
B2 -2
Study Session: Citizen Satisfaction Survey Page 3
Thinking about the next five years, do you think the quality of life in San Luis
Obispo will get better, stay the same, or get worse?
2005 2006 2010 2011
Much better 7% N/A 8% 11%
Somewhat better 17% N/A 17% 15%
Stay the same 42% N/A 56% 57%
Subtotal: 66% NIA 81% 83%
Somewhat worse 25% N/A 10% 11%
Much worse 5% N/A 7% 3%
Don't know 5% N/A 2% 2%
Somme: FIV13
Based on these results, it appears that residents remain steadfast that the City does a good job
providing services and are optimistic about the direction of the quality of life in San Luis Obispo.
It is also worth noting that in another recent public opinion survey, this one conducted by the San
Luis Obispo Council of Governments ( SLOCOG), that 67% of City residents responded that they
are not concerned about the local sales tax rate being too high. 69% responded affirmatively that
they could afford an additional half -cent increase. These questions were asked in the context of a
potential transportation related tax measure, which SLOCOG staff is recommending against
moving forward on. The information still holds relevance, however, because Governor Brown
recently indicated that his administration would be seeking to place a new half -cent sales tax
measure on the ballot state -wide in November 2012.
Measure Y Overview and Financial Sustainability Planning
On November 7, 2006, the citizens of the City of San Luis Obispo passed Measure Y, the
Essential Services Measure. The measure passed with support from 64% of the voters. Measure
Y was a general purpose measure that provides the City with over $5 million annually to
maintain and restore essential services like street paving, traffic congestion relief, public safety,
flood protection, senior citizen services and facilities, neighborhood code enforcement, open
space preservation and other vital general purpose services. Measure Y was approved for a
period of eight years and will sunset at the end of 2014.
Financial sustainability planning for the long term requires the City to think ahead about the
prospects for renewal of Measure Y before its expiration. The prospects for renewing Measure Y
are good, but definitive support for Measure Y has fallen since May 2010. The following table
summarizes and reflects changing community sentiment towards the renewal of Measure Y.
B2 -3
Study Session: Citizen Satisfaction Survev Page 4
How would you vote if Measure Y renewal
were on the ballot today?
The total number of voters that would definitely or probably vote yes was 64% in 2010 and 59%
in 2011. In addition, arguments opposing Measure Y renewal appear to have a greater impact
now ,than they did in 2010. In 2010, after hearing arguments opposed to Measure Y, 62% of
respondents continued to strongly or somewhat favor reauthorization of the sales tax. In 2011,
arguments opposed to the renewal of Measure Y reduced support for reauthorization of the sales
tax from 59% to 54 %. While this may cause some pause, it is important to note that those who
would probably or definitely vote no has fallen as well (from 29% to 26 %).
The largest change as it relates to Measure Y renewal is in the area of people who need more
information to determine how they would vote on Measure Y. These responses increased by 8%
between 2010 and 2011. This is important information for the City Council to consider because it
highlights the need for an educational effort by the City to reach out to residents and share
relevant information about Measure Y and the accomplishments made possible by this funding
source.
Although the number of people who don't know how they'll vote, or who need more information
has increased, awareness of Measure Y has also increased 14 %, as illustrated in the following
table. Staff believes that Measure Y awareness has increased because highly visible projects
were underway or completed during the active summer months. Public outreach efforts that
highlight the City's use of Measure Y funding is also believed to be a contributing factor.
Recently, Measure Y was featured on CNN Local Edition. The Public Works Director was
interviewed and highlighted Measure Y funded projects. This news feature can be viewed on the
City's website. Additionally, the use of signage to highlight Measure Y- funded projects has been
in effect for over a year.
Have you heard about Measure Y, the City of San Luis
Obispo ballot measure that voters approved in 2006
to raise the local city sales tax one half cent per dollar
of expenditures?
2010 -2011 ,..
L....,
I,
Yes, heard a lot 17% 26%
Yes, heard a little 40% 45%
No, haven't heard 41% 27%
Don't know 2% 1%
Major City Goal - Preservation of Essential Services and Fiscal Health
2010 2011
Definitely yes 43% 34%
Probably yes 21% 25%
Probably no I 10% 10%
Definitely no 19% 16%
Don't Know/ 7% 15%
Need more info
The total number of voters that would definitely or probably vote yes was 64% in 2010 and 59%
in 2011. In addition, arguments opposing Measure Y renewal appear to have a greater impact
now ,than they did in 2010. In 2010, after hearing arguments opposed to Measure Y, 62% of
respondents continued to strongly or somewhat favor reauthorization of the sales tax. In 2011,
arguments opposed to the renewal of Measure Y reduced support for reauthorization of the sales
tax from 59% to 54 %. While this may cause some pause, it is important to note that those who
would probably or definitely vote no has fallen as well (from 29% to 26 %).
The largest change as it relates to Measure Y renewal is in the area of people who need more
information to determine how they would vote on Measure Y. These responses increased by 8%
between 2010 and 2011. This is important information for the City Council to consider because it
highlights the need for an educational effort by the City to reach out to residents and share
relevant information about Measure Y and the accomplishments made possible by this funding
source.
Although the number of people who don't know how they'll vote, or who need more information
has increased, awareness of Measure Y has also increased 14 %, as illustrated in the following
table. Staff believes that Measure Y awareness has increased because highly visible projects
were underway or completed during the active summer months. Public outreach efforts that
highlight the City's use of Measure Y funding is also believed to be a contributing factor.
Recently, Measure Y was featured on CNN Local Edition. The Public Works Director was
interviewed and highlighted Measure Y funded projects. This news feature can be viewed on the
City's website. Additionally, the use of signage to highlight Measure Y- funded projects has been
in effect for over a year.
Have you heard about Measure Y, the City of San Luis
Obispo ballot measure that voters approved in 2006
to raise the local city sales tax one half cent per dollar
of expenditures?
2010 -2011 ,..
L....,
I,
Yes, heard a lot 17% 26%
Yes, heard a little 40% 45%
No, haven't heard 41% 27%
Don't know 2% 1%
Major City Goal - Preservation of Essential Services and Fiscal Health
Study Session: Citizen Satisfaction Survey Page 5
As part of the 2011 -13 Financial Plan, the City Council adopted a Major City Goal with the
objective of sustaining the City's short and long -term fiscal health. There are a number of items
identified in the workscope to achieve this goal. One of the key items directs staff to work with
the Council and the community to renew Measure Y. Specifically, the work program directs staff
to determine the appropriate timing for the ballot measure to reauthorize the half -cent sales tax.
The work program also directs staff to identify community priorities and develop educational
materials.
At this time, staff is seeking direction from the City Council to carefully evaluate placing
reauthorization of Measure Y on the November 2012 general election ballot. If Measure Y is to
be reauthorized, it must be placed on the ballot before it expires in 2014. 2012 may represent a
good opportunity to propose reauthorization of Measure Y to the voters because it is a
presidential election year, where turnout is normally increased. The last day to call an election
for ballot measures and qualify for the general election ballot is August 10, 2012. However, it is
generally preferable to make the decision in advance to allow as much time as possible for voter
awareness and education efforts to occur.
Additional Survey Results
Another issue of importance that was evaluated in the survey relates to the City's Utility User
Tax (UUT). Jurisdictions across the state and the country are writing modern UUT ordinances to
address current technology, and are placing them before voters for approval. These modern
ordinances are generally revenue neutral in that the rate is reduced to compensate for the fact that
a modernized ordinance would apply to new technologies, such as mobile data. The UUT is an
important revenue source for the City and a future ballot measure to update the City's ordinance
to address litigation and technology risks is recommended.
In order to take advantage of the survey timing and to get some preliminary data for the City
Council to consider, the citizen satisfaction survey asked if respondents favored reauthorization
of the City's UUT. The results were mixed, with 39% supporting the tax, 39% opposing it and
22% needing additional information. However, because the UUT was not the focus of the
survey, a range of questions that would probe support for a UUT measure was not asked. Staff
will continue to monitor the situation with respect to litigation, and the success of efforts by
other jurisdictions to re- authorize their UUT ordinances. Additional information will be provided
to the City Council when it becomes available.
FISCAL IMPACTS
There are no fiscal impacts associated with receiving the Citizen Satisfaction Survey. Direction
by the City Council to consider whether or not November 2012 is an appropriate time to place
reauthorization of Measure Y on the ballot is consistent with the City's existing work program
for a Major City Goal. No new resources are proposed to be added to this effort.
ALTERNATIVE
1. The City Council can direct staff to follow up on any other issues or questions raised by the
Citizen Satisfaction Survey that warrant additional analysis or review.
B2 -5
Study Session: Citizen Satisfaction Survey Page 6
2. The City Council could direct staff to focus attention and efforts on Measure Y renewal in
2014. This alternative is not recommended because the 2012 election is a presidential
election and voter participation is expected to be higher during this general election.
ATTACHMENT
City of San Luis Obispo Citizen Satisfaction Survey Summary
COUNCIL READING FILE
Citizen Satisfaction Survey Results (2005, 2006, 2010, 2011)
T: \Council Agenda Reports\Administration CAR\ CSSurvey \12 -13 -11 Survey- report.docx
i 1
FAIRBANK, MASLIN, MAULL.N, METZ & ASSOCIATES Os-wber 29- November 1, 2011
CITY OF SAN LUIS OBISPO MEASURE Y RENEWAL
220 -3264 ATTACHMENT
WFT N =400
Hello, I'm from FM3, a public opinion research company. I am definitely NOT trying to sell
you anything or ask for a donation. We are conducting an opinion survey about issues that interest people
living in San Luis Obispo, and we would like to include your opinions. May I speak to ?
YOU MUST SPEAK TO THE VOTER LISTED. VERIFY THAT THE VOTER LIVES AT THE
ADDRESS LISTED, OTHERWISE TERMINATE.
A. Before we begin, could you please tell me if I have reached you on a cell phone? (IF YES, ASK: Are
you in a place where it is safe to talk on the cell phone ?)
Yes, cell and in safe place-------------------------------- - - -32%
Yes, cell not in safe place ---------------- - - - - -- TERMINATE
No, not on cell --------------------------------------------- - - -68%
DON'T READ) DK/NA/REFUSED -------- TERMINATE
Generally speaking, how would you rate the City of San Luis Obispo as a place to live? Would you
say it is an excellent place to live, a good place, just fair, or a poor place to live?
Excellent ------------------------------- - - - - -- 74%
Good------------------------------------ - - - - -- 23%
Just fair---------------------------------- - - - - -- 2%
Poor-------------------------------------- - - - - -- 1%
DON'T KNOW/NA) ---------------- - - - - -- 0%
2. Thinking about the next five years, do you think the quality of life in the City of San Luis Obispo will
get better, stay the same, or get worse? (IF BETTER/WORSE, ASK: "Is that much
BETTER/WORSE or somewhat ?"
Much better------------------------------ - - - -11
Somewhat better------------------------- - - -15%
Stay the same ---------------------------- - - -57%
Somewhat worse ----------------------- - - - -11
Much worse ---------------------------- - - - - -- 3%
DON'T KNOW/NA) ---------------- - - - - -- 2%
B2 -7
FAIRBANK, MASLIN, MAULLtN, METZ & ASSOCIATES 22., -3264 WFT PAGE 2
ATTACHMENT
3. Next, I am going to mention issues some people say might be problems for residents of the City of San
Luis Obispo. After I mention each one, please tell me whether you consider it to be a very serious
problem, a somewhat serious problem, or not too serious a problem or not a problem at all for San Luis
Obispo residents. (ROTATE)
SPLIT SAMPLE A)
a. Crime in general --------------------------
b. Inefficient storm drainage that leads to
NOT NOT DON'T
VERY SMWT TOO A READ)
SERIOUS SERIOUS SERIOUS PROB DK/NA
6 %----- - - -13% ------- 51 %- - - - - -- 28% - - 1%
flooding----------------------------------------------- - - - - -- 6 %----- - - -12% ------- 42 %- - - - - -- 35% - - - -- 4%
Ic. City streets in need of repair ---------------------- --- -- 18% - - - - - -- 28% --- - - - -31% ------- 22% - - - -- 2%
Id. State budget cuts that reduce the
money available to cities for essential
services such as police and fire
protection-----------------------------------------
le. Alcohol - related crimes and problems------- -
If. The availability of senior services ------- - - - --
Jg. Maintaining a good quality of life in
local neighborhoods ----------------------------
h. Waste and inefficiency in City
government ----------------------- ---- ---- -- -- ---
i. The availability of recreation programs - - - --
1 The time it takes for police to respond
to service calls----------------------------- - - - - --
SPLIT SAMPLE B)
k. The time it takes for firefighters to
respond to service calls ------------ - - - - --
1. Access to quality health care ------ - - - - --
m. Too much growth and development --
n. The quality of public schools ----- - - - - --
o. The availability of stable, good paying
jobs in the local area---------------- - - - - --
p. Traffic congestion------------------- - - - - --
q. Homelessness and transients ------ - - - - --
r. The amount of taxes and fees people
have to pay for city services ------- - - - - --
Is. Loss of open space------------------ - - - - --
It. The availability of affordable housing
for middle -class families----------- - - - - --
23% - - - 32% ------- 23 %- - - - - -- 17% - - 5%
22% - - - 38% ------- 22 %- - - - - -- 15% - - 3%
11% ---- 14% --- 31% ------- 27% -- 17%
6 %---- 11 % ------- 39 %- - - - - -- 43% - - 1%
16% - - - 24% ------- 33 %- - - - - -- 21% - - 7%
4 %----- 12% ------- 32 %- - - - - -- 46% - - 6%
2 %----- 7% -------- 34 %- - - - - -- 42% -- 15%
5 %----- 6% -------- 32 %- - - - 45% -- 13%
17% - - - 29% 21% ------- 31% - - 2%
14% - - - 28% 26 %- - - - 32% - - 0%
12% ---- 15% 25 %- - - - 33% -- 15%
43% I 1 % -- - - 8% - - - 3%
29% 28 %- - - - 27% - - 0%
43% 20 %-- - - 9% - - - 1%
22% 33 %- - - - 26% - - 3%
20% 32 %- - - - 33% - - 3%
38% 9 %--- - - 6% - - - 6%
FAIRBANK, MASLIN, MAULLiN, METZ & ASSOCIATES 21., -3264 WFT PAGE 3
ATTACHMENT
LET ME CHANGE THE FOCUS OF MY QUESTIONS.
4. First, have you heard about Measure Y, the City of San Luis Obispo ballot measure that voters
approved in 2006 to raise the local city sales tax one half cent per dollar of expenditures? (IF YES,
ASK: "Have you heard a lot about it or just a little ? ")
Yes, heard a lot (ASK Q.5) ------------------------------ - - -26%
Yes, heard a little (ASK Q.5) ------------------------------- 45%
No, haven't heard about it (SKIP TO Q.6) ----------- - - -27%
DON'T READ) DK/NA (SHIP TO Q.6) ---------- - - - - -- 1%
ASK Q. 5 IF YES ON Q. 4)
5. Do you recall whether you voted on Measure Y? (IF YES, ASK: "Did you vote Yes, in favor of the
local sales tax or No to oppose it ? ")
Voted Yes in favor - 51%
Voted No to oppose --------------------------------------- - - -15%
DON'T READ) Voted, can't recall how /refused---- - - -14%
Did not vote /can't recall if voted------------------------ - - -20%
ASK ALL RESPONDENTS)
6. Next, Measure Y, the local half cent sales tax measure, is scheduled to expire in 2014. To continue
this local sales tax, voters would have to approve its renewal in another election. I know that vote
could be a year or more into the future, but if a renewal of this tax were on the ballot today, would you
vote Yes in favor of renewing the local half cent sales tax or No to oppose renewal? (IF YES/NO,
ASK: "Is that definitely or just probably ? ")
Definitely yes (ASK Q.7) ----------- - - - - -- 34%
Probably yes (ASK Q.7) --------------- 25%
Probably no (ASK Q.7) ---------------- 10%
Definitely no (ASK Q.7) --------------- 16%
DON'T READ) Need more info----- 10%
DON'T READ) DK/NA ------------ - 5%
B2 -9
FAIRBANK, MASLIN, MAULL,N, METZ & ASSOCIATES 22,,-3264 WFT PAGE 4
ASK Q. 7 IF YES/NO IN Q. 6) ATTACHMENT
7. In a few words of your own, what are the main reasons why you would vote (YES/NO ?)
YES
It's important /needed /benefit everyone /maintain quality of life ------------------------ - - -23%
Revenue is needed for city operations/ services--------------------------------- -- --------- - - -19%
Fair tax /everyone contributes ---------------------------------------------------------------- - - -16%
Need revenue to accumulate funds /growth of the city ------------------- W--------------- - - -14%
Road repairs /infrastructure /street lights ---------------------------------------------------- - - -13%
There are things that need to be done /can't be paid for otherwise -------------------- - - - - -- 3%
Support the community --------------------------------------------------------------------- - - - - -- 3%
Generate more money for the economy -------------------------------- ------------------ - - - - -- 2%
Funding is decreasing /local counties need the funds ----------------------------------------- 2%
Need our policeman/fireman /fully staffed ----------------------------------------------- - - -- -- 2%
Need schools open/education -------------------------------------------------------- ------ - - - - -- 2%
Jobs-------------------------------------------------------------------------------------------- - - - - -- 1%
Reduction in government funds would be detrimental to the city -------------------- - - - - -- 1%
Capitalizes on tourist ------------------------------------------------------------------------ - - - - -- 1%
People need to pay more taxes /especially the wealthy ---- ---------------------- ------- - - - - -- 1%
Raise the taxes so we would have better services --------------------------------------- - - - - -- 1%
Most of the local problems stem from lack of funds ----------------------------------------- 1%
Help some of the budget shortfalls -------------------------------------------------------- - - - - -- 1%
It offsets state funding /government needs more money-------------------------------- - - - - -- 1%
Want to see safety for pedestrians and bicycle riders maintained ----- --------------- - - - - -- 1%
Help fund the city's parks /recreation areas ----------------------------------------------- - - - - -- 0%
Won't make much of a difference --------------------------------------------------------- - - - - -- 0%
If there was a reasonable plan/don't just do what they want with the money ------- - - - - -- 0%
Don't know------------------------------------------------------------------------------------ - - - - -- 5%
IE
Too many taxes already----------------------------------------------------------------------- - - -33%
Mismanagement of funds /reduce spending ------------------------------------------------ - - -25%
On a fixed income /can't afford /more money out of our pockets--------------------- --- -- 8%
Don't need more money /city is doing pretty well /could do without it--------------- - - - - -- 6%
Taxesare too high --------------------------------------------------------------------------- - - - - -- 6%
Served its purpose /was to be temporary tax --------------------------------------------- - - - - -- 3%
Hurts lower income people----------------------------------------------------------------- - - - - -- 3%
People are losing their jobs / unemployment---------------------------------------------- - - - - -- 3%
City council will give themselves pay raises like they've done in the past---------- - - - - -- 2%
More revenue is not a solution to city problems ----------------------------- r_------ - - - - -- -- 2%
All that money that went to firefighters and arbitration was unfair ------------------ - - - - -- 2%
Economyis bad ------------------------------------------------------------------------------ - - - - -- 2%
Too many city services already ------------------------------------------------------------ - - - - -- 1%
Don't know-------------------------------------------------------------------------------------- - - -10%
Ois I
FAIRBANK, MASLIN, MAULLYN, METZ & ASSOCIATES 22v-3264 WFT PAGE 5
ATTACHMENT
Next, as you may know, residents of the City of San Luis Obispo are currently paying a Utility Users
Tax of five percent on phone, cable TV, electricity, natural gas and water bills. Decisions in the courts
may mean that voters will be asked at a future election to re- authorize City government to collect the
Utility User Tax. If re- authorization of the Utility Users Tax were on the ballot today, do you think
you would vote Yes, to re- authorize this tax or No, to oppose its re- authorization? (IF YES/NO,
ASK: "Is that definitely or just probably ? ")
Definitely yes - - - -- 21%
Probably yes------------------------------ - - -18%
Probably no------------------------------- - - -18%
Definitely no ----------------------------- - - -21%
DON'T READ) Need more info----- - - -10%
DON'T READ) DK/NA -------------- - - -12%
NOW LET ME RETURN YOUR ATTENTION TO MEASURE Y, THE LOCAL SALES TAX
ROTATE Q9 -10 WITH Q11 -12)
9. I am going to give you some statements that could be made by people who favor a ballot measure to
renew Measure Y, the local half cent sales tax, for an additional period. After hearing each statement,
please tell me if it would make you more inclined to vote Yes in favor of renewal of the local half cent
sales tax. If you do not believe the statement, or if it has no effect on your thinking one way or the
other, you can tell me that too. (IF MORE INCLINED, ASK: "Is that much more or just
somewhat ? ")
MUCH SMWT
MORE MORE (LESS DON'T NO (NO
INCL. INCL. INCL) BELIEVE EFFECT OPIN.
ROTATE)
a. The State has taken 30 million
dollars from the City of San Luis
Obispo over the past decade that
otherwise would have been spent
on essential City services. The
City sales tax is a locally
controlled revenue source that
makes up for some of this loss
and allows San Luis Obispo to
stretch its dollars to meet basic
local needs. Renewing this local
tax is essential to protecting the
vital local services we all rely on. ------ - - - - -- 24% - - - - - -- 31% - - - - - -- 9 %--- - - - - -- 7% -- - - - - -- 25 % - - - - -- 4%
B2 -11
1
FAIRBANK, MASLIN, MAULLtN, METZ & ASSOCIATES
b. San Luis Obispo is making
signficant cuts in the City budget
by reducing the number of
employee positions and
negotiating with employee unions
for employee concessions such as
salary reductions, as well as
increased employee contributions
for health insurance and pensions.
But even with these cutbacks, San
Luis Obispo needs to renew
Measure Y to support essential
police and fire protection and
keep the City's streets, sidewalks,
storm drains and other critical
infrastructure safe and in good
repair. -----------------------------------
c. Renewing the local sales tax is
the best way to avoid forced cuts
to police services, including
cutting back police officers who
patrol City streets and
neighborhoods and reducing drug
and alcohol enforcement that
helps keep drugs off the streets
and reduces alcohol - related
crimes and disturbances. -------- - - - - --
d. Renewing the local sales tax will
provide the funds needed to fill
dangerous potholes and keep city
streets from becoming more and
more uncomfortable and
dangerous to drive .--------------- - - - - --
e. Renewal of the local sales tax
gives San Luis Obispo more local
control and keeps local tax dollars
in San Luis Obispo to pay for
essential services, such as police
and fire protection, senior
programs, park maintenance, and
street repair .----------------------- - - - - --
MUCH
MORE
INCL.
23%
SMWT
MORE
INCL.
22v-3264 WFT PAGE 6
ATTACHMENT
LESS DON'T NO (NO
INCL. ) BELIEVE EFFECT OPIN.)
29% - - - - - -- 9 %-- - - - - -- 13%
20% - - - - - -- 25% --- - - - -13 % - - - - - -- 15%
22 % - - - - -- 4%
23% ------ 4%
26% - - - 31% - - - 6 %-- - - - 12% ------- 23 % - - - 2%
32% - - - 29% ---- 10% -- - - 7% -- - - 20 % - - - 2%
B2 -12
FAIRBANK, MASLIN, MAULLYN, METZ & ASSOCIATES
MUCH SMWT
MORE MORE
INCL. INCL.
22-3264 WFT PAGE 7
ATTACHMENT
LESS DON'T NO (NO
INCL.) BELIEVE EFFECT OPIN.
f If the local sales tax is not
renewed, the City will be forced
to cut back on keeping drunk
drivers off the streets and
preventing other alcohol- related
crime such as public drunkenness
by students and violent assaults. -------- - - - - -- 21% - - - - - -- 21% ---- - - -10% - - - - - -- 20% - - - - - -- 25 % - - - - -- 4%
g. Crime continues to be an issue in
San Luis Obispo and calls to the
police continue at a high volume.
Without renewal of the local sales
tax, rather than have an adequate
police force, we would have to cut
back the police force even more. ------- - - - - -- 18% - - - - -- 21% ------ 11% - - - - - -- 26 %---- - - - -21 % -- - - - - -- 4%
h. Fire prevention services in San Luis
Obispo have expanded and improved
since voters adopted the local sales
tax. If the local sales tax is not
renewed, we will have to cut back
fire prevention programs no matter
how valuable they are for local
businesses, apartment dwellers and
homeowners.------------------------------- - - - - -- 20% - - - - - -- 27% - - - - - -- 9 %-- - - - - -- 18% - - - - - -- 20 % - - - - -- 6%
i. Nearly sixty percent of the funds
provided by the local sales tax go
into capital improvements such as
storm drains, new streets and traffic
signals and open space acquisistion.
But the task is not finished.
Renewing the local sales tax will
allow the City to continue making
necessary infrastructure
improvements to enhance the safety
and quality of life in San Luis
Obispo. ------------------------- ------------ - - - - -- 31% - - - - - -- 30% - - - - - -- 6 %-- - - - - -- 10% ------- 19 % - - - - -- 4%
1 Even in these difficult economic times,
the local sales tax has allowed the City
to avoid even deeper cuts in essential
services while still making progress in
high priority areas such as street paving,
traffic congestion relief, flood
protection, public safety, senior services
and open space preservation. ------------ - - - - -- 28% - - - - - -- 31% - - - - - -- 8 %--- - - - - -- 6% -------- 23 % - - - - -- 4%
B2 -13
FAIRBANK, MASLIN, MAULLiN, METZ & ASSOCIATES 21., -3264 WFT PAGE 8
ATTACHMENT
10. Now, having heard statements favoring a ballot measure to renew Measure Y, the existing half cent
local sales tax, would you vote Yes to approve or No to oppose a ballot measure to renew Measure Y?
IF YES/NO, ASK: "Is that definitely or just probably ? ")
Definitely yes ---------------------------- - - -38%
Probably yes------------------------------ - - -22%
Probably no------------------------------ - - - -11 %
Definitely no ----------------------------- - - -17%
DON'T READ) Need more info--- - - - - -- 9%
DON'T READ) DK/NA ----------- ------ 4%
ROTATE Q9 -10 WITH Q11 -12)
11. Next, I am going to give you some statements that could be made by people who oppose a ballot
measure to renew Measure Y, the local half cent sales tax, for an additional period. After hearing each
statement, please tell me if it would make you more inclined to vote No to oppose renewal of the local
half cent sales tax. If you do not believe the statement, or if it has no effect on your thinking one way
or the other, you can tell me that too. (IF MORE INCLINED, ASK: "Is that much more or just
somewhat ? ")
B2 -14
MUCH SMWT
MORE MORE (LESS DON'T NO (NO
INCL. INCL. INCL) BELIEVE EFFECT OPIN.)
ROTATE)
a. City government is trying to scare
us into renewing this tax increase.
In reality, the City has enough
money and just needs to manage it
better and stop wasting the money
it already has. ------------------------------ - 14% ---- - - -16% ---- - - -10% - - - - - -- 23% - - - - - -- 32 % - - - - -- 7%
b. Binding arbitration on police
salaries has lead to big increases,
which cost taxpayers additional
millions each year. But now voters
have passed Measure B which puts
a stop to binding arbitration. So
we won't need to renew this local
sales tax, which just lets the same
spending practices continue with
no real accountability. -------------------- - 15% ---- - - -17% --- - - - -11 % - - - - - -- 22% - - - - - -- 28 % - - - - -- 7%
c. The local economy is struggling
with high unemployment and the
state has a deep budget deficit. We
should be repealing this local tax,
not talking about renewing it. ----------- - - - - -- 14% ---- - - -13% ------- 12 %- - - - - -- 22% ------- 29 % - - - -- 10%
B2 -14
FAIRBANK, MASLIN, MAULL.N, METZ & ASSOCIATES 22., -3264 WFT PAGE 9
ATTACHMENT
MUCH SMWT
MORE MORE (LESS DON'T NO (NO
INCL. INCL. INCL) BELIEVE EFFECT OPIN.)
d. The City admits that renewing the
local sales tax will not improve
City services. In fact, the City is
simply saying that they will
continue to give us less but charge
more for it. --------------------------------- - - - - -- 13% ---- - - -14% --- - - - -11 % - - - - - -- 27% - - - - - -- 27 % - - - - -- 7%
e. The City is just crying wolf. It says
it has already had to drastically
reduce essential services, such as
road repair, park maintenance, and
police and fire protection because of
budget cuts, but there has been no
noticeable change in services or our
quality of life.------------------------------ - - - - -- 11% ---- - - -17% - - - - - -- 9 %-- - - - - -- 25% ------- 29 %-- - - - -9%
f. City government would not have to
ask voters to renew the local sales
tax if it did not overpay its
employees and give them too many
benefits. Voting no on renewal
will draw the line and force the
City to make real cuts in spending
on personnel costs .------------------------ - - - - -- 15% - - - - - -- 17% ------- 11 %- - - - - -- 23% ------- 25 % - - - - -- 8%
g. Even if the City says this tax
doesn't cost taxpayers very much,
taxpayers are being nickeled and
dimed to death and just can't
afford to renew this City sales tax. ----- - - - - -- 12% ---- - - -16% ------- 12 %- - - - - -- 22% ------- 33 % - - - - -- 5%
h. City government hasn't used local
sales tax revenues in the ways it
promised. Renewing the local
sales tax just lets city bureaucrats
continue to ignore their promises. ------ - - - - -- 12% ---- - - -16% ------- 11 %- - - - - -- 23% ------- 28 % - - - -- 11%
i. City government says it's cutting
back on employee pay and
benefits, but until we really see that
this is done, we should hold back
on renewing this tax. --------------------- - - - - -- 16% ---- - - -16% ------- 10 %- - - - - -- 23% ------- 29 % - - - - -- 5%
j. City government will be asking us
to renew the Utility Users Tax and
now they want us to renew the
local sales tax. That's too much
taxation. We ought to say NO to
both of these taxes. ----------------------- - - - - -- 18% ---- - - -15% ------- 11 %- - - - - -- 21% ------- 29 %-- - - - -5%
B2 -15
FAIRBANK, MASLIN, MAULLtN, METZ & ASSOCIATES 22v-3264 WFT PAGE 10
ATTACHMENT
12. Now, having heard statements favoring a ballot measure to renew Measure Y, the existing half cent
local sales tax, would you vote Yes to approve or No to oppose a ballot measure to renew Measure Y?
IF YES/NO, ASK: "Is that definitely or just probably ? ")
Definitely yes ---------------------------- - - -31%
Probably yes------------------------------ - - -23%
Probably no------------------------------- - - -14%
Definitely no ----------------------------- - - -18%
DON'T READ) Need more info----- - - -10%
DON'T READ) DK/NA ------------ - - - - -- 5%
13. Next, when voters approved Measure Y in 2006, it was for a term of eight years ending in 2014.
Whether you favor or oppose renewing Measure Y, let me ask you to assume for a moment that a
majority of voters want to renew the local sales tax measure. In your opinion, should the local sales
tax be made permanent, or should it be approved for a fixed period of time?
Made permanent------------------------- - - -13%
For fixed period of time (ASK Q.14) - -- 78%
DON'T READ) Don't renew ------ - - - - -- 1%
DON'T READ) Need more info--- - - - - -- 3%
DON'T READ) DK/NA ------------ - - - - -- 4%
IF "FIXED PERIOD OF TIME" IN Q, Q13, ASK Q. 14; ALL OTHERS SKIP TO Q 15)
14. For how many years should Measure Y be renewed beyond 2014? (OPEN -END VOLUNTEERED
RESPONSE; (DO NOT READ. ASK FOR SPECIFIC NUMBER IF LESS THAN 15 YEARS)
One year ------- - - - - - --
Two years ------------
Three years -----------
Four years ------ - -__ —
Five years---------- - --
Six years --------------
Seven years---------- -
Eight years---------- --
Nine years ------ - - - - --
Ten years ------- - - - - --
Eleven years--------- -
Twelve years --- - - - - --
Thirteen years -- - - - - --
Fourteen years -------
Fifteen or more years
Don't know/NA - - -__
5%
9%
6%
18%
22%
13%
3%
11 %
1%
4%
0%
0%
0%
0%
0%
8%
B2 -16
i
FAIRBANK, MASLIN, MAULLiLN, METZ & ASSOCIATES
TO EVERY
22,.-3264 WFT PAGE 11
ATTACHMENT
NEXT, LET ME ASK YOU A FEW QUESTIONS ABOUT SAN LUIS OBISPO CITY
GOVERNMENT
15. First, how would you rate the overall job being done by San Luis Obispo city government in providing
services to City residents? Would you say the City is doing an...? (READ RESPONSES AND
RECORD)
Excellent---------------------------------- - - -17%
Good------------------------------------ - - - - -- 54%
Only fair, or ------------------------------ - - -23%
Poor job--------------------------------- - - - - -- 4%
DON'T READ) Don't know ------- - - - - -- 2%
16. Next, let me ask you specifically, how would you rate the job being done by City officials in (READ
ITEM)? Would you say City officials are doing an excellent, good, just fair or poor job?
DON'T
JUST READ)
EXCELLENT GOOD FAIR POOR DK
ROTATE)
a. Managing City funds -------------------------------------- 12 %-- - - - 32% ----- 30 %-- - - -13% ---- 12%
b. Planning for the future in an era of
reduced city revenues ------------------------------------- 12 %-- - - - 31% ----- 28 %-- - - -13% ---- 16%
c. Negotiating fair and affordable pay
and benefits for local public
employees--------------------------------------------------- 10 %-- - - - 29% - - - - -31 %-- - - -16% ---- 15%
HERE ARE MY LAST QUESTIONS AND THEY ARE FOR STATISTICAL PURPOSES ONLY
17. Do you own or rent your home or apartment?
Own---- ------------------------------------ 64%
Rent------------------------------------------- 33%
DON'T READ) DK/NA------------ - - - - -- 3%
18. Are there children under the age of 18 living at home with you?
Yes-------------------------------------- - - - - -- 20%
No--------------------------------------- - - - - -- 79%
REFUSED/NA) ---------------------- - - - - -- 1%
19. Are you a full -time student at Cuesta College or Cal Poly?
Yes----------------------------------------- - - -14%
No--------------------------------------- - - - - -- 85%
REFUSED/NA) ---------------------- - - - - -- 1%
1
B2 -17
FAIRBANK, MASLIN, MAULLiN, METZ & ASSOCIATES 22t, -3264 WFT PAGE 12
20.
21
22.
23.
In what year were you born?
ATTACHMENT
1993 -1987 (18 -24) ---------------------- - - -16%
1986 -1982 (25 -29) ------------- --------- - - - - -- 9%
1981 -1977 (30 -34) -------------------- - - - - -- 8%
1976 -1972 (35 -39) -------------------- - - - - -- 3%
1971 -1967 (40 -44) -------------------- - - - - -- 5%
1966 -1962 (45 -49) --------------- ----- - - - - -- 7%
1961 -1957 (50 -54) -------------------- - - - - -- 9%
1956 -1952 (55 -59) ---------------------- - - -10%
1951 -1947 (60 -64) -------------------- - - - - -- 7%
1946 -1937 (65 -74) ---------------------- - - -12%
1936 or earlier (75 & over) ------------ - - -11%
REFUSED/ DK/NA) ---------------- - - - - -- 3%
With which racial or ethnic group do you identify yourself? (READ RESPONSES)
Hispanic or Latino--------------------- - - - - -- 6%
African - American --------------------- - - - - -- 1%
Asian------------------------------------------ 2%
Caucasian/white ---------------------- - - - - -- 89%
Some other group---------------------- - - - - -- 0%
DON'T READ) DK/Refused ------ - - - - -- 2%
How would you describe your political outlook? Would you say that you are very conservative,
somewhat conservative, a moderate, somewhat liberal, or very liberal?
Very conservative --------------- - - - - --
Somewhat conservative -------- - - - - --
Moderate --------------------------------
Somewhat liberal ---------------- - - - - --
Very liberal-----------------------------
DON'T READ) Refused /DK/NA -
What was the last level of school you completed?
Grades 1 -8 -----------------------------
Grades 9 -11 --------------------- - - - - --
High school graduate (12)----- - - - - --
Community college, some college/
Business /Vocational school-------- -
College graduate (4) --------------- --
Post- graduate work/
Professional school------------- - - - - --
DON'T READ) Refused ---- - - - - --
10%
18%
28%
29%
11 %
4%
0%
0%
9%
26%
41%
23%
1%
v
FAIRBANK, MASLIN, MAULLiN, METZ & ASSOCIATES 22u-3264 WFT PAGE 13
ATTACHMENT
24. I don't need to know the exact amount but I'm going to read you some categories for household
income. Would you please stop me when I have read the category indicating the total combined
income for all the people in your household before taxes in 2010?
30,000 and under----------------------- - - -16%
30,001 - $50,000 -------------- --------- -- -15%
50,001 - $75,000 ------- — ti --------------- 14%
75,001 - $ 100, 000---------------------- - - -18%
More than $100, 000--------------------- - - -19%
DON'T READ) DK/NA -------------- - - -17%
THANK AND TERMINATE
Gender: By observation Male--------------------------------------- - - -49%
Female--------------------------------- - - - - -- 51%
Party: From file Democrat --------------------------------- - - -43%
Republican ------------------------------- - - -30%
Decline -to -state ----------------------- - - - - -- 22%
Other party ----- ------------------------ - - - - -- 5%
Name
Address
City
Zip
Interviewer
Page #
Voter ID #
FIPS
Oa
FAIRBANK, MASLIN, MAULL.04, METZ & ASSOCIATES
FLAGS
G02---------------------------- 48%
R03------------------ -- -------- 55%
PO4---------------------------- 51%
G04---------------------------- 68%
S05---------------------------- 57%
P06----------------------------- 47%
G06---------------------------- 67%
F08---------------------------- 65%
J08----------------------------- 47%
G08---------------------------- 89%
M09------------------------- 44%
P10---------------------------- 53%
G10---------------------------- 87%
Blank---------------------------- 2%
VOTE BY MAIL
1 ------------- -------------------- -- - -- 15%
2 --------------------- -------------- - - - -5%
3+------------------------------------ 36%
Blank-------------------------- - - - - -- 45%
PERMANENT ABSENTEE
Yes---------------------------- - - - - -- 49%
No----------------------------- - - - - -- 51%
ZIP CODES
93401 -- - - - - --
93405 -- - - - - --
ROTATES
Q9, 10, 11, 12- - - - - --
Q1 1, 12, 9, 10- - - - - --
58%
42%
50%
50%
22v-3264 WFT PAGE 14
ATTACHMENT
pajacc
council
M..tingDO.
12/13/11
AcEnaA RePolRt
lem Number
C IT Y OF S AN L U IS 0 B I S P 0
FROM: Shelly Stanwyck, Parks and Recreation Director
SUBJECT: LEASE OF 1123 MILL STREET BY SAN LUIS OBISPO COUNTY ARTS
COUNCIL
RECOMMENDATION
Give staff direction to finalize the negotiations of a lease agreement for 1123 Mill Street by San
Luis Obispo County Arts Council in the amount of $1,294 for one year and authorize the City
Manager to execute the finalized agreement subject to approval by the City Attorney and receipt by
the tenant of a use permit.
DISCUSSION
Background
As part of the City's 2011 -13 Financial Plan, the Parks and Recreation Department proposed
leasing a portion of the Ludwick Community Center (LCC), 660 square feet of office space
referred to as 1123 Mill Street (Attachments 1), for lease as a revenue enhancement of
approximately $11,000 per year.
On November 28, 2011 the City received and distributed to Council the attached letter
Attachment 2) from San Luis Obispo County Arts Council. San Luis Obispo County Arts Council
is a Countywide Arts Council that supports the visual, literary, and performing arts community
of San Luis Obispo County. The organization in the past has provided input and support to the
City's Public Art Coordinator on public art projects. At this time, San Luis Obispo County Arts
Council is asking to lease the portion of 1123 Mill Street presently offered for lease by the City
for $1,294 per year. This amount reflects the prorata share of maintenance costs for the 660
square -foot office at the LCC.
Direction by Mayor to Place Item on Agenda
In accordance with Council Policies and Procedures the Mayor can direct staff to place items on
future Agendas. On December 2, the Mayor directed staff to place an item on the December 13,
2011 agenda regarding a lease with San Luis Obispo County Arts Council for 1123 Mill Street for
Council's consideration.
City Policy Regarding Leasing to Non Profits
The City's Property Management Manual, Section 475 -C (Property Management and Disposal)
provides guidance regarding the leasing of City -owned buildings and real properties. It states
specifically at page 475 -10:
B3 -1
Approval of Lease of 1123 Mill Street Pa e 2
LEASES OF CITY -OWNED BUILDINGS AND REAL PROPERTY
The following guidelines apply to leases of City -owned buildings to outside
parties.
Leases with Non - Profit Organizations
1. Requests for the long -term use of City property by non-profit organizations
should generally follow the same review procedures as the sale or lease of City
property by private for-profit entities.
2. The proposed use should be consistent with the goals and objectives of the
City's General Plan and not conflict or preclude any existing or planned City
use.
3. Any development or operations directly related to the proposed use should
have a clear and measurable community benefit in alignment with City goals,
policies, and plans.
4. Any lease agreements for the use of City property by non-profit organizations
that charge a less than market rate for the City property should include a
provision for community access and /or City use, or operate in close partnership
in the delivery of City services.
5. Lessees will be responsible for all property related use taxes that may be
assessed.
Because the City "disposes" of property infrequently the most appropriate process will vary in
each case depending on the circumstances. The guidelines in the Real Property Management
manual state that they are "intended to provide the City with a framework for assessing the best
approach on a case -by -case basis. It is not intended to limit the approaches available to the
City: the overarching principle that should always apply is using an approach that will best
accomplish the City's objectives given the circumstances at the time." There are five basic
approaches that the City usually takes; request for proposals, broker services, exclusive
negotiations, competitive sealed bids or auction (or a combination of these approaches), which
are determined by the Council on a case -by -case basis depending on the circumstances.
Ultimately the most appropriate course of action is a policy decision of the City Council.
Proposed Lease Terms
Should Council wish to enter into a lease with SLO Art Council, a draft Facility Lease for a term
of one year with a one year option to extend is attached (Attachment 4). The amount of rent
proposed is $1,294. That amount is reflective of the annual maintenance and utility costs
excluding janitorial services, which will not be provided) for this space under consideration at
the LCC. Those costs are $29,812 per year or approximately $1.96 per square foot. The prorata
share for 1123 Mill Street (660 square feet) would be $1,294 per year. San Luis Obispo County
Arts Council would be responsible for all janitorial services in the leased premises. Parking was
not included in the rent amount sought as the parking behind the LCC is often used by large
groups renting the LCC and street parking is readily available for free in the area. An equivalent
parking spot in a long term metered space or lesser used parking structure would cost
approximately $480 to $720 a year. Upon receipt by San Luis Obispo Arts Council of a use permit
B3 -2
Atmroval of Lease of 1123 Mill Street Page 3
and approval by the City Attorney of the proposed agreement, the City Manager (if authorized by
Council tonight) would execute the final facility lease agreement.
General Plan Consistency Determination & Administrative Use Permit
The property is designated Office /Medium Density Residential in the General Plan and is Zoned
Public Facility (PF). The property has a split land use designation, with the frontage facing
Santa Rosa Street designated Office. Community Development staff has made a preliminary
determination that the proposed use is consistent with the intent of General Plan policies.
Attachment 5 includes relevant General Plan policies for the General Plan designation of Office.
Public Facility (PF) Zone
The property at 1123 Mill Street is zoned PF. Community Development staff have reviewed San
Luis Obispo County Arts Council's correspondence and have preliminarily concluded that it
qualifies as a government office, and is therefore a conditionally allowed use in the PF zone. In
making the determination, staff reviewed the State designation of San Luis Obispo County Arts
Council as the Local Arts Planning Agency and its partnership with the County per Board of
Supervisor's resolution. Typically, non - profit general offices are not allowed in the PF zone
unless they qualify as a "Government Office" and perform quasi - governmental services.
Government offices are the only type of offices allowed in the PF zone, subject to prior approval
of an Administrative Use Permit. If the City Council authorizes negotiation and execution of a
lease for 1123 Mill Street, it would be subject to the condition that the San Luis Obispo County
Arts Council obtains the requisite use permit. If a use permit application is approved through the
City's normal review processes, the lease with the Arts Council can be executed allowing the
Arts Council to occupy the space.
San Luis Obispo County Arts Council as a Government Office
The designation of San Luis Obispo County Arts Council as a "government office" is unique, but
based on legislative acts and designations by state and county bodies. The San Luis Obispo
County Arts Council has been designated by the County Board of Supervisors and the State of
California as the Local Arts Planning Agency under the State -Local Partnership Program
designed to encourage local cultural planning (see Attachment 3). It is this unique and officially
designated collaboration with the County and State Legislature that qualifies the Arts Council as
a government office. The purpose statement of the PF zone reads, that the "PF zone is intended
to provide for public uses and that public uses are those conducted by governmental or nonprofit
agencies
3." Non - profits that receive State or local funding only would not qualify under this
determination unless they carry out quasi - governmental functions. Staff does not believe this
I A local arts agency is a nonprofit organization, or agency of city or county government, officially designated to provide
financial support, services, and /or other programs to a variety of arts organizations.,
2 The State -Local Partnership Program fosters cultural development on the local level through a partnership between the
California Arts Council and the designated local arts agency* of each county. This partnership includes funding,
cooperative activities, information exchange, and leadership enabling individuals, organizations, and communities to
create, present, and preserve the arts of all cultures to enrich the quality of life for all Californians.
3 17.36.010 Purpose and application.
B3 -3
Approval of lease of 1123 Mill Street Page 4
determination sets a precedent because of the circumstances unique to the San Luis Obispo
County Arts Council.
FISCAL IMPACT
The approximately 660 square feet of office at 1123 Mill Street was proposed as a revenue
enhancement and "budget balancer" in the 2011 -13 Financial Plan by the Parks and Recreation
Department. Revenues were projected at $11,000 per year from 1123 Mill Street in each year of
the 2011 -13 Financial Plan. The fiscal impact of this lease at below market rent is $9,706 in lost
revenues annually. As a point of information the property was marketed for lease at a Market
Rate of $1.75 per square foot or $13,860 annually, which represented rent as well as the added
maintenance and utilities costs projected from this use (since the facility is not separately
metered).
ALTERNATIVES
1. Full Market Rent to the San Luis Obispo County Arts Council. Council could
modify the proposed lease and approve a lease agreement with San Luis Obispo County
Arts Council at full market rent or approximately $13,860 per year consistent with the
market rate the property was listed for rent.
2. $1.00 per Year. Council could modify the proposed lease and approve a lease agreement
with San Luis Obispo County Arts Council in the amount of $1.00 per year.
3. Request For Proposals to All Local Non - Profits. Over the years many nonprofits have
expressed interest in leasing various City properties for reduced rents. No nonprofits
were contacted when staff "listed" 1123 Mill Street for lease because the property was
proposed to be leased for added revenues, it is zone Public Facility and therefore a public
agency or quasi - public agency must be the tenant. However, Council could direct staff to
issue a RFP to qualified Non - Profits and offer them an opportunity to propose an
appropriate rental amount for the facility as well as modification to the zoning.
4. Continue to Seek a Tenant at Market Rate. If San Luis Obispo County Arts Council
does not want to pay Market Rent, and Council desires that the property be leased at the
current market rate, Council could direct staff to not lease to San Luis Obispo County Arts
Council and continue to seek an appropriate Tenant for market rent.
ATTACHMENTS
1. "For Lease Flyer"
2. Letter of Interest from San Luis Obispo County Arts Council
3. Board of Supervisors Resolution 2011 -127
4. Proposed Lease Agreement
5. General Plan Policies
T: \Council Agenda Reports \Parks & Recreation CAR\2011 P &R CARS\ Arts Obispo Lease of 1123 Mill CAR
ATTACHMENT 1
Premier downtown location. Close to government buildings, restaurants and shopping.
Suite size 660 Sq. Ft. with two offices, conference room, kitchenette, restrooms and fiber optic service.
Call for more details.
Corner of Mill and Santa Rosa Street adjacent to the Ludwick Community Center.
Total Space Available: 1 Space Available Display Rental Rate
660 SF Rental Rate: $1.75 /SF /Year Min. $1.75/SF /Year
13860.00 Amt /Year
Type: Public Facility, Sub -type: Office Building $1155.00 Amt /Month
Parcel info 002 - 325 -001 Space Available: 660 SF Rental Rate: ($1.75) /SF /Month
Zoning PF Space Type: Office Building Lease Type: /SF /Month
1155.00 /Year$ 13860.00
Last Verified 8/30/2011 Parking Spaces subject to negotiation
Contact: James Bremer
805) 781 -7295
jbremerC?slo city. org
B3 -5
ARTS
OBISPO
Son Luis Obispo County
Arts Council
V.(7. Box 1710
Sim Luis Obispo, CA
93406
Phonc: (605) 544 -9251
Fax: (605) 544 -1522
officenartsobispo. org
wwwartsobispo.org
Board of Directors
Mary Kay I larriagton
President
Julie Frankel
Vice - President
Jane Voigrs
Secretary
Jano Kray
Treasurer
Gordon Fuglie
Crissa Hewitt
Richard Mortensen
Kathleen Waddell
jimt Wallace
ll nrnrny
Ann Ream
Staff
Chadom Aitxamlcr
r,%rwlirr Pire,Yor
lcnna I Ianxcll
i'ruxnun PiAlvd.
3ar}nnt Radovich
w, & lz,&,vliaa (.impnA'rwmr
November 23, 2011
To the members of the San Luis Obispo City Council:
The San Luis Obispo County Arts Council, also known as ARTS Obispo,
is seeking approval to lease office space owned by the City of San Luis
Obispo at 1123 Mill Street in downtown San Luis Obispo.
At this time we understand from City staff that the zoning of the property
allows for our organization's occupancy and use of the site. Assuming we
receive approval to lease the space, we are asking for consideration of a
reduction in the advertised rental rate, perhaps similar to that received by
other City cultural partners, including the San Luis Obispo Museum of Art.
It was determined less than a month ago that we must leave our current
office /gallery space in the Creamery in downtown San Luis Obispo no later
than December 31, 2011. We have been actively seeking alternative space
since then, so expedited consideration of this request would be greatly
appreciated. We put the word out to our extensive network of creative
people that we are in need of approximately 000 sq. ft. of office space
donated if possibie), and the availability of 1123 Mill Street was brought to
our attention. Please note that we are NOT seeking gallery space at this
time — only general office space to house administrative and program staff.
This property seems ideal in terms of size, facilities, and location in the
downtown area of the County seat.
The San Luis Obispo County Arts Council has long partnered with the City
of San Luis Obispo to advance the arts, including the very popular Art After
Dark and Open Studios Art Tour, as well as the collaborative Art in Public
Places program. We contribute to the richness of the City's cultural
activities as well, helping to bring tourist dollars into the community.
We are a 501(c)3 not-for- profit public benefit organization dedicated to
advancing the visual, literary and performing arts in San Luis Obispo
County, specifically in the areas of arts in education, public access to the
arts and opportunities for artists. The County of San Luis Obispo has
designated us as the County's Local Arts Planning Agency for the purpose
of acting as a comprehensive community arts organization. We act in
partnership with the California Arts Council to foster cultural development
on the local level through funding, cooperative activities, information
exchange, and leadership — enabling individuals, organizations, and
communities to create, present, and preserve the arts of all cultures to
enrich the quality of life for residents and visitors.
As we begin celebrating 30 years of service to San Luis Obispo County in
2012, the Board of Directors of the Arts Council is re- visiting our vision and
mission statements. With an emphasis on collaboration and partnership,
the Board is looking to create a sustainable operating model in 2012 and
develop a long -term strategic plan to better serve the needs of the visual,
literary and performing arts community. Please consider partnering with us
to make that happen in 2012 and beyond.
Sincerely,
7r
Mary K Har `ngton, President
Board of Directors
cc: Katie Lichtig, City Manager
Advancing the Arts in San Luis Obispo County
ATTACHMENT 2
IN THE BOARD OF SUPERVISORS
COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA
Tuesday May 3. 2011
PRESENT: Supervisors Frank Mechem, Bruce S. Gibson, Paul A. Teixeira, James
R. Patterson and Chairperson Adam Hill
ABSENT: None
RESOLUTION NO. 2011 -1
RESOLUTION OF THE BOARD OF SUPERVISORS
OF THE COUNTY OF SAN LUIS OBISPO
APPROVING PARTICIPATION IN THE 2011 -12
STATE -LOCAL PARTNERSHIP PROGRAM
DESIGNATING THE LOCAL ARTS PLANNING AGENCY
AND APPROVING AND AUTHORIZING EXECUTION OF A
GRANT CONTRACT WITH THE CALIFORNIA ARTS COUNCIL
The following resolution is now offered and read:
WHEREAS, the California Arts Council and the California Legislature have
established a State -Local Partnership Program (the "Program ") designed to encourage
local cultural planning and decision- making and to reach previously underserved
constituencies; and
WHEREAS, the State - Local Partnership Program requires a mandatory match, at a
level of 1:1, which may be from either public or private sources; and
WHEREAS, pursuant to the 1980 -81 Program Guidelines, the Board of Supervisors
of the County of San Luis Obispo (the "Board of Supervisors ") designated the San Luis
Obispo County Arts Council as the Local Arts Planning Agency under the Program for the
purpose of acting as a comprehensive community arts organization; and
WHEREAS, said plan was finalized by Board Resolution No. 84 -113 and approved
by the State of California; and
WHEREAS, the Board of Supervisors and the San Luis Obispo County Arts Council
together defined as the "Local Partner ") are now eligible to apply for and receive a grant
for continued planning and input from interested citizens in local arts program activities,
NOW, THEREFORE, BE IT RESOLVED AND ORDERED, by the Board of
Supervisors of the County of San Luis Obispo, State of California as follows;
Section 1; The Board of Supervisors hereby approves participation by the Local
Partner designated for 2011 -12 as itself and the San Luis Obispo County Arts Council, in
the 2010 -2011 State -Local Partnership Program.
Section : The Board of Supervisors hereby authorizes and directs the Arts Council
Administrator, San Luis Obispo County Arts Council, to execute the Grant Contract on
behalf of the Local Partnership and submit said contract to the State -Local Partnership
Program Grant Review and Advisory Panel.
Section 3: During the County's annual budget hearings, the Board of Supervisors
may consider funding for the San Luis Obispo Arts Council in an amount up to $41,000 or
on an equal match basis.
hghcHMN I
i
Upon motion of Supervisor Mecham , seconded by
Supervisor Gibson and on the following roll call vote, to wit:
AYES: Supervisors Mecham, Gibson, Teixeira, Patterson and Chairperson Hill
NOES: None
ABSENT: None
ABSTAINING: None
the foregoing resolution is hereby adopted.
Avm
Chairman of the Board of Supervisors
ATTEST:
Julie L, Rodgwald
Clerk of the Board of Supervisors
By; 41d=PC
Deputy Ver
APPROVED AS TO FORM AND LEGAL EFFECT:
WARREN R. JENSEN
County Counsel
By: /s/ r a L Neal
Assistant County Counsel
Date: 4/20/2011
STATE OF CALIFORNIA ) ss,
COUNTY OF SAN LUIS OBISPO )
I, JULIE L, RODEWALD, County Clerk of the above entitled
County, and Ex- Officlo Clerk of the Board of Supervisors
thereof, do hereby certify the foregoing to be a full, true
and correct copy of an order entered In the minutes of said
Board of Supervisors, and now remaining of record in my
office,
Witness, my hand and seal of said Board of Supervisors this
4th day of May, 2011.
JULIE L. RODEWALD, County Clerk and Ex- Officio Clerk of the
Board of Supervisors
By:
Deputy Jerk
h7k%NTI'.
ATTACHMENT 4
DRAFT
BETWEEN THE CITY OF SAN LUIS OBISPO AND
SAN LUIS OBISPO COUNTY ARTS COUNCIL SAN LUIS OBISPO COUNTY ARTS COUNCIL
FOR LEASE OF PROPERTY AT
1123 MILL STREET
This agreement entered into this day of
by and between the City of San Luis Obispo ( "the City ") and The San
Council, a non - profit California corporation,
RECITALS
2011 is made
Luis Obispo County Arts
WHEREAS, the City owns the premises commonly described as the Mill Street Office
Space at the Ludwick Community Center, located at 1123 Mill Street in the City of San Luis
Obispo, California (1123 Mill Street Office Space "); and
WHEREAS, the City wishes to provide to San Luis Obispo County Arts Council the
occupancy and use of the 1123 Mill Street Office; and
WHEREAS, 1123 Mill Street is designated Office /Medium Density Residential in the
General Plan and is Zoned Public Facility (PF); and :
WHEREAS, City Property Management Manual 475 -C provides guidance for the leasing
of City -owned buildings and real properties and permits the Council to evaluate proposed uses
consistent with City policy objectives on a case by case basis; and
WHEREAS, City Property Management Manual guidelines provide that the proposed use
should be consistent with the goals and objectives of the City's General Plan and not conflict or
preclude any existing or planned City Use; and
WHEREAS, at its December 13, 2011 meeting the City Council considered the request
of the San Luis Obispo Arts Council to lease space in the City facility, and determined that the
San Luis Obispo Arts Council's request should be approved, subject to approval of an
Administrative Use Permit, because of the unique status and circumstances of the San Luis
Obispo Arts Council and because the City Council finds that the proposed use has a clear and
measurable community benefit in alignment with City goals; and
WHEREAS, the City Council authorized the City Manager to negotiate and execute a
lease agreement with the San Luis Obispo Arts Council, subject the Arts Council applying for
and obtaining and Administrative Use Permit, and subject to final lease approval by the City
Attorney; and
WHEREAS, the San Luis Obispo Arts Council has submitted an application for and
received approval of an Administrative Use Permit for its proposes use of the City facility; and
I: '
ATTACHMENT
Arts Obispo New Lease Agreement Page-2
WHEREAS, the Community Development Director has determined that the proposed
use is consistent with the City's General Plan; and
WHEREAS, the Community Development Director has determined that the proposed use
is consistent with Section 17.36.010 of the City of San Luis Obispo Municipal Code.
Now, therefore, the parties agree as follows:
LEASE PROVISIONS
1. Term of Agreement. The term of this agreement shall start upon execution by both
parties and expire on December 31, 2012. By mutual written consent of both parties, the
term of this agreement may be extended a period of one year.
2. Rent. For use of the approximately 660 square feet of office which is located exclusively
on the ground floor of the Mill Street side of the building and which address is 1123 Mill
Street Office ( "the Premises "), Arts Obispo shall pay the City a rent fixed at $1,294 per
year (the prorate share for maintenance and utilities based on a cost of $1.96 per square
foot) for the lease term.
3. Extent and Condition of the Premises. San Luis Obispo County Arts Council shall
accept the Premises "as is ". This agreement shall not obligate the City to guarantee the
condition of the Premises, the suitability of the Premises for San Luis Obispo County Arts
Council's intended use, the duration that the Premises may be safely occupied, or the
availability of alternate facilities. Should any occurrence (such as fire, earthquake, flood,
or the need to repair, improve, or use the Premises) necessitate closing the Premises or
a portion of the Premises to the public, Arts Obispo shall have no recourse against the
City for any loss incurred.
4. Cost of Operations. San Luis Obispo County Arts Council shall bear the entire cost of
its operations on the Premises, including:
A. paying the cost of any maintenance for which San Luis Obispo County Arts
Council is responsible;
B. paying any taxes and fees related to its occupancy of the Premises, including all
possessory interest taxes which may be imposed.
Maintenance of the Premises. San Luis Obispo County Arts Council agrees to perform
all "housekeeping tasks" as well as any routine repairs to the premises. Housekeeping
tasks shall generally include routine emptying of wastebaskets, cleaning of windows and
doors, removal and or reporting of graffiti, sweeping of sidewalks in front of the premises,
vacuuming and spot cleaning of carpets, and cleaning of any window blinds.
B3 -10
jAqHMENN
Arts Obispo New Lease Agrees nent
6. Alterations to Building. San Luis Obispo County Arts Council agrees that shall have no
right to make alterations to the building during the term of its lease.
7. Fire Inspection. A fire inspection will be completed by the City's Fire Department at
least annually, and more frequently if necessary. San Luis Obispo County Arts Council
shall be responsible for complying with any corrective notice resulting from such
inspections in its portion of the premises.
8. Relationship of Parties. Under this agreement, the City shall be solely and exclusively
a lessor, and San Luis Obispo County Arts Council shall be solely and exclusively a
lessee. San Luis Obispo County Arts Council shall not be considered a partner, agent,
officer, or employee of the City. San Luis Obispo County Arts Council's officers,
members, affiliates, volunteers, employees, and independent contractors shall not be
considered agents, officers or employees of the City.
9. Use of Facilities by Outside Parties. In recognition of the below market lease rate,
San Luis Obispo County Arts Council agrees:
A. To use due diligence in encouraging other groups and organizations to utilize the
facilities whenever not in use by San Luis Obispo County Arts Council. First
consideration for use by others will be given to local non - profit groups. Use of the
facility by other groups will be coordinated with the San Luis Obispo County Arts
Council schedule.
B. To prepare an annual report for the City that summarizes the facility's use
statistics for the calendar year and provides an assessment of whether San Luis
Obispo County Arts Council is allowing public use of the facility consistent with the
terms of this agreement.
10. Operations Manager. San Luis Obispo County Arts Council will designate a full or part-
time operations manager who will be responsible for meeting the terms of this agreement
and assuring the fullest community use of the facility.
11. Assignment. San Luis Obispo County Arts Council shall not assign this agreement to
another party without the City's prior written consent.
12. Subrogation Waiver. The City and San Luis Obispo County Arts Council release and
relieve each other and waive their entire rights of recovery against each other for damage from
perils covered by their property insurance, whether due to the negligence of the City, San Luis
Obispo County Arts Council, their agents, their officers, their employees, or their guests.
13. Hold Harmless and Indemnification. San Luis Obispo County Arts Council agrees to
defend, indemnify, protect and hold the City and 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, including injury to the Contractor's employees, agents
or officers which arise from
B3 -11
ATTACHMENT 4
Arts Obispo New Lease Agreement Page 4
or are connected with or are caused or claimed to be caused by the acts or omissions of
the Contractor, and its agents, officers or employees, in performing the work or services
herein, and all expenses of investigating and defending against same; provided, however,
that the Contractor's duty to indemnify and hold harmless shall not include any claims or
liability arising from the established sole negligence or willful misconduct of the City, its
agents, officers or employees. Without limitation, from and after the date of execution of
this Agreement, the San Luis Obispo Arts Council shall also indemnify and defend City,
using counsel approved by City in its absolute discretion, from any and all third party
challenges to this Agreement or any related entitlement or approval contemplated
hereunder.
14. Insurance. San Luis Obispo County Arts Council shall procure and maintain for the
duration of the contract insurance against claims for injuries to persons or damages to
property that may arise from or in connection with the performance of the work
hereunder by San Luis Obispo County Arts Council, its agents, representatives,
employees, or sub - contractors as defined in Exhibit 1.
15. Termination. If the City determines that San Luis Obispo County Arts Council is not
faithfully abiding by any term or condition of this agreement, the City may send written
notification giving San Luis Obispo County Arts Council a 15- calendar day notice to cure
the deficiency. If San Luis Obispo County Arts Council has not cured the deficiency
within the 30 days specified in the notice, that failure shall constitute a breach of the
agreement, and the City may give written notice to terminate the agreement effective 30
calendar days from receipt of the notice.
If the City determines that it needs to use the property at 1123 Mill Street for municipal
government purposes (such as civic center expansion), the City may give written notice
to San Luis Obispo County Arts Council to terminate the agreement effective 30 calendar
days from receipt of the notice.
16. Cooperation upon Termination or Expiration. In the event of termination or
expiration, San Luis Obispo County Arts Council shall fully cooperate by relocating its
operations before the termination or expiration date and by not seeking relocation
assistance from the City. By midnight on the termination or expiration date San Luis
Obispo County Arts Council shall remove from the Premises all property in its possession
or custody and shall leave the Premises in a condition as good as when received,
excepting normal wear and tear. Any property remaining on the Premises after the
termination or expiration date shall be deemed abandoned.
17. Notices. All official notices required under this agreement shall be given in writing and
submitted by certified mail, postage prepaid and addressed as follows:
To the City: City Administrator
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
B3 -12
Arts Obispo New Lease Agree nent
To San Luis Obispo County Arts Council: President
San Luis Obispo County Arts Council
P.O. Box 1710
San Luis Obispo, CA 93406
PageA HMENT4
9
18. Enforcement Costs and Attorney's Fees. The prevailing party in any action between
the parties to this agreement brought to enforce the terms of this agreement may recover
from the other party its reasonable costs and attorney's fees in connection with such an
action.
19. Entirety and Integrity of Agreement. This document represents the entire and
integrated agreement between the City and San Luis Obispo County Arts Council. This
document supercedes and negates all prior negotiations, representations, agreements,
and amendments, either written or oral, regarding the Premises and the operation of a
community performing arts theater on the Premises. This document may be amended
only by written instrument executed by both the City and San Luis Obispo County Arts
Council. All provisions of this agreement are expressly made conditions. This
agreement shall be governed by the laws of the State of California.
This agreement is executed by the following authorized representatives:
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
CITY OF SAN LUIS OBISPO,
A Municipal Corporation
Katie Lichtig, City Manager
SAN LUIS OBISPO COUNTY ARTS COUNCIL
B3 -13
Atachment 5
The following General Plan policies provide specific guidance on use of properties related to
quasi - governmental and art facilities for properties designated in the General Plan as Office.
3.4 Offices
3.4.1 Purpose and Included Uses
The City should have sufficient land for Office development to meet the demands of City residents
and the specialized needs of County residents. Office development i n c l u d e s professional
and financial services ( such as doctors, architects, and insurance companies and banks)
and government agencies. The City should retain the regional offices of state and federal agencies. Not
all types of offices are appropriate in all locations. (See office location policies below. Also see the
Public Facilities section).
3.4.2 Office Locations
A. All types of offices are appropriate in the downtown General Retail district, but are discouraged
at street level in storefronts of the commercial core.
B. All types of office activities are appropriate in the Office district which surrounds the
downtown commercial area, though offices needing very large buildings or generating substantial
traffic may not be appropriate in the area which provides a transition to residential neighborhoods.
C. Medical services should be near the hospitals, and may also be located in other
commercial areas of the City.
D. Government social services and the regional offices of state and federal agencies
should be near the intersections of South Higuera Street, Prado Road, and Highway 101
Figure 5);
E. Offices having no substantial public visitation or need for access to downtown government
services may be in Services and Manufacturing districts.
F. Certain business and professional services having no substantial public visitation or
limited need for access to downtown government services may be in Services and Manufacturing
districts. Examples of such uses are computer services, utilities engineering and administration,
architects and engineers, industrial design, advertising, building contractors, labor and
fraternal organizations, veterinarians, and insurance and financial services that do not directly
serve retail customers.
G. Certain business and professional services with limited need for access to downtown
gmerr ael services may be located in areas that are away from the downtown, and designated
Community Commercial. Appropriate types of offices i n c I u d e those that provide direct
over- the - counter" services to customers and clients. Professional offices may also be
appropriate, particularly above the ground floor.
5.1.9 Different Offices
Government and private activities of types not listed in policies 5.1.4, 5.1.5, and 5.1.6 may be established
in these identified areas, so long as they are compatible with and do not displace the government
functions which should be located in the area
5.2.1 Cooperation
The City should cooperate with other agencies and with community groups to help provide facilities for a
library, and for arts and sciences which meet broad community cultural needs.
5.5 Community Arts Support
The City will continue to support community arts programs through a variety of means, such as loans,
grants, and help in obtaining sites.
B3 -14
council Meeting Date
12 -13.11
j Ac En bA REpORt Item Number
C I T Y OF S A N L U T S n R f S P n
FROM: Charles Bourbeau, Director of Finance & Information Technology
SUBJECT: REFINANCING 2002 WATER REVENUE REFUNDING BONDS
RECOMMENDATION
Adopt a resolution authorizing the issuance of 2012 Water Revenue Refunding Bonds to
refinance the 2002 Water Revenue Refunding Bonds.
DISCUSSION
Background
The 2002 Water Revenue Refunding Bonds were issued in the aggregate amount of $9,485,000
to refinance the City's 1993 Water Revenue Bonds which were used to finance improvements to
the City's Water System including upgrades to the City's Water Treatment Plant.
Based on the existing Indenture of Trust, the City has the right to redeem the 2002 Bonds in full
on any business day at a redemption price equal to 100% of the principal amount outstanding,
without premium. This makes it possible to pay off existing bondholders and reissue
replacement bonds at a lower interest rate.
Purpose of Refinancing the 2002 Water Revenue Refunding Bonds
Interest rates are currently at the point where significant savings can occur by proceeding with
the refinancing. However, the changing market environment makes the refinancing time
sensitive as rates could increase. Based on current market conditions the refinancing will result
in approximately $50,000 in annual debt service savings to the Water Fund with a total "present
value" savings of about $325,000 over the remaining term of the bonds. The resulting savings
can be used by the Water Fund for other purposes.
Debt Management Policy
The proposed refunding for these bonds is consistent with the City's adopted capital financing
and debt management policies. Most notably, the proposed refinancing meets the following key
criteria:
1. The projects useful lives are equal to or greater than the term of the financing or refinancing.
It is important to note that the refinancing will not extend the original time period of the 2002
bond issue. The final maturity date remains at 2023.
2. The proposed refinancing will continue to support an investment grade rating and will be
conducted on a competitive basis.
3. Current market conditions present favorable interest rates for the refinancing.
Refinancing 2002 Water Revenue Refunding Bonds Page 2
4. The estimated net present value savings of the refinancing meets the City's policy "trigger,"
which states that refinancings should be undertaken whenever net present value savings of
5% can be achieved. The current net present value savings of this refinancing is 5.03 %,
however, the actual net present value will fluctuate slightly based on the market conditions
on the date the bonds are sold.
5. The refinancing will reduce the resources needed to meet annual debt service requirements.
Proposed Refinancing Structure
The City of San Luis Obispo will issue the 2012 Water Revenue Refunding Bonds. To secure
the bonds, the City will covenant to establish and collect rates, fees and charges of the Water
System sufficient to pay for all operation and maintenance costs of the Water System and to pay
debt service on the 2012 Water Revenue Refunding Bonds. As such, the bonds represent a
special obligation of the City payable solely from net revenues of the Water Enterprise Fund and
do not constitute a debt of the City's General Fund.
The amount of outstanding bonds to be refinanced is $6,300,000. The costs associated with
issuing the bonds (such as bond counsel, financial advisor, trustee and rating agencies), estimated
at approximately $150,000, will be funded from the refinancing. Due to the expected premium
pricing of bonds, the par amount of the new bond issue will actually decrease and is estimated at
approximately $6.1 million.
Professional Assistance
In accordance with service agreements previously approved by the Council, bond and disclosure
counsel services will be provided by the law firm of Jones Hall and financial advisor services
will be provided by Fieldman Rolapp. For trustee services, the City contracts with U.S. Bank.
Description of Financing Documents
The attached resolution approves a variety of documents that are required in order to proceed
with the refinancing. The following is a brief description of these documents prepared by the
City's bond counsel (Jones Hall), which are on file in the Council office:
1. Indenture of Trust. This document contains all of the terms and provisions relating to the
refinancing bonds, including prepayment provisions, maturity schedules, rights and remedies
of the bond owners and the trustee in the event of a default.
2. Official Statement. The Official Statement (OS) describes the financing for prospective
purchasers of the refunding bonds and constitutes the primary marketing document for the
financing.
3. Escrow Deposit and Trust Agreement. This agreement establishes an Escrow Fund to be
held by U.S. Bank, which will hold the bond proceeds and other funds that are to be used for
the refunding. Under the agreement, U.S. Bank agrees to send the required redemption
notice for the 2002 Bonds and to apply the funds held by it thereunder to pay the redemption
price of the 2002 Bonds.
Refinancing 2002 Water Revenue Refunding Bonds Page 3
As reflected in the attached resolution approving these financing documents, the Director of
Finance & Information Technology will be authorized to make minor amendments to these
documents as recommended by bond counsel and the financial advisor, and to execute the final
documents.
Competitive Sale of Bonds
In accordance with the City's Financial Plan policies, the sale of these bonds will be a
competitive process, with the award made to the lowest true interest cost bidder. The attached
resolution authorizes the Director of Finance & Information Technology to make this award
based on the recommendation of the City's financial advisor.
Project Financing Schedule
The following outlines key dates in refinancing these bonds:
Council approval of refinancing December 13, 2011
Bid opening January 10, 2012
Bond closing and receipt of funds January 24, 2012
2002 Water Revenue Refunding Bonds called February 23, 2012
FISCAL IMPACT
As discussed above the average annual debt service savings to the Water Fund as a result of the
refinancing are estimated at approximately $50,000 per year from 2012 to 2023.
ALTERNATIVE
Do Not Proceed with the Refinancing. If the refinancing was not pursued, the savings
achievable by taking advantage of current low interest rates would not be obtained. The savings
that will result from the reduced debt service costs can be used by the Water Fund for other
purposes. As such, we recommend proceeding with the refinancing.
ATTACHMENT
Resolution approving refinancing the 2002 water revenue refunding bonds
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
1. Indenture of Trust
2. Preliminary Official Statement
3. Escrow Deposit and Trust Agreement
T: \Council Agenda Reports\Finance & IT CAR\Finance\20I 1 \Water Bonds Refinancing \Water Bonds Refinancing CAR.docx
Attachment
RESOLUTION NO. (2011 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING THE ISSUANCE AND SALE OF WATER REVENUE REFUNDING
BONDS IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $6,700,000 TO REFINANCE
OUTSTANDING 2002 WATER REVENUE REFUNDING BONDS, AND APPROVING
RELATED DOCUMENTS AND ACTIONS
WHEREAS, the City owns and operates a public enterprise for the supply, treatment and
distribution of water within the service area of the City (the "Water System "), and in order to
refinance bonds issued to finance improvements to the Water System, the City has previously
issued its City of San Luis Obispo 2002 Water Revenue Refunding Bonds in the aggregate
original principal amount of $9,485,000 (the "2002 Bonds "); and
WHEREAS, the City has the right to redeem the 2002 Bonds in full on any business day
at a redemption price equal to 100% of the principal amount thereof, without premium, and in
order to provide funds for that purpose and thereby realize debt service savings, the City Council
wishes at this time to authorize the issuance and sale of City of San Luis Obispo 2012 Water
Revenue Refunding Bonds in the aggregate principal amount of not to exceed $6,700,000 (the
Refunding Bonds ") under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of
Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of
said Code (the "Refunding Bond Law "); and
WHEREAS, the City Council of the City has duly considered such transactions and
wishes at this time to approve said transactions in the public interests of the City;
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Authorization of Refunding Bonds. The City Council hereby authorizes
the issuance of the Refunding Bonds in the maximum principal amount of $6,700,000, for the
purpose of providing funds to redeem and discharge the 2002 Bonds in full. The Refunding
Bonds shall be revenue bonds which are payable from and secured by a pledge of and lien on the
net revenues of the Water System. The Refunding Bonds shall be issued under and in
accordance with the provisions of the Refunding Bond Law.
SECTION 2. Approval of Indenture of Trust. The Refunding Bonds shall be issued
upon the terms and conditions set forth in the Indenture of Trust between the City and U.S. Bank
National Association, as trustee, which is hereby approved in substantially the form on file with
the City Clerk together with any changes therein or additions thereto deemed advisable by the
Director of Finance and Information Technology. The City Manager is hereby authorized and
directed to execute, and the City Clerk is hereby authorized and directed to attest to, the final
form of the Indenture of Trust on behalf of the City.
SECTION 3. Approval of Escrow Deposit and Trust Agreement. The 2002 Bonds shall
be refunded under and in accordance with the provisions of the Escrow Deposit and Trust
Amtechment
Resolution No. (2011 Series
Page 2
Agreement between the City and U.S. Bank National Association, as escrow bank, which is
hereby approved in substantially the form on file with the City Clerk together with any changes
therein or additions thereto deemed advisable by the Director of Finance and Information
Technology. The City Manager is hereby authorized and directed to execute, and the City Clerk
is hereby authorized and directed to attest to, the final form of the Escrow Deposit and Trust
Agreement on behalf of the City.
SECTION 4. Competitive Sale of Bonds. The City Council hereby authorizes and
directs the competitive sale of the Refunding Bonds in accordance with the Notice of Sale in
substantially the form on file with the City Clerk together with any changes therein or additions
thereto deemed advisable by the Director of Finance and Information Technology. The Director
of Finance and Information Technology is hereby authorized and directed to accept the best bid
for the sale of the Refunding Bonds, as determined in accordance with the Notice of Sale.
SECTION 5. Publication of Notice. Pursuant to Section 53692 of the Government Code,
Jones Hall, as bond counsel to the City, is hereby authorized and directed to cause a Notice of
Intention to Sell Bonds, in form and substance acceptable to said firm, to be published once in
The Bond Buyer not later than 15 days prior to the date set for receipt of bids on the Refunding
Bonds.
SECTION 6. Official Statement. The City Council hereby approves and deems nearly
final within the meaning of Rule 15c2 -12 of the Securities Exchange Act of 1934, the
preliminary Official Statement describing the Refunding Bonds in the form on file with the City
Clerk. The City Manager or the Director of Finance and Information Technology (each, an
Authorized Officer ") is individually authorized, at the request of the purchaser of the Refunding
Bonds, to execute an appropriate certificate affirming the City Council's determination that the
preliminary Official Statement has been deemed nearly final within the meaning of such Rule.
Distribution of the preliminary Official Statement by the purchaser of the Refunding Bonds is
hereby approved. An Authorized Officer is hereby authorized and directed to approve any
changes in or additions to a final form of said Official Statement, and the execution thereof by an
Authorized Officer shall be conclusive evidence of approval of any such changes and additions.
The City Council hereby authorizes the distribution of the final Official Statement by the
purchaser of the Refunding Bonds. The final Official Statement shall be executed in the name
and on behalf of the City by an Authorized Officer,
SECTION 7. Engagement of Professional Services. The City Council hereby confirms
the designation of Jones Hall, A Professional Law Corporation, as bond counsel and disclosure
counsel, and the firm of Fieldman, Rolapp & Associates, as financial advisor, in connection with
the issuance and sale of the Refunding Bonds, in accordance with the existing agreements
between the City and each of such firms. The term of each of such agreements shall remain in
effect until terminated by the City in its sole discretion, but not prior to the issuance of the
Refunding Bonds.
SECTION 8. Official Actions. The City Manager, the Director of Finance and
Information Technology, the City Clerk and all other officers of the City are each authorized and
directed in the name and on behalf of the City to make any and all assignments, certificates,
i'
Resolution No. (2011 Series)
Page 3
AUachment
requisitions, agreements, notices, consents, instruments of conveyance, warrants and other
documents, which they or any of them deem necessary or appropriate in order to consummate
any of the transactions contemplated by the agreements and documents approved under this
Resolution. Whenever in this Resolution any officer of the City is authorized to execute or
countersign any document or take any action, such execution, countersigning or action may be
taken on behalf of such officer by any person designated by such officer to act on his or her
behalf in the case such officer shall be absent or unavailable.
SECTION 9. Effective Date. This Resolution shall take effect from and after the date of
approval and adoption thereof.
Upon motion of , seconded by , and on
the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was passed and adopted this 13th day of December, 2011.
Jan Howell Marx, Mayor
ATTEST:
Elaina Cano
City Clerk
APPROVED AS TO FORM:
JD
J. Christine Dietrick
City Attorney
i 1
council
j acen0a uEpont
C I T Y OF S A N L U I S O B I S P O
FROM: Katie Lichtig, City Manager
Christine Dietrick, City Attorney
Michael Codron, Assistant City Manager
Prepared by: Claire Clark, Economic Development Manager
Meeting Date 1213 -2011
Item Number
SUBJECT: APPROVAL OF AGREEMENTS FOR THE PURCHASE AND SALE OF
PROPERTY BETWEEN THE CITY OF SAN LUIS OBISPO AND SLO
CHINATOWN, LLC REGARDING THE CHINATOWN PROJECT.
RECOMMENDATIONS
1. Approve the Purchase and Sale of Real Property with SLO Chinatown, LLC (hereinafter
Copeland ") related to the Chinatown project, contingent upon a finding of General Plan
conformity by the Planning Commission; and
2. Authorize the Mayor to execute agreements, as well as associated leases and other
documents (hereinafter "Agreements ") required to formalize the transactions on the terms
and conditions approved, in substantially the form presented to Council, subject to final
approval by the City Attorney of any modifications directed by Council; and
3. Authorize the City Manager to execute escrow documents on behalf of the City; and
4. Direct staff to return to Council to consider and take action on the Planning
Commission's determination in the event that the Planning Commission does not find the
transactions conform to the General Plan, and
5. Approve an automatic extension of the Third Modification to the Option Agreement
hereinafter "Option ") to suspend expiration of the Option until such time as Council has
had the opportunity to consider and take action on the Planning Commission's
determination only in the event that the Planning Commission does not find the
transactions conform to the General Plan.
REPORT -IN -BRIEF
The purchase, sale and lease transactions that are the subject of this report move the City, and
Copeland closer to realizing the Chinatown Project. Originally envisioned over a decade ago,
the project approvals call for hotel, retail, office and housing on the site that consists of
properties that front on Monterey Street as well as properties fronting Palm Street at the corner of
Morro Street. In order to proceed with the project, the exchange of properties between the City
and Copeland, as envisioned in the previously approved environmental and development
approvals is required. Some of the properties are owned by the City and others owned by
Copeland as shown on the Vicinity Map (Attachment 1).
B5 -1
Chinatown Project Purchase Agreements Page 2
Under consideration is phasing of the project and payment terms for the City property that is part
of the Chinatown Project. The price for the land was established in 2008. Phasing of both
construction and payments are proposed in accordance with the following terms:
Phase the development by separating the Monterey frontage from the Palm hotel
development site to facilitate development of the Monterey frontage while retaining City
ownership of the Palm frontage.
Sell the Monterey parcels to Copeland following subdivision of the City property for
60% of the $1.1 million purchase price. In addition, receive payment of the mitigation fee
for removal of public parking in accordance with the EIR for parking actually removed
due to the construction of buildings on the Monterey parcels and construction of parking
on the Yung parcel.
Purchase the Yung parcel from Copeland for the nominal price of $1 and incorporate it
into the parking lot. Demolish the Yung building at Copeland's expense.
Reconfigure the parking lots at Copeland's expense so that exits as well as entrances are
on Palm Street.
Maintain parking in the upper portion of the parking lots until the hotel is built. Continue
to collect all City parking revenues from the reconfigured parking until hotel construction
begins.
Resolve the potential suit between Copeland and the City related to the construction of
the 919 Palm Street structure.
Sell the Palm development site to Copeland for the remaining 40% of the purchase price
providing prerequisites have been met, in no longer than eight years, with conditions that
require the hotel to be completed within approximately ten years. Receive the balance of
the mitigation fee for removal of public parking in accordance with the EIR.
Sell the Yung parcel back to Copeland for $1 at the time the Palm hotel development site
is transferred to Copeland.
California Government Code Section 65402 requires that a public agency cannot acquire or
dispose of public property unless the transaction is determined by the planning agency (in this
case, the Planning Commission) to be consistent with the General Plan. The proposed
transactions will be considered by the Planning Commission on December 14, 2011. The staff
report for the Planning Commission item will be forwarded to Council and available to the
public prior to Council's consideration of this item. The sale of the City property has been
contemplated and incorporated into the project description since the inception of the Chinatown
proposal, however, the purchase of the Yung parcel has not been reviewed previously. In the
event that the Planning Commission does not find the proposed transactions consistent with the
General Plan, the issue will return to the City Council for further consideration.
DISCUSSION
Background
Initial Vision for Monterey and Palm Street Revitalization. In 1999, Copeland presented a
conceptual proposal to the City and the community entitled, Chinatown -Court Street: A Vision
for the Future of Downtown San Luis Obispo California Inspired by its Past (Council Reading
File). This initial vision contemplated the development of public and privately owned surface
B5 -2
Chinatown Project Purchase Agreements Page 3
parking lots. The vision included construction of the Court Street project on the surface parking
lot at Court Street, development of the 919 Palm Street parking structure and offices, and
development of the Chinatown Project on the surface parking lots between Palm and Monterey
Streets.
Since that initial vision, both the Court Street and 919 Palm Street projects have been completed.
Court Street has been operating since 2006 with a variety of successful retail and office tenants.
The 919 Palm parking garage and office building was also completed and occupied in 2006.
Both Court Street and 919 Palm have added to the vitality of the Downtown by expanding office,
retail, and restaurant uses, adding off street parking, inspiring adjacent improvements along the
Court Street paseo, and providing improved City services through the co- location of the
Community Development Department and the Public Works Department in the ground -floor
office at 919 Palm.
From the beginning, and as it remains today, the sale of City land isn't merely a land transaction.
It is a public - private partnership that seeks to maximize specific public benefits that are achieved
only through development.
The public benefits have long been incorporated into City policy including:
The commercial core is a preferred location for retail uses that are suitable for pedestrian
access, off -site parking, and compact building spaces.
I
There should be a diversity of parking opportunities. Any major increments in parking
supply should take the form of structures, located at the edges of the commercial core, so
people will walk rather than drive between points within the core.2
Rehabilitation and seismic strengthening of Downtown historic properties
Increased retail floor area, including multi -story retail.3
Directly implements specific and identifiable City objectives, as set forth in the General
Plan, the Conceptual Plan for the City's Center, the Downtown Strategic Plan and other
key policy documents.
4
The City should emphasize conference and visitor - serving facilities which have a low
impact upon the environment and upon existing land forms and landscapes, and which
provide low- impact visitor activities and low- impact means of transportation.5
Each of these policies helps to inform the decision - making process for the originally envisioned
development and continue to apply to the final piece, the Chinatown Project.
Chinatown Option. The initial Chinatown Option Agreement (the Option) grew out of the
Purchase Agreements approved by Council in 2003 for the Court Street and 919 Palm Street
parking /office development projects. The Option stated the terms for the purchase and sale of
City parking Lots 3 and 11 plus the building and parking located at 955 Morro on the block
bounded by Palm, Morro, Monterey, and Chorro Streets.
Land Use Element Policy 4.1
2 Land Use Element Policy 4.10
3 Land Use Element Policy 4.16.4
4 Ibid
S Land Use Element Policy 3.5.1
B5 -3
Chinatown Project Purchase Agreements Page 4
The Option has been amended three times since 2003, in each instance to extend the term of the
agreement and respond to the changing conditions affecting the viability of the project.
Presently, the Option only allows Copeland to purchase the entire property from the City, and
only if specific conditions have been met.
Proposed Purchase Agreements for Chinatown. In 2011, Copeland informed the City that the
conditions required to purchase the City's parking lots could not be met for the hotel portion of
the Chinatown project, but a part of the project could move forward along the Monterey Street
portion of the site. As a result, the City Council authorized staff to pursue negotiations for a
phased implementation of the Chinatown project that would allow the Monterey Street portion of
the Chinatown project to be developed. The transactions that are the subject of this report are
intended to finalize the terms of the transaction and allow the Chinatown project to move
forward as a phased project. Under the proposed terms, ownership of the hotel portion of the
project site would be retained by the City until hotel construction is ready to move forward and
all of the City's conditions can be met.
The Phased Approach and Terms
Phased Project
On May 17, 2011, the City Council gave staff direction to pursue a phased implementation of the
Chinatown project to increase vitality along Monterey Street as soon as possible, while
preserving City ownership of the hotel site. Given the recession's effect on the economics of
hotels, phasing the project gives the developer and the City an opportunity to facilitate near term
downtown vitality while preserving parking until the hotel site can be developed.
Because the transaction involves the sale and purchase of city -owned real property, the City
Council has met in closed session as authorized under the Ralph M. Brown Act on several
occasions to provide direction to its negotiating team. Staff was given negotiating parameters
for the terms of the phased real estate transaction that separated the portion of City property
fronting Monterey Street from the portion that fronts on Palm Street as shown on the Existing
Site Plan (Attachment 2). Staff returned to closed session at later meetings and informed
Council of the outcomes of those real estate negotiations and received further direction to
prepare agreements reflecting the terms negotiated and to return to Council during open session
with proposed agreements for the purchase and sale of properties in the Chinatown project under
the phased approach.
Under the proposed agreements, new construction on the Monterey frontage will be pursued with
all due diligence and shall be substantially complete within four years of conveyance of the
Monterey parcels. The look, feel, scale and components of the currently envisioned project will
be substantially similar to the entitled project, but may require City review of changes to facades
and interior tenant improvements. Table 1 highlights the changes between the entitled Chinatown
project and the revised project that is the subject of the proposed agreements.
Chinatown Project Purchase Agreements
Table l
Page 5
General Plan Conformity
California Government Code Section 65402 requires that a public agency cannot acquire or
dispose of public property "...until the location, purpose and extent of such acquisition or
disposition... have been submitted to and reported upon by the planning agency, as to conformity
with said adopted general plan..." The sale of the City property has been contemplated and
incorporated into the project description since the inception of the Chinatown proposal and the
use of the City property, as currently entitled, has been considered by both the Planning
Commission and the Council on multiple occasions. However, the purchase of the Yung parcel
has not been reviewed previously.
Both the proposed purchase of the Yung parcel and the sale of the City property will be
considered and reported upon by the Planning Commission on December 14, 2011. The staff
report for the Planning Commission item will be forwarded to Council and available to the
public prior to Council's consideration of these proposed transactions. Council authority to
execute agreements to acquire or dispose of the properties that are the subject of this report must
be contingent upon a favorable determination by the Planning Commission. The Commission's
Conformity Report will be forwarded to the Council prior to execution by the Mayor of any
agreement to acquire or dispose of property. In the event that the Commission does not find the
proposed property transactions in conformity, the item will be returned to Council. Because the
return to Council would occur after the expiration of the current option, staff recommends that
Council authorize the automatic extension of the current option agreement to accommodate the
return to Council, if further Council action should become necessary.
Financial Terms and Conditions
Purchase Price, Parking Mitigation Measure Fees and Yung Parcel Purchase
The purchase price for the City property, as specified in the Option, is $1.1 million, plus simple
interest of one percent per year. Payment of this purchase price is proposed to be phased along
with the development, giving the City 60 percent of the purchase price with the conveyance of
the Monterey parcels. The remaining 40 percent is to be paid at the time of conveyance of the
Palm development site, if and when the conditions are met for the hotel to move forward.
The parking mitigation fee for removal of public parking spaces continues to be a part of the
terms, consistent with the amount set out in the Option and in the EIR. The mitigation fee is
based on the 2008 in -lieu parking fee adjusted for inflation, currently set at $17,796 per space. It
i
Council Approved Project
reflected in Option
Agreement Project (approximate)
Hotel Rooms 78 78
Housing Units 16 @ 19,161 sq. feet 32@ 15,350 sq. feet
Retail 46,450 46,140
Retail in Hotel 4,700 sq. feet 4,700 sq. feet
Office 5,630 0
Total Square Feet 71,241 61,490
General Plan Conformity
California Government Code Section 65402 requires that a public agency cannot acquire or
dispose of public property "...until the location, purpose and extent of such acquisition or
disposition... have been submitted to and reported upon by the planning agency, as to conformity
with said adopted general plan..." The sale of the City property has been contemplated and
incorporated into the project description since the inception of the Chinatown proposal and the
use of the City property, as currently entitled, has been considered by both the Planning
Commission and the Council on multiple occasions. However, the purchase of the Yung parcel
has not been reviewed previously.
Both the proposed purchase of the Yung parcel and the sale of the City property will be
considered and reported upon by the Planning Commission on December 14, 2011. The staff
report for the Planning Commission item will be forwarded to Council and available to the
public prior to Council's consideration of these proposed transactions. Council authority to
execute agreements to acquire or dispose of the properties that are the subject of this report must
be contingent upon a favorable determination by the Planning Commission. The Commission's
Conformity Report will be forwarded to the Council prior to execution by the Mayor of any
agreement to acquire or dispose of property. In the event that the Commission does not find the
proposed property transactions in conformity, the item will be returned to Council. Because the
return to Council would occur after the expiration of the current option, staff recommends that
Council authorize the automatic extension of the current option agreement to accommodate the
return to Council, if further Council action should become necessary.
Financial Terms and Conditions
Purchase Price, Parking Mitigation Measure Fees and Yung Parcel Purchase
The purchase price for the City property, as specified in the Option, is $1.1 million, plus simple
interest of one percent per year. Payment of this purchase price is proposed to be phased along
with the development, giving the City 60 percent of the purchase price with the conveyance of
the Monterey parcels. The remaining 40 percent is to be paid at the time of conveyance of the
Palm development site, if and when the conditions are met for the hotel to move forward.
The parking mitigation fee for removal of public parking spaces continues to be a part of the
terms, consistent with the amount set out in the Option and in the EIR. The mitigation fee is
based on the 2008 in -lieu parking fee adjusted for inflation, currently set at $17,796 per space. It
i
Chinatown Project Purchase Agreements Page 6
is proposed that Copeland would pay this amount for each space lost with development of the
Monterey Street portion of the project. The exact amount per space will be determined by the
timing of the payment, as the fee is adjusted annually for inflation.
A new term within the proposed agreement is City ownership of the Yung parcel, currently
owned by Copeland. The 3,780 -foot rectangular parcel is located at 861/863 Palm Street, and is
occupied by a vacant unreinforced masonry building subject to a July 1, 2015 deadline for
abatement of the hazard. The negotiated terms include conveyance of the Yung parcel to the
City for the nominal price of one dollar. Copeland will undertake demolition of the unreinforced
building and construction of additional parking spaces in its place. The demolition in conjunction
with construction of the project has always been contemplated. However, under the phased
iteration of the project, sixteen new surface parking spaces are estimated to be sited on the Yung
parcel. All costs of demolition and parking reconfiguration will be borne by Copeland. In the
future, when the conditions are met and a hotel project is able to move forward on the Palm
Street parcel, the City will sell the Yung parcel back to Copeland for one dollar. If Copeland is
unable to proceed with the hotel project the Yung parcel will remain part of the City's real estate
holdings permanently.
Conveyances and Site Development
Phasing of the project as proposed will require a subdivision of the parking lots so that the
Monterey portions can be sold separately from the Palm portions, which will be retained as
public parking. Upon completion of the subdivision, the City will convey to Copeland the
Monterey parcels. At that time, Copeland will pay the first phase of the purchase price and will
pay the mitigation fee for the net public parking spaces removed as a result of the Monterey
phase of the project. This amount will reflect the actual number of spaces lost via the
reconfiguration and closure of the Monterey parcels, estimated to be 40 spaces. The balance of
the purchase price (plus 1 percent interest) and payment of the remaining mitigation fee for
removal of public parking will occur upon conveyance of the Palm development site as further
discussed in this report.
Parking Reconfiguration
As a consequence of construction on the Monterey parcels, continued use of parking lots 3 and
11 requires these parking lots to be reconfigured. In addition to the creation of new parking
spaces on the Yung parcel, Copeland will reconfigure the public parking lots to allow for vehicle
and pedestrian circulation as shown on the Interim Parking Plan (Attachment 3), with ingress and
egress at Palm Street. Copeland shall incur all costs associated with the reconfiguration of the
parking lot and will supply and install the meter poles for meter heads owned by the City.
Copeland has provided a reconfiguration plan for the parking lot that meets the City's standards
for vehicular and pedestrian circulation. The current lot has three entries on Palm Street and two
exits on Monterey Street. The lot reconfiguration will result in two entries and one exit, all of
which are on Palm Street. Consideration was given to a secondary exit on Morro Street, by the
old Public Works building, but it was determined that existing adjacent uses and easements make
this exiting infeasible.
Parking lot reconfiguration is expected to begin with demolition of the Yung building and
portions of the concrete islands within the parking lot. Upon completion of this work, the
i
Chinatown Project Purchase Agreements Page 7
parking lots with egress onto Monterey Street will reopen for use until construction is ready to
begin on the Monterey parcels, in approximately twelve months.
The City will continue to operate and collect revenue from parking on the entire site even after
conveyance of the Monterey parcels, pursuant to a lease agreement between the City and
Copeland. The City will own and operate the parking on the Palm development site, including
the parking on the Yung parcel, until hotel development is initiated and the Palm development
site is conveyed to Copeland.
Hotel Development on the Palm Development Site
Under the current entitlements, the Chinatown project includes a downtown hotel consisting of
78 rooms and meeting spaces, restaurant and associated retail. This element continues to be part
of the proposal, but the timing of development of the hotel has been affected by the recession. As
a result, the negotiated terms provide for delayed construction of the hotel. As proposed, the
hotel construction drawings must be submitted seven years from the date of execution of the
purchase agreement for the Monterey parcels. Failure to do so will result in Copeland forfeiting
the right to acquire the Palm development site and forfeiture of the right to reacquire the Yung
parcel from the City.
City's Right of Reverter on the Palm Development Site
The City will retain the right to take the Palm development site back from Copeland if
construction does not commence within six months of construction permit issuance or if the
project begins construction, but fails to be diligently pursued to completion. If this right is
exercised by the City after transfer of the site, the phased purchase price of $440,000 plus
interest will be refunded to Copeland and, in the event the public parking is still in place, the
mitigation fee for removal of public parking associated with the Palm development site shall also
be refunded to Copeland, but the City will retain title to the Yung Parcel.
Conditions Precedent to Conveyance of the Palm Development Site to Copeland
Several conditions must be met prior to the conveyance of the Palm development site to
Copeland . These prerequisites are consistent with those enumerated in the Option and endeavor
to insure that the development occurs following conveyance. The prerequisites (to be verified by
the City prior to conveyance) include evidence that:
1. Copeland has obtained building and other permits for construction of the Project
and permits have not expired;
2. Copeland has provided documentation to the City of financial resources in a
sufficient amount to complete the construction and equipping of the Project;
3. Copeland has entered into construction contracts for the Project evidencing that
the work of construction be completed within the budget; and
4. Copeland has a binding contract with the operator, if any, of the completed
Project.
Termination of Agreement to Sell the Palm Development Site
The City may terminate the agreement to sell the Palm development site, including the Yung
parcel, to Copeland if:
B5 -7
Chinatown Project Purchase Agreements Page 8
1. Construction on the Monterey parcels is not substantially complete within four
years of the conveyance of the Monterey parcels; or
2. Copeland has not submitted construction plans to the City for development of the
Project on the Palm development site within seven years from the date of the
execution of the purchase agreement for the Monterey parcels.
Lease of 955 Morro (Old Public Works building)
In order to have a City -owned asset put to productive financial use at no cost to the City and until
such time as the Palm development site is conveyed to Copeland the City intends to lease the 955
Morro building to Copeland. Copeland will pay nominal rent of $500 per month under the terms
of the proposal because Copeland will be responsible for upkeep, maintenance and insurance on
the building. Sublease revenue in excess of nominal rent and expenses will be evenly split
between Copeland and the City. Copeland will consult with the City about potential tenants, but
Copeland will have control and sole discretion on tenant selection consistent with applicable
zoning and other City laws and regulations. The parking adjacent to 955 Morro, currently used
for City vehicles, will continue to be used by the City until the Palm development site is
conveyed to Copeland.
Payment for Un -met Parking Demand
This project shall be subject to the City's normal rules for providing parking or paying an in -lieu
fee for parking that is not provided. In keeping with the entitled project, an in -lieu fee for
parking is required for all un -met parking demand within each phase of the project. This project
is also subject to parking mitigation fees in accordance with the EIR due to the removal of public
parking at Lots 3 and 11, as described in prior paragraphs. To be clear, the in -lieu fee and the
parking mitigation fees are completely separate. As such, it is certain that Copeland will pay the
parking mitigation fee and, in addition, will pay parking in -lieu fees as dictated by the City's
generally applicable rules as applied to the project ultimately constructed.
Resolution of Claim for 919 Palm Street Building Construction
The final payment request from Copeland for the construction of the 919 Palm Street parking
garage and offices included significant costs in excess of the fixed construction price. The
pending claim totals approximately $3 Million. As part of the consideration for the agreements
proposed, for the Chinatown project, Copeland has agreed to waive its right to pursue any and
all claims or legal action related to the construction of 919 Palm Street structure.
Next Steps
The phased approach requires a series of steps leading to conveyance of the parcels between the
City and Copeland. The first of these is a general plan conformity report by the Planning
Commission and approval and execution of the Purchase and Sale Agreements (Attachment 4),
for the three sites (the Monterey parcels, the Yung parcel, and Palm Street hotel site). There are
other associated leases and a waiver that must also be executed if the terms of the transactions
are approved by the Council. If the transactions are approved and Agreements are executed, the
first step is subdivision of the City property into separate parcels: the Monterey parcels and the
Palm development site. The subdivision will be accomplished via a public subdivision or other
appropriate application for the division of the property. The application will be subject to
standard review processes, but will be facilitated by a consultant, the costs of which will be paid
for by Copeland. Once the subdivision is complete, the City will convey the Monterey parcels to
Chinatown Project Purchase Agreements Page 9
Copeland and Copeland will convey the Yung parcel to the City in accordance with the
agreements.
Within the thirty days following conveyance of the Monterey parcels, Copeland will move
forward with the Monterey Street portion of the development starting with seismic strengthening
of the Blackstone Hotel, Sauer Bakery, and Muzio building. In addition, the Yung building will
be demolished and the parking lot reconfiguration will be started, subject to permitting
requirements.
While the seismic strengthening work and reconfiguration of parking lots is occurring, Copeland
will prepare and file permit requests for the new Monterey street buildings. Upon approval of
these permits, Copeland will close the Monterey parking lot egresses and will begin construction
of the new buildings on the Monterey parcels.
During and after development of the Monterey portion of the project, the reconfigured parking
lots 3 and 11 will be in continuous operation. This will be the case until construction begins on
the Palm development site.
FISCAL IMPACT
The intent of this transaction is to revitalize the downtown via a public - private partnership that
seeks to maximize public benefits achieved. As outlined below, there are significant fiscal
benefits to the City from the project. Over time, the General Fund is expected to benefit from
increased Sales Tax, Property Tax, and Transient Occupancy Tax revenues upon occupancy. The
Parking Fund will also benefit from the parking mitigation fees, as well as ongoing revenues
from parking operations until the Monterey Parcel and the Palm Development Site are conveyed
to Copeland.
Once fully implemented, the project will benefit the City by approximately $3.9 million in one-
time revenue and $500,000 annually in net -new tax revenue. Of the one -time revenue, the $1.1
million purchase price will be allocated to the General Fund. The Parking Fund will benefit
from the payment of the parking mitigation fee (projected to be $2.8 million) for the removal of
155 public parking spaces currently in service on Lot 3 and 11. The Parking Fund will also
realize ongoing parking revenues from the remainder portions of Lots 3 and 11 until those lots
are conveyed for purposes of developing the Palm Development Site (estimated to be $1.7
million). The following Fiscal Summary provides this information in an accessible format.
B5 -9
Chinatown Project Purchase Agreements Page 10
Fiscal Summary
One -Time Revenue
Purchase Price ($1,100,000)
Interest from July 3, 2008 — July 2, 2011
Estimated interest from July 3, 2011 to land transfer
Total
Credit for Payments
Balance due on Monterey conveyance
Mitigation Measure Fee for Removal of Public
Parking (estimated using current fee levels@ $17,796
per space)
Total One -time Revenues
Monterey Parcels
660,000
19,800
tbd @ 1% simple
interest per year
679,800
265,500)
414,300
711,840
Palm Development
Site
440,000
13,200
tbd @ 1% simple
interest per year
tbd
2,046,540
3,891,380 plus interest
Revenue from Parking Meters on Monterey Parcels
Parking revenues for 43 meters for one year at $1,821
per space (based on current parking meter rates for $78,303
credit card meters.)
Revenue on Palm Development Site
Parking revenues for 115 meters for eight years at
1,821 per year per space (based on current parking $1,675,320
meter rates for credit card meters.)
General Fund
The phased project produces revenues for the City at a more measured pace than anticipated
previously. The assumptions in the Annual Revenue Comparison (Attachment 5) show the
difference between the phased approach and the project coming on -line all at once. Annual net
new revenue to the General Fund of approximately $502,200 is projected once the project is fully
implemented. In comparison, the Council- approved project estimated new net revenue to the
General Fund of approximately $614,300. The difference is primarily due to lower room
revenues for the hotel and lower property tax expectation, both due to the effects of the great
recession of 2008.
General Fund Revenue Council Approved Project Proposed Project
Sales Tax 106,300 112,100
Property Tax 81,300 73,800
Transient Occupancy Tax 426,700 316,300
Total 614,300 502,200
The assumptions made in the five -year financial forecast show revenue from the project
beginning in 2015 -16 with annual sales tax revenues of $197,200 and TOT revenues of
485,000. These projections will be revised according to the terms of the proposed agreement, if
B5 -10
Chinatown Project Purchase Agreements Page 11
it is approved. The sales tax revenues will decrease in the short term due to the phasing of the
project, specifically the delayed implementation of the retail properties on the Palm development
site. The TOT revenues will not be realized until the completion of the hotel.
General Fund Revenue Monterey Parcels Palm Development Site
Sales Tax 77,900 34,200
Property Tax 22,200 51,600
Transient Occupancy Tax 0 316,300
Total 100,100 402,100
Parking Fund
If the project had been implemented as originally envisioned in one phase the Parking Fund
would have realized about $2.8 million. A phased approach has an anticipated benefit of an
additional $1.7 million because of the continued use of the parking lots on the Palm
Development Site. The following table shows the fiscal benefits for the Parking Fund of the
proposed terms, assuming that the parking on the Palm site remains in operation for seven years.
If the Palm site can be developed with a hotel sooner, then all one -time revenues would be
realized at that time.
Parking Fund Revenue Monterey Parcels Palm Development Site
Parking Revenues 78,303 1,675,320
Approximate Parking
Mitigation Fees (2011 rate) 711,840 2,046,540
Total 790,1431 3,721,860
ALTERNATIVES
1. Reject the proposed Agreements. This alternative should only be selected if the Council
does not support phasing of the project. If this alternative is selected, the Option will expire on
January 3, 2012 and negotiations for development on the site will need to begin anew.
2. Provide direction to negotiate further and /or provide additional information. During the
discussion of this item, Council may identify additional information needed prior to entering into
the proposed Agreements or may provide direction to negotiate further with Copeland on
specific terms. If Council has concerns about the proposed Agreements, and would like staff to
negotiate further, it will be helpful for Council to clearly state what the concerns are, and how
Council would like them addressed.
ATTACHMENTS
1. Vicinity Map
2. Existing Site Plan
3. Interim Parking Plans
4. Proposed Agreements (6, 955 Morro Lease to be issued under separate cover)
5. Annual Revenue Comparison
T.1CotsnciI Agenda Reports\Adminisintion CARkChina[ own\ ClunatownAgreemcntl2- 13- 1I1CAIt12-13 -1 [Agrecment.docx
B5 -11
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B5 -15
ATTACHMENT 4
Agreement 6 will be provided under
separate cover
B5 -16
ATTACHMENT 4
RELEASE AND WAIVER
This Release and Waiver ( "Release Agreement" or "this Agreement ") is entered
into as of December _, 2011, between by and between THE CITY OF SAN LUIS
OBISPO, a municipal corporation and charter city ( "City "), and PALM STREET
PARKING STRUCTURE, a California limited liability company ( "Developer "), with
respect to the following facts:
A. The parties entered into that certain Payment Agreement, dated as of
November 5, 2003 (the "Payment Agreement ") in connection with the construction of
the parking structure at the corner of Palm and Morro Street in San Luis Obispo,
California. On June 9, 2006, the Developer submitted a Payment Request to the City
under the Payment Agreement and, at the City's request, provided additional
information to the City on June 26, 2006. On July 7, 2006, the City notified the
Developer that portions of the amount requested by the Developer would not be paid
based on the information provided. The City paid the balance of the amount requested
on August 2, 2006.
B. A dispute exists between the parties regarding the amount due to the
Developer under the Payment Agreement. The partied entered into tolling agreements to
extend the statue of limitations with respect to the dispute, which will expire on
December 31, 2011.
C. The parties hereto wish to resolve any and all claims either party may
have against each other in connection with payments made or payable under the
Payment Agreement.
Accordingly, in consideration of the mutual understandings and promises set
forth in this Release Agreement, the parties agree as follows:
AGREEMENT
1. For good and valuable consideration, the sufficiency of which is hereby
acknowledged, Developer and anyone claiming by, through or under Developer fully
and irrevocably releases City, and each of its employees, officers, directors,
representatives, agents, servants, attorneys, affiliates, parent companies, subsidiaries,
successors and assigns, and all persons, firms, corporations and organizations acting on
its behalf ( "Released City Parties "), from any and all claims that it may now have or
hereafter acquire against any of the Released City Parties for any and all costs, losses,
liabilities, damages, expenses, demands, claims, actions or causes of action (collectively
Claims ") arising from or related to the Payment Agreement.
This release includes any and all claims of which Developer is presently unaware or
which Developer does not presently suspect to exist which, if known by Developer,
would materially affect Developer's release to City. Developer specifically waives the
provision of California Civil Code Section 1542, which provides as follows:
B5 -16.1
ATTACHMENT 4
GENERAL RELEASE. A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE'CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
2. For good and valuable consideration, the sufficiency of which is hereby
acknowledged, City and anyone claiming by, through or under City fully and
irrevocably releases Developer, and each of its employees, officers, directors,
representatives, agents, servants, attorneys, affiliates, parent companies, subsidiaries,
successors and assigns, and all persons, firms, corporations and organizations acting on
its behalf ( "Released Developer Parties "), from any and all claims that it may now
have or hereafter acquire against any of the Released Developer Parties for any and all
costs, losses, liabilities, damages, expenses, demands, claims, actions or causes of
action (collectively "Claims ") arising from or related to the Payment Agreement.
This release includes any and all claims of which City is presently unaware or which
City does not presently suspect to exist which, if known by City, would materially
affect City's release to Developer. City specifically waives the provision of California
Civil Code Section 1542, which provides as follows:
GENERAL RELEASE. A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
3. Based upon the advice of its counsel, each party hereby expressly,
knowingly and voluntarily waives and relinquishes any and all rights that it may have
under Section 1542 as well as under the provisions of all comparable, equivalent, or
similar statutes and principles of law or equity of any and all states of the United States
or of the United States. Each Party understands and acknowledges the significance and
consequences of this waiver and hereby assumes the risk of any injuries, losses or
damages which may arise from such waiver. Each Party expressly intends that such
waiver apply to any and all of the claims released by it.
4. This Release Agreement does not constitute an admission by either party
of liability, or an admission that any cause of action exists in favor of either party for
any claim referred to in this Agreement.
5. All notices, requests, demands and other communications under this
Release Agreement shall be in writing and shall be deemed to have been duly given on
the date of service if served personally, by reliable overnight courier, or by telecopy
transmission for receipt during the receiving parties' normal business hours to the party
to whom notice is to be given, or on the third (3rd) day after mailing if mailed to the
B5 -16.2
ATTACHMENT 4
party to whom notice is to be given, by first class mail, registered or certified, return
receipt requested, postage prepaid, and properly addressed as follows:
City: City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401 -3249
Attention: City Administrative Officer
Facsimile: (805) 781 -7109
With a copy to: City Attorney
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401 -3249
Facsimile: (805) 781 -7409
Developer: Palm Street Parking Structure, LLC
Post Office Box 12260
San Luis Obispo, California 93406
Attention: Tom Copeland
Facsimile: (805) 593 -0109
With a copy to: Suzanne Fryer
General Counsel
Palm Street Parking Structure, LLC
Post Office Box 12260
San Luis Obispo, California 93406
Facsimile: (805) 593 -0109
Any party may change its address for purposes of this Tolling Agreement by
giving the other party written notice of the new address in the manner set forth above.
6. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
7. This instrument contains the entire agreement, for purposes of addressing
the Payment Agreement only, between the parties, and no statement, promise, or
inducement made by either party or agents of the parties that is not contained in this
written contract shall be valid or binding; and this contract may not be enlarged,
modified, or altered except in writing signed by the parties.
8. Each of the individuals executing this Agreement on behalf of the
undersigned parties represents and warrants that he or she has the right, power and
authority to bind the party on whose behalf he or she purports to sign.
9. This Agreement may be executed in counterparts or by facsimile.
B5 -16.3
ATTACHMENT 4
IN WITNESS WHEREOF, the parties to this Modification have duly executed it
as of the day and year first written above.
Approved as to Form:
UA
J. Christine Dietrick
City Attorney
Approved as to Form:
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
Its:
PALM STREET PARKING
STRUCTURE, LLC, a California limited
liability company
go
Its:
Suzanne Fryer
General Counsel, Palm Street Parking Structure, LLC
4 B5 -16.4
ATTACHMENT 4
AGREEMENT OF PURCHASE AND SALE
Monterey Parcels
This Agreement ( "Agreement ") is made and entered into as of December _, 2011, by and
between SLO CHINATOWN, LLC, a California limited liability company ( "Copelands "), and the
CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ( "City "). City and
Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties ".
AGREEMENT
ARTICLE I - DEFINITIONS
The following terms shall have the meanings set forth in this Article I when used in this
Agreement:
Section 1.01 861/863 Palm Building. "861/863 Palm Building" means any and all
structures located on the 861/863 Palm Parcel, commonly referred to as the "Yung building ".
Section 1.02 861/863 Palm Parcel. "861/863 Palm Parcel" means that certain real property
generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002 -416-
031, which is currently owned by CP Monterey Morro, LLC, a California limited liability
company, which has the same owners as Copelands.
Section 1.03 861/863 Palm Parcel Agreement. "861/863 Palm Parcel Agreement" means
that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and
delivered between the City and CP Monterey Morro, LLC.
Section 1.04 Closing. "Closing" means the date upon which and the process by which
Escrow Company will conclude and consummate the purchase and sale of the Monterey Real
Property and as more fully described in Article IV below.
Section 1.05 Closing ate. "Closing Date" shall mean the date on which the Closing
occurs.
Section 1.06 Closing_ Payment. "Closing Payment" means the monetary consideration to be
paid by Copelands to City for the Monterey Real Property as more fully described in Section 2.04
below.
Section 1.07 Escrow. "Escrow" means the escrow to be established at Escrow Company for
the transfer of the Monterey Real Property as defined below. The Escrow shall be established by
Copelands not later than fifteen (15) business days prior to the Closing Date.
Monterey PSA OCC revision 120711 10001207 1000
12/7/2011
B5 -16.5
Section 1.08 Escrow Company. "Escrow Company" means First American Title
Insurance Company National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut
Creek, California 94596, or such other escrow company doing business in San Luis Obispo
County, California, as Copelands and City may designate.
Section 1.09 Escrow Instructions. "Escrow Instructions" means the directions to the
Escrow Company provided in this Agreement and in such additional instructions prepared by
Escrow Company and approved by the Parties. This Agreement shall constitute joint escrow
instructions to Escrow Company. The Parties shall execute such additional instructions not
inconsistent with the provisions of this Agreement which may be reasonably required by Escrow
Company. The Parties shall be bound by Escrow Company's general instructions, but if any
conflict between the provisions of this Agreement and the provisions of Escrow Company's
general instructions exists or arises, then the provisions of this Agreement shall control.
Section 1.10 Lease for Public Parking. "Lease for Public Parking" means the lease
agreement further described in Section 3.01(d) over a portion of the Monterey Real Property after
the Closing Date.
Section 1.11 Monterey Improvements. "Monterey Improvements" means those
certain improvements to be constructed by Copelands on the Monterey Parcels as entitled by San
Luis Obispo City Council Resolution No. 10128 (2009 Series), adopted November 17, 2009, or
as such entitlements subsequently may be modified and approved by the City in the normal
exercise of its development review authority following request therefor by Copelands.
Section 1.12 Monterey Real Property. "Monterey Real Property" means the land and all
appurtenant rights, interests, easements, tenements, estates and improvements owned by the City
to be acquired by Copelands hereunder, which consists of the portion of the Real Property which
is adjacent to Monterey Street, as generally shown on Exhibit A attached hereto, which is
improved with a parking lot. The legal description of the Monterey Real Property shall be
prepared and approved by the parties hereto following a survey of the Real Property and the
completion of a lot subdivision process as further described in Section 2.06 below, and thereupon
shall be attached to this Agreement and incorporated as if set forth herein.
Section 1.13 Palm Development Site. "Palm Development Site" means the Palm Real
Property and the 861/863 Palm Parcels.
Section 1.14 Palm Real Property. "Palm Real Property" means the portion of the Real
Property which does not include the Monterey Real Property.
Section 1.15 Palm Development Site Agreement. "Palm Development Site Agreement"
means that certain Agreement of Purchase and Sale — Palm Development Site, to be executed and
delivered between the City and Copelands.
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Section 1. 16 Preliminary Title Report. "Preliminary Title Report" means the Amended
Preliminary Report prepared by First American Title Insurance Company, dated November 21,
2011, as Commitment No.: NCS- 512999 -CC, attached hereto as Exhibit B.
Section 1.17 Purchase Price. "Purchase Price" means the monetary consideration to be paid
by Copelands to City for the Monterey Real Property as more fully described in Section 2.02
below.
Section 1.18 Real Property. "Real Property" means the land and appurtenant rights and
improvements which consists of five (5) parcels located in the block between Palm and Monterey
Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified as
two (2) portions of APN #002 - 416 -034, and three (3) portions of APN #002 - 416 -029, as shown
on Exhibit C attached hereto.
Section 1.19 Reconfiguration Scope of Work. "Reconfiguration Scope of Work" means the
Copelands' completion of the demolition of the 861/863 Palm Building, creation of new parking
on the 861/863 Palm Parcel and reconfiguration of the public parking on the Palm Real Property
in Lots 3 and 11 as shown on Exhibit D to this Agreement pursuant to issued construction
permits and as discussed in the 861/863 Palm Parcel Agreement.
Section 1.20 Title Company. "Title Company" means First American Title Insurance
Company National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek,
California 94596, or such other title company doing business in San Luis Obispo County,
California, as Copelands and City may designate.
ARTICLE II - PURCHASE AND SALE
Section 2.01 Purchase and Sale. City agrees to sell to Copelands, and Copelands agrees to
purchase from City, the Monterey Real Property upon the terms and conditions set forth in this
Agreement.
Section 2.02 Purchase Price. The purchase price for the Monterey Real Property is Six
Hundred Seventy -nine Thousand Eight Hundred Dollars ($679,800), plus an amount equal to
Five Hundred Fifty Dollars ($550) for each month or part thereof from (and including) July,
2011, until the month in which the Closing occurs, to be paid all cash through the Escrow at the
Closing. At the Closing of escrow for the Monterey Real Property, Copelands shall be entitled to
a credit against the Purchase Price in the amount of $265,000 (the "Option Payments ") for
payments already made by Copelands to City toward its options to purchase the Monterey Real
Property.
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Section 2.03 Payment for Mitigation of Public Parking Removal. In addition to the
Purchase Price, Copelands shall pay in cash through the Escrow at the Closing the Monterey
Parking Mitigation Payment (as defined below) to City. The Monterey Parking Mitigation
Payment is a fee that shall be the amount paid at the Closing to compensate the City for a portion
of the 155 "Displaced Surface Parking" spaces that will be removed as a result of project
construction on the Monterey Real Property, as identified in Table 3.2 -4 of the Addendum to the
Environmental Impact Report for the Real Property, dated September, 2009 (the "2009 EIR ").
The Monterey Parking Mitigation Payment will be equal to the product of the City's then - current
in -lieu parking fee as of the Closing Date multiplied by the number of Monterey Lost Spaces (as
defined below).
17,796 is the current in -lieu parking fee as adopted by the City, which amount will increase as
of July 1, 2012, and annually thereafter, until the Closing Date occurs due to an inflation
escalator adopted as part of the City's fee resolutions duly adopted by the City Council. The
Monterey Lost Spaces" shall be the number of parking spaces on the Monterey Real Property
lost as a result of the planned reconfiguration of the City's existing surface parking lot on the
Real Property (the "Monterey Lost Spaces'), estimated to be 41 spaces. By way of example, if
there are 41 Monterey Lost Spaces, and if the Closing were to occur before July 1, 2012, then the
Monterey Parking Mitigation Payment would be the sum of Seven Hundred Twenty -nine
Thousand Six Hundred Thirty -six Dollars ($729,636). (For avoidance of doubt, the Monterey
Lost Spaces and the Monterey Parking Mitigation Payment provided for in this Agreement are in
addition to and exclusive of the Palm Lost Spaces and the Palm Parking Mitigation Payment
provided for in the Palm Development Site Agreement.)
Consistent with its obligations as a city to conform to applicable law and exercise its discretion
concerning the approval of any parking reconfiguration plan submitted by Copelands, the City
shall cooperate with Copelands in all respects thereto, including evaluating such plan as required
under applicable law, and approving such plan in accordance with applicable law and City
policy. Prior to the Closing, the Parties shall attach as Exhibit D an approved parking
reconfiguration diagram which shall state with precision the number of Monterey Lost Spaces,
and such number of parking spaces shall be used to calculate the Monterey Parking Mitigation
Payment, as described above. Once agreed to by the Parties, the Parties shall execute updated
written escrow instructions stating the amount of the Monterey Parking Mitigation Payment.
Unmet parking demand caused by the Monterey Improvements does not include any of the
Displaced Surface Parking and therefore, for avoidance of doubt, the parties acknowledge that
the Monterey Parking Mitigation Payment required hereunder is and shall be separate from, and
in addition to, any parking in -lieu fees required by City or any of its departments charged with
granting permits required for the Monterey Improvements in connection with any unmet parking
demand caused by the Project.
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Section 2.04 Payment. The Purchase Price plus the Monterey Parking Mitigation Payment
collectively, the "Closing Payment ") shall be paid as follows: at least one business day prior to
the Closing, the cash due from Copelands under Sections 2.02 and 2.03 of this Agreement shall
be deposited by the Copelands into Escrow by wire transfer or cashier's check.
Section 2.05 Due Diligence; Condition of Property. Copelands acknowledges that it has
performed such due diligence as it elects or has elected to perform as to the condition and all
other aspects of the Monterey Real Property, the title to the Monterey Real Property and the
suitability of the site of the Monterey Real Property for the proposed uses and construction.
Copelands further acknowledges that it has or shall have inspected, investigated and tested the
condition of the soil and the geology of the site and the presence of hazardous substances or
archaeological materials and shall have accepted such conditions, and all aspects of the Monterey
Real Property in its "AS -IS, WHERE -IS" condition with all faults and defects, whether patent
or latent, known or unknown. Further, in entering into this Agreement and closing the Escrow
contemplated hereunder, Copelands expressly represents and warrants to City (i) that Copelands
is relying and shall rely solely on its own due diligence to evaluate all aspects of the Monterey
Real Property and its suitability for Copelands' planned development without any representations
and warranties of any kind or nature concerning the Monterey Real Property or any aspect
thereof, either express or implied, from or on behalf of City or any of its employees, agents or
independent contractors, except as otherwise expressly provided in this Agreement, (ii) that
neither City nor any of its employees, agents or independent contractors has made or is
authorized to make any representation or warranty of any kind or nature concerning the Monterey
Real Property, any aspect thereof, or its suitability, either express or implied, nor any warranty,
representation or promises of remediation or cure including, without limitation, any
representation or warranty regarding the geological, subsurface, environmental, architectural,
engineering or other physical aspects or condition of the Monterey Real Property, including
without limitation any subsidence or other issues arising from the possible presence of a
subterranean creek under or near the Monterey Real Property, the rents, income, expenses,
market or other financial aspects or condition of the Monterey Real Property, the compliance
with the Monterey Real Property with any applicable law, code, rule or regulation including
without limitation any environmental protection, pollution, land use, handicapped access or other
laws, the zoning of the Monterey Real Property, the accuracy or completeness of any documents,
information or other data concerning the Monterey Real Property or any aspect thereof furnished
or to be furnished to Copelands by or on behalf of City or any of its employees, agents or
independent contractors or in any other manner concerning the Monterey Real Property or any
aspect thereof, (iii) that any and all due diligence materials provided by the City to Copelands
were and are solely for Copelands' specific and limited use in connection with its due diligence
and evaluations concerning the Monterey Real Property, (iv) that any due diligence materials
prepared by any third party is being furnished to Copelands as an accommodation only without
any warranty by City or such third party as to the accuracy or completeness thereof, except as
otherwise expressly provided by any separate agreement between Copelands and any such third
party, and (iii) that City, and any agency of City, shall not have any obligations whatsoever to
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perform any tests, prepare any reports, make any repairs or take any other action, including
governmental actions, or incur any expense with respect to the Monterey Real Property, except as
otherwise expressly provided in this Agreement.
Section 2.06 Release. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
OR THE LEASE FOR PUBLIC PARKING, COPELANDS AND ANYONE CLAIMING BY,
THROUGH OR UNDER COPELANDS FULLY AND IRREVOCABLY RELEASES CITY,
AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS, REPRESENTATIVES,
AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT COMPANIES,
SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS, FIRMS,
CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF ( "RELEASED
CITY PARTIES "), FROM ANY AND ALL CLAIMS THAT IT MAY NOW HAVE OR
HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED CITY PARTIES FOR ANY
AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES, DEMANDS, CLAIMS,
ACTIONS OR CAUSES OF ACTION (COLLECTIVELY "CLAIMS ") ARISING FROM OR
RELATED TO THE CONDITION OF THE MONTEREY REAL PROPERTY INCLUDING,
WITHOUT LIMITATION, ANY PATENT OR LATENT CONSTRUCTION DEFECTS OR
INADEQUACIES IN THE CONDITION OF THE MONTEREY REAL PROPERTY,
INCLUDING COST OF REPAIR OR CORRECTION, ERRORS, OMISSIONS, OR OTHER
CONDITIONS, LATENT OR OTHERWISE, GEOTECHNICAL AND SEISMIC, SURFACE
OR SUBSURFACE, AFFECTING THE MONTEREY REAL PROPERTY OR ANY PORTION
THEREOF WHETHER OR NOT DISCOVERED PRIOR TO COPELANDS' INSPECTION OF
THE MONTEREY REAL PROPERTY, INCLUDING, WITHOUT LIMITATION:
A) ENVIRONMENTAL MATTERS WHICH WERE:
i) DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR IN
ANY ENVIRONMENTAL AUDIT OBTAINED BY COPELANDS; OR
ii) DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO THE
CLOSING; OR
iii) OTHERWISE DISCLOSED BY CITY TO COPELANDS OR DISCOVERED BY
COPELANDS AT ANY TIME PRIOR TO THE CLOSING;
B) THE ITEMS DESCRIBED IN SECTION 2.05 ABOVE; AND
C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY ANY
AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK OR
TAKING ACTION IN CONNECTION WITH THE MONTEREY REAL PROPERTY ON
BEHALF OF CITY OR ITS PREDECESSORS;
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NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY COPELANDS OF
RELEASED CITY PARTIES SHALL NOT EXTEND TO ANY FRAUD BY CITY UPON
COPELANDS, WHICH IS EXPRESSLY RESERVED BY COPELANDS ON BEHALF OF
ITSELF AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS.
THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH COPELANDS IS
PRESENTLY UNAWARE OR WHICH COPELANDS DOES NOT PRESENTLY SUSPECT
TO EXIST WHICH, IF KNOWN BY COPELANDS, WOULD MATERIALLY AFFECT
COPELANDS' RELEASE TO CITY. COPELANDS SPECIFICALLY WAIVES THE
PROVISION OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS
FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."
IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THAT
ALL OF THE MONTEREY REAL PROPERTY IS SOLD BY CITY AND PURCHASED BY
COPELANDS SUBJECT TO THE FOREGOING. IT IS NOT CONTEMPLATED THAT THE
PURCHASE PRICE WILL BE INCREASED IF COSTS TO COPELANDS ASSOCIATED
WITH THE MONTEREY REAL PROPERTY PROVE TO BE LESS THAN EXPECTED NOR
WILL THE PURCHASE PRICE BE REDUCED IF THE COPELANDS' PLAN TO DEVELOP
THE MONTEREY REAL PROPERTY LEADS TO HIGHER COST PROJECTIONS. THIS
PROVISION SHALL SURVIVE THE CLOSE OF ESCROW AND RECORDING OF THE
GRANT DEED.
Copelands' Initials: _ City's Initials:
Section 2.07 Subdivision Map. Copelands shall prepare a subdivision map or other
appropriate application for the division of the property, for the portion of the Real Property which
comprises the Monterey Real Property as one lot (the "Subdivision Map "), in substantially the
form attached hereto as Exhibit A. Consistent with its obligations as a city to conform to
applicable law and exercise its discretion concerning applications for subdivisions of real
property, the City shall cooperate with Copelands in all respects thereto, including evaluating
such Subdivision Map as required under applicable law, processing such Subdivision Map as a
public subdivision or otherwise as allowed by applicable law and executing the same. Provided
such Subdivision Map shall have been properly prepared and duly approved, City shall cause the
Subdivision Map to be recorded at the Closing.
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ARTICLE III - TITLE TO REAL PROPERTY
Section 3.01 Coi-tdition of Title of Monterey Real Property. Upon Closing, City shall
deliver the Monterey Real Property to Copelands subject to no leases and occupancies, other than
the Lease for Public Parking. Title to the Monterey Real Property shall be conveyed by City to
Copelands by a grant deed in form and substance shown on Exhibit F hereto (the "Grant Deed "),
and subject to the following "Conditions of Title ":
a) A lien to secure payment of real estate taxes and supplemental taxes, if
any, not delinquent;
b) Matters affecting the condition of title created by or with the written
consent of Copelands;
c) Printed exceptions and exclusions as specified on the Preliminary Title
Report; and
d) Lease for Public Parking in favor of the City, in the form of Exhibit E
attached hereto, executed by Copelands and City and evidencing City's right to use a
portion of the Monterey Real Property for public parking until Copelands is ready to
begin construction on the Monterey Real Property.
Section 3.02 Evidence of Title. Delivery of title to the Monterey Real Property in
accordance with Section 3.01 above shall be evidenced by the willingness of the Title Company
to provide its written commitment to issue, upon Closing, recordation of the Grant Deed, and
payment of its regularly scheduled premium, an ALTA Standard Coverage Owner's Policy in the
appropriate amount showing title to the Monterey Real Property vested in Copelands, or
Copelands' allowable assignee, subject to the Conditions of Title described in Section 3.01.
Section 3.03 Title Vesting. Title shall be vested in the Monterey Real Property in the name
of Copelands as provided above, or Copelands' allowable assignee. Copelands shall provide
written notice to the Parties and Escrow Company of any such allowable assignee not less than
five (5) business days prior to the Closing.
ARTICLE IV - CLOSING
Section 4.01 Closing. The sale and purchase transaction contemplated by this Agreement
shall be consummated pursuant to the Escrow Instructions not later than August 1, 2012 ( the
Outside Closing Date ") through an escrow established at the Escrow Company. If Copelands
requests an extension of the Outside Closing Date, and provides reasonable evidence showing
that such an extension is needed or advisable to effectuate the purposes of this Agreement, the
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City Manager may elect to extend the Outside Closing Date without further additional
authorization from the City Council, provided that no such extension of the Outside Closing Date
be later than December 31, 2012 unless the further authorization of the City Council is first
obtained. Any such extension of the Outside Closing Date shall be documented in a writing
executed and delivered by City Manager, on behalf of City, and by Copelands' authorized
member.
Section 4.02 Conditions to Closing -- City. The City's obligation to transfer or cause the
transfer of the Monterey Real Property to the Copelands shall be subject to the fulfillment of the
conditions precedent (the "City Conditions ") set forth below:
a) Related Agreements. Copelands (or its related companies) shall have
executed and delivered to City the following agreements: (i) the 861/863 Palm Parcel
Agreement; (ii) Agreement of Purchase and Sale — Palm Development Site; (c) Lease for
955 Morro Street; (iv) Lease for Public Parking and (v) Release and Waiver.
b) Closing under 861/863 Palm Parcel Agreement. City shall have taken all
actions necessary to close under the 861/863 Palm Parcel Agreement concurrently with
the Closing under this Agreement.
d) Satisfaction of Copelands' Conditions. Copelands shall have certified in
writing to City that all of Copelands' Conditions have been satisfied and Copelands is
obligated to buy the Monterey Real Property.
e) Performance by Copelands. Copelands shall have performed all
obligations to be performed by Copelands, and shall have made all deliveries required of
Copelands, pursuant to this Agreement prior to Closing.
Section 4.03 Conditions to Closing Copelands. The Copelands' obligation to purchase
the Monterey Real Property from the City shall be subject to the fulfillment of the conditions
precedent (the "Copelands' Conditions ") set forth below:
a) Related Agreements. City shall have executed and delivered to Copelands
or its related companies) the following agreements: (i) the 861/863 Palm Parcel
Agreement; (ii) Agreement of Purchase and Sale — Palm Development Site; (c) Lease for
955 Morro Street; (iv) Lease for Public Parking and (v) Release and Waiver.
b) Closing under 861/863 Palm Parcel Agreement. Copelands shall have
taken all actions necessary to close under the 861/863 Palm Parcel Agreement
concurrently with the Closing under this Agreement.
c) Condition of Property; Title. The Title Company shall have committed to
insure good title to the Monterey Real Property as described in the Subdivision Map by
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issuing a title policy in the form described in Section 4.03(d) below in the amount equal
to the Purchase Price plus the Monterey Parking Mitigation Payment, subject only to the
Conditions of Title described in Section 3.01.
d) Title Conditions. The Closing shall also be conditioned on the
commitment of the Title Company to issue, upon payment of its regularly scheduled
premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance,
with the endorsements described below, excluding all bankruptcy exceptions, showing
title to the Monterey Real Property vested of record in the transferee subject (the "Title
Policy "). The Title Policy shall contain endorsements required by Copelands.
e) Satisfaction of City Conditions. City shall have certified that all of the
City Conditions have been satisfied and City is obligated to sell the Monterey Real
Property.
f) Performance b.City. City shall have performed all obligations to be
performed by City, and shall have made all deliveries required of City, pursuant to this
Agreement prior to Closing.
Section 4.04 Time for Closing. The Closing shall take place fifteen (15) days after the
conditions set forth in Sections 4.02 and 4.03 above have been satisfied. The date of the Closing
may be extended by agreement of the parties. On the Closing Date, sole and exclusive
possession of the Monterey Real Property shall be delivered to Copelands, or its allowable
assignee, by City.
Section 4.05 Deposits by City. No later than one business day before the Closing Date,
City shall deposit with Escrow Company:
a) The Grant Deed in the form attached hereto as Exhibit F duly executed by City,
acknowledged and in recordable form,
b) If required by Escrow Company, City's FIRPTA Affidavit in a form reasonably
acceptable to City, duly executed by City.
c) If required by Escrow Company, a California Form 593 -C Real Estate Withholding
Exemption Certificate on Form 593 -C, or equivalent, duly executed by City ( "Form 593 -
C").
d) The Subdivision Map, or other evidence of valid subdivision by means other than a
Subdivision Map (such as by lot line adjustment), in the form approved by the Parties.
e) Such other bills of sale, assignments and other instruments of transfer or conveyance as
Copelands may reasonably request or as may be otherwise necessary to evidence and
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effect the sale, assignment, transfer, conveyance and delivery of the Monterey Real
Property to Copelands.
Section 4.06 Deposits by Copelands. No later than one business day before the Closing
Date, Copelands shall deposit with Escrow Company:
a) The monies required pursuant to Sections 2.02 and 2.03.
b) Counterpart originals of the document listed in Sections 4.05(a) above.
C) Such other instruments or documents as may be necessary to effect the sale,
assignment, transfer, conveyance and delivery of the Monterey Real Property to
Copelands.
Section 4.07 Escrow Company's Actions. Upon the Closing Date, when Escrow
Company holds the items required to be deposited by City and Copelands as described above,
Escrow Company is prepared to issue and deliver to Copelands the Title Policy, and Escrow
Company has received written authorization to close the escrow from Copelands and City,
Escrow Company is hereby instructed and authorized to:
a) Record the Subdivision Map or other document evidencing the valid subdivision
of the Monterey Real Property from the Palm Real Property.
b) Record the Grant Deed in the Office of County Recorder of the County,
C) Pay any transfer taxes.
d) Instruct the County Recorder to return the Grant Deed to Copelands.
e) Disburse to City from the funds deposited into Escrow by Copelands the Purchase
Price less City's share of prorations and other closing costs hereunder.
f) Disburse from funds deposited by Copelands amounts toward payment of all other
items chargeable to the account of Copelands hereunder, and disburse the balance
of such funds, if any, to Copelands.
g) Deliver to Copelands the Non - foreign Affidavit, if any, the Form 593 -C, if any,
and the Title Policy.
ARTICLE V - ADJUSTMENT AND PRORATIONS
At Closing, the following items shall be adjusted and prorated between Copelands and
City by Escrow Company:
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Section 5.01 Taxes. Taxes and assessments on the Monterey Real Property for the period
prior to the Closing shall not be prorated, as the Monterey Real Property shall have been exempt
from property taxes prior to the Closing as a result of its ownership by City; however, as of the
Closing, the Monterey Real Property shall be subject to real property taxes and assessments, all
of which shall be paid by Copelands outside of Escrow.
Section 5.02 Utilities and Contracts. All costs, if any, of utilities furnished to the Monterey
Real Property shall be prorated as of the Closing Date.
ARTICLE VI - CLOSING COSTS; NO BROKERS
Section 6.01 Copelands to Pay All Closing. At Closing, Copelands shall
pay all of the following costs of the Closing, through Escrow: All fees and costs for releasing all
encumbrances, liens and security interests of record which are not allowable Conditions to Title,
all applicable sales, use, documentary or other transfer taxes arising out of the sale of the
Monterey Real Property by City to Copelands, all outside counsel fees for the transactions
contemplated hereunder and not paid prior to Closing pursuant to Section 11.06, the premium for
the Title Policy for the Monterey Real Property and any endorsements requested by Copelands
and all fees to the Escrow Company.
Section 6.02 No Brokerage Commissions. Each of City and Copelands represents
and warrants to the other that it has not dealt with or been represented by any brokers or finders
in connection with the purchase and sale of the Monterey Real Property. Each Party shall
indemnify and hold the other free and harmless from and against all costs and liabilities
including, without limitation, attorneys' fees and the costs and expenses of litigation, for causes
of action or proceedings which may be instituted by any other broker, agent or finder, licensed or
otherwise, claiming through, under or by reason of the conduct of the indemnifying Party in
connection with this transaction.
Section 6.03 Other Closing Costs. Any and all other closing costs related to the transaction
shall be paid by the Parties in the manner consistent with customary practice in San Luis Obispo
County.
Section 6.04 Post - Closing Prorations. Should any real estate taxes, bonds, assessments,
utilities, other expenses of the Monterey Real Property or liens relating to periods before the
Closing Date be omitted from such prorations for any reason, including without limitation late
assessment or Title Company error, then after the Closing, City shall remain solely responsible
for, and shall promptly pay before delinquency, any such real estate taxes, bonds, assessments,
utilities, other expenses of the Monterey Real Property or liens relating to periods before the
Closing Date. This obligation shall survive the Closing.
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ARTICLE VII - POST CLOSING OBLIGATIONS
Section 7.01 Monterey Frontage Retrofit. Within thirty (30) days after the date on which
this Agreement shall have been executed by City, Copelands shall commence the seismic retrofit
on the buildings it currently owns on Monterey Street, San Luis Obispo, California, located at
840 Monterey Street, 848 Monterey Street, 868 Monterey and 870 Monterey. Not later than July
1, 2015, Copelands shall complete such seismic retrofit.
Section 7.02 Reconfigure Parking. Promptly after the Closing Date, Copelands shall begin
to, and shall thereafter diligently continue until completion, to demolish the 861/863 Palm
Building (preserving the Shanghai Low Restaurant sign for use as contemplated in the 2009
EIR), create new parking on the 861/863 Palm Parcel and reconfigure the public parking on the
Palm Real Property in Lots 3 and 11 as shown on Exhibit D. All costs associated with the
demolition of the 861/863 Palm Building and construction of the reconfigured parking lot,
including supplying and installing the parking meter poles, will be paid by Copelands, except
City will supply and install the parking meter heads at its cost. Prior to the demolition of the
861/863 Building, Copelands shall also be responsible for the removal of such asbestos
containing building materials as are disclosed in that certain letter, dated November 11, 2011,
from West Coast Safety Consultants, to Copelands Properties, with respect to its inspection for
asbestos containing building materials at two commercial structures located at 761 and 763 Palm
Street [sic], San Luis Obispo, California, such removal and disposition of such materials to be
completed in compliance with applicable law, at Copelands' sole expense. As provided in the
Lease for Public Parking, public parking on the Palm Real Property shall continue to exit over
the Monterey Real Property after the Closing until the Lease for Public Parking is terminated as
provided therein.
Section 7.03 Redevelopment of Monterey Real Property. Promptly after the Closing Date
and recordation of the Subdivision Map, but not later than four (4) calendar years after the
Closing Date (the "Monterey Construction Deadline "), Copelands shall redevelop the Monterey
Real Property by substantially completing the Monterey Improvements.
Section 7.04 Survival of Obligations Post - Closing. Without limitation, the obligations of
Copelands set forth in this Article VII shall survive the Closing of the Escrow and the
recordation of the Grant Deed.
ARTICLE VIII - INDEMNIFICATIONS
Section 8.01 Indemnification by As of the Closing Date, City shall indemnify, defend
and hold Copelands harmless of, against and from any and all liabilities, claims, demands and
expenses, of any kind or nature (except those items which by this Agreement specifically become
the obligation of Copelands) accruing on or before the Closing Date, including any claim for
labor, materials or supplies in connection with work performed by the City on the Monterey Real
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Property, and which are in any way related to the ownership or operation of the Monterey Real
Property by the City.
Section 8.02 Indemnification by Copelands. As of the Closing Date, Copelands shall
indemnify, defend and hold City harmless of, against and from any and all liabilities, claims,
demands and expenses of any kind or nature (except those items which by this Agreement
specifically remain the obligation of City) accruing after the Closing Date, including any claim
for labor, materials or supplies in connection with work performed on the Monterey Real
Property (except as provided in the Lease for Public Parking), and all expenses related thereto
including, without limitation, court costs and attorneys' fees. Without limitation, from and after
the date of execution of this Agreement, Copelands shall also indemnify and defend City, using
counsel approved by City in its absolute discretion, from any and all third party challenges to this
Agreement or any of the transactions contemplated hereunder or any challenge to any
environmental impact report ( "EIR "), including any addendum or supplement, proposed, drafted
or certified in connection with any of the foregoing transactions.
ARTICLE IX - REMEDIES
Section 9.01 Right to Cure. Should either Party default under any of its obligations
hereunder other than its obligation to close by the Outside Closing Date, the other Party shall
provide notice of such default to the defaulting Party, who will be allowed to cure any such
default for a period of five (5) business days after notice is given the defaulting Party or if the
nature of the breach is that it cannot reasonably be cured within such five (5) day period, then the
defaulting Party will be allowed to commence to correct such breach within such five (5) day
period and diligently proceed therewith to completion. No grace or cure period is allowed for the
failure of either Party to cause the Closing to occur prior to or on the Outside Closing Date.
Section 9.02 Termination and Other Remedies. Should the Closing not occur on or before
the Outside Closing Date for any reason other than the default of City under this Agreement, then
this Agreement shall be terminated, and City shall be entitled to keep all of the Option Payments,
and Copelands acknowledges and agrees it shall have no rights either to the Option Payments or
the Monterey Real Property, including without limitation any right to bring any action seeking
specific performance of this Agreement, damages for its breach, or refund of the Option
Payments. Should the Closing fail to occur on or before the Outside Closing Date due to default
of City which is not cured within any applicable cure period, then Copelands may elect to
terminate this Agreement by written notice thereof to the City, and City shall pay to Copelands
the Option Payments within thirty (30) days of such termination.
Should either Party default under its obligations pursuant to this Agreement, and should such
default result in the Closing failing to occur, then the non - defaulting Party shall have the right to
bring an action against the defaulting Party seeking specific performance of this Agreement.
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Copelands and City agree that in the event the Closing fails to occur because of Copelands'
default, breach or failure to perform hereunder and not due to City's wrongful acts, omissions or
breach, the damages to City would be extremely difficult and impracticable to ascertain, and that
therefore, the sum of the Option Payments and all interest earned thereon is a reasonable estimate
of the damages to City. Accordingly, Copelands agrees that upon (1) Copelands' receipt of
notice of such default or breach from City, (2) failure by Copelands to cure said breach, default
or failure to perform within five (5) days after receipt of such notice, and (3) failure to close
escrow occurs because of such breach, default or failure to perform, then City shall retain the
Option Payments (and all interest earned thereon) previously delivered to City as liquidated
damages, as City's sole remedy in the event of any such material breach or default by Copelands
hereunder.
Initials of Copelands: Initials of City:
Section 9.03 Post - Closing Remedies. In the event that Copelands defaults in performing
any obligations under Section 7.02 of this Agreement, and fails to cure any such default within
the cure period provided pursuant to Section 9.01, then City shall have the right to seek specific
performance as well as any other rights or remedies to which City may be entitled under
applicable law and City shall have also the right to terminate the Palm Development Site
Agreement, to keep any and all deposits and option payments previously made by Copelands in
connection therewith and to retain title to the 861/863 Palm Parcel. In lieu of any other remedies
to which it might otherwise be entitled under applicable law, including without limitation the
right to seek monetary damages, specific performance or rescission of this Agreement, should
Copelands fail to perform any of its post - closing obligations stated in Article VII (other than
under Section 7.02) timely, and fails to cure any such default within the cure period provided
pursuant to Section 9.01, such failure shall constitute a default by Copelands hereunder, and City,
as its sole and only remedy therefor, shall have the right to terminate the Palm Development Site
Agreement and to keep any and all deposits and option payments previously made by Copelands
in connection therewith and to retain title to the 861/863 Palm Parcel.
ARTICLE X - REPRESENTATIONS AND WARRANTIES
Section 10.01 Representations and Warranties of Copelands. Copelands makes the
following representations and warranties to City:
a) Copelands is a California limited liability company duly organized and validly
existing under the laws of the State of California, and is qualified to do business
in the State of California.
b) Copelands has the right, power and authority to enter into this Agreement and to
perform its obligations hereunder, and the person(s) executing this Agreement on
behalf of Copelands have the right, power and authority to do so.
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C) This Agreement constitutes the legal, valid and binding obligation of Copelands
enforceable against Copelands in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium and other principles relating to or limiting the rights of contracting
parties generally. Neither this Agreement nor the consummation of any of the
transactions contemplated hereby violates or shall violate any provision of any
agreement or document to which Copelands is a party or to which Copelands is
bound. No consent from any third party is required before the Monterey Real
Property may be purchased by Copelands.
d) Copelands is not bankrupt or insolvent under any applicable Federal or state
standard. Copelands has not filed for protection or relief under any applicable
bankruptcy or creditor protection statute. Copelands has not been threatened by
creditors with an involuntary application of any applicable bankruptcy or creditor
protection statute. Copelands is not entering into the transactions described in this
Agreement with an intent to defraud any creditor or to prefer the rights of one
creditor over any other. City and Copelands have negotiated this Agreement at
arms - length and the consideration to be paid represents fair value for the assets to
be transferred.
All representations and warranties of Copelands in this Agreement are made as of the date of this
Agreement and as of the Closing, and shall survive the Closing and the recordation of the Grant
Deed. It shall be a material default if Copelands is unable to make such representations and
warranties truthfully as of the Closing Date.
Section 10.02 Representations and Warranties of City. City makes the following
representations and warranties to Copelands:
a) City has not encumbered, transferred, optioned, assigned or otherwise conveyed
its interest or any portion of its interest in the Monterey Real Property or any
portion thereof except as stated in the Preliminary Report, nor has City entered
into any agreement (other than this Agreement or the agreements described in
Section 11.09) to do so. Without limitation of the foregoing, City has provided no
right or option to purchase the Monterey Real Property, or any part thereof, to any
third person including any tenant of any portion of the Monterey Real Property.
d) To City's actual knowledge, the Monterey Real Property is not in violation, nor
has been or is currently under investigation for violation of any federal, state or
local law, ordinance or regulation relating to industrial hygiene, worker health and
safety, or to the environmental conditions in, at, on, under or about the Monterey
Real Property including, but not limited to, soil and groundwater conditions; the
Monterey Real Property has not been subject to a deposit of any Hazardous
Substance. To City's actual knowledge, neither City nor any third party has used,
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generated, manufactured, stored or disposed in, at, on, under or about the
Monterey Real Property or transported to or from the Monterey Real Property any
Hazardous Substance other than in compliance with all applicable Laws. To
City's actual knowledge, there has been no discharge, migration or release of any
Hazardous Substance from, into, on, under or about the Monterey Real Property.
To City's actual knowledge, there is not now, nor has there ever been on or in the
Monterey Real Property underground storage tanks or surface impoundments, any
asbestos - containing materials or any polychlorinated biphenyls used in hydraulic
oils, electrical transformers or other equipment. City assigns to Copeland,
effective upon the Closing, all claims, counterclaims, defenses or actions, whether
at common law, or pursuant to any other applicable federal or state or other laws
which City may have against any third parties relating to the existence of any
Hazardous Substance in, at, on, under or about the Monterey Real Property.
e) To City's actual knowledge, City is not in default under, nor has City received any
notice that any event has occurred which with the giving of notice or the passage
of time, or both, would constitute a default under, any contract, transaction,
agreement, covenant, condition, restriction, lease, easement, encumbrance or
instrument pertaining to the Monterey Real Property.
f) To City's actual knowledge, there are no lawsuits, claims, suits, proceedings or
investigations pending nor, to City's actual knowledge, threatened against or
affecting City or any of the Monterey Real Property nor, to City's actual
knowledge, is there any basis for any of the same. There are no lawsuits, suits or
proceedings pending in which City is the plaintiff or claimant and which relate to
the Monterey Real Property.
As used herein, "to City's actual knowledge" means to the actual knowledge as of the date first
written above of Jay Walter, the Public Works Director for the City, and J. Christine Dietrick,
City Attorney for the City, but without any duty to investigate, make inquiries or undertake any
due diligence whatsoever. All representations and warranties of City in this Agreement are made
as of the date of this Agreement and as of the Closing, and shall survive the Closing and the
recordation of the Grant Deed for a period of one year. It shall be a material default if City is
unable to make such representations and warranties truthfully as of the Closing Date.
ARTICLE XI - MISCELLANEOUS
Section 11.01 Notices. All notices, demands or other communications of any type
collectively "Notices ") given by City to Copelands or by Copelands to City, whether required by
this Agreement or in any way related to this transaction, shall be sufficient if in writing and
delivered by hand or Federal Express or similar courier service to the person to whom the Notice
is directed or mailed by United States Mail, as a Registered or Certified item, Return Receipt
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Requested, at or to the addresses specified in this section. Notices delivered by mail shall be
deposited in a Post Office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows:
City: City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Attention: City Manager
With copies to: City Attorney
990 Palm Street
San Luis Obispo, California 93401
Copelands: Thomas M. Copeland, Manager
SLO Chinatown, LLC
Post Office Box 12260
San Luis Obispo, California 93406
With Copies to: Suzanne Fryer
Copelands' Properties
1026 Chorro Street, Suite 200
Post Office Box 12260
San Luis Obispo, California 93406
Section 11.02 Governing Law; Plurality; and Gender. This Agreement shall be construed
and interpreted in accordance with the laws of the State of California. Where required for proper
interpretation, words in the singular shall include the plural; the masculine gender shall include
the neuter and the feminine, and vice versa.
Section 11.03 Amendment. This Agreement may not be modified or amended, except by an
agreement in writing signed by the parties to this Agreement. The parties may waive any of the
conditions contained in this Agreement or any of the obligations of the other party under this
Agreement, but any such waiver shall be effective only if in writing and signed by the party
waiving such conditions or obligations.
Section 11.04 Authorization. The person executing this Agreement on behalf of Copelands
hereby warrants and represents to City that all necessary legal prerequisites to that party's
execution of this Agreement have been satisfied and that he or she is fully authorized to do so
and to bind the party of whose behalf he or she signs. The person executing this Agreement on
behalf of City claims to do so to the extent the authority to do so has been duly delegated to that
person by the City Council of the City in accordance with applicable law.
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Section 11.05 Time of Essence. Time is of the essence in this Agreement.
Section 11.06 Attorneys' Fees for Transaction and for Disputes. Copelands shall pay all of
the City's outside counsel's fees and costs incurred in connection with the documentation and
negotiation of this Agreement as of the date of the execution of this Agreement upon the City's
execution and delivery of this Agreement to Copelands, and all of City's other outside counsel
fees at Closing. If it becomes necessary for either party to file a suit to enforce this Agreement or
any provisions contained in this Agreement, or to seek damages for a breach, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages, reasonable attorneys'
fees incurred in such suit.
Section 11.07 Consent to Jurisdiction. City and Copelands agree that any suit, action or
other legal proceeding arising out of or in connection with this Agreement may be brought, and
shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State of
California and hereby consent to the jurisdiction of any such court in any such suit, action or
proceedings. City and Copelands hereby waive any objection which such party may have to the
laying of any such suit, action or proceeding in any such court.
Section 11.08 Ca tpions. The description headings of the several Articles, Sections and
Paragraphs contained in this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this Agreement.
Section 11.09 Entire Agreement. Except for the agreements also described in this
Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes the
entire agreement among the parties pertaining to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements and understandings of the parties in
connection therewith, including but not limited to that certain Option to Purchase Real Property,
dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as of
April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 2008
and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011. No
representation, warranty, covenant, agreement or condition not expressed in this Agreement shall
be binding upon the parties to this Agreement or shall affect or be effective to interpret, change
or restrict the provisions of this Agreement.
Section 11.10 Counterparts. A counterpart of this Agreement with separate but fully
executed signature pages attached thereto shall have the full force and effect of an original
executed instrument.
Section 11.11 Successors and Assigns. Other than an assignment to a qualified intermediary
to facilitate a Section 1031 exchange, or an assignment of Copelands' rights but not its
obligations under this Agreement to an affiliate for purposes of vesting the title to the Monterey
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Real Property in such affiliate, this Agreement shall not be assignable by either party, and
nothing contained herein shall inure to the benefit of other parties.
Section 11.12 Exchange. The City acknowledges that Copelands may wish to effect a tax
deferred exchange as provided by Internal Revenue Code Section 1031, as amended and the
treasury regulations promulgated there under. Copelands' rights under this Agreement may be
assigned to a Qualified Intermediary for the purpose of completing such an exchange, so long as
such assignment does not impose on the City any obligations greater than the terms and
conditions of this Agreement, including any obligation to pay any additional costs, and does not
result in any delay in the Closing Date or the performance of Copelands' obligations hereunder.
The parties agree to cooperate in all reasonable respects with each other and any Qualified
Intermediary of the other party in a manner necessary to complete such an exchange. Nothing
herein shall require any party to take title to any real property as part of its obligation to
cooperate in any such trade or exchange.
Section 11.13 Tax Reporting. Escrow Company is designated the "real estate reporting
person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, and
Treasury Regulations Section 1.6045 4, and any instructions or settlement statement prepared by
Escrow Company shall so provide. Escrow Company shall be responsible for filing Form 1099 S
with the Internal Revenue Service.
Section 11.14 Force Majeure. Neither Party shall be liable for any failure or delay in its
performance under this Agreement (other than for delay in the payment of money due and
payable hereunder) if and to the extent said failures or delays are caused by causes beyond that
Party's control that occur without its fault or negligence, including without limitation, fire,
explosion, flood, severe weather, accident, strike, governmental act, embargo, shortages of labor,
materials or fuel, failure by, or inability of , contractors or other third parties to perform,
computer system failure, war or military action, riot, or civil disturbance; provided that, as a
condition to its claim of nonliability, the Party experiencing the difficulty shall give the other
Party written notice of any such failure or delay promptly and in any event not later than five (5)
business days after such failure or delay begins, and such notice shall describe in detail the reason
for such failure or delay. Further, such Party experiencing the difficulty shall use all
commercially reasonable efforts to correct the failure or delay as quickly as possible under the
circumstances. Dates by which performance obligations are scheduled to be met will be
extended for a period of time equal to the time lost due to any delay so caused.
ARTICLE XII - EXHIBITS
All Exhibits shall be approved by each party, which approval shall be evidenced by such
party's initials on each Exhibit hereto.
Exhibit A Monterey Real Property Map
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Exhibit B Preliminary Title Report
Exhibit C Real Property Map
Exhibit D Parking Lot Plan
Exhibit E Lease for Public Parking
Exhibit F Grant Deed
This Agreement is executed by the parties as of the date first written above.
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SLO CHINATOWN, LLC,
a California limited liability company
Thomas M. Copeland
Its: Manager
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CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
By:
Mayor
Attest:
By:_
City Clerk
Approved as to Form:
By:
City Attorney
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ATTACHMENT 4
TABLE OF CONTENTS
ARTICLEI - DEFINITIONS .......................................................................................... ..............................1
Section 1.01 861/863 Palm Building ..................................................................... ..............................1
Section 1.02 861/863 Palm Parcel ......................................................................... ..............................1
Section 1.03 861/863 Palm Parcel Agreement ....................................................... ..............................1
Section1.04 Closing .............................................................................................. ..............................1
Section1.05 Closing Date ...................................................................................... ..............................1
Section1.06 Closing Payment ............................................................................... ..............................1
Section1.07 Escrow ............................................................................................... ..............................1
Section1.08 Escrow Company .............................................................................. ..............................2
Section 1.09 Escrow Instructions ........................................................................... ..............................2
Section 1.10 Lease for Public Parking ................................................................... ..............................2
Section 1.11 Monterey Improvements ................................................................... ..............................2
Section 1.12 Monterey Real Property .................................................................... ..............................2
Section 1.13 Palm Development Site ..................................................................... ..............................2
Section1.14 Palm Real Property ............................................................................ ..............................2
Section 1.15 Palm Development Site Agreement .................................................. ..............................2
Section 1.16 Preliminary Title Report .................................................................... ..............................3
Section1.17 Purchase Price ................................................................................... ..............................3
Section1.18 Real Property ..................................................................................... ..............................3
Section 1.19 Reconfiguration Scope of Work ................................................... - .-- .............. ............. 3
Section1.20 Title Company ................................................................................... ..............................3
ARTICLE II - PURCHASE AND SALE ........................................................................ ..............................3
Section 2.01 Purchase and Sale .............................................................................. ..............................3
Section2.02 Purchase Price ................................................................................... ..............................3
Section 2.03 Payment for Mitigation of Public Parking Removal .......................... ..............................4
Section2.04 Payment ............................................................................................. ..............................5
Section 2.05 Due Diligence; Condition of Property ............................................... ..............................5
Section2.06 Release .............................................................................................. ..............................6
Section2.07 Subdivision Map ............................................................................... ..............................7
ARTICLE III - TITLE TO REAL PROPERTY ............................................................. ............................... 8
Section 3.01 Condition of Title of Monterey Real Property ................................... ..............................8
Section3.02 Evidence of Title .............................................................................. ............................... 8
Section3.03 Title Vesting ...................................................................................... ..............................8
ARTICLEIV - CLOSING ............................................................................................... ..............................8
Section4.01 Closing .............................................................................................. ..............................8
Section 4.02 Conditions to Closing -- City . ......................................................................................... 9
Section 4.03 Conditions to Closing -- Copelands .................................................. ..............................9
Section4.04 Time for Closing .............................................................................. .............................10
Section4.05 Deposits by City ............................................................................... .............................10
Section 4.06 Deposits by Copelands ................................................................... ............................... l l
Section 4.07 Escrow Company's Actions ........................................................... ............................... l 1
ARTICLE V - ADJUSTMENT AND PRORATIONS ................................................. ..............................1 1
Section5.01 Taxes ................................................................................................ .............................12
Section 5.02 Utilities and Contracts ...................................................................... .............................12
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ARTICLE VI - CLOSING COSTS; NO BROKERS ..................................................... .............................12
Section 6.01 Copelands to Pay All Closing Costs ................................................. .............................12
Section 6.02 No Brokerage Commissions ............................................................. .............................12
Section 6.03 Other Closing Costs ......................................................................... .............................12
Section 6.04 Post - Closing Prorations .................................................................... .............................12
ARTICLE VII - POST CLOSING OBLIGATIONS ...................................................... .............................13
Section 7.01 Monterey Frontage Retrofit .............................................................. .............................13
Section 7.02 Reconfigure Parking ........................................................................ .............................13
Section 7.03 Redevelopment of Monterey Real Property ..................................... .............................13
Section 7.04 Survival of Obligations Post - Closing ............................................... .............................13
ARTICLE VIII - INDEMNIFICATIONS ...................................................................... .............................13
Section 8.01 Indemnification by City,....__ ... ..... - . ...... I ............. I .................. I ....... 11 ...... ....... ....13
Section 8.02 Indemnification by Copelands .......................................................... .............................14
ARTICLE IX - REMEDIES ........................................................................................... .............................14
Section9.01 Right to Cure .................................................................................... .............................14
Section 9.02 Termination and Other Remedies ..................................................... .............................14
Section 9.03 Post - Closing Remedies ..................................................................... .............................15
ARTICLE X - REPRESENTATIONS AND WARRANTIES ...................................... .............................15
Section 10.01 Representations and Warranties of Copelands ............................. .............................15
Section 10.02 Representations and Warranties of City ....................................... .............................16
ARTICLE XI - MISCELLANEOUS .............................................................................. .............................17
Section11.01 Notices .................................................. ............................... ....................17
Section 11.02 Governing Law; Plurality; and Gender ........................................ .............................18
Section11.03 Amendment ................................................................................. .............................18
Section 11.04 Authorization ............................................................................... .............................18
Section11.05 Time of Essence ........................................................................... .............................19
Section 11.06 Attorneys' Fees for Transaction and for Disputes ........................ .............................19
Section 11.07 Consent to Jurisdiction ................................................................. .............................19
Section11.08 Captions ....................................................................................... .............................19
Section 11,09 Entire Agreement ............................................. ............................... ..19
Section11.10 Counterparts ................................................................................. .............................19
Section 11.11 Successors and Assigns ................................................................ .............................19
Section11.12 Exchange ..................................................................................... .............................20
Section11.13 Tax Reporting .............................................................................. .............................20
Section11.14 Force Majeure .............................................................................. .............................20
ARTICLE XII - EXHIBITS 20
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AGREEMENT OF PURCHASE AND SALE
861/863 Palm Parcel
This Agreement ( "Agreement ") is made and entered into as of December 2011, by and
between CP MONTEREY MORRO, LLC, a California limited liability company ( "Copelands "), and
the CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ( "City "). City and
Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties ".
AGREEMENT
ARTICLE I - DEFINITIONS
The following terms shall have the meanings set forth in this Article I when used in this
Agreement:
Section 1.01 861/863 Palm Building. "861/863 Palm Building" means any and all
structures located on the 861/863 Palm Parcel, commonly referred to as the "Yung building ".
Section 1.02 861/863 Palm Parcel. "861/863 Palm Parcel" means that certain real property
generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002 -416-
031 which is currently owned by Copelands, including without limitation the land and all
appurtenant rights, interests, easements, tenements, estates, buildings and improvements thereon,
and which is legally described as stated in Exhibit A hereto.
Section 1.03 Closiniz. "Closing" means the date upon which and the process by which
Escrow Company will conclude and consummate the purchase and sale of the 861/863 Palm
Parcel and as more fully described in Article IV below.
Section 1.04 Closing Date. "Closing Date" shall mean the date on which the Closing
occurs.
Section 1.05 Closing Payment. "Closing Payment" means the monetary consideration to be
paid by City to Copelands for the 861/863 Palm Parcel as more fully described in Section 2.02
below.
Section 1.06 Escrow. "Escrow" means the escrow to be established at Escrow Company
for the transfer of the 861/863 Palm Parcel as defined below. The Escrow shall be established by
Copelands not later than fifteen (15) business days prior to the Closing Date.
Section 1.07 Escrow Company. "Escrow Company" means First American Title Insurance
Company, National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek,
California 94596, or such other escrow company doing business in San Luis Obispo County,
California, as City and Copelands may designate.
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Section 1.08 Escrow Instructions. "Escrow Instructions" means the directions to the
Escrow Company provided herein and in such additional instructions prepared by Escrow
Company and approved by the Parties. This Agreement shall constitute joint escrow instructions
to Escrow Company. The Parties shall execute such additional instructions not inconsistent with
the provisions of this Agreement which may be reasonably required by Escrow Company. The
Parties shall be bound by Escrow Company's general instructions, but if any conflict between the
provisions of this Agreement and the provisions of Escrow Company's general instructions exists
or arises, then the provisions of this Agreement shall control.
Section 1.09 Monterey Parcels Agreement. "Monterey Parcels Agreement" means that
certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and delivered
between the City and SLO Chinatown, LLC.
Section 1.10 Monterey Real Property. "Monterey Real Property" means the land and all
appurtenant rights, interests, easements, tenements, estates and improvements which consist of
the portion of the Real Property which is adjacent to Monterey Street as more fully described in
the Monterey Parcels Agreement.
Section 1.11 Palm Development Site. "Palm Development Site" means the Palm Real
Property and the 861/863 Palm Parcel.
Section 1.12 Palm Real Property. "Palm Real Property" means the portion of the Real
Property which does not include the Monterey Real Property.
Section 1.13 Palm Development Site Agreement. "Palm Development Site Agreement"
means that certain Agreement of Purchase and Sale — Palm Development Site, to be executed and
delivered between the City and SLO Chinatown, LLC.
Section 1.14 Preliminary Title Report. "Preliminary Title Report" means the Preliminary
Report prepared by First American Title Insurance Company, dated November 4, 2011, as
Commitment No.: NCS- 512995 -CC, attached hereto as Exhibit B.
Section 1.15 Purchase Price. "Purchase Price" means the monetary consideration to be
paid by City to Copelands for the 861/863 Palm Parcel as more fully described in Section 2.02
below.
Section 1.16 Real Property. "Real Property" means the land and appurtenant rights and
improvements which consists of five (5) parcels located in the block between Palm and Monterey
Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified as
two (2) portions of APN #002 - 416 -034, and three (3) portions of APN #002 - 416 -029, as
described in the Monterey Parcels Agreement. The Real Property and the 861/863 Palm Parcel
are shown on Exhibit C attached hereto.
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Section 1.17 Reconfiguration Scope of Work. "Reconfiguration Scope of Work" means the
Copelands' completion of the demolition of the 861/863 Palm Building (preserving the Shanghai
Low Restaurant sign for use as contemplated in the 2009 EIR), creation of new parking on the
861/863 Palm Parcel and reconfiguration of the public parking on the Palm Real Property
including without limitation supplying and installing the required parking meter poles) in Lots 3
and 11 as shown on Exhibit D to the Monterey Parcels Agreement pursuant to issued
construction permits.
Section 1.18 Title Comp ."Title Company" means First American Title Company,
National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek, California
94596, or such other title company doing business in San Luis Obispo County, California, as City
and Copelands may designate.
ARTICLE II - PURCHASE AND SALE
Section 2.01 Purchase and Sale. Copelands agrees to sell to City, and City agrees to
purchase from Copelands, the 861/863 Palm Parcel upon the terms and conditions set forth in
this Agreement.
Section 2.02 Purchase Price. The purchase price for the 861/863 Palm Parcel is One Dollar
1). The cash purchase price is only part of the consideration for this transaction; other
consideration for it includes the concomitant sale by City to Copelands' affiliate, SLO
Chinatown, LLC, of the Monterey Real Property pursuant to the Monterey Parcels Agreement,
and the execution and delivery of the Purchase and Sale Agreement for the Palm Development
Site.
Section 2.03 Patent. The Purchase Price shall be paid as follows: prior to the Closing,
the cash due from City under Section 2.02 of this Agreement shall be deposited by the City into
Escrow by check or in cash.
Section 2.04 Due Diligence. City acknowledges that it has performed such due diligence
as it elects to perform as to the condition of the title to the 861/863 Palm Parcel and the
suitability of the site of the 861/863 Palm Parcel for its proposed future use as a parking lot.
Subject to Copelands' completion of the Reconfiguration Scope of Work, City has, or prior to
Closing shall have, inspected, investigated and tested the condition of the soil and the geology of
the site and the presence of hazardous substances or archaeological materials and shall have
accepted such conditions, and all aspects of the 861/863 Palm Parcel in its "AS -IS, WHERE -
IS" condition with all faults and defects, whether patent or latent, known or unknown. Further,
in entering into this Agreement and closing the Escrow contemplated hereunder, City expressly
represents and warrants to Copelands (i) that City is relying and shall rely solely on its own due
diligence to evaluate all aspects of the 861/863 Palm Parcel and its suitability for City's planned
use without any representations and warranties of any kind or nature concerning the 861/863
Palm Parcel or any aspect thereof, either express or implied, from or on behalf of Copeland or
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any of its employees, agents or independent contractors, except as otherwise expressly provided
in this Agreement, (ii) that neither Copeland nor any of its employees, agents or independent
contractors has made or is authorized to make any representation or warranty of any kind or
nature concerning the 861/863 Palm Parcel, any aspect thereof, or its suitability, either express or
implied, nor any warranty, representation or promises of remediation or cure including, without
limitation, any representation or warranty regarding the geological, subsurface, environmental,
architectural, engineering or other physical aspects or condition of the 861/863 Palm Parcel,
including without limitation any subsidence or other issues arising from the possible presence of
a subterranean creek under or near the 861/863 Palm Parcel, the rents, income, expenses, market
or other financial aspects or condition of the 861/863 Palm Parcel, the compliance with the
861/863 Palm Parcel with any applicable law, code, rule or regulation including without
limitation any environmental protection, pollution, land use, handicapped access or other laws,
the zoning of the 861/863 Palm Parcel, the accuracy or completeness of any documents,
information or other data concerning the 861/863 Palm Parcel or any aspect thereof furnished or
to be furnished to City by or on behalf of Copeland or any of its employees, agents or
independent contractors or in any other manner concerning the 861/863 Palm Parcel or any
aspect thereof, (iii) that any and all due diligence materials provided by the Copelands to the City
were and are solely for City's specific and limited use in connection with its due diligence and
evaluations concerning the 861/863 Palm Parcel, (iv) that any due diligence materials prepared
by any third party are being furnished to City as an accommodation only without any warranty by
Copeland or such third party as to the accuracy or completeness thereof, except as otherwise
expressly provided by any separate agreement between City and any such third party, and (v) that
Copeland, and any agency of Copeland, shall not have any obligations whatsoever to perform any
tests, prepare any reports, make any repairs or take any other action, including governmental
actions, or incur any expense with respect to the 861/863 Palm Parcel, except as otherwise
expressly provided in this Agreement or the Monterey Parcels Agreement, including without
limitation the removal and disposal of certain asbestos - containing materials from the buildings
located on the 861/863 Parcel as required pursuant to Section 7.02 of the Monterey Parcels
Agreement.
Section 2.05 Release. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
AND IN THE MONTEREY PARCELS AGREEMENT, CITY AND ANYONE CLAIMING
BY, THROUGH OR UNDER CITY FULLY AND IRREVOCABLY RELEASES
COPELANDS, AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS,
REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT
COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS,
FIRMS, CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF
RELEASED COPELAND PARTIES "), FROM ANY AND ALL CLAIMS THAT IT MAY
NOW HAVE OR HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED
COPELAND PARTIES FOR ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES,
EXPENSES, DEMANDS, CLAIMS, ACTIONS OR CAUSES OF ACTION (COLLECTIVELY
CLAIMS ") ARISING FROM OR RELATED TO THE CONDITION OF THE 861/863 PALM
PARCEL OTHER THAN THE REMOVAL AND DISPOSAL OF CERTAIN ASBESTOS-
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CONTAINING MATERIALS FROM THE BUILDINGS LOCATED ON THE 861/863
PARCEL AS REQUIRED PURSUANT TO SECTION 7.02 OF THE MONTEREY PARCELS
AGREEMENT AND SECTION 7.01 HEREIN, INCLUDING, WITHOUT LIMITATION, ANY
PATENT OR LATENT CONSTRUCTION DEFECTS OR INADEQUACIES IN THE
CONDITION OF THE 861/863 PALM PARCEL, INCLUDING COST OF REPAIR OR
CORRECTION, ERRORS, OMISSIONS, OR OTHER CONDITIONS, LATENT OR
OTHERWISE, GEOTECHNICAL AND SEISMIC, SURFACE OR SUBSURFACE,
AFFECTING THE 861/863 PALM PARCEL OR ANY PORTION THEREOF WHETHER OR
NOT DISCOVERED PRIOR TO CITY'S INSPECTION OF THE 861/863 PALM PARCEL,
INCLUDING, WITHOUT LIMITATION:
A) ENVIRONMENTAL MATTERS WHICH WERE:
I) DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR IN
ANY ENVIRONMENTAL AUDIT OBTAINED BY CITY; OR
II) DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO THE
CLOSING; OR
III) OTHERWISE DISCLOSED BY COPELANDS TO CITY OR DISCOVERED BY CITY
AT ANY TIME PRIOR TO THE CLOSING;
B) THE ITEMS DESCRIBED IN SECTION 2.04 ABOVE; AND
C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY ANY
AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK OR
TAKING ACTION IN CONNECTION WITH THE 861/863 PALM PARCEL ON BEHALF OF
CITY OR ITS PREDECESSORS;
NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY CITY OF RELEASED
COPELANDS PARTIES SHALL NOT EXTEND TO ANY FRAUD BY COPELANDS UPON
CITY, WHICH IS EXPRESSLY RESERVED BY CITY ON BEHALF OF ITSELF AND
ANYONE CLAIMING BY, THROUGH OR UNDER CITY.
THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH CITY IS PRESENTLY
UNAWARE OR WHICH CITY DOES NOT PRESENTLY SUSPECT TO EXIST WHICH, IF
KNOWN BY CITY, WOULD MATERIALLY AFFECT CITY'S RELEASE OF COPELANDS.
CITY SPECIFICALLY WAIVES THE PROVISION OF CALIFORNIA CIVIL CODE
SECTION 1542, WHICH PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."
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IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THAT
ALL OF THE 861/863 PALM PARCEL IS SOLD BY COPELANDS AND PURCHASED BY
CITY SUBJECT TO THE FOREGOING. IT IS NOT CONTEMPLATED THAT THE
PURCHASE PRICE WILL BE INCREASED IF COSTS TO CITY ASSOCIATED WITH THE
861/863 PALM PARCEL PROVE TO BE LESS THAN EXPECTED NOR WILL THE
PURCHASE PRICE BE REDUCED IF THE CITY'S USE OF THE 861/863 PALM PARCEL
LEADS TO HIGHER COSTS. THIS PROVISION SHALL SURVIVE THE CLOSE OF
ESCROW AND RECORDING OF THE GRANT DEED.
Copelands' Initials: City's Initials:
i y
ARTICLE III - TITLE TO REAL PROPERTY
Section 3.01 Conditions of Title of 861/863 Palm Parcel. Copelands shall deliver title to
the 861/863 Palm Parcel to City subject to no leases and occupancies at the time of the Closing.
Title to the 861/863 Palm Parcel shall be conveyed by Copelands to City by a grant deed in form
and substance shown on Exhibit D hereto (the "Grant Deed "), and subject to the following
Conditions of Title ":
a) A lien to secure payment of real estate taxes and supplemental taxes, if
any, not delinquent;
b) Matters affecting the condition of title created by or with the written
consent of City; and
c) Printed exceptions and exclusions as specified on the Preliminary Title
Report.
Section 3.02 Evidence of Title. Delivery of title to the 861/863 Palm Parcel in accordance
with Section 3.01 above shall be evidenced by the willingness of the Title Company its written
commitment to issue, upon Closing, recordation of the Grant Deed, and payment of its regularly
scheduled premium, an ALTA Extended Coverage Owner's Policy in the appropriate amount
showing title to the 861/863 Palm Parcel vested in City subject to the Conditions of Title
described in Section 3.01.
Section 3.03 Title Vesting. Title shall be vested in the 861/863 Palm Parcel in the name of
City as provided above.
ARTICLE IV - CLOSING
Section 4.01 Closing. The sale and purchase transaction contemplated by this Agreement
shall be consummated pursuant to the Escrow Instructions not later than August 1, 2012 (the
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Outside Closing Date ") through an escrow established at the Escrow Company. If Copelands
requests an extension of the Outside Closing Date, and provides reasonable evidence showing
that such an extension is needed or advisable to effectuate the purposes of this Agreement,
including without limitation the Parties' desire to have the Closings under this Agreement and
the Monterey Parcels Agreement occur concomitantly if an extension of the Outside Closing
Date is provided in connection with the Monterey Parcels Agreement, the City Manager may
elect to extend the Outside Closing Date without further additional authorization from the City
Council, provided that no such extension of the Outside Closing Date be later than December 31,
2012 unless the further authorization of the City Council is first obtained. Any such extension of
the Outside Closing Date shall be documented in a writing executed and delivered by City
Manager, on behalf of City, and by Copelands' authorized member.
Section 4.02 Conditions to Closing -- Copelands. The Copelands' obligation to transfer or
cause the transfer of the 861/863 Palm Parcel to the City shall be subject to the fulfillment of the
conditions precedent (the "Copelands' Conditions ") set forth below:
a) Related Agreements. City shall have executed and delivered to Copelands
the following agreements: (i) Monterey Parcels Agreement; (ii) Agreement of Purchase
and Sale — Palm Development Site; (c) Lease of 955 Morro Street; (iv) Release and
Waiver, and (v) that certain lease agreement further described in Section 3.01(d) of the
Monterey Parcels Agreement (the "Lease for Public Parking ").
b) Closing under Monterey Parcels Agreement. City shall have taken all
actions necessary to close under the Monterey Parcels Agreement concurrently with the
Closing under this Agreement.
d) Satisfaction of City's Conditions. City shall have certified to Copelands
that all of the City's Conditions have been satisfied and City is obligated to buy the
861/863 Palm Parcel.
Section 4.03 Conditions to Closing -- City. The City's obligation to purchase the 861/863
Palm Parcel from the Copelands shall be subject to the fulfillment of the conditions precedent
the "City's Conditions ") set forth below:
a) Related Agreements. Copelands (or its related companies) shall have
executed and delivered to City the following agreements: (i) the Monterey Parcels
Agreement; (ii) Agreement of Purchase and Sale — Palm Parcels; (c) Lease of 955 Morro
Street; (iv) Release and Waiver and (v) the Lease for Public Parking.
b) Closing under Monterey Parcels Agreement. Copelands, and its related
company, SLO Chinatown, LLC, shall have taken all actions necessary to close under the
Monterey Parcels Agreement concurrently with the Closing under this Agreement.
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c) Condition of Property.. The Title Company shall have committed to
insure good title to the 861/863 Palm Parcel by issuing a title policy in the form described
in Section 4.03(d) below in the amount equal to the most recent value of the 861/863
Palm Parcel determined per an appraisal or broker opinion of value provided to Title
Company by City, subject only to the Conditions of Title described in Section 3.01.
d) Title Conditions. The Closing shall also be conditioned on the
commitment of the Title Company to issue, upon payment of its regularly scheduled
premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance,
with the endorsements described below, excluding all bankruptcy exceptions, showing
title to the 861/863 Palm Parcel vested of record in the transferee subject (the "Title
Policy "). The Title Policy shall contain endorsements required by City and approved by
the City Attorney in writing.
e) Satisfaction of Copelands' Conditions. Copelands shall have certified in
writing to City that all of Copelands' Conditions have been satisfied and Copelands is
obligated to sell the 861/863 Palm Parcel.
Section 4.04 Time for Closing. The Closing shall take place fifteen (15) days after the
conditions set forth in Sections 4.02 and 4.03 above have been satisfied. The date of the Closing
may be extended by agreement of the parties. On the Closing Date, sole and exclusive
possession of the 861/863 Palm Parcel shall be delivered to City by Copelands.
Section 4.05 Deposits by Copelands. No later than one business day before the Closing
Date, Copelands shall deposit with Escrow Company:
a) The Grant Deed in the form attached hereto as Exhibit D duly executed by
Copelands, acknowledged and in recordable form,
b) Copeland's FIRPTA Affidavit in a form reasonably acceptable to City,
duly executed by Copelands.
C) A California Form 593 -C Real Estate Withholding Exemption Certificate
on Form 593 -C, or equivalent, duly executed by Copelands ( "Form 593 -C ").
d) Such monies as are required to pay Copelands' share of the closing costs
and prorations discussed elsewhere herein.
e) Such other bills of sale, assignments and other instruments of transfer or
conveyance as City may reasonably request or as may be otherwise necessary to evidence
and effect the sale, assignment, transfer, conveyance and delivery of the 861/863 Palm
Parcel to City.
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Section 4.06 Deposits by Qfty. No later than one business day before the Closing
Date, City shall deposit with Escrow Company:
a) The monies required pursuant to Section 2.02, and such other monies as
are required to pay City's share of the closing costs and prorations discussed elsewhere
herein.
b) Counterpart originals of the document listed in Sections 4.05(a) above.
C) Such other instruments or documents as may be necessary to effect the
sale, assignment, transfer, conveyance and delivery of the 861/863 Palm Parcel to City.
Section 4.07 Escrow Company's Actions. Upon the Closing Date, when Escrow Company
holds the items required to be deposited by Copelands and City as described above, Escrow
Company is prepared to issue and deliver to City the Title Policy, and Escrow Company has
received written authorization to close the escrow from City and from Copelands, Escrow
Company is hereby instructed and authorized to:
a) Record the Grant Deed in the Office of County Recorder of the County.
b) Pay any transfer taxes.
C) Instruct the County Recorder to return the Grant Deed to City.
d) Disburse to Copelands from the funds deposited into Escrow by City the
Purchase Price less Copelands' share of prorations and other closing costs hereunder.
e) Disburse from funds deposited by City amounts toward payment of all
other items chargeable to the account of City hereunder, and disburse the balance of such
funds, if any, to City.
f) Deliver to City the Non - foreign Affidavit, if any, the Form 593 -C, if any,
and the Title Policy.
ARTICLE V - ADJUSTMENT AND PRORATIONS
At Closing, the following items shall be adjusted and prorated between City and
Copelands by Escrow Company:
Section 5.01 Taxes. Taxes and assessments on the 861/863 Palm Parcel for the period
prior to the Closing shall be prorated as of the Closing Date.
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Section 5.02 Utilities and Contracts. All costs, if any, of utilities furnished to the 861/863
Building before it is demolished as provided in the Monterey Parcels Agreement shall be paid or
payable by Copelands, whether incurred before or after the Closing Date. All costs, if any, of any
other utilities furnished to the 861/863 Palm Parcel shall be prorated as of the Closing Date.
ARTICLE VI - CLOSING COSTS; NO BROKERS
Section 6.01 Copelands' Costs. At Closing, Copelands shall pay the following costs of
Closing: all fees and costs for releasing all encumbrances, liens and security interests of record
which are not allowable Conditions to Title, all applicable sales, use, documentary or other
transfer taxes arising out of the sale of the Real Property and all fees to the Escrow Company, the
premium for the Title Policy issued to the City for the 861/863 Palm Parcel and any
endorsements required by City.
Section 6.02 No Brokerage Commissions. Each of City and Copelands represents and
warrants to the other that it has not dealt with or been represented by any brokers or finders in
connection with the purchase and sale of the Property. Each Party shall indemnify and hold the
other free and harmless from and against all costs and liabilities including, without limitation,
attorneys' fees and the costs and expenses of litigation, for causes of action or proceedings which
may be instituted by any other broker, agent or finder, licensed or otherwise, claiming through,
under or by reason of the conduct of the indemnifying Party in connection with this transaction.
Section 6.03 Other Closing osts. Any and all other closing costs related to the transaction
shall be paid by the Parties in the manner consistent with customary practice in San Luis Obispo
County.
Section 6.04 Post - Closing Prorations. Should any real estate taxes, bonds, assessments,
utilities, other expenses of the 861/863 Palm Parcels or liens relating to periods before the
Closing Date be omitted from such prorations for any reason, including without limitation late
assessment or Title Company error, then after the Closing, Copelands shall remain solely
responsible for, and shall promptly pay before delinquency, any such real estate taxes, bonds,
assessments, utilities, other expenses of the Property or liens relating to periods before the
Closing Date. This obligation shall survive the Closing.
ARTICLE VII - POST CLOSING OBLIGATIONS
Section 7.01 Reconfigure Parking; Removal of Asbestos. Promptly after the Closing Date,
Copelands shall begin, and shall thereafter diligently continue until completion, the
Reconfiguration Scope of Work. Copelands shall pay all costs of and associated with the
Reconfiguration Scope of Work (including without limitation supplying and installing the
required parking meter poles), except City will supply and install the parking meter heads at its
cost. Prior to the demolition of the 861/863 Building, Copelands shall also be responsible for the
removal of such asbestos containing building materials as are disclosed in that certain letter,
dated November 11, 2011, from West Coast Safety Consultants (the "Asbestos Report"), to
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Copelands Properties, with respect to its inspection for asbestos containing building materials at
two commercial structures located at 761 and 763 Palm Street [sic], San Luis Obispo, California,
such removal and disposition of such materials to be completed in compliance with applicable
law, at Copelands' sole expense.
Section 7.02 Survival of Obligations Post - Closing. Without limitation, the obligations of
Copelands set forth in this Article VII shall survive the Closing of the Escrow and the
recordation of the Grant Deed.
ARTICLE VIII - INDEMNIFICATIONS
Section 8.01 Indemnification by Copelands. As of the Closing Date, Copelands shall
indemnify, defend and hold City harmless of, against and from any and all liabilities, claims,
demands and expenses, of any kind or nature (except those items which by this Agreement
specifically become the obligation of City) accruing on or before the Closing Date, including any
claim for labor, materials or supplies in connection with the Reconfiguration Scope of Work, and
which are in any way related to the ownership or operation of the 861/863 Palm Parcel and for
any claim for labor, materials or supplies in connection with work performed by Copelands or its
agents or contractors on the 861/863 Palm Parcel after the Closing in connection with Copelands'
obligations to complete the Reconfiguration Scope of Work. Without limitation, from and after
the date of execution of this Agreement, Copelands shall also indemnify and defend City, using
counsel approved by City in its absolute discretion, from any and all third party challenges to this
Agreement or any of the transactions contemplated hereunder or any challenge to any
entitlement, approval and /or environmental impact report (" EIR ") proposed, drafted, certified or
certified in connection with any of the foregoing transactions, including any supplement or
addenda thereto.
Section 8.02 Indemnification by City. As of the Closing Date, City shall indemnify, defend
and hold Copelands harmless of, against and from any and all liabilities, claims, demands and
expenses of any kind or nature (except those items which by this Agreement specifically remain
the obligation of Copelands) accruing after the Closing Date, including any claim for labor,
materials or supplies in connection with work performed on the 861/863 Palm Parcel by the City
but not by Copelands or its agents or contractors), and all expenses related thereto including,
without limitation, court costs and attorneys' fees.
ARTICLE IX - REMEDIES
Section 9.01 Right to Cure. Should either Party default under any of its obligations
hereunder other than its obligation to close by the Outside Closing Date, the other Party shall
provide notice of such default to the defaulting Party, who will be allowed to cure any such
default for a period of three (3) business days after notice is given the defaulting Parry. No grace
or cure period is allowed for the failure of either Party to cause the Closing to occur prior to or on
the Outside Closing Date.
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Section 9.02 Termination. Should the Closing not occur on or before the Outside Closing
Date for any reason other than the default of Copelands under this Agreement, the Monterey
Parcels Agreement or the Palm Development Site Agreement, then this Agreement shall be
terminated, and City shall have no rights to bring any action seeking specific performance of this
Agreement or damages for its breach.
Copelands and City agree that in the event the Closing fails to occur because of Copelands'
default, breach or failure to perform hereunder or pursuant to the Monterey Parcels Agreement or
the Palm Development Site Agreement (prior to the expiration of any applicable grace or cure
period), and not due to City's wrongful acts, omissions or breach, then City shall have the right to
seek specific performance of this Agreement, or damages for its breach, or both, and without
limitation to record a lis pendens encumbering title to the 861/863 Palm Parcel to City pending
the outcome of any such action.
Section 9.03 Remedies upon Termination. In the event of any termination of this
Agreement not caused by the default of either of the Parties hereto which is not cured within any
applicable cure period, this Agreement shall be of no further force or effect, and neither of the
Parties shall have any recourse against the other nor any right to file a lis pendens or to bring an
action for specific performance hereunder. Should either Party default under its obligations
pursuant to this Agreement, and should such default result in the Closing failing to occur prior to
the Outside Closing Date, then the non - defaulting Party shall have the right to bring an action
against the defaulting Party seeking specific performance of this Agreement.
Section 9.04 Post - Closing Remedies. In the event that Copelands defaults in performing
any of its post - closing obligations under this Agreement or pursuant to the Monterey Parcels
Agreement or the Palm Development Site Agreement, and fails to cure any such default within
the cure period provided pursuant to Section 9.01, then City shall have the right to seek specific
performance as well as any other rights or remedies to which City may be entitled under
applicable law. In addition to, and not in lieu of the foregoing, should Copelands fail to complete
any of its post - closing obligations stated in Article VII timely, such failure shall constitute a
default by Copelands hereunder, and City shall have the right to terminate the purchase
agreement for the Palm Development Site Agreement, to keep any and all deposits and option
payments previously made by Copelands in connection therewith, and to retain title to the
861/863 Palm Parcel.
ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES
Section 10.01 Representations and Warranties of Copelands. Copelands makes the
following representations and warranties to City:
a) Copelands is a California limited liability company duly organized and
validly existing under the laws of the State of California, and is qualified to do business
in the State of California.
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b) Copelands has the right, power and authority to enter into this Agreement
and to perform its obligations hereunder, and the person(s) executing this Agreement on
behalf of Copelands have the right, power and authority to do so.
C) Copelands has not encumbered, transferred, optioned, assigned or
otherwise conveyed its interest or any portion of its interest in the 861/863 Palm Parcel or
any portion thereof except as stated in the Preliminary Report, nor has Copelands entered
into any agreement (other than this Agreement) to do so. Without limitation of the
foregoing, Copelands has provided no right or option to purchase the 861/863 Palm
Parcel, or any part thereof, to any third person including any tenant of any portion of the
861/863 Palm Parcel.
d) To Copelands' actual knowledge, the 861/863 Palm Parcel is not in violation,
nor has been or is currently under investigation for violation of any federal, state or local law,
ordinance or regulation relating to industrial hygiene, worker health and safety, or to the
environmental conditions in, at, on, under or about the 861/863 Palm Parcel including, but
not limited to, soil and groundwater conditions; the 861/863 Palm Parcel has not been subject
to a deposit of any Hazardous Substance. Neither Copelands nor, to Copelands' actual
knowledge, any third party has used, generated, manufactured, stored or disposed in, at, on,
under or about the 861/863 Palm Parcel or transported to or from the 861/863 Palm Parcel
any Hazardous Substance other than in compliance with all applicable laws. To Copelands'
actual knowledge, there has been no discharge, migration or release of any Hazardous
Substance from, into, on, under or about the 861/863 Palm Parcel. Except as described in the
Asbestos Report attached hereto as Exhibit E hereto, to Copelands' actual knowledge, there
is not now, nor has there ever been on or in the 861/863 Palm Parcel underground storage
tanks or surface impoundments, any asbestos - containing materials or any polychlorinated
biphenyls used in hydraulic oils, electrical transformers or other equipment. Copelands
assigns to City, effective upon the Closing, all claims, counterclaims, defenses or actions,
whether at common law, or pursuant to any other applicable federal or state or other laws
which Copelands may have against any third parties relating to the existence of any
Hazardous Substance in, at, on, under or about the 861/863 Palm Parcel.
e) Copelands is not in default under, nor has Copelands received any notice that
any event has occurred which with the giving of notice or the passage of time, or both, would
constitute a default under, any contract, transaction, agreement, covenant, condition,
restriction, lease, easement, encumbrance or instrument pertaining to the 861/863 Palm
Parcel.
f) There are no lawsuits, claims, suits, proceedings or investigations pending
nor, to the Copelands' actual knowledge, threatened against or affecting Copelands or any of
the 861/863 Palm Parcel nor, to Copelands' actual knowledge, is there any basis for any of
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the same. There are no lawsuits, suits or proceedings pending in which Copelands is the
plaintiff or claimant and which relate to the 861/863 Palm Parcel.
g) This Agreement constitutes the legal, valid and binding obligation of
Copelands enforceable against Copelands in accordance with its terms, except to the extent
that such enforcement may be limited by applicable bankruptcy, insolvency, moratorium and
other principles relating to or limiting the rights of contracting parties generally. Neither this
Agreement nor the consummation of any of the transactions contemplated hereby violates or
shall violate any provision of any agreement or document to which Copelands is a party or to
which Copelands is bound. No consent from any third party is required before the Monterey
Real Property may be purchased by Copelands.
h) Copelands is not bankrupt or insolvent under any applicable Federal or state
standard. Copelands has not filed for protection or relief under any applicable bankruptcy or
creditor protection statute. Copelands has not been threatened by creditors with an
involuntary application of any applicable bankruptcy or creditor protection statute.
Copelands is not entering into the transactions described in this Agreement with an intent to
defraud any creditor or to prefer the rights of one creditor over any other. City and
Copelands have negotiated this Agreement at arms' length and the consideration to be paid
represents fair value for the assets to be transferred.
All representations and warranties of Copelands in this Agreement are made as of the date of this
Agreement and as of the Closing, and shall survive the Closing and the recordation of the Grant
Deed. It shall be a material default if Copelands is unable to make such representations and
warranties truthfully as of the Closing Date.
ARTICLE XI - MISCELLANEOUS
Section 11.01 Notices. All notices, demands or other communications of any type
collectively "Notices ") given by Copelands to City or by City to Copelands, whether required by
this Agreement or in any way related to this transaction, shall be sufficient if in writing and
delivered by hand or Federal Express or similar courier service to the person to whom the Notice
is directed or mailed by United States Mail, as a Registered or Certified item, Return Receipt
Requested, at or to the addresses specified in this section. Notices delivered by mail shall be
deposited in a Post Office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows:
City: City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Attention: City Manager
With copies to: City Attorney
861/863 Palm PSA 120611 1000
12/7/2011
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990 Palm Street
San Luis Obispo, California 93401
Copelands: Thomas M. Copeland, Manager
CP Monterey Morro, LLC
Post Office Box 12260
San Luis Obispo, California 93406
With Copies to: Suzanne Fryer
Copelands' Properties
1026 Chorro Street, Suite 200
Post Office Box 12260
San Luis Obispo, California 93406
Section 11.02 Governing Law; Plurality; and Gender. This Agreement shall be construed
and interpreted in accordance with the laws of the State of California. Where required for proper
interpretation, words in the singular shall include the plural; the masculine gender shall include
the neuter and the feminine, and vice versa.
Section 11.03 Amendment. This Agreement may not be modified or amended, except by an
agreement in writing signed by the parties to this Agreement. The parties may waive any of the
conditions contained in this Agreement or any of the obligations of the other party under this
Agreement, but any such waiver shall be effective only if in writing and signed by the party
waiving such conditions or obligations.
Section 11.04 Authorization. The person executing this Agreement on behalf of City hereby
warrants and represents to Copelands that all necessary legal prerequisites to that party's
execution of this Agreement have been satisfied and that he or she is fully authorized to do so
and to bind the party of whose behalf he or she signs. The person executing this Agreement on
behalf of City claims to do so to the extent the authority to do so has been duly delegated to that
person by the City Council of the City in accordance with applicable law.
Section 11.05 Time of Essence. Time is of the essence in this Agreement.
Section 11.06 Attorneys' Fees for Transactions and for Disputes. Copelands shall pay all of
the City's outside counsel's fees and costs incurred in connection with the documentation and
negotiation of this Agreement as of the date of the execution of this Agreement upon the City's
execution and delivery of this Agreement to Copelands, and all of City's other outside counsel
fees at Closing. If it becomes necessary for either party to file a suit to enforce this Agreement
or any provisions contained in this Agreement, or to seek damages for a breach, the prevailing
party shall be entitled to recover, in addition to all other remedies or damages, reasonable
attorneys' fees incurred in such suit.
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Section 11.07 Consent to Jurisdiction. Copelands and City agree that any suit, action or
other legal proceeding arising out of or in connection with this Agreement may be brought, and
shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State of
California and hereby consent to the jurisdiction of any such court in any such suit, action or
proceedings. Copelands and City hereby waive any objection which such party may have to the
laying of any such suit, action or proceeding in any such court.
Section 11.08 Captions. The description headings of the several Articles, Sections and
Paragraphs contained in this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this Agreement.
Section 11.09 Entire Agreement. Except for the agreements also described in this
Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes the
entire agreement among the parties pertaining to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements and understandings of the parties in
connection therewith, including but not limited to that certain Option to Purchase Real Property,
dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as of
April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 2008
and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011. No
representation, warranty, covenant, agreement or condition not expressed in this Agreement shall
be binding upon the parties to this Agreement or shall affect or be effective to interpret, change
or restrict the provisions of this Agreement.
Section 11.10 Counterparts. A counterpart of this Agreement with separate but fully
executed signature pages attached thereto shall have the full force and effect of an original
executed instrument.
Section 11.11 Successors and Assigns. This Agreement shall not be assignable by either
party, and nothing contained herein shall inure to the benefit of other parties.
Section 11.12 Tax Reporting. Escrow Company is designated the "real estate reporting
person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, and
Treasury Regulations Section 1.6045 4, and any instructions or settlement statement prepared by
Escrow Company shall so provide. Escrow Company shall be responsible for filing Form 1099 S
with the Internal Revenue Service
ARTICLE XII - EXHIBITS
All Exhibits shall be approved by each party, which approval shall be evidenced by such
party's initials on each Exhibit hereto.
Exhibit A Legal Description of 861/863 Palm Parcel
Exhibit B Preliminary Title Report
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Exhibit C Map showing Land Affected by this Agreement
Exhibit D Grant Deed
Exhibit E Asbestos Report
This Agreement is executed by the parties as of the date first written above.
CP MONTEREY MORRO, LLC,
a California limited liability company
861/863 Palm PSA 120611 1000
12/7/2011
By:
Thomas M. Copeland
Its: Manager
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
By:
Mayor
Attest:
By:
City Clerk
Approved as to Form:
By:
City Attorney
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ATTACHMENT 4
TABLE OF CONTENTS
ARTICLEI - DEFINITIONS .......................................................................................... ..............................1
Section 1.01 861/863 Palm Building ........................................................... ..............................1
Section 1.02 861/863 Palm Parcel ............................................................... ............................... l
Section1.03 Closing ..................................................................................... ..............................1
Section1.04 Closing Date ............................................................................ ..............................1
Section 1.05 Closing Payment ...................................................................... ..............................1
Section1.06 Escrow ..................................................................................... ..............................1
Section 1.07 Escrow Company .................................................................... ............................... l
Section 1.08 Escrow Instructions ................................................................. ..............................2
Section 1.09 Monterey Parcels Agreement ................................................... ..............................2
Section 1.10 Monterey Real Property ........................................................... ..............................2
Section 1.11 Palm Development Site ........................................................... ..............................2
Section 1.12 Palm Real Property .................................................................. ..............................2
Section 1.13 Palm Development Site Agreement ......................................... ..............................2
Section 1.14 Preliminary Title Report .......................................................... ..............................2
Section 1.15 Purchase Price ......................................................................... ..............................2
Section1.16 Real Property ........................................................................... ..............................2
Section 1.17 Reconfiguration Scope of Work .............................................. ..............................3
Section1.18 Title Company ......................................................................... ..............................3
ARTICLE 11- PURCHASE AND SALE ........................................................................ ..............................3
Section 2.01 Purchase and Sale .................................................................... ..............................3
Section 2.02 Purchase Price ......................................................................... ..............................3
Section2.03 Payment ................................................................................... ..............................3
Section2.04 Due Diligence .......................................................................... ..............................3
Section2.05 Release ..................................................................................... ..............................4
ARTICLE III - TITLE TO REAL PROPERTY ............................................................. ............................... 6
Section 3.01 Conditions of Title of 861/863 Palm Parcel ............................ ..............................6
Section 3.02 Evidence of Title ..................................................................... ..............................6
Section3.03 Title Vesting ............................................................................ ..............................6
ARTICLEIV - CLOSING ............................................................................................... ..............................6
Section4.01 Closing ..................................................................................... ..............................6
Section 4.02 Conditions to Closing -- Copelands ......................................... ..............................7
Section 4.03 Conditions to Closing -- City ................................................... ..............................7
Section 4.04 Time for Closing ...................................................................... ..............................8
Section 4.05 Deposits by Copelands ............................................................ ..............................8
Section4.06 Deposits by City ...................................................................... ..............................9
Section 4.07 Escrow Company's Actions ..................................................... ..............................9
ARTICLE V - ADJUSTMENT AND PRORATIONS ................................................... ..............................9
Section5.01 Taxes ....................................................................................... ..............................9
Section 5.02 Utilities and Contracts ............................................................ .............................10
ARTICLE VI - CLOSING COSTS; NO BROKERS ..................................................... .............................10
Section 6.01 Copelands' Costs .................................................................... .............................10
Section 6.02 No Brokerage Commissions ................................................... .............................10
Section 6.03 Other Closing Costs ................................................................ .............................10
Section 6.04 Post- Closing Prorations .......................................................... .............................10
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ARTICLE VII - POST CLOSING OBLIGATIONS ...................................................... .............................10
Section 7.01 Reconfigure Parking; Removal of Asbestos ........................... .............................10
Section 7.02 Survival of Obligations Post - Closing ..................................... .............................11
ARTICLE VIII - INDEMNIFICATIONS ............. ............................... ................11
Section 8.01 Indemnification by Copelands ................................................ .............................11
Section 8.02 Indemnification by City .......................................................... .............................11
ARTICLE IX - REMEDIES ........................................................................................... .............................11
Section 9.01 Right to Cure .......................................................................... .............................11
Section 9.02 Termination ............................................................................ .............................12
Section 9.03 Remedies upon Termination ...................................,............... ..........,..................12
Section 9.04 Post - Closing Remedies ...................................................... ............................... .12
ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES ............. .............................12
Section 10.01 Representations and Warranties of Copelands ..................... .............................12
ARTICLE XI - MISCELLANEOUS .............................................................................. .............................14
Section11.01 Notices ................................................................................. .............................14
Section 11.02 Governing Law; Plurality; and Gender ................................ .............................15
Section11.03 Amendment .......................................................................... .............................15
Section 11.04 Authorization ....................................................................... .............................15
Section 11.05 Time of Essence ................................................................... .............................15
Section 11.06 Attorneys' Fees for Transactions and for Disputes.... .......... .............................15
Section 11.07 Consent to Jurisdiction ......................................................... .............................16
Section11.08 Captions ............................................................................... .............................16
Section 11.09 Entire Agreement ................................................................. .............................16
Section 11.10 Counterparts ......................................................................... .............................16
Section 11.11 Successors and Assigns ........................................................ .............................16
Section11.12 Tax Reporting ...................................................................... .............................16
ARTICLE XII - EXHIBITS 16
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AGREEMENT OF PURCHASE AND SALE
Palm Development Site
This Agreement ( "Agreement ") is made and entered into as of December , 2011, by and
between SLO CHINATOWN, LLC, a California limited liability company ( "Copelands "), and the
CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ( "City "). City and
Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties ".
AGREEMENT
ARTICLE I - DEFINITIONS
The following terms shall have the meanings set forth in this Article I when used in this
Agreement:
Section 1.01 861/863 Palm Building. "861 /863 Palm Building" means any and all structures
located on the 861/863 Palm Parcel, commonly referred to as the "Yung building ". The 861/863
Palm Buildings are scheduled for demolition and will no longer be located on the 861/863 Palm
Parcel at the time of Closing pursuant to this Agreement.
Section 1.02 861/863 Palm Parcel. "861 /863 Palm Parcel" means that certain real property
generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002 -416-
031, which is currently owned by CP Monterey Morro, LLC, a California limited liability
company, which has the same owners as Copelands, but which will be owned by the City at the
time of Closing. The legal description of the 861/863 Palm Parcel is attached hereto as Exhibit
A.
Section 1.03 861/863 Palm Parcel Agreement. "861 /863 Palm Parcel Agreement" means
that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and
delivered between the City and CP Monterey Morro, LLC, pursuant to which Copelands will sell
the 861/863 Palm Parcel to the City.
Section 1.04 Closing. "Closing" means the date upon which and the process by which
Escrow Company will conclude and consummate the purchase and sale of the Palm Development
Site and as more fully described in Article IV below.
Section 1.05 Closing Date. "Closing Date" shall mean the date on which the Closing
occurs.
Section 1.06 Closing Payment. "Closing Payment" means the monetary consideration to be
paid by Copelands to City for the Palm Development Site as more fully described in Section 2.04
below.
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Section 1.07 Escrow. "Escrow" means the escrow to be established at Escrow Company for
the transfer of the Palm Development Site as defined below. The Escrow shall be established by
Copelands not later than fifteen (15) business days prior to the Closing Date.
Section 1.08 Escrow Comp ."Escrow Company" means First American Title
Insurance Company, National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut
Creek, California 94596, or such other escrow company doing business in San Luis Obispo
County, California, as Copelands and City may designate.
Section 1.09 Escrow Instructions. "Escrow Instructions" means the directions to the Escrow
Company provided herein and in such additional instructions prepared by Escrow Company and
approved by the Parties. This Agreement shall constitute joint escrow instructions to Escrow
Company. The Parties shall execute such additional instructions not inconsistent with the
provisions of this Agreement which may be reasonably required by Escrow Company. The
Parties shall be bound by Escrow Company's general instructions, but if any conflict between the
provisions of this Agreement and the provisions of Escrow Company's general instructions exists
or arises, then the provisions of this Agreement shall control.
Section 1.10 Monterey Improvements. "Monterey Improvements" means those certain
improvements to be constructed by Copelands on the Monterey Parcels as entitled by San Luis
Obispo City Council Resolution No. 10128 (2009 Series), adopted November 17, 2009, or as
such entitlements subsequently may be modified and approved by the City in the normal exercise
of its development review authority following request therefor by Copelands.
Section 1.11 Monterey Parcels Agreement. "Monterey Parcels Agreement" means that
certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and delivered
between the City and Copelands.
Section 1.12 Monterey Real Property. "Monterey Real Property" means the land and
appurtenant rights, interests, easements, tenements, estates and improvements which consist of
the portion of the Real Property which is adjacent to Monterey Street, as identified with
particularity in the Monterey Parcels Agreement, and, prior to the Closing under this Agreement,
will have been transferred by the City to Copelands, will no longer contain a City surface parking
lot, but will be improved with the Monterey Improvements.
Section 1.13 Palm Development Site. "Palm Development Site" means the land and
appurtenant rights, interests, easements, tenements, estates and improvements to be acquired by
Copelands which consist of the Palm Real Property and the 861/863 Palm Parcels. The legal
description of the Palm Development Site shall be prepared and approved by the parties hereto
following a survey of the Real Property as described in the Monterey Parcels Agreement, and
thereupon shall be attached to this Agreement and incorporated as if set forth in full herein.
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Section 1.14 Palm Real Property. "Palm Real Property" means the portion of the Real
Property which does not include the Monterey Real Property. The legal description of the Palm
Real Property shall be prepared and approved by the parties hereto following a survey of the Real
Property as described in the Monterey Parcels Agreement, and thereupon shall be attached to this
Agreement and incorporated as if set forth herein as Exhibit B.
Section 1.15 Preliminary Title Report. "Preliminary Title Report" means the Preliminary
Report on the Palm Real Property prepared by First American Title Insurance Company, dated
November 21, 2011, as Commitment No.: NCS- 512999 -CC , attached hereto as Exhibit C -1 and
the Preliminary Report on the 861/863 Palm Parcel, prepared by First American Title Insurance
Company, dated November 4, 2011, as Commitment No.: NCS - 512995 -CC, attached hereto as
Exhibit C-2.
Section 1.16 Purchase Price. "Purchase Price" means the monetary consideration to be paid
by Copelands to City for the Palm Development Site as more fully described in Section 2.02
below.
Section 1.17 Real Property. "Real Property" means the land and appurtenant rights and
improvements which consists of five (5) parcels located in the block between Palm and Monterey
Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified as
two (2) portions of APN #002 - 416 -034, and three (3) portions of APN #002 - 416 -029, as
described in the Monterey Parcels Agreement.
Section 1.18 Title Company. "Title Company" means First American Title Company,
National Commercial Services, 1850 Mt. Diablo Blvd Suite 300, Walnut Creek, California
94596, or such other title company doing business in San Luis Obispo County, California, as
Copelands and City may designate.
ARTICLE II - PURCHASE AND SALE
Section 2.01 Purchase and Sale. City agrees to sell to Copelands, and Copelands agrees to
purchase from City, the Palm Development Site upon the terms and conditions set forth in this
Agreement.
Section 2.02 Purchase Price. The purchase price for the Palm Development Site is Four
Hundred Fifty -three Thousand Two Hundred and One Dollars ($453,201), plus an amount equal
to Three Hundred Sixty -six and 67/100 Dollars ($366.67) for each month or part thereof from
and including) July, 2011, until the month in which the Closing occurs to be paid all cash
through the Escrow at the Closing.
Section 2.03 Payment for Mitigation of Public Parking Removal. In addition to the
Purchase Price, Copelands shall pay in cash through the Escrow at the Closing the "Palm Parking
Mitigation Payment ") (as defined below) to City. The Palm Parking Mitigation Payment is a fee
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that shall be the amount paid at the Closing to compensate the City for a portion of the 155
displaced surface parking spaces (the "Displaced Surface Parking ") that will be removed as a
result of project construction on the Palm Development Site, as identified in Table 3.2 -4 of the
Addendum to the Environmental Impact Report for the Real Property, dated September, 2009
the "2009 EIR "). The Palm Parking Mitigation Payment will be equal to $17,796 (as adjusted
below) multiplied by the number of Palm Lost Spaces (as defined below). The Parties
acknowledge that certain parking spaces on the Palm Development Site will be permanently lost
as a result of the redevelopment contemplated hereunder (the "Palm Lost Spaces "). The number
of Palm Lost Spaces shall be equal to 155 minus the number of parking spaces lost as a result of
the planned reconfiguration of the City's existing surface parking lot as provided in the Monterey
Parcels Agreement (the "Monterey Lost Spaces'). By way of example, if there are 41 Monterey
Lost Spaces, then the Palm Lost Spaces will be equal to 114. (For avoidance of doubt, the Palm
Lost Spaces, and the Palm Parking Mitigation Payment provided for herein, are in addition to and
exclusive of the Monterey Lost Spaces and the Monterey Parking Mitigation Payment provided
for in the Monterey Parcels Agreement.) The Monterey Lost Spaces will be as shown on the
parking reconfiguration diagram to be attached to the Monterey Parcels Agreement as Exhibit D.
17,796 is the current in -lieu parking fee as adopted by the City, which amount will increase as
of July 1, 2012, and each July thereafter, due to an inflation escalator adopted as part of the
City's fee resolutions duly adopted by the City Council, until the Closing Date occurs. If there are
141 Palm Lost Spaces, the Parties estimate that the Palm Parking Mitigation Payment will be not
less than Two Million Twenty -eight Thousand Seven Hundred Forty-four Dollars ($2,028,744),
and acknowledge the amount shall increase as the City's in -lieu parking fee increases over time.
Unmet parking demand caused by the Project does not include any of the Displaced Surface
Parking and therefore, for avoidance of doubt, the parties acknowledge that the Palm Parking
Mitigation Payment required hereunder is and shall be separate from, and in addition to, any
parking in -lieu fees required by City or any of its departments charged with granting permits
required for the Project in connection with any unmet parking demand caused by the Project.
Section 2.04 Payment. The Purchase Price plus the Palm Parking Mitigation Payment
collectively, the "Closing Payment ") shall be paid as follows: at least one business day prior to
the Closing, the cash due from Copelands under Sections 2.02 and 2.03 of this Agreement shall
be deposited by the Copelands into Escrow by wire transfer or cashier's check.
Section 2.05 No Restrictions on City's Use of Property Prior to Closing. City's use and
management of the Palm Development Site prior to the Closing shall not be restricted or limited
in any way by the terms of this Agreement, subject only to City taking no irreversible action that
would preclude its ability to deliver title to the Palm Development Site as contemplated in
Section 3.01 of this Agreement. For avoidance of doubt, and without limitation of the foregoing,
City may pursue and enter into lot mergers, reciprocal access agreements, leases, ground leases,
licenses and any other land use management action deemed appropriate in the sole and absolute
discretion of City prior to the Closing hereunder.
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Notwithstanding the foregoing, Copelands will lease a portion of the Palm Real Property which
consists of the property commonly known as 955 Morro, San Luis Obispo, from the City
pursuant to that certain Lease attached hereto as Exhibit E (the "955 Morro Lease "). The 955
Morro Lease shall provide for nominal rent of $500 per month and Copelands will be responsible
for upkeep, maintenance and insurance on the building which is the Premises. Sublease revenue
for the Premises in excess of nominal rent and expenses will be split 50150 between the City and
Copelands. Copelands will consult with City about potential tenants yet Copelands will control
and have sole discretion on tenant selection consistent with applicable zoning and other City laws
and regulations. Parking adjacent to 955 Morro will continue to be used by the City until the
Palm Development Site is transferred to Copelands. The term of the 955 Morro Lease will end
on the Closing Date, or, if this Agreement terminates, may be terminated by written notice.
Section 2.06 Date Diligence; Condition of Property. Copelands acknowledges that, prior to
the Closing, it shall have performed such due diligence as it elects to perform as to the condition
and all other aspects of the Palm Development Site, the title to the Palm Development Site and
the suitability of the site of the Palm Development Site for the proposed uses and construction.
Copelands further acknowledges that prior to the Closing contemplated hereunder, Copelands
owned the 861/863 Palm Parcel, which it transferred to the City, and further that Copelands
undertook to remove certain asbestos from the buildings located on 861/863 Palm Parcel as
described in the 861/863 Palm Parcel Agreement and the Monterey Parcels Agreement, and prior
to the Closing shall have completed its obligations thereunder. Copelands further acknowledges
that it has or shall have and shall have inspected, investigated and tested the condition of the soil
and the geology of the site and the presence of hazardous substances or archaeological materials
and shall have accepted such conditions "AS -IS, WHERE -IS" condition with all faults and
defects, whether patent or latent, known or unknown. Further, in entering into this Agreement
and closing the Escrow contemplated hereunder, Copelands expressly represents and warrants to
City (i) that Copelands is relying and shall rely solely on its own due diligence to evaluate all
aspects of the Palm Development Site and its suitability for Copelands' planned development
without any representations and warranties of any kind or nature concerning the Palm
Development Site or any aspect thereof, either express or implied, from or on behalf of City or
any of its employees, agents or independent contractors, except as otherwise expressly provided
in this Agreement, (ii) that neither City nor any of its employees, agents or independent
contractors has made or is authorized to make any representation or warranty of any kind or
nature concerning the Palm Development Site, any aspect thereof, or its suitability, either express
or implied, nor any warranty, representation or promises of remediation or cure including,
without limitation, any representation or warranty regarding the geological, subsurface,
environmental, architectural, engineering or other physical aspects or condition of the Palm
Development Site, including without limitation any subsidence or other issues arising from the
possible presence of a subterranean creek under or near the Palm Development Site, the rents,
income, expenses, market or other financial aspects or condition of the Palm Development Site,
the compliance with the Palm Development Site with any applicable law, code, rule or regulation
including without limitation any environmental protection, pollution, land use, handicapped
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ATTACHMENT 4
access or other laws, the zoning of the Palm Development Site, the accuracy or completeness of
any documents, information or other data concerning the Palm Development Site or any aspect
thereof furnished or to be furnished to Copelands by or on behalf of City or any of its employees,
agents or independent contractors or in any other manner concerning the Palm Development Site
or any aspect thereof, (iii) that any and all due diligence materials provided by the City to
Copelands were and are solely for Copelands' specific and limited use in connection with its due
diligence and evaluations concerning the Palm Development Site, (iv) that any due diligence
materials prepared by any third party is being furnished to Copelands as an accommodation only
without any warranty by City or such third party as to the accuracy or completeness thereof,
except as otherwise expressly provided by any separate agreement between Copelands and any
such third party, and (v) that City, and any agency of City, shall not have any obligations
whatsoever to perform any tests, prepare any reports, make any repairs or take any other action,
including governmental actions, or incur any expense with respect to the Palm Development Site,
except as otherwise expressly provided in this Agreement.
Section 2.07 Release. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN THE LEASE FOR 955 MORRO, COPELANDS AND ANYONE
CLAIMING BY, THROUGH OR UNDER COPELANDS FULLY AND IRREVOCABLY
RELEASES CITY, AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS,
REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT
COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS,
FIRMS, CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF
RELEASED CITY PARTIES "), FROM ANY AND ALL CLAIMS THAT IT MAY NOW
HAVE OR HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED CITY PARTIES
FOR ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES,
DEMANDS, CLAIMS, ACTIONS OR CAUSES OF ACTION (COLLECTIVELY "CLAIMS ")
ARISING FROM OR RELATED TO THE CONDITION OF THE PALM DEVELOPMENT
SITE INCLUDING, WITHOUT LIMITATION, ANY PATENT OR LATENT
CONSTRUCTION DEFECTS OR INADEQUACIES IN THE CONDITION OF THE
PROPERTY, INCLUDING COST OF REPAIR OR CORRECTION, ERRORS, OMISSIONS,
OR OTHER CONDITIONS, LATENT OR OTHERWISE, GEOTECHNICAL AND SEISMIC,
AFFECTING THE PROPERTY OR ANY PORTION THEREOF WHETHER OR NOT
DISCOVERED PRIOR TO COPELANDS' INSPECTION OF THE PALM DEVELOPMENT
SITE, INCLUDING, WITHOUT LIMITATION:
A) ENVIRONMENTAL MATTERS WHICH WERE:
i) DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR IN
ANY ENVIRONMENTAL AUDIT OBTAINED BY COPELANDS OR ELSEWHERE IN THIS
AGREEMENT, THE 861/863 PALM PARCEL AGREEMENT OR THE MONTEREY
PARCELS AGREEMENT; OR
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ii) DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO THE
CLOSING; OR
iii) OTHERWISE DISCLOSED BY CITY TO COPELANDS OR DISCOVERED BY
COPELANDS AT ANY TIME PRIOR TO THE CLOSING;
B) THE ITEMS DESCRIBED IN SECTION 2.06 ABOVE; AND
C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY ANY
AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK OR
TAKING ACTION IN CONNECTION WITH THE PALM DEVELOPMENT SITE ON
BEHALF OF CITY OR ITS PREDECESSORS;
NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY COPELANDS OF
RELEASED CITY PARTIES SHALL NOT EXTEND TO ANY FRAUD BY CITY UPON
COPELANDS, WHICH IS EXPRESSLY RESERVED BY COPELANDS ON BEHALF OF
ITSELF AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS.
THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH COPELANDS IS
PRESENTLY UNAWARE OR WHICH COPELANDS DOES NOT PRESENTLY SUSPECT
TO EXIST WHICH, IF KNOWN BY COPELANDS, WOULD MATERIALLY AFFECT
COPELANDS' RELEASE TO CITY. COPELANDS SPECIFICALLY WAIVES THE
PROVISION OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS
FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."
IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THAT
ALL OF THE PALM DEVELOPMENT SITE IS SOLD BY CITY AND PURCHASED BY
COPELANDS SUBJECT TO THE FOREGOING. IT IS NOT CONTEMPLATED THAT THE
PURCHASE PRICE WILL BE INCREASED IF COSTS TO COPELANDS ASSOCIATED
WITH THE PALM DEVELOPMENT SITE PROVE TO BE LESS THAN EXPECTED NOR
WILL THE PURCHASE PRICE BE REDUCED IF THE COPELANDS' PLAN TO DEVELOP
THE PALM DEVELOPMENT SITE LEADS TO HIGHER COST PROJECTIONS. THIS
PROVISION SHALL SURVIVE THE CLOSE OF ESCROW AND RECORDING OF THE
GRANT DEED.
Copelands' Initials: City's Initials:
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ARTICLE III - TITLE TO PALM DEVELOPMENT SITE
Section 3.01 Condition of Title of Palm Development Site. Upon Closing, City shall
deliver the Palm Development Site to Copelands subject to no leases and occupancies. Title to
the Palm Development Site shall be conveyed by City to Copelands by a grant deed in form and
substance shown on Exhibit D hereto (the "Grant Deed "), and subject to the following
Conditions of Title ":
a) A lien to secure payment of real estate taxes and supplemental taxes, if
any, not delinquent;
b) Matters affecting the condition of title created by or with the written
consent of Copelands, or approved by Copelands in writing;
Report;
c) Printed exceptions and exclusions as specified on the Preliminary Title
d) Lease for 955 Morro; and
e) , Any such other lot mergers, reciprocal access easements or any other land
use management action that the City has entered into after the date of this Agreement and
which has become an encumbrance of record on the Palm Development Site, each of
which shall be allowed in the City's sole discretion during its ownership of the Palm
Development Site; provided that no such encumbrance to title remaining at the time of
Closing may interfere with the Copelands' ability to develop the Project.
Section 3.02 Evidence of Title. Delivery of title to the Palm Development Site in
accordance with Section 3.01 above shall be evidenced by the willingness of the Title Company
to provide its written commitment to issue, upon Closing, recordation of the Grant Deed, and
payment of its regularly scheduled premium, an ALTA Standard Coverage Owner's Policy in the
appropriate amount showing title to the Palm Development Site vested in Copelands, or
Copelands' allowable assignee, subject to the Conditions of Title described in Section 3.01.
Section 3.03 Title Vesting. Title shall be vested in the Palm Development Site in the name
of Copelands as provided above, or Copelands' allowable assignee. Copelands shall provide
written notice to the Parties and Escrow Company of any such allowable assignee not less than
five (5) business days prior to the Closing.
ARTICLE IV - CLOSING
Section 4.01 Closing. The sale and purchase transaction contemplated by this Agreement
shall be consummated pursuant to the Escrow Instructions not later than June 30, 2020 (the
Outside Closing Date ") through an escrow established at the Escrow Company.
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Section 4.02 Conditions to Closing _City. The City's obligation to transfer or cause the
transfer of the Palm Development Site to the Copelands shall be subject to the fulfillment of the
conditions precedent (the "City Conditions ") set forth below:
a) Related Agreements. Copelands (or its related companies) shall have
executed and delivered to City the following agreements: (i) the 861/863 Palm Parcel
Agreement; (ii) Monterey Parcels Agreement; (c) Lease for 955 Morro Street; (iv)
Release and Waiver; and (v) the Lease for Public Parking.
b) Closing under 861/863 Palm Parcel Agreement and Monterey Parcels
Agreement. The closing shall have occurred under the 861/863 Palm Parcel Agreement
and the Monterey Parcels Agreement.
c) Construction on Palm Development Site. The Copelands shall have
provided evidence reasonably satisfactory to the City that it is prepared to commence
construction on the Palm Development Site in accordance with San Luis Obispo City
Council Resolution No. 10128 (2009 Series), adopted November 17, 2009, and in
conformity with the 2009 EIR (including without limitation the reuse of the Shanghai
Low Restaurant sign), or as such entitlements subsequently may be modified and
approved by the City in the normal exercise of its development review authority
following request therefor by Copelands (the "Project ") as follows:
i) the Copelands have obtained permits for construction of the Project
the "Permits ") and the Permits have not expired;
ii) the Copelands shall have provided to the City documents
evidencing the financial resources, from lenders and from equity funds and
investors as may be necessary, in a sufficient amount to complete the construction
and equipping of the Project in accordance with a budget prepared by Copelands;
iii) the Copelands have entered into construction contracts for the
Project evidencing that the work of construction can be completed within the
budget; and
iv) the Copelands have submitted evidence to the City that a binding
contract has been entered into, or is not appropriate, between Copelands and an
operator of the completed Project.
d) Construction on Monterey Parcels. Construction of the Monterey
Improvements on the Monterey Real Property has been substantially completed within
four (4) years of the Closing under the Monterey Parcels Agreement and Copelands
thereafter is diligently pursue completion thereof.
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e) Satisfaction of Copelands' Conditions. Copelands shall have certified that
all of the Copelands' Conditions have been satisfied and Copelands is obligated to buy the
Palm Development Site.
f) Performance by Copelands. Copelands shall have performed all
obligations to be performed by Copelands, and shall have made all deliveries required of
Copelands, pursuant to this Agreement prior to Closing.
Section 4.03 Conditions to Closing_ -- Copelands. The Copelands' obligation to purchase
the Palm Development Site from the City shall be subject to the fulfillment of the conditions
precedent (the "Copelands' Conditions ") set forth below:
a) Related Agreements. City shall have executed and delivered to Copelands
or its related companies) the following agreements: (i) the 861/863 Palm Parcel
Agreement; (ii) Monterey Parcels Agreement; (c) Lease for 955 Morro Street; (iv)
Release and Waiver; and (v) the Lease for Public Parking.
b) Closing under 861/863 Palm Parcel Agreement and Monterey Parcels
Agreement. The closing shall have occurred under the 861/863 Palm Parcel Agreement
and the Monterey Parcels Agreement.
c) Condition of Prope . ; Title. The Title Company shall have committed to
insure good title to the Palm Development Site as described in the Subdivision Map (as
defined in the Monterey Parcels Agreement) by issuing a title policy in the form described
in Section 4.03(d) below in the amount equal to the Purchase Price plus the Palm Parking
Mitigation Payment, subject only to only to the Conditions of Title described in Section
3.01.
d) Title Conditions. The Closing shall also be conditioned on the
commitment of the Title Company to issue, upon payment of its regularly scheduled
premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance,
with the endorsements described below, excluding all bankruptcy exceptions, showing
title to the Palm Development Site vested of record in the transferee subject (the "Title
Policy "). The Title Policy shall contain endorsements required by Copelands.
e) Satisfaction of City Conditions. City shall have certified that all of the
City Conditions have been satisfied and City is obligated to sell the Palm Development
Site.
f) Performance by City. City shall have performed all obligations to be
performed by City, and shall have made all deliveries required of City, pursuant to this
Agreement prior to Closing.
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Section 4.04 Time for Closing. The Closing shall take place fifteen (15) days after the
conditions set forth in Sections 4.02 and 4.03 above have been satisfied, but no later than the
Outside Closing Date. The date of the Closing may be extended by agreement of the parties. On
the Closing Date, sole and exclusive possession of the Palm Development Site shall be delivered
to Copelands, or its allowable assignee, by City.
Section 4.05 Deposits by City. No later than one business day before the Closing Date,
City shall deposit with Escrow Company:
a) The Grant Deed in the form attached hereto as Exhibit D duly executed by City,
acknowledged and in recordable form,
b) If required by Escrow Company, City's FIRPTA Affidavit in a form reasonably
acceptable to City, duly executed by City.
c) If required by Escrow Company, a California Form 593 -C Real Estate
Withholding Exemption Certificate on Form 593 -C, or equivalent, duly executed
by City ( "Form 593 -C ").
d) Such other bills of sale, assignments and other instruments of transfer or
conveyance as Copelands may reasonably request or as may be otherwise necessary to evidence
and effect the sale, assignment, transfer, conveyance and delivery of the Palm Development Site
to Copelands. Deposits by Copelands.No later than one business day before the Closing Date,
Copelands shall deposit with Escrow Company:The monies required pursuant to Sections 2.02, 2.03
and 6.01.
b) Counterpart originals of the document listed in Sections 4.05(a) above.
C) Such other instruments or documents as may be necessary to effect the sale,
assignment, transfer, conveyance and delivery of the Palm Development Site to
Copelands.
Section 4.07 Escrow Company's Actions. Upon the Closing Date, when Escrow
Company holds the items required to be deposited by City and Copelands as described above,
Escrow Company is prepared to issue and deliver to Copelands the Title Policy, and Escrow
Company has received written authorization to close the escrow from Copelands and City,
Escrow Company is hereby instructed and authorized to: Record the Grant Deed in the Office of
County Recorder of the County.
b) Pay any transfer taxes.
C) Instruct the County Recorder to return the Grant Deed to Copelands.
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d) Disburse to City from the funds deposited into Escrow by Copelands the Purchase
Price less City's share of prorations and other closing costs hereunder.
e) Disburse from funds deposited by Copelands amounts toward payment of all other
items chargeable to the account of Copelands hereunder, and disburse the balance
of such funds, if any, to Copelands.
f) Deliver to Copelands the Non - foreign Affidavit, if any, the Form 593 -C, if any,
and the Title Policy.
Section 4.08 Early Termination. Either the City or the Copelands may terminate this
Agreement by providing written notice thereof to the other party, and no Closing shall thereafter
occur hereunder, if.
a) Construction of the Monterey Improvements on the Monterey Real
Property has not been substantially completed within four (4) years of the Closing under
the Monterey Parcels Agreement; or
b) Copelands has not submitted construction plans for the Project by the date
which is seven (7) years from the date this Agreement was executed and delivered by the
parties.
Upon the termination of this Agreement as provided in this Section, Escrow shall be
cancelled, all instruments shall be returned to the parties who deposited the same, cash deposited
in Escrow, if any, shall be returned to the Copelands and the Copelands shall pay any title and
escrow cancellation charges.
ARTICLE V - ADJUSTMENT AND PRORATIONS
At Closing, the following items shall be adjusted and prorated between Copelands and
City by the Escrow Company:
Section 5.01 Taxes. Taxes and assessments on the Palm Development Site for the period
prior to the Closing shall not be prorated, as the Palm Development Site shall have been exempt
from property taxes prior to the Closing as a result of its ownership by City; however, as of the
Closing, the Palm Development Site shall be subject to real property taxes and assessments, all
of which shall be paid by Copelands outside of Escrow.
Section 5.02 Utilities and Contracts. All costs, if any, of utilities furnished to the Palm
Development Site shall be prorated as of the Closing Date.
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ARTICLE VI - CLOSING COSTS; NO BROKERS
Section 6.01 Copelands to Pay All Closing. At Closing, Copelands shall pay all
of the costs of the Closing, including without limitation all fees and costs for releasing all
encumbrances, liens and security interests of record which are not allowable Conditions to Title,
all of City's outside counsel fees for the transactions contemplated hereunder and not paid prior
to Closing pursuant to Section 11.06, all applicable sales, use, documentary or other transfer
taxes arising out of the sale of the Palm Development Site, the premium for the Title Policy for
the Palm Development Site and any endorsements requested by Copelands and all fees to the
Escrow Company.
Section 6.02 No Brokerage Commissions. Each of City and Copelands represents and
warrants to the other that it has not dealt with or been represented by any brokers or finders in
connection with the purchase and sale of the Palm Development Site. Each Party shall indemnify
and hold the other free and harmless from and against all costs and liabilities including, without
limitation, attorneys' fees and the costs and expenses of litigation, for causes of action or
proceedings which may be instituted by any other broker, agent or finder, licensed or otherwise,
claiming through, under or by reason of the conduct of the indemnifying Party in connection with
this transaction.
Section 6.03 Other Closing Costs. Any and all other closing costs related to the
transaction shall be paid by the Parties in the manner consistent with customary practice in San
Luis Obispo County. Po st-Clo sing Prorations. Should any real estate taxes, bonds, assessments,
utilities, other expenses of the Palm Development Site or liens relating to periods before the
Closing Date be omitted from such prorations for any reason, including without limitation late
assessment or Title Company error, then after the Closing, City shall remain solely responsible
for, and shall promptly pay before delinquency, any such real estate taxes, bonds, assessments,
utilities, other expenses of the Property or liens relating to periods before the Closing Date. This
obligation shall survive the Closing. POST CLOSING OBLIGATIONS
Section 7.01 Limitations and Restrictions on the Use of Palm Development Site; Reverter.
After the Closing, Copelands agree to promptly commence construction on the Project and to
diligently pursue such construction to completion thereafter. The parties agree, and the Grant
Deed for the Palm Development Site shall reflect, that until substantial completion of the Project
in accordance with the Permits: (i) the use of the Palm Development Site shall be limited and
restricted to the construction of the Project in accordance with the Permits; (ii) the Copelands
shall not encumber the Palm Development Site except as security for construction loans to
finance the construction of the Project; and (iii) the City has the right of reverter and a power of
termination (Civil Code section 885.010) to cause the title of the Copelands to the Palm
Development Site to terminate and to revert to the City (a) if the construction of the Project in
accordance with the Permits does not commence within six (6) months of permit issuance, or (b)
if construction is commenced but is not diligently pursued by Copelands to completion within
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twenty -four (24) months of the Closing Date, or within such additional period of time to which
the City may consent in writing upon demonstration by Copelands of diligence and good cause,
such consent not to be unreasonably withheld. Upon the timely substantial completion of the
Project in accordance with the Permits, the City shall execute and deliver to the Copelands, a
Certificate of Completion in substantially the form attached hereto as Exhibit F, which shall
acknowledge that the deed restriction and any right of reverter in favor of the City have
terminated. In the event the City, being entitled to do so, causes the title to the Palm
Development Site to revert to the City, then the City shall pay to the Copelands (a) an amount
equal to the Purchase Price as set forth in Section 2.02 above and (b) only if the parking on the
Palm Development Site shall not have been removed as of the time the City exercises its right of
reverter, an additional amount equal to the amount paid by Copelands for the Palm Parking
Mitigation Payment. If, at the time of City's exercise of its reverter, Copelands has removed any
or all of the existing parking on the Palm Development Site, City shall be entitled to retain the
Palm Parking Mitigation Payment paid to it by Copelands. In the event the City, being entitled to
do so, causes the title to the Palm Development Site to revert to the City, the City shall be
entitled permanently to retain title to the 861/863 Palm Parcel and shall have no obligation to
offer, return, or sell title to the 861/863 Palm Parcel to Copelands.
Section 7.02 Survival of Obligations Post - Closing. Without limitation, the obligations
of Copelands set forth in this Article VII shall survive the Closing of the Escrow and the
recordation of the Grant Deed.
ARTICLE VIII - INDEMNIFICATIONS
Section 8.01 Indemnification by City. As of the Closing Date, City shall indemnify, defend
and hold Copelands harmless of, against and from any and all liabilities, claims, demands and
expenses, of any kind or nature (except those items which by this Agreement specifically become
the obligation of Copelands) accruing on or before the Closing Date, including any claim for
labor, materials or supplies in connection with work performed on the Palm Development Site,
and which are in any way related to the ownership or operation of the Palm Development Site.
Section 8.02 Indemnification by Copelands. As of the Closing Date, Copelands shall
indemnify, defend and hold City harmless of and from any and all liabilities, claims, demands
and expenses of any kind or nature (except those items which by this Agreement specifically
remain the obligation of City) accruing after the Closing Date, including any claim for labor,
materials or supplies in connection with work performed on the Palm Development, and all
expenses related thereto including, without limitation, court costs and attorneys' fees. Without
limitation, from and after the date of execution of this Agreement, Copelands shall also
indemnify and defend City, using counsel approved by City in its absolute discretion, from any
and all third party challenges to this Agreement or any of the transactions contemplated
hereunder or any challenge to any entitlement, approval or environmental impact report ( "EIR ")
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proposed, drafted, or certified in connection with any of the foregoing transactions, including any
supplement or addendum thereto.
ARTICLE IX - REMEDIES
Section 9.01 Right to Cure. Should either Party default under any of its obligations
hereunder other than its obligation to close by the Outside Closing Date, the other Party shall
provide notice of such default to the defaulting Party, who will be allowed to cure any such
default for a period of five (5) business days after notice is given the defaulting Party. No grace
or cure period is allowed for the failure of either Party to cause the Closing to occur prior to or on
the Outside Closing Date.
Section 9.02 Termination. Should the Closing not occur on or before the Outside Closing
Date for any reason other than the default of City under this Agreement, then this Agreement
shall be terminated, and City shall be entitled to keep any option or deposit or other payments,
and Copelands acknowledges and agrees it shall have no rights either to any option or deposit or
other payments or to bring any action seeking specific performance of this Agreement, damages
for its breach, or refund of any option or deposit or other payments. In addition, upon
termination of this Agreement, the City shall be entitled permanently to retain title to the Palm
Development Site (including without limitation the 861/863 Palm Parcel) and shall have no
obligation to offer, return, or sell title to said real property to Copelands.
Copelands and City agree that in the event the Closing fails to occur because of Copelands'
default, breach or failure to perform hereunder and not due to City's wrongful acts, omissions or
breach, the damages to City would be extremely difficult and impracticable to ascertain, and that
therefore, the right of City to permanently retain any option, deposit and other payments as well
as title to the Palm Development Site (including without limitation the 861/863 Palm Parcel) is a
reasonable estimate of the damages to City. Accordingly, Copelands agrees that upon
1) Copelands' receipt of notice of such default or breach from City, (2) failure by Copelands to
cure said breach, default or failure to perform within 3 days after receipt of such notice, and
3) failure to close escrow occurs because of such breach, default or failure to perform, then City
shall retain any option, deposit or other payments (and all interest earned thereon) previously
delivered to City and title to the Palm Development Site, as liquidated damages, as City's sole
remedy in the event of any such material breach or default by Copelands hereunder.
Initials of Copelands: Initials of City:
Section 9.03 Remedies upon Termination. In the event of any termination of this
Agreement not caused by the default of either of the Parties hereto which is not cured within any
applicable cure period, this Agreement shall be of no further force or effect, and neither of the
Parties shall have any recourse against the other nor any right to file a lis pendens or to bring an
action for specific performance hereunder. Should either Party default under its obligations
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pursuant to this Agreement, and should such default result in the Closing failing to occur prior to
the Outside Closing Date, then the non - defaulting Party shall have the right to bring an action
against the defaulting Party seeking specific performance of this Agreement.
Section 9.04 Post - Closing Remedies; Right of Reverter. In the event that Copelands
defaults in performing any of its post - closing obligations under this Agreement, and fails to cure
any such default within the cure period provided pursuant to Section 9.01, then City shall have
the right to seek specific performance as well as any other rights or remedies to which City may
be entitled under applicable law. In addition to, and not in lieu of the foregoing, should
Copelands fail to complete any of its post- closing obligations stated in Article VII timely, such
failure shall constitute a default by Copelands hereunder, and City shall have the right to exercise
its right of reverter and to cause title to the Palm Development Site to revert to City by filing a
document indicating its election to exercise its right of reverter with the County Recorder's
Office for the County of San Luis Obispo, California and by paying to Copelands the amounts
indicated in Section 7.01. Copelands hereby agrees that in such event, it shall have no right to
challenge or take any action whatsoever to prevent City from exercising its right to reverter, nor
to attempt to have such reverter overturned, nor to bring any action against City or any of its
employees or agents seeking damages or any other relief as a result of City's action to enforce its
reversionary rights.
ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES
Section 10.01 Representations and Warranties of Copelands. Copelands makes the
following representations and warranties to City:
a) Copelands is a California limited liability company duly organized and validly existing
under the laws of the State of California, and is qualified to do business in the State of
California.
b) Copelands has the right, power and authority to enter into this Agreement and to perform
its obligations hereunder, and the person(s) executing this Agreement on behalf of
Copelands have the right, power and authority to do so.
c) This Agreement constitutes the legal, valid and binding obligation of Copelands
enforceable against Copelands in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the rights of contracting parties generally. Neither this
Agreement nor the consummation of any of the transactions contemplated hereby violates
or shall violate any provision of any agreement or document to which Copelands is a
party or to which Copelands is bound. No consent from any third party is required before
the Palm Development Site may be purchased by Copelands.
d) Copelands is not bankrupt or insolvent under any applicable Federal or state standard.
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Copelands has not filed for protection or relief under any applicable bankruptcy or
creditor protection statute. Copelands has not been threatened by creditors with an
involuntary application of any applicable bankruptcy or creditor protection statute.
Copelands is not entering into the transactions described in this Agreement with an intent
to defraud any creditor or to prefer the rights of one creditor over any other. City and
Copelands have negotiated this Agreement at arms - length and the consideration to be
paid represents fair value for the assets to be transferred.
All representations and warranties of Copelands in this Agreement are made as of the date of this
Agreement and as of the Closing, and shall survive the Closing and the recordation of the Grant
Deed. It shall be a material default if Copelands is unable to make such representations and
warranties truthfully as of the Closing Date.
ARTICLE XI - MISCELLANEOUS
Section 11.01 Notices. All notices, demands or other communications of any type
collectively "Notices ") given by City to Copelands or by Copelands to City, whether required by
this Agreement or in any way related to this transaction, shall be sufficient if in writing and
delivered by hand or Federal Express or similar courier service to the person to whom the Notice
is directed or mailed by United States Mail, as a Registered or Certified item, Return Receipt
Requested, at or to the addresses specified in this section. Notices delivered by mail shall be
deposited in a Post Office or other depository under the care or custody of the United States
Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows:
City: City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Attention: City Manager
With copies to: City Attorney
990 Palm Street
San Luis Obispo, California 93401
Copelands: Thomas M. Copeland, Manager
SLO Chinatown, LLC
Post Office Box 12260
San Luis Obispo, California 93406
With Copies to: Suzanne Fryer
Copelands' Properties
1026 Chorro Street, Suite 200
Post Office Box 12260
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San Luis Obispo, California 93406
Section 11.02 Governing Law; Plurality; and Gender. This Agreement shall be construed
and interpreted in accordance with the laws of the State of California. Where required for proper
interpretation, words in the singular shall include the plural; the masculine gender shall include
the neuter and the feminine, and vice versa.
Section 11.03 Amendment. This Agreement may not be modified or amended, except by an
agreement in writing signed by the parties to this Agreement. The parties may waive any of the
conditions contained in this Agreement or any of the obligations of the other party under this
Agreement, but any such waiver shall be effective only if in writing and signed by the party
waiving such conditions or obligations.
Section 11.04 Authorization. The person executing this Agreement on behalf of Copelands
hereby warrants and represents to City that all necessary legal prerequisites to that party's
execution of this Agreement have been satisfied and that he or she is fully authorized to do so
and to bind the party of whose behalf he or she signs. The person executing this Agreement on
behalf of City claims to do so to the extent the authority to do so has been duly delegated to that
person by the City Council of the City in accordance with applicable law.
Section 11.05 Time of Essence. Time is of the essence in this Agreement.
Section 11.06 Attorneys' Fees for Transaction and for Disputes. Copelands shall pay all of
the City's outside counsel's fees and costs incurred in connection with the documentation and
negotiation of this Agreement as of the date of the execution of this Agreement upon the City's
execution and delivery of this Agreement to Copelands, and all of City's other outside counsel
fees at Closing. If it becomes necessary for either party to file a suit to enforce this Agreement or
any provisions contained in this Agreement, or to seek damages for a breach, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages, reasonable attorneys'
fees incurred in such suit.
Section 11.07 Consent to Jurisdiction. City and Copelands agree that any suit, action or
other legal proceeding arising out of or in connection with this Agreement may be brought, and
shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State of
California and hereby consent to the jurisdiction of any such court in any such suit, action or
proceedings. City and Copelands hereby waive any objection which such party may have to the
laying of any such suit, action or proceeding in any such court.
Section 11.08 Captions. The description headings of the several Articles, Sections and
Paragraphs contained in this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this Agreement.
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Section 11.09 Entire Agreement. Except for the agreements also described in this
Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes the
entire agreement among the parties pertaining to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements and understandings of the parties in
connection therewith, including but not limited to that certain Option to Purchase Real Property,
dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as of
April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 2008
and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011. No
representation, warranty, covenant, agreement or condition not expressed in this Agreement shall
be binding upon the parties to this Agreement or shall affect or be effective to interpret, change
or restrict the provisions of this Agreement.
Section 11.10 Counterparts. A counterpart of this Agreement with separate but fully
executed signature pages attached thereto shall have the full force and effect of an original
executed instrument.
Section 11.11 Successors and Assigns. This Agreement shall not be assignable by either
party, and nothing contained herein shall inure to the benefit of other parties. Until completion of
construction of the Project, the Copelands shall not make or create any sale, assignment,
hypothecation or other transfer of ownership with respect to this Agreement or the Palm
Development Site or the control of its uses, either voluntarily or by operation of law, without the
prior approval of the City, which may be granted or denied in the City's sole discretion. Any such
transfer made in contravention of this Agreement shall be void. Notwithstanding the foregoing,
the following transfers shall be permitted:
a) After the Closing, a hypothecation creating a security interest encumbering
the fee interest in the Palm Development Site a construction loan to complete the Project;
b) Any transfer directly resulting from the foreclosure of a security interest or the
granting of a deed in lieu of foreclosure of a security interest permitted under the
preceding paragraph; and
c) Any transfer to an entity which is 100% owned by the Copelands, or if not
100% owned, the majority of the beneficial interests in such entity is owned by the
Copelands and the entity is controlled by the Copelands, and the Copelands deliver to the
City satisfactory evidence of such ownership and control.
Section 11.12 Tax Reporting. Escrow Company is designated the "real estate reporting
person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, and
Treasury Regulations Section 1.6045 4, and any instructions or settlement statement prepared by
Escrow Company shall so provide. Escrow Company shall be responsible for filing Form 1099 S
with the Internal Revenue Service.
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d r i 1' a i-`4v1 E NT 4
Section 11.13 Force Majeure . Neither Party shall be liable for any failure or delay in its
performance under this Agreement (other than for delay in the payment of money due and
payable hereunder) if and to the extent said failures or delays are caused by causes beyond that
Party's control that occur without its fault or negligence, including without limitation, fire,
explosion, flood, severe weather, accident, strike, governmental act, embargo, shortages of labor,
materials or fuel, failure by, or inability of , contractors or other third parties to perform,
computer system failure, war or military action, riot, or civil disturbance; provided that, as a
condition to its claim of nonliability, the Party experiencing the difficulty shall give the other
Party written notice of any such failure or delay promptly and in any event not later than five (5)
business days after such failure or delay begins, and such notice shall describe in detail the reason
for such failure or delay. Further, such Party experiencing the difficulty shall use all
commercially reasonable efforts to correct the failure or delay as quickly as possible under the
circumstances. Dates by which performance obligations are scheduled to be met will be
extended for a period of time equal to the time lost due to any delay so caused.
ARTICLE XII - EXHIBITS
All Exhibits shall be approved by each party, which approval shall be evidenced by such
party's initials on each Exhibit hereto.
Exhibit A Legal Description of 861/863 Palm Parcels
Exhibit B Legal Description of Palm Real Property
Exhibit C -1 Preliminary Title Report for 861/863 Palm
Exhibit C -2 Preliminary Title Report for Palm Real Property
Exhibit D Form of Grant Deed
Exhibit E 955 Morrow Lease
Exhibit F Form of Certificate of Completion
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A'i i ACHMENT 4
This Agreement is executed by the parties as of the date first written above.
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SLO CHINATOWN, LLC,
a California limited liability company
By:
Thomas M. Copeland
Its: Manager
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
By:
Mayor
Attest:
By:
City Clerk
Approved as to Form:
By:
City Attorney
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kil i A N MEN T 4.
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS ......................................................................................... ............................... I
Section 1.01 861/863 Palm Building .......................................................... ............................... l
Section 1.02 861/863 Palm Parcel ............................................................... ............................... I
Section 1.03 861/863 Palm Parcel Agreement ............................................ ............................... I
Section1.04 Closing ............................................................... .................. ................. ................. I
Section1.05 Closing Date ............................................................................ ..............................1
Section1.06 Closing Payment ..................................................................... ............................... l
Section1.07 Escrow ..................................................................................... ..............................2
Section 1.08 Escrow Company ........ ............................... .......................... ..............................2
Section 1.09 Escrow Instructions.. ...............,.........,.........,........................... ..............................2
Section 1.10 Monterey Improvements .......................................................... ..............................2
Section 1.11 Monterey Parcels Agreement ................................................... ..............................2
Section 1.12 Monterey Real Property ........................................................... ..............................2
Section 1.13 Palm Development Site ........................................................... ..............................2
Section 1.14 Palm Real Property .................................................................. ..............................3
Section 1.15 Preliminary Title Report .......................................................... ..............................3
Section 1.16 Purchase Price ......................................................................... ..............................3
Section1.17 Real Property ......................................................................... ..............................3
Section1.18 Title Company ......................................................................... ..............................3
ARTICLE 11- PURCHASE AND SALE ........................................................................ ..............................3
Section 2.01 Purchase and Sale .................................................................... ..............................3
Section2.02 Purchase Price ......................................................................... ..............................3
Section 2.03 Payment for Mitigation of Public Parking Removal ................ ..............................3
Section2.04 Payment.... ..... .................... ........ .............. ............. ................................... 4
Section 2.05 No Restrictions on City's Use of Property Prior to Closing ..... ..............................4
Section 2.06 Due Diligence; Condition of Property ..................................... ..............................5
Section2.07 Release ...... ............................................................................. .. .............................. 6
ARTICLE III - TITLE TO PALM DEVELOPMENT SITE .......................................... ............................... 8
Section 3.01 Condition of Title of Palm Development Site .......................... ..............................8
Section 3.02 Evidence of Title .................................................................... ............................... 8
Section3.03 Title Vesting ............................................................................ ..............................8
ARTICLEIV - CLOSING ............................................................................................... ..............................8
Section4.01 Closing .................................................................................... ..............................8
Section 4.02 Conditions to Closing -- City ................................................... ..............................9
Section 4.03 Conditions to Closing -- Copelands ..................................................................... 10
Section 4.04 Time for Closing .................................................................... .............................11
Section 4.05 Deposits by City. - . ...... ....... - ......................................... ................................... I I
Section 4.06 Deposits by Copelands ........................................................... .............................11
Section 4.07 Escrow Company's Actions .................................................. ............................... l l
Section 4.08 Early Termination ..................................... ............................... .12
ARTICLE V - ADJUSTMENT AND PRORATIONS .................................................. .............................12
Section5.01 Taxes ...................................................................................... .............................12
Section 5.02 Utilities and Contracts..... ....... ...................................................... ..................... 12
ARTICLE VI - CLOSING COSTS; NO BROKERS ..................................... ...............................
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Section 6.01 Copelands to Pay All Closing Costs ....................................... .............................13
Section 6.02 No Brokerage Commissions ................................................... .............................13
Section 6.03 Other Closing Costs ................................................................ .............................13
Section 6.04 Post- Closing Prorations .......................................................... .............................13
ARTICLE VII - POST CLOSING OBLIGATIONS ...................................................... .............................13
Section 7.01 Limitations and Restrictions on the Use of Palm Development Site; Reverter.... 13
Section 7.02 Survival of Obligations Post - Closing ..................................... .............................14
ARTICLE VIII - INDEMNIFICATIONS ...................................... ............................... ........14
Section 8.01 Indemnification by City .............................. .................14
Section 8.02 Indemnification by Copelands ................................................ .............................14
ARTICLEIX - REMEDIES ................................................................................ ............................... ..15
Section9.01 Right to Cure .......................................................................... .............................15
Section 9.02 Termination ............................................................................ .............................15
Section 9.03 Remedies upon Termination ................................................... .............................15
Section 9.04 Post - Closing Remedies; Right of Reverter ............................. .............................16
ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES ............. .............................16
Section 10.01 Representations and Warranties of Copelands ..................................................16
ARTICLE XI - MISCELLANEOUS .............................................................................. .............................17
Section11.01 Notices ................................................................................. .............................17
Section 11.02 Governing Law; Plurality; and Gender ................................ .............................18
Section11.03 Amendment .......................................................................... .............................18
Section 11.04 Authorization ....................................................................... .............................18
Section11.05 Time of Essence ................................................................... .............................18
Section 11.06 Attorneys' Fees for Transaction and for Disputes ................ .............................18
Section 11.07 Consent to Jurisdiction ......................................................... .............................18
Section11.08 Captions ............................................................................... .............................18
Section 11.09 Entire Agreement ................................................................. .............................19
Section 11.10 Counterparts .................................................................. ............................... .....19
Section 11.11 Successors and Assigns ........................................................ .............................19
Section11.12 Tax Reporting ...................................................................... .............................19
Section 11.13 Force Majeure ..................................................................... .............................20
ARTICLEXII - EXHIBITS ........................................................................................... .............................20
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STANDARD INDUSTRIAL /COMMERCIAL SINGLE - TENANT LEASE - NET
Basic Provisions ( "Basic Provisions ").
1.1 Parties: This Lease ( "Lease "), dated for reference purposes only December 13, 2011 is made by and between,
SLO CHINATOWN, LLC, a California limited liability company ( "Lessor") and CITY OF SAN LUIS OBISPO, a municipal corporation
and charter city ( "Lessee "), (collectively the "Parties ", or individually a "Party ").
1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the
terms of this Lease, and commonly known as (1) a portion of San Luis Obispo City Parking Lot #3, which is located on the property
to be acquired by Lessor pursuant to that certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and
delivered between Lessor and Lessee (the "Monterey Agreement'), which is adjacent to Monterey Street and is between 870
Monterey Street and 886 Monterey Street, and (2) a portion of San Luis Obispo City Parking Lot #11, which is located on the
property to be acquired by Lessor pursuant to the Monterey Agreement which is adjacent to Monterey Street and is between 848
Monterey Street and 868 Monterey Street, as generally shown on Exhibit A attached hereto located in the County of San Luis
Obispo, State of California.
1.3 Term: Month to month, which may be terminated by Lessor on not less than thirty (30) days prior written notice
the "Termination Notice ") as set forth in Paragraph 3.2 below ( "Original Term ") commencing on the Closing Date, as that term is
defined in the Monterey Agreement ( "Commencement Date ") and ending on the effective date of the Termination Notice
Expiration Date "). (See also Paragraph 3)
1.4 Early Possession: N/A ( "Early Possession Date ") (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $1.00 per month ( "Base Rent "), payable on the First of each month commencing on the
Commencement Date. (See also Paragraph 4)
If this box is checked, there are provisions in this Lease to be adjusted.
1.6 Base Rent and Other Monies Paid Upon Execution:
a) Base Rent: $ -0 -, for the period
b) Security Deposit: $ -0- ( "Security Deposit'). (See also Paragraph 5)
c) Association Fees: $ -0 -, for the period
d) Other: $ -0 -, for_
e) Total Due Upon Execution of this Lease: $ -0 -.
1.7 Agreed use: Parking lot available for public parking (See also Paragraph 6)
1.8 Insuring Party. Lessee is the 'Insuring Party" unless otherwise stated herein. (See also Paragraph 8)
1.9 Real Estate Brokers: (See also Paragraph 15)
a) Representation: The following real estate brokers (the 'Brokers ") and brokerage relationships exist in
this transaction (check applicable boxes):
None , represents Lessor exclusively ( "Lessor's Broker");
None represents Lessee exclusively ( "Lessee's Broker "); or
None represents both Lessor and Lessee ( "Dual Agency ").
b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the
Brokers the Brokerage fee agreed to in a separate written agreement (or if there is no such agreement, the
sum of -0 -_ or,-O-_ % of the total Base Rent) for the brokerage services rendered by the Brokers.
1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by, N/A ( "Guarantor ").
See also Paragraph 37)
1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:
an Addendum consisting of Paragraphs _ through _;
0 a plot plan depicting the Premises, which is attached as Exhibit A hereto;
a current set of the Rules and Regulations;
a Work Letter;
other (specify):
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at
the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in calculating Rent, is an approximation which the Parties
agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less.
Note: Lessee is advised to verify the actual size prior to executing this Lease.
2.2 Condition. Lessor shall deliver the Premises to Lessee AS IS, WHERE IS, with no warranty of any nature
whatsoever on the Commencement Date ( "Start Date ").
B5 -16.71
ATTACHMENT 4
2.3 Compliance. Lessor makes no warranty with respect to whether improvements on the Premises comply with
the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances ( "Applicable Requirements ")
that were in effect at the time that each improvement, or portion thereof, was constructed. Lessee is responsible for determining
whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended Use and acknowledge
that past uses of the Premises may not longer be allowed. If the Premises do not comply with the Applicable Requirements and
Lessee gives Lessor written notice of non compliance, then Lessee shall correct such non compliance at Lessee's sole cost and
expense as soon as reasonably possible thereafter, and shall provide Lessor with satisfactory assurance of such correction within a
reasonable time under the circumstances.
If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an
addition to or an alteration of the Premises, the remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Premises ( "Capital Expenditure" ), Lessee shall be fully responsible for the cost thereof or Lessee may
instead terminate this Lease. If Lessee elects termination, Lessee shell immediately cease the use of the Premises which require
such capital expenditure and deliver to Lessor written notice specifying a termination date at least 60 days thereafter. Such
termination date may, however, be the last day that Lessee could legally utilize the Premises without commencing such capital
expenditure if such date is earlier than 60 days from the date of such termination notice.
2.4 Acknowledgements. Lessee acknowledges that it is currently in possession of the Premises and that : (a) it
has been advised by Lessor and /or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to
the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and
the Americans with Disabilities Act), and their suitability for Lessee's intended use, (b) Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor's agents, nor Brokers have made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no
representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii)
it is Lessor's sole responsibility to investigate the financial capability and /or suitability of all proposed tenants.
2.5 Lessee as Prior Owner /Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or
effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be
responsible for any necessary corrective work.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in
Paragraph 1.3,
3.2 Termination. The Parties acknowledge that Lessor intends to develop the Premises. Only after the parking lot
and exits therefrom onto Palm Street have been reconfigured as described in (a) that certain Agreement of Purchase and Sale —
Monterey Parcels, to be executed and delivered between the City and SLO Chinatown, LLC, a California limited liability company,
and (b) that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and delivered between the City and
CP Monterey Morro, LLC (these agreements are referred to herein collectively as the "PSA Agreements "), Lessor shall have the
right to terminate this Lease on not less than 30 days prior written notice to Lessor, which notice may not be given by Lessor until a
construction permit for the Premises has been issued to Lessor. Nothing in this Paragraph, however, shall prevent Lessor from
exercising its rights to early termination of this Lease in the event of a breach by Lessee as provided in Paragraph 13.2.
3.3 [INTENTIONALLY OMITTED.]
3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the Premises to Lessee until Lessee
complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be
required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is
required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to
withhold possession until such conditions are satisfied.
4. Rent.
4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the
Security Deposit) are deemed to be rent ( "Rent ").
4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States,
without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary
amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is inaccurate such
inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period
during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's
rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of
25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check. Payments will
be applied first to accrued late charges and attorney's fees, second to accrued interest, then to Base Rent and Common Area
Operating Expenses, and any remaining amount to any other outstanding charges or costs.
4.3 [intentionally omitted]
5. Security Deposit. [INTENTIONALLY OMITTED.]
6. Use.
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6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is
unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or
properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds,
fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed
Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical
systems therein, and /or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall
within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to
the change in the Agreed Use.
6.2 Hazardous Substances.
a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any
product, substance or waste whose presence, use or manufacture, disposal, transportation or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential
liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to hydrocarbons, petroleum, gasoline and /or crude oil or any products, by products or
fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous
Substance, without the express written consent of Lessor and timely compliance (at Lessee's expense) with all Applicable
Requirements. "Reportable Use" shall mean (i) the installation or, use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with
respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and /or (iii) the
presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use
any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with
Applicable requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk
of contamination or damage or expose Lessor to any liability therefor. If addition, Lessor may condition the consent to any
reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public the
Premises and /or the environment against damage, contamination injury and or liability, including but not limited to, the installation
and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and /or
increasing the Security Deposit.
b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance
has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other
documentation which it has concerning the presence of such Hazardous Substance.
c) Lessee Remediation. Lessee shall not cause or knowingly permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, comply with all Applicable Requirements and take all investigatory and /or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance,
security and /or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance in or on the Premises during the term of this Lease, by or for Lessee .
d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and
ground lessor, if any, harmless from and against any and all loss of rents and /or damages, liabilities, judgment, claims, expenses,
penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or
for Lessee (provided however, that Lessee shall have no liability under the Lease with respect to underground migration of any
Hazardous Substances under the Premises from adjacent properties not caused or contributed by Lessee. Lessee's obligations
shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or
knowingly permitted by Lessee, and the cost of investigation, removal, remediation, restoration and /or abatement, and shall survive
the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and
Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.
e) [intentionally omitted]
f) [intentionally omitted]
g) Lessor Termination Option. If a Hazardous Substance Condition (see paragraph 9.1(e)) occurs during the
term of this Lease, unless Lessee is legally responsible therefore (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to
Lessor's rights and Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either(i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) only after the parking lot and exits therefrom onto Palm Street have been reconfigured as
described in the PSA Agreements, give written notice to Lessee within 30 days after receipt by Lessor of knowledge of the
occurrence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date 60 days following the
date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written
notice to Lessor of Lessee's commitment to pay the cost of the remediation of such Hazardous Substance Condition. Lessee shall
provide Lessor with satisfactory assurance of the availability of said funds within 30 days following such commitment. In such event,
this Lease shall continue in full force and effect, and Lessee shall proceed to make such remediation as soon as reasonably
possible. If Lessee does not give such notice and provide the required assurance of available funds within the time provided, this
Lease shall terminate as of the date specified in Lessor's notice of termination.
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6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee
shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, without
regard to whether such Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after
receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other information evidencing
Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness
or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold
in the Premises.
6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in Paragraph 30) and consultants shall
have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable
notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost
of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or Hazardous Substance Condition
see paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such
case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related
to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to
Lessor within 10 days of the receipt of a written request therefor.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
a) In General. Subject to the provisions of Paragraph 2.2(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance
with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result
of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment
or facilities, such as parking lots, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee's obligations shall
include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the
Premises in a first -class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity.
b) [intentionally omitted]
c) Failure to Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter
upon the Premises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall
be required), perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
d) [intentionally omitted]
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2(Condition), 2.3 (Compliance), 9 (Damage or
Destruction), and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever,
to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee, other
than as provided in the PSA Agreements. It is the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this Lease.
7.3 Utility Installations; Trade Fixtures; Alterations.
a) Definitions. The term "Utility Installations" refers to all floor and window coverings, air and /or vacuum lines,
power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment,
plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Premises, including parking meter heads . The term "Alterations" shall mean any
modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and /or Utility Installations" are defined as Alterations and /or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a).
b) No Consent. Lessee shall be entitled to make any Alterations or Utility Installations to the Premises without
Lessor's prior written consent.
c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been
furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's
lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right to post notices of non - responsibility. If Lessee shall contest
the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the
Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action,
Lessee shall pay Lessor's attorneys' fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
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a) Ownership. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all
Alterations and Utility Installations made by Lessee shall be the property of Lessee. Other than the parking meter heads referred to
in paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.
b) Removal of Parking Meter Heads. At the end of the term of this Lease, Lessee shall remove all parking meter
heads from the Premises, and such parking meter heads shall remain the property of Lessee.
c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination
date in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. "Ordinary wear
and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee
shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee to the
amounts required by applicable law (except for Hazardous Substances which were deposited via underground migration from areas
outside of the Premises, or if applicable, the Premises). Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be
deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by
Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment For Insurance. Lessee shall pay directly for all insurance required under Paragraph 8.
8.2 Liability Insurance.
a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance
protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based
upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $3,000,000.00 per occurrence
with an annual aggregate of not less than $5,000,000.00. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization's "Additional Insured - Managers or Lessors of Premises"
Endorsement. The policy shall not contain any intra- insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity
obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be
primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance
only.
b) Carried by Lessor. Lessor may maintain such liability insurance as its deems appropriate and such insurance
shall be in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name
of Lessor, with loss payable to Lessor, any ground - lessor, and to any Lender insuring loss or damage to the Premises. The amount
of such insurance shall be equal to the full insurable replacement cost of the Premises [City is confirming this amount], as the same
shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and
available insurable value thereof. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility Installations, Trade
Fixtures, and Lessee's personal property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is
available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except
the perils of earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All Consumers for the city nearest where the Premises
are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured Loss. The obligation to carry insurance under
Sections 8.3 and 8.4 may be met with self- insurance.
b) Rental Value. [INTENTIONALLY OMITTED].
c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor
which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such
building or buildings if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.
8.4 Lessee's Property; Business Interruption Insurance.
a) Property Damage. [INTENTIONALLY OMITTED].
b) Business Interruption. [INTENTIONALLY OMITTED].
c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of
coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this
Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact
business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at
least A -, VII VI, as set forth in the most current issue of "Best's Insurance Guide ", or such other rating as may be required by a
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Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to
the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts of
the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to
Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance
binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining
term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the
other Party may, but shall not be required to, procure and maintain the same.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby
release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property
arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by
the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the
case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence or willful misconduct, Lessee shall indemnify, protect, defend and
hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any
and all claims, loss of rents and /or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and /or liabilities
arising out of, involving, or in connection with, the use and /or occupancy of the Premises by Lessee other than as expressly
provided in the PSA Agreements. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters,
Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease
by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (1) injury or damage to the person
or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises, or from other
sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its
agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee's business or for any loss of income or
profit therefrom. Instead, it is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the
insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the
extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain
the required insurance and /or does not provide Lessor with the required binders or certificates evidencing the existence of the
required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount
equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent
represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee's failure to
maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with
respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder,
nor relieve Lessee of its obligation to maintain the insurance specified in this Lease.
9. Damage or Destruction.
9.1 Definitions.
a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 2 months or less from the date of the
damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 2 months or less from the date of the
damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.
c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of
the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by
the operation of Applicable Requirements, and without deduction for depreciation.
e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the
presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2, in, on, or under the Premises which
requires repair, remediation, or restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessee
shall, at Lessee's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in full force and effect
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless
caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessee may
either: (i) repair such damage as soon as reasonably possible at Lessee's expense, in which event this Lease shall continue in full
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force and effect, or (ii) terminate this Lease by giving written notice to Lessor within 30 days after receipt by Lessee of knowledge of
the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessee
elects to terminate this Lease, Lessor shall have the right within 10 days after receipt of the termination notice to give written notice
to Lessee of Lessor's commitment to pay for the repair of such damage without reimbursement from Lessee. Lessor shall provide
Lessee with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease
shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessor does not make the required commitment, this Lease shall terminate as of the date specified in
the termination notice.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this
Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful
misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.
9.5 [intentionally omitted]
9.6 Abatement of Rent; Lessee's Remedies.
a) Abatement.; Right to Action. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's use
of the Premises is impaired.
b) Remedies. If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial and
meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee's election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified
in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect.
Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph
9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to
be, used by Lessor.
10. Real Property Taxes.
10.1 Definition. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes);
improvement bond; and /or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises or
the Project, Lessor's right to other income therefrom, and /or Lessor's business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located.
Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of
events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levied
or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.
10.2 Payment of Taxes. If the Premises are or become exempt from Real Property Taxes because they are leased
by Lessee, a governmental agency, then Lessee shall have no obligation to pay any amount for Real Property Tax installments.
However, if the Premises are not exempt from such taxes, then Lessor shall pay them. .
10.3 Joint Assessment..
10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon
Trade Fixtures, and all personal property of Lessee. When possible, Lessee shall cause its Trade Fixtures, and all other personal
property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a
written statement setting forth the taxes applicable to Lessee's property.
11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and
other utilities and services supplied to the Premises, together with any taxes thereon. There shall be no abatement of rent and
Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or
service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or in
cooperation with governmental request or directions.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign
or assignment ") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent.
b) [intentionally omitted]
c) [intentionally omitted]
d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per
Paragraph 131(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such
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unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days
written notice, increase the monthly Base Rent to $
e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and /or
injunctive relief.
f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the
time consent is requested.
g) [intentionally omitted]
12.2 Terms and Conditions Applicable to Assignment and Subletting.
a) Regardless of Lessor's consent, no assignment or subletting shall: (i) be effective without the express written
assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations
hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending
approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of
Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach.
c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment
or subletting.
d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors
or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee,
without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by
Lessor.
e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information
relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or
sublessee, including but not limited to the intended use and /or required modification of the Premises, if any, together with a fee of
500 as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or
additional information and /or documentation as may be reasonably requested. (See also Paragraph 36)
f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into
such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to
conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented to in writing.
g) Lessor's consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option
granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph
39.2)
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:
a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and
Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach
shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. In the event that the amount collected by
Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of
the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for
any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as
to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.
b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the
expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.
d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent.
e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the
right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of
reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms,
covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
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a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially
reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential vandalism.
b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill
any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3
business days following written notice to Lessee.
c) The commission of waste, act or acts constituting public or private nuisance, and /or an illegal activity on the
Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee.
d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements,
ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested
subordination, (vi) evidence concerning any guaranty and /or Guarantor, (vii) any document requested under Paragraph 42, (viii)
material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee
under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee.
e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default
continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee's Default is such that more than
30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said
30 day period and thereafter diligently prosecutes such cure to completion.
f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the
benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a
petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession
of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored
to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the
event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not
affect the validity of the remaining provisions.
g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
h) [intentionally omitted]
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written
notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 120% of the costs and expenses incurred by Lessor in such performance
upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall
terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental
loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could
be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the
Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in
connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to
in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor
to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragraph
12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any
part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay
rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by
Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run
concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an
unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and /or by said statute.
b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event
Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and /or the appointment of
a receiver to protect the Lessor's interests, shall not constitute a termination of the Lessee's right to possession.
c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the
Premises are located. The expiration or termination of this Lease and /or the termination of Lessee's right to possession shall not
relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof
or by reason of Lessee's occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by
Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Lessee's full and faithful
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performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other
charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an inducement Provision shall
be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver
by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.
13.4 [intentionally omitted]
13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when
due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non - scheduled
payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non-
scheduled payments. The interest ( "Interest ") charged shall be computed at the rate of 10% per annum but shall not exceed the
maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Lessor.
a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable
time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no
event be less than 10 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however,
that if the nature of Lessor's obligation is such that more than 10 days are reasonably required for its performance, then Lessor shall
not be in breach if performance is commenced within such 10 day period and thereafter diligently pursued to completion.
b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach
within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such
cure, or Lessee may elect to cure such breach at Lessee's expenses and pursue an action at law or in equity against Lessor
including without limitation an action seeking specific performance of this Lease Lessee shall document the cost of said cure and
supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold
under the threat of the exercise of said power (collectively "Condemnation "), this Lease shall terminate as to the part taken as of
the date the condemning authority takes title or possession, whichever first occurs. If more than 25% of that portion of the Premises,
is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the
Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by
such Condemnation. Condemnation awards and /or payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however,
that Lessee shall be entitled to any compensation paid by the condemnor for Lessee's relocation expenses, loss of business
goodwill and /or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the
event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by
such Condemnation.
15. Brokerage Fees.
15.1 Additional Commission..
15.2 Assumption of Obligations. Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have
assumed Lessor's obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and
31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lessee's Broker may
send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice,
Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall be deemed to
be a third party beneficiary of any commission agreement entered into by and /or between Lessor and Lessor's Broker for the limited
purpose of collecting any brokerage fee owed.
15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant
to the other that it has had no dealings with any person, firm, broker or finder in connection with this Lease, and that no one is
entitled to any commission or finder's fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect,
defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
a) Each Party (as "Responding Party ") shall within 10 days after written notice from the other Party (the
Requesting Party ") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then
most current "Estoppel Certificate" form published by the AIR Commercial Real Estate Association, plus such additional
information, confirmation and /or statements as may be reasonably requested by the Requesting Party.
b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the
Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except
as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if
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Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.
c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall
deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such
lender or purchaser, including but not limited to Lessee's financial statements for the past 3 years. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner or owners at the time in
question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease. In the event of a transfer
of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations and /or covenants under this Lease thereafter to be
performed by the Lessor. Subject to the foregoing, the obligations and /or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction,
shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean
and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of
Lessor or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor's partners,
members, directors, officers or shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or
observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties
with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as
to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and
character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by
either Party.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and
may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter
designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given
on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given 24 hours after
delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be
deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.
24. Waivers.
a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be
deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or
of any other term, covenant or condition hereof. Lessor's consent to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the
basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and /or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.
c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL
MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE
EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. [intentionally omitted]
26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond
the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to $_of the
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Base Rent applicable immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent
by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever
possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of
the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the
plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning
as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives,
successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non - Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground
lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device "), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions
thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have no
liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and /or
any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this
Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are acquired by another
upon the foreclosure or termination of a Security Devise to which this Lease is subordinated (i) Lessee shall, have the right to
terminate this Lease or, at its election, subject to the non - disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the
remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between
Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder (but not of its
obligations under the PSA Agreements) and such new owner shall assume all of Lessor's obligations, except that such new owner
shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership;
b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more
than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to
such new owner.
30.3 Non - Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease,
Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non - disturbance agreement (a "Non -
Disturbance Agreement" ) from the Lender which Non - Disturbance Agreement provides that Lessee's possession of the Premises,
and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by
Lessee, use its commercially reasonable efforts to obtain a Non - Disturbance Agreement from the holder of any pre- existing Security
Device which is secured by the Premises. In the event that Lessor is unable to provide the Non - Disturbance Agreement within said
60 days, then Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate for the execution and delivery of a
Non - Disturbance Agreement.
30.4 Self- Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any
further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately
document any subordination, attornment and /or Non - Disturbance Agreement provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded
in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action,
or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall
include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by
compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees
award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and
consultation).
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the
Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose
of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or
additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services,
pipes and conduits through the Premises and /or other premises as long as there is no material adverse effect to Lessee's use of the
Premises. All such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without
Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
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34. Signs. Lessor may place on the Premises any sign without Lessor's prior written consent so long as any such
sign complies with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender
of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall
automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any
one or all existing subtenancies. Lessor's failure within 10 days following any such event to elect to the contrary by written notice to
the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such
interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and
expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of,
or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or
the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any
determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall
furnish its reasons in writing and in reasonable detail within 10 business days following such request.
37. [intentionally omitted]
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants,
conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. [intentionally omitted]
40. [intentionally omitted]
41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include
the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee
assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third
parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the
Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid
by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have
the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive
the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation
on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as
it was not legally required to pay, A Party who does not initiate suit for the recovery of sums paid "under protest" with 6 months shall
be deemed to have waived its right to protest such payment.
44. Authority; Multiple Parties; Execution.
a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of
such authority.
b) If this Lease is executed by more than one person or entity as "Lessee ", each such person or entity shall be
jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any
amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same
as if all of the named Lessees had executed such document.
c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.
45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions
shall be controlled by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall
not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all
Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the
modification. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable
non - monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.
PAGE 13
INITIALS
2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION
95-16.83
INITIALS
FORM MTN- 5 -5 /05E
ATTACHMENT 4
48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and /or the Arbitration of all
disputes between the Parties and /or Brokers arising out of this Lease - is x is not attached to this Lease.
50. Americans with Disabilities Act. Since compliance with the Americans with Disabilities Act (ADA) is
dependent upon Lessee's specific use of the Premises, Lessor makes no warranty or representation as to whether or not the
Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premises requires modifications or
additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and /or
additions at Lessee's expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION
CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT
THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE
ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF
THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF
HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE
ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.
WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF
THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS
LOCATED.
The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
Executed at: San Luis Obispo, CA Executed at: San Luis Obispo, CA
On:
By LESSOR:
SLO CHINATOWN, LLC,
a California limited liability company
By:
Name Printed: Thomas M. Copeland
Title: Manager
Address: P.O. Box 12260
San Luis Obispo, CA 93406
Telephone:(805) 593 -0200
Facsimile:(805) 593 -0109
Federal ID No.
On:
By LESSEE:
CITY OF SAN LUIS OBISPO,
a municipal corporation and charter city
By:
Name Printed.
Title:
By:
Name Printed:
Title:
Address:
Telephone:(_)
Facsimile: (_)
Federal ID No.
NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write
or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 800 W 6th Street,
Suite 800, Los Angeles, CA 90017. Telephone No. (213) 687 -8777. Fax No.: (213) 687 -8616.
Copyright 2001 - By AIR Commercial Real Estate Association. All rights reserved.
No part of these works may be reproduced in any form without permission in writing.
PAGE 14
B5 -16.84
INITIALS INITIALS
02001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN- 5 -5/05E
Revenue Details
Property Tax
Retail including hotel
retail
Office
Residential
Hotel
Restaurant
Total Property Tax
Existing Property Tax
Net Property Tax Total
Sales Tax
Retail including hotel
I
Annual Revenue Comparison
Entitled Project
From 2008 Analysis
26,900.00
3,000.00
14,800.00
49,100.00
In hotel
93,800.00
12,500.00
81,300.00
ATTACHMENT 5
Proposed Project
Proposed Project Difference
26,700.00 $ 200.00)
3,000.00)
8,100.00 $ 6,700.00)
49,100.00 $
35,100.00
e
In hotel
Restaurant
83,900.00 $ 9,900.00)
14,600.00 $ 2,100.00
l
73,800.00 $ 7,500.00)
retail 111,500.00 114,400.00 1 $ 2,900.00
Hotel 30,200.00 35,100.00 4,900.00
Restaurant In hotel In hotel
Total Sales Tax 141,700.00 ' 149,500.00 7,800.00
I
Net sales tax, including
transfer from other
retailers 106,300.00 112,100.00 5,800.00
Total Property and SalespY
Tax Revenue 187,600.00 185,900.00 __. 1,700.00)
Transient Occupancy Tax
Hotel 426,700.00. 316,300.00
j
110,400.00)
Total Property, Sales &
TOT Revenue 614,300.00 502,200.00
Project Details Entitled Project (sf) Units Proposed Project (sf) Units Summary (sf)
Retail 51,150 50,840 310)
Office 5,630 5,630)
Residential 19,161 16 15,350 32 3,811)
Hotel 85,430 78 85,430 78
Restaurant 6,000 6,000
Total 167,371 157,620 9,751)
B5 -17