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2016/04/20 Stark Menifee Land, LLC FY16/17 DIF Menifee Town Center/Newport Rd Improvements IMPROVEMENT AND CREDIT/REIMBURSEMENT AGREEMENT: CITY OF MENIFEE DEVELOPMENT IMPACT FEE AND MEMORANDUM OF UNDERSTANDING REGARDING DEVELOPER'S CONTRIBUTION TO CAPITAL IMPROVEMENT PROGRAM This IMPROVEMENT AND CREDIT / REIMBURSEMENT AGREEMENT: CITY OF MENIFEE DEVELOPMENT IMPACT FEE AND MEMORANDUM OF UNDERSTANDING REGARDING DEVELOPER'S CONTRIBUTION TO CAPITAL IMPROVEMENT PROGRAM ("Agreement") is entered into this 20th day of April, 2016, by and between the City of Menifee, a California municipal corporation of the State of California ("City"), and Stark Menifee Land, LLC, a Wisconsin limited liability company, with its principal place of business at 735 North Water Street, Suite 790, Milwaukee, Wisconsin 53202 ("Developer"). City and Developer are sometimes hereinafter referred to individually as "Party"and collectively as"Parties". RECITALS WHEREAS, Developer owns 127.73 acres of real property located within the City of Menifee, California, which is more specifically described in the legal description set forth in Exhibit"A", attached hereto and incorporated herein by this reference ("Property"); WHEREAS, Developer has requested from City certain entitlements and/or permits for the construction of improvements on the Property, which are more particularly described as mixed use developments known alternatively as the Town Center Specific Plan, with certain exceptions, and located on the south side of Newport Road, west of Haun Road ("Project"); WHEREAS, as a condition to City's approval of the Project, City required Developer to construct certain street and transportation system improvement(s) of regional and City-wide importance ("DIF Improvements," as more specifically described in Section 2.0, below), and to that end, the Developer and City have entered that certain the Development Agreement regarding the Town Center Specific Plan dated June 13, 2011 and recorded as document number 2011- 0272260 ("Original Development Agreement"), as amended by that certain First Major Amendment dated August 15, 2014 and recorded as document number 20 1 4-03 1 440 1 ("First Amendment") and the Administrative Adjustment by letter agreement dated March 13, 2015 ("First Administrative Adjustment"). The Original Development Agreement, as modified by the First Amendment and First Administrative Adjustment are, collectively, the "Development Agreement." WHEREAS, pursuant to Section 3.5 of the First Amendment the Developer is required to contribute One Million Eleven Thousand dollars ($1,011,000) toward the "Town Center Newport Road Improvements" (as that term is defined in the First Amendment) (the "Developer's Contribution"). The Developer' Contribution includes $143,000 for the "Town Center Newport Road Improvement Plans" (as that term is defined in the First Amendment) and $868,000 as the Newport Road Payment(as that term is defined in the First Amendment). -1- WHEREAS, City is the administrator of a Development Impact Fee ("DIF") Program that was originally established by the County of Riverside, but effectively became the City's upon the City's incorporation in October 2008. WHEREAS, pursuant to the DIF Program, City requires Developer to pay the DIF, which covers Developer's fair share of the costs to deliver those DIF Improvements (as defined below)that help mitigate the Project's local and regional traffic impacts and burdens; WHEREAS, the City, as the administrator of the DIF Program, has determined that some of the costs of Town Center Newport Road Improvement Plans (as defined in the Development Agreement) and the Town Center Newport Road Improvements (as defined in the Development Agreement) qualify under the DIF Program as DIF Improvement. WHEREAS, concurrent with the execution of this Agreement, City and Developer have entered into an "IMPROVEMENT AND CREDIT / REIMBURSEMENT AGREEMENT TRANSPORTATION UNIFORM MITIGATION FEE PROGRAM" ("TUMF Agreement"), which will provide Developer with credits toward its obligations to pay fees under the Western Riverside Council of Government's ("WRCOG") Transportation Uniform Mitigation Nexus Fee ("TUMF") Program, in exchange for Developer's contribution of funds ("Developer's Contribution") to a City-hired and controlled contractor("City Contractor") that will use those funds to construct the Town Center Newport Road Improvements, of which a specified portion, as set forth in the TUMF Agreement, have been determined by the City and WRCOG to qualify as part of the Regional System of Highways and Arterials ("TUMF Network"); WHEREAS, As of the date of this Agreement it is anticipated that Five Hundred Seventy Six Thousand Five Hundred Fifty Five dollars ($576,555.00) of the Developer Contribution will be eligible for TUMF credit under the TUMF Agreement; WHEREAS, the Parties recognize and agree that the TUMF Agreement follows a form and format dictated by WRCOG that assumes that Developer maintains the primary responsibility for constructing TUMF improvements to the TUMF network, whereas in this specific instance, under the terms of Section 3.5 of the First Amendment and this Agreement, Developer will only pay the Developer Contribution, at the City's direction under this Agreement, to a City-selected and managed contractor that will in turn construct, among other things , the Town Center Newport Road Improvements. As a result, certain additional understandings are required between the City and Developer to clarify the means by which certain provisions in the TUMF Agreement will be implemented; and WHEREAS, City and Developer now desire to enter into this Agreement for the following purposes: (1) to provide for the timely delivery of the Town Center Newport Road Improvements (which are comprised of the TUMF improvements and DIF Improvements) by the City Contractor using, among other resources, the Developer Contribution, (2) to ensure that the -2- Developer Contribution for the DIF Improvements is provided, by means of this Agreement, directly by Developer to a the City Contractor as part of a larger contract constructed under the sole direction and authority of City, (3) to provide a means by which the portion of Developer's Contribution that is (i) in excess of the TUMF credits to be received by Developer under the TUMF Agreement and (ii) eligible for credit under the DIF Program are offset against Developer's obligation to pay the applicable DIF for the Project ("DIF Credit Amount"), and (4) clarify the means by which Developer's obligations under the TUMF Agreement will be satisfied. NOW, THEREFORE, for the purposes set forth herein, and for good and valuable consideration, the adequacy of.which is hereby acknowledged, Developer and City hereby agree as follows: TERMS 1.0 Incorporation of Recitals. The Parties hereby affirm the facts set forth in the Recitals above and agree to the incorporation of the Recitals as though fully set forth herein. 2.0 Construction of DIF Improvements. As required by the Development Agreement the Developer shall, by means of this Agreement, contribute Developer's Contribution to a contractor engaged by City to carry out a City-initiated capital improvement plan ("CIP"), which CIP will provide for, as a separate bid item within the larger CIP, the construction of certain infrastructure improvements generally described as, and substantially consistent with, the Town Center Newport Road Improvements (as that term is defined in the Development Agreement and Exhibit "B" to the First Amendment). The portion of these improvements that is eligible for inclusion in the DIF Program shall collectively comprise the DIF Improvements. Construction of the DIF Improvements shall include any transitions and/or other incidental work deemed necessary for drainage or public safety. 3.0 Acceptance of DIF Improvements; As-Built or Record Drawings. When the DIF Improvements are properly completed by the City Contractor and approved by City, and if they comply with all applicable federal, state and local laws, ordinances, regulations, codes, standards, and other requirements, City shall accept the DIF Improvements. City may, in its sole and absolute discretion, accept fully completed portions of the DIF Improvements prior to such time as all of the DIF Improvements are complete. Upon the total or partial acceptance of the DIF Improvements by City, the City shall cause the City Contractor to file with the Recorder's Office of the County of Riverside a notice of completion for the accepted DIF Improvements in accordance with California Civil Code sections 8182, 8184, 9204, and 9208 ("Notice of Completion"), at which time the accepted DIF Improvements shall become the sole and exclusive property of City without any payment therefor. Notwithstanding the foregoing, City may not accept any DIF Improvements unless and until the City causes the City Contractor to provide one (1) set of "as-built" or record drawings or plans to the City for all such DIF Improvements. The drawings shall be certified and shall reflect the condition of the DIF Improvements as constructed, with all changes incorporated therein. -3- 4.0 Default;Notice; Remedies. 4.1 Notice. If Developer neglects, refuses, or fails to fulfill or timely complete any obligation, term, or condition of this Agreement, which the City acknowledges is limited only to timely payment of the Developer Contribution, City may at any time thereafter declare Developer to be in default of this Agreement and make written demand upon Developer, to immediately remedy the default ("Notice"). Developer shall remedy the default or violation within five (5)days of the Notice. 4.2 Other Remedies. No action by City pursuant to this Section 4.0 et sec. of this Agreement shall prohibit City from exercising any other right or pursuing any other legal or equitable remedy available under this Agreement or the Development Agreement City may institute an action for specific performance to require payment of the Developer Contribution. 5.0 DIF Credit. 5.1 Developer's DIF Obligation. Developer hereby agrees and accepts that as of the date of this Agreement, the estimated amount Developer is obligated to pay to City pursuant to Ordinance 2009-62 as part of the DIF Program is $5,140,000, comprised of $940,000 for retail/commercial development and $4,200,000 for residential development ("DIF Obligation"). Notwithstanding, this DIF Obligation does not have to be paid until Certificates of Occupancy are obtained. The DIF Obligation is an estimate based upon general land use assumptions included within the Project. 5.2 Credit Offset Against DIF Obli ag tion. In consideration for Developer's obligation under this Agreement for the delivery of DIF Improvements, credit shall be applied by City to offset the DIF Obligation ("Credit"). Developer hereby agrees that the amount of the Credit shall be applied after(1) all eligible TUMF credits under the TUMF Agreement have been provided to Developer, and (2) the process of project delivery of DIF Improvements to the lowest responsible bidder has been initiated in accordance with this Agreement and the CIP Agreement. At no time will the Credit exceed the Developer's DIF Obligation. Further, at no time will the Credit exceed the DIF Credit Amount. If the dollar amount of the Credit is less than the dollar amount of the DIF Obligation, the Developer agrees the Credit shall be applied to offset the DIF Obligation as follows: (1) For residential units in the Project,the Credit shall be applied to all residential units to offset and/or satisfy the DIF Obligation. The residential units for which the DIF Obligation has been offset and/or satisfied by use of the Credit, and the amount of offset applicable to each unit, shall be identified in the notice provided to Developer by City pursuant to this section. -4- (2) For commercial and industrial structures in the Project, the Credit shall be applied to all commercial and industrial development to offset and/or satisfy the DIF Obligation. The commercial or industrial structure(s) for which the DIF Obligation has been offset and/or satisfied by use of the Credit, and the amount of offset applicable to such structure(s), shall be identified in the notice provided to the Developer by City pursuant to this section. City shall provide Developer written notice of the determinations that City makes pursuant to this section, including how the Credit is applied to offset the DIF Obligation as described above. 5.3 Verified Cost of the DIF Improvements. Upon recordation of the Notice of Completion for the DIF Improvements and acceptance of the DIF Improvements, the City's Public Works Director shall determine the actual cost of the DIF Improvements as compared to the Developer Contribution. The Public Works Director shall then determine the extent to which Developer has or will receive TUMF credits under the TUMF Agreement. The Public Works Director shall deduct the TUMF Credit from the Developer Contribution, and the result of that deduction shall be the DIF Credit Amount The City's Public Works Director will use his or her best efforts to determine the amount of the DIF Credit Amount and provide Developer written notice thereof within thirty (30) calendar days of receipt of all the required information from Developer. (a) DIF Balance. If the dollar amount of the DIF Credit Amount is less than the dollar amount of the DIF Obligation, the City's Public Works Director shall provide written notice to Developer of the amount of the difference owed ("DIF Balance") and Developer shall pay the DIF Balance when required by the DIF Program in order to satisfy the DIF Obligation. 6.0 Additional Agreements and Understandings. 6.1 Responsibility for Selecting Contractor for CIP: Notwithstanding anything to the contrary in the TUMF Agreement, City shall have the sole responsibility for selecting and engaging a contractor ("CIP Contractor") to implement the CIP which shall include the Project ("CIP Contract"). The Developer shall not be a party to the CIP Contract. For the avoidance of doubt, the CIP Contract shall specify that Developer's Contribution shall be applied to the maximum extent feasible first to the TUMF Improvements and second to the DIF Improvements. City shall provide notice to Developer within thirty (30) days after entering into the CIP Contract. 6.2 Deposit of Developer's Contribution: Within fifteen (15) days after receiving the notice required by Section 6.1 (and/or Section 3.5 of the First Amendment), Developer shall deposit Developer's Contribution with the City. 6.3 City Payment of Developer's Contribution to Contractor: City shall, at such time as is required under the CIP Contract, provide the Developer's contribution to the contractor under the CIP Contract, with specific instructions that said funds are to be applied to the maximum extent feasible first to the TUMF Improvements and second to the DIF Improvements. -5- 6.4 Clarification of Construction Obligations: Developer's obligations under Sections 2.0 through 9.0, 11, 12, and 13 (including all subsections therebetween) of the TUMF Agreement shall be satisfied in full through the provision of Developer's Contribution to City in accordance with this Agreement, and through the subsequent performance under the CIP Contract by the CIP Contractor. The City shall defend, indemnify, and hold harmless Developer, including its employees and agents, from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental agency, arising out of or incident to any acts, omissions, negligence, or willful misconduct of City, its employees, contractors, or agents in connection with the performance of the City's obligations under this Agreement and the TUMF Agreement, or arising out of or in any way related to or caused by the City or the City Contractor with respect to the design, construction, maintenance or use of the DIF Improvements or TUMF Improvements, including but not limited to, their condition prior formal acceptance by the City ("Claims"). This indemnification includes, without limitation, the payment of all penalties, fines, judgments, awards, decrees, attorneys fees, and related costs or expenses, and the reimbursement of Developer, including its employees, and/or agents for all legal expenses and costs incurred by each of them. This indemnification excludes only such portion of any Claim to the extent it is caused by the negligence or willful misconduct of Developer as determined by a court or administrative body of competent jurisdiction. The City's obligation to indemnify shall survive the expiration or termination of this Agreement, and shall not be restricted to insurance proceeds, if any, received by Developer, or its employees or agents. 7.0 Miscellaneous. 7.1 Assignment. Developer may assign all or a portion of its rights pursuant to this Agreement to a purchaser of a portion or portions of the Property ("Assignment"). Developer and such purchaser and assignee ("Assignee") shall provide to City such reasonable proof as it may require that Assignee is the purchaser of such portions of the Property. Any assignment pursuant to this section shall not be effective unless and until Developer and Assignee have executed an assignment agreement with City in a form reasonably acceptable to City, whereby Developer and Assignee agree, except as may be otherwise specifically provided therein, to the following: (1) that Assignee shall receive all or a portion of Developer's rights pursuant to this Agreement, including such credit as is determined to be applicable to the portion of the Property purchased by Assignee pursuant to Section 5.0 et seq. of this Agreement, and (2) that Assignee shall be bound by all applicable provisions of this Agreement. 7.2 Relationship Between the Parties. The Parties hereby mutually agree that this Agreement shall not operate to create the relationship of partnership,joint venture, or agency between City and Developer. Developer's contractors are exclusively and solely under the control and dominion of Developer. Nothing herein shall be deemed to make Developer or its contractors an agent or contractor of City. -6- I 7.3 Warranty as to Property Ownership; Authority to Enter Agreement. Developer hereby warrants that it owns fee title to the Property and that it has the legal capacity to enter into this Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority make this Agreement and bind each respective Party. 7.4 Prohibited Interests. Developer warrants that it has not employed or retained any company or person, other than a bona fide employee working solely for Developer, to solicit or secure this Agreement. Developer also warrants that it has not paid or agreed to pay any company or person, other than a bona fide employee working solely for Developer, any fee, commission, percentage, brokerage fee, gift, or other consideration contingent upon the making of this Agreement. For breach of this warranty, City shall have the right to rescind this Agreement without liability. 7.5 Notices. All notices, demands, invoices, and written communications shall be in writing and delivered to the following addresses or such other addresses as the Parties may designate by written notice: To City: City of Menifee Attn: Jonathan Smith, Director of Public Works 29714 Haun Road Menifee, CA 92586 Phone: (951) 672-6777 Fax No.: (951) 679-3843 To Developer: Stark Menifee Land, LLC Attn: Brian Stark 735 North Water Street, Suite 790 Milwaukee, WI 53202 Phone: (414) 294-7000 Fax No.: (414) 294-7700 Copy to: Regent Properties Attn: Daniel Gryczman Regent Properties 11990 San Vicente Blvd., Suite 200 Los Angeles, CA 90049 Phone: (310) 806-9822 Fax No.: (310) 806-9801 Depending upon the method of transmittal, notice shall be deemed received as follows: by facsimile, as of the date and time sent; by messenger, as of the date delivered; and by U.S. Mail first class postage prepaid, as of 72 hours after deposit in the U.S. Mail. -7- i I 7.6 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate, or convenient to attain the purposes of this Agreement. 7.7 Construction; References; Captions. It being agreed that the Parties or their agents have participated in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days, or a period for performance shall be deemed calendar days and not work days. All references to Developer include all personnel, employees, agents, and contractors of Developer, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers, except as otherwise specified in this Agreement. The captions of the various sections, articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement. 7.8 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties. 7.9 Waiver. No waiver of any default or breach shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual right by custom, estoppel, or otherwise. 7.10 Binding. Each and all of the covenants and conditions shall be binding on and shall inure to the benefit of the Parties, and their successors, heirs, personal representatives, or assigns. This section shall not be construed as an authorization for any Party to assign any right or obligation. 7.11 No Third Party Beneficiaries. There are no intended third party beneficiaries of any right or obligation assumed by the Parties. 7.12 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. 7.13 Consent to Jurisdiction and Venue. This Agreement shall be construed in accordance with and governed by the laws of the State of California. Any legal action or proceeding brought to interpret or enforce this Agreement, or which in any way arises out of the Parties' activities undertaken pursuant to this Agreement, shall be filed and prosecuted in the appropriate California State Court in the County of Riverside, California. Each Party waives the benefit of any provision of state or federal law providing for a change of venue to any other court or jurisdiction including, without limitation, a change of venue based on the fact that a governmental entity is a party to the action or proceeding, or that a federal right or question is -8- J involved or alleged to be involved in the action or proceeding. Without limiting the generality of the foregoing waiver, Developer expressly waives any right to have venue transferred pursuant to California Code of Civil Procedure Section 394. 7.14 Time is of the Essence. Time is of the essence in this Agreement, and the Parties agree to execute all documents and proceed with due diligence to complete all covenants and conditions. 7.15 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original and which collectively shall constitute one instrument. 7.16 Entire Agreement. This Agreement contains the entire agreement between City and Developer and supersedes any prior oral or written statements or agreements between City and Developer. [SIGNATURES OF PARTIES ON NEXT PAGE] -9- I IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written. DEVELOPER: Stark Menifee Land, LLC By: Brian Stark Its: 0 b n I ATTEST: VA,.0 Ica,L Its: 0 VV 6V,�.�3 k LLC, rs ti 0_ ' CITY OF ME By: Scott Mann, Mayor ATTEST: By- - S Sah Manwaring, City Clerk APP70 ,AS TO FORM: By: J ry . elching, City"Atto ey -10- I i LEGAL DESCRIPTION OF PROPERTY E-�IIBIT"4" LEG-AL DESCRIPTION- THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MENNIFEE, III'THE COUNTY OF RIVERSIDE,STATE OF CALIFORNIA,AND IS DESCRIBED AS FOLLOWS: PARCELS 1 THROUGH 11, 14,AND 16 THROUGH 26 OF PARCEL MAP NO.36299-1,IN THE CITY OF MENIFEE, COUNTY OF RIVERSIDE,STATE OF CALIFORNIA,AS PER MAP FILED IN BOOK 238.PAGES 88 THROUGH 93. INCLUSIVE OF PARCEL MAPS_IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, APRIL 28, 2015. APN:360-080-055-9;360-080-056-0;360-080-057-1;360-080-058-2;360-080-059-3;360-080-060-3;360-080-0614 EXHIBIT A I�