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HomeMy WebLinkAbout1452ORDINANCE NO. 1452 (2004 Series) AN ORDINANCE OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE CITY, THE DALIDIO FAMILY AND SAN LUIS OBISPO MARKETPLACE, LLC FOR THE SAN LUIS OBISPO MARKETPLACE PROJECT WHEREAS, the City Council of the City of Sap. Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on August 3, 2004, for the purpose of considering a proposed development agreement (hereinafter "Development Agreement ") for the San Luis Obispo Marketplace Project at 2005 Dalidio Drive; and WHEREAS, said public hearing was conducted pursuant to Chapter 17.94 entitled Development Agreements of the San Luis Obispo Municipal Code; and WHEREAS, notices of said public hearing were made at the time and in the manner required by law; and WHEREAS, the proposed Development Agreement was analyzed in the Final Environmental. Impact Report (FEIR) for the San Luis Obispo Marketplace project, and the City Council certified said FEIR and adopted statements of overriding considerations on July 7, 2004; and WHEREAS, at a public hearing held on July 14, 2004, the Planning Commission of the City of San Luis Obispo considered the subject Development Agreement and recommended against its approval; and WHEREAS, the City Council has duly considered the proposed Development Agreement and exhibits, the recommendation of the Planning Commission, 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 ORDAINED by the City Council of San Luis Obispo as follows: SECTION 1. The City of San Luis Obispo; Ernest F. Dalidio, Jr., Successor Trustee of Dalidio Family Trust u/t/a dated October 29, 1987, Ernest Dalidio Jr., Successor Trustee of the Thelma F. Perrozi Trust u /t/a dated February 7, 1991, and Clara B. Dalidio, Trustee of the Clara B. Dalidio Trust u/t/a dated January 15, 1991 (collectively, "Dalidio Family "); and San Luis Obispo Marketplace Associates, LLC, desire to enter into a Development Agreement pursuant to Government Code Sections 65864 through 65869.5, and Chapter 17.94 of the San Luis Obispo Municipal Code with respect to real property located at 2005 Dalidio Drive in San Luis Obispo. The legal descriptions of said parcels are more particularly described in the proposed Development Agreement, attached hereto as Exhibit "A" and incorporated herein by reference. 01452 Ordinance No. 1452 (2004 Series) Page 2 SECTION 2. The Planning Commission conducted a public hearing to consider the Development Agreement pursuant to Municipal Code Section 17.94.100 on July 14, 2004 and recommended against approval of the agreement, citing a potential inconsistency with the General Plan due to skewing of the jobs /housing balance, and questionable public benefit to be gained by the project. The City Council held a properly noticed public hearing regarding the proposed Development Agreement pursuant to Section 17.94.110 et seq. on August 3, 2004. Oral and written evidence were presented both to the Commission and the Council. SECTION 3. Based upon substantial evidence in the record of the proceeding including, without limitation, the written and oral staff reports, testimony of the applicant and other interested parties, the FEIR prepared for the San Luis Obispo Marketplace project pursuant to the California Environmental Quality Act, the General Plan, and the record and decision of the Planning Commission, the City Council hereby finds that the proposed Development Agreement is consistent with the General Plan of the City of San Luis Obispo. The City Council further finds that the proposed Development Agreement complies with the zoning, subdivision, and other applicable ordinances and regulations. SECTION 4. The proposed Development Agreement furthers the public convenience, general welfare, and good land use practice, making it in the public interest to enter into the Development Agreement with the applicant. The Development Agreement provides for the orderly and comprehensive development of a land area in a visible and important location in the City. The Development Agreement ensures that the project can be developed over time in its approved form, and that the applicant will provide substantial public benefits as a part of the development. SECTION 5. Taking into account all of the conditions of approval that have been applied to the project, the City Council further finds that: (a) The Development Agreement will not adversely affect the health, peace, comfort or welfare of persons residing or working in the surrounding area, since the project is in keeping with the character and general development pattern of the existing area; (b) The Development Agreement will not be materially detrimental to the use, enjoyment or valuation of property of other persons located in the vicinity of the site, since the Development Agreement ensures that public improvements, additional infrastructure and other public benefits will be provided as the project is constructed; (c) The Development Agreement will not jeopardize, endanger or otherwise constitute a menace to the public health, safety or general welfare, since the Development Agreement will provide public safety improvements such traffic improvements contemplated by the separate finding that the Development Agreement will help the City pay for the freeway interchange as contemplated by the Circulation Element that the City could not otherwise afford. Further, the project is conditioned to comply with applicable fire, building and life safety codes and regulations; Ordinance No. 1452 (2004 Series) Page 3 (d) The Development Agreement will be in the best interests of the City in that it implements the proposed San Luis Obispo Marketplace project and will provide certainty to the City and the Applicant regarding that project's development time table, impact fees, applicable ordinances, overall development standards and similar matters. The proposed project will provide for a functional and attractive development that will contribute to the City's tax base while preserving a considerable amount of land for agricultural, conservation and open space uses. Because of this, the Development Agreement is in the best interests of the City and its residents; (e) The Development Agreement is consistent with the General Plan, any applicable Specific Plan and the Municipal Code. The administrative record and findings of this Ordinance demonstrate conformance with City requirements; (f) The project will be appropriate at the proposed location and will be compatible with neighboring uses, in light of the existing adjacent commercial uses, and as the Conservation Land and the proposed residential uses separate much of the proposed project from existing residential uses; and (g) The Development Agreement would promote the public interest and welfare of the City. The development project will preserve open space, provide for public improvements contemplated by the Circulation Element and expand the City's tax base through regional serving retail uses different from those in the downtown area. The development project also provides for a residential use adjacent to an existing residential area and limits the commercial- retail use to an area adjacent to existing commercial and retail development. SECTION 6. The proposed Development Agreement complies with the terms, conditions, restrictions and requirements of Chapter 17.94 of the San Luis Obispo Municipal Code. Pursuant to San Luis Obispo Municipal Code Section 17.94.130, the Development Agreement and the project approvals incorporated therein provide for a duration of the agreement, uses to be permitted on the property, permitted density, maximum height, size and location of buildings, and the reservation of land for public purposes such as open space. SECTION 7. The proposed Development Agreement was analyzed in the Final Environmental Impact Report (FEIR) for the San Luis Obispo Marketplace project, and the City Council certified said FEIR and adopted statements of overriding considerations on July 7, 2004. The City Council finds and determines that the Final Environmental Impact Report adequately addresses the potential significant environmental impacts of the proposed Development Agreement, and reflects the independent judgment of the City Council. The Council, through the certification of the Final Environmental Impact Report, incorporated the mitigation measures listed in the Mitigation Monitoring Program into the project and the Development Agreement. In light of adoption of the overriding considerations and incorporation of the mitigation measures, the project and Development Agreement will not have a significant adverse impact on the environment. �(71 bwv 6D ell� 54011-� Ordinance No. 1452 (2004 Series) Page 4 SECTION 8. Based upon the foregoing, the City Council hereby approves the Development Agreement attached hereto as Exhibit "A" and authorizes the Mayor to execute said Development Agreement on behalf of the City. SECTION 9. A summary of this ordinance, together with the names of the Council members voting for and against, shall be published at least five (5) days prior to its final passage, in the Telegram- Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect upon final approval of annexation of the site by the Local Agency Formation Commission or when the possible suspension, pursuant to Elections Code Section 9237, of the effective date of Resolution No. 9590 (2004 Series) is lifted, whichever is later. INTRODUCED on the 3rd day of August, 2004, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the 17th day of August, 2004, on the following roll call vote: AYES: Council Member Ewan, Vice Mayor Schwartz, Mayor Romero NOES: Council Member Mulholland ABSENT: Council Member Settle ATTEST: Diane Reynolds . Acting City . Der APPROVED AS TO FORM: Jon P. Lowell City Attorney Mayor FOOO W_. , �. 4 M'_ _ -0, Dave Romero hereby certify that this document is a true and accurate copy of Ordinance No. and that the ordinance was Published to Charter 5ect4r' Pursuant 4 Gate rk , _r RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: ANDRE, MORRIS & BUTTERY P. O. BOX 730 SAN LUIS OBISPO, CA 93406 SPACE ABOVE THIS LINE FOR RECORDER'S USE DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT (hereafter "Agreement ") is made and entered into on (the "Agreement Date "), by and between: (i) the CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter City ( "City "); (ii) ERNEST F. DALIDIO, JR., Successor Trustee of Dalidio Family Trust u/t/a dated October 29, 1987, ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u/t/a dated February 7, 1991, and CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u /t/a dated January 15, 1991 (collectively, "Dalidio Family "); and (iii) SAN LUIS OBISPO MARKETPLACE ASSOCIATES, LLC, a California limited liability company ( "SLO Marketplace "). Dalidio Family and SLO Marketplace are referred to collectively as "Developer." Additional specified terms are defined in Exhibit "A" hereto. RECITALS A. The Development Agreement Statute authorizes City to enter into an agreement for the development of real property with any person having a legal or equitable interest in such property in order to establish certain development rights in such property. B. Dalidio Family is the owner of the Real Property. The Real Property consists of approximately 131 acres of land that is included in City's General Plan and sphere of influence. The Real Property is intended to be annexed to City. C. SLO Marketplace has entered into an option agreement with Dalidio Family whereby SLO Marketplace has an option to purchase a portion of the Real Property. Dalidio Family and SLO Marketplace each have a legal and/or equitable interest in the Real Property. D. Developer intends to: (i) develop the Project on the Real Property as follows: a) on the Retail Land, SLO Marketplace intends to cause to be constructed the Retail Project; b) on the Business Land, Dalidio Family intends to construct the Business Project; c) on the Residential Land, SLO Marketplace intends to construct the Residential Project; and (ii) not develop those portions of the Real Property as follows: a) the Conservation Land will be preserved as open space via an easement; and b) approximately 16.2 acres of the Real Property committed to public roads, including a freeway interchange approximately 11.7 acres in size. The "Project" shall mean collectively, the Retail Project, the Business Project, the Residential Project, the creation of CA DOCUME- I\sbuwU .00AIS- 1 \TenV\F1NALD -LDOC 1 open space on the Conservation Land and the Real Property committed to public roads including the Freeway Interchange. E. In 2002 Developer submitted a development proposal, and on May 21, 2002, the City Council determined that the proposed Project constitutes an appropriate basis for a City project application and directed further processing of the proposal. F. The purpose of this Agreement is to facilitate the implementation of City's General Plan through the development of the Project, thereby realizing various public benefits to City and private benefits to Developer, including those described in these Recitals. The development of the Project requires a major investment by Developer in public facilities, substantial front -end investment in on -site and off -site improvements, dedications of land, participation in other programs for public benefit and purposes, and substantial commitments of resources to achieve both the private benefits of the Project. for Developer and the public purposes and benefits of the Project for City. Developer will be unable to make and realize the benefits from such commitments of land and resources without the assurances of a realized Project provided by this Agreement. G. Developer is willing, pursuant to the terms of this Agreement, to make expenditures and provide benefits to City including, without limitation, contributions toward construction of a full freeway interchange at U.S. Highway 101 and Prado Road, as described in Exhibit "B" (the "Freeway Interchange "), the development cost of which is estimated to be approximately $22 million. City and Developer desire to provide a mechanism whereby the Freeway Interchange will be constructed and funded in whole or in part by utilizing tax - exempt debt financing which is secured by a portion of the Real Property and is reimbursed through sales tax and transient occupancy tax revenues. H. The general benefits to be received by City from this Agreement and the implementing of the Project include, without limitation: 1. Implementing the General Plan and furthering it goals; 2. Implementing City's Circulation Element by providing improved access to the Project and adjacent areas by constructing the Freeway Interchange; 3. Causing Developer to accelerate and provide specific public infrastructure improvements and facilities in advance of City's opportunity to require Developer to provide same; 4. Providing for Developer to dedicate approximately 54.7 acres of the Real Property as a conservation easement; 5. Providing for Developer to contribute to City's open space acquisition fund an amount determined by City to be sufficient to acquire a fee interest or an open space /conservation easement on approximately 24 acres of additional off -site land; CADOCUME -I Wouw6LOCALS- 1 \Temp\FINALD -1. DOC 2 6. Providing City with anticipated increased sales and transient occupancy tax revenues; 7. Providing City with an opportunity for a portion of the Real Property to be developed as a business park or such related use, in support of economic development; 8. Providing for the opportunity of preserving the historic "Sulkey Racing Stadium" structure, a grandstand structure that was constructed on the Real Property approximately 100 years ago and used by City residents for horse racing, and which is currently stored on the Real Property in a non - functional condition (the "Grandstand Structure "); 9. Providing for added commercial hotel development; and 10. Proving for affordable housing in furtherance of City's inclusionary housing goals. I. The parties acknowledge that it is the Dalidio Family's desire to make a voluntary, charitable contribution to City of fee interest in and to the Conservation Land, at such time as development of the Business Project is completed. J. Some of those expenditures and dedications of land by Developer are over and above those that City could require of Developer in the normal course of granting project approvals. Developer is willing to make such additional expenditures and/or grant such additional dedications in return for receiving the benefits conferred on Developer by this Agreement. K. City desires the timely, efficient, orderly, and proper development of the Project, and believes it is in the public interest to obtain the benefits conferred by the additional expenditures and additional dedications by Developer referred to above. City further believes it is in the public interest to provide for the vesting of Developer's rights to develop the Project in conformance with the Project Approvals -and the terms and conditions contained herein so that such vested rights shall not be disturbed by changes in laws, rules, or regulations, including measures passed by initiative, that occur after the Effective Date of this Agreement. L. The parties are entering into the Reimbursement Agreement concurrently with this Agreement. The Reimbursement Agreement is intended to provide for reimbursement of costs of construction, including related administration, design, and financing costs, of the Freeway Interchange. The Reimbursement Agreement is intended to survive the expiration of all terms of this Agreement. The Reimbursement Agreement shall provide for the sharing of up to 50% of the net new sales tax and transient occupancy tax revenues generated by the Retail Project, less certain exclusions and adjustments, as more particularly described in the Reimbursement Agreement, not to exceed the Developer's special tax obligations under the Reimbursement Agreement. M. For the reasons recited herein, Developer and City have determined that the development of the Real Property in accordance with the Project Approvals is a development project for which this Agreement is appropriate. Further, this Agreement will: (i) eliminate CADOCUME —I \cMuwrU.00AIS— Memp\FINALD —LDOC 3 uncertainty in planning and provide for the orderly development of the Real Property; (ii) insure progressive installation of necessary improvements, provide for public services appropriate to the development of the Real Property; (iii) help insure attainment of the maximum effective utilization of resources within City at the least economic cost to its citizens; and (iv) otherwise achieve the goals and purposes of the Development Agreement Statute. In exchange for these benefits to City, together with the public benefits created by the development of the Real Property, Developer desires to receive the assurance that it may proceed with development of the Real Property; (i) in accordance with the Applicable Rules of City; (ii) pursuant to the terms and conditions contained in this Agreement; and (iii) based on both existing and subsequent Project Approvals. N. City and Developer have reached agreement and desire to express herein a development agreement that will facilitate development of the Project subject to the conditions set forth in this Agreement and set forth in the Project Approvals, as defined herein. O. In connection with the development of the Project, City approved an amendment to the General Plan on July 7, 2004, by Resolution No. 9590 (2004 Series) (the General Plan Amendment"). Among other things, the City Council found that this Agreement and the Project: (i) are consistent with its General Plan, as amended; (ii) are compatible with the uses authorized in, and the regulations prescribed for, the Real Property; (iii) are in conformity with public convenience, general welfare, and good land use practice; (iv) will not be detrimental to the health, safety, or general welfare; and (v) will not adversely affect the orderly development of property or the preservation of property values. P. The Environmental Impact Report ( "EIR ") was certified by the City Council on July 7, 2004, by Resolution No. 9588 (2004 Series) (the "EIR Certification "). Pursuant to CEQA, a mitigation/monitoring program for the Project was approved by the City Council. With respect to all environmental impacts identified in the EIR as not being capable of mitigation to an insignificant level, City has determined that the benefits of the proposed Project outweigh these unmitigated environmental effects and, accordingly, City adopted a Statement of Overriding Considerations on July 7, 2004. Q. Pursuant to California Government Code Section 65859 and City's General Plan, City prezoned the Real Property as set forth in Exhibit "C ", on August 3, 2004, by Ordinance No. 1449 (2004 Series) (the "Prezoning "). The Prezoning shall become effective upon the date of completion of annexation of the Real Property to City ( "Annexation ") or when the possible suspension, pursuant to Elections Code Section 9237, of the effective date of Resolution No. 9590 (2004 Series) is lifted, whichever is later. Because Annexation is a necessary prerequisite to the development of the Project, it is the intent of the parties that if Annexation is not completed within the time specified herein, the Agreement and all rights and obligations hereunder will thereupon terminate. R. Consistent with City's General Plan, City approved that certain Development Plan (the "Development Plan ") for a portion of the Project, including the Retail Project, on July 7, 2004, by Ordinance No. 1449 (2004 Series). CADOCUME -1 \t1ousa \[.0CAM- 1 \TetM\F1NAM -I.D0C 4 S. On July 14, 2004, the Planning Commission of City, after giving notice pursuant to Government Code Sections 65867, 65090 and 65091, held a public hearing on Developer's application for this Agreement. T. The City Council, after providing public notice as required by law, on August 3, 2004, considered and approved the Conservation Easement by Resolution No. 9596 (2004 Series). U. The City Council, after providing public notice as required by law, held a public hearing on this Agreement on August 3, 2004. On August 17, 2004, the City Council adopted Ordinance No. 1452 (2004 Series) approving this Agreement. V. The parties acknowledge that the Project represents a unique development in the City of San Luis Obispo by virtue of its composition, scale, public improvement components and open space protection component, and as such is unlikely to be reproduced in the foreseeable future in San Luis Obispo. The parties further acknowledge that City's interest in reaching project- specific agreements with Developer as to the specifications of the Project, including providing for a non - pedestrian oriented design and construction of the Freeway Interchange, is served by this Agreement. By providing incentives and disincentives in this Agreement and the Reimbursement Agreement, City intends that the Commercial Project will continue to be a "hybrid power shopping center," and as such will not have a material adverse impact on downtown San Luis Obispo retail activities from either an economic or social standpoint. NOW, THEREFORE, with reference to the above recitals and in consideration of the mutual promises, obligations and covenants herein contained, City and Developer agree as follows: AGREEMENT 1. Real Property Subject to the Agreement. This Agreement applies to and governs the development of the Real Property. 2. Relationship of City and Developer. This Agreement is a contract that has been negotiated and voluntarily entered into by City and Developer. Developer is not an agent of City. City and Developer hereby renounce the existence of any form of joint venture or partnership between them, and agree that nothing contained in this Agreement or in any document executed in connection with this Agreement shall be construed as making City and Developer joint venturers or partners. 3. Effective Date and Term. 3.1. Effective Date. The parties anticipate that completion of Annexation (having the meaning in this Agreement that the phrase 'completion of annexation proceedings annexing the property to the city' has in Section 65865(b) of the Development Agreement Statute), triggering the Effective Date, shall occur prior to December 31, 2004 and shall use their best efforts to achieve Annexation by that date. In the event that Annexation has not occurred on or before December 31, 2005 (subject to extension as set forth in Section 3.4, below), despite the CA DCCUME- 1kdouurU .0CAL$- 1 \TetW\FINALD -I.D0C 5 parties best efforts to achieve Annexation, this Agreement shall be null and void and shall be terminated without any further obligations hereunder, unless the parties mutually agree to an extension of the time for Annexation. 3.2. Term. The Term shall commence on the Effective Date and extend for the following periods, unless this Agreement is otherwise terminated or modified as set forth herein: (i) with respect to development of the Retail Project, the Term shall be five (5) years from the Effective Date; and (ii) with respect to the development of the Business Project and the Residential Project, the Term shall be fifteen (15) years from the Effective Date. 3.3. Term of Project Approvals. The term of any Subdivision Map and the other Project Approvals shall automatically be extended for the Term. Expiration of this Agreement shall not affect any rights of Developer arising from the Project Approvals, except to the extent that Subdivision Maps or other entitlements have a validity coterminous with this Agreement. 3.4. Effect of Challenge. If any litigation is filed, referendum commenced or any legal or political action taken challenging this Agreement, the General Plan Amendment, the EIR Certification, the Development Plan, the Prezoning, the Annexation or any other Project Approval (including but not limited to any environmental determinations related to any of the foregoing) or otherwise raising issues concerning the validity of such matters or the validity and binding nature of this Agreement, the Term shall be extended for the period of time such action is pending. Upon the conclusion of such action (by dismissal, final entry of judgment or otherwise), Developer and City shall indicate on an addendum to this Agreement the period of any such extension and may record a notice to that effect. Further, in the event of any such action, City shall, upon Developer's request and at Developer's discretion, cause the Annexation to be postponed until the later of the conclusion of such action providing for a resolution which allows the Project to proceed, or the date upon which Developer requests the Annexation process to resume. During any such postponement of Annexation, the dates for Annexation set forth in Section 3.1 shall toll and be extended for a like period of time. In the event of a delay in the letting of the contract for the construction of the Freeway Interchange, such that the contract is not let within one (1) year after Annexation, then the Term shall be extended for the period beginning one (1) year after Annexation and ending upon letting of such contract. 4. Development of the Real Property. 4.1. Right to Develop. Developer shall have the vested right to develop the Project on the Real Property in accordance with the Vested Components. No part of the Vested Components may be revised or changed during the Term without the consent of the owner of the portion of the Real Property to which the change applies (taking into account the terms of Sections 21 and 22 hereof, relating to assignment of rights under this Agreement). The Vested Components shall be effective against, and shall not be amended by, any subsequent ordinance or regulation, whether adopted or imposed by the City Council or by the initiative or referendum process. Notwithstanding anything to the contrary herein, in accordance with the Development Agreement Statute, this Agreement specifies, with respect to the Project, the duration of this Agreement, the permitted uses of the Real Property, the density and intensity of use, the maximum height and size of the proposed buildings, and provisions for reservation or dedication of land for public uses. CA DOCUME- I\sbuwU.00AM- t \TerW\RNALD -LDOC 6 4.2. Project Plan. The Project is more specifically described and defined in Exhibit "D ", (the "Project Plan "), provided that the parties acknowledge that certain components of the Project Plan are subject to Discretionary Approvals. The parties acknowledge that the City Council approves in concept the designs and specifications contained in the Project Plan, provided that certain items contained in and components of the Project Plan are subject to approval by advisory bodies of City. If any such advisory body of City denies approval of any component of the Project, Developer shall be entitled to appeal any advisory body action to the City Council. Notwithstanding anything to the contrary set forth herein, in the event that any component of the Project Plan is subjected to a final rejection by City, Developer shall be entitled to terminate this Agreement, and thereupon the parties shall have no further obligations hereunder. 4.3. Permitted Uses. The permitted uses of the Real Property, the maximum density and intensity of use, the maximum height, bulk and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, the location and maintenance of on -site and off -site improvements, the location of public utilities, and any other terms and conditions of development applicable to the Real Property, shall be those set forth in this Agreement, the Project Approvals, any Subsequent Approvals, and any amendments to this Agreement, the Project Approvals or any Subsequent Approvals, and the Applicable Rules. The permitted uses of the Real Property include those set forth in this Agreement, including the description of the Project herein. Developer shall be entitled to construct the Project to the maximum density, intensity, height and size set forth in the Project Plan, in this Agreement and as permitted under the Applicable Rules. 4.4. Subdivision. Developer shall have the right from time to time to subdivide or reconfigure the parcels comprising the Real Property, as may be necessary in order to develop the Project or to lease, mortgage or sell a portion of the Real Property in connection with its development, as long as the subdivision or reconfiguration is consistent with the terms of this Agreement, the Subdivision Map Act and Applicable Rules. 4.5. Development of the Business Project and Residential Project. The parties acknowledge that as of the Effective Date development planning for the Business Project and the Residential Project will be in their early stages. As such, substantial Subsequent Approvals are expected to be required with respect to the Business Project and the Residential Project. The terms and conditions of this Agreement shall apply to the development of the Business Project and the Residential Project, and Subsequent Approvals related thereto. 5. Applicable Rules, Regulations, and Official Policies. 5.1. Laws Applicable to the Project. The Applicable Rules shall remain in full force and effect for the Term. For convenience, some of the Applicable Rules are listed in Exhibit "E." 5.2. Subsequently Enacted Rules and Regulations. During the Term, City may apply to the Real Property New Rules, provided that they are not in conflict with or more stringent than the Applicable Rules and do not: 5.2.1. Limit the permitted uses of the Real Property; CADOCUME— I\skous ALOCALS- 1 \Temp\FINALD —LDOC 7 5.2.2. Reduce the maximum density or intensity of use, or reduce the maximum height, bulk or size of the proposed buildings; 5.2.3. Increase the provisions of the Project Approvals requiring the reservation or dedication of land for public purposes; 5.2.4. Increase the on -site or off -site improvements required by the Project Approvals or change the location thereof; 5.2.5. Limit or control the availability of public utilities, services or facilities or any privileges or rights to public utilities, services, or facilities (for example, water rights, water connections or sewage capacity rights, sewer connections, etc.) for the Project; 5.2.6. Limit the rate, timing, phasing or sequencing of the approval, development or construction of all or any part of the Project in any manner; 5.2.7. Limit or control the location of buildings, structures, grading, or other improvements of the Project in a manner that is inconsistent with or more restrictive than the limitations included in the Project Approvals; 5.2.8. Apply to the Project any New Rules otherwise allowed by this Agreement that are not uniformly applied on a City -wide basis or that discriminate against Developer; 5.2.9. Substantially increase the cost of constructing or developing the Project or any portion thereof; 5.2.10. Result in Developer having to substantially delay construction of the Project; 5.2.11. Establish, enact, increase or impose against the Project any rules, regulations, policies or standards that were not in force and effect on the Effective Date (except as expressly permitted by this Agreement), or otherwise impose against the Project any condition, dedication or other exaction not specifically authorized by Applicable Rules; 5.2.12. Limit the processing or procuring of applications or approvals of Project Approvals; or 5.2.13. Affect any other terms or conditions of this Agreement without the approval of Developer. If there is any conflict between the New Rules and this Agreement, the Vested Components or the Applicable Rules, the latter shall control and prevail. If there is any conflict between the Project Approvals and this Agreement, the Vested Components or the Applicable Rules, the former shall control and prevail. 5.3. Moratorium Not Applicable. Notwithstanding anything to the contrary contained in this Agreement, in the event an ordinance, resolution, or other measure is enacted, whether by action of City, by initiative, referendum, or otherwise, that imposes a building moratorium that would otherwise affect the Project or all or any part of the Real Property or C:\DOCUME- 1\sbuser \LOCALS- 1 \Temp\FINAIA —I.DOC 8 which would require a vote of the people as a condition to the grant of any approvals for the Project, City shall not apply such ordinance, resolution, or other measure to the Project, the Real Property, this Agreement, or the Project Approvals. If, however, it is determined by a court of competent jurisdiction that a building moratorium or voter approval referenced above is effective as to any portion of the Project, this Agreement shall remain unchanged and in full force and effect as to the portion of the Project not affected by such moratorium or voter approval; provided, however, that Developer may elect to terminate this Agreement within ninety (90) days after Developer receives written notice of such court determination. The parties acknowledge and agree that this Section 5.3 shall in no manner be interpreted to affect the validity of any challenge to the legislative adoption of this Agreement or approval of the Project. 5.4. Public Art. City acknowledges and agrees that Developer's installation of works of art substantially consistent with the designs and locations set forth in Exhibit "F," subject to approval of such works in accordance with City's public art approval process, shall be in full performance of any applicable City public art requirement or fees, and City shall impose no additional public art requirements, approval requirements or fees with respect to the Project. 5.5. Drainage. City acknowledges and agrees that Developer shall be entitled to construct the Project substantially in accordance with the general elevations set forth in the plans attached hereto as Exhibit "G" and that said plans and specifications comply with adopted City guidelines and are consistent with the EIR. 5.6. Parking. It is the intent of the parties that the Retail Project have a parking ratio of no less than four (4) parking spaces per 1,000 square feet of total planned commercial space (including outdoor sales areas), provided consistent with the FOR and the conditions imposed by the City Council in conjunction with its approval of the Preliminary Development Plan, introduced by ordinance on July 7, 2004 and finally adopted on August 3, 2004. In no event shall a lesser ratio be allowed unless by the mutual consent of the parties. 5.7. Si_gnage. The parties contemplate a signage program that will include up to one (1) freeway shopping center identification sign and two (2) additional monument signs at entrances to the Retail Project, subject to review in accordance with the Applicable Rules. 5.8. City Discretion. This Section 5 shall not be construed to limit the authority or obligation of City under law to hold necessary public hearings, to limit discretion of City or any of its officers or officials with regard to Applicable Rules that require the exercise of discretion by City or any of its officers or officials, provided that subsequent discretionary actions shall not conflict with the terms and conditions of this Agreement or any public financing as approved pursuant to this Agreement, and City shall process such subsequent discretionary actions expeditiously. 6. Timing of Development. 6.1. Later - Adopted Initiative. It is the parties' specific intent that this Agreement shall prevail over any later- adopted initiative that might otherwise have the effect of restricting or limiting the timing or sequencing of development of the Project. Therefore, subject to the terms of this Agreement, the Project Approvals, any Subsequent Approvals and the Applicable Rules, Developer shall have the right, but not the obligation, to develop the Real Property in such order and at such rate and times as Developer deems appropriate within the CADOCUME -1V10 erU OCALS- 1 \Te"T\FINALD -LDOC 9 exercise of its subjective business judgment, and such order, rate, and time selected by Developer shall in no way affect or impair Developer's vested rights under this Agreement. The parties acknowledge that the California Supreme Court held in Pardee Construction Co. v. City of Camarillo, 37 Cal. 3d 465 (1984), that the failure of the parties therein to provide for the timing of development resulted in a later- adopted initiative restricting the timing of the development. It is the intent of City and Developer to avoid such a result by hereby acknowledging and providing that Developer has the right to develop the Project in such order and at such rate and times as Developer deems appropriate within the exercise of its sole and subjective business judgment, except as specifically stated otherwise in this Agreement. 7. Processing. 7.1. Further Approvals and Permits. Subsequent to the Effective Date, development of the Project may require Subsequent Approvals. Each Subsequent Approval obtained by Developer shall automatically vest and become a Vested Component upon the effective date of such approval. On satisfactory completion by Developer of all required preliminary actions and payment of all required processing fees, City shall, in accordance with this Agreement and the Applicable Rules, expeditiously process all requests or applications for any Subsequent Approvals, and promptly initiate, commence, and complete all steps and actions required to grant such Subsequent Approvals, that are necessary or desirable for the Project, including, but not limited to, the following: 7.1.1. The processing of Discretionary Approvals; and 7.1.2. The processing of applications for and issuing of all Ministerial Approvals. 7.2. No Abridgement of Density or Height. Notwithstanding its ability to issue Subsequent Approvals in relation to site, architectural and design review, City shall not refuse such approvals, or require changes in the Project, that would have the effect of restricting or preventing Developer from constructing buildings at the maximum density, height and size allowed in the Project Approvals. 7.3. Conditions of Approval. City may impose conditions of approval on applications of Developer to the extent such conditions of approval are consistent with this Agreement and Applicable Rules. If City denies any application for a Project Approval, City must specify in writing the basis for its denial in order to assist Developer in resubmitting and ultimately securing City's approval of the requested Project Approval. Any such denial shall be consistent with this Agreement and Applicable Rules. 7.4. Processing During Third Party Litigation. City shall not delay or stop the Project, processing or construction of the Project, or issuance of Discretionary Approvals or Ministerial Approvals because of the filing of any litigation against City or Developer relating to this Agreement, the Project, the Project Approvals or Subsequent Approvals unless a court order prevents the activity or except as expressly provided herein. City shall not stipulate to the issuance of any such order. 7.5. Significant Actions By Third Parties Necessary To Implement The Existing Approvals. The parties acknowledge that development of the Project requires actions CADOCUME- I \sbuxr \LOCALS- 1 \TerT\FINALD -I.DOC 10 by and agreements with other private, public and quasi - public entities other than City to issue permits and approvals. Developer shall be responsible for the acquisition of permits, approvals, easements (subject to the provisions of section 66462.5 of the Subdivision Map Act) and services required to serve the Project from all non -City providers of utilities at Developer's cost. 7.5.1. At Developer's sole discretion and in accordance with Developer's construction schedule, Developer may apply for such other permits and approvals as may be required by private and public and quasi - public entities other than City (including, without limitation, districts and special districts providing flood control, sewer and fire protection) in connection with the development of, or the provision of services to, the Project. City shall cooperate with Developer to obtain such permits and approvals and shall, from time to time at the request of Developer, use its best efforts to enter into binding agreements with any such other entity as may be necessary to ensure the timely availability of such permits and approvals. In the event that any such permit or approval as set forth above is not obtained within three (3) months from the date the application is deemed complete by the appropriate entity, and such circumstance materially deprives Developer of the ability to proceed with development of the Real Property or any portion thereof, or materially deprives City of a bargained -for public benefit of this Agreement, then, in such case, and at the election of Developer, Developer and City shall meet and confer with the objective of attempting to agree on alternatives and/or amendment to this Agreement to allow the development of the Real Property to proceed with each party substantially realizing its bargained -for benefit therefrom. 8. Fees, Assessments, and Taxes. 8.1. Project Fees. Except as expressly provided herein, fees imposed by City in connection with the Project and Project Approvals (including but not limited to planning, engineering, building permit, fire plan check and development impact fees) shall be in accordance with Applicable Rules and subject to the terms and conditions of this Agreement. 8.2. Water Fees; Water Rights. Developer shall be responsible for payment of water impact fees for the Retail Project in effect as of January 1, 2002 (which the parties agree were the fees in place as of the date of Developer's application to City for development of the Project). Water impact fees for the Business Project and the Residential Project shall be in accordance with the Applicable Rules. Developer may request a reduction of water impact fees in accordance with the Applicable Rules. The parties acknowledge that Developer neither relinquishes nor conveys to City any rights with respect to groundwater or other water rights with respect to the Real Property, and Developer expressly reserves any and all water rights it has in connection with the Real Property. Developer shall be entitled to irrigate the Conservation Land utilizing groundwater, and shall not be required by City to irrigate the Conservation Land with reclaimed water in lieu of groundwater. For the Business Land and the Retail Land, the parties acknowledge that pursuant to the Applicable Rules, Developer may use well water for landscaping and irrigation purposes provided that appropriate agreements are in place in the event that such well water crosses property lines. 8.3. Transportation Impact Fees. All transportation impact fees with respect to the Retail Project shall be in the amounts determined by such fees in effect as of January 1, 2002 (which the parties agree were the fees in place as of the date of Developer's application to City for development of the Project). Transportation impact fees for the Business Project and the Residential Project shall be in accordance with the Applicable Rules. Except as expressly CADOCUME —I\s10 s rU.00ALS- 1 \Tertq>\FINALD —LDOC 11 provided herein, no additional transportation impact fees, including but not limited to traffic, noise or pollution impact fees shall be imposed in connection with the Project. 8.4. EIR Impact Mitigation Fees. Developer shall be responsible for payment of all impact mitigation fees required by the EIR. 8.5. Affordable Housing. City acknowledges and agrees that construction of the Residential Project, without payment of any special fees or assessments, satisfies all requirements . applicable to the Project with respect to inclusionary housing and similar residential housing requirements and, in particular, all affordable housing requirements, ordinances and regulations. 8.5.1. Notwithstanding anything to the contrary set forth herein, in the event Developer is precluded for any reason from causing the Residential Project to be constructed within five (5) years after the Effective Date, Developer shall pay the in -lieu affordable housing fee in accordance with the Applicable Rules. 8.5.2. Notwithstanding anything to the contrary set forth herein, in the event Developer is precluded for any reason from causing the Residential Project to be constructed: (a) the Conservation Land shall be increased by approximately 3.3 acres to include the Residential Land, which shall be subject to the Conservation Easement described in Section 10.1.1; (b) the Off -Site Open Space shall be reduced by 3.3 acres, and City shall immediately refund to Developer the sum of Twenty -Six Thousand Four Hundred Dollars ($26,400.00) representing the sum paid by Developer for such 3.3 acres of Off -Site Open Space. 8.6. New Fees. Except as expressly provided herein, any new or increased fees, dedications, and exactions relating to or imposed upon new. development that are adopted by City after the Effective Date, as well as any new or increased fees (including but not limited to application, development and impact fees), dedications, and exactions that result from any modification of any Applicable Rules after the Effective Date, shall not be applicable to or imposed upon the Project. 8.7. New Taxes. Except for taxes solely imposed on new development, any subsequently enacted City -wide taxes shall apply to the Project provided that (1) such taxes have general applicability on a City -wide basis and do not discriminate against Developer; (2) the application of such taxes to the Real Property is prospective; and (3) the application of such taxes would not prevent development in accordance with this Agreement. 8.8. Right to Contest. Nothing contained in this Agreement shall prevent Developer from paying any such fee, tax, or assessment under protest, or otherwise asserting its legal rights to protest or contest a given fee, tax, or assessment assessed against the Project or the Real Property. 9. Infrastructure Capacity. City hereby acknowledges that, upon implementation of the Project (including the Freeway Interchange) and its environmental mitigation measures, it has sufficient capacity in its existing infrastructure, services, and utility systems, including, without limitation, traffic circulation, flood control, sewer collection, sewer treatment, sanitation service and, except for services not provided by and outside City's control, water supply, treatment, distribution, and service, to accommodate the Project as provided in this Agreement. To the CA DOCUME- 1\tbuxAWCALS- 1 \TerT\FlNA1D -LDOC 12 extent that the Project completes its necessary improvements, the will City render these services or provides such utilities, and shall serve the Project and shall not restrict hookups or service for the Project, except for reasons beyond City's control. Upon request from Developer, City shall provide a letter, addressed to a recipient specified by Developer, acknowledging the sufficiency of City's infrastructure capacity to service the Project based upon the assumption that the Project completes its necessary improvements and environmental mitigation measures to the satisfaction of the City. 10. Dedication of Land for Public Purposes. 10.1. Grant of Conservation Easement. 10.1.1. Promptly after both recordation of a Subdivision Map for the Project and issuance of building permits necessary to construct the Retail Project, Dalidio Family shall offer to dedicate to City, and' City shall promptly accept, a conservation easement preserving the Conservation Land, (the "Conservation Easement ") in substantially the form set forth in Exhibit "H." Developer shall be entitled to make use of the Conservation Land that is consistent with the easement and the Applicable Rules, including but not limited to: agriculture; a well; groundwater treatment facilities; water lines; and recreational and educational uses as contemplated under the Applicable Rules, including bicycle and pedestrian paths, roadways and land use studies areas. 10.1.2. The Conservation Easement described in Section 10.1.1 shall not prohibit placement by Developer, at Developer's sole cost, of the Grandstand Structure on the Conservation Land. However, Developer must secure all necessary permits and entitlements to relocate the Grandstand Structure from its current location to the Conservation Land, as may be requested by Developer under the Applicable Rules, e.g., authorization from the Cultural . Heritage Commission and or the Architectural Review Committee. City shall not be responsible for the costs of moving, maintenance or repair of the Grandstand Structure. 10.2. Off -Site Open Space Preservation. Promptly after recordation of a Subdivision Map for the Project and issuance of building permits necessary to construct the Retail Project, Developer shall fund the perpetual preservation as open space twenty -four (24) acres of land (the "Off -Site Open Space ") by acquisition of a fee, conservation easement or open space easement on and over land in or around the City of San Luis Obispo. Developer's obligation under this Section 10.3 shall be limited to the payment to City of One Hundred and Ninety -Two Thousand Dollars ($192,000.00), and any excess cost arising from the Off -Site Open Space shall be paid by City. City shall be responsible for all obligations arising from acquisition and ownership of the Off -Site Open Space. City shall apply the funds received by it pursuant to this Section 10.3 to acquire, as promptly as reasonably practical, the Off -Site Open Space land. The parties acknowledge that the Off -Site Open Space will be comprised of prime agricultural land located within City's sphere of influence. Irrespective of City's acquisition of land under this Section, Developer may pay to City the sum of One Hundred and Ninety -Two Thousand Dollars ($192,000.00) in full performance of its obligations under this Section 10.3. 10.3. Roadways. In accordance with the Subdivision Map Act, a Subdivision Map for the Project prepared and submitted by Developer shall irrevocably offer to dedicate to City that portion of the Real Property as is necessary for roadways and walkways in relation to the Project for no additional consideration. Upon recordation of the Project's Subdivision Map CA DOCUME- I\sbuser %0CALS- 1 \Te"W\F1NALD -LDOC 13 said offer of dedication shall be accepted by the City in accordance with the City's standard roadway acceptance policies. This shall not apply to land necessary for construction of the Freeway Interchange, the property transfer of which land shall be governed by the terms of Section 11. 11. Freeway Interchange. The Freeway Interchange improvements shall be constructed and funded as set forth in this Agreement. 11.1. Funding of Freeway Interchange. 11.1.1. Funding of the Freeway Interchange will be accomplished through the issuance of public financing obligations by the City in an amount such as to be able to fund the total cost of the Freeway Interchange which is now estimated to be approximately $22 million. 11.1.2. Debt service on this public financing will be supported among other things by a special tax on the Project and other benefiting properties, as provided in the Reimbursement Agreement. Pursuant to the Reimbursement Agreement, Developer will receive a contingent reimbursement of special taxes on properties as a function of certain designated revenues City derives from the Retail Project. The Reimbursement. Agreement shall survive the term of this Agreement, and Developer's obligations hereunder with respect to the Freeway Interchange are expressly conditioned upon Developer's right to receive contingent reimbursement in accordance with the Reimbursement Agreement. 11.1.3. Notwithstanding anything to the contrary herein, in the event that, prior to the date the Freeway Interchange financing becomes an obligation of Developer, the total cost of the Freeway Interchange is increased to an amount whereby financing of such amount, and recovery of such amount from tax revenues generated by the Project, is not reasonably feasible, then the parties shall meet and confer in an effort to agree upon terms and conditions for the construction and financing of freeway interchange improvements which are adequate for the Project and which are reasonably feasible as to cost. In the event that the parties are unable to reach such an agreement, either party may terminate this Agreement by giving thirty (30) days' prior written notice to the other party, provided that Developer shall not be obligated to pay any amounts associated with public financing of the Freeway Interchange. The parties acknowledge and agree that financial calculations exchanged by the parties in connection with the preparation of this Agreement shall constitute competent evidence of the reasonableness of the cost of the Freeway Interchange, and that changed circumstances other than the total cost of the Freeway Interchange shall not entitle either party to terminate this Agreement pursuant to this Section 11.1.3. In no event shall a total development cost of $22 million for the Freeway Interchange be deemed reasonably infeasible. 11.2. Acquisition of Land. Developer shall use its best efforts to negotiate the acquisition of land determined necessary or desirable for the Freeway Interchange and that is not the Real Property or City -owned real property. Should Developer fail to acquire said property, the City shall use all means at its disposal for property acquisition. The cost of acquiring all such land shall be a Freeway Interchange Cost, and such acquisition shall be consummated as soon as practicable after the funding of the Freeway Interchange financing. The purchase price of such land shall be subject to the prior written consent of City, which shall not be unreasonably withheld or delayed. CA DOCUME- I\sbuwrV.00ALS- 1 \TcrMT1NAW -LDOC 14 11.2.1. Upon funding of the Freeway Interchange financing, Dalidio Family shall convey that portion of the Real Property described in Exhibit "I" for construction of the Freeway Interchange, in exchange for the consideration set forth below. As a Freeway Interchange Cost, Dalidio Family shall be paid the fair market value, calculated as provided in this section, of the portion of the Real Property required for the purpose constructing the Freeway Interchange. Such payment shall be made within ten (10) days after the date of recordation of deed by Dalidio Family of such land to City or the State of California. The fair market value of such portion of the Real Property means the sale value at the time of the appraisal for comparable real property in San Luis Obispo County, comparable in area and location to the Real Property, assuming that the land will not be used for road purposes and that there are no special restrictions on its use, and taking into consideration other comparable factors, as determined by an independent real estate appraiser appointed by City. Furthermore, the fair market value determination shall be based upon the valuation of the property used for agricultural purposes, added to the valuation of the property used for retail commercial purposes, and then divided by two (2). In this way, the appraised value reflects the fact that approximately one half the real property will remain as open space. The appraiser shall be selected by City and shall have competed for inclusion on the City's approved list of consulting appraisers and selected for such inclusion. The fees of the appraiser shall be advanced by Developer and shall be a Freeway Interchange Cost. 11.2.2. City shall provide and make available that portion of City - owned real property necessary for construction of the Freeway Interchange, in exchange for the consideration set forth below. As a Freeway Interchange Cost, City shall be paid the fair market value of City -owned real property required for the purpose constructing the Freeway Interchange. The fair market value of such real property means the sale value at the time of the appraisal for comparable real property in San Luis Obispo County, comparable in area and location to such real property, assuming that the land will not be used for road purposes and that there are no special restrictions on its use, and taking into consideration other comparable factors, as determined by an independent real estate appraiser appointed by City. The appraiser shall have competed for inclusion on the City's approved list of consulting appraisers and selected for such inclusion. The fees of the appraiser shall be provided by Developer and then capitalized into the cost of the Freeway Interchange. 11.3. Freeway Design and Development Applications. Developer and City shall diligently pursue all aspects of the application for construction of the Freeway Interchange, all environmental processing and supporting technical studies. Developer shall diligently pursue the planning, initial study, and other efforts necessary to specify in final form the cost and character of the Freeway Interchange. City shall provide timely review and response to applications made in respect of the Freeway Interchange. By entering into this Agreement, Developer specifically acknowledges its obligation and agrees to vote for and participate in the District to fund a portion of the cost of the Freeway Interchange contemplated under this Agreement. 11.4. Scope of Freeway Interchange Work. The scope of work for the Freeway Interchange shall be those improvements between and including the intersections described in Exhibit "B" as "Intersection D" (on the west side of the Freeway Interchange) and Intersection A" (on the ease side of the Freeway Interchange), and all work conducted on State Highway 101. CADOCUME -1 V Muwr \LOCALS - I \Te"W\FINALD -LDOC 15 11.5. Pre - Construction Costs. Until the funding of the Freeway Interchange financing, Developer shall be responsible for advancing all costs associated with obtaining Caltrans approval of all documents necessary to allow construction of the Freeway Interchange to commence. All such costs advanced by Developer, as well as costs of design and approval of the Freeway Interchange shall be a Freeway Interchange Cost. Freeway Interchange Costs shall also include 100% of the billings of Mark Thomas Company to Developer in connection with the Freeway Interchange, and that portion of the billings of Cannon Associates and Andre Morris & Buttery reasonably attributable to the design, development and construction of the Freeway Interchange. 11.6. Time for Funding_ and Construction of Freeway Interchange. The parties acknowledge and agree that completion of the Freeway Interchange is integral to the Project. As no building permits will be issued by the City for any portion of the Developer's projects until such time as the Freeway Interchange construction contract has been awarded, each party hereto will use its best efforts to cause, in cooperation with Caltrans and other public agencies and private parties, the Freeway Interchange construction contract to be awarded and completed as soon as practical. Once the contract for Freeway Interchange Construction has been awarded, either City or Caltrans shall manage the project and Developer will be relieved of any further involvement. Upon completion of the Freeway Interchange all, if any, remaining proceeds of the Freeway Interchange financing not otherwise expended shall be applied to the outstanding principal and interest of any such financing outstanding, on a pro -rata basis. In the event that City manages the Freeway Interchange construction project, City's reasonable construction management costs with respect to the Freeway Interchange shall be Freeway Interchange Costs. 11.6.1. Subject to the terms and conditions of this Agreement, the Applicable Rules and mitigations required by the EIR, including requirements for Discretionary Approvals: (i) City shall issue grading permits for the Project irrespective of the status of the Freeway Interchange; (ii) City shall issue building permits for the Project only upon successful award of contract for construction of the Freeway Interchange; and (iii) Developer may commence use of the Project (and City shall issue all necessary Certificates of Occupancy) prior to completion of construction of the Freeway Interchange. 11.7. Approval by State Agencies. The parties acknowledge that the design and completion of the Freeway Interchange is subject to California laws, rules and regulations, and the parties shall use their best efforts to promptly obtain approvals from State agencies, including Caltrans, for the Freeway Interchange. 11.8. Naming of City Street. The extension of Dalidio Drive from Madonna Road to the Freeway Interchange, at which point such street connects with Prado Road, shall be named and for all purposes identified as " Dalidio Road." 11.9. Reimbursement of Freeway Interchange Costs. All Freeway Interchange Costs advanced or incurred by Developer or City, respectively, shall be reimbursed to them from the Freeway Interchange financing proceeds. Such reimbursements shall be made promptly after the funding of the Freeway Interchange financing, and after Developer and City, respectively, produce reasonable documentation of such costs and their relation to the Freeway Interchange. CADOCUME- lvlouxr \LOCALS- I \TetM\FINALD -LDOC 16 12. Fees. Conditions and Dedications. Developer or any other person with respect to the Project shall have and be subject to only those obligations, conditions, and exactions expressly provided in this Agreement or in force and applicable to the Project as of the Effective Date of this Agreement. 13. Public Improvements; Dedication of Public Roads. The on -site and off -site improvements, public roads and other infrastructure related to the Project, shall be made and constructed in accordance with the terms of this Agreement, including the description of the Project herein, which terms City acknowledges and agrees meet all applicable statutory and other legal requirements. 14. Amendment or Cancellation. 14.1. Conflict of City and State or Federal Laws. In the event that state or federal laws or regulations enacted after the Effective Date of this Agreement prevent or preclude compliance with one or more provisions of this Agreement or require changes in plans, maps or permits approved by City, the parties shall modify or suspend this Agreement, as required by Section 65869.5 of the Government Code, to the extent necessary to comply with such state or federal laws or regulations. In such event, either party may provide the other party with written notice of such state or federal law or regulation, a copy of such law or regulation and a statement concerning the conflict with the provisions of this Agreement. The parties shall, within thirty (30) days after such notice is provided, meet and confer in good faith in a reasonable attempt to modify this Agreement to comply with such state or federal law or regulation. 14.1.1. Council Hearings. After the parties have met and conferred pursuant to Section 14.1 hereof, regardless of whether the parties have reached an agreement of the effect of the change upon this Agreement of the state or federal law or regulation, the matter shall be scheduled for hearing before the City Council. Written notice of such hearing shall be given pursuant to Government Code Section 65867 or any other then - applicable statute. The City Council, at such hearing, shall determine the extent of the modification or suspension necessitated by the change in the state or federal law or regulation. Developer, at the hearing, shall have the right to offer oral and written testimony. 14.1.2. Cooperation in Securing Permits. City shall cooperate with Developer in the securing of any permits which may be required as a result of modifications or suspensions made pursuant to Section 14.1.1 hereof. 14.2. Amendment. This Agreement may be amended in writing from time to time by mutual consent of the parties to this Agreement and in accordance with the procedures of State law. Modifications that are minor in nature and do not require legislative action may be made by Developer and City's Administrative Officer. Substantive modifications shall be approved by City under the appropriate approval process. Any amendment to this Agreement which does not relate to the Term, permitted uses, provisions for reservation and dedication of land, or conditions, terms, restrictions and requirements relating to subsequent discretionary actions, monetary contributions by Developer or any conditions or covenants relating to the use of the Real Property, shall not require notice or public hearing pursuant to Government Code Sections 65867, 65867.5 and 65868. Any amendment of the Project Approvals by either City's Administrative Officer or City, whichever is applicable, pursuant to Section 14.3 of this CA DOCVME— IVI— rLLACAI.S— I \TerM\RNAM —LDOC 17 Agreement, shall not require an amendment to this Agreement. For purposes of this Agreement, the resubdivision of the Real Property, or the filing of an amended subdivision map, that creates new legal lots (including the creation of new lots within any designated remainder parcel) or that merges lots, shall not require an amendment to this Agreement. Subsequent Approvals that are consistent with City's General Plan shall also not require an amendment to this Agreement. Such Subsequent Approvals shall be deemed incorporated into this Agreement, and shall be an integral part hereof. . 14.3. Amendment of Project Approvals. Upon the written request of Developer for a minor amendment or modification to the Project Approvals including, but not limited to, (i) the location of buildings, streets and roadways and other physical facilities, or (ii) the configuration of the parcels, lots or development areas, Community Development Director shall determine whether the requested amendment or modification is consistent with this Agreement and the Applicable Rules. For purposes of this Agreement, the determination of whether such amendment or modification is minor shall be made by reference to whether the amendment or modification is minor in the context of the overall Project. If City's Community Development Director finds that the proposed amendment is both minor and consistent with this Agreement and the Applicable Rules, City's Community Development Director may approve the proposed amendment without notice and public hearing. If such findings are not made, the request shall be processed in accordance with the Applicable Rules. For purposes of this Agreement and notwithstanding any City ordinance or resolution to the contrary, lot line adjustments shall be deemed minor amendments or modifications. 14.4. Cancellation by Mutual Consent. Except as otherwise permitted in this Agreement, this Agreement may be cancelled in whole or in part only by the mutual consent of the parties or their successors -in- interest, in accordance with the same procedure used when entering into this Agreement. 15. Annual Review. 15.1. Review Date. The Review Date shall be one year following the Effective Date and the annual anniversary of said date each year thereafter. 15.2. Annual Review Process. City's designee shall initiate the annual review by giving to Developer no later than sixty (60) days following the Review Date written notice that City intends to undertake such review for the annual period ending with the Review Date. Developer shall provide evidence of good faith compliance with the terms and conditions of this Agreement to City's designee within thirty (30) days following receipt of City's notice. City's designee shall review the evidence submitted by Developer and shall, within thirty (30) days following receipt of Developer's evidence, make a recommendation to the City Council either: (i) that the City Council finds that Developer has demonstrated good faith compliance with the terms and conditions of this Agreement; or (ii) that the City Council finds that Developer has not demonstrated good faith compliance with the terms and conditions of this Agreement, setting forth with specificity the basis on which City's designee makes his/her recommendation of a finding of non - compliance. Developer shall provide additional evidence as and when reasonably determined necessary by City's designee. 15.3. Hearing. The recommendation of City's designee shall be considered by the City Council at a regularly scheduled meeting following the Council's receipt of the C:\ DOCUME- I\tbuser U.00AIS- 1 \TertW\FINAM -LD-CC 18 recommendation. If the recommendation is that the City Council find that Developer has demonstrated good faith compliance with the terms and conditions of this Agreement, the matter shall be placed on the "consent calendar." If the matter is either removed from the consent calendar or the recommendation is that the City Council find that Developer has failed to demonstrate good faith compliance with the terms and conditions of this Agreement, the matter shall be heard by the City Council. 15.4. Determination. If the City Council finds and determines that Developer has complied in good faith with the terms and conditions of this Agreement during the period under review, the review for that period shall be concluded. If the City Council finds and determines, on the basis of substantial evidence, that Developer has not complied in good faith with the terms and conditions of this Agreement during the period under review, and Developer has been notified and given an opportunity to cure in accordance with the provisions of Section 16.2, below, the Council may modify or terminate this Agreement in accordance with State law. 15.5. Failure to Hold Review. In the event that City does not initiate an annual review or that the City Council does not make its determination within six (6) months of the Review Date for a given year, then it shall be deemed conclusive that Developer has complied in good faith with the terms and conditions of this Agreement during the period under review. 16. Default. 16.1. Other Remedies Available. In the event either party is in default of or breaches the terms or conditions of this Agreement, the nondefaulting party may pursue all other remedies at law or in equity that are not otherwise provided for in this Agreement, expressly including the remedy of specific performance of this Agreement. 16.2. Notice and Cure. On the occurrence of an event of default of the terms or conditions of this Agreement by either party, the nondefaulting party shall serve written notice of such default on the defaulting party. If the default is not cured by the defaulting party within thirty (30) days after service of such notice of default, the nondefaulting party may then commence any legal or equitable action to enforce its rights under this Agreement; provided, however, that if the default cannot be cured within the thirty (30) day period, the nondefaulting party shall refrain from any such legal or equitable action so long as the defaulting party begins to cure such default within the thirty (30) day period and diligently pursues such cure to completion. Failure to give notice shall not constitute a waiver of any default. 16.3. Judicial Reference. Pursuant to California Code of Civil Procedure Sections 638 et seg., all legal actions shall be heard by a referee who shall be a retired judge from either the San Luis Obispo County Superior Court, the California Court of Appeal, the United States District Court, or the United States Court of Appeals, provided that the selected referee shall have experience in resolving land use and real property disputes. Developer and City shall agree on a single referee who shall then try all issues, whether of fact or law, and report a finding and judgment thereon and issue all legal and equitable relief appropriate under the circumstances of the controversy before such referee. If Developer and City are unable to agree on a referee within ten (10) days of a written request to do so by either party to this Agreement, either party may seek to have one appointed pursuant to Code of Civil Procedure Section 640. The cost of such proceeding shall initially be borne equally by the parties. Any C: \DOCUME- I\sbuser \LOCALS- I \TenV\FINALD -I.DOC ' 19 referee selected pursuant to this Paragraph shall be considered a temporary judge appointed pursuant to Article 6, Section 21 of the California Constitution. 16.4. Estoppel Certificate. Either party may, at any time, and from time to time, request written notice from the other party requesting such party to certify in writing that, to the knowledge of the certifying party, (i) this Agreement is in full force and effect and a binding obligation of the parties, (ii) this Agreement has not been amended or modified either orally or in writing, or if so amended, identifying the amendments, and (iii) the requesting party is not in default in the performance of its obligations under this Agreement, or if in default, to describe therein the nature and amount of any such defaults. A party receiving a written request under this Section shall execute and return such certificate within thirty (30) days following the receipt thereof, or such longer period as may reasonably be agreed to by the parties. City's Administrative Officer of City shall be authorized to execute any certificate requested on behalf of City. The failure to deliver such certificate within such time shall be conclusive evidence on the party which fails to deliver such statement that this Agreement is in full force and effect without modification and that there are no uncured defaults in the performance of the requesting party. Failure to execute such an estoppel certificate shall not be deemed a default. 16.5. Freeway Interchange Plans. In the event of Developer's material breach hereunder with respect to the construction of the Freeway Interchange, Developer shall, upon City's written request, deliver to City all plans, specifications, engineering work product and similar written materials with respect to the Freeway Interchange in Developer's possession or control, and Developer shall convey to City all Developer's right, title and interest thereto. 17. Mortgagee Protection; Certain Rights of Cure. 17.1. Mortgagee Protection. This Agreement shall be superior and senior to any Mortgage. Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish or impair the lien of any Mortgage made in good faith and for value, but all of the terms and conditions contained in this Agreement shall be binding upon and effective against any Mortgagee. 17.2. Mortgagee Not Obligated. Notwithstanding the provisions of Section 17.1, above, no Mortgagee shall have any obligation or duty under this Agreement to construct or complete the construction of improvements, or to guarantee such construction or completion of improvements. 17.3. Notice of Default to Mortgagee. If City receives notice from a Mortgagee requesting a copy of any notice of default given Developer hereunder and specifying the address for service thereof, then City shall deliver to such Mortgagee, concurrently with service thereon to Developer, any notice given to Developer with respect to any claim by City that Developer has committed an event of default. Each Mortgagee shall have the right during the same period available to Developer to cure or remedy, or to commence to cure or remedy, the event of claimed default set forth in City's notice. 18. Hold Harmless; Developer's Activities. 18.1. Developer hereby agrees to, and shall defend, indemnify, save and hold City and its elected and appointed boards, commissions, officers, agents, and employees CA DOCUME- BsbuserU .00AM- I %TenV\FINALD -LDOC: 20 harmless from any and all claims, costs, and liability for any damages, personal injury or death, which may arise, directly or indirectly, from Developer's or Developer's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Developer or by any of Developer's contractors or subcontractors or by any one or more persons directly or indirectly employed by or acting as agent for Developer of any of Developer's contractors or subcontractors. Nothing contained in the foregoing indemnity provision shall be construed to require indemnification for claims, demands, damages, costs, expenses or judgments resulting from the sole negligence or willful misconduct of City. 18.2. Developer hereby agrees to, and shall defend, indemnify and hold harmless City and its agents, officers, and employees from any claim, action, or proceeding against the City or its agents, officers, or employees to attack, set aside, void, or annul an approval of the City concerning City's issuance of any approval, permit, certificate, or acceptance relating to the Project, including entering into this Development Agreement or the Reimbursement Agreement. Notwithstanding the foregoing: (a) City shall promptly notify Developer of any claim, action, or proceeding, tender the defense to Developer, and cooperate fully in the defense; (b) if the City fails to promptly notify Developer of any claim, action, or proceeding, or if City fails to cooperate fully in the defense, then, (in addition to any claims of Developer for City's breach) Developer shall not thereafter be responsible to defend, indemnify, or hold the City harmless; and (c) upon the tender to Developer by City of the defense of a claim, action or proceeding, Developer shall at its sole cost and expense defend such claim, action or proceeding, and provided that Developer does so, Developer shall not be obligated under this Section 18.2 to indemnify, defend or hold harmless City with respect to City's own expenses, time and attorneys' fees, which shall be borne solely by City. Nothing contained in this Section 18.2 prohibits City from participating in the defense of any claim, action or proceeding, provided that City bears its own attorneys' fees and costs, and City defends the action in good faith. 19. Severability. The unenforceability, invalidity, or illegality of any provision, covenant, condition, or term of this Agreement shall not render the other provisions unenforceable, invalid, or illegal, except that if it is determined in a final judgment by a court of competent jurisdiction that Developer's rights are not vested in the manner and to the extent agreed to in this Agreement, then the Parties shall meet and confer in a good faith attempt to agree on a modification to this Agreement that shall fully achieve the purposes hereof. If such a modification cannot be agreed on, then Developer or City may terminate this Agreement on 90- days' written notice to the other Party. 20. Attorneys' Fees and Costs. If City or Developer initiates any action at law or in equity to enforce or interpret the terms and conditions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs in addition to any other relief to which it may otherwise be entitled. In addition to the above award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit shall be entitled to its attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. If any person or entity not a party to this Agreement initiates an action at law or in equity to challenge the validity of any provision of this Agreement or the Project Approvals, the parties shall cooperate in defending such action at their own cost and expense. City shall not reject any financial settlement acceptable to Developer, provided that Developer pays any and all C:\DOCUME-lksloumeLWALS-I\Tcnip\FINALD-I.DJK 21 consideration which is part of said settlement; if City does reject any financial settlement acceptable to Developer, City shall continue to defend such action at its own expense. 21. Transfers and Assignments. 21.1. Right to Assign. The interests, rights, or obligations of Developer under this Agreement and under the Project Approvals may be transferred or assigned, provided such transfer or assignment is made as a part of the transfer, assignment, sale or lease of all or a portion of the Real Property. Any such transfer or assignment shall be subject to the provisions of this Agreement. If all or any portion of the Real Property is transferred by Developer. ( "Transferred Real Property "), any transferee desiring the benefits of this Agreement shall expressly assume this Agreement as it pertains to the Transferred Real Property; and such transferee shall succeed to all of Developer's rights under this Agreement as they relate to the Transferred Real Property. Thereafter, a default under this Agreement by Developer regarding that portion of the Real Property other than the Transferred Real Property shall not be considered or acted upon by City as a default by the transferee regarding the Transferred Real Property and shall not affect the transferee's rights regarding the Transferred Real Property. Likewise, a default by a transferee relating to the Transferred Real Property shall not be considered or acted upon by City as a default by Developer regarding any remaining property and shall not affect Developer's rights regarding such remaining property. City and Developer may amend this Agreement without the assent of the transferee (i) if the amendment is pursuant to Section 14.3; or (ii) if the amendment relates to portions of the Real Property other than the Transferred Real Property; or (iii) if the amendment does not require notice and public hearing pursuant to Section 14, or (iv) if the amendment is to effectuate a change in the required public improvements and the value and usability of the Transferred Real Property are not substantially and materially affected thereby. 21.2. Release Upon Transfer. Upon the transfer, sale, or assignment of Developer's rights and interests hereunder pursuant to the preceding subparagraph of this Agreement, Developer shall be released from the obligations under this Agreement with respect to the Transferred Real Property arising after the date of such transfer, sale, or assignment; provided, however, that if any transferee, purchaser, or assignee expressly assumes the obligations of Developer under this Agreement, Developer shall be released with respect to all such assumed obligations. The transferee, purchaser, or assignee shall be subject to all the provisions of this Agreement. Notwithstanding the foregoing, any such transferee shall be obligated by this Agreement to vote for and participate in the District to fund the cost of the Freeway Interchange contemplated under this Agreement. 21.3. Foreclosure. Nothing contained in this Section 21 shall prevent a transfer of the Real Property, or any portion of the Real Property, to a lender as a result of a foreclosure or deed in lieu of foreclosure, and any lender acquiring the Real Property, or any portion of the Real Property, as a result of foreclosure or a deed in lieu of foreclosure shall take such Real Property subject to the rights and obligations of Developer under this Agreement; provided, however, in no event shall such lender be liable for any defaults or monetary obligations of Developer arising before acquisition of title to the Real Property by such lender, and provided further, in no event shall any such lender or its successors or assigns be entitled to a building permit or occupancy certificate until all fees due under this Agreement (relating to the portion of the Real Property acquired by such lender) have been paid to City. CADOCUME- I\sbuserq.00AIS- F Temp\FINALD- LDOC 22 22. Agreement Runs with the Land. Except as otherwise provided in this Agreement, all of the provisions, rights, terms, covenants, and obligations contained in this Agreement shall be binding on, and inure to the benefit of, the parties and their respective heirs, successors, and assignees, representatives, lessees, and all other persons acquiring the Real Property, or any portion of the Real Property, or any interest therein, whether by operation of law or in any manner whatsoever. All of the provisions of this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to applicable laws, including, but not limited to, California Civil Code Section 1468. Each covenant to do, or refrain from doing, some act on the Real Property under this Agreement, or with respect to any owned property, (i) is for the benefit of such properties and is a burden on such properties, (ii) runs with such properties, and (iii) is binding on each party and each successive owner during its ownership of such properties or any portion thereof, and shall be a benefit to and a burden on each party and its property hereunder and each other person succeeding to an interest in such properties. 23. Force Majeure. In addition to any specific provisions of this Agreement, performance of obligations under this Agreement shall be excused and the term of this Agreement shall be similarly extended during any period of delay caused at any time by reason of acts of God such as floods, earthquakes, fires, or similar catastrophes; wars, riots, or similar hostilities; strikes and other labor difficulties beyond the party's control; shortage of materials; the enactment of new laws or restrictions imposed or mandated by other governmental or quasi - governmental entities preventing this Agreement from being implemented; litigation involving this Agreement or the Project Approvals, which delays any activity contemplated under this Agreement; or other causes beyond a party's control. City and Developer shall promptly notify the other party of any delay under this Agreement as soon as possible after the delay has been ascertained. 24. Recordation of Development Agreement, Amendment, or Cancellation. Within ten (10) days after the Effective Date of this Agreement, the City Clerk shall submit a fully - executed original of this Agreement for recording with the County Recorder. If the parties to the Agreement or their successors -in- interest amend or cancel the Agreement or if City terminates or modifies the Agreement for failure of Developer to comply in good faith with the terms or conditions of the Agreement; the City Clerk shall submit for recording the notice of such action with the County Recorder of San Luis Obispo County. 25. Miscellaneous Provisions. The following miscellaneous provisions shall apply to this Agreement: 25.1. Counterparts. This Agreement may be executed in any number of counterparts which together shall constitute the agreement of the parties. 25.2. Laws. It is specifically stipulated that this Agreement will be interpreted and construed according to the laws of the State of California. Venue for any dispute arising under this Agreement shall be San Luis Obispo County, California. 25.3. Amendments. No modification or amendment of this Agreement will be of any force or effect unless made in writing and executed by all parties hereto. CADOCUME —Rsto— L0CALS- 1 \Ternp\FINALD —LDOC 23 25.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives and successors. 25.5. Further Documents. The parties agree that they will execute such other instruments and documents as are or may become necessary or convenient to carry out the intent and purposes of this Agreement. 25.6. Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons or entities may require. 25.7. Entire Agreement. This instrument contains all of the understandings and agreements of whatsoever kind and nature existing between the parties hereto with respect to this Agreement, and the rights, interests, understandings, agreements and obligations of the respective parties and their prior oral agreements, if any. 25.8. Headings. All headings in this Agreement . are inserted only for convenience and ease of reference, and are not to be considered in the construction or interpretation of any provision of this Agreement. 25.9. Authority. Each individual executing this Agreement on behalf of a party hereto, by his or her signature, represents that he or she maintains full authority on behalf of the applicable party to execute this Agreement, and thereby bind the applicable party to all covenants, duties and obligations contained herein. 25.10. Exhibits. All exhibits, schedules and recitals to this Agreement as referenced in any portion hereof are hereby incorporated by this reference, as though fully set forth in the body of this Agreement; provided, however, notwithstanding any other provisions of this Agreement, if for any reason any exhibit or schedule referenced herein is not attached to this Agreement at the time of its execution by the parties, then when such exhibit or schedule becomes available, it shall be initialed by the parties and attached to this Agreement, bearing no impact on the enforceability of this Agreement. 25.11. Time. Time is agreed to be of the essence with respect to this Agreement. 25.12. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given (i) if delivered personally, when received; (ii) if transmitted by facsimile, upon the generation by the transmitting facsimile machine of a confirmation that the entire document has been successfully transmitted; (iii) if sent by recognized courier service, on the business day following the date of deposit with such courier service, or (iv) if sent by registered mail, postage prepaid, return receipt requested, on the third business day following the date of deposit in the United States mail. All such notices shall be addressed to a party at its address as set forth below, or to such other address or facsimile number as a party shall notify the other of in accordance with this Section. C:\ DOCUME- I\sbuseru .00AM- 1 \TerW\FINALD -I.DOC 24 If to City: City of San Luis Obispo Ken Hampian City Administrative Officer 990 Palm Street San Luis Obispo, CA 93401 facsimile: (805) 781 -7109 With a Copy to: Jonathan Lowell City Attorney 990 Palm Street San Luis Obispo, CA 93401 facsimile: (805) 781 -7409 If to Developer: Ernest Dalidio, Jr. 2706 Rodman Drive Los Osos, CA 93402 facsimile: (805) 528 -0941 SC Properties Attn: Bill Bird 510 S. Grand Avenue Glendora, CA 91741 facsimile: (626)963 -1505 With a Copy to: Andre, Morris & Buttery Attn: Michael J. Morris P.O. Box 730 San Luis Obispo, CA 93406 -0730 facsimile: (805) 543 -0752 25.13. Project is a Private Undertaking. It is specifically understood and agreed to by and between the parties hereto that: (i) the subject development is a private development; (ii) City has no interest or responsibilities for or duty to third parties concerning any improvements until such time and only until such time that City accepts the same pursuant to the provisions of this Agreement or in connection with the various subdivision map approvals; and (iii) Developer shall have full power over and exclusive control of the Project subject only to the limitations and obligations of Developer under this Agreement; and (iv) the contractual relationship between City and Developer is such that Developer is an independent contractor and not an agent of City. 25.14. Enforceability. City acknowledges that SLO Marketplace has an equitable interest in a portion of the Real Property, in that SLO Marketplace has entered into an option agreement with Dalidio Family whereby SLO Marketplace has an option to purchase such portion of the Real Property. Dalidio Family hereby consents to SLO Marketplace's entering into this Agreement, and to this Agreement becoming effective with respect to SLO Marketplace on the Effective Date, irrespective of whether or not SLO Marketplace has then acquired fee title to a portion of the Real Property. City agrees that, to the extent that, and for so long as, SLO Marketplace's interest in the Real Property as an option holder is deemed under California law to CADOCUME- I\sbuwrV,0CA" -1\T rWTINAM -LDOC 25 be insufficient to enforce its rights under this Agreement, Dalidio Family may, in its sole discretion, enforce all rights and interests of SLO Marketplace hereunder. Rights and obligations of Developer hereunder shall be deemed to apply to Dalidio Family or SLO marketplace, respectively, only insofar as those parties are owners of respective portions of the Real Property. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written. "City" CITY OF SAN LUIS OBISPO, a Municipal Corporation Its: I HEREBY APPROVE the form and legality of the foregoing Agreement this day of City Attorney CADOCUME -1 \s1ouserU.0CALS -1 \Temp\FINALD- L DOC 26 "Dalidio Family" ERNEST DALIDIO, JR. Successor Trustee of Dalidio Family Trust u/t/a dated October 29, 1987 ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u/t/a dated February 7, 1991 CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u/t/a dated January 15, 1991 "SLO Marketplace" SAN LUIS OBISPO MARKETPLACE ASSOCIATES, LLC, a California limited liability company C Its: DEVELOPMENT AGREEMENT EXHIBITS Exhibit A — Defined Terms Exhibit B — Freeway Interchange Exhibit C — Prezoning Exhibit D — Project Plan Exhibit E — Applicable Rules Exhibit F — Public Art Exhibit G — Drainage Plans Exhibit H — Conservation Easement Exhibit I — Freeway Land Exhibit J — Business Land Exhibit K — Open Space Land Exhibit L — Real Property Exhibit M — Reimbursement Agreement Exhibit N — Residential Land Exhibit O — Retail Land DEVELOPMENT AGREEMENT EXHIBIT "A" DEFINED TERMS "Annexation" is defined in Recital Q. "Applicable Rules" means City's ordinances, resolutions, rules, fees, regulations, uniform codes and official policies (including, without limitation, the existing Project Approvals), governing the permitted uses of the Real Property, and any standards and specifications relating to environmental review, growth management, density, and design for improvements and construction on the Real Property (including, but not limited to, any and all public improvements), shall be those in force and effect on the Agreement Date. "Business Land" means the approximately 8.1 acres of the Real Property described in Exhibit "Y'. "Business Project" means the business park improvements consisting of commercial buildings, which is intended to be developed on the Business Land. "CEQA" means the California Environmental Quality Act. "Conservation Land" means the approximately 54.7 acres of the Real Property described in Exhibit "K ". "Development Agreement Statute" means California Government Code Section 65864 et seq. "Discretionary Approvals" means applications for and issuing of all discretionary approvals requiring the exercise of judgment and deliberations by City. "District" means the Community Facilities District formed by City to fund the cost of the Freeway Interchange. "Effective Date" means the effective date of this Agreement, which shall be the date on which Annexation occurs, as provided in Section 3.1 "EIR" means the Environmental Impact Report prepared for the Project and for this Agreement, pursuant to CEQA. "EIR Certification" is defined in Recital P. "Freeway Interchange" is defined in Recital G. F:WE7\D\Ddira04\DA Exhibitc\DA Exhibit Adoc "Freeway Interchange Cost" or "Freeway Interchange Costs" shall mean all expense and cost reasonably necessary for the design, planning, approval and construction of the Freeway Interchange, which expense and cost shall be funded by means of the issuance of public financing obligations, as described in Section 11 of this Agreement and in the Reimbursement Agreement. "General Plan" means City's General Plan. "General Plan Amendment" is defined in Recital O. "Grandstand Structure" is defined in Recital H. "Ministerial Approvals" means all ministerial approvals requiring the determination of conformance with the Applicable Rules, including, without limitation, site plans, development plans, land use plans, grading plans, 'improvement plans, building plans and specifications, final maps, zoning clearances, grading permits, improvement permits, wall permits, building permits, lot line adjustments, encroachment permits, certificates of use and occupancy and approvals, and entitlements and related matters necessary or desirable for the completion of the Project. "Mortgage" means any lien placed upon the Real Property, or any portion thereof after the date of recording this Agreement, including the lien for any deed of trust or mortgage. "Mortgagee" means any person or entity, including any deed of trust beneficiary or mortgagee who acquires title to the Real Property, or any portion thereof, by foreclosure, trustee's sale, deed in lieu of foreclosure or otherwise. "New Rules" means new or modified ordinances, resolutions, rules, regulations and official policies that were not in force and effect on the Effective Date. "Off -Site Open Space" is defined in Section 10.4. "Conservation Easement" is defined in Section 10.1. "Prezoning" is defined in Recital Q. "Project" is defined in Recital D. "Project Approvals" means the General Plan Amendment, the EIR Certification, the Prezoning, the preliminary and final development plans, any existing or necessary land use, zoning, site plan or subdivision approvals, use permits and all other approvals and entitlements required for the development of the Project, including, but not limited to, development allocations, zone changes, zone variances, conditional use permits, grading permits, building permits, lot line adjustments, encroachment permits, business licenses, site plan approvals, parcel maps, tentative subdivision maps, subdivision improvement agreements, and any accompanying conditions of approval that will accomplish the goals, objectives, policies and plans referenced, described, implied and shown in this Agreement. F:WET\D\DdiCaW\DA Echibiu\DA Exhibit A.doc "Project Plan" is defined in Section 4.2. "Real Property" means that certain real property located in an unincorporated area of the County of San Luis Obispo, California, more particularly described in Exhibit "L" attached hereto. "Reimbursement Agreement" means the Special Tax Reimbursement Agreement between City and Developer of even date herewith, a copy of which is attached hereto as Exhibit "M" (the "Reimbursement Agreement "), "Residential Land" means that approximately 3.3 acres of the Real Property described in Exhibit "N ". "Residential Project" means, collectively, residential improvements on the Residential Land including approximately sixty (60) dwelling units and related improvements. "Retail Land" means that approximately 48.7 acres of the Real Property described in Exhibit "O ". "Retail Project" means, collectively, commercial improvements, including, but not limited to, approximately 615,000 square feet of gross leasable area that may include retail units, up to three (3) anchor stores of 100,000 to 140,000 square feet of gross leasable area each, restaurants and other uses permitted under the applicable zoning regulations, with additional areas allocated to uncovered outdoor sales and, a hotel with approximately 150 guest rooms. "Review Date" means the annual review date for this Agreement, as specified in Section 15.1. "Subsequent Approvals" means additional City approvals or permits or amendments to the Project Approvals, which may include, but are not limited to: (i) a vesting tentative map, multiple final vesting maps and/or parcel maps for each phase of the Project (as determined by Developer); (ii) final maps; (iii) site plans; (iv) development plans; (v) land use plans; (vi) grading plans; (vii) improvement plans; (viii) building plans and specifications; (ix) zoning clearances; (x) grading permits; (xi) improvement permits; (xii) building and use permits; (xiii) lot line adjustments; and (xiv) encroachment permits. Act. "Subdivision Map" shall mean a map created in accordance with the Subdivision Map "Subdivision Map Act" shall mean California Government Code Section 66410 et seq. "Term" means the term of this Agreement, as provided in Section 3.2. "Transferred Real Property" is defined in Section 21.1 F:WE.rW\Dali604\DA FxWbks\DA Exhibit Ada "Vested Component" means this Agreement, the Project Approvals, any Subsequent Approvals ad any amendments to any of the foregoing as may, from time to time, be approved pursuant to this Agreement. F:WCTD\DdidW\DA Extdbiu\DA Exhibit Adoc DEVELOPMENT AGREEMENT EXHIBIT "B" DESCRIPTION OF FREEWAY INTERCHANGE 1. PROPOSED PROJECT A. PROJECT DESCRIPTION The City of San Luis Obispo is proposing to upgrade Route 101/Prado Road interchange. The existing Prado Road interchange is a partial interchange located at KP 43.2 (PM 26.8). This interchange is being converted to a full interchange with a tight diamond configuration on the northbound side and a partial cloverleaf configuration on the southbound side. In addition, Prado Road will be extended to Madonna Road in accordance with the City's circulation element of the General Plan and will be consistent with the 1994 Regional Transportation Plan for San Luis Obispo County. The proposed project will improve access and circulation for the adjacent commercial developments, accommodate build -out of the City's General Plan and relieve traffic congestion at Madonna Road interchange and Los Osos Valley Road interchange. The project proposes improvements as follows: Construct an overcrossing structure over Route 101 with four 3.6 m through lanes, dual 3.6 m left turn pockets, a 2 m wide striped median, two 2.4 m standard bicycle lanes and two 2.4 m wide sidewalks on both sides of the structure. 2. Reconstruct the northbound Route 101 single lane diagonal on -ramp and off -ramp on the east side. At the ramp termini, the northbound diagonal off -ramp will be widened to three lanes (two left and one right). The northbound on -ramp will have two receiving lanes for the dual left turn movements, but will transition to a standard one lane on -ramp. 3. Construct a new southbound Route 101 loop off -ramp, along with a southbound Route 101 diagonal on -ramp, for the west side. These two ramps will be single lane ramps. At the ramp termini, the southbound loop off -ramp will be widened to three lanes (one left, one shared left/right and one right). The southbound diagonal on -ramp will have two receiving lanes for the dual left turn movements, but will transition to a standard one lane on -ramp. 4. Construct an auxiliary lane in northbound and southbound directions of Route 101 between the Prado Road interchange and the Madonna Road interchange. U.S. Route 101 is part of the National Highway System and is presently a four lane freeway that runs north -south through the project area, connecting the Pismo Beach area with San Luis Obispo. In the project area, Route 101 has full interchanges at Los Osos Valley Road (KP 41.7, PM 25.91) to the south and Madonna Road (KP 44.27, PM 27.5) to the north. At Prado Road, there is access to and from Route 101 on the east side only. This access is a buttonhook ramp configuration terminating at Prado Road to provide northbound off -ramp and Pod\DtDa1i(&04\DA ExhibiutDA Exhibit 8 part I AOC on -ramp access to Route 101. These ramps do not meet current design standards. The northbound off -ramp is located 1.52 km north of the Los Osos Valley Road interchange, and the northbound on -ramp is located 1.04 km south of the Madonna Road interchange. The interchange at Prado Road is situated on relatively flat terrain, except for the incised stream channels of San Luis Obispo and Prefumo Creeks. Agricultural fields, US Border Patrol Office and a commercial development complex are located on the west side of the freeway. The City's corporation yard, an old drive -in movie theatre, fallow fields, commercial building, storage yards and the City's wastewater treatment plant are located on the east side. During the past 40 years since the freeway was constructed, developments in the southern part of the City of San Luis Obispo have resulted in an increase in demand for access to and from Route 101. However, only minor improvements have been made which include inside median shoulder widening, outside shoulder widening, the installation of a median barrier and the addition of the auxiliary lane between Madonna Road and Marsh Road. C. SAFETY IMPROVEMENTS With the construction of a full interchange, drivers would be less likely to get confused, thereby eliminating or reducing the potential for wrong way movements. This project will remove the existing partial interchange and replace it with a full interchange. The northbound Route 101 on- ramp and off -ramp at Prado Road will be upgraded to current ramp design standards and provided with standard deceleration, acceleration and lane drop lengths to improve traffic merges and to reduce traffic conflicts. D. SITE PLAN The attached plan illustrates the Freeway Interchange, which shall be built substantially in accordance with such plans. As provided in Section 11.4, the scope of the Freeway Interchange shall be the improvements shown on the attached plan between and including the intersections described as "Intersection D" on the west side and "Intersection A" on the east side. F:hettDtDaG(a04\DA Exhibiu\DA Exhibit B put I.doc a 0 u •�I o 0 WW I yy „- e •�I o 0 WW I R� ' ' cu ,-,• , „b a � O tl]�Lld1 a4 �� � ( 1l•_jt I " rolls � a U O n ICI a a i $� 3 O cr �b YY� �gnW $oY m < Z zo /✓ V u I �zf u I - �La aa� . Y. x i$ �. - �o ° . -! a o 8 0 l< v O a a�V r a :I E a a ] a J ] ] ] J J J ] 8 ] ] J J J J ] ] a ] ] a J 5a� aQQ aQ o A tl 7f aQ if a X !]� 3�'. a s d ]pQ 6 R� ' ' cu ,-,• , „b a � O tl]�Lld1 a4 �� � ( 1l•_jt I " rolls � a U O n ICI a a i $� 3 O cr �b YY� �gnW $oY m < Z zo /✓ V u I �zf u I - �La aa� . Y. x i$ �. - �o ° . -! a o 8 0 l< v O a a�V r a :I DEVELOPMENT AGREEMENT EXHIBIT "C" PREZONING F % t1 \DMD*Iif&N\DA Exhibks\UA Exhibk C doc ROAD RIGI ® COMMERCIAL I RETAIL(C -R -PD) ® BUSINESS PARK (OS) LAGUNA LAKE PARK EXTENSION (CIOS10) OPEN SPACE (AG) ® AFFORADABLE HOUSING (R4-5) ® ROAD RIGHT OF WAY SOURCE: CANNON ASSOCIATES, JUNE 10, 2004 (74 DEVELOPMENT AGREEM o soo i000 EXHIBIT C: PREZOW 1 INCH = 500 FEET DEVELOPMENT AGREEMENT EXHIBIT "D" PROJECT PLAN The Retail Project will be built substantially in accordance with the Site Plan attached hereto, subject to the approvals described in Section 4.2. V',NET00a1i604\DA ExhibilADA Exhibe D.doc i z Q 5 W CO •1 , I 1 n ••• .O � •il •e I Um�U IJ 1 .� r� .� ... n O `'1 d: :.1 ' �•,�, U_Iitli:n �: O :,,•, �, a 1' °. ••11 . iii , - - • -..p- ^•1,1: y, I IIIIItiP^ 1 ey 4� 0• 0 � 'j th -�N, •�', 771{ • �, •� l�wl...x..:..'P.�..� —{u 1 1)�077eeeee0ll�e�ep ^blj,��le>• .�� _� :r - I v sv in f .U3$ o Elm m L 14 U M Y L C M G C o� /Q 0 V ! °~ O C) W O J � co U) U � J ce 181 0 DEVELOPMENT AGREEMENT EXHIBIT "E" APPLICABLE RULES n.ee Mew E.nih� r:.dm A. General Plan 1. Land Use Element 2. Housing Element 3. Open Space Element 4. Circulation Element 5. Noise Element 6. Safety Element 7: Conservation Element 8. Energy Conservation Element 9. Parks and Recreation Element 10. Water and Wastewater Element B. City of San Luis Obispo Municipal Code C. Fee Schedules and Ordinances DEVELOPMENT AGREEMENT EXHIBIT E: APPLICABLE RULES F:%wtT Dsh(NMV)A rxhihks%DA Exhihk E.dm DEVELOPMENT AGREEMENT EXHIBIT "F" PUBLIC ART PUBLIC ART TO BE DISPLAYED IN THE SAN LUIS OBISPO MARKETPLACE The Public Art will consist of a combination of life -sized bronze figures and bas relief monuments depicting the County history. The life -sized bronze figures will be either a mustang horse or horse and rider and a replica of the western farmer and his wife. The four bas relief monuments are two sided, made of simulated stone and bronze depicting the stages of history in San Luis Obispo in both pictures and text. These items will be placed at various locations on the property where public access is most logical. DEVELOPMENT AGREEMENT EXHIBIT "G" DRAINAGE PLANS F:\nn \D\D *lildN\DA CIhitkADA Cahihe G.doc DEVELOPMENT AGREEMENT EXHIBIT "H" CONSERVATION EASEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: ANDRE, MORRIS & BUTTERY P. O. BOX 730 SAN LUIS OBISPO, CA 93406 SPACE ABOVE THIS LINE FOR RECORDER'S USE GRANT OF CONSERVATION EASEMENT THIS GRANT OF CONSERVATION EASEMENT (the "Grant ") is made on 200—(the "Effective Date ") , by ERNEST F. DALIDIO, JR., Successor Trustee of Dalidio Family Trust u /t/a dated October 29, 1987, ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u/t/a dated February 7, 1991, and CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u /t/a dated January 15, 1991 (collectively, "Grantors "), in favor of the CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter. City (the "City "). RECITALS A. Grantors are the sole owners of the real property located in the City of San Luis Obispo, State of California, legally described as approximately 54.7 acres of land near the intersections of Prado Road, Dalidio Road and Madonna Road, in San Luis Obispo, California, as fully described in Exhibit A, which is attached to and made a part of this Grant by reference (the "Property "). B. The Property possesses natural, scenic, open- space, historical, cultural and agricultural values. In particular, the Property, which exists in an essentially unimproved state, provides an open view corridor of great natural beauty at the entrance of the City of San Luis Obispo. The approximately 7 -acre portion of the Property along Prefumo Creek, more specifically described in Exhibit "B" (the "Creek Area "), harbors plant and animal life. The remaining approximately 47.7 acres of the Property (the "Agricultural Area ") is primarily agricultural land, which presents a valuable scenic, open space, historical and agricultural resource to the City of San Luis Obispo. C. The Grantors and San Luis Obispo Marketplace Associates, LLC, a California limited liability company ( "Marketplace ") entered into that certain Development Agreement dated , 2004 with the City providing for the annexation of 131 acres of real property to the City, with the intent that Grantor and Marketplace would develop approximately 60.1 acres of such real property for commercial and residential use, that 16.2 acres of such real property would be utilized for roadways, and that approximately 54.7 acres of such real property would be preserved in essentially its present scenic beauty and openness, and available for habitat protection and ongoing agricultural use, through the imposition of a perpetual conservation (;AAgmennnc\Dandio Conservation Ea.- -m AgmL 07.10- 04.DOC easement with conditions hereinafter expressed. In connection with the Development Agreement and approval of Marketplace's development project, the City prezoned a portion of the Property "C /OS," Conservation /Open Space, and a portion "AG," Agriculture. Grantor is willing to grant this conservation easement as a part of the governmental approval of the commercial development described above. D. It is the intention of Grantors to grant to the City a conservation easement on, over and across the Property pursuant to the California Civil Code Section 815 (the "Act "), whereby Grantors relinquish certain rights and enter into certain covenants concerning the Property, as more particularly set forth below. E. The purposes of this Grant of a conservation easement in the Property are to preserve the natural, scenic, and open space character of the Property for public enjoyment, to protect plant and animal habitat in the Creek Area, and to preserve the Agricultural Area primarily for agricultural, historical, open space and scenic uses (the "Grant Purposes "). F. By accepting this Grant, the City agrees to honor the intentions of Grantors, to act in a manner consistent with the purposes of this grant, and to preserve and protect in perpetuity the conservation values of the Property. AGREEMENT 1. Grant of Easement. In consideration of the above and the mutual covenants, terms, conditions, and restrictions contained in this grant deed, and pursuant to the laws of California and in particular to the Act, Grantors voluntarily grant and convey to the City a conservation easement in the Property in accordance with the terms and conditions set forth herein. The term of the granted conservation easement shall be perpetual. 2. Prohibited Uses. In order to maintain the existing open space and agricultural character of the Property, except as provided herein, Grantors and Grantors' successors in interest will refrain from doing, causing, or permitting any of the following acts with respect to the Property: 2.1. Constructing improvements on the Property, other than those that exist at the time of the grant of this Grant, except appurtenances consistent with the open space and agricultural zoning of the Property and are consistent with the stated purposes, terms, conditions, restrictions, and covenants of this Grant, with the provisions of the Act, and except those improvements for which the right is expressly reserved in this Grant or the Act, including paved pathways and roadways. 2.2. Locating any advertising of any kind or nature on the Property. 2.3. Constructing, placing, or maintaining a parking lot, storage area, or dump site for the storage or disposal of anything that is not indigenous or natural to the Property or related to the permitted uses of the Property. GAAg-- ,,ts\Dulidio Couscrvation Eascmcnt Agent. 07- 30- 04.DOC 2 2.4. Constructing, placing, or maintaining overhead pipes, conduits, or wires above the Property for the purpose of transmitting communications or power. 2.5. Conducting agricultural operations on the Creek Area or making any recreational use of the Creek Area that significantly interferes with the plant and wildlife protection values of the Creek Area. 3. Permitted Uses. Subject to applicable law and governmental regulation, Grantors reserve the right to all uses and occupancy of, and ingress and egress to and from, the Property in any manner consistent with the stated purposes, terms, conditions, restrictions, and covenants of this Grant. Without limiting the generality of the foregoing, the following rights are consistent with the purpose of this Grant and with the Act, and are expressly reserved by Grantors: 3.1. To engage in any and all agricultural uses of the Agricultural Area which are compatible with and preserve the open space character of the Agricultural Area, including but not limited to: planting, raising, harvesting, and producing agricultural, aquacultural, horticultural, and forestry crops and products of every nature and description; the primary processing, storage, and sale, including direct retail sale to the public, of crops and products harvested and produced principally on the Agricultural Area; breeding, raising, pasturing, and grazing cattle and/or horses; and breeding and raising bees, fish, poultry, and other fowl. To use and store agricultural equipment and products on the Agricultural Area. To install improvements and structures in support of permitted agricultural uses, fencing, utilities and facilities in connection with the permitted agricultural uses on the Agricultural Area, and consistent with the intent of this Grant. To use the Property as a buffer between adjacent urban uses and the agricultural uses on the Agricultural Area. 3.2. The above reservation notwithstanding, any intensive agricultural uses that are or may be obnoxious, offensive, or constitute a public nuisance in an urban location, are prohibited. Similarly, the construction or development of any structure, including but not limited to dairy barns, poultry barns, or other structures intended for use in conjunction with intensive agricultural uses that are or may be obnoxious, offensive, or constitute a public nuisance in an urban location, are prohibited. 3.3. In furtherance of the historical values of the Property, and to provide for the preservation of the historic "Sulkey Racing Stadium" grandstand structure that was located on or near the Property approximately 100 years ago and used by residents of the City of San Luis Obispo for horse racing (the "Grandstand Structure "), nothing in this Grant shall prohibit installation by Grantors of the Grandstand Structure on the Property, provided the siting and installation of such structure is in accordance with the Applicable Rules, as defined in that separate Development Agreement entered into between the parties, dated September _, 2004. 3.4. To use the Property for any and all irrigation, agricultural, agricultural accessory and currently- existing water resources purposes, including but not limited to water wells, water lines, water treatment, drainage, and retention, and the construction of improvements related thereto. 3.5. To engage in any and all passive recreational uses of the Property. GAAgreetnn m0.1idio Conservation r�senxnt Agmt. 07- 30- 04.DOC 3 3.6. To install, alter, relocate and maintain surface and subsurface utilities, utility easements, roads and facilities, to conduct grading and regrading and to install and maintain water drainage facilities and improvements on the Agricultural Area, consistent with Grant Purposes. 3.7. To permit the construction of a public road as contemplated in the Circulation Element of the General Plan of the City of San Luis Obispo. 3.8. To permit the construction of a bicycle path as contemplated in the Bicycle Transportation Plan (May 2002). 3.9. To use any existing structure on the Property and any structure permitted to be installed on the Property pursuant to this Grant. 3.10. To maintain the Property and all improvements thereto, including but not limited to natural resource management, pruning and removal of trees and plants, and preventing damage from potential natural hazards. 4. Public Facilities. Notwithstanding any provision herein, this Grant shall in no way restrict the construction of either public service facilities installed for the benefit of the land which is the subject of this Grant, the roadway and bicycle path identified in Sections 3.7 and 3.8 above, or public service facilities installed pursuant to an authorization by the Public Utilities Commission. 5. Right to Prevent Prohibited Use. Grantors grant to the City and the City's successors and assigns, for the term of this Grant, the right, but not the obligation, to prevent or prohibit any activity that is inconsistent with the stated purposes, terms, conditions, restrictions, or covenants of this grant and the right to enter the Property for the purpose of removing any building, structure, improvement, or any material whatsoever constructed, placed, stored, deposited, or maintained on the Property contrary to any term, condition, restriction, or covenant of this Grant. 6. Monitoring and Enforcement. The purposes, terms, conditions, restrictions, and covenants in this Grant may be specifically enforced or enjoined by proceedings in the Superior Court of the State of California, consistent with the terms of Section 51086(a) of the California Government Code. To that end, Grantor specifically permits City to enter upon the Property upon reasonable notification to Grantor for the purpose of determining that no violations of purposes, terms, conditions, restrictions or covenants contains within the Grant have occurred. Such inspections shall be undertaken on a reasonable schedule, but no less than once per year. 7. Costs of Enforcement. If any legal proceeding, arbitration or other action is brought or threatened for the enforcement or interpretation of this Grant, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Grant, and the prevailing party in any such action(s) should incur any legal fees, including, but not limited to, attorneys' fees, paralegal fees, expert witness fees and other similar costs, the successful or prevailing party or parties to any such dispute or action shall be entitled to recover their reasonable attorneys' fees and additional legal costs incurred, together with any other relief to which they may otherwise be entitled, as determined by an arbitrator, judge at trial, or upon appeal or petition. G AAgreen- m\Dalidio Conservation Ed meat Ag-e 07- 30-04.DCC 4 8. Acts Beyond Grantors' Control. Nothing contained in this instrument may be construed to entitle the City to bring any action against Grantors for any injury to or change in the Property resulting from causes that are beyond Grantors' control, including, but not limited to, fire, flood, storm, earth movement, or any prudent or reasonable action undertaken by Grantors in emergency situations to prevent or mitigate significant damage or injury to the Property resulting from such causes. 9. No Authorization for Public Trespass. The granting of this conservation easement by this instrument and the acceptance of the easement by the City do not authorize, and.are not to be construed as authorizing, the public or any member of the public to enter, trespass on, or use all or any portion of the Property, or as granting to the public or any member of the public any tangible rights in or to the Property. It is understood that the purpose of this grant is solely to restrict the use of the Property, so that it. may be kept as near as possible in its current state. 10. Costs, Taxes, and Liabilities. Grantors retain all responsibility and shall bear all costs and liabilities of any kind concerning the ownership, operation, and maintenance of the Property, including maintaining comprehensive liability insurance. Grantors must pay before delinquency all taxes, assessments, fees, and charges of whatever description levied on or assessed against the Property by competent authority. 11. Condemnation. If an action in eminent domain for condemnation of any interest in the Property is filed, or if the Property is acquired for a public improvement by a public agency or person, these restrictions will be null and void as to the interest in the Property actually condemned or acquired. However, all conditions, restrictions, and covenants of this grant will be in effect during the pendency of such an action; if such an action is abandoned before the recordation of a final order of condemnation, any portion of the Property that is not actually acquired for public use will once again be subject to all of the terms, conditions, restrictions, and covenants of this grant. Grantors will be entitled to the amount of compensation as if the Property had not been burdened by the conservation easement. 12. Extinguishment. If circumstances arise in the future that render the purpose of this Easement impossible to accomplish, this Grant can only be terminated or extinguished, whether in whole or in part, by judicial proceedings in a court of competent jurisdiction. 13. Amendment. This conservation easement may not be amended in whole or in part as to any term, condition, restriction, or covenant without the prior written consent of the Grantors and the City, as may be permitted by applicable California law. 14. Binding on Successors and Assigns. This Grant, and each and every term, condition, restriction, and covenant of this grant, is intended for the benefit of the public and is enforceable pursuant to the provisions of the Act. This Grant binds Grantors and Grantors' successors and assigns and constitutes a servitude on the Property that runs with the land. 15. Liberal Construction. This Grant is to be liberally construed in favor of the Grant and the Grant Purposes in order to effectuate the purposes of the easement and the policy and purpose of the Act. If any provision in this Grant is found to be ambiguous, an interpretation G:Wgl -1.11 x\Dnlidio C.11--ti— F---t Agtm 07-30-04.DOC 5 consistent with the purpose of this easement that would render the provision valid will be adopted over any interpretation that would render it invalid. 16. Severability. If any provision of this Grant is found to be invalid, or if the application of this easement to any person or circumstance is disallowed or found to be invalid, the remainder of the provisions of the grant, or the application of the grant to persons or circumstances other than those to which its application was disallowed or found invalid, will not be affected and will remain in full force and effect. 17. Controlling Law. This Grant is to be interpreted, enforced, and performed in accordance with the laws of the State of California. 18. Entire Agreement. This Grant sets forth the entire agreement of the parties with respect to the conservation easement and supersedes all previous conversations, negotiations, understandings, settlements, or agreements related to the conservation easement. 19. Captions. The captions in this Grant have been inserted solely for the purpose of convenience of reference and are not to be construed as part of this instrument and do not affect the construction or interpretation of the Grant. 20. Counterparts. The parties may execute this instrument in two or more counterparts, which shall, collectively, be signed by all parties. Each counterpart shall be deemed an original instrument as against any party who has signed it. In the event of any disparity between the counterparts produced, the recorded counterpart controls. "Grantor" ERNEST DALIDIO, JR. Successor Trustee of Dalidio Family Trust u /t/a dated October 29, 1987 ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u /t/a dated February 7, 1991 CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u/t/a dated January 15, 1991 G: Agrccmenu\Dn1idio Con— vatiom Ease nemt Agmt 07- 30- 04.DOC 6 MIA /// GAAgrecimim Dulidio Couscr —lion Fasanem Agrm 07- 30- 04.DOC ACCEPTANCE OF CONSERVATION EASEMENT The CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter City accepts this grant of a conservation easement. Dated: "City" CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter City LM Its: I HEREBY APPROVE the form and legality of the foregoing Agreement this day of Kf�� ::_, C�-� Jonat an IeKwell, City Attorney G: Ag— ...mu\Mlidio Coww -lion Usc=w Agmi 0730- 04.DOC DEVELOPMENT AGREEMENT EXHIBIT "I" FREEWAY LAND F:VwMalifa04VA Fxhibiu'DA Ealu'bit 4doc ( 4 7 0 600 1000 1 INCH v 500 FEET DEVELOPMENT AGREEMEN' EXHIBIT I: FREEWAY LAN[ DEVELOPMENT AGREEMENT EXHIBIT "J" BUSINESS LAND F ;%— AD%Dalif.NM)A EahNu%DA E.hibil l.dx BUSIN (: 4 o Goo 1000 1 INCH - 500 FEET DEVELOPMENT AGREEMENI EXHIBITJ: BUSINESS LANE DEVELOPMENT AGREEMENT EXHIBIT "Kit OPEN SPACE LAND FMcNAMiN010A Fxhibib\DA Exhibit K doc (74 0 500 1000 1 INCH Q 500 FEET PACE DEVELOPMENT AGREEMENI EXHIBIT K: OPEN SPACE LA DEVELOPMENT AGREEMENT EXHIBIT "L" REAL PROPERTY Real property in the Unincorporated area of San Luis Obispo said County of San Luis Obispo, State of California, described as follows: Parcel 1: That portion of Lot 64 of the Subdivisions of the Ranchos Canada de Los Osos and La Laguna, in the County of San Luis Obispo, State of California, according to map filed for record In Book A, Page 83 and 84 of Maps, in the office of the County Recorder of said County, described as follows: Beginning at the Northeast corner of said Lot 64; thence North 55 1/20 West, 10.10 chains to post marked M. R. No. 3; thence South 41 024' West, 19.96 chains to post marked M. R. No. 4; thence South 55 1/20 East, 15.25 chains to the Southeast corner of said Lot 64; thence North 26 1/2*. East, 20.00 chains to the point of beginning. EXCEPTING therefrom that portion conveyed to the State of California by deed dated October 15, 1947 and recorded December 18, 1947 in Book 464, Page 87 of Official Records. PARCEL 2: That portion of Lot 65 of the Subdivisions of the Ranchos Canada de Los Osos and La Laguna, in the County of San Luis Obispo, State of California, according to map filed for record in Book A, Page 83 and 84 of Maps, in the office of the County Recorder of said County, described as follows: Beginning at the Northeast corner of said Lot 65; thence North 55 1/20 West, 12.19 chains; thence South 50 1/20 West, 19.42 chains to a point in the line of fence; thence along said fence South 55 1/20 East, 20.15 chains to post on the Southeast line of said Lot; thence Northerly 18.90 chains to the point of beginning. EXCEPTING therefrom that portion conveyed to the State of California by deed dated October 15, 1947 and recorded December 18, 1947 in Book 464, Page 87 of Official Records. PARCEL 3: All of Lot "K" of the Resubdtvision of Lots 58, 61, 62, 63, 64, and 65 as per J. T. Stratton's Survey and map of the Subdivislons of the Ranchos Canada de Los Osos and La Laguna, in the County of San Luis Obispo, State of California, according to map filed for record January 30, 1875 In Book A, Page 161 of Maps, In the office of the County Recorder of said County. EXCEPTING therefrom that portion conveyed to United States Postal Service by deed dated August 5, 1980 and recorded September'S, 1980 In Book 2266, Page 904 through 906 of Official Records as subsequently corrected by a Grant Deed dated May 7, 1981 and recorded June 10, 1981 in Book 2332, Page 318 through 320 of Ofitdal Records. PARCEL 4: That portion of Lots L, M and N of the Resubdivislons of Lots 58, 61, 62, 63, 64, and 65 as per J. T. Stratton's Survey and Map of the Subdivisions of the Ranchos Canada de Los Osos and La First Ainencan Tit to PMm%MDs i(.W%DA EAibk, %DA E.hibe L doc APN: 067- 121-022 First American Title FAmn%D%Dsli /*OW \DA Eahbiu\DA Eahibk L4m Laguna, in the County of San Luis Obispo, State of California, according to map filed for record January 30, 1875 in Book A, Page 161 of Maps, in the office of the County Recorder of said County, described as follows: Beginning at stake marked "N.N." at the most Southerly corner of said Lot "L" thence South 55 1/20 East along the Northeasterly line of said Lot "M ", 3.06 chains to the most Easterly corner of said Lot "M ", thence South 50 1/20 West along the Southeasterly line of said Lots "M" and "N ", 19.44 chains to the Southerly corner of said Lot "N "; thence North 55 112' West along the Southwesterly line of said Lot "N ", 11.12 chains to post marked "A.E" at the Easterly comer of Lot "0" of said subdivisions; thence North 37° West along the Northeast line of said Lot "0 ", 1.42 chains to the center of Foreman Creek and the most Southerly corner of the lands of Rosa Machado; thence along the center of said creek and along the Easterly line of the lands of Rosa Machado on the following courses and distances: North 18 1/40 East, 1.17 chains; North 6 1/40 West, 2.62 chains; North 13 3/40 East, 2.50 chains; North 18 1/2° East, 2.50 chains; North 130 East, 2.50 chains, North 3 1/20 East, 2.25 chains, North 180 East, 4 chains to the top of the bank as the Easterly side of a ditch carrying the water out of the Laguna into Foreman Creek, thence along the Easterly bank of said ditch and the Easterly Line of the lands of said Rosa Machado, North 11/40 East, 2.25 chains; North 21 1/20 West, 2.79 chains; North 90 West, 4.21 chains to the Southerly line of the Los Osos Road; thence North 62 1/20 East, along the Southerly line of the said Road 9.83 chains to a stake marked "M.M." at the most Northerly comer of said Lot "L "; thence South 461 East along the lines between Lots "K' and "L" of said subdivision; 24.72 chains to post marked "A.L." at the most Easterly corner of said Lot "L"; thence South 41 3/40 West along the Southeasterly line of said Lot "L ", 8.90 chains to the point of beginning. EXCEPTING from said Parcel 4 that portion thereof conveyed to Ray C. Skinner, et ux., by deed dated January 12, 1960 and recorded January 29, 1960 in Book 1045, Page 234 of Official Records. ALSO EXCEPTING from said Parcel 4 that portion described in the Final Judgment of Condemnation recorded June 26, 1975 In Book 1840, Page 217 of Official Records. Said portion is more particularly described as follows: A portion of Lots M and N of the R. R. Harris Resubdivision of Lots 58 and 61 of the Ranchos Canada de Los Osos and la Laguna as filed in Book A, Page 161 of Maps, in the office of the Recorder of the County of San Luis Obispo, California, described as follows: Beginning at the most Northerly point of Tract 169, as recorded in Book 6, Page 45 of Maps as filed in the office of the Recorder of the County of San Luis Obispo, California, said point being on the Southerly line of Madonna Road; thence along said Southerly line of Madonna Road which bears North 62 °30' East a distance of 54.90 feet; thence South 5 048'47" East a distance of 246.80 feet; thence South 19 °57'37" East a distance of 24439 feet, thence South 0 026'53" West a distance of 182.46 feet; thence South 20°33'06' West a distance of 235.26 feet, thence South 3 050'57" West a distance of 252.36 feet; thence South 14 02170" West a distance of 373.89 feet; thence South 1 °00'32' East, a distance of 322.13 feet; thence North 55 030' West a dstance of 63.90 feet; thence a" the Easterly line of Tract 169 to the true point of beginning through the following courses: North 7 025'16" East, a distance of 116.08 feet; thence North 1 000'32" West, a distance of 154.16 feet; thence North 9 03939" East, a distance of 128.27 feet; thence North 14 °2170" East, a distance of 267.10 feet; thence North 3 050'57" East, a distance of 228.68 feet; thence North 11 014'33" East, a distance of 101.44 feet; thence North 16 042'13" East, a distance of 207.16 feet; thence North 0 °26'53" East, a distance of 100.02 feet; thence North 19 057'37" West, a distance of 215.04 feet; therxe North 5 048'4" West, a distance of 201.68 feet; thence North 14 039'55" West, a distance of 71.55 feet to the point of beginning. First Amerkan Title F4ms%MD. i(.W%DA E.bibis%DA E.Wbi Ld- N � !Q) u �w 1 I V t * v5 y7 `I (ti ;.. .. > N to i W (.:.,n � N H I o o 'c i =SN 7r mm r c l R *4 Y c yh� C � �9 c:�o f �. Z V = PDm i c A ao'v O Z Z M r L O Z O� z�Z Z�{ ><y to m _ Iv, _ 7 ` ♦ 4' Y 1-t4i,, r 4y� . Description: San Luis Obispo, CA Assessor Map 67.12 Page: 1 of f Order. Usa Comment: FA,KlM70&li(w04 DA E■hbiuiDA Exhibit Ldm z 3� W a y 1 k *11 . e �vry s O 0 DEVELOPMENT AGREEMENT EXHIBIT "M" SPECIAL TAX REIMBURSEMENT AGREEMENT SPECIAL TAX REIMBURSEMENT AGREEMENT THIS SPECIAL TAX REIMBURSEMENT AGREEMENT (hereafter "Agreement ") is made and entered into on , by and between: (i) the CITY OF SAN LUIS OBISPO, a Municipal Corporation and Charter City ( "City"); (ii) ERNEST F. DALIDIO, JR., Successor Trustee of Dalidio Family Trust u/t/a dated October 29, 1987, ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u/t/a dated February 7, 1991, and CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u/t/a dated January 15, 1991 (collectively, "Dalidio Family "); and (iii) SAN LUIS OBISPO MARKETPLACE ASSOCIATES, LLC, a California limited liability company ( "SLO Marketplace"). Dalidio Family and SLO Marketplace are referred to collectively as "Developer." Additional specified terms are defined in Exhibit "A" hereto. RECITALS A. Dalidio Family is the owner of the Real Property. The Real Property consists of approximately 131 acres of land that is included in City's General Plan and sphere of influence. The Real Property is intended to be annexed to City. B. SLO Marketplace has entered into an option agreement with Dalidio Family whereby SLO Marketplace has an option to purchase a portion of the Real Property. Dalidio Family and SLO Marketplace each have a legal and/or equitable interest in the Real Property. C. Developer intends to develop the Project on the Real Property as follows: (i) on the Retail Land, SLO Marketplace intends to construct the Retail Project; (ii) on the Business Land, Dalidio Family intends to construct the Business Project; (iii) on the Residential Land, Developer intends to cause to be constructed the Residential Project; (iv) the Conservation Land will be preserved as open space; and (v) approximately 16.2 acres of the Real Property will be committed to public roads, including a freeway interchange. The parties entered into that certain Development Agreement of even date herewith (the "Development Agreement ") to facilitate the implementation of the Project. D. Developer is willing, pursuant to the terms of this Agreement and the Development Agreement, to make expenditures and provide benefits to City, specifically, contributions toward construction of a full freeway interchange at U.S. Highway 101 and Prado Road, as described in Exhibit "B" (the "Freeway Interchange "), the development cost of which is estimated to be approximately $22 million (the "Freeway Interchange Cost "). City and Developer desire to provide a mechanism whereby the Freeway Interchange will be constructed and funded in whole or in part by utilizing tax - exempt debt financing which is secured by a portion of the Real Property and is reimbursed through sales tax and transient occupancy tax revenues. 52.4% percent of the total construction cost shall be allocated to the Commercial Property and 17.7% to the Benefiting Properties. Developer's willingness to enter into obligations set forth in the Development Agreement with respect to the Freeway Interchange is conditioned on the benefits conferred to Developer under this Agreement. E. The general benefits to be received by City from this Agreement and the construction of the Freeway Interchange include, without limitation: F:Md\D\Dalifv04Uteimbursemem Agr« t\Dalidio KA 072304.DOC M Implementing the General Plan and furthering it goals; 2. Implementing City's Circulation Element by providing improved access to the Project and adjacent areas by constructing the Freeway Interchange; and 3. Causing Developer to accelerate and provide specific public infrastructure improvements and facilities in advance of City's opportunity to require Developer to provide same: F. The parties acknowledge that the Project represents a unique development in the City of San Luis Obispo by virtue of its composition, scale and open space protection component, and as such is unlikely to be reproduced in the foreseeable future in San Luis Obispo. The parties further acknowledge that City's interest in reaching project- specific agreements with Developer as to the specifications of the Project, including providing for a non- pedestrian oriented design and construction of the Freeway Interchange, is served by this Agreement. By providing incentives in this Agreement and the Development Agreement, City intends that the Retail Project will continue to be a "hybrid power shopping center," and as such will not have a material adverse impact on downtown San Luis Obispo retail activities from either an economic or social standpoint. G. City and Developer have reached agreement and desire to express herein the terms and conditions applicable to the funding of the cost of the Freeway Interchange, and Developer's reimbursement with respect to such costs. H. The purpose of this Reimbursement Agreement is to provide for the sharing of up to 50% of the net new sales tax and transient occupancy tax revenues generated by the Retail Project, less certain exclusions and adjustments, as more particularly described herein, in order to assist the Developer in paying its Special Tax obligations for the construction of the Freeway Interchange. Accordingly, in no event will the City share more than the cumulative amount of Special Taxes paid by the Developer, even if this is less than 50% of the DESTR; and in no case will the City share more than 50% of the DESTR. I. The City Council, after providing public notice as required by law, held a public hearing on this Agreement on [INSERT DATE]. On [INSERT DATE], the City Council adopted Ordinance No. [INSERT NUMBER] approving this Agreement. NOW, THEREFORE, with reference to the above recitals and in consideration of the mutual promises, obligations and covenants herein contained, City and Developer agree as follows: AGREEMENT Effective Date and Term. 1.1. Effective Date. This Agreement shall be effective as of the Effective Date of the Development Agreement. FAnetUDeGWAReimbumement Agreement0alidio RA 072304.DOC 2 1.2. Term. The Term shall commence on the Effective Date and extend to the later of thirty-five (35) years from the effective date set forth in Section 1.1, above, or one (1) year after final payment by the Developer of any special taxes related to debt service payments for special tax bonds (the "District Bonds ") issued through the Community Facilities District ( "District ") formed pursuant to Section 2.1. 2. Funding of Freeway Interchange. 2.1. City's Share of Freeway Interchange Cost. City shall be responsible for promptly. funding and paying directly 29.9% of the Freeway Interchange Cost, and City shall provide evidence satisfactory to the underwriter of the District Bonds, in a timely fashion and prior to the time for issuance of the District Bonds, that City has committed funding for its 29.9% share of the Freeway Interchange Cost. 2.2. Formation of District. The remaining 70.1 % of the Freeway Interchange Cost, after City's payment of its 29.9% share, shall be financed by the issuance of tax exempt District Bonds. City shall use its best efforts to form the District and issue the District Bonds with a bond authorization amount equal to approximately 70.1 % of the Freeway Interchange Cost, to finance the Commercial Property's and Benefiting Properties' share of the Freeway Interchange Cost, with a repayment term of thirty (30) years, and the terms of which shall be subject to City's policies for land -based financings, attached hereto as Exhibit "C." 2.3. Obligation for Repayment. The obligation for repayment of the District Bonds shall be allocated among the Commercial Property and the Benefiting Properties, respectively, in accordance with the Freeway Cost Allocation. The parties acknowledge and agree that the Freeway Cost Allocation represents the parties' good faith estimate, based on traffic analysis and other factors, of the respective utilization of the Freeway Interchange by increased traffic generated by the Project and the Benefiting Properties, and other new development in the City of San Luis Obispo. 2.4. Commercial Property Share. The District shall include the Commercial Property, and the Commercial Property shall be subject to District Special Tax, which totals the full amount payable with respect to the District Bonds, multiplied by the Commercial Property's percentage of the Freeway Cost Allocation, amortized over the repayment term of the District Bonds. 2.5. Benefiting Property Share. The Benefiting Properties shall bear that portion of the cost of the Freeway Interchange set forth in the Freeway Cost Allocation, in the manner provided in Section 3 below. 2.6. Exclusion of Land. The Conservation Land and the Residential Land shall be excluded from the District and shall not be obligated hereunder to bear any portion of the Freeway Interchange cost. 2.7. Identification of Properties and Required Taxes. Promptly after the Effective Date, City will use its best efforts to form the District and prepare a Rate and Method of Apportionment to be prepared, which specifies in detail boundaries of the District and special tax of all properties in the District (the "RMA "). Developer shall have the opportunity to review and comment on the RMA prior to its final adoption. The RMA shall not, without Developer's F:VW\D\Ds1A04Ut6mbunanrnt AQra:m ADalidio RA 072304.DOC '1 prior written consent: (a) provide for allocation of District Special Taxes to the Commercial Property in excess of the Freeway Cost Allocation; (b) provide for allocation of District Special Taxes to the Benefiting Properties in excess of the Freeway Cost Allocation; (c) contain terms which are unreasonable or arbitrary; or (d) vary materially from the terms and conditions of this Agreement. Each year, Developer shall obtain and incorporate within the DESTR Reimbursement Application a copy of the tax schedule for all the properties for which Developer is responsible for advancing payments including the Commercial Property and the Benefiting Properties. 2.8. Debt Service Structure. Upon timely written request by Developer, City shall cause the District Bonds to be amortized such that repayment is escalated over the term of the District Bonds, thereby reducing the obligation of Developer and the Benefiting Properties for District Special Taxes during the initial years of the term of the District Bonds, and increasing such obligations during the later years of the term of the District Bonds, provided that the annual escalation amount of the payments is not less than one percent (1 %) per year. 2.9. Security Upon Commencement of Construction. At the time of commencement of construction of the Retail Project, in order to ensure financing of the Freeway Interchange contemplated herein through sales tax revenues, Developer shall provide security in a manner satisfactory to the issuers of the District Bonds and their legal counsel, provided that any securitization of the District Bonds in addition to or other than encumbrance of the Retail Property shall be subject to the prior written agreement of City and Developer. In the event City and Developer are unable to timely agree upon such securitization, then the commercially reasonable manner of securing the District Bonds shall be submitted to arbitration in accordance with Section 6, below. 3. Advances for Other Properties Benefiting from the District . 3.1. Payment by Developer on Behalf of Benefiting Properties. The Benefiting Properties' share of the Freeway Interchange costs shall initially be funded with the proceeds of the District Bonds, such payments shall be secured by the Commercial Property, and payment of the portion of the District Special Taxes attributable to the Benefiting Properties shall initially be advanced and paid by Developer (the "BP Advances "), until such time as each Benefiting Property bears its share of the District Special Taxes, as set forth in this Section 3. Other than the District Special Taxes, Developer shall be responsible for no property taxes or other taxes or obligations with respect to the Benefiting Properties. Developer shall be reimbursed for the BP Advances (which amount shall include interest thereon accruing from the date of the advances at an annual rate of five and one - quarter percent (5.25 %) compounded annually) as follows: 3.1.1. City shall pay to Developer the amount of all unreimbursed BP Advances to the extent of Developer's share of DESTR remaining after Developer has been reimbursed for all District Special Taxes related to the Commercial Property, as set forth in Sections 4 and 5; and 3.1.2. At such time as each of the Benefiting Properties are approved for development, City shall require the owners of each such Benefiting Property, prior to issuance of a building permit thereon, to make a lump sum payment to City in an amount equal to the total District Special Tax payments previously made on behalf of that Benefiting Property, F:V.AD1D.1i404\R6.*u —t A`roe \D.Iidio RA 072704.DOC 4 together with interest thereon at the rate of 5.25% per year compounded annually. From that total payment, the City shall pay Developer any and all unreimbursed BP Advances with respect to such Benefiting Property, with interest thereon at 5.25% per year compounded annually. Thereafter, such Benefiting Property shall either be annexed to the District and the owner thereof shall be responsible for making applicable District Special Tax payments; or pay the total allocated District Special Tax obligation remaining in a lump sum, including any costs associated with the prepayment of District Bonds. Upon annexation to the District of a Benefiting Property, a portion of the District Bonds shall be secured by such Benefiting Property in proportion to its share of the Freeway Cost Allocation, the Commercial Property shall no longer secure such portion of the District Bonds, and Developer shall thereafter not be liable for such portion of the District Special Taxes or the District Bonds. 3.2. City shall use its best efforts to cause any portion of the real property constituting a portion of the Benefiting Properties which is necessary or desirable to be utilized for location of a portion of the Freeway Interchange to be dedicated for such use at no cost, with the reasonable value of such dedicated land, as agreed upon by Developer and City, being deducted from District Special Taxes that may be imposed on the dedicating party in the future by causing such amount to be allocated proportionately among all District Special Taxes. 4. Definition and Measurement of Defined Excess Sales Tax Revenue (DESTR). City shall reimburse Developer for District Special Taxes in accordance with the terms hereof. Such reimbursements shall be paid in installments in an amount cumulatively equal to fifty percent (50 %) of DESTR (the "Developer DESTR "). 4.1. Basic Definition. Except as provided elsewhere in this Agreement, "DESTR" shall be the sum of three components: (1) total sales and use taxes remitted by the State of California to the City (as adjusted pursuant to Sections 4.2 and 4.4, below, "Remitted Sales Taxes ") based on collections at all of the retail outlets in the Retail Project, excluding those in the hotel, reduced by the "Retail Transfer Factor," which shall be initially set at thirty -three percent (33 %)(the "Adjusted Sales Tax "); (2) total transient occupancy tax collected by City from hotels within the Retail Project reduced by the "Hotel Transfer Factor" which shall be set at twenty percent (20 %) (the Adjusted Transient Occupancy Tax "); and (3) Remitted Sales Taxes from retail outlets within the hotel reduced by the Hotel Transfer Factor. 4.2. Exclusions from Remitted Sales Tax. Excluded from Remitted Sales Tax shall be the following items: 4.2.1. Deemed Transferred Sales - Not from Downtown Merchants. Excluded from Remitted Sales Tax shall be the reported Remitted Sales Taxes for any outlet which is a Deemed Non - Downtown Transfer. A "Deemed Non - Downtown Transfer" shall be any outlet previously located elsewhere in the City of San Luis Obispo but not in Downtown which, within a two (2) -year period beginning one (1) year before the opening of the outlet within the Retail Project, closed its store in San Luis Obispo. The designation of Deemed Non - Downtown Transfer and the resulting exclusion of the sales taxes from Remitted Sales Tax shall be subject to limited appeal as provided for in Section 6. 4.2.2. Deemed Transfer from an Outlet Within Downtown San Luis Obispo. If, as set forth above with respect to a Deemed Non - Downtown Transfer, a retail outlet opens in the Retail Project and, within a two (2) -year period, commencing one (1) year before F:VKf0 Da1A04\ tcimbuncmcnt AQrcomcmValidio RA 072304.DOC r, the opening, closes an existing outlet in Downtown, then the Remitted Sales Taxes for that outlet shall be excluded from Remitted Sales Tax. Further, an amount equal to that sales tax being excluded pursuant to the preceding sentence shall be deducted from Remitted Sales Tax. "Downtown" shall, for this purpose, be defined as that area bounded by Santa Rosa Street on the North, Broad Street on the South, Marsh Street on the East, and Mill Street on the West. The designation of a Deemed Downtown Transfer may be subject to limited appeal as provided in Section 6. 4.2.3. Branch Outlet Adjustment - Non - Downtown. If an outlet of a chain retail operation were to open within the Retail Project and that chain already had outlets elsewhere in San Luis Obispo not exclusively located within Downtown, then the amount of sales tax eligible for inclusion in Remitted Sales Tax would be limited to the lesser of (1) the actual Remitted Sales Taxes for the branch outlet within the Retail Project; or (2) the amount by which the Aggregate Chain Sales Tax exceeded the Projected Chain Sales Tax during any calendar year. The "Aggregate Chain Sales Tax" shall be the Remitted Sales Taxes from all that chain's branch outlets located within the City of San Luis Obispo. The "Projected Chain Sales Tax" shall be the Remitted Sales Taxes for all of that chain's branch outlets in the year immediately prior to the opening of the outlet within the Retail Project increased annually for the Consumer Price Index for all urban wage earners as reported for the Los Angeles Metropolitan area. 4.2.4. Branch Outlet Adjustment — Downtown. For any outlet opening in the Retail Project which is a branch of a chain which has outlets exclusively within Downtown, an adjustment to Remitted Sales Tax shall be computed as follows: the steps outlined in Section 4.2.3 above with respect to the branch outlet adjustment for non - Downtown locations shall be followed. If this calculation results in a situation in which the excess of Aggregate Chain Sales Tax over Projected Chain Sales Tax is smaller than the actual sales tax for the Retail Project outlet, then not only shall the contribution to Remitted Sales Tax be limited to this lower amount but an additional amount equal to the amount by which the excess falls short of the sales in the Retail Project outlet shall be deducted from Remitted Sales Tax. 4.2.5. No Multiple Exclusions. In no event shall the terms of more than one of Subsections 4.2.1, 4.2.2, 4.2.3 or 4.2.4 (each, an "Exclusion Section ") be applied to a single retail operation located in the Retail Project. In the event that a single retail operation in the Retail Project qualifies under more than one of the Exclusion Sections, then City shall elect which one of the Exclusion Sections shall be applied for a particular calendar year. 4.2.6. Example Calculations. In Exhibit "D" an example set of calculations is provided for each of the four exclusions or adjustments identified above. 4.2.7. Exceptions from Exclusions and Deductions. Notwithstanding anything to the contrary herein, due to mitigating circumstances which minimize the sales tax transfer effect, the following shall not be subject to any sales tax exclusion or deduction set forth in this Section 4.2: (a) the location of any retailer occupying less than 1,000 square feet in any hotel structure in the Retail Project; and (b) any kiosk, computer sales terminal, automated transaction terminal, concession, farmer's market or any point of sale that occupies less than 1,000 square feet of floor space and that is not located in a separately demised premises leased by Developer to a retailer (as an example only, should a supermarket tenant provide for the sale of Jamba Juice from within the tenant's leased premises, or if Cingular wireless products are F:MN\D1Da1ir.04\R. mewsanc t Ag-- no.Iiaio aw 072304.00c 6 provided from a kiosk in a public area, such operations shall not be subject to sales tax exclusions or reductions under this Section 4.2). Notwithstanding anything to the contrary herein, any retail operation that does not separately report sales tax shall not be subject to any sales tax exclusion or deduction set forth in this Section 4.2. 4.3. Adjustment of Retail Transfer Factor. Developer and City acknowledge that in developing the Retail Transfer Factor, assumptions were made about the prospective impact of the project on existing retail outlets in the City of San Luis Obispo and that such assumptions may not apply to the same degree over time. In recognition of the tendency for transfer effects to moderate over time, the Retail Transfer Factor shall be adjusted downwards by one percent (1 %) for the sixth (61h) full calendar year of operation of the Retail Project and by one percent (1 %) per year for each of the next four (4) calendar years. This means that commencing with the tenth (101h) full calendar of operation of the project and for the remaining term of this Agreement, the Retail Transfer Factor shall be twenty-eight percent (28 %). 4.4. Exclusions from Remitted Sales Tax for Additional "Pedestrian Oriented" Space. 4.4.1. Purpose in General Statement. Due to the special nature of downtown merchandising in the City of San Luis Obispo and its strong pedestrian orientation, City has, in making this Agreement, relied heavily on representations by Developer that the Retail Project will remain a "big box" shopping center and not become heavily pedestrian oriented. The measure of pedestrian orientation is the number and location of new demised spaces created each of which is less than five thousand (5,000) square feet of gross leasable area. For any such new spaces, the total Remitted Sales Taxes shall be excluded from the calculation of Remitted Sales Tax. In addition, an amount equal to such total sales taxes from such new "pedestrian oriented" outlets shall be deducted from the Remitted Sales Tax otherwise calculated. 4.4.2. Method of Calculation. At the opening of Retail Project, Developer will provide a detailed floor plan of all buildings in the Retail Project together with the site plan, a prototype of which is attached herein as Exhibit "E ". This floor plan will reflect the "as built" condition of the Retail Project and will serve as the baseline for subsequent calculations. Developer will concurrently provide a tabulation of all spaces in the Retail Project occupying less than 5,000 square feet of gross leasable area according to Developer' current rent roll, a copy of which should be provided to the City with the understanding that Developer may omit the actual dollar rents. The purpose of the rent roll is to establish a baseline of tenant occupancies and sizes which can serve for future reference. As part of the annual Remitted Sales Tax Reimbursement Application to be provided by Developer as described below, Developer shall provide an updated version of this floor plan indicating any changes and identifying any spaces that have been created or demised that are less than 5,000 square feet and were formerly in a store space larger than 5,000 square feet. Changes in the dimensions of individual stores, division of one small store into another small store, or creation of kiosks, concessions, farmer's markets or space that is not separately demised premises shall not count as a creation of new "pedestrian oriented" space provided that the aggregate number of square feet devoted to stores with less than 5,000 square feet has not changed. In the Remitted Sales Tax Reimbursement Application, the developer shall disclose and describe any changes in space previously occupied by tenants with over 5,000 square feet. All exclusions and penalties in this Section 4.4 shall apply only to retail spaces demised to be less than 5,000 square feet after the initial opening of F:MeAD0a1ifa04\Aeimburwnm t A`romwnt0elidio RA 072304.DOC 7 the Retail Project, and shall not apply to retail space that is less than 5,000 square feet in size upon initial opening of the Retail Project. Notwithstanding anything to the contrary herein, no commercial space of less than 1,000 square feet in any hotel structure in the Retail Project shall be subject to any sales tax exclusion or deduction set forth in this Section 4.4. 4.4.3. Appeal for Relief from Penalty for Small Space. In the event that one or more of the anchor tenants currently occupying 5,000 square feet or more as designated on the site plan in Exhibit "E" vacate their premises and Developer, after expending all commercially reasonable efforts, has been unable to rent the space to tenants requiring adding a minimum of 5,000 square feet, Developer may, if Developer wishes, appeal to City for relief against the penalty associated with the demising in space of additional space less than 5,000 square feet. 4.4.3.1. Application Requirement. An application for such relief shall be made in writing and shall describe among other things: (1) the nature and scope and timing of the "commercially reasonable efforts" used to rent the space to a large tenant; (2) the designation by name or by likely store type of the smaller tenants whose tenancy will be - solicited because a larger tenant could not be found; and (3) a detailed discussion of why these smaller tenants will not operate in a manner directly competitive with the merchants in Downtown. 4.4.3.2. No Requirement to Relax Penalty. Nothing in this clause shall, in any way, require that City relieve Developer from the provisions of this Section 4.4.3. 4.5. Change in Sales Tax Laws. With respect to Adjusted Sales Tax only (and without regard to Adjusted Transient Occupancy Tax), in the event that, after the date of this Agreement, the Remitted Sales Taxes for taxes attributable to point of sale taxes are modified by law, regulation or otherwise, then the calculation of Adjusted Sales Tax shall remain in effect, provided that the reimbursements made under this Agreement subsequent to the date of such change with respect to Adjusted Sales Tax shall be the lesser of: 4.5.1. The reimbursements that would have been made under the prior law as described in this Agreement (as an example only, an increase in the local sales tax rate shall not increase City's obligation to make such reimbursements); or 4.5.2. All sums remitted to City that are attributable to, or calculated by reference to, point of sale taxes with respect to the Retail Project, whether directly or indirectly derived or paid from sales tax revenue, less the adjustments set forth in Sections 4.2 and 4.5 and less the Transfer Amount. As an example, in the event that City receives revenues based on, or calculated with reference to, point of sale taxes with respect to the Retail Project, and some portion of that amount is paid to City from sources of funds other than sales tax revenues, then the full sum subvened to City which is directly or indirectly attributable to point of sale taxes at the Retail Project shall be included in the calculation of Adjusted Sales Tax. As a further example, in the event that Remitted Sales Taxes are reduced by law, and the reduction is compensated for by a subvention or "in- lieu" payments to City of a like or related amount of revenue from another source, then such amount received that is attributable to reduced sales taxes with respect to the Retail Project shall be included in the calculation of Adjusted Sales Taxes. Further, in the event that remittance of revenue to City attributable to point of sale taxes F:*aMD\DaH&01Vtaimbunwn i( Agrvcm oo.eaa RA 072304DOC 8 are substituted or replaced by remittance of revenues to City from other sources, whether or not such substitution is permanent, the substituted amount remitted to City shall be included in the calculation of Adjusted Sales Tax. In the event of a dispute between the parties regarding a characterization of a source to replace sales taxes, said issue may be submitted to arbitration pursuant to Section 6. 4.5.3. Developer shall have no entitlement to any funds nor shall the City have any obligation to pay until such time as funds are disbursed by the State to the City and specifically identified in a manner that meets the standards set forth in 4.5.2 above. 4.5.4. City agrees, with respect to Transient Occupancy Tax regulations or formulas, that it will make no revisions to City's Transient Occupancy Tax regulations or formulas which are in any way discriminatory against the hotel in the Project, and that any such revisions, if they occur, shall be applied uniformly to all hotels throughout the City of San Luis Obispo. 4.6. Application of Reimbursement Payments. City's reimbursement payments to Developer shall be paid to Developer to the extent of Developer DESTR,. and applied to reimbursements in the following order of priority: 4.6.1. First, City shall pay to Developer the total of any and all District Special Taxes paid by Developer (or to be paid with the property tax bill following City's payment to Developer) which are allocable to the Commercial Property, and which have not previously been reimbursed under this Agreement plus interest thereon from the date of payment until the date of reimbursement at the rate of five and one - quarter percent (5.25 %) per annum, compounded annually; 4.6.2. Second, City shall pay Developer the total of any and all District Special Taxes paid by Developer (or to be paid with the property tax bill following City's payment to Developer) which are allocable to the Benefiting Properties, and which have not previously been reimbursed under this Agreement plus interest thereon from the date of payment until the date of reimbursement at the rate of five and one - quarter. percent (5.25 %) per annum, compounded annually; and 4.6.3. Finally, to the extent that Developer DESTR for any year exceeds the amounts payable in that year to Developer in reimbursements for that year, City shall accumulate a reserve and make that reserve available to Developer in any subsequent year the DESTR is inadequate to meet Developer's reimbursement requirements for that year. This reserve shall be accumulated year -to -year and shall not exceed the amount of District Special Tax for which Developer is liable in any one year, including advances for Benefiting Properties for which Developer is liable. 4.6.4. City shall have the option, in its sole discretion, to substitute for the formally separate reserve fund described above, an obligation by City to Developer to disburse such funds as might be drawn from a reserve fund in the amounts and under the conditions described in 3.6.3 above, provided: (i) that such obligation be in writing; (ii) that it extend for the duration of this Agreement; (iii) that it identify the source of funds to be used for payment which source may be the City's retained share of total sales and transient occupancy F:Met\D\D.rr avidmeumt Ag —�tO.eeio iu 072304 -DOC 9 taxes from the Project without regard to transfer deductions; and (iv) that the document securing be in a form acceptable to Developer in Developer's reasonable discretion. 5. Application and Processing for Reimbursement Based on DESTR. 5.1. Overview of Process. Within ninety (90) days of the end of each calendar year, Developer shall submit to City a completed application for reimbursement of special taxes from DESTR (the "DESTR Reimbursement Application "). City shall have thirty (30) days in which to review such application and to challenge any facts alleged therein. Failure to provide such a challenge within thirty (30) days shall constitute a deemed approval of the DESTR Reimbursement Application. The major elements in the DESTR Reimbursement Application shall be a provision of evidence that the District Special Taxes have been paid, that any transferred or branch stores opened within the Retail Project have been appropriately accounted for, and that any additional "pedestrian oriented" space has been appropriately accounted for. 5.2. Format and Contents of Application. The DESTR Reimbursement Application shall contain the following elements: 5.2.1. Evidence of Pam. A government- issued receipt or canceled check indicating the District Special Taxes due have been paid (except those District Special Taxes not yet delinquent), not only for the Commercial Project but, until such time as the Benefiting Properties are developed, that their District Special Taxes due have also been paid by Developer, and the amount of such District Special Taxes. 5.2.2. Cumulative Balance Calculations. Developer shall also provide a cumulative accounting of the amount that Developer has advanced for District Special Taxes with respect to Benefiting Properties, and the amount that he has been reimbursed with the understanding that all unreimbursed amounts bear interest compounded annually at the rate of five and one - quarter percent (5.25 %). Developer shall provide an annual accounting of the outstanding balance, if any, owed to Developer, including but not limited to the District Special Taxes that will be paid by Developer in the calendar year following the date of the balance calculations (collectively, the "Cumulative Balance "). 5.2.3. Tenant and Leased Space Schedule. The DESTR Reimbursement Application shall also include a complete rent roll for the Retail Project (from which, at Developer's election, the actual rent figures may be omitted) showing the date the space was leased, the amount of leasable area, the scheduled expiration of the lease. Appended to this rent roll shall be the following information for every tenant in the space: (a) the corporate address at which the tenant may be contacted, a statement of whether or not the tenant had prior to opening its facility in the Retail Project, any other outlet within the City of San Luis Obispo; and (b) if such outlet was opened, its location size and name and whether it is still open or plans to close. 5.2.4. Space Allocation Calculation. Developer shall also provide a current layout of the stores in the center if such layout is at all different from the one accompanying the prior application. Developer shall identify whether or not any changes in spaces larger than 5,000 square feet have been made and whether the result of such changes is to create any additional spaces smaller than 5,000 square feet. Should such changes have occurred, F:Na\DftD&N&04\ teimbun i AQrocrtK Ma idio RA 07210-4.DOC 10 the developer shall describe them in detail and indicate how the aggregate amount of tenant space in spaces less than 5,000 square feet has changed from the prior application. 5.2.5. Comments and Other Information. In a separate section entitled "Comments ", Developer should provide any narrative description Developer thinks relevant to an understanding by City of issues involving either transfer or branch locations as described above or additional pedestrian orientation. Specifically, Developer should identify any areas in which Developer would seek to avoid the traditional deduction or penalty calculations by virtue of special circumstance and outline such special circumstances. A failure to identify such special circumstances or to indicate a basis for prospective appeal of the City's determination that there shall be a deduction or exclusion from DESTR in this part of the DESTR Reimbursement Application shall constitute a waiver of any such rights of appeal. 5.3. City Review and Approval of DESTR Reimbursement Application. City shall have thirty (30) days in which to review the application for completeness and accuracy in the depiction of the various tenants and spaces. Before the end of that period, City shall inform Developer in writing that Developer's application has been approved as submitted -or approved with modifications, which modifications shall be specified. More specifically, City shall identify any outlets for whom the retail sales taxes will be excluded from DESTR and any amounts equal to the retail sales taxes will deducted from DESTR, together with its reasons therefor. City shall accompany its notice to Developer with detailed documentation of the amounts of applicable sales taxes subvened and all other material factors affecting the calculation of reimbursements hereunder. City shall make no disallowances, deductions or exclusions from payments to Developer except as expressly provided in this Agreement. 5.4. Amount of Payment. No payment shall be made to Developer prior to the receipt of a completed and approved DESTR Reimbursement Application. At that time, the amount calculated for reimbursement shall be the lesser of: (a) one half of the DESTR after all adjustments; or (b) that amount necessary to retire the Cumulative Balance of unrecovered District Special Taxes. The Cumulative Balance shall consist of all payments made by Developer on behalf of the Retail Project and the Benefiting Properties, reduced by all prior reimbursements by DESTR, prior reimbursements from owners of the Benefiting Properties, increased by interest on the unrecovered amounts at the rate of 5.25% per annum compounded annually, and increased by the amount of the District Special Tax payable by Developer in the calendar year following the date of the subject DESTR Reimbursement Application. Developer shall have provided a calculation of this cumulative balance as part of Developer's DESTR Reimbursement Application. An example calculation is provided in Exhibit "F." 5.5. Disbursement Sequence. Under the terms of the proposed municipal financing, Developer will be obligated to make special tax payments twice a year with its regular property tax payments. To accommodate this, City proposes to make disbursements of DESTR twice a year. 5.5.1. First Ouarter Payment. The first such disbursement shall be made in conjunction with the annual DESTR Reimbursement Application and shall be made based on the prior calendar year's DESTR in a timely manner to permit timely payment of the property taxes (and District Special Taxes) due on April 10th of each year. F:h—AM MIAWAeimbu—nm" Ag �tOzreio RA 072304.00c I I 5.5.2. Fourth Quarter Payment. A second payment, based on the DESTR receipt to City through the third quarter of the year, shall be made to Developer in time for the payment of property taxes due on December 10th of each year. This second payment, however, shall be limited, (since no DESTR Reimbursement Application is required) to that amount necessary to pay the current year's special taxes including any advances that Developer is required to make for special taxes on the Benefiting Properties. Such payment will not be used to fund a surplus balance, or to recover prior deficits, since those calculations will be made only on an annual basis together with the payment made in the first quarter of each year. 5.5.3. First Year Payment. Notwithstanding anything to the contrary herein, Developer shall be entitled to submit one DESTR Reimbursement Application at any time during the first calendar year in which District Special Taxes are imposed, and Developer shall be entitled to payments under Section 5.5.1 and/or Section 5.5.2 based upon such DESTR Reimbursement Application and DESTR receipt to City through the end of the calendar quarter preceding City's payment, provided that City shall not be obligated to make such payment sooner than thirty (30) days after Developer submits the DESTR Application to City. 5.6. Disputed Payment. In the event that there is a dispute about some portion of the DESTR, these dates shall apply but only to that amount of DESTR reimbursement not under dispute. Any disputed amounts will be paid within thirty (30) days after the arbitrator has issued his award under provisions of Section 6.2. 5.7. Special Provisions for Accommodating the "Triple Flip." For the fiscal year 2003 -2004, the State of California plans to reduce the City's sales tax rate by 25% (by one - quarter percent from the current I% City sales tax rate) in order to allow the State to enact a new '/< -cent sales tax to be dedicated solely to the repayment of deficit reduction bonds, thus resulting in no net increase in the overall sales tax rate paid by consumers and businesses. The State plans to backfill this loss to the City through an "in -lieu sales tax" that will ultimately be funded by the State's General Fund by reallocating proceeds from the Educational Revenue Augmentation Fund. This change in sales tax rates and allocations, known as "the triple flip," may or may not be in effect at the time the District Bonds are sold. 5.7.1. Developer Option to Increase Capitalized Interest. If the "triple flip" is in effect, Developer has the right but not the obligation to request an increase in the bond size to accommodate an additional six (6) months of capitalized interest so as to offset the delay in receipt of DESTR created by the "triple flip ". For this purpose, the delayed additional "in -lieu sales taxes" allocated to City to offset the earlier reduction in City's sales tax rate shall be included in the calculation of DESTR as if they were Remitted Sales Taxes. 5.7.2. Developer's Absorption of Increased Special Tax. Developer agrees, in turn, that the total additional District Special Taxes created by this addition of capitalized interest to the District Bond, shall be paid solely by Developer and shall not be ALLOCATED TO City or to the Benefiting Properties, but shall be subject to reimbursement from Developer DESTR. 5.7.3. Relief from Requirement to Absorb Increased Special Tax. At such times as Benefiting Properties assume their share of the District Special Taxes obligation, they shall assume their pro rata share of the entire special tax including the small premium associated with the additional capitalized interest. F:*dYYDa1ifk04%R n*uncmcM AQrctmart%o.rmo RA 072304 OC 12 6. Disputes Resolution and Rights of Appeal. 6.1. Potentially Disputed Area Topics and Rights to Appeal. Developer may challenge the characterization of any outlets for whom sales taxes are deducted from DESTR on the basis that there exists an explicitly extenuating circumstance, i.e., that the outlet would have left the City of San Luis Obispo if it had not located in the Retail Project, because of which the traditional transfer penalty should not apply. Further, the parties hereby expressly acknowledge that the retailers known as "Pier 1" and "Famous Footwear" qualify as such extenuating circumstances because they have closed their outlets in the City of San Luis Obispo without respect to the status of the Retail Project, and as such there shall be no sales tax deduction or exclusion under this Agreement with respect to the location of those retailers in the Retail Project. 6.2. Arbitration. In the event of any dispute as to the provisions of this Agreement, the parties shall promptly meet and confer in a good faith effort to resolve such disputes. If the parties are unable to voluntarily agree upon a resolution of any dispute between them with respect to the provisions of this Agreement only, then within fifteen (15) days of a notice of dispute by a party hereto, then the dispute shall be resolved by arbitration in the following manner: 6.2.1. Within five (5) days after the parties' failure to resolve a dispute informally, the parties shall jointly name one (1) independent arbitrator (the "Arbitrator "). If the parties are unable to agree on the Arbitrator, the Arbitrator shall be named by the Superior and Municipal Court of the State of California, in and for the County of San Luis Obispo. No person shall be appointed or designated an arbitrator unless he /she is then qualified to arbitrate contractual disputes. 6.2.2. The Arbitrator shall, within fourteen (14) calendar days after appointment, receive from each of the parties a written statement outlining its determination of the matters at issue, supported by the reasons therefor, with counterpart copies to each party. The Arbitrator shall arrange for a simultaneous exchange of such proposed resolutions. The Arbitrator shall thereafter within fourteen (14) calendar days select which of the two (2) proposed resolutions most closely approximates his/her own determination of the matters at issue, and the Arbitrator shall have no right to propose a middle ground or any modification of either of the two (2) proposed values. The resolution the Arbitrator chooses as most closely approximating his/her own determination shall constitute the decision of the Arbitrator and will be final and binding upon the parties, absent fraud or gross error. 6.2.3. In the event of a failure, refusal or inability of the Arbitrator to act, his/her successor shall be appointed in the same manner as such Arbitrator was first chosen hereunder. Each party shall pay the fees and expenses of its respective arbitrator and the parties shall equally share the fees and expenses of the Arbitrator. 6.2.4. The Arbitrator shall have the right to consult experts and competent authorities with factual information or evidence pertaining to a determination of a resolution of the dispute. The Arbitrator shall render his/her decision in writing with counterpart copies to each party. The Arbitrator shall have no power to modify the provisions of this Agreement. The substantive law of the State of California shall be applied by the Arbitrator to the resolution of the dispute. The prevailing party shall be entitled to reimbursement of attorney F:V.f,DkM ir.0ARcin rsc..M A`�t%Mliea RA 072304DOC 13 fees, costs, and expenses incurred in connection with the arbitration, as determined by the Arbitrator. All decisions of the Arbitrator shall be final, binding, and conclusive on all parties. 0 6.2.5. The provisions of this Section may be enforced by any Court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys fees, to be paid by the party against whom enforcement is ordered. Judgment on the award rendered by the Arbitrator may be entered in any court having jurisdiction. 6.2.6. BY INITIALING IN THE SPACE BELOW THE PARTIES ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AND ARE GIVING UP ANY RIGHTS THEY MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. INITIALED: 7. Miscellaneous Provisions. The following miscellaneous provisions shall apply to this Agreement: 7.1. Counterparts. This Agreement may be executed in any number of counterparts which together shall constitute the agreement of the parties. 7.2. Laws. It is specifically stipulated that this Agreement will be interpreted and construed according to the laws of the State of California. Venue for any dispute arising under this Agreement shall be San Luis Obispo County, California. 7.3. Amendments. No modification or amendment of this Agreement will be of any force or effect unless made in writing and executed by all parties hereto. 7.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives and successors. This Agreement is personal to Developer and does not run with the land of the Real Property. Developer may assign its rights and obligations under this Agreement with the prior consent of City, which consent shall not be unreasonably withheld or delayed, subject to the following: Developer may not assign its rights and obligations under this Agreement, except in conjunction with the sale of the Shopping Center Property. There shall be no transfer or partitioning of rights under this Agreement associated with the sale or transfer of an individual pad or the hotel site. Furthermore, Developer cannot sell the Shopping Center Property and concurrently assign rights under this Agreement until the Freeway Interchange construction contract is let and the Retail Project is open for business. Nothing in this section shall prevent the sale of the Shopping Center Property, but will prevent the assignment of this Agreement until these conditions are met; thereafter, for the Agreement to be assigned it must be in conjunction with the sale of the Shopping Center Property. Developer shall be released from all liabilities arising subsequent to such assignment. 7.5. Further Documents. The parties agree that they will execute such other instruments and documents as are or may become necessary or convenient to carry out the intent and purposes of this Agreement. F:1na0D\M1A04\Acimbuncmrnt Aafo — I\Dalidio M 072304.DOC 14 7.6. Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons or entities may require. 7.7. Entire Agreement. This instrument contains all of the understandings and agreements of whatsoever kind and nature existing between the parties hereto with respect to this Agreement, and the rights, interests, understandings, agreements and obligations of the respective parties and their prior oral agreements, if any. 7.8. Headings. All headings in this Agreement are inserted only for convenience and ease of reference, and are not to be considered in the construction or interpretation of any provision of this Agreement. 7.9. Authority. Each individual executing this Agreement on behalf of a party hereto, by his or her signature, represents that he or she maintains full authority on behalf of the applicable party to execute this Agreement, and thereby bind the applicable party to all covenants, duties and obligations contained herein. 7.10. Exhibits. All exhibits, schedules and recitals to this Agreement as referenced in any portion hereof are hereby incorporated by this reference, as though fully set forth in the body of this Agreement; provided, however, notwithstanding any other provisions of this Agreement, if for any reason any exhibit or schedule referenced herein is not attached to this Agreement at the time of its execution by the parties, then when such exhibit or schedule becomes available, it shall be initialed by the parties and attached to this Agreement, bearing no impact on the enforceability of this Agreement. 7.11. Time. Time is agreed to be of the essence with respect to this Agreement. 7.12. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed duly given (i) if delivered personally, when received; (ii) if transmitted by facsimile, upon the generation by the transmitting facsimile machine of a confirmation that the entire document has been successfully transmitted; (iii) if sent by recognized courier service, on the business day following the date of deposit with such courier service, or (iv) if sent by registered mail, postage prepaid, return receipt requested, on the third business day following the date of deposit in the United States mail. All such notices shall be addressed to a party at its address as set forth below, or to such other address or facsimile number as a party shall notify the other of in accordance with this Section. If to City: City of San Luis Obispo Ken Hampian, City Administrative Officer 990 Palm Street San Luis Obispo, CA 93401 Facsimile: (805) 781 -7109 With a Copy to: Jonathan Lowell, City Attorney 990 Palm Street San Luis Obispo, CA 93401 Facsimile: (805) 781 -7409 F:1nct\D0a1ita04Vteimbunement Agmment0alidiu RA 072304.DOC 15 If to Developer: Ernest Dalidio, Jr. 2706 Rodman Drive Los Osos, CA 93402 facsimile: (805) 528 -0941 SC Properties Attn: Bill Bird 510 S. Grand Avenue Glendora, CA 91741 facsimile: (626)963 -1505 With a Copy to: Andre, Morris & Buttery Attn: Michael J. Morris P.O. Box 730 San Luis Obispo, CA 93406 -0730 facsimile: (805) 543 -0752 7.13. Project is a Private Undertaking. It is specifically understood and agreed to by and between the parties hereto that: (i) the subject development is a private development; (ii) City has no interest or responsibilities for or duty to third parties concerning any improvements until such time and only until such time that City accepts the same pursuant to the provisions of this Agreement or in connection with the various subdivision map approvals; and (iii) Developer shall have full power over and exclusive control of the Project subject only to the limitations and obligations of Developer under this Agreement; and (iv) the contractual relationship between City and Developer is such that Developer is an independent contractor and not an agent of City. 7.14. Enforceability. City acknowledges that SLO Marketplace has an equitable interest in a portion of the Real Property, in that SLO Marketplace has entered into an option agreement with Dalidio Family whereby SLO Marketplace has an option to purchase such portion of the Real Property. Dalidio Family hereby consents to SLO Marketplace's entering into this Agreement, and to this Agreement becoming effective with respect to SLO Marketplace on the Effective Date, irrespective of whether or not SLO Marketplace has then acquired fee title to a portion of the Real Property. City agrees that, to the extent that, and for so long as, SLO Marketplace's interest in the Real Property as an option holder is deemed under California law to be insufficient to enforce its rights under this Agreement, Dalidio Family may, in its sole discretion, enforce all rights and interests of SLO Marketplace hereunder. Rights and obligations of Developer hereunder shall be deemed to apply to Dalidio Family or SLO marketplace, respectively, only insofar as those parties are owners of respective portions of the Real Property. F:Nne\D\D.1ir.04Vt6mbwscmrnt Ae— (Oalidio aw 072304.DOC 16 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written. "City" "Dalidio Family" CITY OF SAN LUIS OBISPO, a Municipal Corporation ERNEST DALIDIO, JR., Successor Trustee By: of Dalidio Family Trust u/t/a dated October 29, 1987 Its: I HEREBY APPROVE the form and legality of the foregoing Agreement this day of City Attorney F:Met\D\Dalifs04\Rcimbu s mt Ag=a ,\Dalidio RA 072304.DOC 17 ERNEST DALIDIO JR., Successor Trustee of the Thelma F. Perrozi Trust u/t/a dated February 7, 1991 CLARA B. DALIDIO, Trustee of the Clara B. Dalidio Trust u/t/a dated January 15, 1991 "SLO Marketplace" SAN LUIS OBISPO MARKETPLACE ASSOCIATES, LLC, a California limited liability company an Its: REIMBURSEMENT AGREEMENT EXHIBITS Exhibit A — Defined Terms Exhibit B — Freeway Interchange Description Exhibit C — City Policies for Land -Based Financings Exhibit D — Example DESTR Calculations Exhibit E — Prototype Floor and Site Plan Exhibit F — Example Reimbursement Application Calculations Exhibit G — Benefiting Properties Exhibit H — Business Land Exhibit I — Conservation Land Exhibit J — Freeway Cost Allocations Exhibit K — Real Property Exhibit L — Residential Land Exhibit M — Retail Land F:WET\D\D&IifGWVtA Exhlbitz\RA Eahibi( lock do REIMBURSEMENT AGREEMENT EXHIBIT "A" DEFINED TERMS "Adjusted Sales Tax" is defined in Section 4.1. "Adjusted Transient Occupancy Tax" is defined in Section 4.1. "Aggregate Chain Sales Tax" is defined in Section 4.2.3. "Arbitrator" is defined in Section 6.2.2. "Benefiting Properties" means the real properties identified as the "Prado Area" and the "Margarita Area," as more fully described in Exhibit "G ", which will significantly benefit from the Freeway Interchange. "BP Advances" is defined in Section 3.2. "Business Land" means the approximately 8.1 acres of the Real Property described in Exhibit "H ". "Business Project" means the business park improvements consisting of commercial buildings, which is intended to be developed on the Business Land. "Commercial Property" means the Retail Land and the Business Land. "Conservation Land" means the approximately 54.67 acres of the Real Property described in Exhibit "I ". "Cumulative Balance" is defined in Section 5.2.2. "Deemed Non - Downtown Transfer" is defined in Section 4.2.1. "DESTR" is defined in Section 4.1. "DESTR Reimbursement Application" is defined in Section 5.1. "Developer DESTR" is defined in Section 4. "Development Agreement" is defined in Recital D. "District" means the Community Facilities District formed by City to fund the cost of the Freeway Interchange. F:MatWOWKSOMI A Exhibiu\RA Exhibit A.dx "District Bonds" is defined in Section 1.2. "District Special Tax" means the special tax resulting from the formation of the District. "Downtown" is defined in Section 4.2.2. "Freeway Cost Allocations" means the allocation of the District Bond allocations between the Commercial Property and the Benefiting Properties set forth in Exhibit "J." "Freeway Interchange" is defined in Recital D. "Freeway Interchange Cost" is defined in Recital D. "Hotel Transfer Factor" is defined in Section 4.1. "Project" shall mean collectively, the Retail Project, the Business Project, the Residential Project, the creation of open space on the Conservation Land, the approximately 16.2 acres of the Real Property committed to public roads, and the Freeway Interchange. The Project is more specifically described and defined in the Development Agreement. "Projected Chain Sales Tax" is defined in Section 4.2.3. "Real Property" means that certain real property located in an unincorporated area of the County of San Luis Obispo, California, more particularly described in Exhibit "K" attached hereto. "Remitted Sales Tax" is defined in Section 4.1. "Residential Land" means that approximately 3.3 acres of the Real Property described in Exhibit "L." "Residential Project" means, collectively, residential improvements on the Residential Land including approximately sixty (60) single family homes and related improvements. "Retail Land" means that approximately 48.7 acres of the Real Property described in Exhibit "M" and all improvements thereto. "Retail Project" means, collectively, commercial improvements, including, but not limited to, approximately 650,000 square feet of gross leasable area that may include retail units, up to three (3) anchor stores of 100,000 to 140,000 square feet of gross leasable area each, a hotel with approximately 150 guest rooms, restaurants and other uses permitted under the applicable zoning regulations, with additional areas allocated to outdoor sales. "Retail Transfer Factor" is defined in Section 4.1. F:Nnv%D0Wi604YkA &chibiu% A Fnhbil A.doe "Shopping Center Property" shall mean that portion of the Retail Land, as shown on Exhibit "M," which is southwest side of Dalidio Road, upon which the shopping center improvements are to be built. "Term" means the term of this Agreement, as provided in Section 4.2. F ;MPcM\Da i(&04\ A ExhlbiuVtA Exhibit A.dm REIMBURSEMENT AGREEMENT EXHIBIT "B" DESCRIPTION OF FREEWAY INTERCHANGE 1. PROPOSED PROJECT A. PROJECT DESCRIPTION The City of San Luis Obispo is proposing to upgrade Route 101/Prado Road interchange. The existing Prado Road interchange is a partial interchange located at KP 43.2 (PM 26.8). This interchange is being converted to a full interchange with a tight diamond configuration on the northbound side and a partial cloverleaf configuration on the southbound side. In addition, Prado Road will be extended to Madonna Road in accordance with the City's circulation element of the General Plan and will be consistent with the 1994 Regional Transportation Plan for San Luis Obispo County. The proposed project will improve access and circulation for the adjacent commercial developments, accommodate build -out of the City's General Plan and relieve traffic congestion at Madonna Road interchange and Los Osos Valley Road interchange. The project proposes improvements as follows: 1. Construct an overcrossing structure over Route 101 with four 3.6 in through lanes, dual 3.6 in left turn pockets, a 2 in wide striped median, two 2.4 in standard bicycle lanes and two 2.4 in wide sidewalks on both sides of the structure. 2. Reconstruct the northbound Route 101 single lane diagonal on -ramp and off -ramp on the east side. At the ramp termini, the northbound diagonal off -ramp will'be widened to three lanes (two left and one right). The northbound on -ramp will have two receiving lanes for the dual left turn movements, but will transition to a standard one lane on -ramp. 3. Construct a new southbound Route 101 loop off -ramp, along with a southbound Route 101 diagonal on -ramp, for the west side. These two ramps will be single lane ramps. At the ramp termini, the southbound loop off -ramp will be widened to three lanes (one left, one shared left/right and one right). The southbound diagonal on -ramp will have two receiving lanes for the dual left turn movements, but will transition to a standard one lane on -ramp. 4. Construct an auxiliary lane in northbound and southbound directions of Route 101 between the Prado Road interchange and the Madonna Road interchange. U.S. Route 101 is part of the National Highway System and is presently a four lane freeway that runs north -south through the project area, connecting the Pismo Beach area with San Luis Obispo. In the project area, Route 101 has full interchanges at Los Osos Valley Road (KP 41.7, PM 25.91) to the south and Madonna Road (KP 44.27, PM 27.5) to the north. At Prado Road, there is access to and from Route 101 on the east side only. This access is a buttonhook ramp configuration terminating at Prado Road to provide northbound off -ramp and F1ncdD\Ddifd4VlA ExhibitsVtA Exhibit B put Ldoc on -ramp access to Route 101. These ramps do not meet current design standards. The northbound off -ramp is located 1.52 km north of the Los Osos Valley Road interchange, and the northbound on -ramp is located 1.04 km south of the Madonna Road interchange. The interchange at Prado Road is situated on relatively flat terrain, except for the incised stream channels of San Luis Obispo and Pref imo Creeks. Agricultural fields, US Border Patrol Office and a commercial development complex are located on the west side of the freeway. The City's corporation yard, an old drive -in movie theatre, fallow fields, commercial building, storage yards and the City's wastewater treatment plant are located on the east side. During the past 40 years since the freeway was constructed, developments in the southern part of the City of San Luis Obispo have resulted in an increase in demand for access to and from Route 101. However, only minor improvements have been made which include inside median shoulder widening, outside shoulder widening, the installation of a median barrier and the addition of the auxiliary lane between Madonna Road and Marsh Road. C. SAFETY IMPROVEMENTS With the construction of a full interchange, drivers would be less likely to get confused, thereby eliminating or reducing the potential for wrong way movements. This project will remove the existing partial interchange and replace it with a full interchange. The northbound Route 101 on- ramp and off -ramp at Prado Road will be upgraded to current ramp design standards and provided with standard deceleration, acceleration and lane drop lengths to improve traffic merges and to reduce traffic conflicts. D. SITE PLAN The attached plan illustrates the Freeway Interchange, which shall be built substantially in accordance with such plans. As provided in Section 11.4, the scope of the Freeway Interchange shall be the improvements shown on the attached plan between and including the intersections described as "Intersection D" on the west side and "Intersection A" on the east side. F :V&1%D\Ddifu04\tA Exhibiu\RA Exhibit 8 pan I.dm +�'' ((jell" • ° > � a„ 4.. ,dnH •�•;._ W ¢ � \'�. YY W Nub 19 r 'r G ly v. ,� a... •+ 'vim. } ` V'• : ��> ol w 1 d��/ \ �_ � J yr• 4 t � � � �4� W 5 I I l� O � N N i 1. Rol r w x W Y � � • � i p d yl Ef0 ©00 ^ • i 0 V p r My a� �F C] CD po�gs�� c CL cc +�'' ((jell" • ° > � a„ 4.. ,dnH •�•;._ W ¢ � \'�. YY W Nub 19 r 'r G ly v. ,� a... •+ 'vim. } ` V'• : ��> ol w 1 d��/ \ �_ � J yr• 4 t � � � �4� W 5 I I l� O � N N i 1. Rol r w x W Y � � • � i p d yl Ef0 ©00 ^ • i 0 V p r My a� �F C] REIMBURSEMENT AGREEMENT EXHIBIT "C" CITY POLICIES FOR LAND -BASED FINANCINGS i city of SAII ILIIS OBISPO City Policies for Land -Based Financing The following is an excerpt from the 2003 -05 Financial Plan Supplement of the City's Budget and Fiscal Policies regarding land -based financings (Section E under Capital Financing and Debt Management). Land -Based Financin Public Purpose. There will be a clearly articulated public purpose in forming an assessment or special tax district in financing public infrastructure improvements. This should include a finding by the Council as to why this form of financing is preferred over other funding options such as impact fees, reimbursement agreements or direct developer responsibility for the improvements. Eligible Improvements. Except as otherwise determined by the Council when proceedings for district formation are commenced, preference in financing public improvements through a special tax district shall be given for those public improvements that help achieve clearly identified community facility and infrastructure goals in accordance with adopted facility and infrastructure plans as set forth in key policy documents such as the General Plan, Specific Plan, Facility or Infrastructure Master Plans, or Capital Improvement Plan. Such improvements include study, design, construction and/or acquisition of: a. Public safety facilities. b. Water supply, distribution and treatment systems. c. Waste collection and treatment systems. d. Major transportation system improvements, such as freeway interchanges; bridges; intersection improvements; construction of new or widened arterial or collector streets (including related landscaping and lighting); ME Exhibit C sidewalks and other pedestrian paths; transit facilities; and bike paths. Storm drainage, creek protection and flood protection improvements. Parks, trails, community centers and other recreational facilities. g. Open space. h. Cultural and social service facilities. i. Other governmental facilities and improvements such as offices, information technology systems and telecommunication systems. School facilities will not be financed except under appropriate joint community facilities agreements or joint exercise of powers agreements between the City and school districts. Active Role. Even though land -based financings may be a limited obligation of the City, we will play an active role in managing the district. This means that the City will select and retain the financing team, including the financial advisor, bond counsel, trustee, appraiser, disclosure counsel, assessment engineer and underwriter. Any costs incurred by the City in retaining these services will generally be the responsibility of the property owners or developer, and will be advanced via a deposit when an application is filed; or will be paid on a contingency fee basis from the proceeds from the bonds. 4. Credit Quality. When a developer requests a district, the City will carefully evaluate the applicant's financial plan and ability to carry the project, including the payment of assessments and special taxes during build -out. This may include detailed background, credit and lender checks, and the preparation of independent appraisal reports and market absorption studies. City Policies for Land -Based Financin For districts where one property owner accounts for more than 25% of the annual debt service obligation, a letter of credit further securing the financing may be required. Reserve Fund. A reserve fund should be established in the lesser amount of: the maximum annual debt service; 125% of the annual average debt service; or 10% of the bond proceeds. 6. Value -to -Debt Ratios., The minimum value -to- date ratio should generally be 4:1. This means the value of the property in the district, with the public improvements, should be at least four times the amount of the assessment or special tax debt. In special circumstances, after conferring and receiving the concurrence of the City's financial advisor and bond counsel that a lower value -to -debt ratio is financially prudent under the circumstances, the City may consider allowing a value -to -debt ratio of 3:1. The Council should make special findings in this case. Appraisal Methodology. Determination of value of property in the district shall be based upon the full cash value as shown on the ad valorem assessment roll or upon an appraisal by an independent Member Appraisal Institute (MAI). The definitions, standards and assumptions to be used for appraisals shall be determined by the City on a case -by -case basis, with input from City consultants and district applicants, and by reference to relevant materials and information promulgated by the State of California, including the Appraisal Standards for Land - Secured Financings prepared by the California Debt and Investment Advisory Commission. Capitalized Interest During Construction. Decisions to capitalize interest will be made on case -by -case basis, with the intent that if allowed, it should improve the credit quality of the bonds and reduce borrowing costs, benefiting both current and future property owners. 9. Maximum Burden. Annual assessments (or special taxes in the case of Mello -Roos or -2- Exhibit C similar districts) should generally not exceed 1% of the sales price of the property; and total property taxes, special assessments and special taxes payments collected on the tax roll should generally not exceed 2 %. 10. Benefit Apportionment. Assessments and special taxes will be apportioned according to a formula that is clear, understandable, equitable and reasonably related to the benefit received by —or burden attributed to —each parcel with respect to its financed improvement. Any annual escalation factor should generally not exceed 2 %. 11. Special Tax District Administration. In the case of Mello -Roos or similar special tax districts, the total maximum annual tax should not exceed 110% of annual debt service. The rate and method of apportionment should include a back -up tax in the event of significant changes from the initial development plan, and should include procedures for prepayments. 12. Foreclosure Covenants. In managing administrative costs, the City will establish minimum delinquency amounts per owner, and for the district as a whole, on a case -by -case basis before initiating foreclosure proceedings. 13. Disclosure to Bondholders. In general, each property owner who accounts for more than 10% of the annual debt service or bonded indebtedness must provide ongoing disclosure information annually as described under SEC Rule 15(c) -12. 14. Disclosure to Prospective Purchasers. Full disclosure about outstanding balances and annual payments should be made by the seller to prospective buyers at the time that the buyer bids on the property. It should not be deferred to after the buyer has made the decision to purchase. When appropriate, applicants or property owners may be required to provide the City with a disclosure plan. REIMBURSEMENT AGREEMENT EXHIBIT "D" EXAMPLE DESTR CALCULATIONS F:WE'rD%"if9NlJ A E.hibks\J A E.WW D.doc Prepared for SLO RDA by ADK° 1. San Luis Marketplace "Exhibit D" 3:03 Py 7/23/2004 Exhibit D: Illustrative Example Calculation of DESTR DESTR Component #1: Adjusted Sales Tax Illustrative Sales Net Sales Tax for Store Name Sq Ft GLA Tax Less Exclusions Less Penalty DESTR Store A 5,000 $15,000 ($12,000) (a) $0 $3,000 Store B 3,000 $9,750 ($4,500) (b) ($9,750) ($4,500) Store C 4,000 $11,600 ($5,600) (c) $0 $6,000 Store D 1,500 $6,750 ($1,750) (d) ($1,750) $3,250 Store E 96,000 $230,400 $0 $0 $230,400 All other stores (excluding those in hotel) 650,000 $1,423,500 LO L $1,423,500 Total for Retail Outlets 759,500 $1,697,000 ($23,850) ($11,500) $1,661,650 Less: Reduction per Retail Transfer Factor of 33% (initial value) ($548,345) Adjusted Sales Tax $1,113,306 DESTR Component #2: Adjusted Transient Occupancy Tax Total Transient Occupancy Tax from Project Hotel $460,000 Less: Reduction per Hotel Transfer Factor of 20% ($92,000) Adjusted Transient Occupancy Tax $368,000 DESTR Component #3: Adjusted Sales Tax from Hotel Retail Outlets Total Sales Tax from Hotel Retail Outlets $6,000 Less: Reduction per Hotel Transfer Factor of 20% ($1,200) Adjusted Sales Tax from Hotel Retail Outlets Tax $4,800 TOTAL DESTR (Illustrative) $1,486,106 TOTAL DEVELOPER DESTR @ 50% (Illustrative) $743,053 NB: All numbers included herein are Illustrative only and do not represent actual tax collections. 1 hey are provided merely to illustrate the calculations with potential exclusions and penalties as defined in the Special Tax Reimbursement Aareement- Notes to Exclusions: (a) "Deemed Transfer Sales - Not from Downtown Merchants" Assumes a Store A outlet from outside Downtown SLO had $12,000 in reported sales tax prior to relocating to the Retail Project. (b) 'Deemed Transfer Sales - From Downtown Merchants" Assumes a Store B outlet from within Downtown SLO had $4,500 in reported sales tax prior to relocating to the Retail Project. (c) "Branch Outlet Adjustment - Not from Downtown Merchants" Assumes a branch outlet (Store C) of a chain with existing outlet(s) in SLO but outside Downtown SLO opens in the Retail Center, with $11,600 in reported sales tax. Assumes further that Aggregate Sales Tax from all this chain's outlets in SLO exceeds the Projected Sales Tax by $6,000. The amount allowed to DESTR is therefore the lesser of the two amounts. (d) 'Branch Outlet Adjustment - From Downtown Merchants" Assumes a branch outlet (Store D) of a chain with existing outlet(s) in Downtown SLO opens in the Retail Center, with $6,750 in reported sales tax. Assumes further that Aggregate Sales Tax from all this chain's outlets in SLO exceeds the Projected Sales Tax by $5,000, which is lower than Tax. St-MidptaceupdatedDistributed w Exhibs v3.)dsADK&A Working Draft - Subject to Change REIMBURSEMENT AGREEMENT EXHIBIT "E" PROTOTYPE FLOOR AND SITE PLANS FAncAMDa1ifa04 \RA Exhibits \RA Exhibit E.do Z 5 (L U) -- ----- - - - - -- - - - - - - - - - - - - ------ --7=7 --------- -------------------- tltl��lEi�►_��)i !'! �1�!lti.� � t'f �� EEE :Y��� 5 � - ----------- --------------------------- 21 .c u 81 r. + c ACV to W (1) 0 ca i Ate, co CC cu 0 0 cu O 0 U) ✓ ca CO (61 q ®R cmr ,j , IC Prepared for SLO RDA by AD7'- San Luis.Marketplace "Exhibit F (1)" 12:34 PM 7/27/2004 Exhibit F: Illustrative Example Calculation of the Cumulative Balance of Unrecovered District Special Taxes, as Required for DESTR Reimbursement Application (Note a) Version A: Example illustrating full payoff of cumulative balance Year 1 2 3 4 5 6 7 8 9 10 Memo: Illustrative DESTR 1,487 1,556 1,618 1,662 1,704 1,768 1,832 1,897 1,965 2,035 Total Payments Made by Developer on Behalf of Retail Project and Benefiting Properties (Note b): Project Share of Total Bond 596 596 596 596 596 596 596 596 596 596 Margarita Share of Bond Payment 288 288 288 288 288 0 0 0 0 0 Prado Share of Bond Payment 104 104 104 104 104 104 104 104 104 104 Total Payments Made by Developer for Project and Benefiting Properties 988 988 988 988 988 700 700 700 700 700 Less: Prior Reimbursements from DESTR (Note c) 0 (743) (778) (809) (831) (852) (884) (916) (949) 0 Less: Prior Reimbursements from Owners of Benefitting Properties: Margarita Payoff 0 0 0 0 (1,656) 0 0 0 0 0 Prado Payoff 0 0 0 0 0 0 0 0 0 (1,438) Total Prior Reimbursements from Owners of Benefiting Properties 0 0 0 0 1( ,656) 0 0 0 0 1( ,438) Net Payments Made by Developer 988 245 210 179 (1,499) (152) (184) (216) (249) (738) Plus: Interest at 5.25% 0 52 67 82 96 22 15 6 (5] (18) Net Payments Made by Developer with Interest 988 297 278 261 (1,403) (130) (169) (209) (253) (756) Cumulative Payments Made by Developer with Interest 988 1,285 1,562 1,823 420 290 121 (88) (341) (1,098) Plus: District Special Tax Payable by Developer in Following Year 988 988 988 988 700 700 700 700 700 0 DEFINED "CUMULATIVE BALANCE" OF UNRECOVERED DISTRICT SPECIAL TAXES (Note d) 1,976 2,273 2,550 2,811 1,120 990 821 612 359 (1,098) (a) All numbers included herein are illustrative only and do not represent actual payments or reimbursements. They are provided merely to illustrate the calculation of the Cumulative Balance as defined in the Special Tax Reimbursement Agreement. (b) The interest rate and resulting payment calculations are purely illustrative in that first, the interest rate cannot be predicted in advance and second, the Reimbursement Agreement provides that the developer may request escalating rather than constant debt service. (c) Per section 4 of the Reimbursement Agreement, developer reimbursements may be no greater than 50% of DESTR. (d) The 'Cumulative Balance" is the potential maximum payment due the developer under section 5.4 of the Reimbursement Agreement. SLMldplacetlpdatedoistributed w Exhibs v4.rasADK&A Working Draft - Subject to Change Prepared for SLO RDA by ADKR ' San Luis Marketplace "Exhibit F (2)" 12:34 PM 7/27/2004 Exhibit F: Illustrative Example Calculation of the Cumulative Balance of Unrecovered District Special Taxes, as Required for DESTR Reimbursement Application (Note a) Version B: Example illustrating no retirement of cumulative balance Year 1 2 3 4 5 6 7 8 9 10 Memo: Illustrative DESTR 1,487 1,556' 1,618 1,662 1,704 1,768 1,832 1,897 1,965 2,035 Total Payments Made by Developer on Behalf of Retail Project and Benefiting Properties (Note b): Project Share of Total Bond 1,161 1,161 1,161 1,161 1,161 1,161 1,161 1,161 1,161 1,161 Margarita Share of Bond Payment 288 288 288 288 288 0 0 0 0 0 Prado Share of Bond Payment 104 104 104 104 104 104 104 104 104 104 Total Payments Made by Developer for Project and Benefiting Properties 1,553 1,553 1,553 1,553 1,553 1,265 1,265 1,265 1,265 1,265 Less: Prior Reimbursements from DESTR (Note c) 0 (743) (778) (809) (831) (852) (884) (916) (949) (983) Less: Prior Reimbursements from Owners of Benefitting Properties: Margarita Payoff 0 0 0 0 (1,656) 0 0 0 0 0 Prado Payoff 0 0 0 0 0 0 0 0 0 (1,438) Total Prior Reimbursements from Owners of Benefiting Properties 0 0 0 0 (1,656) 0 0 0 0 (1,438) Net Payments Made by Developer 1,553 810 775 744 (934) 413 381 349 316 (1,156) Plus: Interest at 5.25% 0 82 128 176 224 187 218 250 281 313 Net Payments Made by Developer with Interest 1,553 891 903 920 (710) 600 599 599 598 (843) Cumulative Payments Made by Developer with Interest 1,553 2,444 3,348 4,268 3,558 4,157 4,757 5,355 5,953 5,110 Plus: District Special Tax Payable by Developer in Following Year 1,553 1,553 1,553 1,553 1,265 1,265 1,265 1,265 1,265 1,161 DEFINED "CUMULATIVE BALANCE" OF UNRECOVERED DISTRICT SPECIAL TAXES (Note d) 3,106 3,997 4,901 5,821 4,823 5,422 6,022 6,621 7,218 6,271 (a) All numbers included herein are illustrative only and do not represent actual payments or reimbursements. They are provided merely to illustrate the calculation of the Cumulative Balance as defined in the Special Tax Reimbursement Agreement. (b) The interest rate and resulting payment calculations are purely illustrative in that first, the interest rate cannot be predicted in advance and second, the Reimbursement Agreement provides that Nte developer may request escalating rather than constant debt service. (c) Per section 4 of the Reimbursement Agreement, developer reimbursements may be no greater than 50% of DESTR. (d) The "Cumulative Balance" is the potential maximum payment due the developer under section 5.4 of the Reimbursement Agreement. SLWpiaceupdatedoistributed w Exfribs v4.)dsADK&A Working Draft - Subject to Change REIMBURSEMENT AGREEMENT EXHIBIT "G" BENEFITING PROPERTIES F %— %D%D.h(.04%FA E.hibas\RA E.hiW G.d- San Luis San Luis Marketplace f ce and Benefiting P Peado .;: , a H �e IPIZ Area.*- a.��:' ........ REIMBURSEMENT AGREEMENT EXHIBIT "H" BUSINESS LAND F Mc1\D\Dahf.04 %KA E.bbk% \RA E■biba H d- BUSIN (74 0 500 1000 1 INCH - 500 FEET F:MrtMY0.1ifx04\RA Eshibitt%RA Exhibit H.6m REIMBURSEMENT AGREEMENT EXHIBIT H: BUSINESS LAND REIMBURSEMENT AGREEMENT EXHIBIT "I" CONSERVATION LAND F Vw%D1Dalif&04%J A EahbiuVlA Eahibk I.doc C( ( 4 7 0 am 1000 1 INCH - 500 FEET FA"" \D\Dalif,*4\J A Eahlbils\RA Eahibk 14o REIMBURSEMENT AGREEMENT EXHIBIT I: CONSERVATION LAND REIMBURSEMENT AGREEMENT EXHIBIT "J" FREEWAY COST ALLOCATIONS The obligation for. the District Bonds shall be as follows: Commercial Property: 74.8% Benefiting Properties Prado Area: 6.7% Margarita Area: 18.5% Total 100% W v F'r\M .M ft A F.h;bi"\RA F.hihit 1 dM REIMBURSEMENT AGREEMENT EXHIBIT "K" REAL PROPERTY Real property in the Unincorporated area of San Luis Obispo said County of San Luis Obispo State of California, described as follows: Parcel 1: That portion of Lot 64 of the Subdivisions of the Ranchos Canada de Los Osos and La Laguna, in the County of San Luis Obispo, State of California, according to map filed for record In Book A, Page 83 and 84 of Maps, In the office of the County Recorder of said County, described as follows: Beginning at the Northeast corner of said Lot 64; thence North 55 1/20 West, 10.10 chains to post marked M. R. No. 3; thence South 41 024' West, 19.96 chains to post marked M. R. No. 4; thence South 55 1/20 East, 15.25 chains to the Southeast corner of said Lot 64; thence North 26 1/2 1.East, 20.00 chains to the point of beginning. EXCEPTING therefrom that portion conveyed to the State of California by deed dated October 15, 1947 and recorded December 16, 1947 in Book 464, Page 87 of Official Records. PARCEL 2: That portion of Lot 65 of the Subdivisions of the Ranchos Canada de Los Osos and La Laguna, in the County of San Luis Obispo, State of California, according to map filed for record in Book A, Page 83 and 84 of Maps, in the office of the County Recorder of said County, described as follows: Beginning at the Northeast corner of said Lot 65; thence North 55 1/2° West, 12.19 chains; thence South 50 1/2° West, 19.42 chairs to a point in the line of fence; thence along said fence South 55 1/20 East, 20.15 chains to post on. the Southeast fine of said Lot; thence Northerly 18.90 chains to the point of beginning. EXCEPTING therefrom that portion conveyed to the State of California by deed dated October 15, 1947 and recorded December 18, 1947 In Book 464, Page 67 of Official Records. PARCEL 3: All of Lot "K" of the Resubdivision of Lots 58, 61, 62, 63, 64, and 65 as per J. T. Stratton's Survey and map of the Subdivisions of the Ranchos Canada de Los Osos and La Laguna, iri the County of San Luis Obispo, State of California, according to map filed for record January 30, 1875 In Book A, Page 161 of Maps, In the office of the County Recorder of said County. EXCEPTING therefrom that portion conveyed to United States Postal Service by deed dated August 5, 1980 and recorded September'5, 1980 In Book 2266, Page 904 through 906 of Official Records as subsequently corrected by a Grant Deed dated May 7, 1981 and recorded June 10, 1981 in Book 2332, Page 318 through 320 of Official Records. PARCEL 4: That portion of Lots L, M and N of the Resubdivisions of Lots 58, 61, 62, 63, 64, and 65 as per J. T. Stratton's Survey and Map of the Subdivisions of the Ranchos Canada de Los Osos and La Fast American Title F \e %MD.14044LA E.hli0kz\RA E.hbe K.d« Laguna, in the County of San Luis Obispo, State of California, according to map filed for record January 30, 1875 in Book A, Page 161 of Maps, in the office of the County Recorder of said County, described as follows: Beginning at stake marked "N.N." at the most Southerly corner of said Lot "L" thence South 55 1120 East along the Northeasterly line of said Lot "M ", 3.06 chains to the most Easterly corner of said Lot "M', thence South 50 1/2° West along the Southeasterly line of said Lots "M" and "N ", 19.44 chains to the Southerly corner of said Lot "N "; thence North 55 1/2° West along the Southwesterly tine of said Lot "N ", 11.12 chains to post marked "A.E" at the Easterly corner of Lot 'O" of said subdivisions; thence North 370 West along the Northeast line of said Lot "O ", 1.42 chains to the center of Foreman.Creek and the most Southerly corner of the lands of Rosa Machado; thence along the center of said creek and along the Easterly line of the lands of Rosa Machado on the following courses and distances: North 18 1/4° East, 1.17 chains; North 6 1/40 West, 2.62 chains; North 13 3/40 East, 2.S0 chains; North 18 1/2° East, 2.50 chains; North 130 East, 2.50 chains, North 3 1/21 East, 2.25 chairs, North 181 East, 4 chains to the top of the bank as the Easterly side of a ditch carrying the water out of the Laguna into Foreman Creek; thence along the Easterly bank of said ditch and the Easterly lane of the lands of said Rosa Machado, North 1 1/41 East, 2.25 chairs; North 21 1/20 West, 2.79 chains; North 9° West, 4.21 chains to the Southerly line of the Los Osos Road; thence North 62 1/20 East, along the Southerly line of the said Road 9.83 chains to a stake marked "M.M." at the most Northerly corner of said lot "L "; thence South 460 East along the lines between Lots "K" and "L" of said subdivision; 24.72 chains to post marked "A.L." at the most Easterly corner of said Lot "L ";. thence South 41 3/41 West along the Southeasterly line of said Lot "L ", 8.90 chains to the point of beginning. EXCEPTING from said Parcel 4 that portion thereof conveyed to Ray C. Skinner, et ux., by deed dated January 12, 1960 and recorded January 29, 1960 in Book 1045, Page 234 of Official Records. ALSO EXCEPTING from said Parcel 4 that portion described in the Final Judgment of Condemnation recorded June 26, 1975 in Book 1840, Page 217 of Official Records. Said portion is more particularly described as follows: A portion of Lots M and N of the R. R. Harris Resubdivislon of Lots 58 and 61 of the Ranchos Canada de Los Osos and La Laguna as filed in Book A, Page 161 of Maps, in the office of the Recorder of the County. of San Luis Obispo, California, described as follows: Beginning at the most Northerly point of Tract 169, as recorded in Book 6, Page 45 of Maps as filed in the office of the Recorder of the County of San Luis Obispo, California, said point being on the Southerly fine of Madonna Road; thence along said Southerly line of Madonna Road which bears North 62 030' East a distance of 54.90 feet; thence South 5 048'47" East a distance of 246.80 feet; thence South 19 °57'37" East a distance of 244.39 feet; thence South 0026'53" West a distance of 182.46 feet; thence South 20 033'06" West a distance of 235.26 feet; thence South 3 °50'57" West a distance of 252.36 feet; thence South 14 °21'20" West a distance of 373.89 feet; thence South 1 000'32" East, a distance of 322.13 feet; thence North 55 030' West a distance of 63.90 feet; thence along the Easterly line of Tract 169 to the true point of beginning through the .following courses: North 7 025'16" East, a distance of 116.08 feet; thence North 1 000'32" West, a distance of 154.16 feet; thence North 9 039'39" East, a distance of 128.27 feet; thence North 14 °21'20" East, a distance of 267.10 feet; thence North 3 050'57" East, a distance of 228.68 feet; thence North 11 914'33" East, a distance of 101.44 feet; thenoe North 16 042'13' East, a distance of 207.16 feet; thence North 0026'53" East, a distance of 100.02 feet; thence North 19 057'37" West, a distance of 215.04 feet; thence North 5 048'4' West, a distance of 201.68 feet; thence North 14039'55" West, a distance of 71.55 feet to the point of beginMng. First American Title IF \- AD%M1;fa04\KA EahiW, \RA E.hibn K.d« APN:067- 121 -022 First American Title F Mc1\DkDali(a04\RA Eahibiit\RA Eahibk K.dm ti jog n 'a r. __tD cl mm r ° C�A N 0 M 9 Y + Z A In m i O °l7 �� m rn Aw;0 _ C c _4° '— = pv O � N r'— I \D\D-N(- V \KA E.hbMSVtA E�bibk K do w S' h O h cc r1 � I 6 �B 3 yO O O M pip T r b 'hq jf Descaiptfon: San Luis Obispo, CA Assessor Map 67.12 Page: 1 of i Order. Use Comment: r'— I \D\D-N(- V \KA E.hbMSVtA E�bibk K do w S' h O h cc r1 � I 6 �B 3 yO O O M REIMBURSEMENT AGREEMENT EXHIBIT "L" RESIDENTIAL LAND F..WEr%UUnkju0l\CaNtA EahtU Ldx (74 REIMBURSEMENT AGREEMENT EXHIBIT L: RESIDENTIAL LAND 1 INCH - 500 FEET F lNETTL\Linkj.01\C —%f A E.hibin L 6- REIMBURSEMENT AGREEMENT EXHIBIT "M" RETAIL LAND F %n \D\D.lihWVLA E.AibkORA F-h-bw M do ( 4 7 o aoo 1000 Emd [It U11R * 2 1"j F Ma%D%DvliG04 \RA E.hoibkz %F A Eahiba M.doc REIMBURSEMENT AGREEMENT EXHIBIT M: RETAIL LAND DEVELOPMENT AGREEMENT EXHIBIT "N" RESIDENTIAL LAND F:M OMali(a040A EahiNWDA Eahlit N.da 0. 17 DEVELOPMENT AGREEMENI a 600 1000 EXHIBIT N: RESIDENTIAL LAt MEMEL r _ i INCH - 500 FEET DEVELOPMENT AGREEMENT EXHIBIT "O" RETAIL LAND F-VomM alifsoODA Exhibiu%DA Eah3h O.doc 17 0 aw 1000 EW 1 INCH - 500 FEET DEVELOPMENT AGREEMEN EXHIBIT 0: RETAIL LANI