HomeMy WebLinkAboutOperatingMemo#2_SanLuisRanchOPERATING MEMORANDUM NUMBER TWO
BETWEEN
THE CITY OF SAN LUIS OBISPO
AND MI SAN LUIS RANCH, LLC
The Development Agreement by and among the City of San Luis Obispo (the "City") and MI San
Luis Ranch LLC ("SLR") dated as of on or about September 18, 2018, and which became effective
on October 18, 2018 (the "Development Agreerzaent"), provides in Section 9.03 of the
Development Agreement that compliance with the requirements of the San Luis Ranch Specific
Plan (the "Specific Plan"), the Conditions of Approval (the "Conditions of Approval") for the San
Luis Ranch Project (the "Project"), the conditions of approval for Vesting Tentative Tract Map.
No. 3096 (the "VTTM"), and provisions of the Development Agreement (collectively, the Specific
Plan, the Conditions of Approval, the VTTM, and the Development Agreement may be referred
to collectively as the "Project Approvals") require a close degree of cooperation between the City
and SLR and refinements and further development of the Project may demonstrate that
clarifications are appropriate with respect to the details of performance. The Development
Agreement further provides that if and when City and SLR agree that such clarifications are
necessary or appropriate, they may effect such clarifications through operating memoranda
approved by the City and SLR.
With this Operating Memorandum, City and SLR wish to clarify certain conditions in the Project
Approvals in order to carry out the intent of the City and SLR with respect to the design and
development of the Project. Capitalized terms used in this Operating Memorandum shall carry the
same definitions as those set forth in the Development Agreement.
A. PURPOSE:
The purpose of this Operating Memorandum is to identify a basic framework between the City and
SLR, for allowing SLR to proceed with the recording of a Final Map with respect to the VTTM
and to facilitate the construction of the improvements as contemplated under the terms of the
Development Agreement. This Operating Memorandum will reduce certain uncertainties
associated with the orderly development of the Project, provide for the effective and efficient
development of public facilities, infrastructure and services, a wide range of housing types,
densities and affordable housing options, and provide significant public benefits to the City and
its residents.
The City and SLR previously entered into Operating Memorandum No. 1, which addressed certain
issues listed below. This Operating Memorandum No. 2 is intended to provide further clarity on
these points.
The City anticipates that the City Council will consider a Resolution regarding the CEQA
Addendum and updated traffic study discussed herein at its August 18, 2020 meeting and the City
Manager will also update the Council on Clarifications agreed to in this Operating Memorandum
by the City Manager as provided in the Development Agreement.
B. CLARIFICATIONS:
l) Future Dedication of Large Billboard Location: SLR shall dedicate Lots 303,
307, 308, 309, and 311 required for the Prado Interchange/Southbound ramp in accordance with
the express provisions of Section 6.02.3(a) of the Development Agreement. SLR shall retain
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Lot 310, which includes the Large Billboard. SLR shall place a covenant in favor of the City
against Lot 3 10 prohibiting the construction of any new structures on Lot 310, except as expressly
permitted under the City's nonconforming structures ordinance. In the event that CalTrans ever
requires Lot 310 or any portion thereof for construction of the Prado Interchange/Southbound
ramp, then SLR shall dedicate Lot 310 to CalTrans in its then current condition.
2) Roundabout Right of Way: SLR has engaged in direct conversations, both in
conjunction with the City and separately, with the owner of the Embassy Suites property (the
"Embassy Suites Owner") for acquisition of additional public right of way necessary for the
roundabout required by the City (the "Roundabout Right of Way"). SLR has presented both
market appraisals and offers to the Embassy Suites Owner that exceed the value of the area for the
Roundabout Right of Way shown on the appraisals, but the Embassy Suites Owner has declined
such offers. The City acknowledges that SLR has used and is continuing to use reasonable good
faith efforts to secure such necessary Roundabout Right of Way. Upon notification from SLR that
SLR has exhausted all reasonable good faith efforts to secure such necessary Roundabout Right of
Way together with documentation regarding such efforts, the City shall, within thirty (30) days of
the date of such submission, make a determination of how to proceed with regard to the
Roundabout Right of Way in accordance with Section 6.03.1(b) of the Development Agreement.
3) Higuera and Tank Farm Road: Under the original EIR, the SLR Project was
responsible for 5% of the need for additional traffic improvements at the intersection of Higuera
and Tank Farm Road. The original conditions of approval contemplated that SLR would fund and
construct improvements to extend the northbound right -turn pocket length, subject to
reimbursements for costs exceeding the Project's fair share obligation. Subsequent changes to the
SLR Project land use plan have reduced the total amount of traffic anticipated to be generated by
the SLR Project. An updated traffic study prepared by a qualified transportation engineering
professional has concluded that with these changes to the SLR Project, the northbound right -turn
pocket improvements are no longer warranted at this time. Notwithstanding this reduction, SLR
has agreed to continue to fund future improvements at this intersection in the amount of Forty-two
Thousand Five Hundred Dollars ($42,500), which reflects SLR's prior fair share obligation as
identified on Table 3 of the San Luis Ranch Financing Plan. This fee will be paid at the time of
recordation of the final map for Tract 3096. Upon payment of such fee, all conditions and
mitigation measures related to this intersection shall be deemed satisfied in full, as outlined in the
accompanying CEQA addendum. Either the City or another entity selected by the City will
undertake such improvements at a time in the future to be determined by the City in its sole
discretion. The City shall use its best efforts to consider and adopt a resolution to remove any
conditions of approval inconsistent with this paragraph.
4) Cost Reimbursement Issues: Since the execution of the Development Agreement,
the public infrastructure costs being allocated to the SLR Project have increased over Ten Million
Dollars ($10,000,000) beyond what was contemplated in the Development Agreement. In
addition, pursuant to the Development Agreement, the City was to reimburse SLR for oversized
or excess public infrastructure being installed by SLR beyond SLR's fair share in the amount of
Two Million Dollars ($2,000,000).
(a) The Parties have agreed that SLR's payment toward the Prado Interchange
shall be reduced by Two Million Dollars ($2,000,000) in lieu and in full satisfaction of the City's
Two Million Dollar ($2,000,000) reimbursement obligation described above.
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(b) The City and SLR will agree to work in good faith to negotiate a private
reimbursement agreement with other benefitted properties in amount equal to about 50% of the
cost of 24" sewer line identified as item #24 on Table 3 of the San Luis Ranch Financing Plan.
(c) Other than the reimbursements set forth in items (a) and (b) above, SLR
agrees to not seek any additional reimbursements notwithstanding anything to the contrary in the
Development Agreement.
5) Affordable Housing Development:
As provided in Operating Memorandum No. 1, SLR is continuing to pursue the relocation
of the Project's affordable housing units originally contemplated for NG-30 (Tract 3150) to VTTM
Lot 7 for inclusion in a mixed use project on Lot 7. In order to facilitate potential grant funding to
assist in construction of the Prado Interchange, SLR has submitted an application to the City to
increase the total number of affordable units to be constructed on VTTM Lot 7 from 34 to between
64 and 77 units. The City shall reasonably consider and diligently process an application to
facilitate such proposal.
SLR agrees that it will transfer the portion of VTTM Lot 7 identified for the affordable
housing development (currently identified as Lot 11) (the "Affordable Lot") to Peoples' Self Help
Housing (the "Affordable Developer"), subject to a deed restriction that requires the Affordable
Developer to build a minimum of 64 affordable housing units with a mix of affordability at both
the low and very low income levels. Per Planning Commission Resolution No. PC-1006-20, the
Community Development Director is authorized to modify the base inclusionary housing
requirement to allow the transfer of 26 very -low income units from the NG-30 site (Tract 3150) to
the VTTM Lot 7 if the City Council approves the transfer as part of its action on the VTTM Lot 7
project. The timing and other development requirements shall be as set forth in an Affordable
Housing Regulatory Agreement, which the parties shall negotiate in good faith in conjunction with
the transfer of the Affordable Lot to the Affordable Developer.
SLR will consider converting 25 units on Lots 3 and 4 of Tract 3150 (the loft efficiency
units) to moderate affordable units, which would bring the total number of affordable units to 15%
of the Project's total units.
The City anticipates that it may receive grant funds of up to approximately Seven Million
Dollars ($7,000,000) due to these changes to the SLR Project. In the event that the City secures
such grant funding prior to January 15, 2021, the City agrees to allocate up to a total amount of
Two Million Dollars ($2,000,000) (the "Affordable Subsidy") at the rate of $80,000 per unit, to
SLR to partially offset the costs associated with the development of moderate income units on Lots
3 and 4 of Tract 3150, described above. Alternatively, the City may fund the Affordable Subsidy
from other affordable housing fees previously collected by the City. The Affordable Subsidy shall
be remitted to SLR no later than February 28, 2021. In the event that the City does not remit the
Affordable Subsidy by such date, the units on Lots 3 and 4 of Tract 3150 may be offered as market
rate units.
The timing of construction and/or completion of the affordable units on Lots 3 and 4 of
Tract 3150 shall not be a condition precedent to issuance of building permits or certificates of
occupancy, as applicable, for the other Lots in Tract 3150, including the town home lots (Lots 5,
6, and 7), the condominium lots (Lots 1 and 2), the clubhouse lot (Lot 8), or the common -area
improvements (Lots 9 and 10).
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In the event that SLR in its sole judgment detennines that such proposal is infeasible, or if
the City does not approve SLR's application, then the terms of Operating Memorandum No. 1
shall control.
6) Extension of 101 Southbound Off -ramp at LOVR: As a supplement to the
provisions of Operating Memorandum No. 1 related to the this intersection, SLR, the City, and
CalTrans have discussed implementing the original design submitted by SLR consistent with the
original mitigation measure and approvals as well as interconnecting the existing traffic signals at
the 101 off-ramp/LOVR and the LOVR/Calle Joaquin intersections to provide CalTrans with the
ability to coordinate the timing of these signals to reduce potential back-up onto US 101. SLR
will fund such interconnectivity up to Ten Thousand Dollars ($10,000), payable at final map
recordation.
7) Prado and South Higuera Road Intersection improvements: Under the original
EIR, the SLR Project was responsible for 10% of the need for additional traffic improvements at
the intersection of Prado and South Higuera Road. The original conditions of approval provided
that SLR would install the contemplated improvements, subject to reimbursements. Subsequent
changes to the SLR Project land use plan have reduced the total amount of traffic anticipated to be
generated by the SLR Project. An updated traffic study prepared by a qualified transportation
engineering professional has concluded that with these changes to the SLR Project, the intersection
improvements are no longer warranted at this time. Changes to the SLR Project have reduced the
need for such improvements to a level of less than significance. Notwithstanding this reduction,
SLR has agreed to continue to fund future improvements at this intersection in the amount of
Seventy-five Thousand Dollars ($75,000), which reflects SLR's prior fair share obligation as
identified on Table 3 of the San Luis Ranch Financing Plan. This fee will be paid at the time of
recordation of the final map for Tract 3096. Upon payment of such fee, all conditions and
mitigation measures related to this intersection shall be deemed satisfied in full, as outlined in the
accompanying CEQA addendum. Either the City or another entity selected by the City will
undertake such improvements at a time in the future to be determined by the City in its sole
discretion. The City shall use its best efforts to consider and adopt a resolution to remove any
conditions of approval inconsistent with this paragraph.
8) CFD Bonding Issues. In reviewing the issuance of bonds for the SLR Project's
CFD, the City will allow a bond sale or sales in an amount not to exceed the amount stated in the
Rate & Method of Apportionment (RMA) dated April 2, 2019, provided that the total special tax
rate will not exceed that stated in the RMA. All fiords generated by the bond issuance for the CFD
shall be used to support the development of the public infrastructure required by the SLR Project
as set forth in the RMA and the Development Agreement. To the extent that unspent funds accrue
from Special Tax revenue (referred to as "Paygo Funds" meaning the use of special tax revenue to
directly fund the cost of acquisition, construction, and improvement of authorized facilities not
financed by bonds, as part of an acquisition agreement with the City), any such Paygo Funds shall
be allocated on a 50-50 split between costs attributable to SLR and costs attributable to the City.
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IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the last written
date below.
FOR City:
Date: 'f -`7 —LOZd
Dere ohnson, City Manager
FOR SLR:
MI SAN LUIS RANCH, LLC,
a Delaware limited liability company
Date: <S"' By:
Avl' k-
Donald R. Faye, Authorized Agent
071928\11542795v]0 5
ACTION BY UNANIMOUS WRITTEN CONSENT
OF
THE MANAGEMENT COMMITTEE
OF
MI ENTITLEMENT IV, LLC
- Authority to Act
THE UNDERSIGNED, being the sole representative of the Management
Committee of MI Entitlement IV, LLC, a Delaware limited liability company (the
"Company"), acting pursuant to the provisions of the Limited Liability Company
Agreement of the Company dated February 11, 2014, as amended by that certain First
Amendment to Limited Liability Company Agreement of the Company dated as of
February 11, 2014; as further amended by that certain Second Amendment to Limited
Liability Company Agreement of the Company dated as of April 22, 2015; and as
assigned pursuant to that certain Assignment and Assumption of Membership Interest
(MI Entitlement IV, LLC) dated as of February 12, 2020 ("Assignment Agreement")
(collectively, the "Operating Agreement"), hereby adopts the following actions by written
consent:
WHEREAS, pursuant to the Assignment Agreement, all right, title and interest in
the Company and its entire membership interest and voting rights therein were assigned
by GGCCB, LLC, a California limited liability company, to Presidio Merced Land IV
Passive, LLC, a Delaware limited liability company ("PML4P"), leaving PML4P as the
sole member and manager of the Company.
WHEREAS, pursuant to Section 5.5 and Sections 5.6.9 and 5.6.27 of the
Operating Agreement, the Management Committee of the Company has the right to
approve all Major Decisions concerning the business and affairs of the Company,
including the approval of any document that is to be recorded against any property owned
by any Subsidiary LLC and any matter which under the terms of a Subsidiary LLC
agreement requires the approval of the Company or of the manager of a Subsidiary LLC;
WHEREAS, the Company, acting as Manager of MI SAN LUIS RANCH, LLC,
a Delaware limited liability company, ("SLR") believes it to be in the best interests of
SLR to authorize Donald R. Faye to executed certain documents as more specifically set
forth in the Action by Unanimous Written Consent of the Manager of MI San Luis
Ranch, LLC, attached hereto as Exhibit "A" (the "Manager Consent");
WHEREAS, SLR is a Subsidiary of the Company;
WHEREAS, the Company, acting as Manager of SLR, believes it to be in the best
interests of SLR, to acknowledge and accept Donald R. Faye as an authorized agent of
the Company, on behalf of SLR as more specifically set forth in the Manager Consent;
and
WHEREAS, the Management Committee finds it to be in the best interests of the
Company to approve the acts of the Company set forth in the Manager Consent.
1
NOW THEREFORE BE IT RESOLVED that the attached Manager Consent is
approved, and the Company, as Manager of SLR, a Subsidiary LLC of the Company, is
authorized to execute that certain Manager Consent attached hereto as Exhibit "A".
IN WITNESS WHEREOF, the undersigned has executed this Action by
Unanimous Written Consent effective as of July 22, 2020.
MANAGEMENT COMMITTEE:
P-
DONALD R. FAYE
EXHIBIT "A"
"MANAGER CONSENT"
ACTION BY UNANIMOUS WRITTEN CONSENT
OF
THE MANAGER
OF
MI SAN LUIS RANCH, LLC
- Acknowledgement of Authorityfor Donald R. Faye to Sign
THE UNDERSIGNED, being the Manager of MI San Luis Ranch, LLC, a
Delaware limited liability company (the "Company"), formerly known as MI Dalidio,
LLC, acting pursuant to the provisions of the Limited Liability Company Agreement of
the Company dated January 9, 2014, as amended by that certain First Amendment to
Limited Liability Company Agreement of Company dated as of May 8, 2014
(collectively, the "Operating Agreement"), hereby adopts the following actions by written
consent:
WHEREAS, pursuant to Section 3.2 of the Operating Agreement, the Manager of
the Company shall have the authority to bind the Company to any third party with respect
to any matter;
WHEREAS, the Manager finds it to be in the best interests of the Company to
authorize Donald R. Faye to execute, as Authorized Agent of the Company, the final map
and any and all recordable documents, instruments, statements or similar items related
thereto in connection with the Company's mapping of all or a portion of the property
owned by the Company (the "Property").
NOW THEREFORE BE IT FURTHER RESOLVED, Donald R. Faye is hereby
authorized by the Manager to sign and execute documents described herein on behalf of
the Company as may be applicable to the process of mapping the Property.
IN WITNESS WHEREOF, the undersigned has executed this Action by
Unanimous Written Consent effective as of July 22, 2020.
MANAGER:
MI ENTITLEMENT IV, LLC
a Delaware limited liability company
By: Presidio Merced Land IV Passive, LLC
a Delaware limited liability company
Its: Manager
By: -A06.
Michael M. Sul Ivan
Its: Authorized Representative