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2023/05/17 MLC Holdings Agreement for Deposit and Reimbursement of fees incurred by the City of Menifee in Conducting and Processing Analysis under the California Environmental Quality Act of the Salt Creek ProjectMay 17, 2023 MLC Holdings Attn: Louisa Feletto 5 Peters Canyon Drive Irvine, CA 92606 Re: Agreement for the Deposit and Reimbursement of fees incurred by the City of Menifee in Conducting and Processing Analysis under the California Environmental Quality Act of the Salt Creek Project. Dear Ms. Feletto, MLC Holdings (“Developer”) has requested that the City of Menifee (“City”) consider (“Salt Creek Project”). The project proposes the construction of a subdivision at the southwest corner of Briggs Road and Simpson Road. The proposed project would develop 330 residential units on approximately 58.34 acres. The residential units would be constructed in lots of various sizes and would consist of small lot condominiums, and traditional one‐ and two‐story single‐ family homes. The proposed project would also include an approximately 5‐acre park on the southern boundary near the Salt Creek Flood Channel (“Project”). To conduct its review and analysis of the Project, the City is required to conduct an environmental analysis (“CEQA Analysis”) as required by the California Environmental Quality Act, Public Resources Code section 21000 et seq., and its implementing guidelines found at Title 14 of the California Code of Regulations section 15000 et seq. The City will commence to take the steps necessary, at Developers sole expense so that the City will be able to conduct and complete the CEQA Analysis. Developer is prepared to reimburse the City for all costs associated with the City’s conduct, processing, and consideration of the CEQA Analysis including without limitation in-house staff time and resources, environmental consultant time and resources, City’s legal counsel’s time and resources, and other third-party cost items. For example, the costs incurred by the City to engage an environmental review consultant, and any necessary sub-consultants or technical consultants, to conduct the CEQA Analysis shall be borne by the Developer. This letter serves as an “Initial Deposit Agreement” by and between Developer and the City. To assist the City in undertaking their consideration of whether or not to approve the Project, Developer agrees to provide the City with an initial deposit, consisting of at least 50% of the contract amount plus, an administrative cost of 15% of the professional services agreement or DocuSign Envelope ID: 5CEF0137-8172-4D59-BCAC-9862D528581DDocuSign Envelope ID: 573A17DA-E68E-4E00-B671-15A206D7CDCE MLC Holdings May 17, 2023 Page 2 $5,000, whichever is less, in the amount of $72,765 (“Initial Deposit”). The Initial Deposit plus any remaining balance due of the total of the Professional Services Agreement and administrative cost is to be incurred by the City in connection with the conduct, processing, review, evaluation, and action taken on the CEQA Analysis (“Analysis Costs”). Developer deposited the Initial Deposit with the City, to the attention of the Finance Director, on or before May 30, 2023 (“Effective Date”), which is at least one (1) week in advance of the Professional Services Agreement being fully executed by the City of Menifee with the selected consultant. The remaining 50% or balance, if applicable, of the Analysis Costs $67,765 (“Second Deposit Payment”) shall be due at the halfway point of completion of the Analysis , but no later than prior to public release of the CEQA documents. The Community Development Department shall notify the Developer once the halfway point of completion of the Analysis has been reached. The Second Deposit payment shall be deposited with the City, to the attention of the Finance Director, within and no later than two (2) weeks, ten (10) business days of receiving notification from the Community Development Department. If Developer fails to timely provide a Second Deposit Payment, the City may without further notice cease all work on the CEQA Analysis and order that all consultants, attorneys and third parties do the same (“Stop Work Order”) until the Second Deposit Payment is received. Developer understands and acknowledges that, even if the Second Deposit Payment has not yet been received, it shall remain fully responsible for Analysis Costs incurred by the City up to the date that the City issues a Stop Work Order. The Initial Deposit and Second Deposit Payment shall be used to reimburse the Analysis Costs. If at any time the City in its sole discretion determines that the Analysis Costs will exceed the amount of the Initial Deposit and Second Deposit Payment, then Developer shall, within ten (10) business days of receipt of written demand from the City, supplement the deposit amount so that the amount remaining on deposit with the City equals all remaining estimated Analysis Costs (“Deposit Supplement”). The City may from time to time repeat the process of revising the estimated Analysis Costs and requiring a revised deposit amount from Developer (upon ten (10) business days written notice) (“Further Deposit Supplement”). If Developer fails to timely provide a Deposit Supplement or Further Deposit Supplement, the City may without further notice cease all work on the CEQA Analysis and order that all consultants, attorneys and third parties do the same and issue a Stop Work Order. Developer understands and acknowledges that, even if the deposit is fully exhausted, it shall remain fully responsible for Analysis Costs incurred by the City up to the date that the City issues a Stop Work Order. Any unspent monies will be reimbursed within thirty (30) days upon receipt of the project’s final accounting. MLC Holdings has made an Initial Deposit and possibly a Deposit Supplement and Further Deposit Supplements (the “Deposit”). If DEVELOPER terminates in writing the CEQA Analysis, or once the project is entitled, City will refund to DEVELOPER the remaining funds from the Deposit within thirty (30) days upon receipt of the project’s final accounting. PAYMENT SCHEDULE: DocuSign Envelope ID: 5CEF0137-8172-4D59-BCAC-9862D528581DDocuSign Envelope ID: 573A17DA-E68E-4E00-B671-15A206D7CDCE MLC Holdings May 17, 2023 Page 3 Payment Description Amount Due Description Due Date Initial Deposit At least 50% Analysis Costs + Lesser of 15% of Analysis Costs OR $5,000 At least one (1) week before Professional Services Agreement Signed Second Deposit 50% or balance of Analysis Costs Within ten (10) business days of Notification from Community Development Department of halfway point of Analysis Completion Deposit Supplement/ Further Deposit Supplement TBD, if applicable, for additional contract amendment costs identified. Within ten (10) business days of Notification from Community Development Department of need for Deposit Supplement. Developer understands and acknowledges that City shall exercise its sole discretion in selecting and providing direction to any consultants or other third parties in connection with the CEQA Analysis. It is anticipated that the CEQA Analysis will be presented to the Menifee Planning Commission for consideration and potential action in the future. Developer and the City understand that the City is reserving the right to exercise its sole and absolute discretion as to all matters over which the City is, by law, entitled or required to exe rcise discretion. By executing this Initial Deposit Agreement, the City is not committing or agreeing to undertake any activity requiring the subsequent discretion of the City, or any department of the City. The City’s execution of this Initial Deposit Agreement is merely an agreement to allow the necessary work to be completed, at Developer’s expense, to bring the CEQA Analysis forward for City consideration. Nothing in this Initial Deposit Agreement shall be deemed to constitute a commitment by the City to approve or certify the CEQA Analysis, or a prejudgment of the matters required to be considered as part of the decision whether or not to approve the Project. Please document Developer’s concurrence with these terms and limitations by signing below and returning the originally executed letter to me. DocuSign Envelope ID: 5CEF0137-8172-4D59-BCAC-9862D528581DDocuSign Envelope ID: 573A17DA-E68E-4E00-B671-15A206D7CDCE MLC Holdings May 17, 2023 Page 4 Very truly yours, CITY OF MENIFEE Cheryl Kitzerow, AICP Community Development Director APPROVED AS TO FORM: By: Jeffrey Melching, City Attorney ACCEPTANCE OF INITIAL DEPOSIT AGREEMENT: MLC Holdings By: Date: Louisa Feletto, DocuSign Envelope ID: 5CEF0137-8172-4D59-BCAC-9862D528581D Forward Planning Manager 6/1/2023 DocuSign Envelope ID: 573A17DA-E68E-4E00-B671-15A206D7CDCE