HomeMy WebLinkAboutD-2101 MI San Luis Ranch, LLCRecording Fees Exempt Pursua C.tp' — - – - —
Government Code § 27383
Recording Requested By And
When Recorded Mail to:
City of San Luis Obispo
c/o City Clerk
990 Palm Street
San Luis Obispo, California 93401
071928\9447955
20 x.8039139
Tommy Gong
San Luis Obispo - County Clerk -Recorder
09/21/2018 11:07 AM
Recorded at the request of:
PUBLIC
Titles: 1 Pages: 108
Fees: $0.00
Taxes:$0.00
Total: $0.00
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DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF SAN LUIS OBISPO
AND
MI SAN LUIS RANCH, LLC
RELATING TO
THE SAN LUIS RANCH
(The "SAN LUIS RANCH DEVELOPMENT AGREEMENT")
As Adopted by the San Luis Obispo City Council
on August 21, 2018 by Ordinance No. - 1649 (2018 Series)
TABLE OF CONTENTS
RVVITAIN AND DEFINITIONS............................................................................................ 1
AGREEMENT.............................................................................................................................
4
ARTICLE1. GENERALLY
..........................................................................................................
4
Section1.01.
Developer.........................................................................................................
4
Section1.02.
Effective...........................................................................................................
4
ARTICLE 2. DESCRIPTION OF THE PROJECT.......................................................................
6
Section2.01.
In General.........................................................................................................
6
Section2.02.
Project Approvals.............................................................................................
6
Section 2.03.
Subsequent Approvals......................................................................................
7
Section 2.04.
Subsequent Approval Documents. The Subsequent Approvals ......................
7
Section 2.05.
Processing Subsequent Approvals...................................................................
7
Section2.06.
Approvals.........................................................................................................
8
ARTICLE 3. DEVELOPMENT OF PROJECT IN GENERAL ...................................................
8
Section 3.01.
Consideration to Developer.............................................................................
8
Section 3.02.
Consideration to City.......................................................................................
8
Section 3.03.
Rights of DeveloperGenerally........................................................................ 8
Section 3.04.
Rights of City Generally.................................................................................. 8
Section 3.05.
Project Parameters...........................................................................................
8
ARTICLE4. APPLICABLE LAW...............................................................................................
9
Section4.01.
In General.........................................................................................................
9
Section 4.02.
Application of Other City Laws.......................................................................
9
Section 4.03.
Uniform Codes and Standard Specifications.................................................
1 I
Section 4.04.
State and Federal Law....................................................................................
11
ARTICLE 5. FINANCIAL
COMMITMENTS OF CITY AND DEVELOPER .........................
12
Section5.01,
In General.......................................................................................................
12
Section 5.02.
Establishment of Financing Mechanisms......................................................
14
Section 5.03.
Imposition of and Increases in Fees, Taxes, Assessments and Other Charges
.......................................................................
14
Section 5.04.
Other Financing Commitments ...............................................
18
ARTICLE 6. COMMITMENTS RELATED TO PUBLIC IMPROVEMENTS ........................
23
Section 6.01.
Backbone Infrastructure Improvement Plan ...................................................
23
Section 6.02.
Construction and Dedication of Project Facilities and Infrastructure............
24
Section 6.03.
Cooperation as to Project Facilities and Infrastructure ..................................
25
071928\9447955 i
ARTICLE 7. OTHER COMMITMENTS OF CITY AND DEVELOPER ................................. 28
Section 7.01.
Mutual Cooperation for Other Governmental Permits .................................. 28
Section 7.02.
Timing of Development.................................................................................
28
Section 7.03.
Dedication of Park Lands...............................................................................
29
Section 7.04.
Dedication of Open Space/Agricultural Lands ..............................................
29
Section 7.05.
Affordable Housing.......................................................................................
30
Section7.06.
Energy............................................................................................................
30
Section7.07.
Water..............................................................................................................
31
Section7.08.
Wastewater.....................................................................................................
31
Section 7.09.
Recycled Water Facilities...............................................................................
31
Section 7.10.
Storm Drain Facilities....................................................................................
32
Section 7.11.
Floodplain Management................................................................................
32
Section 7.12.
Traffic and Circulation Improvements...........................................................
32
Section7.13.
Miscellaneous................................................................................................
32
ARTICLE 8. CONSIDERATION OF PERMITS AND APPROVALS .....................................
33
Section 8.01.
Review and Action Generally........................................................................
33
Section 8.02.
Applicable Law..............................................................................................
33
Section 8.03.
General Plan and San Luis Ranch Specific Plan Amendments .....................
34
Section 8.04.
MMRP Application........................................................................................
34
Section 8.05.
Life of Approvals...........................................................................................
34
Section8.06.
Vesting Maps.................................................................................................
34
ARTICLE9. AMENDMENTS...................................................................................................
34
Section9.01.
In General.......................................................................................................
34
Section 9.02.
Future Approvals Do Not Require Amendments to Agreement ....................
35
Section 9.03.
Operating Memoranda...................................................................................
35
Section 9.04.
Administrative Amendments........................................................................
35
ARTICLE 10. ANNUAL
REVIEW............................................................................................
35
Section10.01.
In General.....................................................................................................
35
Section 10.02.
Other Investigations and Evaluations..........................................................
36
ARTICLE 11. MMRP EVALUATION AND DEVELOPMENT AGREEMENT REVIEW ....
36
Section 11.01.
MMRP Evaluation.......................................................................................
36
Section 11.02.
MMRP Implementation...............................................................................
36
Section 11.03.
Enforcement.................................................................................................
36
Section 11.04.
Development Agreement Review................................................................
36
071928\9447955 ii
Section 11.05.
Director's Findings of Compliance..............................................................
36
Section 11.06.
Finding of Development Agreement Noncompliance .................................
36
ARTICLE 12. DEFAULT,
REMEDIES, TERMINATION OF DEVELOPMENT
AGREEMENT..............................................................................................................................
37
Section 12.01.
Notice and Cure...........................................................................................
37
Section 12.02.
Actions during Cure Period..........................................................................
37
Section 12.03.
Remedies of Non -Defaulting Party..............................................................
37
Section 12.04.
Administrative Remedies.............................................................................
38
Section 12.05.
Judicial Remedies........................................................................................
38
Section 12.06.
Termination Due to Default.........................................................................
38
Section 12.07.
Judicial Reference.........................................................................................
39
ARTICLE 13. ASSIGNMENT,
TRANSFER AND NOTICE........... .........................................
40
Section 13.01.
Assignment of Interests, Rights and Obligations .........................................
40
Section 13.02.
Transfers In General.....................................................................................
40
Section 13.03.
Non -Assuming Transferees..........................................................................
41
ARTICLE 14. MORTGAGEE PROTECTION...........................................................................
42
Section14.01.
In General.....................................................................................................
42
Section 14.02.
Impairment of Mortgage or Deed of Trust ...................................................
42
Section 14.03.
Notice of Default to Mortgagee...................................................................
42
Section 14.04.
Right of Mortgagee to Cure.........................................................................
42
Section 14.05.
Mortgagee Liability for Past Defaults or Obligations ..................................
42
Section 14.06.
Technical Amendments to this Article 14 ...................................................
43
ARTICLE 15. GENERAL PROVISIONS..................................................................................
43
Section 15.01.
Incorporation of Recitals..............................................................................
43
Section 15.02.
Project is a Private Undertaking..................................................................
43
Section 15.03.
Cooperation in the Event of Legal Challenge ..............................................
43
Section 15.04.
Defense and Indemnity................................................................................
44
Section 15.05.
Governing Law; Attorneys' Fees.................................................................
44
Section 15.06.
Force Majeure........................................
44
Section15.07.
Waiver..........................................................................................................
45
Section15.08.
Notices.........................................................................................................
45
Section 15.09.
No Joint Venture or Partnership...................................................................
46
Section15.10.
Severability..................................................................................................
46
Section 15.11.
Estoppel Certificate......................................................................................
47
Section 15.12.
Further Assurances.. - . ...................................................... ...........................
47
071928\9447955 iii
Section15.13. Construction................................................................................................. 47
Section 15.14. Other Miscellaneous Terms......................................................................... 47
Section 15.15. Counterpart Execution................................................................................. 48
Section15.16. Time............................................................................................................. 48
Section 15.17. Good Faith/Fair Dealing.............................................................................. 48
Section15.18. List of Exhibits.......................................................................................•..... 48
071928\9447955 iv
DEVELOPMENT AGREEMENT
BY AND BETWEEN THE CITY OF SAN LUIS OBISPO AND
MI SAN LUIS RANCH, LLC RELATING TO
THE SAN LUIS RANCH
THIS DEVELOPMENT AGREEMENT is entered into this _ day of , 2018
("Execution Date"), by and between the CITY OF SAN LUIS OBISPO, a municipal
corporation and charter city ("City"), and MI SAN LUIS RANCH, LLC, a Delaware limited
liability company ("Developer"), hereinafter referred to in this Development Agreement
individually as a "Party" and collectively as the "Parties."
RECITALS AND DEFINITIONS
A. The "Project," as referenced in this Development Agreement, consists of the
development of housing, neighborhood commercial, commercial retail, park, and agricultural and
open space uses located within the San Luis Ranch Specific Plan area on the southwestern
boundary of the City, as further described in Section 2.01 below. The "Property," as referenced
in this Development Agreement, consists of approximately 131 acres of land designated for
development under the San Luis Ranch Specific Plan ("SLR SP"). The Property is depicted on
Exhibit A and legally described on Exhibit B, both attached hereto and incorporated herein by
this reference.
B. Developer represents and warrants to City that as of the Execution Date,
Developer owns or otherwise has legal interest in the Property.
C. The Property has an entitled development project that was the subject of the
Dalidio Ranch Initiative Measure ("Measure J") that was submitted to, and approved by, the
voters of San Luis Obispo County on November 7, 2006. Among other uses, Measure J
authorizes Developer to proceed with development on the Property of 530,000 square feet of
commercial/retail, 198,000 square feet of business/office, and 60 residential units.
D. On December 9, 2014, City adopted an update to the Land Use and Circulation
Elements ("LUCE") of the City's General Plan that included the area subject to the SLR SP (the
"SLR SP Area"). The City's General Plan designates the SLR SP Area for a variety of land
uses to benefit the City and its residents including residential, neighborhood commercial, open
space, and agricultural, and the City has found that this Development Agreement is consistent
with the applicable provisions of the General Plan and the SLR SP.
E. City and Developer have engaged in a cooperative and successful relationship to
establish a specific plan for the future of the SLR SP Area. These efforts culminated in the
City's adoption and approval of the following entitlements:
(1) The Final Environmental Impact Report and associated Mitigation Monitoring
and Reporting Plan (including all mitigation measures therein) for the Project
certified and adopted, respectively, by Resolution No. 10822, on July 18, 2017,
and the Supplemental Final Environmental Impact Report for the Project certified
071928\ 9447955
and adopted by Resolution No. 10927 (2018 Series), on July 17, 2018, as further
identified in Recital F, below.
(2) An amendment to the General Plan (Resolution No. 10822), adopted on July 18,
2017, including amendments to the LUCE ("LUCE Update") adopted by
Resolution No. 10586 (2014 Series) on December 9, 2014.
(3) The SLR SP adopted by Resolution No. 10822, on July 18, 2017, as amended by
Resolution No. 10927, adopted on July 17, 2018.
(4) The City's Zoning Ordinance as amended by Ordinance No. 1636 (2017 Series),
adopted July 18, 2017.
(5) The Development Plan approved by Resolution No. 10822, on July 18, 2017.
(6) The Vesting Tentative Map #3096 approved on July 18, 2017.
(7) The Annexation Agreement approved by Resolution No. 10885, adopted on May
1, 2018.
(8) Ordinance No. 1649 (2018 Series) dated August 21, 2018 adopting this
Development Agreement (the "Adopting Ordinance").
(9) The conditions of approval of each of the foregoing.
(10) The resolution of Application to the San Luis Obispo County Local Area
Formation Commission ("LAFCO") initiating the annexation of the Property into
the City.
These approvals are collectively referred to herein as the Project Approvals (as further
defined in Section 2.02).
F. Before approving the Project Approvals, the City Council of the City of San Luis
Obispo: (i) reviewed and considered the significant environmental impacts of the Project and
several alternatives to the Project, as described in that certain Final Environmental Impact Report
(the "Project EIR") and (ii) adopted Resolution No. 10822 on July 18, 2017 to certify the
Project EIR, making Findings Concerning Mitigation Measures and Alternatives (the
"Findings"), adopting a Statement of Overriding Considerations, and adopting a Mitigation
Monitoring and Reporting Plan (the "MMRP"), all in accordance with the provisions of the
California Environmental Quality Act, California Public Resources Code section 21000 et seq.
("CEQA"). Subsequently, the City Council of the City of San Luis Obispo reviewed and
considered the significant impacts of certain changes to the Project in that certain Supplemental
Final Environmental Impact Report (the "SEIR") and adopted Resolution No. 10927
(2018 Series) on July 17, 2018 to certify the SEIR in accordance with CEQA.
G. A principal purpose of this Development Agreement is to further the cooperative
relationship between City and Developer for the benefit of the City and the residents of the City
during the implementation of the SLR SP. The City and Developer join as Parties to this
071928\ 9447955 2
Development Agreement to ensure the requirements of the Development Agreement statute
(California Government Code section 65864 et. seq.) and the City's Development Agreement
ordinance, chapter 17.94 of its Zoning Ordinance, are satisfied. As more fully set forth below,
this Development Agreement contains covenants and/or servitudes that run with the title to the
Property.
H. In conjunction with the negotiation of this Development Agreement, the Parties
have developed a Financial Plan, a copy of which is attached hereto as Exhibit C, and which the
City's economic consultant used as a basis to develop a Financial Feasibility Memorandum, a
copy of which is attached hereto as Exhibit D.
I. The Parties intend this Development Agreement to achieve the following
purposes:
(1) that the City shall be kept and/or made "whole" by Developer as to the Property
and by other property owners, in regard to their respective properties, with respect
to all aspects, including without limitation, fiscal impacts, of the planning,
development, maintenance and operation of the SLR SP Area including the costs
to the City of providing public services and facilities to the Project, the payment
of City's costs associated with the implementation of this Development
Agreement, the Project Approvals, all other planning and environmental efforts
described and envisioned by this Development Agreement, the Subsequent
Approvals (as defined in Section 2.03 below), and the mitigation of the Project's
environmental impacts;
(2) that once this Development Agreement has taken legal effect, Developer shall
have a full and vested right, throughout the term of this Development Agreement,
to the Rights and Obligations as to the Property;
(3) to reduce the uncertainty in planning and implementation of the Project and to
secure the orderly development thereof, ensure a desirable and functional
community environment, provide effective and efficient development of public
facilities, infrastructure and services appropriate for the development of the
Project, ensure maximum effective utilization of resources within the City, and
provide other significant benefits to the City and its residents;
(4) to secure Project features and development conditions above and beyond those
that may be levied by the City under existing zoning and development regulations
and the Project EIR;
(5) to provide Developer with a reliable and definitive form of reimbursement or fee
credits for offsite and onsite infrastructure beyond its fair share;
(6) to be consistent with and to implement the City's General Plan, the SLR SP and,
more particularly, to achieve the community's development objectives for the
Property as set forth in Policy 8.1.4 of the Land Use Element;
071928\ 9447955 3
(7) to enable the City to potentially capture sales taxes that are being leaked to other
communities because of the jobs -housing imbalance; and
(8) to provide 580 residences that would help capture a substantial amount of
commuters currently heading to jobs in the City.
The Rights and Obligations of the Parties to this Development Agreement shall be construed and
interpreted so as to give full effect to each and all of these purposes.
J. As used in this Development Agreement, "Rights" shall mean all of the vested
and other rights and benefits of this Development Agreement, and the term "Obligations" shall
mean all of the duties, obligations, responsibilities and other burdens of this Development
Agreement. References to lot numbers in this Development Agreement refer to lots as numbered
in Vesting Tentative Tract Map. No. 3096 dated July 18, 2017.
K. As used in this Development Agreement, the terms, phrases and words shall have
the meanings and be interpreted as set forth in this Development Agreement (the meaning given
the term in the singular shall include the term in the plural and vice versa) unless the context
clearly indicates the Parties intended another meaning. To the extent any capitalized terms
contained in this Development Agreement are not defined within it, then such terms shall have
the meaning ascribed to them in Applicable Law or, if no meaning is given a term in such
sources, the most common understanding of the term, in light of the terms and conditions of this
Development Agreement, shall control.
AGREEMENT
NOW, THEREFORE, in consideration of the promises, covenants and provisions set
forth in this Development Agreement, the Parties hereby agree as follows:
ARTICLE 1. GENERALLY
Section 1.01. Developer. As used herein, "Developer" means MI San Luis Ranch, LLC,
as that business entity existed on the Effective Date and any permitted successor, assign, or
transferee of MI San Luis Ranch, LLC.
Section 1.02. EffectiveVesting_and Annexation Dates. This Development Agreement is
entered into by and between the City and Developer and takes legal effect on the date that it is
signed by the later of them to do so (the "Effective Date"), although the rights and obligations of
this Agreement with respect to the development of the Site are not effective until the later of
(i) , 2018, the date that Ordinance No.= approving this Development Agreement
takes legal effect (the "Vesting Date"), or (ii) the date upon which the Property is annexed into
the City (the "Annexation Date"). The terms and conditions of this Development Agreement
shall be for the benefit of or a burden upon the Property, shall run with title to the Property, and
shall be binding upon Developer and its successors, assigns and transferees during their
respective ownerships of any portion of the Property from and after the later of those two dates.
071928\9447955 4
Section 1.03. Term.
Section 1.03.1. In General.
(a) Although this Agreement shall legally bind the Parties upon the Effective Date,
the term of this Development Agreement shall commence upon the Annexation Date defined in
section 1.02 above and shall continue until, and terminate upon, the earliest of the following
dates ("Termination Date"):
(1) 12:01 a.m. on the 20th anniversary of the Annexation Date (the "Initial
Termination Date"), unless Developer requests, and the City approves, an
extension of the Term for an additional 10 -year period, in which case the
Termination Date shall be 12:01 on the 30th anniversary of the Annexation Date.
Such request for an extension shall be submitted, in writing, to the City Manager
at least 60 days, but no earlier than 180 days, before the Initial Termination Date.
The City may deny the request for an extension if Developer is not in substantial
compliance with all of its Obligations under this Development Agreement. Any
disputes regarding or relating to any extensions under this Section shall be
resolved in accordance with Article 12 hereof;
(2) 12:01 a.m. on the 15th anniversary of the Annexation Date, should Developer fail
to complete the Backbone Infrastructure for the Project (except for any fair share
payments related to the Prado Overpass and related ramps, including the payment
of the Prado Road Interchange Mitigation Fee (defined and governed by Sections
5.04.5 and 5.04.6, below)) in accordance with the SLR SP, SEIR and Section
6.01, below, prior to such date.
(3) This Development Agreement may be terminated with respect to property
included in a recorded final subdivision map creating residential lots on any
portion of the Property, provided that no further on-site or off-site infrastructure is
required and no conditions or mitigation measures remain to be satisfied before
building permits may issue for the development of those lots. Concurrently with
or following recordation of such a subdivision map as to any portion of the
Property, Developer may request in writing, and the Community Development
Director shall be authorized to execute and shall not unreasonably withhold, a
certificate of termination of this Agreement in recordable form solely as to the
property included in such a final recorded map; provided that no such certificate
need issue if Obligations to the City under this Development Agreement remain
unfulfilled which are not made conditions of approval of the subdivision map.
Upon the Community Development Director's recordation of such a certificate,
this Development Agreement shall terminate as to the land covered by such final
map. If Developer does not request or the Community Development Director does
not issue such a certificate, this Development Agreement shall continue to apply
to any lot depicted on such a subdivision map until this Development Agreement
otherwise expires or terminates according to its terms. Notwithstanding the
foregoing, this Development Agreement shall automatically terminate with
071928\ 9447955 5
respect to any lot intended for residential development upon final sign -off of the
building permit for a residential structure on such lot.
(4) Notwithstanding the foregoing, this Development Agreement shall terminate in
accordance with Government Code Section 65865(b) if the annexation is not
completed within five years of the Vesting Date defined by section 1.02 above,
unless such date is extended by mutual agreement of the Parties.
(b) This Development Agreement shall be of no further force, effect or operation
upon the Termination Date. Subject to the provisions of Section 8.05 below, in no event shall the
expiration or termination of this Development Agreement result in expiration or termination of
any Approval without further action of City.
Section 1.04. Execution and Recordation of Agreement.
Section 1.04.1. Execution and Recordation. Developer shall execute this
Development Agreement in conformance with Section 15.17 below within five business days
following the adoption of the Adopting Ordinance referenced in Recital E above. Provided
Developer has so executed this Agreement, City shall execute this Agreement, in conformance
with Section 15.15 of this Agreement, within five business days of Developer's execution of this
Development Agreement.
Section 1.04.2. Recordation. City shall deliver this Agreement to the County
Recorder for recordation within 10 days following its execution.
ARTICLE 2. DESCRIPTION OF THE PROJECT
Section 2.01. In General. As used herein, "Project" means the development of the
Property as described in the Project Approvals (defined in Section 2.02 below), including all
on-site and off-site "Project Facilities and Infrastructure" (defined in Section 5.01.1 below).
Section 2.02. Project Approvals. As used herein, "Project Approvals" include, but are
not limited to:
(i) those provisions of City's General Plan that relate to or affect the Property, as the
General Plan existed on the Vesting Date and as it may be amended from time to
time consistently with this Development Agreement (the "General Plan");
(ii) those provisions of the SLR SP (including the Design Guidelines) that relate to or
affect the Property, as the SLR SP existed on the Vesting Date and as it may be
amended from time to time consistently with this Development Agreement;
(iii) the zoning of the Property, as it existed on the Vesting Date and as it may be
amended from time to time consistently with this Development Agreement
thereafter (the "Zoning"); and
(iv) the other entitlements listed in Recital E above;
071928\ 9447955 6
provided, however, that "Project Approvals" shall not mean or include amendments to the
General Plan, SLR SP or Zoning of the Property that conflict with the Project Approvals as they
existed on the Vesting Date, unless Developer consents in writing to such conflicting
amendments.
Section 2.03. Subse cent Approvals. As used herein, "Subsequent Approvals" are
those permits and approvals (other than the Project Approvals and amendments thereto)
necessary or desirable for the development of the Project including, without limitation, those
identified in Section 2.04 below.
Section 2.04. Subsequent Approval Documents. The Subsequent Approvals defined in
Section 2.03 above include, but are not limited to:
(i) subdivision maps (including phased final maps) and related or similar approvals
issued under the California Subdivision Map Act;
(ii) development permits (including Site Plan Reviews and Conditional Use Permits
as described in the SLR SP);
(iii) architectural review and design review approvals (as described in the SLR SP);
(iv) any other discretionary or ministerial permits or approvals of City necessary or
appropriate for build -out of the Project and Property; and
(v) any amendments to any of the foregoing necessary or appropriate for the
development of the Project.
Section 2.05. Processing Subsequent Approvals.
Section 2.05.01. Processing of SubsMuent Approvals. City will accept, make
completeness determinations, and process, promptly and diligently to completion, all
applications for Subsequent Approvals for the Project in accordance with the terms of this
Development Agreement and Applicable Law.
Section 2.05.02. Scope of Review of Subse cent Approvals. By approving the
Project Approvals, City has made a final policy decision that the Project is in the best interests of
the public health, safety and general welfare. Accordingly, City shall not use its authority in
considering any application for a discretionary Subscqucnl Approval to change the policy
decisions reflected by the Project Approvals or otherwise to prevent or delay development of the
Project as set forth in the Project Approvals. Instead, the Subsequent Approvals shall be deemed
to be tools to implement those final policy decisions. The scope of the review of applications for
Subsequent Approvals shall be limited to a review of substantial conformity with the Applicable
Law and Rights vested hereunder (the "Vested Elements") (except as otherwise provided by
Sections 4.02 through 4.04), and compliance with CEQA and other Applicable Law. Where
such conformity/compliance exists, City shall not deny an application for a Subsequent Approval
for the Project.
071928\ 9447955 7
Section 2.05.03. Conditions of Subsequent Approvals. City shall have the right
to impose reasonable conditions upon Subsequent Approvals including, without limitation,
normal and customary dedications for rights of way or easements for public access, utilities,
water, sewers, and drainage necessary for the Project; provided, however, such conditions and
dedications shall not be inconsistent with the Applicable Law or Project Approvals, nor
inconsistent with the development of the Project as contemplated by this Agreement except to
the extent required by Applicable Law. Developer may protest any conditions, dedications or
fees while continuing to develop the Property. Such a protest by Developer shall not delay or
stop the issuance of building permits or certificates of occupancy for any aspect of the Project
not related to the condition protested. No conditions imposed on Subsequent Approvals shall
require dedications or reservations for, or construction or funding of, public infrastructure or
public improvements beyond those already included in the SLR SP and the MMRP except to the
extent required by CEQA.
Section 2.06. Approvals. Project Approvals, amendments to Project Approvals, and
Subsequent Approvals are sometimes referred to in this Development Agreement collectively as
the "Approvals" and each individually as an "Approval."
ARTICLE 3. DEVELOPMENT OF PROJECT IN GENERAL
Section 3.01. Consideration to Developer. The Parties acknowledge and agree that
City's agreement to perform and abide by the Rights and Obligations of City set forth herein is
material consideration for Developer's agreement to perform and abide by the Rights and
Obligations of Developer set forth herein.
Section 3.02. Consideration to City. The Parties acknowledge and agree that
Developer's agreement to perform and abide by the Rights and Obligations of Developer set
forth herein is material consideration for City's agreement to perform and abide by the Rights
and Obligations of City set forth herein.
Section 3.03. Rights of Developer Generally. Developer shall have a fully vested right
to develop the Project and to use the Property consistently with this Development Agreement and
Applicable Law.
Section 3.04. Rights of City Generally. City shall have a right to regulate development
of the Project and use of the Property consistently with this Development Agreement and
Applicable Law.
Section 3.05. Traject Parameters. The permitted uses of the Property, the density and
intensity of use of the Property, the maximum height and size of buildings included in the
Project, and provisions for the reservation and dedication of land shall be as set forth herein and
in the Project Approvals.
071928\ 9447955 8
ARTICLE 4. APPLICABLE LAW
Section 4.01. In General.
Section 4.01.1. Applicable Law Defined. Except as the Parties may otherwise
agree in writing, the rules, regulations and official policies applicable to the Project and the
Property during the Term of this Development Agreement shall be those set forth in this
Development Agreement and, except as otherwise set forth herein, the rules, regulations and
official policies of City (including the plans, municipal codes, ordinances, resolutions and other
local laws, regulations, capital facilities fees and policies of City) in force and effect on the
Vesting Date as well as state and federal law applicable to the Project (collectively, "Applicable
Law").
Section 4.01.2. ApMovals as Applicable Law. Applicable Law shall include,
without limitation, Approvals as they may be issued from time to time consistently with this
Agreement.
Section 4.02. Application of Other City Laws.
Section 4.02.1. No Conflicting City Laws.
(a) City may apply to the Project and the Property any rule, regulation or official
policy of City (including any plan, municipal code, ordinance, resolution or other
local law, regulation, capital facility fee or policy of City) (each a "City Law")
that does not conflict with Applicable Law or this Agreement. City shall not,
however, without the written consent of Developer apply to the Project or the
Property (whether by initiative, referendum, imposition of mitigation measures
under CEQA or otherwise) any City Law that is in conflict with Applicable Law
or this Agreement.
(b) Any changes by the City to the General Plan or any Specific Plan, Zoning
Ordinance, or other rules, regulations, ordinances, or policies of the City (whether
adopted by ordinance, initiative, referendum, resolution, policy, order, or other
means) (collectively "Future Rules") that are not in conflict with the Vested
Elements shall apply to the Project. For purposes of this Section, "in conflict"
means Future Rules would (i) alter the Vested Elements, or (ii) significantly
frustrate the intent or purpose of the Vested Elements, or (iii) materially increase
(e.g., by an amount more than 10%) the cost of performance of, or preclude
compliance with, any provision of the Vested Elements, or (iv) significantly delay
development of the Project, or (v) limit or restrict the availability of public
utilities, services, infrastructure or facilities (for example, without limitation,
water rights, water connection or sewage capacity rights, sewer connections, etc.)
to the Project, or (vi) impose limits or controls in the rate, timing, phasing or
sequencing of development of the Project beyond those existing on the Vesting
Date, or (vii) increase or adopt new impact fees levied against the Project, except
as provided in this Development Agreement, or (viii) limit or control the location
of buildings, structures, grading, or other improvements of the Project
071928\ 9447955 9
inconsistently with or more restrictive than the Project Approvals; or (ix) apply to
the Project any Future Rule otherwise allowed by this Agreement that is not
uniformly applicable to all substantially similar development projects and project
sites in the City; (x) require the issuance of additional permits or approvals by the
City other than those required by Applicable Law; or (xi) establish, enact,
increase, or impose against the Project or Property any fees, assessments, or other
monetary obligations other than those specifically permitted by this Agreement;
(xii) impose against the Project any condition, dedication or other exaction not
specifically authorized by Applicable Law; or (xiii) limit the processing or
procuring of applications and approvals of Subsequent Approvals. To the extent
that Future Rules conflict with the Vested Elements, the Future Rules shall not
apply to the Project, except as provided in this Section.
To the maximum extent permitted by law, City shall prevent any Future Rules
from invalidating or prevailing over all or any part of this Agreement, and City
shall cooperate with Developer and shall undertake such actions as may be
necessary to ensure this Agreement remains in full force and effect. City shall not
support, adopt or enact any Future Rule, or take any other action which would
violate the express provisions or spirit and intent of this Agreement or the Project
Approvals. Developer reserves the right to challenge in court any Future Rule
that would conflict with the Vested Elements or this Agreement or reduce the
development rights provided by this Agreement.
A Future Rule that conflicts with the Vested Elements shall nonetheless apply to
the Property if, and only if: (i) consented to in writing by Developer; (ii) it is
determined by City and evidenced through findings adopted by the City Council
that the change or provision is reasonably required to prevent a condition
dangerous to the public health or safety; (iii) it is required by changes in State or
Federal law as set forth in Section 4.04 below; (iv) it consists of revisions to, or
new Uniform Codes permitted by Section 4.03; or (v) it is otherwise permitted by
this Development Agreement.
Prior to the Vesting Date, the Parties shall have prepared two sets of the Project
Approvals and Applicable Law (exclusive of state and federal law), one for City
and one for Developer. If it becomes necessary in the future to refer to any of the
Project Approvals or Applicable Law, the contents of these sets are presumed for
all purposes of this Development Agreement, absent clear clerical error or similar
mistake, to constitute the Project Approvals and Applicable Law.
(c) No City -imposed moratorium or other limitation (whether relating to the rate,
timing, or sequencing of the development or construction of all or any part of the
Project, whether imposed by ordinance, initiative, resolution, policy, order, or
otherwise, and whether enacted by the City Council, an agency of City, the
electorate, or otherwise) affecting parcel or subdivision maps (whether tentative,
vesting tentative, or final), building permits, occupancy certificates or other
entitlements to use or service (including, without limitation, water and sewer)
approved, issued, or granted within City, or portions of City, following the
071928\ 9447955 10
approval of the SLR SP, shall apply to the Project to the extent such moratorium or
other limitation is in conflict with this Development Agreement; provided,
however, the provisions of this subsection shall not affect City's compliance with
moratoria or other limitations mandated by other governmental agencies or court -
imposed moratoria or other limitations, including without limitation City action to
impose a moratorium on water or sewer service connections required by
Applicable Law. Notwithstanding anything herein to the contrary, in the event (i) the
City declares an "Extreme" or "Critical" water shortage, as described in the City's
2015 Urban Water Management Plan and as may be later codified in the City's
Municipal Code, and (ii) the Citywide average potable water use falls below 95-gpcd,
then any new water connections within the Project may be required to provide a net
positive water offset prior to issuance of a building permit.
(d) If City attempts to apply to the Project a City Law which Developer believes to
conflict with Applicable Law or this Agreement, Developer shall give City
written notice describing the legal and factual basis for Developer's position. The
Parties shall meet and confer within 30 days of City's receipt of that notice to
seek to resolve any disagreement. If no mutually acceptable solution can be
reached, either Party may take such action as may be permitted under Article 12
below.
Section 4.03. Uniform Codes and Standard S ecifications.
(a) Nothing herein shall prevent City from applying to the Project standards
contained in uniform building, construction, fire or other uniform codes, as the
same may be adopted or amended from time to time by City, provided:
(1) That the provisions of any such uniform code shall apply to the Project
only to the extent that such code is in effect on a City-wide basis; and
(2) With respect to those portions of any such uniform code that have been
adopted by City without amendment, that the provisions of any such
uniform code shall be interpreted and applied consistently with the
generally prevailing interpretation and application of such code in
California.
(b) Notwithstanding anything to the contrary contained herein, public improvements
shall be constructed in accordance with the public works standard specifications in
effect at the time that such improvements are constructed.
Section 4.04. State and Federal Law.
(a) Nothing herein shall prevent City from applying to the Project or the Property any
change in City Law required by: (a) state or federal law; or (b) any governmental
agency that, due to the operation of state law (and not the act of City through a
memorandum of understanding, joint exercise of powers or other agreement
entered into after the Vesting Date), has binding legal authority over City.
(b) If the application of such changes prevents or precludes performance of one or
more provisions of this Agreement, City and Developer shall take any and all
such actions as may be necessary or appropriate to ensure the provisions of this
Development Agreement are implemented to the maximum extent practicable.
071928\ 9447955 11
Section 4.05. Expansion of Development Rights. If any Future Rule or State or Federal
law expands, extends, enlarges or broadens Developer's rights to develop the Project, then, (a) if
such law is mandatory, the provisions of this Development Agreement shall be modified as may
be necessary to comply or conform with such new law, and (b) if such law is permissive, the
provisions of this Development Agreement shall be modified, upon the mutual agreement of
Developer and City, as may be necessary to comply or conform with such new law. Immediately
after enactment of any such new law, upon Developer's request, the Parties shall meet and confer
in good faith for a period not exceeding 60 days (unless such period is extended by mutual
written consent of the Parties) to prepare such modification. Developer shall have the right to
challenge City's refusal to apply any new law mandating expansion of Developer's rights under
this Development Agreement pursuant to Article 12 of this Development Agreement, and if such
challenge is successful, this Development Agreement shall be modified to comply with, or
conform to, the new law.
ARTICLE 5. FINANCIAL COMMITMENTS OF CITY AND DEVELOPER
Section 5.01. In General. This Article 5 establishes a framework for the imposition and
allocation to the extent permitted by law of fees, assessments and other revenues to be generated
and/or paid by the Project and/or the Property. The provisions of this Article 5 are intended to
prevent the Project from resulting in negative fiscal impacts on City; to facilitate the
construction, operation and maintenance of infrastructure and facilities to avoid or limit the
physical impacts of development; and to assist in the development of the Project so as to provide
long-term fiscal and other benefits to City, including increased employment opportunities, an
increased City tax base, and an enhanced quality of life for the City's residents. In consideration
of, and in reliance upon City agreeing to this Development Agreement, Developer will provide
the community benefits ("Community Benefits") described in Exhibit C attached hereto, which
are over and above those dedications, conditions and exactions required by Applicable Law other
than this Agreement.
Section 5.01.1. Basic Principles.
(a) This Article 5 is intended to implement the following conceptual framework: that
the City shall not incur costs for construction of new public facilities and
infrastructure needed to serve the Project or the Property or for the provision of
municipal services to the Project or the Property including the operation and
maintenance of facilities and infrastructure to serve the Project (collectively, the
"Project Facilities and Infrastructure"), except to the extent necessary to
address existing infrastructure deficits. Any costs of any Project Facilities and
Infrastructure beyond the Project's fair share of such Project Facilities and
Infrastructure shall be borne by other property owners and/or developers served
by such Project Facilities and Infrastructure or the City if needed to address an
existing operational deficit to be addressed by such Project Facilities and
Infrastructure. Nothing herein shall either require or prevent the City from
contributing to the cost to develop such Project Facilities and Infrastructure from
any lawfully available funds, in the City's sole discretion.
071928\ 9447955 12
(b) The cost of providing Project Facilities and Infrastructure shall be consistent with
the following principles, except as otherwise specifically permitted by this
Development Agreement:
(i) there shall be a reasonable relationship between any municipal cost
required to be borne by the Project and the type of development within the
Project to which such cost is attributable;
(ii) there shall be a reasonable relationship between the need to incur any such
municipal cost and the type of development within the Project to which
such cost is attributable;
(iii) no municipal cost required to be borne by the Project shall exceed the
estimated reasonable cost of providing the service or facility to which such
municipal cost relates; and
(iv) with respect to any fee required to finance Project Facilities and
Infrastructure, there shall be a reasonable relationship between the amount
of the fee and the cost of the Project Facilities and Infrastructure funded
by such fee.
(c) Whenever this Development Agreement requires a "reasonable relationship"
betwccn the Project and any requirement imposed thereon, there shall be required
an essential nexus between the Project and such requirement and rough
proportionality in the allocation of a municipal cost or fee both internally to
various portions of the Property and as between the Project and other projects
within the City.
(d) As used herein, the term "Project Facilities and Infrastructure" shall include
public facilities and infrastructure only to the extent they serve the Project or the
Property, and shall not include public facilities or infrastructure to the extent such
facilities or infrastructure serve projects or areas other than the Project or the
Property, unless the public facilities and infrastructure serving the Project or
Property are required to be oversized to serve other projects or areas in
accordance with the provisions of Section 6.02.2 below.
Section 5.01,2. Financing of Infrastructure; Operation and Maintenance. City
shall exhaust all reasonable efforts and diligently pursue and utilize all mechanisms which may
be appropriate to finance Project Facilities and Infrastructure and Project -related municipal
services or the operation and maintenance of the Project Facilities and Infrastructure, such as
Mello -Roos Districts, Enhanced Infrastructure Financing Districts, Landscaping and Lighting
Districts, and other Maintenance Assessment Districts, in accordance with the following
principles:
(a) The level of municipal services provided to the Project, including the level of
operation and maintenance of Project Facilities and Infrastructure, shall be equal
or superior to the level of service provided elsewhere in the City.
071928\ 9447955 13
(b) Any costs associated with such mechanism shall be borne by the financing
mechanism or the Project.
(c) The City may require as a condition of approval of a future tentative subdivision
or parcel map a financing mechanism or mechanisms to finance the operation and
maintenance of Project Facilities and Infrastructure to serve the development of
the land depicted on that map.
Section 5.02. Establishment of Financing Mechanisms.
Section 5.02.1. Procedures for Establishment. The establishment of any
mechanism to finance the construction, operation or maintenance of Project Facilities and
Infrastructure (each a "Financing Mechanism") and the issuance of any debt in connection
therewith ("Project Debt") shall be initiated upon Developer's written request to the City's
Finance Director. Such request shall include the purposes for which the Financing Mechanism is
to be established and/or the Project Debt issued, and the general terms and conditions upon
which the establishment of the Financing Mechanism and/or the issuance of the Public Debt will
be based. City's consideration of Developer's request shall be consistent with the principles set
forth in Section 5.01.2 above. If Developer requests the City to form a Mello -Roos Community
Facilities District or an Enhanced Infrastructure Financing District to finance Project Facilities
and Infrastructure, City shall use its best efforts to cause such district to be formed and bonds to
be issued and, in the case of a Mello -Roos Community Facilities District, special taxes to be
levied to the extent permitted by Applicable Law.
Section 5.02.2. Nature of City Participation. City's participation in the formation
of any Financing Mechanism, its operation thereafter, and in the issuance of any Project Debt,
shall include all of the usual and customary municipal functions associated with such tasks,
including, without limitation, the formation and administration of special districts; the issuance
of Project Debt; the monitoring and collection of fees, taxes, assessments and charges such as
utility charges; the creation and administration of enterprise funds; the enforcement of debt
obligations and other functions or duties authorized or mandated by Applicable Law.
Section 5.03. Imposition of and Increases in Fees Taxes. Assessments and Other
Charges.
Section 5.03.1. Taxes and Assessments.
(a) During the Term of this Development Agreement, Developer shall be bound to
and shall not protest, challenge or cause to be protested or challenged, any City
tax in effect on the Vesting Date.
(b) City may apply to the Project or the Property any assessment or fee not in effect
on the Vesting Date only if such assessment or fee is:
(1) An assessment or fee levied in connection with the establishment or
implementation of a Financing Mechanism in accordance with Sections
5.01 and/or 5.02 above; or
071928\ 9447955 14
(2) An assessment or fee to which Developer agrees.
(c) No assessment shall be imposed on the Project or the Property other than through
a Financing Mechanism as set forth above unless lawfully applied on a City-wide
basis.
(d) No new debt shall be issued that affects the Project or the Property without
Developer's approval, unless the approvals otherwise conform with the
requirements of Articles XIII A, C and D of the California Constitution and any
requisite voter approval is achieved, in which case the City may issue debt even if
Developer votes against the matter.
(e) Following the establishment of the initial Financing Mechanism for the Project,
nothing herein obligates Developer to approve any particular future funding
source (e.g., a CFD) or to assist the City, including financial assistance, in
establishing a new financial mechanism that requires a vote of the public without
Developer's prior written consent, in Developer's sole discretion.
Section 5.03.2. Other Fees and Chargees; Credits and Reimbursements.
(a) City shall impose against or apply to the Project or the Property only those
financial obligations (other than taxes and assessments) described in this Section
5.03.2. Except as otherwise specifically stated below, any financial obligation
imposed against or applied to the Project under this Section 5.03.2 shall be
consistent with the provisions of controlling California law, including California
Constitution article XIII A and Government Code sections 66000 to 66025.
(b) Developer has obtained vested rights pursuant to the VTTM as to the rate of all
City-wide and Project -specific development impact fees ("DIF" or "DIFs") in
effect as of the date that the VTTM was deemed complete. Developer shall pay
all such DIF fees in effect as of the date that the VTTM was deemed complete
(the "Vested DIF"). On April 17, 2018, the City adopted a comprehensive update
of the City's DIF program (the "2018 DIF Update"), which is not applicable to
the Project in light of the Project's existing vested rights under the VTTM.
Notwithstanding the application of such vested rights, Developer has agreed to
voluntarily pay additional DIFs as set forth in this Section 5.03.2(b). All DIFs
shall be calculated al the lime of issuance of a building permit for the applicable
structure and be due and payable at the time of the issuance of the certificate of
occupancy of the applicable structure or, if no certificate of occupancy is issued,
upon the final sign -off of the building permit.
(1) DIFs for Residential Units.
(i) DIFs related to Transportation, Water and Waste Waters shall
remain at the amount of the Vested DIF until the earlier of: (1) the first
I City and Developer acknowledges that the 2018 DIF Update currently uses the term "Capacity and
Connection Charges" to refer to DIFs related to Waste Water.
071928\ 9447955 15
anniversary of the date of recordation of the first Final Map, subject to the
Parties working in good faith to diligently process the approval and
recordation of the Final Map; or (2) two years after Annexation (the
"Reset Date"). Thereafter, the amount of the initial Vested DIF shall be
increased by ten percent (10%) each of the following years on the
anniversary of the Reset Date until the earlier of the following to occur:
(i) the amount of such adjusted Vested DIFs equal the amount established
under the 2018 DIF Update, as adjusted annually in accordance with the
2018 DIF Update; or (ii) ten (10) years following the Effective Date (the
"Residential DIF Vesting Termination Date"). Thereafter, DIFs shall
be adjusted in accordance with the then applicable City law.
(ii) DIFs related to Fire, Police, and General Government fees, which
do not exist under the Vested DIF but are proposed under the 2018 DIF
Update, will be applied, if adopted, at the rate established in the 2018 DIF
Update and adjusted annually in accordance with the then applicable City
law.
(iii) Developer shall pay all DIFs related to Parklands as provided in
Section 7.03.
(2) DIFs for Non -Residential Development (including without limitation
commercial, retail, hotel, and office).
(i) DIFs related to Transportation, Water and Waste Water shall
remain at the amount of the Vested DIF until the Reset Date. Thereafter,
the amount of the Vested DIFs shall be increased by ten percent (10%)
each of the following years on the anniversary of the Reset Date until the
earlier of the following to occur: (i) the amount of such adjusted Vested
DIFs equal the amount established under the 2018 DIF Update, as adjusted
annually in accordance with the 2018 DIF Update; or (ii) ten (10) years
following the Effective Date (the "Non -Residential DIF Vesting
Termination Date"). Thereafter, DIFs shall be adjusted in accordance
with the then applicable City law.
(ii) DIFs related to Fire, Police, and General Government fees, which
do not currently exist but are proposed under the 2018 DIF Update, shall
not apply for one (1) year following the Reset Date. Thereafter, such DIFs
shall be applicable to any non-residential structure within the Project area
at the rate established in the 2018 DIF Update and adjusted annually in
accordance with the then applicable City law.
(iii) The Developer shall pay any DIFs related to Parklands at the rate
established in the 2018 DIF Update and adjusted annually in accordance
with the then applicable City law.
071928\ 9447955 16
(3) Minimum Excess DIF Payment and True -U2. On the tenth anniversary of
the Effective Date (the "True Up Date"), the City shall calculate the
amount of DIFs related to Transportation, Water and Waste Water related
to all permits issued prior to the True Up Date as of the date of when such
DIFs for each permit was calculated:
(1) the amount of such DIFs that would have been paid under the
Vested DIFs (the "Vested DIFs Amount");
(2) the amount of such DIFs actually paid (the "Actual DIFs
Amount"); and
(3) the amount of such DIFs that would have been paid under the 2018
DIF Update (the "2018 DIFs Amount").
The difference between the Actual DIFs Amount and the Vested DIFs
Amount shall be referred to as the "Excess DIF Payments". Developer
has agreed that in no event shall the total amount of Excess DIF Payments
be less than the lower of (i) Two Million Seven Hundred Thousand
Dollars ($2,700,000) or (ii) the 2018 DIFs Amount (the "Minimum
Excess DIF Amount"). In the event that the Excess DIF Payments paid
prior to the True Up Date is less than the Minimum Excess DIF Amount,
the City shall deliver an invoice to Developer in the amount of such
underpayment together with supporting documentation establishing such
amount, and Developer shall remit payment of such amount to City within
thirty (30) days. Any disputes related to such calculations shall be
resolved in accordance with Section 12.07.
(c) Costs of service fees imposed by City, such as planning, engineering, building
permit, and fire plan check fees shall be in accordance with the fees in effect as of
the date the fee is due.
(d) The Developer shall pay all then -current processing fees for any subsequent
planning applications and permits as adopted by the City Council.
(e) City acknowledges that Developer may install infrastructure improvements
beyond its "fair share" obligation. In such event, the City agrees to provide
credits against any fees charged by the City for such improvements beyond the
Project's "fair share" obligation and to provide reimbursements, funded by
Development Impact Fees paid by other developers, including traffic impact fees,
or funded from other sources, but excluding sewer and water connection fees.
Nothing in this Development Agreement shall preclude City and Developer from
entering into infrastructure -item -specific reimbursement agreements for the
portion of the cost of any dedications, public facilities and/or infrastructure the
City may require the Developer to construct as conditions of the Project
Approvals to the extent that they exceed the Project's "fair share."
071928\ 9447955 17
(f) Developer shall pay City reasonable staff and consultant time and other
reasonable costs (including reasonable consultant costs) associated with:
(1) the MMRP Evaluation, and the Development Agreement Review,
(2) Developer's fair share of the establishment of any Financing Mechanism
(to the extent such costs are not recovered from the Financing
Mechanism), including any necessary election costs, and
(3) All other administrative tasks associated with City's adoption and
implementation of this Development Agreement and the SLR SP.
The parties acknowledge that Developer's fair share of the establishment of any
Financing Mechanism may be 100% if the Financing Mechanism is limited to
land owned or controlled by the Developer and used to fund public facilities and
infrastructure to the extent necessary to serve development of that land.
(g) City acknowledges that Developer has paid all required fees of the California
Department of Fish and Wildlife ("CDFW") related to posting of the Notice of
Determination under CEQA for the Project EIR as well as the fee required by the
County Clerk/Recorder. To the extent that any additional fees are due to the
County Clerk/Recorder in the future related to Subsequent Approvals, the City
may require proof of payment of such fees before issuing building permits or
accepting the filing a Final Subdivision Map.
(h) During the term of this Development Agreement, fees and charges other than
those specifically described in subsections (a) through (g) above may be imposed
against or apply to the Project or the Property only as City and Developer agree in
writing.
Section 5.04. Other Financing Commitments.
Section 5.04.1. Arrangements with Other Governmental Agencies. City and
Developer acknowledge and agree that City may from time to time enter into joint exercise of
power agreements, memoranda of understanding, or other agreements with other governmental
agencies consistent with and to further the purposes of this Development Agreement.
Section 5.04.2. Other Funding Sources.
(a) City and Developer agree to pursue actively outside sources of funding for the
construction, operation and maintenance of Project Facilities and Infrastructure
including, in particular, facilities and infrastructure which serve the region. City
shall not unreasonably object to any request from Developer to apply for county,
state or federal funds that may be used to support the development of Project
Facilities and Infrastructure. For purposes of this Section 5.04.2, it is reasonable
for City to object to a request from Developer to apply for county, state or federal
funds for the Project if there are established funding priorities from administering
071928\ 9447955 18
agencies (i.e. San Luis Obispo Council of Governments) which are in conflict
with the Project Facilities and Infrastructure.
(b) Any obligation of Developer under this Development Agreement to fund or
otherwise bear the costs of the construction of improvements, the provision of
services or any other item, whether or not the sole obligation of Developer, may
be satisfied through the use of funds provided by, from or through any third party
(including other non -City, governmental) sources.
Section 5.04.3. Reimbursement.
(a) City shall reimburse the costs associated with Developer's funding or construction
of that portion of any oversized or accelerated improvement or facility that is
attributable to a project or area other than the Project or Property. Costs eligible
for reimbursement shall include hard costs, such as the reasonable direct costs of
construction and materials; and soft costs, such as bond, architecture, engineering,
and professional fees, the reasonableness of which shall be determined by the
City, in its discretion. Such reimbursement shall be based on a fair share
allocation of costs determined by calculating the pro rata share of the capacity in
such oversized or accelerated improvements that is attributable to other projects
or properties based on the percentages set forth in the Financing Plan in
Exhibit C. On- and off-site, over -sized improvements are depicted in Exhibit C;
provided, however, that the City and Developer acknowledge that the amounts
specified in Exhibit C for each improvement are estimates only and that total
reimbursable costs shall be based on Developer's actual costs as set forth in this
Section 5.04.3. Reimbursement shall be provided timely, in accordance with
Applicable Law, following City's collection of funds from the following sources:
(1) Development Impact Fees paid by the Project for the improvements
specified with respect to the SLR SP impact fees or the City-wide
transportation impact fees, as applicable;
(2) Development Impact Fees paid to the City for other development in the
SLR SP Area that are not committed to repayment obligations under other
Reimbursement Agreements;
(3) Develupu►eut Impact Fees paid to City from developers who contribute, or
have contributed, to the impact associated with the improvements installed
by Developer;
(4) Capital Facilities taxes or assessments in a Community Facilities District;
and
(5) Property tax increment revenue in an Enhanced Infrastructure Financing
District.
(b) Backbone infrastructure that is larger than the minimum size or standard as
identified in the Standard Specifications and Engineering Design Standards may
071928\ 9447955 19
be considered to be oversized and shall be subject to review and approval by the
City prior to being included in a separate reimbursement agreement. The
Developer may be reimbursed by other private development(s) for that
developments' Fair Share of the cost to construct sewer and water infrastructure
per San Luis Obispo Municipal Code sections 16.20.100 and 16.20.110. The
Developer will provide a study identifying the benefit area for each such
reimbursement agreement, conforming to San Luis Obispo Municipal Code
section 16.20.110, for review and approval of the City Utilities Department, and
may provide for reimbursement for segments of infrastructure which meet a
utility's minimum size standard if the study shows those minimally sized facilities
to benefit identified additional developments.
(c) To the extent permitted by law, City shall impose as a condition of approval on
any project that benefits from the oversized or accelerated improvements or
facilities described in this Section 5.04.3(a) such project's proportionate fair share
of the cost of the improvements eligible for reimbursement as set forth in
Exhibit C.
(d) Under no circumstances shall the City be obligated to fund reimbursement from
its General Fund or other discretionary resources or from funds which may not be
lawfully used for that purpose or to advance funds to Developer as reimbursement
before those funds are collected from others.
(e) Failure by the City to collect funds, or error by the City in calculating the amount
to collect, from the sources identified in subsection 5.04.3(a) above shall not
subject the City to any liability, obligation, or debt to Developer. Notwithstanding
the foregoing, the City shall reimburse Developer pursuant to the terms of this
Development Agreement with respect to all such funds actually collected by the
City. Failure by the City to reimburse Developer after the City collects such
funds shall entitle Developer to exercise its remedies under Article 12. For any
improvement subject to reimbursement under this section, Developer shall
provide City with evidence of the actual hard and soft costs of each of the
improvements in the form of receipted bills, canceled checks, and contracts.
Approval of reimbursement may occur in phases as projects are accepted by City.
Regardless of Developer's claimed costs incurred in constructing the reimbursable
improvements, City has the authority, through its Director or designee, in the
exercise of his or her reasonable discretion, to determine the amount subject to
possible reimbursement for each improvement.
(f) In the event any owner or developer pays all or a portion of the fees or
assessments identified in subsection 5.04.3(a)(1)—(5) above under protest, the City
need not make reimbursements under this Development Agreement until the
limitation period for suit for a refund of such funds paid under protest has passed,
and no court action ("Action") has been instituted. If an Action is instituted
seeking refund of funds paid under protest, or to prevent the City from collecting
such funds, or challenging any provision of this Development Agreement, the
City shall not pay over such funds to Developer until the Action has been
071928\ 9447955 20
concluded and the authority of the City to collect such funds and reimburse the
Developer has been sustained. The City shall promptly notify Developer in
writing of any Action. The City shall reasonably support Developer's efforts to
participate as a party to an Action, to defend an Action or settle an Action.
Furthermore, the City may tender defense of an Action to Developer. If, within 15
days of the City's mailing a notice in compliance with Section 15.08 below
requesting that Developer defend the Action, should Developer thereafter fail to
undertake the defense of the Action at Developer's sole cost and expense, the City
may stipulate to return of the funds collected under protest, to cease collecting
such funds, or enter into any other settlement of the Action acceptable to the City,
and Developer shall lose any right to reimbursement under this Development
Agreement of the amount contested in the Action. Developer shall further
reimburse the City for its costs and attorneys' fees incurred in defense of the
Action, including reasonable payment for legal services performed by the City
Attorney or City's outside counsel, and for any liability the City incurred in the
Action. In addition, if the City fails to impose a requirement upon development
projects to pay their respective prorated share of the improvements specified in
Exhibit "C" or fails to collect such funds, Developer may exercise all of its legal
rights to attempt to collect such funds from the owners or developers of the
benefitted properties, which legal rights shall not be interpreted to include an
action against the City. If Developer attempts to collect such funds from such
owners or developers, the City shall assign to Developer all of its rights to collect
such funds under this Development Agreement.
(g) The City reserves the right to offset any funds it collects from the sources
identified in this Section 5.04.3 against any unpaid fees, debts or obligations of
Developer to the City. The City shall provide Developer with notice, in
accordance with Section 15.08 and Article 12, of its intent to offset any collected
funds against unpaid fees, debts or obligations described in the notice, and
provide Developer with a reasonable opportunity to pay such fees, debts, or
obligations.
(h) Developer's right to reimbursement under this Section 5.04.3 shall survive
termination of this Development Agreement until the earlier of (i) Developer
having been fully reimbursed or (ii) 25 years following the Effective Date. Such
obligations shall survive the termination of this Development Agreement.
Section 5.04.4. Other Shortfalls of Com. Developer understands and
acknowledges that in the event that the residential portions of the Project are developed in
advance of the commercial portions of the Project, the costs to City of serving the residential
portions of the Project may exceed the fees, charges and revenues generated by or as a result of
the residential portions of the Project. Accordingly, in order to mitigate potential shortfalls to the
City's General Fund resulting from such event, the Parties agree to implement an early
residential development fee (the "Early Residential Development Fee") to cover the costs of
such municipal services. Each year in conjunction with the annual review of this Development
Agreement, Developer shall pay to the City an Early Residential Development Fee in the amount
of two hundred sixty-two dollars ($262.00) per residential unit for which the City has previously
071928\ 9447955 21
approved the final sign -off of the building permit for such residential unit (other than for a Model
Home, as contemplated by Section 7.13.07, below). Upon the issuance of the first certificate of
occupancy for any commercial use in the Project, the obligation to pay the Early Residential
Development Fee shall terminate and shall thereafter no longer be collected by or paid to the
City in conjunction with the annual review of this Development Agreement. Prior to the first
anniversary of the Effective Date, Developer shall post a bond in the amount of Three Hundred
Thousand Dollars ($300,000.00) in favor of the City to secure Developer's performance of its
obligations under this Section 5.04.4, which such bond shall be maintained for one (1) year after
issuance of the first certificate of occupancy for any commercial use in the Project.
Adjustments to. Early Residential Development Fee - Commencing upon the fifth
anniversary of the Reset Date, and upon the day that immediately follows the passage of each sixty
month period thereafter (hereinafter collectively the "Adjustment Date(s)"), the Early Residential
Development Fee payable hereunder shall be adjusted in direct relation to the same ratio of the
percentage change, if any, in the Consumers Price Index for all Urban Consumers (CPI -U) All
Items, 1978 Revised, (1982-84=100) Los Angeles, as issued by the U. S. Department of Labor,
Bureau of Labor Statistics, for the month immediately preceding the Adjustment Date (the
"adjustment date index"), over said index for the month of the date of the annexation of the
Property (the "beginning index"). The parties acknowledge that the indexes herein referenced are
not always published in a fashion which allows for adjustment exactly upon each annual adjustment
date. If the described adjustment index shall no longer be published, another index generally
recognized as authoritative shall be substituted by agreement of the parties. If they are unable to
agree within thirty (30) days after demand by either party, a substituted index shall, upon
application by either party, be selected by the Chief Officer of the Los Angeles Regional Office of
the Bureau of Labor Statistics, its successor, or another entity providing similar services as mutually
agreed by the parties. If the index is changed so that the adjustment date index differs from the
beginning index, the index shall be converted in accordance with the conversion factor published by
the United States Department of Labor, Bureau of Labor Statistics.
Section 5.04.5. Subsidy -for Third Party City Costs Related to Prado Ove ass. In
the event that (i) the first Final Map for the Project has been approved for recordation by the City
Council prior to September 1, 2018, and (ii) as of July 1, 2019, the Developer has not paid the
Mitigation Measure fair share fee (the "Prado Road Interchange Mitigation Fee") related to
the construction of the Prado Overpass and related facilities (the "Prado Road Interchange"),
then Developer shall pre -pay up to One Million Five Hundred Thousand Dollars ($1,500,000) of
the Prado Road Interchange Mitigation Fee to reimburse City for documented third -party costs
related to the planning, entitlement, and/or construction of the Prado Road Interchange.
Section 5.04.6. Timinja of Pa ment for Balance of Prado Road Interchange
Mitigation Fee. The balance of the Prado Road Interchange Mitigation Fee shall be paid prior to
the issuance of occupancy permits when any combination of land uses with permitted occupancy
within the San Luis Ranch Specific Plan Area generate a cumulative total of 233 "PM Peak Hour
Trips" or more based upon Table 25 of the San Luis Ranch Specific Plan Multimodal
Transportation Impact Study, as summarized in the table below (the "Initial Trigger Date").
071928\ 9447955 22
For example, if occupancy permits have been issued for 200 Single Family
Residential Units and 77 Multi -Family Residential Units the total PM peak hour trip generation
would be at 232.97 and no further occupancy permits for any land uses in the SLR SP Area
would be issued until the balance of the Prado Road Interchange Mitigation Fee is paid.
As an alternative to paying the Prado Road Mitigation Fee upon the Initial Trigger
Date, as specified above, prior to the PS&E Trigger Date, defined below, Developer may deposit
an irrevocable letter of credit ("Letter of Credit") with the City, in a form subject to the
reasonable approval of the City Attorney, for the then current estimate of the balance of the
Prado Road Interchange Mitigation Fee. Upon sixty percent (60%) design submittal of
CalTrans's Plans, Specifications and Estimate for the Prado Road Interchange (the "PS&E
Trigger Date"), the remaining balance of the Prado Road Interchange Mitigation Fee shall be
fully due and payable. At any time prior to the PS&E Trigger Date, the City may request, and
Developer shall pay, the amount reasonably estimated by the City as necessary to cover any
anticipated third -party pre -construction costs for the Prado Road Interchange. In the event
Developer fails to pay such costs within thirty (30) days of City's written demand, City may call
the Letter of Credit due and payable. Following Developer's payment upon City's demand,
Developer may deposit a revised Letter of Credit with the City, with a principal balance reduced
in the amount of such payment.
ARTICLE 6. COMMITMENTS RELATED TO PUBLIC IMPROVEMENTS
Section 6.01. Backbone Infrastructure Improvement Pin. The SLR SP Backbone
Infrastructure ("Backbone Infrastructure") is planned to be designed and constructed in
accordance with the SLR SP, EIR and SEIR. The Parties acknowledge that further analysis may
result in a more cost-effective approach to the provision of the planned infrastructure to
adequately serve development of the SLR SP Area, and that Figures [_] of the SLR SP may be
modified in accordance with Section 9.03 without the need for amendment of this Development
Agreement.
Section 6.01.1. Specific Plan Improvements. The improvements described in the
SLR SP and Resolution No. 10822 (2017 Series) certifying the EIR, constitute the SLR SP
"Improvement Plan."
071928\ 9447955 23
PM Peak Hour PM PH Vehicle Trip
Land Use Sue
Vehicle Trips Rate
Single -[`—An ' Residential 300 units
279 0.93 veil trips/uuit
Multi,-Fanuly Residential 281? emits
171 0.61 veh trips/unit
General Retail 150,0(9) 5. f.
786 5.24 veli trips/ 1,000 s.f.
General Office 100.1Ar+1 91
190 1.90 veh tops/1,000 91
Ilotel 2(x1 rooms
_ 120 0.60 veli trips/room
I) Developmrnt of 270 single lanO. tcsidential lots results
in 233 PM lxak hour velucle trips, at which point
the Prado Raid interchange intptoventents arc tuggeted.11us table can be nsctl to calculate taps resulting
lion, other eombittations of land uses.
2) Veluctrlar trip rate from Table 23 in TIS.
Solace; San 1.4us Ranch Stxcitir Plau Nitxltinwdal 11S Table 25, 2016; Ca. I[:, 2018.
For example, if occupancy permits have been issued for 200 Single Family
Residential Units and 77 Multi -Family Residential Units the total PM peak hour trip generation
would be at 232.97 and no further occupancy permits for any land uses in the SLR SP Area
would be issued until the balance of the Prado Road Interchange Mitigation Fee is paid.
As an alternative to paying the Prado Road Mitigation Fee upon the Initial Trigger
Date, as specified above, prior to the PS&E Trigger Date, defined below, Developer may deposit
an irrevocable letter of credit ("Letter of Credit") with the City, in a form subject to the
reasonable approval of the City Attorney, for the then current estimate of the balance of the
Prado Road Interchange Mitigation Fee. Upon sixty percent (60%) design submittal of
CalTrans's Plans, Specifications and Estimate for the Prado Road Interchange (the "PS&E
Trigger Date"), the remaining balance of the Prado Road Interchange Mitigation Fee shall be
fully due and payable. At any time prior to the PS&E Trigger Date, the City may request, and
Developer shall pay, the amount reasonably estimated by the City as necessary to cover any
anticipated third -party pre -construction costs for the Prado Road Interchange. In the event
Developer fails to pay such costs within thirty (30) days of City's written demand, City may call
the Letter of Credit due and payable. Following Developer's payment upon City's demand,
Developer may deposit a revised Letter of Credit with the City, with a principal balance reduced
in the amount of such payment.
ARTICLE 6. COMMITMENTS RELATED TO PUBLIC IMPROVEMENTS
Section 6.01. Backbone Infrastructure Improvement Pin. The SLR SP Backbone
Infrastructure ("Backbone Infrastructure") is planned to be designed and constructed in
accordance with the SLR SP, EIR and SEIR. The Parties acknowledge that further analysis may
result in a more cost-effective approach to the provision of the planned infrastructure to
adequately serve development of the SLR SP Area, and that Figures [_] of the SLR SP may be
modified in accordance with Section 9.03 without the need for amendment of this Development
Agreement.
Section 6.01.1. Specific Plan Improvements. The improvements described in the
SLR SP and Resolution No. 10822 (2017 Series) certifying the EIR, constitute the SLR SP
"Improvement Plan."
071928\ 9447955 23
Section 6.01.2. The Improvement Plan may be amended by agreement of the
Parties to take advantage of new technologies, to respond to changes in the underlying land use
assumptions upon which the plan is based, or for such other reasons as the Parties may agree,
consistent with the Project EIR, SEIR or a subsequent environmental review, if required.
Section 6.02. Construction and Dedication of Project Facilities and Infrastructure.
Section 6.02.1. Construction and Funding by Developer. The City may, in any
manner consistent with the terms and provisions of this Development Agreement, require
Developer to construct or to fund the construction of any Project Facilities and Infrastructure
when needed to satisfy the Backbone Infrastructure Improvements Plan, the EIR, and SEIR.
Section 6.02.2. Dversizin of Facilities and Infrastructure.
(a) In addition to requiring Developer to construct or to fund the construction of
Project Facilities and Infrastructure, City may require any Project Facilities and
Infrastructure constructed or funded by Developer under Section 6.02.1 above to
be oversized to serve projects or areas other than the Project or the Property,
provided that:
(1) City shall cooperate with Developer and shall exhaust all reasonable
efforts and diligently pursue all necessary or appropriate actions related to
the establishment of a Financing Mechanism to provide such additional
funding;
(2) City shall grant a fee credit, enter into private reimbursement agreements,
or reimburse the costs associated with Developer's funding or construction
of that portion of any such oversized improvements that is attributable to
projects or areas other than the Project or the Property, pursuant to
subsection 5.03.2(e) above.
(b) If the incremental construction of facilities required by the SLR SP would involve
significant inefficiencies for a component of the Project that the City reasonably
finds unacceptable, it may require Developer to construct or provide advance
funding for the construction of oversized improvements required by the SLR SP.
For example, if the Project generates a need for an 18 -inch sanitary sewer line, but
other projects reasonably may be expected to use that sewer line and thereby
increase the required capacity of such line to 24 inches, City may require
Developer to construct or fund the construction of a 24 -inch sewer line (but shall
provide reimbursement as described in subsection 5.04.2(b) above and as
otherwise required under the Subdivision Map Act).
Section 6.02.3. Dedications.
(a) To the extent rights-of-way or other interests in real property owned by Developer
within the Property are needed for the construction, operation or maintenance of
Project Facilities and Infrastructure, Developer shall dedicate or otherwise convey
such rights-of-way or other interests in real property to City by the earlier of
071928\ 9447955 24
(i) when such rights are actually needed for Project Facilities and Infrastructure or
(ii) before approval of a final subdivision map for the Project that includes such
rights-of-way or other interests in real property. Such rights-of-way or interests
shall be dedicated or otherwise conveyed in the widths set forth in the SLR SP or
as depicted on the tentative map.
(b) Any public improvements constructed by Developer and conveyed to City, and
any rights-of-way or other real property interests conveyed to City, shall be
dedicated or otherwise conveyed: (i) free and clear of any liens unacceptable to
the City and (ii) except as otherwise agreed to by City, in a condition free of any
toxic materials; provided, however, that, City shall be responsible for the
condition of any real property acquired by eminent domain. Nothing herein shall
affect or prevent City's right to pursue claims against third parties under
applicable law.
Section 6.03. Cooperation as to Project Facilities and Infrastructure.
Section 6.03.1. In General. City shall cooperate with Developer and take all
actions necessary or appropriate to facilitate the development of Project Facilities and
Infrastructure. Such cooperation shall include, without limitation: (i) the diligent, timely and
lawful exercise by City of its power of eminent domain to acquire any rights-of-way or other real
property interests City and Developer agree are needed for Project Facilities and Infrastructure
(provided that the costs of any such acquisition shall be borne by the Project); and (ii) City's
diligent efforts to work with other landowners and governmental and quasi -governmental
agencies to allow timely approval and construction of such Project Facilities and Infrastructure.
(a) Developer shall exhaust all reasonable efforts and diligently pursue acquisition of
all necessary easements and/or rights of way not currently owned or controlled by
City or Developer which are required to construct the Off -Site Improvements. For
purposes of this Section 6.03.1, the term "reasonable efforts" shall mean that the
Developer has made a commercially reasonable written offer to purchase the
property interest at fair market value, in accordance with an appraisal conducted
by an MAI appraiser.
(b) If after exercising reasonable efforts Developer is unable to acquire the necessary
easements and/or rights of way, City, upon written request of Developer, shall, in
City's sole discretion: (1) require Developer to construct function.9lly equivalent
alternative improvements to those previously approved, provided that such
alternative improvements are equally or more effective in addressing the impact;
(2) pursue acquisition of the real property interests by means of eminent domain;
or (3) if the City declines to exercise powers of eminent domain, abandon or defer
the Obligation in accordance with Section 66462.5 of the Subdivision Map Act.
City and Developer acknowledge that eminent domain is a discretionary process
and that City cannot commit to its use unless and until all appropriate
notifications, hearings and proceedings have been undertaken. If City chooses to
pursue acquisition of the real property interests by means of eminent domain, City
shall take all reasonable steps necessary towards that endeavor, including
071928\ 9447955 25
undertaking appraisals, noticing property owners, noticing and holding required
public hearings and meetings, and following any other procedures required for
pre judgment possession and Developer shall pay all costs reasonably incurred by
City related to, arising from, or associated with such acquisition or condemnation
proceedings, including but not limited to, attorneys' fees, expert witness fees, and
jury awards of any kind. In addition, Developer shall indemnify, defend and hold
City harmless from and against any and all claims, liabilities or causes of action
of any kind associated with City's acquisition of such real property interests,
excluding therefrom any claims, liabilities or causes of action arising from City's
gross negligence or willful misconduct.
(c) City shall not unreasonably delay the recordation of the Final Map or the issuance
of any grading and building permits for private improvements on the Property
during the pendency of any activities under this Section except as necessary to
protect public health and safety. In addition, and not by way of limitation, City
shall not delay the processing, approval, or recordation of any Final Map for the
Project due to Developer's inability to obtain any off-site land acquisitions or
easements; provided, however, that (i) City shall not require any engineering
other than conceptual plans until the areas of such acquisitions or easements are
obtained or the improvements are waived or alternative improvements are
identified, as described above, and (ii) Developer and City shall include such land
acquisitions or easements within the scope of any subdivision improvement
agreement and related bonds. In order for the Developer to satisfy financing
requirements and to complete approval and recordation of the Final Map while
Developer is attempting to acquire any remaining off-site acquisitions, City shall
allow feasible interim alternatives that do not require offsite acquisitions in order
for the Project to function, including but not limited to a controlled intersection in
lieu of a roundabout at the intersection of Dalidio Drive and Froom Ranch Way,
in accordance with Applicable Law, including CEQA, and subject to approval by
the City Manager, which shall not be unreasonably withheld, delayed or
conditioned.
(d) Upon acquisition of the necessary interest in land, or upon obtaining right of
entry, either by agreement or court order, Developer shall commence and
complete the public improvements. This requirement shall be included, and, if
necessary, detailed, in any subdivision improvement agreement entered between
the Developer and the City pursuant to Government Code section 66462.
(e) If and to the extent this Section 6.03.1 demands more of Developer than does
Section 66462.5 of the Subdivision Map Act, this Section shall apply in addition
to the Developer's obligations under that statute.
(f) City acknowledges that the execution and recordation of this Development
Agreement satisfies the requirements of Condition of Approval 36 related to
recordation of an agreement between City and Developer.
071928\ 9447955 26
(g) City acknowledges that Condition of Approval 70, which states, "Easements and
encroachment permits from Caltrans shall be secured to cross the highway, and
shall include the installation of a new sewer casing per requirements of the
encroachment permit" may be satisfied following recordation of the Final Map,
but prior to occupancy of any structure in the Project.
(h) City acknowledges that Condition of Approval 95, which states, "The project plan
and reports shall show compliance with the City's Floodplain Management
Regulations and FEMA requirements. This project is located within an unstudied
A zone and adjacent to an AE zone. The required conditional Letter of Map
Revisions Based on Fill (CLOMR-F) shall be processed and approved by FEMA
prior to commencement of construction or placement of fill within the Special
Flood Hazard Area (SFHA). The final LOMR-F shall be submitted to FEMA,
along with the required Community Acknowledgement form, within 6 months of
the completion of the grading. The LOMR-F shall be approved by FEMA prior to
acceptance of the final building pad and development grades by the City of San
Luis Obispo and prior to building permit issuance" may be satisfied by posting a
bond for grading restoration costs, in an amount subject to the approval of the
City Engineer and in a form subject to the approval of the City Attorney, which
will allow limited improvements within the current boundaries of the floodplain
area to be constructed, as follows: (i) site grading and backbone infrastructure
improvements may be undertaken and completed that are consistent with a
submitted CLOMR-F covering the area of the proposed grading; (ii) following
approval of such CLOMR-F by FEMA, the grading shall be confirmed as
consistent with the approved CLOMR-F and, if necessary, any remedial work
shall be undertaken; (iii) following certification that grading is consistent with an
approved CLOMR-F, City and Developer shall work in good faith with one
another towards allowing Developer to proceed with additional improvements
within the current boundaries of the floodplain area taking into consideration:
(i) the status of the LOMR-F and any feedback received from FEMA; and
(ii) compliance with the City's Floodplain Management Regulations. The Parties
acknowledge that there may be more than one CLOMR-F or LOMR-F for the
Project Site.
Section 6.03.2. Temporary Access Licenses. City agrees to grant to Developer a
temporary non-exclusive access license in a form and in a location subject to the approval of the
City Attorney, the City's Natural Resources Director, and Developer, across the property
commonly known as the "City Farm Property" (APNs: 053-152-006, 053-152-007, and
053-152-008) to allow reasonable access for Project construction and for agricultural operations
on the Property. Said license shall be subject to the consent and approval of any current lessee
on said property, whose leases shall also be subordinated to the related easement to be granted by
City to Developer. In return, Developer shall grant the City a temporary non-exclusive access
license in a mutually agreeable location to serve the agricultural operations of the City Farm
Property. Prior to Developer's use of the temporary access license for construction purposes,
Developer shall, at its sole cost and expense, design and install an all-weather road along the
entirety of the access roadway area. During the term of this temporary non-exclusive access
license, Developer shall, at its sole cost and expense, maintain the roadway and the all-weather
071928\ 9447955 27
surface in good and passable condition. This temporary non-exclusive access license shall
automatically terminate and be replaced by the below referenced Permanent Access Easements
upon completion of Project construction.
Section 6.03.3. Permanent Access Easements. City agrees to grant to Developer
a permanent non-exclusive access easement in a form and in a location subject to the approval of
the City Attorney, the City's Natural Resources Director, and Developer across the City Farm
Property to allow access for agricultural operations on the Property. Said easement shall be
subject to the consent and approval of any current lessee on the property, whose leases shall be
subordinated to the easements to be granted by City to Developer. In return, Developer shall
grant City a permanent non-exclusive access easement in a mutually agreeable location to serve
the agricultural operations of the City Farm Property. City and Developer shall have mutual
responsibility for maintenance of the access easements and the all-weather road which shall be
allocated as follows: 25% City and 75% Developer.
Section 6.03.04. Cooperation Related to Off -Site Improvements. To the extent
that Developer is required to construct any Off -Site Improvements that require work on land
outside of the control of Developer, including without limitation related to compliance with
Conditions of Approval 9, 12, and 12.a, Developer may apply for approval from the City Public
Works Director to extend the timeline for completion of such improvements upon posting of
appropriate security, such as bonding, for the completion of such improvements, which approval
shall not be unreasonably withheld.
ARTICLE 7. OTHER COMMITMENTS OF CITY AND DEVELOPER
Section 7.01. Mutual Coo eration for Other Governmental Permits. City and Developer,
as appropriate, shall each be responsible to apply to the respective governmental or quasi -
governmental agencies for necessary permits and approvals for development and use of the
Property (e.g., agencies having jurisdiction over water supply; wastewater treatment, reuse and
disposal; access to the Property; wetlands -related and other biological issues). City and
Developer shall each take any and all actions as may be necessary or appropriate to process
successfully such permits and approvals, provided such permits and approvals are consistent
with the SLR SP and agreed by the City and Developer to be reasonably necessary or desirable
for the construction, maintenance or operation of the Project.
Section 7.02. Timing of Development.
Section 7.02.1. Timing Requirements.
(a) Developer shall be obligated to comply with the terms and conditions of the
Project Approvals, the SLR SP, and this Development Agreement when specified
in each. The Parties acknowledge that the rate at which the Project will develop
depends upon numerous factors and market conditions that are not entirely within
Developer's or the City's control. The Parties wish to avoid the result of Pardee
Construction Co. v. City of Camarillo, 37 Cal.3d 465 (1984), where the failure of
the parties there to expressly provide for the timing of development resulted in the
court's determination that a later -adopted initiative restricting the timing of
071928\ 9447955 28
development prevailed over the parties' agreement. Accordingly, the Parties
acknowledge that Developer shall have the right to develop the Project at such
time Developer deems appropriate in the exercise of its subjective business
judgment except as provided in subsections (b) and (c), below.
(b) Developer may proceed with the development of any portion of the Project
consistent with the Project Approvals, or make any financial commitment
associated with any such development when, in Developer's sole and absolute
discretion, Developer determines it is in Developer's best financial or other
interest to do so. The foregoing sentence shall not, however, limit any obligation
of Developer under this Development Agreement with respect to any
development activities that Developer chooses to undertake hereunder, nor shall
anything herein be interpreted to relieve Developer from compliance with any
condition of approval, environmental mitigation compliance measure or other
applicable regulatory requirement under Applicable Law.
(c) In accordance with Section 17.88.020.13 of the City's Municipal Code, the City
has found that the SLR SP and this Development Agreement are consistent with
the policies and intent of the City's Growth Management Ordinance. Section
7.7.1 of the SLR SP relating to timing of improvements is hereby incorporated by
reference.
Section 7.03. Dedication of Park Lands. Developer shall dedicate land to satisfy its
obligations under the Quimby Act, the General Plan Park Element, and Applicable Law. At a
minimum, Developer shall dedicate 2.8 acres of land within the Property for use as public park
land. Developer shall construct all park and recreation improvements as required by the
conditions of approval subject to the City's Parks and Recreation Commission's review and
approval. Ongoing maintenance and operation of the park facilities shall be funded by the Project
residents pursuant to one or more of the Funding Mechanisms described in Section 5.02 above
and/or assessments under homeowner CC&Rs, and shall not be payable from the City's General
Fund or other community -wide resources. Should the land the Developer offers for dedication be
insufficient to meet Developer's obligation under Applicable Law, Developer shall dedicate
sufficient additional land off-site or pay an lieu fee in the maximum amount of Three Million
One Hundred Seventy Five Thousand Twenty Six Dollars ($3,175,026) to meet its requirement
after applicable credits for additional park lands provided. Any in lieu fee assessments shall be
based upon the amount of the fees in place as of the date of the approval of this Development
Agreement. City shall prioritize any in lieu fees paid by Developer for improvements at Laguna
Lake Park, subject to City's review of its funding constraints and obligations.
Section 7.04. Dedication of Open Space/Agricultural Lands. To compensate for the loss
of onsite agricultural lands and to meet the open space objectives of the General Plan, Developer
shall dedicate, in a form subject to the approval of the City Attorney and the City's Natural
Resources Director, a conservation easement or series of conservation easements in accordance
with the SLR SP, the Project Approvals, and subsections (a) through (h) below.
(a) Land designated in the Specific Plan as "Open Space" shall be subject to an
"Open Space Easement".
071928\ 9447955 29
(b) Land designated as "Agriculture Heritage Facilities and Learning Center" shall be
subject to a "Historic Preservation and Agricultural Easement".
(c) Land designated as Agriculture shall be restricted by an "Agricultural Easement".
(d) Developer shall mitigate a portion of the agricultural/open space obligations for
the Project by obtaining a perpetual Agricultural Easement off-site: (i) on
approximately 30 acres within a larger parcel of land identified as Assessor Parcel
No. 067-181-010; or (ii) on comparable land subject to the approval of the City's
Natural Resources Manager.
(e) Developer shall offer for dedication the above -referenced easements in
accordance with the requirements of the Project Approvals.
(f) Developer may use land subject to the above -referenced easements in accordance
with the restrictions of those easements, the Project Approvals, and Applicable
Law.
(g) Prior to issuance of any grading permits for the Property, Developer shall provide
that for every one (1) acre of on-site Important Farmland (Prime Farmland,
Farmland of Statewide Importance, and Unique Farmland) that is permanently
converted to non-agricultural use as a result of the Project's development, that
one (1) acre of land of comparable agricultural productivity shall be preserved
through a perpetual Agriculture Easement.
(h) Developer shall comply with the Operational Guidelines, terms and conditions for
the Agricultural Land as set forth in Exhibit E, which are incorporated herein by
this reference.
Section 7.05. Affordable Housing. In furtherance of the City's inclusionary housing
goals, Developer shall provide affordable housing within the Project as set forth in Exhibit F.
The Developer shall integrate affordable units into neighborhoods as required for the on-site
residential development. Developer may provide the affordable units required for the commercial
portion of the development on-site, off-site or through the payment of in -lieu fees.
Section 7.06. Energy.
(a) Developer shall provide for accelerated compliance with the City's Energy
Conservation Goals and its Climate Action Plan by implementing energy
conservation measures significantly above City standards and norms by providing
for solar PV energy generation for 100 percent of onsite electrical demand at
build -out. The Project shall also include energy efficiency standards in excess of
the Building Code in effect in the City on the Vesting Date and implement the
feasible strategies set forth in Section 5.4.2 of the SLR SP.
(b) Developer shall provide sustainability features including: (i) housing that meets
the 2019 net zero building and energy codes or, if the 2019 building and energy
codes are not yet adopted upon building permit application, equivalent energy
071928\ 9447955 30
features shall be provided to the approval of the Community Development
Director, (ii) implementing any future City-wide policy regarding zero carbon
emissions, (iii) solar electric panels, (iv) integrated power outlets for electric
vehicles and electric bicycles, (v) building design that maximizes grey water
usage, and (vi) work -at-home options with high-speed fiber-optic connectivity.
Section 7.07. Water. Developer shall provide for accelerated compliance with the
Climate Action Plan by implementing special water conservation measures to reduce the use of
potable water by Project households to 35 percent below the City-wide average as of July 18,
2017 (95-gpcd).
(a) Developer shall install water improvements necessary to serve the Project as
shown in Figure 7.1 of the SLR SP.
(b) Notwithstanding anything herein to the contrary, Developer shall comply with the
California Water Code and the regulations imposed by the City in its capacity as
the Groundwater Sustainability Agency pursuant to the Sustainable Groundwater
Management Act ("SGMA") in all matters related to the Project. Developer
acknowledges that SGMA regulations will be implemented after the Vesting Date
of this Development Agreement and likely throughout its term and nevertheless
agrees to comply with them as to the Project.
(c) Developer reserves all groundwater or other water rights with respect to the
Property and shall be entitled to irrigate agricultural or open space land with
ground or well water, to the extent that such reservation and action does not
violate Applicable Law and so long as such water meets or exceeds all applicable
water quality standards.
(d) Any and all tentative subdivision maps approved for the Project shall comply with
Government Code Section 66473.7 if, and to the extent, required by Government
Code Section 65867.5(c).
Section 7.08. Wastewater. Developer shall provide sufficient wastewater capacity in the
force main between Laguna Lift Station and the plant's headworks structure to convey the
wastewater generated by the Project as shown in Figure 7.3 of the SLR SP and as documented in
the Project's sewer design narratives. The City has approved a sewer design exception for the
Project, and, to offset such exception, prior to recordation of the Final Map, Developer shall pay
City Three Hundred Thousand Dollars ($300,000) (the "Capacity Offset Fee"). The City shall
use the Capacity Offset Fee to establish a grant program for existing City residents to replace or
upgrade existing sewer laterals equivalent to 66,000 gallons per day of sewer capacity. Each
linear foot of replaced private lateral under such grant program shall have a credit of 17 gallons
per day, or approximately 64 residential laterals having an average length of 60 feet within the
Laguna Sewer Service Area.
Section 7.09. Recycled Water Facilities. Developer shall provide the recycled water
improvements shown in Figure 7.2 of the SLR RP.
071928\ 9447955 31
Section 7.10. Storm Drain Facilities. Before approval of a Final Subdivision Map or
building permit for a use that does not require a map, Developer shall provide storm drain
facilities as set forth in Figure 7.4 of the SLR SP adequate to accommodate the storm water
runoff from the area subject to such Map or building permit.
Section 7.11. Floodplain Management. Before approval of a Final Subdivision Map or
building permit for a use that does not require a map, Developer shall construct or make all
necessary grading and drainage improvements in accordance with the SLR SP Floodplain
Management Plan and EIR. The City shall allow building permits to be issued in areas that are
within a mapped floodplain upon: (i) certification of compliance with the SLR SP Floodplain
Management Plan and (ii) a covenant by the Developer to purchase flood insurance or other
similar measure until such time as FEMA has approved a Letter of Map Revision for the
Property.
Section 7.12. Traffic and Circulation Improvements. Developer shall construct
improvements to satisfy the traffic mitigation measures and bicycle and multimodal
improvements as set forth in Resolution No. 10822, conditions of approval and for backbone
infrastructure for the Project, as modified by Sections 5.04.5 and 5.04.6, hereof. For any
improvements required prior to initial occupancy, such improvements may be secured through
the posting of a bond, which will allow building permits to be issued concurrent with
construction of such improvements; provided, however, that final occupancy shall be permitted
only upon full completion of all such improvements.
Section 7.13. Miscellaneous.
Section 7.13.01. Covenants Conditions and Restrictions CC&Rs . CC&Rs for
each subdivision within the Property shall state substantially the following: "This project is
within the boundaries of the SLR SP and, as such, is subject to design guidelines and
development standards incorporated into the SLR SP and the SLR SP Design Guidelines, both
on file with the Community Development Department of the City of San Luis Obispo." Before
the City need approve a Final Subdivision Map or issue a building permit for a land use that does
not require a map, the CC&R disclosure statement referenced above shall be provided to the City
Attorney for review and approval.
Section 7.13.02. Public Improvements. Unless the Parties otherwise mutually
agree, the City shall own and maintain, or cause to be maintained, the following public
improvements:
(a) Potable water system and water tank, within public properties or public
easements;
(b) Sanitary sewer system, within public properties or public easements;
(c) Recycled water system, within public properties or public easements;
(d) Storm drain system, including continuous deflective separation (CDS) vaults or
other best management practices (BMP) facilities, within public properties or
public easements;
071928\ 9447955 32
(e) Public roadways;
(f) Public parks; and
(g) Public access, landscape, and utility easements.
Section 7.13.03. Public Utilities Easements. All land subject to public utilities
easements (PUEs); public water, sewer, or storm drain easements; and public access easements
shall be open and accessible to the City at all times.
Section 7.13.04. ,Design Review of Major Surface Public Facilities. Design
Review shall be completed for all major surface public facilities before construction.
Section 7.13.05. 'Design and Construction Swidards for Sewer and Wdtgr
Facilities. All sewer, water and recycled water facilities shall conform to the Design and
Construction Standards in effect for the Project when improvement plans are submitted. The
submittal shall include all pertinent engineering analysis and design calculations. The plans shall
be subject to the Director of Public Works' review and approval.
Section 7.13.06. Cable/Fiber Networking. Developer shall provide cable or
suitable conduit to each City facility, public park, or other lot designated for Cit�or public use
within the Project for fiber networking. The cable or suitable conduit shall be sho n on the joint
trench improvement plans and constructed before the final lift of asphalt is placed on adjacent
streets.
Section 7.13.07. Model Homes. Prior to recordation of any final map, City
agrees to issue building permits and occupancy certificates for the construction of model homes
(and related model home complex structures) that will be used by Developer for the purpose of
promoting sales of single-family residential units within the Project; provided, however, in no
event shall City be required to issue more than twenty-four (24) building permits for the
construction of model homes, and in no event shall Developer be permitted to sell or transfer any
model home until a Final Map has been recorded on that portion of the Project where the model
home is located.
ARTICLE 8. CONSIDERATION OF PERMITS AND APPROVALS
Section 8.01. Review and Action Generally. Upon Developer's submission of any
complete application for an Approval together with any fees required under Article 5 and
required by City in accordance with Applicable Law, City shall use its best efforts to commence
and complete promptly and diligently all steps necessary to act on the application. Developer
shall promptly provide to City all information reasonably requested by City for its consideration
of any such application.
Section 8.02. Applicable Law. Except as otherwise specifically provided in this Article
8, all applications for Approvals submitted by Developer shall be considered by City in
accordance with Applicable Law. To the extent Developer applies for an approval that would
have the effect of amending a component of Applicable Law as defined in Section 4.01.1, the
071928\ 9447955 33
aspect of Applicable Law to be amended shall not apply to the City's consideration of the
application for such request.
Section 8.03. General Plan and San Luis Ranch Specific Plan Amendments. The Parties
anticipate that Developer may request amendments to the General Plan or the SLR SP to respond
to changing circumstances and conditions. City is not obligated to approve any such application
and may, in the exercise of its legislative discretion, approve, deny or propose conditions or
modifications thereto, including conditions or modifications that might otherwise be prohibited
by the vested rights provided by this Development Agreement. Developer shall be afforded a
reasonable opportunity to review any such proposed conditions and modifications and to
withdraw its application for a General Plan amendment or Developer Specific Plan amendment
(in which case neither Developer's proposed amendments nor the City's proposed modifications
shall become effective).
Section 8.04. MMRP Application. When conducting an environmental review of any
application for an Approval, City shall review the MMRP to determine if any mitigation measure
contained in the MMRP as to the portion of the Property subject to this Development Agreement
should be incorporated into the design of, or made a condition of approval of, such Approval.
Section 8.05. Life of Approvals. Any Approval issued by City, including any Tentative
Tract Maps, shall continue in effect without expiration until the later of. (i) the expiration or
earlier termination of this Development Agreement or (ii) the date upon which such Approval
would otherwise expire under California law.
Section 8.06. Vesting Maps. The ordinances, standards and policies applicable to any
vesting tentative map, vesting parcel map, vesting subdivision map or any other type of vesting
map ("Vesting Map") under California Government Code section 66474.2, and the ordinances,
policies and standards vested under any Vesting Map pursuant to California Government Code
section 66498.1(b) shall be those established as Applicable Law under this Agreement. If this
Development Agreement terminates before the expiration of any Vesting Map or the vested
rights provided thereby, such termination of this Development Agreement shall not affect
Developer's right to proceed with development under such Vesting Map in accordance with the
ordinances, policies and standards so vested under the Vesting Map. In accordance with
California Government Code section 66456.1, Developer and the City have concurred that
multiple final maps may be filed.
ARTICLE 9. AMENDMENTS
Section 9.01. In General. This Development Agreement may be amended from time to
time only upon the mutual written consent of City and Developer and in compliance with
section 17.94.190 of the City's zoning ordinance; provided, however, that in connection with the
transfer of any portion of Developer's Rights and/or Obligations under this Development
Agreement to another person, entity, or organization pursuant to Article 13 below, Developer,
such transferee and City may agree that the signature of such transferee may thereafter only be
required to amend this Development Agreement insofar as such amendment would materially
alter the Rights and/or Obligations of such transferee. In no event shall the signature or consent
071928\ 9447955 34
of any "Non -Assuming Transferee" (as defined in Section 13.03 below) be required to amend
this Development Agreement.
Section 9.02. Future Approvals Do Not Require Amendments to Agreement. Except as
the Parties may otherwise agree, no amendment of this Development Agreement shall be
required in connection with the issuance of any Approval or an amendment to the MMRP. Any
Approval issued after the Vesting Date as to a portion of the Property shall be incorporated
automatically into this Development Agreement and vested hereby. Unless otherwise permitted
by this Development Agreement, however, City shall not amend or issue any Approval unless
Developer requests such an amendment or Approval.
Section 9.03. Operating Memoranda. The provisions of this Development Agreement
require a close degree of cooperation between City and Developer. The Parties acknowledge that
clarifications may be necessary with respect to the details of performance of City and Developer.
If and when, from time to time during the term of this Development Agreement, the Parties agree
that such clarifications are necessary and appropriate, the Parties shall effectuate such
clarifications through operating memoranda, approved in writing by each of them, which, after
execution, shall be attached hereto as addenda and become a part hereof. No such operating
memoranda shall constitute an amendment to this Development Agreement requiring public
notice or hearing. The City Manager, in consultation with the City Attorney, shall make the
determination on behalf of City whether a requested clarification may be effectuated pursuant to
this Section 9.03 or whether the requested clarification is of such a character as to constitute an
amendment hereof pursuant to Section 9.01 above. The City Manager shall be authorized to
execute any operating memoranda hereunder on behalf of City.
Section 9.04. Administrative Amendments. Upon the request of Developer for an
amendment or modification of any Project Approval, the Planning Director or his/her designee
shall determine: (a) whether the requested amendment or modification is minor when considered
in light of the Project as a whole; and (b) whether the requested amendment or modification
substantially conforms with the material terms of this Development Agreement and the
Applicable Law. If the Planning Director or his/her designee finds that the requested amendment
or modification is both minor and substantially conforms to the material terms of this
Development Agreement and the Applicable Law, the amendment or modification shall be
determined to be an "Administrative Amendment," and the Planning Director or his/her
designee may approve the Administrative Amendment without public notice or a public hearing.
ARTICLE 10. ANNUAL REVIEW
Section 10.01. In General. The Community Development Director shall annually and
concurrently conduct: (i) the MMRP Evaluation as set forth in Section 11.01; and (ii) the
Development Agreement Review as set forth in Section 11.04 (collectively, the "Annual
Review"). With respect to the MMRP Evaluation, if the Community Development Director
determines that mitigation measures adopted by City in connection with its approval of the SLR
SP and the Zoning are not being implemented as set forth in the MMRP, he or she shall take any
appropriate remedial action as described in Section 11.01 below. Further, the Community
Development Director shall incorporate the results of the MMRP Evaluation into the review of
any applications for Approvals submitted thereafter.
071928\ 9447955 35
Section 10.02. Other Investigations and Evaluations. City may from time to time,
whether or not as a part of an Annual Review, investigate or evaluate any matter that is properly
the subject of an Annual Review.
ARTICLE 11. MMRP EVALUATION AND DEVELOPMENT AGREEMENT REVIEW
Section 11.01. MMRP Evaluation. During its Annual Review, City shall conduct the
MMRP Evaluation by evaluating whether the mitigation measures the City adopted upon its
approval of the SLR SP and the Zoning are being implemented as to the Property as set forth in
the MMRP.
Section 11.02. MMRP Implementation. As set forth in the MMRP, City shall consider in
connection with any application for an Approval the extent to which mitigation measures
described in the MMRP should be incorporated into the design of the project under consideration
or made conditions of the approval of the project. During an MMRP Evaluation, the City shall
evaluate its overall success over the previous year in implementing such mitigation measures and
consider any additional steps that may be appropriate to ensure, as Approvals are considered
over the following year, successful implementation of such mitigation measures (including, in
particular, mitigation measures that are the responsibility of City or other agencies with
regulatory authority over the Project).
Section 11.03. Enforcement. Developer shall be responsible only for those mitigation
measures the City requires to be incorporated into the design of the Project, including those that
are made conditions of any Approval. Failure to comply with any such design requirement or any
condition of approval shall be enforced in any manner authorized by Applicable Law.
Section 11.04. Development Agreement Review. The Community Development
Director shall review this Development Agreement annually to ascertain Developer's good faith
compliance as to the Property (the "Development Agreement Review"). The Development
Agreement Review shall be conducted concurrently with the MMRP Evaluation as part of the
Annual Review pursuant to Article 10. In connection with the Development Agreement Review,
Developer shall provide information reasonably requested by City.
Section 11.05. Director's Findings of Compliance. If the Community Development
Director finds good faith compliance by Developer with this Agreement, the Community
Development Director shall issue a "Finding of Development Agreement Compliance," which
shall be in recordable form and may be recorded by Developer or any "Mortgagee" (as defined in
Section 14.01 below). Issuance of a Finding of Development Agreement Compliance and
expiration of the appeal period specified below without appeal, or confirmation by the City
Council of the issuance of the Finding of Development Agreement Compliance upon such
appeal, shall finally determine the Development Agreement Review for the applicable period.
Section 11.06. Finding of Development Agreement Noncompliance. If the Community
Development Director finds that Developer and/or a Transferee has not complied in good faith
with this Agreement, the Community Development Director shall proceed as specified in
sections 17.94.200-17.94.220 of the City's Zoning Ordinance.
071928\ 9447955 36
ARTICLE 12. DEFAULT, REMEDIES, TERMINATION OF DEVELOPMENT
AGREEMENT
Section 12.01. Notice and Cure.
(a) Any failure by a Party to perform any term or provision of this Development
Agreement, which failure continues uncured for 60 days following written notice
of such failure from the other Party (unless such period is extended by written
mutual consent), shall constitute a default under this Agreement. Any such notice
shall specify the nature of the alleged failure and, where appropriate, how such
alleged failure may be cured. If the nature of the alleged failure is such that it
cannot reasonably be cured within 60 days, then commencement of the cure
within that time, and diligent prosecution to completion of the cure thereafter,
shall be timely. If the alleged failure is cured, then no default shall exist and the
noticing Party shall take no further remedial action and shall acknowledge the
cure in writing to the other Party. If the alleged failure is not cured, then a default
shall exist under this Development Agreement and the noticing Party may
exercise any of the remedies available under sections 12.03 through 12.05 below.
(b) No failure or delay in giving notice of default shall constitute a waiver of default;
provided, however, that the provision of notice and opportunity to cure is a
prerequisite to the enforcement or correction of any default.
Section 12.02. Actions during Cure Period.
(a) During any cure period specified under Section 12.01 and before delivery of a
notice of failure or default, the Party charged shall not be considered in default of
this Development Agreement. If there is a dispute as to the existence of a default,
the Parties shall otherwise continue to perform their obligations hereunder, to the
maximum extent practicable in light of the disputed matter, pending its resolution
or termination of this Development Agreement.
(b) City shall continue to process in good faith applications for Approvals during any
cure period, but need not approve any such application if it relates to a project as
to which there is an alleged default hereunder.
Section 12.03, Remedies of Non-Defatilfing Party.
Section 12.03.1. In General. If any Party is in default under the terms of this
Agreement, the non -defaulting Party may elect, in its sole and absolute discretion, to pursue any
of the following courses of action: (i) waive such default; (ii) in City's case, pursue
administrative remedies as provided in Section 12.04 below, (iii) pursue judicial remedies as
provided for in Section 12.05 below; and/or (iii) terminate this Development Agreement as and
to the extent permitted by Section 12.06 below and consistently with section 17.94.210 and
17.94.220 of the City's Zoning Ordinance. In no event shall City modify this Development
Agreement as a result of a default by a defaulting Party except in accordance with the provisions
of Section 9.01 above.
071928\ 9447955 37
Section 12.03.2. Severability of Default. City acknowledges that the
development of the Project may be carried out by more than one person, entity or organization
under this Development Agreement (e.g., portions of Developer's interest in the Property and
this Development Agreement may be transferred to another person, entity or organization, a
"Transferee" under Article 13 below). The Parties acknowledge and agree that, in accordance
with Article 13 below, more than one Transferee may be responsible for certain actions required
or forbidden by this Development Agreement and that more than one Transferee therefore may
be in default with respect to that action. Accordingly, if City determines to terminate or exercise
any remedy under this Development Agreement due to a default by Developer or by any
Transferee (hereinafter "Defaulting Developer"), such termination or other remedy shall apply
only with respect to the Rights and Obligations of such Defaulting Developer and any
termination of this Development Agreement as to any Defaulting Developer shall be deemed to
terminate only those Rights and Obligations arising hereunder between City and such Defaulting
Developer. City shall, to the extent possible, refrain from seeking any termination of this
Development Agreement or other remedy if such remedy would affect materially the ability of a
non -defaulting Developer and/or a non -defaulting Transferee (hereinafter "Non -Defaulting
Developer") to realize the Rights provided hereunder. The Parties further acknowledge and
agree that in certain instances it may not be possible for City to exercise remedies against the
Defaulting Developer of one portion of the Project without affecting in some way a Non -
Defaulting Developer of the same or of some other portion of the Project.
Section 12.04. Administrative Remedies. Except as otherwise specifically stated in this
Development Agreement, City may exercise any and all administrative remedies to the extent
necessary or appropriate to secure compliance with this Agreement. Such administrative
remedies may include, among others, withholding building permits, certificates of occupancy or
other Approvals relating to that portion of the Project in default of this Agreement.
Section 12.05. Judicial Remedies. Except as otherwise specifically stated in this
Development Agreement, either Party may, in addition to any other rights or remedies, institute
legal action to cure, correct, or remedy any default, enforce any covenant or agreement herein,
enjoin any threatened or attempted violation hereof, enforce by specific performance the
Obligations and Rights of the Parties hereto or obtain any other remedy consistent with this
Agreement; provided, however, that in no event shall any person be entitled hereunder to
monetary damages for any cause, including breach of contract by a Party to this Agreement.
Notwithstanding the foregoing, City may enforce payment obligations under Applicable Law,
including under this Agreement and Developer may enforce City's obligations under this
Agreement to pay or transfer money to the Developer by a writ of mandate or action for specific
performance. Nothing in this Section 12.05 shall be deemed to limit either Party's rights under
the Government Claims Act, California Government Code section 810 et seq. For purposes of
instituting a legal action under this Agreement, any City Council determination under this
Development Agreement shall be deemed final agency action unless expressly stated otherwise.
Section 12.06. Termination Due to Default.
Section 12.06.1. In General. Either Party may terminate this Development
Agreement pursuant to Section 12.06.2 below and sections 17.94.190-17.94.220 of the City's
Zoning Ordinance in the event of a default by the other Party, provided: (i) such default is
071928\ 9447955 38
prejudicial to the interests of the non -defaulting Party and is neither minor nor technical and (ii)
in the case of any termination by City, City first shall have exercised any and all administrative
or other remedies short of filing suit available to secure Developer's compliance with this
Agreement; provided, however, that City shall not be requiied, as a prerequisite to initiating the
termination of this Agreement, to exercise its administrative and other non -judicial remedies for
a period of more than 180 days or such longer period to which the Parties may have agreed.
Termination of this Development Agreement by Developer or a Transferee as to any portion or
portions of the Property shall not affect the Rights or Obligations of Developer or any other
Transferee as to any other portion or portions of the Property.
Section 12.06.2. Procedures for Termination.
(a) Before any proposed termination of this Development Agreement pursuant to this
Section 12.06, and following the 180 -day or lunger period specified in Section
12.06.1 above, if applicable, a non -defaulting Party intending to seek termination
of this Development Agreement shall deliver to the defaulting Party (or Parties) a
written "Preliminary Notice of Intent to Terminate" this Agreement, and all
Parties shall meet and confer in good faith effort to agree upon an alternative to
termination that will afford the non -defaulting Party the benefit of its bargain
under this Agreement. If those discussions are not successful in resolving the
dispute, the non -defaulting Party desiring to terminate this Development
Agreement shall deliver to the defaulting Party a written "Final Notice of Intent
to Terminate".
(b) Within 60 days after the City delivers a Final Notice of Intent to Terminate to a
defaulting Party, the City Council shall review the matter at a noticed public
hearing as set forth in California Government Code sections 65865, 65867, and
65868 and in sections 17.94.190-17.94.220 of the City's Zoning Ordinance.
Termination shall be effective 30 days after such City Council review, unless the
default is sooner resolved to the mutual satisfaction of the Parties.
(c) Within 60 days after Developer delivers a Final Notice of Intent to Terminate to
City, the City Council shall consider whether City should take any further
curative action. Termination shall be effective 30 days following such City
Council consideration (or 90 days following delivery by Developer of a Final
Notice of Intent to Terminate if the City Council fails to complete its
consideration by that date), unless the default is sooner resolved to the mutual
satisfaction of the Parties.
Section 12.07. Judicial Reference. Pursuant to Code of Civil Procedure Section 638 et
seq., 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 upon
a single referee who shall 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. If Developer
and City are unable to agree upon a referee within ten (10) days of either Party's written request
071928\ 9447955 39
to do so, either Party may seek to have a referee appointed pursuant to Code of Civil Procedure
Section 640. The cost of such proceeding shall initially be borne equally by the Parties. Any
referee selected pursuant to this Section 12.07 shall be considered a temporary judge appointed
pursuant to Article 6, Section 21 of the California Constitution. Notwithstanding the provisions
of this Section 12.07, either Party shall be entitled to seek declaratory and injunctive relief in any
court of competent jurisdiction to enforce the terms of this Agreement, or to seek to enjoin the
other Party from an asserted breach thereof, pending the selection of a referee on a showing that
the moving party would otherwise suffer irreparable harm. Upon the mutual agreement by both
Parties, any legal action may be submitted to mediation in accordance with rules to be mutually
agreed upon by the Parties.
ARTICLE 13. ASSIGNMENT, TRANSFER AND NOTICE
Section 13.01. Assignment of Interests, Rights and Obligations. Developer may transfer
or assign ("Transfer") all or any portion of its Rights and Obligations under this Development
Agreement as to any portion of the Property (the "Transferred Property") to any person
acquiring an interest in such Transferred Property, including, without limitation, purchasers or
ground lessees of lots, parcels or facilities on such Transferred Property (a "Transferee"). Any
such Transfer shall relieve the transferring party (a "Transferor") of any and all Rights and
Obligations under this Development Agreement insofar as they pertain to the Transferred
Property, as provided in this Article 13.
Section 13.02. Transfers In General.
Section 13.02.1. In General. In connection with any Transfer of all or any
portion of the Project or the Property, other than a transfer or assignment to a "Non -Assuming
Transferee" as described in Section 13.03 below or a "Mortgagee" as defined in Section 14.01
below, the Transferor and the Transferee may enter into a written agreement regarding their
respective Rights and Obligations in and under this Development Agreement (a "Transfer
Agreement"). Any such Transfer Agreement may contain provisions: (i) releasing the Transferor
from any Rights and Obligations under this Development Agreement that relate to the
Transferred Property, provided the Transferee expressly assumes all such Rights and
Obligations, (ii) transferring to the Transferee rights to improve the Transferred Property and any
other Rights and Obligations of the Transferor arising under this Agreement, and (iii) addressing
any other matter deemed necessary or appropriate in connection with the Transfer.
Section 13.02.2. City Review of Release Provisions.
(a) A Transferor shall have the right, but not the obligation, to seek City's consent to
those provisions of any Transfer Agreement purporting to release such Transferor
from any Rights and Obligations arising under this Development Agreement (the
"Release Provisions"). If a Transferor fails to seek City's consent or City does
not consent to any such Release Provisions, then such Transferor may
nevertheless transfer to the Transferee any and all Rights and Obligations of such
Transferor arising under this Development Agreement (as described in Sections
13.02.1(i) and (ii) above) but, with respect to City, shall not be released from
those Rights and Obligations described in the Release Provisions to which City
071928\ 9447955 40
has not consented. If City consents to any Release Provisions, then: (i) the
Transferor shall be free from any and all Rights and Obligations accruing on or
after the date of any Transfer with respect to those Rights and Obligations
described in such Release Provisions and (ii) no default hereunder by Transferee
with respect to any Rights and Obligations from which the Transferor has been
released shall be attributed to the Transferor nor may such Transferor's Rights be
canceled or diminished in any way by any such default. City may consent, or
conditionally consent, to all, none, or some of the Release Provisions.
(b) City shall review and consider promptly and in good faith any request by a
Transferor for City's consent to any Release Provisions. City's consent to such
Release Provisions may be withheld only if: (i) reliable evidence supports a
conclusion that the Transferee will be unable to perform the Rights and
Obligations proposed to be assumed by the Transferee pursuant to the Transfer
Agreement, (ii) the Rights and Obligations may not reasonably be allocable
among particular portions of the Project and Property, such as the Transferred
Property, (iii) the Transferor or Transferee fails to provide acceptable security, as
and if reasonably requested by City, to ensure the performance of the Rights and
Obligations proposed to be assumed by the Transferee pursuant to the Release
Provisions, or (iv) the Transferor or Transferee fails to provide information
reasonably requested by the City to assist it in making the determinations
described in this paragraph. In no event shall City unreasonably withhold consent
to any Release Provisions. City shall respond within 30 days to any request by a
Transferor for consent to any Release Provisions, and, if the City fails to respond
during such 30 day period, the City shall be deemed to have consented to the
Release Provisions.
(c) Subject to the provisions of paragraph (b) above, because and to the extent certain
Obligations arising under this Development Agreement may not reasonably be
allocable among portions of the Project, City may refuse to consent to release the
Transferor of one portion of the Project from such Rights and Obligations under
this Development Agreement even though the Rights and Obligations are being or
have been assumed by the Transferee of some other portion of the Project.
Section 13.03. Non -Assuming Transferees. Except as otherwise required by a
Transferor, the Obligations of a Transferor shall not apply to any purchaser of any property that
has been established as a single legal parcel for nonresidential use that does not require any
further on-site or off-site infrastructure. The Transferee in such a transaction and the successors
and assigns of such a Transferee ("Non -Assuming Transferees") shall be deemed to have no
Obligations under this Agreement, but shall continue to benefit from the Rights provided by this
Development Agreement for the duration of its term. Nothing in this section shall exempt any
Transferred Property transferred to a Non -Assuming Transferee from payment of applicable fees,
taxes and assessments or compliance with an Approval or Applicable Law.
071928\ 9447955 41
ARTICLE 14. MORTGAGEE PROTECTION
Section 14.01. In General. The provisions of this Development Agreement shall not
limit Developer's right to encumber the Property or any portion thereof, or any improvement
thereon by any mortgage, deed of trust or other device securing financing with respect to such
portion. City acknowledges that lenders providing such financing and other "Mortgagees"
(defined below) may require certain interpretations and modifications of this Development
Agreement and agrees upon request, from time to time, to meet with Developer and
representatives of such lenders to negotiate in good faith any such request for an interpretation or
modification. City shall not unreasonably withhold its consent to any such requested
interpretation or modification provided such interpretation or modification is consistent with the
intent and purposes of this Agreement. Any person holding a mortgage, deed of trust or other
security instrument on all or any portion of the Property made in good faith and for value (each,
a "Mortgagee"), shall be entitled to the rights and privileges of this Article 14.
Section 14.02. Impairment of Mortgage or Deed of Trust. Except as otherwise
specifically stated in any security instrument held by a Mortgagee, no default under this
Development Agreement shall defeat, render invalid, diminish, or impair the lien of any
mortgage or deed of trust on the Property made, or other interest in the Property acquired, by any
Mortgagee in good faith and for value.
Section 14.03. Notice of Default to Mortgagee. If a Mortgagee has submitted to the City
a written request for notice as specified herein, City shall exercise its best efforts to provide to
such Mortgagee written notification of any failure or default by Developer in the performance of
Developer's Obligations concurrently with the written notice provided to Developer. If the City
fails to deliver written notification to any Mortgagee that has submitted a written request to City
as provided herein, then any period for such Mortgagee to remedy or cure any alleged failure or
default shall not commence until the City's actual delivery of such written notification to such
Mortgagee.
Section 14.04. Right of Mortgagee to Cure. Any Mortgagee shall have the right, but not
the obligation, to cure any failure or default by Developer during the cure period allowed
Developer under this Agreement, plus an additional 60 days if, to cure such failure or default, the
Mortgagee must obtain possession of the property as by seeking appointment of a receiver or
other legal process. Any Mortgagee that undertakes to cure any such failure or default shall
provide written notice to City of that fact; provided that no initiation of any such efforts by a
Mortgagee shall obligate such Mortgagee to complete or succeed in any such curative efforts.
Section 14.05. Mortgagee Liability for Past Defaults or Obligations. Except as otherwise
specifically provided in this Article 14, any Mortgagee, including a successful bidder at a
foreclosure sale, who comes into possession of the Property or any part thereof, shall take such
property subject to the Rights and Obligations of this Development Agreement and in no event
shall any such property be released from any Obligations. Nothing in this Article 14 shall prevent
City from exercising any remedy it may have for a default under this Development Agreement;
provided, however, that in no event shall such Mortgagee be liable personally for any defaults or
monetary obligations of Developer arising before such Mortgagee acquires or possesses such
property.
071928\ 9447955 42
Section 14.06. Technical Amendments to this Article 14. City agrees to reasonably
consider and approve interpretations and/or technical amendments to the provisions of this
Agreement that are required by lenders for the acquisition and construction of the improvements
on the Property or any refinancing thereof and to otherwise cooperate in good faith to facilitate
Developer's negotiations with lenders. The Parties acknowledge and agree that such technical
amendments shall be processed in accordance with Section 9.04 of this Development Agreement.
ARTICLE 15. GENERAL PROVISIONS
Section 15.01. Incorporation of Recitals. The Recitals set forth above are incorporated
herein as though set forth in full.
Section 15.02. Project is a Private Undertaking. The development Developer proposes to
undertake is a private development, and Developer shall exercise full dominion and control over
the Project subject only to Developer's Obligations contained in this Agreement, the Approvals
and Applicable Law.
Section 15.03. Cooperation iii the Event of Legal Challenge.
Section 15.03.1. In General. If any person not a Party to this Development
Agreement institutes any administrative, legal or equitable action or other proceeding
challenging the validity of any provision of this Agreement, any Approval or Subsequent
Approval, or the sufficiency of any review of this Development Agreement or any Approval or
Subsequent Approval under CEQA (each a "Third Party Challenge"), the Parties shall
promptly meet and confer as to the most appropriate response to such Third Party Challenge;
provided, however, that any such response shall be consistent with Sections 15.03.2 and 15.03.3
below.
Section 15.03.2. Tender to and Conduct of Defense by Develo er. City shall
tender the complete defense of any Third Party Challenge to Developer, and upon acceptance of
such tender by Developer: (i) Developer shall indemnify City against any and all fees and costs
arising out of the defense of such Third Party Challenge and (ii) Developer shall control the
defense and/or settlement of such Third Party Challenge and may take any and all actions it
deems necessary and appropriate in its sole discretion in connection therewith; provided,
however, that Developer shall seek and secure City's consent to any settlement of such Third
Party Challenge, which consent shall not unreasonably be withheld or delayed.
Section 15.03.3. Defense by City. If Developer should fail to accept City's
tender of defense under Section 15.03.2 above, City shall defend such Third Party Challenge and
control the defense and/or settlement of such Third Party Challenge as City decides (in its sole
discretion), and City may take any and all actions it deems necessary and appropriate (in its sole
discretion) in connection therewith; provided, however, that City shall seek and secure
Developer's consent to any settlement of such Third Party Challenge, which consent shall not
unreasonably be withheld or delayed. Developer shall indemnify City against any and all fees
and costs arising out of the City's defense of such Third Party Challenge including the
reasonable value of the services of its City Attorney and outside counsel, if any. Notwithstanding
the foregoing, if Developer determines for any reason that it no longer intends to develop the
071928\ 9447955 43
Project, then it may deliver notice of such determination to City and shall not be liable for any
defense costs incurred by City more than 90 days following the delivery of such notice.
Section 15.04. Defense and Indemnity. Developer shall defend and indemnify City from
and against any and all damages, claims, costs and liabilities arising out of the personal injury or
death of any person, or damage to the property of any person, to the extent such damages,
claims, costs or liabilities result from the construction of the Project by Developer or by
Developer's contractors, subcontractors, agents or employees, except to the extent caused by the
negligence or willful misconduct of City, or any of City's officers, employees, contractors or
agents. Nothing in this Section 15.04 shall be construed to mean that Developer shall defend or
indemnify City from or against any damages, claims, costs or liabilities arising from, or alleged
to arise from, activities associated with the maintenance or repair by City or any other public
agency of improvements that have been offered for dedication and accepted by City or such
other public agency. City and Developer may from time to time enter into subdivision
improvement agreements, as authorized by the Subdivision Map Act, which agreements may
include defense and indemnity provisions different from those contained in this Section 15.04. If
any conflict appears between such provisions in any such subdivision improvement agreement
and the provisions set forth above, the provisions of such subdivision improvement agreement
shall prevail.
Section 15.05. Governing Law; Attorneys' Fees. This Development Agreement shall be
construed and enforced in accordance with the laws of the State of California. Venue for any
dispute arising under this Development Agreement lies in the county of San Luis Obispo and
Developer hereby consents to personal jurisdiction there for that purpose. The Parties will
cooperate to facilitate venue for any Third Party Challenge described in Section 15.03 above in
San Luis Obispo County. Should any legal action be brought by either Party because of any
default under this Development Agreement, to enforce any provision of this Agreement, or to
obtain a declaration of rights hereunder, the prevailing Party shall be entitled to such reasonable
and actual attorneys' fees, and costs as may be fixed by the Court. The standard of review for
determining whether a default has occurred under this Development Agreement shall be the
standard generally applicable to contractual obligations in California. The terms and provisions
of this Section 15.05 shall survive any termination of this Agreement.
Section 15.06. Force_Majeure. Performance by any Party of its Obligations hereunder
shall be excused and the Term of and any dates under this Development Agreement shall be
extended day for day during any period of "Permitted Delay" as hereinafter defined. For
purposes hereof, Permitted Delay shall include delay beyond the reasonable control of the Party
claiming the delay (and despite the good faith efforts of such Party) including, but not limited to:
(i) acts of God; (ii) civil commotion; (iii) riots; (iv) strikes, picketing or other labor disputes; (v)
shortages of materials or supplies; (vi) damage to work in progress by reason of fire, floods,
earthquake or other casualties; (vii) failure, delay or inability of the other Party to act; (viii) as to
Developer only, the failure, delay or inability of City to provide adequate levels of public
services, facilities or infrastructure to the Property; (ix) as to City only, with respect to
completion of the Annual Review or to processing applications for Approvals, the failure, delay
or inability of Developer to provide adequate information or substantiation as reasonably
required to complete the Annual Review or process applications for Approvals; (x) restrictions
imposed or mandated by governmental entities other than the City, including without limitation,
071928\ 9447955 44
any development moratorium for any purpose; (xi) enactment of conflicting state or federal laws
or regulations, (xii) judicial decisions or similar legal incapacity to perform, and (xiii) litigation
brought by a third party attacking the validity of this Agreement. A party's inability to make a
payment when due shall not be the basis of a Permitted Delay. Any Party claiming a Permitted
Delay shall notify the other Party (or Parties) in writing of such delay within 30 days after the
commencement of the delay, which notice ("Permitted Delay Notice") shall include the
estimated length of the Permitted Delay. A Permitted Delay shall be deemed to occur for the
time set forth in the Permitted Delay Notice unless a Party receiving the Permitted Delay Notice
objects in writing within 10 days after receiving the Permitted Delay Notice. Upon such an
objection, the Parties shall meet and confer within 30 days after the date of the objection in a
good faith effort to resolve their disagreement as to the existence and length of the Permitted
Delay. If no mutually acceptable solution can be reached, either Party may take action as may be
permitted under Article 12 above.
Section 15.07. Waiver.
Section 15.07.1. Legal Rights. Developer acknowledges and agrees that the
terms and provisions of this Development Agreement specifically permit City in some instances
to impose requirements upon the Project that City would not otherwise be able to impose due to
a lack of nexus, rough proportionality, or reasonable relationship between the Project and such
requirement, or other reasons. To the extent any such requirement is imposed by City upon the
Project consistently with the terms and provisions of this Agreement, Developer waives any right
to challenge judicially the imposition of such requirement by City. Except as otherwise provided
in this Section 15.07.1, City shall comply with Applicable Law.
Section 15.07.2. Other Rights. While Section 15.07.1 prohibits Developer from
challenging judicially certain City requirements imposed consistently with this Agreement,
nothing in this Development Agreement shall be deemed to abrogate or limit, nor be deemed to
waive, any right of Developer (whether arising under the United States Constitution, the
California Constitution or otherwise) to request City to refrain from imposing upon Developer,
the Project or the Property any requirement that this Development Agreement permits City so to
impose or otherwise petition City with respect to any matter related to the Project or the
Property.
Section 15.08. Notices. Any notice or communication required hereunder between the
Parties shall be in writing, and may be delivered either personally, by facsimile (with original
forwarded promptly by regular U.S. Mail) or by Federal Express or other similar courier
promising overnight delivery. If personally delivered, a notice or communication shall be
deemed to be received when delivered to the Party to whom addressed. If delivered by facsimile
transmission, a notice or communication shall be deemed to be received upon receipt of the
entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00 p.m. on a business day or on a Saturday, Sunday or holiday shall be deemed to have
been received on the next business day. If delivered by Federal Express or similar courier, a
notice or communication shall be deemed to be received when delivered as shown on a receipt
issued by the courier. Such notices or communications shall be delivered to the Parties at their
addresses set forth below:
071928\ 9447955 45
If to City to: City Manager
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Telecopy/Facsimile: (209) 941-7449
With a courtesy copy to: City Attorney
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 95330
If to Developer to: MI San Luis Ranch, LLC
C/O Coastal Community Builders, Inc.
330 James Way, Suite 270
Pismo Beach, CA 93449
Attn: Gary Grossman
With courtesy copies to: Cox, Castle & Nicholson LLP
2029 Century Park East, Suite 2100
Los Angeles, CA 90067
Attn: Andrew K. Fogg, Esq. or Ronald I. Silverman, Esq.
and
Spierer, Woodward, Corbalis & Goldberg
707 Torrance Blvd, Suite 200
Redondo Beach, CA 90277
Attn: Steven F. Spierer, Esq.
Any Party may at any time, change its address or facsimile number for notice by giving 10 days'
written notice to the other in accordance with this Section 15.08.
Section 15.09. No Joint Venture or Partnership. Nothing in this Development Agreement
or in any document executed in connection with it shall be construed as creating a joint venture,
partnership or any agency relationship between City and Developer. City shall have no
responsibility for public improvements unless and until they are accepted by City in the manner
required by law.
Section 15.10. Severability. If any provision of this Development Agreement is held
invalid, void or unenforceable but the remainder of this Development Agreement can be
enforced without failure of material consideration to any Party, then the remainder of this
Development Agreement shall not be affected and shall remain in full force and effect, unless
amended by mutual consent of the Parties. Notwithstanding the foregoing, if any material
provision of this Development Agreement, or the application of such provision to a particular
situation, is held to be invalid, void or unenforceable, Developer (in its sole and absolute
discretion) may terminate this Development Agreement by providing written notice of such
termination to City.
071928\9447955 46
Section 15. 11. Estoppel Certificate. Any Party and any Mortgagee may, at any time, and
from time to time, deliver written notice to the other Party or Parties requesting such Party or
Parties to certify in writing that, to the knowledge of the certifying Party: (i) this Development
Agreement is in full force and effect and a binding obligation of the Parties; (ii) this
Development Agreement has not been amended or modified either orally or in writing, but if so
amended or modified, identifying those amendments and modifications; and (iii) as of the date of
the most recent Annual Review, the requesting Party (or any Party specified by a Mortgagee) is
not in default in the performance of its Obligations under this Development Agreement, or if in
default, describing the nature and amount or extent of any such defaults. A Party receiving a
request hereunder shall execute and return such certificate or give a written, detailed response
explaining why it will not do so within 30 days of receipt of a request. Each Party acknowledges
that such a certificate may be relied upon by third parties acting in good faith. A certificate
provided by City establishing the status of this Development Agreement shall be in recordable
form and may be recorded at the expense of the recording Party.
Section 15.12. Further Assurances. Each Party shall execute and deliver to the other
Party or Parties all such other further instruments and documents and take all such further actions
as may be reasonably necessary to carry out this Development Agreement and the Approvals and
to provide and secure to the other Party or Parties the full and complete enjoyment of its Rights
hereunder.
Section 15.13. Construction.
(a) All Parties have been represented by counsel in the preparation of this
Development Agreement and no presumption or rule that ambiguity shall be
construed against a drafting party shall apply to its interpretation or enforcement.
Captions of sections and subsections are provided for convenience only and shall
not be deemed to limit, amend, or affect the meaning of the provisions to which
they pertain. If any conflict appears between this Development Agreement and the
rules, regulations or official policies of City, the provisions of this Development
Agreement shall prevail and be deemed to have amended any such conflicting
rules, regulation or official policy as of the Vesting Date to the extent permitted
by Applicable Law. In the event of a direct conflict between any provision of this
Development Agreement and any of the Project Approvals, the provisions of this
Development Agreement shall control.
(b) The Parties intend this Development Agreement to be consistent with the
requirements of Chapter 17.94 of the City's Zoning Ordinance and it shall be
construed consistently with that intent. Should any conflict arise between this
Development Agreement and Chapter 17.94 as it exists on the Vesting Date, this
Development Agreement shall control.
Section 15.14. Other Miscellaneous Terms. In construing this Agreement, the singular
includes the plural; the masculine gender includes the feminine and the neuter; "shall" is
mandatory and "may" is permissive.
071928\ 9447955 47
Section 15.15. Counterpart Execution. This Development Agreement may be executed
in any number of counterparts and shall be deemed duly executed when each of the Parties has
executed such a counterpart.
Section 15.16. Time. Time is of the essence of each and every provision of this
Development Agreement.
Section 15.17. Good Faith/Fair Dealing. The Parties agree that a covenant of good faith
and fair dealing shall apply to all actions of the Parties. As used herein, this covenant shall mean
that the Parties shall act reasonably, and no Party shall do anything which shall have the effect of
destroying or injuring the rights of any other Party to receive the benefit of its bargain in this
Development Agreement. Nothing in this Section 15.17 shall detract from the principle of
Section 12.05 that neither Party shall be entitled to monetary damages for breach of this
Development Agreement.
Section 15.18. List of Exhibits:
A — San Luis Ranch Specific Plan Site Plan/Depiction of Property
B — Legal Description of Property
C — Financing Plan
D — Feasibility Memorandum
E — Agricultural Land Operations & Guidelines
F — Affordable/Workforce Housing Plan
071928\ 9447955 48
IN WITNESS WHEREOF, the Parties have executed this Development Agreement as of
the Execution Date above.
CITY:
CITY OF SAN LUIS OBISPO,
a municipal corporation
By:
Hei Ha on. Mayor
APPROVED AS TO FORM:
istine Dietrick, City Attorney
(signatures conlinued on next page)
071928\ 9447955 49
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual
who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.
State of California
County of San Luis Obispo
On August 28, 2018
before me, Heather Suzanne Goodwin, Notary Public
(insert name and title of the officer)
personally appeared Heidi Harmon
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
HEATHER SUZANNE GOODWIN
Notary Public - California
San Luis Obispo County ;.
WITNESS my hand and official seal. Commission 42198666
My Comm, Expires Jun 21, 2021
Signature (Seal)
a r: Jnr.,,
DEVELOPER:
MI SAN LUIS RANCH, LLC,
a Delaware limited liability company
By: MI ENTITLEMENT IV, LLC
a Delaware limited liability company
Its: Manager
By: Presidio Merced Land IV Passive, LLC
a Delaware limited liability company
Its: Co -Manager
LN
Michael Ste van
Its: Authorized Representative
By: GGCCB, LLC
a California limited liability company
Its: Co -Manager
Gary Grossman
Its: Managing Member
071928\ 9447955 50
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
STATE OF C
Minnesota
COUNTY OF Hennepin
ss:
On Vftm die"' �'?' 2018 before me, Amy Sundell t N o A �qj P WO l '
Notary Public (insert name and title of the officer),
personally appeared Michael M. Sullivan , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
AMY SUNDELL
NOTARY PUBLIC
z MINNESOTA
W O0 ExpM JSMUMV 31, 2020
Signature: G
[Seal]
071928\ 9447955 Notary - I
I• I- --o . - lk
DEVELOPER:
MI SAN LUIS RANCH, LLC,
a Delaware limited liability company
By: MI ENTITLEMENT IV, LLC
a Delaware limited liability company
Its: Manager
By: Presidio Merced Land IV Passive, LLC
a Delaware limited liability company
Its: Co -Manager
Michael Sullivan
Its: Authorized Representative
By: GGCCB, LLC
a California limited liability company
Its: Co -Manager
Lo
�,ary �� ' tisman
Its: Managing Member
071928\ 9447955 50
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
S'L'ATE OF CALIFORNIA
COUNTY OF �Vt 6S
On C6 - �_'Fbu ' , 2018 before. me, —r�o LC�i lMaV YJ" -Z -j iy0�a W) I C
Notary Public (insert name and title of the officer),
personally appeared barq6S:5 wmm , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
,Signature:
ri •r/,w�G • = �
071928\ 9447955 Notary - 3
IL
I I •1 �_ . ' .--ter �' 1 � .�� '�
EXHIBIT A
SAN LUIS RANCH SPECIFIC PLAN SITE PLAN
(attached)
071928\ 9447955 Exhibit A-1
v ,
EXHIBIT B
LEGAL DESCRIPTION
(attached)
071928\ 9447955 Exhibit B-1
EXHIBIT B
ANNEXATION No. ??
To the City of San Luis Obispo,
County of San Luis Obispo, State of California
A portion of Lot 64 and 65 of the Subdivision of the Rancho Canada de Los Osos and La Laguna, as filed in Book A,
at Page 83 and 84 of Maps, and Lot L and a portion of Lots K, M, and N of the Re -subdivision of Lots 58, 61, 62, 63,
64 and 65, per J. Stratton's Survey and Map of the Subdivisions of the Rancho Canada de Los Osos and La Laguna,
as filed in Book A, at Page 161 of Maps in the office of the Recorder, San Luis Obispo County, California, more
particularly described as follows:
Commencing at the most Northerly corner of Lot K (Corner "EE") as shown on said map filed in Book A, at Page 161
of Maps, being on the existing City Limit boundary of the City of San Luis Obispo at the Northern terminus of
course No. 62 of the "Los Osos Road No. 1 Annexation" as approved by Resolution No. 1728 of the legislative body
of said City, and being on the Southeasterly line of Madonna Road right-of-way, known formerly French Road;
Thence, leaving said Road, along the Southwesterly line of said Lot J as shown on said map filed in Book A, at Page
161 of Maps, and along the existing City Limit boundary of said Los Osos Road No. 1 Annexation, South 45° 36' 37"
East, 393.00 feet to the True Point of Beginning;
1. Thence, continue along the Southwesterly line of said Lot J, and along the existing Cily Limit boundary of
said Los Osos Road No. 1 Annexation, South 45° 36' 37" East, 1088.13 feet;
2. Thence, along the Southeasterly line of said Lot J, North 42° 52' 03" East, 145.28 feet;
3. Thence, along the Southwesterly line of Lot I as shown on said map filed in Book A, at Page 161 of Maps,
South 54° 08' 17" East, 558.56 feet to the Westerly boundary of the State Highway 101 right-of-way;
4. Thence, continue along the existing boundary of said Los Osos Road No. 1 Annexation, Southerly, and
along the Westerly boundary of State Highway 101 right-of-way on a curve that is concave to the West
from a radial bearing North 62° 47' 19" West, with a radius of 2420.00 feet, through a central angle of 00°
33' 58", an arc length of 23.91 feet;
5. Thence, continue along the Westerly boundary of State Highway 101 right-of-way, and along the existing
boundary of said Los Osos Road No. 1 Annexation, South 27° 46' 39" East, 2557.88 feet to the
Northeasterly boundary of Lot "EE" as designated according to said map filed in Book A, at Page 161 of
Maps;
6. Thence, leaving the Westerly boundary of State Highway 101 right-of-way, along the Northeasterly
boundary of said Lot EE, being the existing City Limit boundary of Annexation No. 71 as approved by
Resolution No. 2005-09 of the legislative body of said City, North 54° 25' 52" West, 1349.74 feet;
7. Thence, continue along the Northeasterly boundary of said Lot "EE", and along the existing City Limit
boundary of said Annexation No. 71, North 53° 35' 32" West, 733.70 feet to the most Northerly corner of
said Lot EE, being the Northeast corner of Lot 0 (corner "AE") as designated according to said map filed in
Book A, at Page 161 of Maps, and being the most Eastern corner of the existing City Limit boundary of the
"Lakewood Addition" as approved by Resolution No. 924 of the legislative body of said City;
8. Thence, along the Northeasterly line of said Lot 0, and along the existing City Limit boundary of said
"Lakewood Addition", North 35° 34' 51" West, 41.45 feet to the most Southern corner of Tract No. 169 as
filed in Book 6, at Page 45 of Maps in the office of the Recorder for said County, and the most Southern
Page 1 of 2
corner of the existing City Limit boundary of the "Johnson Annexation" as approved by Resolution No. 627
of the legislative body of said City;
9. Thence, leaving said Northeasterly line of Lot O, along the Easterly line of said Tract No.169, and along the
existing City Limit boundary of said "Johnson Annexation", North 8° 50' 11" East, 116.07 feet;
10. Thence, continue along the Easterly line of said Tract No.169, and along the existing City Limit boundary of
said "Johnson Annexation", North 0° 24' 24" East, 154.15 feet;
11. Thence, North 11° 04' 38" East, 128.26 feet;
12. Thence, North 15° 46' 21" East, 267.07 feet;
13. Thence, North 5° 15' 56" East, 228.66 feet;
14. Thence, North 12" 39' 30" East, 101.44 feet;
15. Thence, North 18° 07' 07" East, 207.14 feet;
16. Thence, North V 51' 40" East, 100.02 feet;
17. Thence, North 18° 32' 56" West, 215.02 feet;
18. Thence, North 4° 24' 05" West, 201.66 feet;
19. Thence, North 13° 15' 08" West, 71.55 feet to the Southerly line of the Madonna Road right-of-way,
known formerly as French Road;
20. Thence, along the Southerly line of said Madonna Road right-of-way, along the existing City Limit
boundary of said "Johnson Annexation", and along the existing City Limit boundary of "Parcel E-1" of the
Annexation of Territory to the City of San Luis Obispo, as approved by Resolution No. 81-41 of the
legislative body of said City, North 63° 34' 05" East, 817.33 feet to the most Western corner of that parcel
of land designated Parcel 1 in the Correction Deed as conveyed to United States Postal Service by Grand
Deed filed in Book 2332, at Page 318 of Official Records in the office of the Recorder for said County;
21. Thence, along the Southwesterly boundary of said parcel of land conveyed to United States Postal Service,
and along the existing City Limit boundary of "Parcel E-1" and "Parcel E-2" of said Annexation of Territory
to the City of San Luis Obispo, as approved by Resolution No. 81-41, South 38° 48' 08" East, 464.31 feet;
22. Thence, continue along the existing City Limit boundary of "Parcel E-1" and "Parcel E-2" of said
Annexation of Territory to the City of San Luis Obispo, and along the Southeasterly line of said parcel of
land conveyed to United States Postal Service, North 47° 13' 35" East, 475.60 feet to the point of
beginning;
Containing 131.38 acres more or less.
Prepared by:
Dan Hutchinson, LS 5139
Dated:
Page 2 of 2
EXHIBIT C
FINANCING PLAN
(attached)
071928\ 9447955 Exhibit C- I
San Luis Ranch Financing Plan
TheEconomicsof lerarl Use
E
Prepared for:
City of San Luis Obispo
Prepared by:
Economic & Planning Systems, Inc.
June 2018
Economic & Planning Systems, Inc.
One Kaiser Plaza, Suite 1410
Oakland, CA 94612-3604
510.841.9190 tel
510.740.2080 fax
Oakland EPS #161142
Sacramento
Denver
Los Angeles
www.epsys.com
Table of Contents
1. EXECUTIVE SUMMARY............................................................................................ 1
2. SAN LUIS RANCH PROJECT OVERVIEW......................................................................... 4
San Luis Ranch Specific Plan...................................................................................... 4
3. INFRASTRUCTURE IMPROVEMENTS TO BE FUNDED............................................................ 7
4, FUNDING AND FINANCING SOURCES.......................................................................... 11
San Luis Ranch Funding Sources............................................................................... 11
CityFunding Sources............................................................................................... 12
FundingStrategy for Regional Improvements............................................................. 13
EconomicConsiderations......................................................................................... 17
S. IMPLEMENTATION MEASURES AND RELATED ACTIONS ...................................................... 18
List of Tables
Table 1
San Luis Ranch Infrastructure Financing Plan Summary ......................................... 3
Table 2
San Luis Ranch Specific Plan Residential Use Summary ..........................................5
Table 3
San Luis Ranch Regional Improvement Cost Allocation ...........................................
9
Table 4
San Luis Ranch Proposed Community Benefits Program Developers Proposal..........
10
Table 5
Funding Sources for Regional Improvements......................................................
13
Table 6
Funding Strategy for Prado Road/US 101 Interchange .........................................
16
1. EXECUTIVE SUMMARY
The San Luis Ranch Financing Plan (Financing Plan) identifies the services and infrastructure
improvements required to serve the San Luis Ranch Project and describes how these items will
be funded and/or financed over time. The Financing Plan conforms with the San Luis Ranch
Specific Plan, Subdivision Map, and financial terms included in the San Luis Ranch Development
Agreement and provides implementing actions for the major funding sources identified.
Upon annexation to the City, the San Luis Ranch Project, which consists of 131.4 acres, will
create a new neighborhood located west of Highway 101 in the southwest quadrant of the City.
The San Luis Ranch Specific Plan allows up to 580 dwelling units and commercial development
including a 200 -room hotel, 100,000 square feet of office space, and 150,000 square feet of
retail and service commercial space. The Project also includes 7.8 acres of parks, waterways, and
other interior open space, as well as 52.3 acres of farmed agricultural land.
The Financing Plan addresses how the infrastructure and services needed to serve the San Luis
Ranch Project will be funded, as the new neighborhood is constructed and occupied by new
residents and businesses:
• Municipal services include "Citywide" services within the Project area. The Citywide services
will be fully funded by municipal revenues derived from the Project area assuming that the
proposed commercial development occurs.' Prior to occupancy of the commercial
development, a fiscal mitigation payment is stipulated by the terms of the Development
Agreement.
Infrastructure needed for the San Luis Ranch Project includes contributions to Citywide and
other subarea development impact fee programs, mitigating impacts upon regional (off-site)
infrastructure, and funding "backbone" and subdivision -related improvements within the
Project area. The largest cost infrastructure item is the Project's "fair share" of the proposed
Prado Road/Highway 101 Interchange.
Funding for required infrastructure improvements will be derived from a variety of sources
including developer equity investments to build or contribute to building needed infrastructure
improvements. Table 1 presents an overall financing strategy for the San Luis Ranch Project.
Developer equity will be a key source of overall infrastructure funding. It is estimated that the
developer will invest an estimated $22.8 million in project -related infrastructure, including
paying the City's development impact fees as specified in the Development Agreement. Some of
the developer's equity investment in City or Region -Serving Infrastructure will be offset by
credits or reimbursement from the City's development impact fee programs or private
reimbursement from other benefitting properties because the developer is "oversizing" the
improvement relative to its nexus -based "fair share" costs, correcting existing deficiencies, or
advancing the improvement before its actual need. At the same time, major improvements
required also benefit other development, the City as a whole, or the region.
1 San Luis Ranch Fiscal Analysis, ADE, September 11, 2017.
San Luis Ranch Financing Plan
June 2018
The City's, other development's, and the region's share of City or region -serving infrastructure in
the vicinity of the Project will be funded by the City's development impact fee programs (levied
on other development in the City), exactions on other developers, and a range of other City and
regional funding grant sources.
This Financing Plan provides details regarding funding of each of the major infrastructure types
listed in Table 1. This information, in turn, requires a series of implementation actions needed to
secure the funding for fulfilling the requirements of the related entitlement documents including
the Specific Plan, the Project Environmental Impact Report, the Fiscal Impact Report, the Vesting
Tentative Subdivision Map, and the Development Agreement. The preparation of the Financing
Plan occurred through a cooperative effort between the Developer and its team of advisors and
City staff and their consultants and advisors.
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2. SAN LUIS RANCH PROJECT OVERVIEW
The San Luis Ranch Project is the development of a major new City neighborhood. The project
includes a mix of residential, commercial, and office uses while preserving nearly half of the site
as open space and agriculture on a 131.4 -acre property, as described in the San Luis Ranch
Specific Plan. The Project site is located west of U.S. Highway 101, east of Madonna Road, and
south of Dalidio Drive in the southwestern part of the City. The property includes a single parcel
(APN 067-121-022).
The Specific Plan area would require annexation to the City of San Luis Obispo. The project is
within the City's Sphere of Influence and Urban Reserve Line and is designed to be consistent
with both City and Local Agency Formation Commission (LAFCo) policies, including the
requirement that the annexation be compatible with the City's General Plan and supportable by
the City's infrastructure. The intent is for the project to be consistent with the development
parameters described in the City's 2014 Land Use Element.
Following annexation of the area and development, the San Luis Ranch Project will create a new
neighborhood along the southern border of the City. Development will be regulated by various
controlling documents including the Development Agreement and the San Luis Ranch Specific
Plan and Vesting Tentative Map adopted by the City in July of 2017.
San Luis Ranch Specific Plan
The San Luis Ranch Specific Plan (Specific Plan) allows up to 580 dwelling units; a commercial
area with up to 250,000 square feet of neighborhood -serving retail and office uses; a 200 -room
hotel, 7.8 acres of internal open space; and 52.3 acres of permanently protected farmed
agricultural land. The Project includes an Agricultural Heritage Facilities and Learning Center
which will serve as an agri-tourism destination with seasonal attractions and promote the
region's agricultural history. Uses allowed in the open space and agricultural areas include
educational uses, urban agriculture, crop production, agricultural accessory uses, produce
stands, and temporary events. These features are described in the Specific Plan text and its
appendices.
The Specific Plan is organized around the principles of 1) maintaining and promoting San Luis
Obispo's agricultural heritage; 2) providing open space and recreational areas; 3) delivering
diverse housinq opportunities, including workforce housing; and 4) creating a multimodal
community. There are several key infrastructure improvements specified in the Specific Plan,
including the Prado Road/Highway 101 Interchange, Froom Ranch Way, Dalidio Road
Improvements, Madonna Road Improvements, and related multimodal improvements, consistent
with the City's Circulation Element and Bicycle Transportation Plan.
Residential Uses
The Specific Plan includes up to 580 residential units of varied density and type, including single
family attached and detached housing on a range of lot sizes and multifamily housing, as shown
on Table 2. Residential uses are generally to be located on the western portion of the San Luis
Ranch Specific Plan Area, west of Froom Ranch Way and south of Dalidio Drive. Residential land
uses will be accessible from local streets, with connections to Froom Ranch Way, Madonna, and
4
San Luis Ranch Financing Plan
June 2018
Prado roads. The single-family units are proposed to consist of a mix of traditional lot layouts
and small lot layouts with front- and alley -loaded garages. The multifamily units are proposed to
be compact homes, which will be located at the northwest portion of San Luis Ranch, effectively
transitioning between the existing neighborhood to the west, and Madonna Road to the North.
There also will be multifamily flats in buildings of 12 units or larger. These units will be designed
as townhouses or apartments with up to 4 bedrooms per unit.
The affordable housing located within the San Luis Ranch Specific Plan Area will provide 34 units
on site for Very Low, Low-, and Moderate -income households, and fourteen additional units
affordable to workforce households (121-160 percent of Area Median Income).
Table 2 San Luis Ranch Specific Plan Residential Use Summary
Source: San Luis Ranch; ADE Fiscal, 9/11/2017
Neighborhood Commercial Uses
The commercial area of the San Luis Ranch will allow for up to 100,000 square feet office
buildings and 150,000 square feet of retail and service business buildings focused on Prado
Road. The commercial -retail center will offer a variety of uses that will both provide for the needs
of the residential neighborhood in San Luis Ranch, as well as complement the overall retail
offerings within the City. Allowed commercial uses include retail, services, restaurants, office,
and hotel. It is anticipated that the planned 200 -room hotel could include conference facilities,
meeting space, and restaurants.
Commercial areas will be accessible by automobiles, transit riders, pedestrians, and bicyclists.
Regional transit services will connect residents and visitors throughout the area.
Open Space Uses
With half of the site set aside for agriculture, open space, and parks, San Luis Ranch takes an
integrated, comprehensive approach to planning and managing open and recreational spaces.
The San Luis Ranch Specific Plan enhances the City's open space by introducing new amenities,
including adding a key link in the Bob Jones Trail and active linear parks.
Estimated
Assessed Value
Residential Category
Amount
per Unit
Low -Medium Density
192
$730,000
Medium Density
77
$520,000
High Density
277
$425,000
Affordable Housing
34
$142,200
Total Residential
580
Source: San Luis Ranch; ADE Fiscal, 9/11/2017
Neighborhood Commercial Uses
The commercial area of the San Luis Ranch will allow for up to 100,000 square feet office
buildings and 150,000 square feet of retail and service business buildings focused on Prado
Road. The commercial -retail center will offer a variety of uses that will both provide for the needs
of the residential neighborhood in San Luis Ranch, as well as complement the overall retail
offerings within the City. Allowed commercial uses include retail, services, restaurants, office,
and hotel. It is anticipated that the planned 200 -room hotel could include conference facilities,
meeting space, and restaurants.
Commercial areas will be accessible by automobiles, transit riders, pedestrians, and bicyclists.
Regional transit services will connect residents and visitors throughout the area.
Open Space Uses
With half of the site set aside for agriculture, open space, and parks, San Luis Ranch takes an
integrated, comprehensive approach to planning and managing open and recreational spaces.
The San Luis Ranch Specific Plan enhances the City's open space by introducing new amenities,
including adding a key link in the Bob Jones Trail and active linear parks.
San Luis Ranch Financing Plan
June 2018
Parks and Recreation Uses
San Luis Ranch will provide park and open space amenities consistent with the values set forth in
the General Plan. Parklands will include an active linear park with a fitness loop and multi -use
trails, a central neighborhood park featuring both active and passive recreational opportunities,
and pocket parks interspersed throughout the residential areas to provide enhanced pedestrian
connectivity and visual openness.
Pocket parks provided throughout the San Luis Ranch community will provide both recreational
and pedestrian amenities and open space breaks, allowing connectivity between residential areas
and creating a more open feel to the neighborhood. A key linear park element of the Specific
Plan will be the San Luis Ranch Preserve and Trailhead that will link the Bob Jones Trail and
connect the linear park behind Target to Laguna Lake.
Agricultural Preservation
The San Luis Ranch Specific Plan will preserve a significant piece of San Luis Obispo agriculture
as well as integrate the site's historical agriculture into the community, with farm operations to
be provided by a private lease agreement. The agricultural land will be contiguous with the
adjacent San Luis Obispo City Farm to allow for integration and will include the community
learning center. The Agricultural Heritage Facilities and Learning Center will be a destination for
residents and tourists alike and will provide the community with local food, education, and a
connection to agriculture.
M.
3. INFRASTRUCTURE IMPROVEMENTS TO BE FUNDED
The San Luis Ranch Project, as a largely undeveloped area, will require the full complement of
local infrastructure to serve the Project area including streets and in -street utilities, drainage,
parks and trails and bikeways. Infrastructure and municipal facilities required to serve the
Project include "backbone" and "in -tract" infrastructure as well as "City -serving and region -
serving" infrastructure, which is typically located beyond the Project boundary but is required (at
least in part) to accommodate the Project development.
In -Tract Infrastructure
"In -tract" improvements typically include the neighborhood streets and utilities serving the
developed portions of development. These improvements will be installed by the developer or
subsequent builders at their expense in conformance with the Subdivision Map requirements and
dedicated to the City in the typical fashion.
Backbone Infrastructure
"Backbone" infrastructure improvements include collector and arterial streets, major wet -utility
improvements, and other public facilities such as parks that service the entire Project area or
beyond. San Luis Ranch backbone infrastructure will be built by the developer at their expense
and dedicated to the City. Insofar as these individual backbone improvements have been
identified in City master facility plans or development impact fee programs the developer may
qualify for fee credits or reimbursement.
Citywide or Region -Serving Infrastructure
A significant investment in region -serving transportation and other infrastructure improvements
is required to provide adequate transportation capacity for San Luis Ranch, reduce existing
congestion, and provide capacity for other pending nearby development projects as well as the
remaining development potential in the City broadly. As a part of the broader environmental
impact and traffic analysis for the San Luis Ranch Project the City has identified approximately
$54.2 million of improvements. Table 3 provides a listing of these improvements and shows a
technically -derived cost allocation for each infrastructure item, as summarized below:
• San Luis Ranch cost allocation. Approximately $22.8 million of these costs are attributable to
the San Luis Ranch Project based upon the City's "fair share" cost allocation and/or other
agreements.
• City/reaionai share cost allocation. This leaves a net amount to be funded of $31.4 million.
Funding sources to fund this "net" cost are discussed below.
• San Luis Ranch "up -front" costs. Approximately $25.5 million in up -front costs are required
by San Luis Ranch to build or participate in project specific infrastructure.
Community Benefits
As a part of adopting a Development Agreement, the City is obligated to identify "community
benefits" that are offered by the developer as consideration for the City's willingness to enter
into the Development Agreement. Community benefits, in this context, are "extraordinary,"
7
San Luis Ranch Financing Plan
June 2018
meaning they are items that exceed the general nexus -based benefits of the project (e.g., net -
positive fiscal flows, economic development benefits, and achieving other General Plan policies)
and items that are required by City policy or regulations or EIR mitigations. At the minimum, the
dollar value of these extraordinary community benefits should exceed the estimated nexus -based
value of the Development Agreement to the developer, including the value of vesting the
entitlements, offering to provide financing mechanisms, and other financial considerations. The
City and the San Luis Ranch Developer have discussed a program of extraordinary community
benefits summarized on Table 4 that sums to $14.25 million. Analysis has shown that this
amount exceeds the value of the Development Agreement to the developer.
93
San Luis Ranch Financing Plan
June 2018
Table 3 San Luis Ranch Regional Improvement Cost Allocation
Source: City Staff Regional Infraslruclure database dated October 9, 2017, with agreed-upon costs for the Prado Road/US 101 Interchange (Item #4) and the Bob Jones Trail (Ilem #21)
Cost Allocation
Preliminary
Developer Share City/Regional Share
Item #
Item
Developer RolelParticipatlon
Cost Total
Estimate
Percent
Amount Percent
Amount
ROADWAYS
1
Froom Ranch Way (Prado to Oceanaire) Including Bridge
Build 8 Fund
$7,071,277
100%
$7,071,277 0%
$0
2
Froom Ranch Way (Oceanaire to Target Driveway)
Design & Pay Fees- Built 9y Oflmrs
$423,561
1556
$63,534 85%
$360,027
3
Froom Ranch Way & LOVR Intersection Widening
Build vd Pplenliel Private
$450,000
20%
$90,000 80%
$360,000
Reirnpursemdnt
4
Prado Road/US 101 Interchange and North Bound Ramps
Financing of Project improvements; Net
$25,000,000
28%
$7,000,000 72%
$18,000,000
Fees -Built By City
5
Prado Road Southbound Ramps
Pay Fees - Built By Others
$10,000,000
28%
$2,800,000 72%
$7,200,000
6
Madonna & DalidiolPrado Intersection Widening
Build & Fund
$2,000,000
100%
$2,000,000 0%
$0
OTHER AREA ROADWAYS (MITIGATIONS)
7
Madonna & SB 101 Off Ramp - Lengthen EB Left Tum Pocket
Build & Fund
$50,000
100%
$50,000 0%
$0
8
Madonna & Oceanaire Pedestrian X-ing Enhancements
Build & Fund
$300,000
50%
$150,000 50%
$150,000
9
Madonna & San Luis Ranch Way Pedestrian X-ing Enhancement
Build & Fund
$150,000
100%
$150,000 0%
$0
10
LOVR & SB 101 Off Ramp - Lengthen Left Tum Pocket
Build & Fund
$250,000
100%
$250,000 0%
$0
11
LOVR & Higuera - Lengthen EB Right Turn Pocket
Build & Fund
$25,000
10096
$25,000 0%
$0
12
Higuera & South - Lengthen NB Right Tum Pocket
Build w/ Potential Private
$250,000
50%
$125,000 50%
$125,000
Reimbursement
OTHER AREA ROADWAY MITIGATIONS - FEE ONLY PROJECTS
13
Prado & Higuera Widening
Pay Fees- Built By Others
$750,000
10%
$75,000 90%
$675,000
14
Madonna Rd @ LOVR - Signal Timing Optimization
Pay Fees - Built By Others
$2,500
0%
$0 100%
$2,500
15
Madonna & Oceanaire Tum Lane Extensions
Pay Fees - Built By Others
$25,000
100%
$25,000 0%
$0
16
Madonna & LOVR - Tum Lane Extensions
Pay Fees - Built By Others
$25,000
100%
$25,000 0%
$0
17
LOVR & Auto Park Way Signalization
Pay Fees- Built By Others
$200,000
11%
$22,000 89%
$178,000
18
Higuera & Tank Farm- Lengthen NB Right Turn Pocket
Pay Fees - Built By Others
$850,000
6%
$42,500 95%
$807,500
SLR BIKEWAYS
19
Prado Road Class I Path (Madonna to Froom)
Build & Fund
$1,500,000
100%
$1,500,000 0%
$0
20
Madonna Road Class I Path / Protected bikeway
'Build & Fund
$800,000
60%
$480,000 40%
$320,000
(Hwy 101 to Oceanaire)
21
Bob Jones Trail (Calle Joaquin to Froom Ranch Road)
Build w/ Potential Private
$1,000,000
1691
$160,000 84%
$840,000
Reimbursement
SLR BIKEWAYS - FEE ONLY PROJECTS
22
Prado Road Class I Path (NB Ramps to Higuera)
Pay Fees - Built By Others
$500,000
28%
$140,000 72%
$360,000
23
Bob Jones Trail (Madonna to Prado)
Pay Fees - Built By Others
$1,500,000
3%
$45,000 97%
$1,455,000
UTILITIES
24
Install new24" HDPE Sewer Line
150% developer share for the sewer
$1,078,700
50.
$539,350 50%
$539,350
system
Cost Totals $54,201,036 $22,828,661 $31,372,377
Source: City Staff Regional Infraslruclure database dated October 9, 2017, with agreed-upon costs for the Prado Road/US 101 Interchange (Item #4) and the Bob Jones Trail (Ilem #21)
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4. FUNDING AND FINANCING SOURCES
San Luis Ranch Funding Sources
Developer or Builder Equity
Developer equity, including revenue from a Community Facilities District (CFD) bond issue, is
one of the primary sources of funding for infrastructure improvements needed to serve the San
Luis Ranch area. Developer (or builder) equity will pay City development impact and mitigation
fees, fund construction of all "in -tract" and "backbone" improvements located within the San Luis
Ranch area, fund the Project's "fair share" allocation of off-site "regional" improvements, of
which some will be subject to fee credits, and advance funding over and above the "fair share"
costs, a portion of which will be subject to reimbursement by the City. It is estimated that total
developer equity necessary to fund the backbone and in -tract infrastructure and region -serving
infrastructure (including the amount beyond the nexus -based "fair share" amount) is $25.5
million.
Participation in Area and Citywide Development Impact Fee Programs
The San Luis Ranch Project will be subject to the City's various development impact fee
programs, as specified in the Development Agreement. Per the Development Agreement, the
San Luis Ranch Project will pay transportation fees and water and wastewater connection
charges, as of the date of the Vesting Tentative Map (July 2017), except these fees will escalate
at 10 percent per year beginning one year after the annexation and recordation of the first Final
Map creating a developable residential (or commercial) lot until the fees reach the maximum fees
approved and adopted by the City Council as part of the 2018 update.2
The residential component of the San Luis Ranch Project will pay the fire and police fees as
approved and adopted by the City Council in 2018. The commercial component of the San Luis
Ranch Project will pay the fire and police as approved and adopted by the City Council in 2018,
except these fees will be phased in as described in the Development Agreement. Additional
development impact fees are charged by the local school district.
Per the terms of the Development Agreement, the difference between the fees that would be
paid per the 2018 update and the July 2017 "vested" fees is referred to as the "excess"
development impact fee payment. Both the developer and the City have agreed that in no event
will the total amount of excess fee payments be less than $2,700,000.
Construction and Dedication of "In -tract- Improvements
As is common practice, the developer of San Luis Ranch will build in -tract and backbone
infrastructure within, and on the periphery of, the San Luis Ranch area to the specification of the
City as documented in the Tentative Subdivision Map and subsequently dedicate these
improvements and underlying lands to the City.
2 During 2017 and 2018 the City engaged in a comprehensive effort to update and reorganize its
impact fees, and the updated fee program was adopted in January 2018
11
San Luis Ranch Financing Plan
June 2018
"Fair Share" Allocation of Other Improvement Costs
The development of the San Luis Ranch Project will increase traffic on existing roadways and
create demand for other City/County infrastructure. Many of these improvements are facilities
located beyond the project boundary. This additional demand was studied in detail as part of the
Environmental Impact Report (EIR) and the mitigation measures identified to maintain policy -
based levels of service on these facilities.
One of the most significant improvements is the construction of an overcrossing from the San
Luis Ranch site across U.S. Highway 101 via an overpass that will connect to the existing section
of Prado Road on the east side of the freeway. This overpass will serve the expanded commercial
and residential development of San Luis Ranch and will provide an additional east/west
connection in San Luis Obispo that would reduce congestion at the Los Osos Valley Road and
Madonna Road interchanges and route traffic to and from the Airport Area via the Prado Road
connection. The overpass will also have a Class I Bike path, on -street bike lanes, and sidewalks.
This improvement is to be constructed as a separate project from the Specific Plan as it is
developed, and the Specific Plan would pay a fair share contribution to the design and
construction. Consequently, the project will construct improvements that are necessary to
correct existing deficiencies and to accommodate traffic and other impacts above and beyond its
own impacts.
Community Facilities District
The owners of the property have requested and the City has agreed to form a CFD subject to
Council action for the San Luis Ranch area. Such a CFD, pursuant to the Community Facilities
District Act of 1982, allows for the levy of a special tax on real property located within the
designated boundary of the CFD for a range of purposes including providing funding for
municipal services, local area maintenance, and infrastructure. It is common for the special taxes
to be used to service municipal bonds issued for the CFD to fund new development -related
infrastructure. The San Luis Ranch CFD will primarily be used as a source of funding for the
Prado Road/Highway 101 Interchange improvements and either directly fund or reimburse
developer funding of regional improvements.
City Funding Sources
Development Impact Fee or Exaction Revenue
Insofar as other developers/builders are obligated to pay their "fair share" of infrastructure
impruvr.rnr.nls by paying the Cltywlde and area development impact fees or additional nexus -
based "exactions," a portion of this revenue will be used for reimbursement for investments
above "fair share" made by the San Luis Ranch developer (or other nearby developers that may
advance funding for construction of fee -funded facilities and improvements).
Other Funding Sources
Funding for the City's share of non -San Luis Ranch improvement costs may be derived from a
variety of sources typically used by the City to fund infrastructure. These include private funding
from other development, public grants and use of eligible and available impact fee revenue.
12
San Luis Ranch Financing Plan
June 2018
Funding Strategy for Regional Improvements
A key aspect of the San Luis Ranch Financing Plan is providing funding for a range of
improvements required for its development but also needed to meet needs of other nearby
development and development throughout the City and region. Overall, these improvements are
estimated to cost $54.2 million. As shown in Table 3, above, these costs are dominated by the
Prado Road/US 101 Interchange. Table 3 also shows the cost allocation to the San Luis Ranch
developer and the remainder that is the share that must be funded by the City or others. A key
consideration regarding these improvements is their phasing and linkage, (i.e., when the
individual improvements need to be constructed as new development occurs). At the present
time it is expected that the improvements will need to be constructed over the next 10 years or
more, depending on the rate of actual development and other factors. Table 5 shows the
sources of funding that the developer will rely upon to pay for San Luis Ranch's cost allocation,
as further described below.
Table 5 Funding Sources for Regional Improvements
Funding Sources
SLR Cost Allocation
Notes
Developer Fair Share Allocation
Total "Fair Share" Cost Allocation
$22,828,661
Developer Funding Sources
SLR Developer Equity
$6,000,000
San Luis Ranch to determine allocation
Mello Roos Community Facilities District (CFD) — SLR Parcels
$14,000,000
between residential and commercial
Credits/Reimbursements/Adjustments
City Adjustments
$2,000,000
City to determine sources of adjustments
(e g , credits, reimbursements, other)
Totals
Estimated Total Funding
$22,000,000
Value of Fee Deferral or Other Considerations
$828,661
Reflects fee deferral to certificate of
occupancy or other considerations
Funding Gap
$0
Additional Negotiated Housing Commitment
Provided in consideration of the City
Total Workforce Units
14
Adjustments shown above. Distribution of
units will be per Housing Element Policy
13
San Luis Ranch Financing Plan
June 2018
Phasing of Regional Improvements
The Regional Improvements will be phased in a manner that meets increasing travel demand and
also the availability of necessary funding from development -based or City sources.
Up -front Developer Obligation
The Developer's up -front obligation to build improvements and/or pay fees, before accounting for
credits/reimbursements or other adjustments, is estimated to be $25.5 million. This is above and
beyond the Developer's Fair Share of Costs, and the City is committing to providing credits/
reimbursements or other adjustments to address the $2.7 million difference.
Developer Pays Fair Share Costs Funding of Regional Improvements
Developer will provide funding for its "fair share" of regional infrastructure improvement costs as
exaction cash payments, through direct construction, subject to credits and reimbursements
from the City where justified and issuance of CFD bonds. Estimated cost of the developer's fair
share is $22.8 million, just over 40 percent of total regional infrastructure project costs. This
developer funding or construction will occur on a schedule consistent with Subdivision Map
requirements or as specified in the Development Agreement.
City and Regional Funding or Construction of Regional Improvements
The larger portion of the regional infrastructure costs, $31.4 million, nearly 60 percent of the
total, falls to the City (and the region) to fund. The City has identified a range of sources for this
purpose as described below. Due to some uncertainty, including what the actual costs are and
also variations in the amounts received from the individual funding sources, it will be prudent to
have a funding contingency, (i.e., identify total funding in excess of the currently estimated cost
of the improvements).
Future Citywide Impact Fee Funding
A number of the infrastructure projects included in the Regional Improvements list are also
included in the City's updated development impact fee program. These impact fees will generate
fee revenues over time that will be available to fund the regional improvements associated with
the San Luis Ranch development. Some of these fees may not fully recover the total costs of
project improvements, and SLO Ranch may not be paying the total of new fees that are
established, therefore final reimbursement calculations will be necessary when the City does final
adoption of this program.
Contributions from other Benefitting Developers
There are several pending development projects that will benefit from the regional improvements
and thus will contribute funding either as entitlement -related exactions to the City, building part
of the improvement themselves, or through private reimbursement agreements with the
Developer. It is currently estimated that approximately $845,027 in transportation costs3 will be
3 See Item #2, #3, and #12 on Table 3.
14
San Luis Ranch Financing Plan
June 2018
available over time from these sources and $539,000 in potential private reimbursement4 for
wastewater utility improvements will be sought.
San Luis Obispo Council of Governments Grant Funding
The San Luis Obispo Council of Governments (SLOCOG) administers the major State and federal
transportation grant programs for jurisdictions in San Luis Obispo County. To date SLOCOG has
identified approximately $6,000,000 that may be used to assist with construction of the Prado
Road/Highway 101 Interchange Phase I. Additional funding will be needed as Phase II proceeds.
Other Funding
Approximately $953,000 in funding will be needed from other funding sources, including the
City's General Fund, to help complete projects that are needed to be built by San Luis Ranch.5
These funds are not able to be passed on to the impact fee programs or reimbursed through
public grant sources.
Because the regional improvements benefit San Luis Obispo County, accommodating trips
starting or ending in the unincorporated portions of the County, there is an obligation to fund a
proportional amount of the region -serving infrastructure, specifically components of the Prado
Road/Highway 101 Interchange. The County will make a one-time contribution of $1,435,260
toward this project, which is intended to supplement the amount of regional share that will be
paid by the San Luis Obispo Council of Governments (SLOCOG).
Tax Increment Funding
The City is currently in the process of seeking annexation of the San Luis Ranch territory to the
City. As a part of this annexation process, a property tax exchange agreement ("Tax Exchange
Agreement") is necessary to establish a property tax base and increment for the City. The Tax
Exchange Agreement was approved by the County Board of Supervisors on May 1, 2018. The
City will receive one-third of all future property tax increment, after transfers to the Educational
Revenue Augmentation Fund (ERAF), beginning in Fiscal Year 2019-20 and each year thereafter.
This financial agreement is contingent upon approval of the annexation by LAFCO.
Property taxes are one of the main revenue sources the City uses to fund its municipal services
as shown in the San Luis Ranch Fiscal Impact Report.6 The City and/or County could decide each
year to appropriate some or all of the property tax increment from development of the San Luis
Ranch Project to a special "tax increment fund" that would fund their cost allocations. This
pledge of tax increment would be for a predetermined period of years required to accumulate or
pay debt service on a related debt issue or loan.
Funding Strategy for Prado Road/US 101 Interchange
As described above, the Developer and the City have agreed to obligations towards the funding
of the Prado Road/US 101 Interchange based upon a 28 percent "nexus -based" allocation of cost
4 See Item #24 on Table 3.
5 Per City staff analysis dated 2/8/18.
6 Ibid.
15
San Luis Ranch Financing Plan
June 2018
to the developer. The balance is funded with City and regional sources to address the existing
deficiency and to provide improved capacity for future Citywide and regional development.
Table 6 illustrates the Prado Road improvement cost-sharing agreement and shows the specific
sources of funding that the developer and the City will use. In addition to direct equity
investment as part of project development, the developer has agreed to the formation of a CFD.
Together, these two sources will fund the bulk of the developer's $9.8 million obligation. The City
will draw upon a variety of sources including funding from the recently updated Traffic Impact
Fee (TIF) Program and contributions from San Luis Obispo County and SLOCOG reflecting the
regional benefits of the Prado Road/US 101 Interchange improvements. Other grant funding
sources may also be obtained.
Table 6 Funding Strategy for Prado Road/US 101 Interchange
Funding Sources
Cost city
Allocation
Notes
Total Cost of Prado Road/US 101 Interchange
Prado Road/US 101 Interchange and North Bound Ramps
$25,000,000
See Table 3
Prado Road Southbound Ramps
$10,000,000
Appendix A of the Capital Facilities Fee
Program Nexus Study
Financing
5' .023,545
.Appendix A of the Capital Facilities Fee
Program Nexus Study
Total Cost
$46,023,545
Direct Developer Funding
Developer Contribution
$9,800,000
Fair Share Allocation (28%), See Table 3
Transportation Development Impact Fee Program
Transportation Impact Fees
$28,663,545
Appendix A of the Capital Facilities Fee
Program Nexus Study
Regional Funding Sources
One-time contribution towards Prado
County of San Luis Obispo
$1,435,260
Road/Highway 101 Interchange Project as
described in the Tax Exchange Agreement
San Luis Obispo Council of Governments (SLOCOG)
$6,000,000
STIP Funding for Prado Road/Highway 101
Interchange Project (secured)
Future SLOCOG Allocation
$124,740
Requested but not yet secured
Totals
Estimated Total Funding
$46,023,545
Funding Gap (General Fund or Other)
$0
Regarding the substantial contribution to the Prado Road/US 101 Interchange improvements
from the City's TIF, there likely will be imbalances between the timing of the needed
improvements and the availability of funding. This is often the case with impact fee programs
where improvement costs are often needed "upfront" and fee revenues accumulate over time as
16
San Luis Ranch Financing Plan
June 2018
development of the project area (and in the City as a whole) occurs. In this event the City may
need to loan the TIF Program funds to assure timely delivery of roadway improvements, to be
paid back by the subsequently accruing fee revenues. Funding for such a loan could be derived
from the City's General Fund reserves or through a loan (e.g., from the State Infrastructure
Bank), through financing (e.g., a certificate of participation), or through a pledge of City tax
increment revenue.
Economic Considerations
Project Feasibility
As a part of achieving new development as envisioned in the City's General Plan and specified in
specific plans or other zoning actions, it is in the interest of the City to cooperate with developers
and builders to promote feasibility of new development, (i.e., that new development generates
economic returns sufficient to attract necessary private equity investment and commercial
lending). While market conditions can constrain investment at low points in the business cycle,
over the longer terms the type and amount of development authorized by the City and the costs
imposed for needed infrastructure and facilities should balance so as not to unnecessarily impede
desired development.
Financial Burden Measures
A variety of methods are used to determine the cost burden placed upon new development
associated with providing the necessary infrastructure including in -tract and backbone
infrastructure improvements and contributions to City -serving infrastructure through payment of
impact fees or other mechanisms. The San Luis Ranch Project, given the real estate values
created and the total cost of infrastructure improvements, is shown to fall within reasonable
market levels of financial burden.
Incidence of Burdens
Depending upon the type of funding relied upon to develop a project, the "incidence" of the
burden (who pays?) varies. Equity provided by the developer for project costs including
contributions to public infrastructure and facilities is a burden on the equity investors in the
project. Special taxes or assessments on real property are a burden on the local homeowners or
businesses subject to these taxes or assessments. Excise taxes (e.g., sales taxes, utility taxes,
transient occupancy taxes) are a burden on those engaging in purchases of these goods. The
City has established CFD policies which place a 1.8 percent "cap" on property tax burdens.
The San Luis Ranch project is located in County Tax Rate Area (TRA) 112-002 which has a total
current tax rate of 1.07225 percent, reflecting the basic 1 percent as well as voter -approved
overrides.? Future additional tax overrides related to voter -approved general obligation bonds
and special taxes or assessments may be approved in the future.
7 San Luis Obispo County Auditor -Controller.
17
5. IMPLEMENTATION MEASURES AND RELATED ACTIONS
The Financing Plan will be implemented concurrent with approval and subsequent development
of the San Luis Ranch area. Key components of implementation will include the following.
1. Adopt Development Agreement
The Entitlement Documents for the San Luis Ranch Project include a Development Agreement,
which is a contract between the Developer and the City that vests the entitlement over a long
term (20 years) as consideration for extraordinary benefits to be received by the City for
granting the vesting. The San Luis Ranch Development Agreement largely provides a framework
and security for funding the regional infrastructure improvements and the related reimbursement
to the Developer for investments that exceed the 'fair share" cost allocation for these
improvements.
2. Administer Subdivision Map Conditions
A vesting tentative map was adopted for the San Luis Ranch in July 2017. The Subdivision Map
includes an extensive set of conditions that must be met by the Developer as the project is
developed, including construction of all "in -tract" infrastructure improvements and other
obligations.
3. Adopt and Administer City Development Impact Fees
The City of San Luis Obispo levies a range of development impact fees on new development.
These currently include fees for transportation improvements, parks and recreation
improvements, and water and wastewater connection charges.$ These fees are levied on a
citywide basis and also additional fees are charged within specific subareas of the City where
additional local infrastructure is required. In 2018 the City completed a major update to its
impact fee program that includes new fee categories for public safety and revisions to existing
fees. The San Luis Ranch Project will be charged the fees that were in place at the time the
vesting tentative map was adopted, subject to the adjustments specified in the Development
Agreement. If the developer builds improvements that are funded by the impact fees they will be
eligible for a credit against the respective fee liability that will be passed on to subsequent
builders otherwise subject to the fees. If infrastructure is oversized with respect to the
developer's "fair share" cost allocation, the value of the oversizing will be reimbursed with fee
revenue received from other development subject to the fee.
4. Prepare and Administer Reimbursement Agreement(s)
The San Luis Ranch Development Agreement will enable and specify the terms and security for
reimbursement agreements that will be created for each of the individual regional improvements.
8 In addition, the City charges in -lieu fees for park land, public art, and affordable housing; however,
these in lieu fees are often the subject of specific negotiations.
18
San Luis Ranch Financing Plan
June 2018
Projects Eligible for Private Reimbursement
Three projects have been identified that may be eligible for private reimbursement. Alternatively,
these improvements may be incorporated into the updated Impact Fee Program.
• Froom Ranch Way: Oceanaire to Target Driveway (Item #2 on Table 3)
• Froom Ranch Way and LOVR Intersection Widening (Item #3 on Table 3)
• Higuera & South: Lengthen North Bound Right Turn Pocket (Item #12 on Table 3)
Projects Eligible for Impact Fee Credits
Insofar as the Developer builds or directly funds infrastructure improvements that are included in
one of the City's development impact fees, the Developer is eligible to receive credit against its
fee obligations for these improvements. The Development Agreement will specify the precise
terms of these fee credits. Currently, the following projects may be eligible for impact fee credits
(see Table 3).
■ Madonna and Dalidio/Prado Intersection Widening
• US SB Ramp at Los Osos Valley Road
• LOVR and Higuera Intersection
• Turn Lane extensions at Madonna and Oceanaire, and Madonna and LOVR
• Prado Road Class I Bike Path US 101 to South Higuera
Additionally, some projects may be eligible for crediting under the City's updated Mitigation Fee
Act Transportation Impact Fee program. Final credit amounts are subject to final Council
approval. Potential projects that may receive crediting under the revised program include:
• Madonna Road Class I Path (US 101 to Oceanaire)
• Madonna and Oceanaire Pedestrian Crossing Enhancements
• Prado Road and South Higuera Widening
• Prado Road Class I Bike Path in front of US Post Office
• Bob Jones Trail (Calle Joaquin to Froom Ranch Road)
It is estimated that approximately $2,142,000 in potential impact fee credit for project
construction and mitigation fee requirements will be available to assist in delivering the
improvements needed by the San Luis Ranch development.9
Source of Reimbursement Agreement Funding
A number of infrastructure improvements are specified in the City's development impact fee
programs and Environmental Impact Fee mitigation measures that the San Luis Ranch Developer
will fund or build beyond its "fair share" allocation of cost. These contributions will be eligible for
reimbursement from fees paid by other developers benefiting from these improvements or from
other sources.
Community Facilities District
A CFD, as enabled by the Community Facilities District Act of 1982, allows a local jurisdiction to
levy a special tax within a specified area to pay for public services and/or infrastructure needed
9 Per City staff analysis, dated 2/8/18.
19
San Luis Ranch Financing Plan
June 2018
within the area. Over the past three decades, CFDs have become a common mechanism for
cities to fund services and finance development -related infrastructure. The levy of any special tax
and any related bond issuance is subject to voter approval, and if the area is inhabited, approval
by two-thirds of the voters in the area is required. If fewer than 12 voters are located in the
area, approval by the landowners is required (San Luis Ranch area currently has no residential
uses).
City Policy and Approach
The City of San Luis Obispo has not, before this San Luis Ranch Project, created any CFDs to
fund capital improvements. The City has, in anticipation of San Luis Ranch and other
development -related financing requirements, adopted policies and procedures related to CFDs
that guide formation of the San Luis Ranch CFD. A key policy adopted by the City is that
"aggregate" property tax burden within the City should not exceed 1.8 percent of assessed value
annually.
Funding Capacity
The funding capacity of a CFD is based upon the type and amount of development within the
bounds of the CFD and the amount of the special tax levied against each parcel. Special taxes
levied as part of a CFD must clearly specify a "rate and method of apportionment" which defines
the amount of the tax levied on each parcel and how the amount may be increased (indexed)
over time to account for inflationary cost increases. Generally, CFD special taxes are limited to a
fraction of the 1 percent property tax allowed under Article 13 A of the State Constitution.
The funding capacity of the San Luis Ranch Project, taking account of the market value of
development being created, the existing general and special taxes, and the City's established
special tax "cap" of 1.8 percent, is estimated to be approximately $2.9 million annually. Given
market conditions and maximum equivalent HOA rates in the community of $200 per month, and
the significant amount of smaller multifamily units, the aggregate tax burden on residential units
may limit this capacity to below this maximum, resulting in a funding capacity of approximately
$1.7 million per year.
Special Tax Components
The San Luis Ranch CFD is primarily being formed to provide a source for infrastructure funding
to be allocated at the Developer's discretion. The "Rate and Method of Apportionment" that will
be developed as part of CFD adoption will specify how the San Luis Ranch special taxes shall be
allocated. Based upon current cost analysis, the allocation of CFD special tax funding at full
development of the San Luis Ranch Project area would include $14 million luwdrd!s irifrdsLruclure
funding. Within this total, there will be a component for administration.
CFD Administration
The City will be required to administer the CFD from year to year. Given the nature of the special
tax (a fixed tax rate plus an index -based inflator), this administration is quite simple, involving
sending documentation to the County Tax Collector as the annual property tax bills are prepared.
This service is typically provided by consultants to the City and costs approximately $10,000 to
$20,000 per year depending upon the size of the CFD and complexity of the special tax. There
will be some additional administration required by the Finance Department to control CFD funds
consistent with the terms of the Rate and Method of Apportionment and related financial
reporting (in the CAFR, etc.).
20
San Luis Ranch Financing Plan
June 2018
Formation Process
It is anticipated that the CFD formation will be initiated at the time the San Luis Ranch
annexation is adoption by the City Council. The following steps must be accomplished as part of
the CFD formation process:
• Develop CFD concept and document costs to be funded
Map CFD Boundary and conduct voter determination (area occupied area or unoccupied?)
• Prepare Rate and Method of Apportionment
• Adopt Resolution of Intention
• Adopt Resolution of Formation and set date for election
• Conduct election (or obtain landowner approval)
Adopt Ordinance to Levy Special Tax
21
EXHIBIT D
FEASIBILITY MEMORANDUM
(attached)
071928\ 9447955 Exhibit D- I
MEMORANDUM
To: Derek Johnson, City Manager
Michael Codron, Director of Community Development
From: Walter Kieser and Ashleigh Kanat
Subject; San Luis Ranch Financial Feasibility and Funding of Region -
Serving Improvements; EPS #161142
Date: May 17, 2018
The Ernnnmics n/'l wid Use
As a part of our broader scope of financial services related to the
San Luis Ranch Specific Plan Project, Economic & Planning Systems, Inc.
(EPS) has been asked to evaluate the financial feasibility of the Project
from a private sector "developer" perspective, explore how the costs for
the regional infrastructure beyond the "fair share" of costs attributable
Cal
to San Luis Ranch can be funded through combined private and City
sources, and also explore the community benefits deriving from the
development of the Project, including the general benefits expected to
occur and also the "extraordinary" benefits offered by the Developer in
connection with the City's willingness to enter into a development
agreement. It is important to document feasibility to assure that the
Project, as planned, can meet its infrastructure financing obligations
while remaining competitive and feasible in the marketplace. Regarding
the extraordinary community benefits offered, it is necessary to find that
these benefits to the community equal or exceed the value of the
Development Agreement to the Developer.
This Memorandum documents this financial review effort which has
included a careful and cooperative effort involving City staff and
representatives of the Developer Team to identify Project -related
infrastructure items and their cost estimates, estimating the value of
community benefits, preparing and reviewing confidential financial
information from the Developer (i.e., information subject to a non-
disclosure agreement), and identification and evaluation of funding
options available to the Developer and the City to fund needed regional -
Economic &Planning Systems, Inc.
serving infrastructure.
One Kaiser Plaza, Suite 1410
Oakland, CA 94612-3604
510.841.9190 tel
510.740.2080 fax
Oakland
Sacramento
Denver
Los Angeles
www.epsys.com
Memorandum
San Luis Ranch Financia! Feasibility
Findings
May 17, 2018
Page 2
I. San Luis Ranch Project has the potential to achieve the financial returns necessary
to attract the needed equity and commercial credit.
Based upon our review of the Developer's pro forma financial analysis it is our opinion that
the San Luis Ranch Project can be financially feasible as indicated by the measures of
financial return applied and the Developer's willingness to accept the indicated level of
return. This finding is highly sensitive to the market pricing ultimately achieved and the
respective absorption rates of proposed residential and commercial development, the actual
overall project development costs, and the Project's actual "fair share" allocation of region -
serving infrastructure costs. As the average home price increases within the range of pricing
indicated by market analysis, financial returns improve proportionately. It is noted that the
Developer is not providing a "guarantee" on the pricing of the homes (other than deed
restrictions on the inclusionary and 14 workforce housing units secured by the Development
Agreement).
2. The City has a range of options for funding region -serving infrastructure beyond
the "fair share" allocated to San Luis Ranch.
As a part of the broader environmental impact and traffic analysis for the San Luis Ranch
Project the City has identified some $54.2 million of improvements that are needed to serve
the Project while also alleviating existing traffic congestion and serving other future
development in the southern area of the City and nearby unincorporated portions of the
County as development occurs over the coming decades. Of this amount, approximately
$25.5 million in upfront costs are required of the project to complete project specific
improvements. Approximately $22.8 million of these costs are attributable to the San Luis
Ranch Project based upon the City's "fair share" cost allocation technical analysis.' This
leaves a net amount to be funded from other City, private or regional sources of $31.4
million to fully complete the $54.2 million of total projects required for the San Luis Ranch
development. There are a range of funding and financing options to pay for the non -project
share of these improvements, including private reimbursements, integrating these projects
into the City's development impact fee programs as part of ongoing update efforts, working
with the County to ensure the County pays its "fair share" allocation and obtaining a portion
of future regional funding.
3. The San Luis Ranch Project will create a range of community benefits and offers
"extraordinary" community benefits that exceed the value of the Development
Agreement to the Developer.
The San Luis Ranch has been designed to achieve a high development standard and as such
will confer a range of community benefits to the City including implementation of General
Plan policies, creation of construction and permanent employment, providing parks and open
space areas in an area of town that is deficient of public parks, and funding needed
improvements to region -serving infrastructure. Additionally, extraordinary community
benefits (beyond those items that occur as the result of Project development or are otherwise
required by City regulation or policy) are being offered including funding infrastructure
beyond the Developer's "fair share" cost allocation, providing home sales preferences for
1 The fair -share allocation analysis is based on the City's transportation model and represents a
collaborative effort between the City's transportation department and the Project developer.
Memorandum
San Luis Ranch Financial Feasibility
May 17, 2018
Page 3
local workers and owner occupants, providing a workforce housing program, providing land
and building an Agricultural Heritage and Learning Center, exceeding State and City's energy
efficiency standards and thereby accelerating compliance with the City's Climate Action Plan,
and exceeding the City's multimodal goals and objectives. Based upon our analysis, the
extraordinary community benefits are estimated to be $14.25 million and the value of the
Development Agreement to the Developer is estimated to be $7.05 million, thus the benefits
to the community outweigh the Developer's benefits.
Project Revenues
The San Luis Ranch Project revenue will be derived primarily from building and selling homes.
Additional revenue will be derived from sale of parcels to other builders. The residential pricing
assumptions used in the pro forma financial analysis reflect a market range of average prices for
single-family for -sale housing from $525,000 to $625,000 (the top of the market range indicated
by market analysis for the expected residential prototypes). The pro forma financial analysis
shows sales of housing and the commercial parcels occurring (following site work that begins in
2018/19) from 2020 through 2026. Pricing and absorption assumptions are consistent with
current and expected future market conditions, and considered conservative for purposes of the
pro forma analysis. The Project's Affordable and Workforce Housing Program is reflected as a
discount on Project average home pricing and beyond these price -restricted units, as noted
above, no other price restrictions will occur.
Project Costs
Project costs shown in the pro forma financial analysis include the full range of costs required to
develop the Project Site and construct the residential component of the San Luis Ranch Project:
• Land acquisition
• Pre -development costs
Site improvements
• City development impact fees and permitting fees
Offsite improvements including the "fair share" allocation of regional improvement costs
Financing costs, including returns on initial equity invested and construction loan interest
• Vertical construction costs and contingency
These costs as reflected in the pro forma financial analysis all appear to fall within a range typical
for such large development projects, with the exception of the "fair share" allocation of the
regional improvements, as has been noted.
Rate of Return to Equity Investment
The San Luis Ranch Project, as is the case for all major development projects, requires
substantial equity investment as well as commercial credit for both site "horizontal" development
and building "vertical" construction costs. Real estate finance became considerably more difficult
as the result of the Great Recession due to increased standards and costs for commercial credit
including higher equity requirements to obtain credit. The San Luis Ranch Project also carried a
significant land acquisition cost since its purchase in 2015. These higher equity investments and
requirements increase the need for equity investment and also contribute to overall costs due to
the greater risks involved in equity investment. Our review of the pro forma financial analysis
involves review of all data and assumptions regarding their veracity and also viewing resulting
financial returns from a variety of perspectives. In this instance we have concluded that
Memorandum
San Luis Ranch Financia/ Feasibility
May 17, 2018
Page 4
the "internal rate of return" method indicated in the San Luis Ranch pro forma financial analysis,
given the use of leverage involved, meets typical real estate industry standards and is acceptable
to the Developer as a basis for moving forward with the Project development.
San Luis Ranch Infrastructure Financing Strategy
In cooperation with City staff and the Project Developer Team, EPS has documented
infrastructure needs and costs and options for funding this infrastructure as part of the broader
effort to prepare a Financing Plan for the San Luis Ranch Project. As a part of this overall
Financing Plan there are two components for fund region -serving infrastructure: 1) assuring that
the San Luis Ranch Project commits developer equity to funding infrastructure costs within the
Project and also their "fair share" of offsite regional improvements and 2) funding the portion of
offsite regional improvements not allocated to San Luis Ranch. Our analysis has determined that
the funding for both the project -related "fair share" and the City and regional "fair share" can be
secured. Table 1 presents the strategy for funding region -serving infrastructure.
Table 1 San Luis Ranch Infrastructure Financing Strategy
Funding Sources
SLR
"Fair Share"
Cost Allocation
Notes
Developer Fair Share Allocation
Total "Fair Share" Cost Allocation
$22,828,661
Developer Funding Sources
SLR Developer Equity
$6,000,000
San Luis Ranch to determine allocation
Mello Roos Community Facilities District (CFD) — SLR Parcels
$14,000,000
between residential and commercial
Credits/Reimbursements/Adjustments
City to determine sources of adjustments (e.g ,
City Adjustments
$2,000,000
credits, reimbursements, other).
Totals
Estimated Total Funding
$22,000,000
Value of Fee Deferral or Other Conslderotlons
$828,661
Reflects fee defei ral to cei tificate of occupancy
or other considerations.
Funding Gap
$0
Additional Negotiated Housing Commitment
Provided in consideration of the City
Total Workforce Units
14
Adjustments shown above Distribution of units
will be per Housing Element Policy.
Memorandum
San Luis Ranch Financial Feasibility
Community Benefits
May 17, 2018
Page 5
The San Luis Ranch Project, by virtue of its development and conforming to City planning
policies, regulatory standards, and mitigating potential environmental impacts, will confer a
range of community benefits in the City of San Luis Obispo. These positive effects of the project
including community development objectives or social, economic and/or fiscal benefits, while a
precondition for a development agreement, are considered as extraordinary community benefits:
1. Creating a new residential neighborhood and commercial district in the City consistent with
General Plan policies.
2. Providing a range of housing prototypes that include small, higher density units that will be
"affordable by design".
3. Providing new housing targeted at the City's lower income and working families and including
34 contractually price -restricted affordable (inclusionary) housing units, and an additional 14
price -restricted workforce housing units.
4. Achieving 'net -zero" energy consumption and other energy efficiency standards.
Generating employment opportunities for the City's construction -related companies and
workers.
6. Financing infrastructure that in addition to meeting travel demands created by the Project
relieves existing congestion and provides additional capacity for other future development.
7. Providing more than 50 acres of open space including land set aside for continued
agricultural use preserving the area's agricultural heritage.
Extraordinary Community Benefits
"Extraordinary" community benefits of a development project are public improvements or other
material offerings that cannot be required by the City based on its code requirements or CEQA
mitigation, each which must meet Constitutional statutory standards to achieve the "rational
nexus" test. A complete listing of the extraordinary community benefits being offered by the San
Luis Ranch Developer is shown in Table 2. Specifically, the developer has committed to
constructing or funding improvements or mitigating impacts that exceed the mitigation measures
specified in the project environmental impact report or other City -determined requirements. The
developer has also agreed to build a public improvement in advance of when it might otherwise
be required. For example, an intersection improvement that may not be required to mitigate
project -induced congestion until five years in the future could be built in advance, assuring that
the improvement is constructed and conferring congestion reduction immediately. These
improvements include the following:
1. Land and Building Dedications
2. Multi -Modal Transportation Improvements and Programs
3. Energy and Water Conservation Features
4. Affordable and Workforce Housing Programs
Taken as a whole these cited community benefits total $14.25 million. The estimates were
prepared by the Developer's financial consultant, Kosmont Companies, and have been reviewed
for the reasonableness of the assumptions used and computational accuracy by EPS.
Memorandum
San Luis Ranch Financial Feasibility
Table 2 Summary of Extraordinary Community Benefits
May 17, 2018
Page 6
Extraordinary Community Benefit Items Offered by San Luis Ranch Dollar Value Beyond
SLR's Fair Share
1.0 Land and Building Dedications
1.1 Agricultural Heritage and Learning Center - Building Costs (Net of Mitigation Requirements) $2,025,000
2.0 Multi -Modal Transportation
2.1 Bike Share/Rental $290,000
2.2 Car Sharing/Park & Ride $290,000
2.3 Electric Car Charging Stations $240,000
3.0 Energy and Water Conservation Features_
3.1 Solar PV [1] $3,204,500
3.2 Building Efficiency/Net Zero $725,000
4.0 Affordable and Workforce Housinq Prggnams
4.0 Priority for SLO Residents, Workers (1.5% of Initial Sales Value) $4,468,875
4.2 Owner Occupancy Restriction on NG -10 and NG -23 Units (1.5% of Initial Sales Value) $2,703,000
4.3 Local Heroes Program - Minimum of $1,500 Incentive per Home (Assuming Approx. 200 Homes) $300,000
Total Extraordinary Community Benefits (Rounded) $14,250,000
[1] Total cost of Item 3.1 is $4,930,000. San Luis Ranch's fair share is 35%, or $1,725,500. The balance of $3,204,500 represents value to
the City beyond San Luis Ranch's fair share
Sources: San Luis Ranch; City of San Luis Obispo; Kosmont Companies; Economic & Planning Systems, Inc
Comparing the Value of Community Benefits with Value Received by Developer
As part of reaching a Development Agreement it is customary that the community benefits
offered by the Developer meet or exceed the value(s) conferred on the Developer by the City. As
a general measure the extraordinary community benefits offered should meet or exceed the
estimated value of the vested entitlement to the developer combined with the additional benefit
to the developer from other special terms granted by the City (e.g., infrastructure financing
contributions, formation of financing districts, etc.).
Value of Vesting the Entitlement
As a part of this effort a review of the Developer's pro forma financial analysis was conducted by
EPS, subject to the terms of a non -disclosure agreement. Applying the standard method of
measuring a reduction in the "threshold IRR" associated with reduced risks and costs to the San
Luis Ranch project associated with two vesting assurances: 1) elimination of future planning or
regulatory changes (i.e., rezoning of the Project area) and 2) assuring project development
phasing through a fixed allocation of housing units pursuant to City's Growth Management
Ordinance. These two considerations are estimated to confer a value of approximately
$2.75 million to the Developer.
Memorandum May 17, 2018
San Luis Ranch Financial Feasibility Page 7
Value of Terms Offered Conferring Additional Benefit to the Developer
As noted, the developer has requested other considerations intended to lower costs or improve
project revenues in pursuit of adequate financial returns. In this instance, the additional benefits
to the Developer offered in the Development Agreement include the willingness to establish and
administer a Community Facilities District (CFD) to finance a portion of the Developer's share of
regional infrastructure costs.
The value of the CFD to the Developer has been estimated by comparing the interest rate
available through municipal bonds to commercial credit. Given the expected $14 million bond
issuance, it is expected that over the 30 -year term of the bond interest rate savings would be in
the range of $4.3 million.
In summary, it is concluded that the Development Agreement extraordinary community benefits
offered to the City by the Developer, estimated to be $14.25 million, exceed the estimated $7.05
million of benefit received by the San Luis Ranch Developer by approximately $7.2 million.
EXHIBIT E
AGRICULTURAL LAND OPERATIONS & GUIDELINES
(attached)
071928\ 9447955 Exhibit E- I
Exhibit E
Operational Requirements and Guidelines for the Agricultural Land
on San Luis Ranch
In addition to the conditions of the Project Approvals and the terms of the Development Agreement, San
Luis Ranch agrees to the following:
Agricultural Heritage Facilities and Learning Center:
The Agricultural Heritage Facilities and Learning Center (the "Agricultural Heritage Learning Center") will
include the historically significant Dalidio Home, Racetrack Viewing Stand and Hay Barn. The restored
agricultural setting will allow San Luis Ranch residents and visitors to experience the working farm much
as it operated in decades past, and learn about current organic farming practices. The Agricultural
Heritage Learning Center will be a destination for the San Luis Obispo community and will feature local
food, farming and cooking education and build a lasting connection to our agricultural heritage.
Operational Milestones:
(a) Prior to issuance by the City of any grading permits for the Property, the Developer shall
submit a draft Organic Farm Management Plan (the "Farm Plan") to the City for review
and approval. At a minimum, the Farm Plan shall have the following components:
A preliminary operations plan for the Agricultural Land (as defined in the
Development Agreement) which shall include: a description of the necessary
licenses and permits for all agricultural operations on the Agricultural Land
covered by the permanent Agricultural Easement; a description of practices
and procedures to be performed and maintained to achieve compliance with
the Specific Plan, including progress toward and attainment of organic
certification, and to ensure continued agricultural operations on the
Agricultural Land covered by the permanent Agricultural Easement; a
description of the monitoring practices and procedures to be performed and
maintained, including the frequency with which they will be performed, to
verify that the plan is effectively implemented; a description of the
accounting and recordkeeping system; any additional information deemed
necessary by the City to evaluate compliance with the Specific Plan and to
ensure continued agricultural operations.
A preliminary education plan for the Agricultural Heritage Learning Center,
outlining potential educational opportunities on the permanent Agricultural
Easement area and Agricultural Heritage Learning Center.
(b) Prior to issuance of grading permits for the multi -family component of the Project, the
Developer shall restore and relocate the three existing on-site historic structures to the
Agricultural Heritage Learning Center at the northeast corner of the farm, maintaining
Revised 12-08-2017
their approximate original solar orientation and relation to one another. These historically
significant structures will include an agricultural processing center and a farm stand for
local goods and products. These structures will be open to the public for community
gatherings and educational programs. Prior to the rnnstrurtion of the Prado Road
overcrossing, these facilities shall only be open for use by the residents of the Project and
the lessee of the adjacent City Farm Property.
(c) No later than one year after completion of on-site grading on the Agricultural Land
covered by the permanent Agricultural Easement, or prior to the execution of a lease of
that Land, whichever occurs first, the Developer shall submit a final Farm Plan to the City's
Natural Resources Manager for review and approval, which shall not be unreasonably
withheld, and the developer shall enroll the area within the permanent Agricultural
Easement in the USDA organic certification program or an equivalent. The parties
acknowledge that the Farm Plan is subject to change and/or amendment and that any
such modifications shall be subject to review and approval by the City's Natural Resources
Manager, which shall not be unreasonably withheld. All annual organic reports and
operational statements shall be provided to City upon request.
(d) Developer agrees to incorporate the Farm Plan in any lease entered into for agricultural
operations on the Agricultural Land. Any such lease shall contain a clause terminating
that lease if there is continuing non-compliance with the Farm Plan after sixty (60) days
of receipt of notice and otherwise empowering the developer to take steps sufficient to
enforce the Farm Plan.
City's Remedies
(a) If Developer fails to submit the draft Farm Plan or the final Farm Plan when and as set
forth above, or if City determines thatthe Agricultural Land is not operating in accordance
with the approved plan, City shall provide written notice to the Developer of such
violation and demand corrective action sufficient to cure the violation.
(b) Developer shall have ten (10) working days to submit a Farm Plan or ninety (90) calendar
days after notice from City to bring the farm operations into compliance with the Farm
Plan.
(c) After conclusion of the ten (10) working day or ninety (90) calendar day period, as
applicable and following the termination of any existing lease and the eviction of any
tenant, City shall have the right to require the Developer to execute a lease with an
organic farmer of City's choice, subject to approval by Developer which shall not be
unreasonably withheld or delayed. City shall have the right to dictate the terms and
conditions of said lease. Developer acknowledges and agrees that, should Developer
refuse to approve such tenant or refuse to execute such lease, City shall have the right to
seek specific performance to compel Developer to execute such lease. In addition to the
foregoing remedy, City may seek an injunction prohibiting Developer from using or
further leasing the Agricultural Land. City may also seek appointment of a receiver to take
control of the Agricultural Land pursuant to Code of Civil Procedure §§ 564 et seq.
Developer acknowledges that the continued agricultural operation of the Agricultural
Land is a critical community value and an important component of the City's approval of
Revised 12-08-2017
the San Luis Ranch project and developer agrees that a receivership is an appropriate
remedy per Code of Civil Procedure § 564(a)(9) in order to preserve the Agricultural Land
and the rights of the City should Developer, or its successors and assigns, fail to comply
with this Agreement and the conditions of the Project Entitlements relative to the use,
operation and care of the Agricultural Land, including the requirements of in this Exhibit
F. Developer acknowledges the remedies set forth herein are cumulative to each other
and to any other remedy afforded to City in law or in equity and that no election of
remedies shall apply.
(d) The Developer shall bear any and all expenses, costs and liabilities the City incurs to
enforce this Agreement and the conditions of the Project Entitlements relative to the use,
operation and care of the Agricultural Land, including the requirements of this Exhibit F,
including, without limitation, costs of suit and attorneys' fees.
(e) For purposes of ensuring the City has legal standing to enforce these remedies, all leases
of the Agricultural Land shall include language granting Citythe Special Power of Attorney
to enforce any defaults under the terms of the lease.
Revised 12-08-2017
EXHIBIT F
AFFORDABLEIWORKFORCE HOUSING PLAN
(attached)
071928\ 9447955 Exhibit F-1
Exhibit F
Affordable & Workforce Housing Plan
Affordable Housing Plan
The San Luis Ranch project will encourage long term housing affordability by including design and devel-
opment strategies that provide lower cost housing, by including a range of housing sizes and types that
are not typically provided in the community, including deed -restricted workforce units, and by providing
lower income inclusionary units as required by the City Inclusionary Housing Ordinance. Since the price
of houses over time is most closely related to the size of the dwelling unit, the size of the lot, and costs of
maintenance, the project has concentrated on lowering the overall size of market rate dwelling units, and
reducing lot size for market rate units.
Within each of the residential zones there will be dwelling unit sizes ranging from 220 square foot studios
to 2,200 square foot single family detached units. Lot sizes range from air -space studios to 3,200 square
feet. Consequently, the average size of the units and lots across the development is far smaller (less than
the size) of existing residential housing stock in the City.
Maintenance expenses, to the extent feasible, may be included in a Community Facilities Districtto reduce
the necessity for Homeowner's Association fees and other costs associated with that maintenance and
governance structure. Landscape maintenance and cost of water and utilities will also be reduced through
the use of drought tolerant landscaping, smaller lots and other sustainable and cost reducing features.
The City's Housing Element provides incentives to develop housing in a denser pattern, with smaller unit
sizes to encourage affordability across the low, moderate and workforce income ranges. These incentives
include reduced inclusionary housing requirements for denser projects and for projects with lower dwell-
ing unit square footages. Conversely, more inclusionary housing is required for projects with dwelling
units that exceed unit sizes of 2,000 square feet. Table 2A of the Housing Element contains these adjust-
ment factors.
According to the City's Inclusionary Housing Ordinance and Table 2A, the inclusionary housing require-
ment for the residential component of the San Luis Ranch project is a total of 34 units, with 26 very low,
4 low, and 4 moderate income units. These inclusionary units will be integrated throughout the project in
the single-family detached, townhome, studio, 1 and 2 -bedroom condominium products. In addition, the
commercial component of the project requires a total of 34 inclusionary units. The project proposes to
meet the commercial component requirement by either constructing these units on-site or paying an af-
fordable housing in -lieu fee.
City Residential Requirements
The San Luis Ranch Specific Plan includes locations for on-site units to fulfill the affordable housing re-
quirement for the residential development planned for the Specific Plan Area. Including residential uses
only, the Specific Plan Area must provide a total of 34 deed restricted affordable units in the development,
and must provide at least 5% low and 10% moderate income affordability per Table 2 of the Housing
Element. Any additional units provided above the inclusionary requirement could be sold or rented at
market rate. See residential calculation below.
Residential Inclusionary Requirement Calculation
City Commercial Requirements
The commercial uses envisioned in the Specific Plan Area will be required to provide an additional 34 units
of affordable housing. The commercial inclusionary calculations for the San Luis Ranch Specific Plan are
as follows:
Commercial Inclusionary Requirement Calculation
Required
Use Acreage x2 Inclusionary
Retail 9.45 2 18.9
Hotel 3.5 2 71
Office 3.7 2 7.4
Total 34
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 2 of 7
Required
# of
Density
Unit
Build 5%
Build lo%
Total Base
Adjust
Inclu-
Units
(units/acre)
S.F.
(very low
income)
(moderate
income)
Required
Factor
sionary
Units
200
NG -30
1,000
10
20
30
0
0
3.75
100
NG -23
1,300
5
10
20
15
0.25
200
NG -10
1,500
10
30
1
30
80
NG -30
I
NA
Total
34
City Commercial Requirements
The commercial uses envisioned in the Specific Plan Area will be required to provide an additional 34 units
of affordable housing. The commercial inclusionary calculations for the San Luis Ranch Specific Plan are
as follows:
Commercial Inclusionary Requirement Calculation
Required
Use Acreage x2 Inclusionary
Retail 9.45 2 18.9
Hotel 3.5 2 71
Office 3.7 2 7.4
Total 34
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 2 of 7
The San Luis Ranch project will address housing affordability in several ways, most notably through the
design itself, which includes medium and high-density housing with lot sizes and floor areas that are well
below the typical average for existing single-family detached units in the community.
The City's Inclusionary Housing Requirement will be addressed through deed restrictions on very low, low
income and moderate -income units to be constructed by San Luis Ranch, and/or provided by dedicating
and donating improved land to a non-profit affordable housing provider. However, should an affordable
housing provider fail to construct the units, the obligation to provide for the 34 deed -restricted affordable
housing units remains with San Luis Ranch to complete. The following highlights are summarized from the
Specific Plan:
Mix of Residential Densities and Small Lots. There is an intentional mix of residential densities in the
San Luis Ranch project that includes a range of small lot sizes, attached townhomes, and multifamily
dwellings, with an emphasis on higher density units. Floor plans ranging from 220 to 2,200 square feet
in studio, 1 BR/IBA, 2611/113A, 2BR/2BA and 3BR/2BA configurations. The average unit size across the
entire project is less than 1,330 square feet.
NG -10 Zoning. The San Luis Ranch Specific Plan includes 200 small -lot, single family units, which are
intended to meet the needs of young professionals, empty nesters and young families. These smaller
units, ranging in size from 1,300 square feet to 2,150 square feet, have one -or two car garages with
limited guest parking spaces. This parking reduction is justified by the lower expected occupancy for
these smaller units and the multimodal features of the overall development. The four inclusionary
moderate -income units will be provided on in Phase 1 of the project on Lots 53, 64, 174, and 191.
NG -23 Zoning. The San Luis Ranch Specific Plan includes 100 attached and detached townhome units,
close to services and open spaces. Units will range in size from 1,300 square feet to 2,110 square feet.
Four of these 2- bedroom units will be deed restricted for low-income families. The inclusionary units
will be provided on Lots 261, 267, 283, and 293.
NG -30 Zoning. Finally, the San Luis Ranch Specific Plan includes 272 studio, one to three-bedroom
multi -family units adjacent to open space and Madonna Road. Like other portions of the project, this
multi -family zone will be directly served by an on -street transit stop and located within easy walking
distance of nearby shopping. 26 of these units will be deed restricted as inclusionary housing for very
low income families. Inclusionary and other multi -family units may be either dedicated to an afforda-
ble housing provider or managed by the San Luis Ranch. Multi -family unit sizes will range from 220
square foot studios to 1,100 square foot units for larger families.
• Neighborhood Commercial. The 19.6 -acre Neighborhood Commercial portion of the Specific Plan
area will generate a requirement for 34 additional inclusionary units. Development of this portion of
the project site will be based on market demand. Approximately half of the NC area is currently lo-
cated in ALUP Safety Zone S1 -b that precludes residential development; however, the area outside of
the S1 -b zone can accommodate the required 34 units. Alternatively, the project may pay an afforda-
ble housing in -lieu fee per the Inclusionary Housing Ordinance and Table 2 of the Housing Element to
satisfy this requirement.
Overall, the project will provide a total of twenty-six (26) very low, four (4) low, and four (4) moderate
Income inclusionary units. The inclusionary housing product mix has been intentionally skewed toward
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 3 of 7
very low-income units to ensure that this income group is adequately represented in the project, and to
recognize that the moderate -income groups have adequate market rate opportunities in the NG -10, NG -
23 and NG -30 neighborhoods. Table 2 shows the distribution of the affordable units, and Exhibit 1 shows
the Inratinn of the moderate and low-income units. Distribution of the 26 very low-income units will be
included in NG -30 neighborhood as described below.
Inclusionary Housing Phasing Plan
Neighborhood Distribution
Program NG -10 NG -23 NG -30 Commercial Total
Moderate Income (Sale) 4 4 8
Low Income (Sale) 4 4 8
Very Low Income (Rental) 26 26 52
Units in Phase 4 4 26 34 68
Total - Inclusionary Very Low 52
Total - Inclusionary Low 8
Total - Inclusionary Moder- 8
ate
Total 68
*The Commercial Development and associated Inclusionary Housing Requirement will be determined by the Com-
munity Development Department of the time of submittal of detailed plans for that component of the project. This
requirement will be met either by development of units within the commercial project off-site construction, or by
payment of affordable housing in -lieu fee, or a combination thereof
Inclusionary Housing Program Synopsis:
The affordable housing located within the residential portion of the San Luis Ranch Specific Plan Area will
provide 34 units on site for very low, low, and moderate income households. The applicant is committed
to including at least 5% very low income units in the project. Per Section 17.90.040.D of the City's Afford-
able Housing Incentives which follows State law, a developer that agrees to construct 5% of the total units
of a housing development for very low income households qualifies for a 20% density bonus. In this case,
5% of the allowed 500 units under the LUCE requires 25 very low income units. The project is proposing
26 very low income units.
The tables above show the required inclusionary units as well as the proposed density bonus units. Me-
dian and low income units (SFR and Townhomes) are intended to be for sale units. The applicant will retain
the flexibility to either rent or sell the very low income units.
Deed -restricted, affordable units will be located throughout the residential portion of the Specific Plan
Area, as illustrated in the above table.
San Luis Ranch March 6, 2018
Affordable & Workforce Housing Plan Page 4 of 7
Workforce Housine Plan
The City of San Luis Obispo has a recognized need for workforce housing (121-160 of Area Family Median
Income). The San Luis Ranch Specific Plan aims to help meet the City's housing needs by providing a highly
desirable new home type to the San Luis Obispo housing market: small lot (1,000 to 3,200 square feet)
single family and multi -family housing types.
A primary goal of the City of San Luis Obispo, realized and implemented through the San Luis Ranch pro-
ject, is to create workforce housing and increase the supply of housing available to local employees. A
special five -point program will be provided to create workforce housing and increase the supply of hous-
ing available to local employees. This program includes 1) 14 deed -restricted workforce housing units for
eligible households earning 121-160% of the Area Median Income. Two of these workforce housing deed -
restricted units will be located in the NG10 Zone on Lots 105 and 121, two will be located in the NG23
Zone on Lots 251 and 257, and ten will located in the NG30 Zone (See Exhibit 1 for unit locations); 2)
providing local priority preferences for individuals who work within the City of San Luis Obispo to purchase
or rent a residence within the Project; 3)) Owner Occupied Restrictions; 4) "Local Heroes" discount for
public safety, hospital workers and teachers; and 5) participation in the City Equity Share program,
These housing programs seeks to target the Project to local employees, reduce the influence of investors
in the limitation of housing choice and availability, and provide for 14 deed -restricted units.
Notwithstanding anything set forth below, all preferences and/or priorities for workforce housing units
will be administered in accordance with, and subject to, all applicable federal, state and local laws and
regulations, including Fair Housing rules.
Subject to applicable law, the elements of the workforce housing programs are as follows:
• Local Preference ("SLO Workers First"). Program 10.4 of the City's Housing Element encourages resi-
dential developers to "...sell or rent their projects to those residing or employed in the City first before
outside markets." Further, the City and project applicants recognize that one of the principal reasons
for the designation of additional residential land in the community in the 2014 Land Use and Circula-
tion Element update was to address the current jobs -housing imbalance. One direct and effective
way of achieving this is to provide priority for existing employees to rent or purchase residences within
the Project. To that end, San Luis Ranch will give first preference to rent or purchase a residence
within the Specific Plan area to local employees identified on the interest list. These areas include the
City's corporate limits and areas outside the City limits such as Cal Poly, California Men's Colony,
Cuesta College, agricultural lands within the Edna Valley area and business parks on South Broad
Street. Specifically, for purposes of this program, the term "local employees" shall include individuals
who are employed in business that are located in geographic areas that are customarily included in
the City's annual jobs -housing balance analysis in its General Plan Status Report, including the follow-
ing zip codes: 93401, 93405 and 93407. New employees to businesses in these geographic areas with
bona fide employment offers will be considered "local employees" as well. San Luis Ranch will main-
tain and update the interest list through full build -out of the Project. San Luis Ranch will operate and
administer this program as follows:
a. San Luis Ranch shall maintain the interest list and shall separate and prioritize names of
local employees based on interest in product type.
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 5 of 7
When product becomes available, usually 270-360 days prior to certificate of occupancy
(assuming a 180 -day construction period), San Luis Ranch shall notify those individuals of
the opportunity to purchase a residence on a lottery basis. Once notified, those individu-
als shall have approximately 60 days to get pre -qualified to purchase the residence and
to provide San Luis Ranch with proof that the individual is a local employee and the time
notice (i.e. paycheck or bona fide offer of employment from a local employer.)
c. If an individual fails to get pre -qualified or fails to provide San Luis Ranch with proof of
local employment within the time periods above, then San Luis Ranch may remove or put
that name at the end of the interest list.
San Luis Ranch agrees not to sell any units within the Project to any individual without
first offering the unit to a local employee who is on the interest list for that product type.
Upon exhausting all local employees on the interest list for a product type, San Luis Ranch
agrees to give priority in the sale of such units to individuals employed in the County, and
finally to individuals from outside the county.
Nothing herein shall preclude San Luis Ranch from notifying multiple individuals with the opportunity
to purchase a residence and prioritizing the purchase and sale based on a lottery basis. Nothing herein
shall preclude San Luis Ranch from taking all reasonable actions necessary in order to facilitate the
sale of units within the Project provided such actions are consistent with the "SLO Workers First"
program described herein. San Luis Ranch shall, upon request, update the City on its implementation
of this program and provide City with the interest list and proof of employment for all sales made
under this program.
City and San Luis Ranch acknowledge that this program described above will accomplish three im-
portant objectives: 1) use new housing to address the current imbalance between existing jobs and
housing; 2) ensure that, to the maximum extent practicable, that the increased housing in San Luis
Obispo results in a decline in the current commute traffic; and, 3) reduce competition from outside
buyers in the initial offering and sales.
Owner -Occupancy Restrictions. San Luis Ranch agrees to include restrictions in the purchase agree-
ment and Covenants Conditions and Restrictions (CC&Rs) for all single family detached units (NG -10)
and (NG -23) (total of 300 dwelling units) requiring these units to be restricted to owner -occupants for
the first five years after sale. In the case of units with Accessory Dwelling Units (ADUs), the Principal
Dwelling or the ADU will need to be occupied by the property owner. The final form of these agree-
ments will be determined at the time of development of the first final reap, and will pruvidt- I'm .,F,-
propriate monitoring and enforcement. Enforcement and monitoring of the owner occupancy re-
quirement on all single-family dwellings will be controlled by the San Luis Ranch Owners' Association,
or in coordination with a qualified housing non-profit.
• Local Heroes: San Luis Ranch will offer a special program for buyers who are considered "Local He-
roes." These Local Heroes are Police, Firefighters, Active and Retired Military, Teachers, EMTs, Nurses
and City or County Employees. Qualification for this incentive is verified on the loan application re-
viewed by our Preferred Lender. (This provision is included to ensure consistent review parameters.
Buyers are not obligated to finance home purchase with Preferred Lender.) Military, Active or
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 6 of 7
I
Veterans submit separate evidence. San Luis Ranch will provide a minimum $1,500 incentive that is
credited to the buyer at closing and can be used at the design center for upgrades and/or closing
costs.
San Luis Ranch
Affordable & Workforce Housing Plan
March 6, 2018
Page 7 of 7
END OF DOCUMENT