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HomeMy WebLinkAbout2001-13 - Adopting a Development Agreement between the City of Newport Beach and the Irvine Company [Development Agreement No. 14].ORDINANCE 2001- 13 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ADOPTING A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND THE IRVINE COMPANY [DEVELOPMENT AGREEMENT NO. 141 The City Council of the City of Newport Beach DOES HEREBY ORDAIN as follows: SECTION 1. The City Council finds and declares that: a. The State Legislature and the City Council have determined that the lack of certainty in the approval of development projects can result in a waste of resources, escalate the cost of housing and other development to the consumer, and discourage investment in and commitment to the comprehensive planning which would make maximum efficient utilization of resources at the least economic cost to the public; and b. Assurance that an applicant may proceed with a project in accordance with existing policies, rules and regulations, and subject to conditions of approval, will strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic costs of development; and C. California government Code Section 65864 et seq. authorizes cities to enter into development agreements with any person having a legal or equitable interest in property for the development of the property; and d. Chapter 15.45 of the Newport Beach Municipal code provides requirements and procedures for the amendment of development agreements; and e. The Development Agreement has been prepared in compliance with state law and the Newport Beach Municipal Code; and f. On September 21, 2000, the Planning Commission of the City of Newport Beach held a duly- noticed public hearing regarding the proposed Development Agreement and; and g. The Planning Commission found that the Development Agreement is in conformance with the Newport Beach General Plan, as proposed by accompanying General Plan Amendment No. 99 -3 (C), and forwarded the Development Agreement to the City Council with a recommendation of adoption, subject to certain amendments; and h. On October 10, 2000 and June 26, 2001, the City Council of the City of Newport Beach held duly- noticed public hearings regarding the proposed Development Agreement, and testimony was presented to and considered by the City Council; and i. Pursuant to the California Environmental Quality Act (CEQA), the City has completed an Initial Study, determined that the impacts of the subject Development Agreement have been fully evaluated in previously certified Environmental Impact Reports, that the conditions to the preparation of a Subsequent or Supplemental EIR do not exist, and that a Negative Declaration is appropriate; and j. The Development Agreement will preserve the benefits of years of land use planning and open space- habitat preservation efforts, while establishing ultimate City control of the area. SECTION 2. Development Agreement No. 14, attached hereto as Exhibit A, is hereby adopted. SECTION 3. The Mayor shall sign and the City Council shall attest to the passage of this Ordinance. This Ordinance shall be published once in the official newspaper of the City, and the same shall become effective thirty (30) days after the date of its adoption. This Ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach held on July 10, 2001, and adopted on July 24, 2001 by the following vote, to wit: ATTEST: CITY CLERK AYES, COUNCIL MEMBERS Heffernan, O'Neil, Ridgeway, Glover, Bromberg, Proctor, Mayor Adams NOES, COUNCIL MEMBERS None ABSENT COUNCIL MEMBERS None %— sr( UT •; ANNEXATION AND DEVELOPMENT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH U I0; THE IRVINE COMPANY r-, mm IRVINE COMMUNITY DEVELOPMENT COMPANY CONCERNING THE NEWPORT COAST AND ADJACENT PROPERTIES ANNEXATION AND DEVELOPMENT AGREEMENT This Annexation and Development Agreement (hereinafter "Agreement') is entered into effective as of July _ 2001, (hereinafter the "Effective Date ") by and among the CITY OF NEWPORT BEACH (hereinafter "CITY "), and THE IRVINE COMPANY and IRVINE COMMUNITY DEVELOPMENT COMPANY (hereinafter collectively "OWNER "). RECITALS A. OWNER collectively owns a substantial portion of the real property ('Property ") described on Exhibit "A" and depicted on Exhibit "B," consisting of approximately 5,615 acres. B. The Property is currently in the unincorporated area of the County of Orange ( "County "). OWNER has obtained development approvals from the County and the California Coastal Commission for the majority of the Property from the County and has commenced subdivision and development of the Property under the jurisdiction of the County. C. The development approvals for the Property have been granted after a lengthy planning process that involved the careful review of numerous environmental documents (Planning and Environmental History is attached as Exhibit C). The development approvals include: The County of Orange Newport Coast Local Coastal Program and Master Coastal Development Permit for that portion of the Property in the Coastal Zone. A Development Agreement with the County (County Development Agreement). 3. The Newport Ridge Planned Community Plan. 4. Subdivision Maps. D. The Property is also part of the Natural Communities Conservation Plan (NCCP) — a complex agreement that requires OWNER to dedicate portions of the Property upon completion of certain phases of development. OWNER is also required to dedicate large portions of the Property pursuant to the development approvals. Page 2 of 23 E. OWNER was required, by the development approvals, to make costly infrastructure improvements far in excess of those necessary to mitigate the impacts, or serve the needs, of the development. OWNER was required to make, and has made, these extraordinary improvements prior to development of the Property. F. OWNER has acquired a fully vested right to develop the Property in accordance with the development approvals because of the extraordinary expenditures for public and private improvements made in reliance on the development approvals, the dedications made in reliance on the development approvals and the County Development Agreement. G. CITY and OWNER intend for this Agreement to fully conform to the development approvals and to fully facilitate full implementation of the Project, as conditioned. To the maximum extent permitted by law, this Agreement is intended to be the functional equivalent of, or supplement, the County Development Agreement in light of the CITY's intention to delegate to the County all municipal land use authority over the Property until such time as the Project is complete. H. City is desirous of annexing the Property but recognizes that the development approvals for the Property involve complex and interrelated planning documents. CITY does not have sufficient staff to timely process the permits required for implementation of the Project in compliance with all the development approvals. Moreover, the development approvals and land use plan involve the dedication of valuable habitat and open space within and outside of the boundaries of the Property and City does not have the personnel and expertise to ensure that dedications occur as planned. I. CITY and OWNER have discussed the process and terms and conditions of annexing the Property to CITY, and each has determined that it is in their respective best interests to pursue that annexation pursuant to the terms of this Agreement and the development approvals. In particular CITY desires assurances that OWNER will support eventual annexation of all of the Property to CITY, in order to: (a) Facilitate the timely and orderly integration of the Property into the CITY consistent with the CITY's sphere of influence; (b) Facilitate planning and provision of municipal services to the Property without any adverse fiscal impact on the CITY or the ultimate owners of the property; and (c) ensure consistency with and implement the CITY's General Plan. At the same time, OWNER desires to obtain assurances from CITY that, subsequent to annexation: Page 3 of 23 (a) OWNER will still be able to develop the Property to the full extent permitted by the development approvals granted by the County and the Coastal Commission subject to conditions of approval imposed by the Coastal Commission and the County and and consistency with the City's General Plan; (b) Development will be processed by the County in accordance with a uniform set of land use and building rules, regulations and requirements, as established by the development approvals given by the County for the Property prior to its annexation; and (c) Development of the Property will be subject only to costs, fees, processing requirements, conditions or exactions that would have been imposed had the Property not been annexed to CITY. J. In addition to the authority at common law for annexation agreements, Government Code Sections 65864 et seq. ( "Development Agreement Law "), and Chapter 15.45 of the Newport Beach Municipal Code authorize CITY to enter into binding development agreements with persons having a legal or equitable interest in real property. This Agreement is consistent with the public policy that supports development agreements in that it strengthens the public planning process, facilitates implementation of comprehensive planning, provides significant public benefits, and reduces the economic costs of development. K. The City Council has found that this Agreement is in the best public interest of the CITY and its residents, adopting this Agreement constitutes a present exercise of its police power, and this Agreement is consistent with the City's General Plan and the Newport Beach Municipal Code Chapter. L. This Agreement is not intended to, and shall not be construed, to impair the rights and obligations of OWNER, or other involved parties under and pursuant to the Newport Coast Local Coastal Program, Second Amendment, and the Litigation Settlement Agreement entered into June 27, 1997, by and among OWNER, the Friends of the Irvine Coast, Laguna Greenbelt, Inc., and Stop Polluting Our Newport. Page 4 of 23 COVENANTS NOW, THEREFORE, the Parties agree as follows: DEFINITIONS AND EXHIBITS. 1.1 Definitions. This Agreement uses a number of terms having specific meanings, as defined below. These specially defined terms are distinguished by having the initial letter capitalized, or all letters capitalized, when used in the Agreement. The defined terms include the following: 1.1.1 "Agreement' means this Annexation and Development Agreement. 1.1.2 "Coastal Zone Area" means that portion of the Property that is subject to the provisions of the California Coastal Act, Public Resources Code section 30000 et seq. 1.1.3 "CITY" means the City of Newport Beach, a California charter city. 1.1.4 "County' means the County of Orange, a political subdivision of the State of California. 1.1.5 "Development' whether or not capitalized means the improvement of the Property for the purposes of completing the structures, improvements and facilities comprising the Project including, but not limited to: grading; the construction of infrastructure and public facilities related to the Project whether located within or outside the Property; the construction of buildings and structures; and the installation of landscaping and park facilities and improvements. For purposes of this Agreement, however, "Development" does not include any remodeling, reconstruction, or other building or grading activity by any person subsequent to the termination of this Agreement as provided in and pursuant to Section 2.3.3 below. 1.1.6 "Development Approvals" means all permits, licenses, consents, rights and privileges, and other actions subject to approval or issuance by County or CITY in connection with Development of the Property, including but not limited to: (a) General plans and general plan amendments adopted by the County or the CITY; (b) Specific plans and specific plan amendments; (c) Zoning and rezoning adopted by the County or the CITY; (d) Tentative and final subdivision and parcel maps; Page 5 of 23 (e) Variances, conditional use permits, master plans, public use permits and plot plans; and (f) Grading and building permits. 1.1.7 "Development Plan" means the plan for Development of the Property, including without limitation the planning and zoning standards, regulations, and criteria for the Development of the Property, contained in and consistent with the Development Approvals. The components of the Development Plan are more fully described in Exhibit "D." 1.1.8 "Effective Date" means the date this Agreement is approved by the CITY as shown in the first paragraph. 1.1.9 "Land Use Regulations" means all ordinances, resolutions, codes, rules, regulations and official policies governing Development and use of land applicable to the Property pursuant to this Agreement, including, without limitation, the permitted use of land, the density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, and the design, improvement and construction standards and specifications applicable to the Development of the Property. "Land Use Regulations" does not include any CITY ordinance, resolution, code, rule, regulation or official policy, governing: (a) the conduct of businesses, professions, and occupations; (b) except as provided in Section 4.9 below, taxes and assessments; (c) the control and abatement of nuisances; (d) the granting of encroachment permits and the conveyance of rights and interests which provide for the use of or the entry upon public property; and (e) the exercise of the power of eminent domain 1.1.10 "OWNER" means individually and collectively The Irvine Company and Irvine Community Development Company, and where appropriate in context their respective successors in interest to all or any part of the Property. 1.1.11 "Mortgagee" means a mortgagee of a mortgage, a beneficiary under a deed of trust or any other security- device, a lender and their successors and assigns. Page 6 of 23 1.1.12 "Project' means the Development of the Property consistent with the Development Plan. 1.1.13 "Property' means the real property described in Exhibit "A" and shown on Exhibit "B" to this Agreement. 1.1.14 "Reservation of Authority' means the rights and authority excepted from the assurances and rights provided to OWNER under this Agreement and reserved to CITY under Section 4.6 of this Agreement. 1.1.15 "Subsequent Development Approvals" means all Development Approvals subsequent to the Effective Date in connection with Development of the Property. 1.1.16 "Subsequent Land Use Regulations" means any Land Use Regulations adopted and effective after the Effective Date of this Agreement, other than the Development Plan. 1.1.17 "Term" shall mean the period of time from the Effective Date until the termination of this Agreement as provided in subsection 10.1, or earlier termination as provided in Section 7. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" Legal Description of the Property. Exhibit "B" Map showing Property and its location. Exhibit "C" Planning and Environmental History. Exhibit "D" List of County Development Approvals. Exhibit "E" Mitigation Measures. Exhibit "F" Affordable Housing Implementation Plans. 2. GENERAL PROVISIONS. 2.1 Binding Effect of Agreement. This Agreement shall be binding on the CITY from and following the Effective Date. However, CITY shall have no right or duty with respect to the Property until annexation of Page 7 of 23 the Property to CITY and CITY intends, through a joint powers agreement, ordinance or other mechanism, to delegate to the County all municipal land use jurisdiction and all responsibility for processing Development Approvals that the City has, or may have, pursuant to State or local law. 2.2 Assignment by OWNER. 2.2.1 Right to Assign. OWNER shall have the right to sell, transfer or assign the Property in whole or in part (provided that no transfer violates the Subdivision Map Act, Government Code Section 66410, et seg.), and in so doing assign its rights and obligations under this Agreement as the same may relate to the portion of the Property being transferred, to any person, partnership, joint venture, firm or corporation at any time during the term of this Agreement. 2.2.2 Release of Transferring Owner. Upon the sale, transfer or assignment of all or a portion of the Property, the transferring OWNER shall be released of all obligations under this Agreement that relate to the portion of the Property being transferred; provided that the obligations under Sections 4 and 5 of this Agreement that relate to the portion of the Property being transferred are assumed by and enforceable against the transferee. 2.2.3 Termination of Agreement With Respect to Individual Residential Lots On Sale to Public and Completion of Construction. Notwithstanding any other provisions of this Agreement, the obligations of Owner pursuant to this Agreement shall terminate with respect to any residential lot and such residential lot shall be released and no longer be subject to this Agreement upon satisfaction of both of the following conditions: (a) The residential lot has been finally subdivided and individually (and not in "bulk ") sold or leased (for a period longer than one year) to a member of the public or other ultimate user; and, (b) A certificate of occupancy has been issued or a final building inspection has been conducted and approved for the primary dwelling unit on the residential lot. 2.2.4 Termination of Agreement With Respect to Non - Residential Parcels. Notwithstanding any other provisions of this Agreement, the obligations of Owner pursuant to this Agreement shall terminate with respect to any non - residential parcel and the non - residential parcel shall be released and no longer be subject to Page 8 of 23 this Agreement at such time as the parcel has been fully improved and occupied consistent with the allowed intensity of development under the Development Plan. 3. PRE - ANNEXATION OBLIGATIONS AND COMMITMENTS. 3.1 Annexation of Property. Consistent with and subject to the terms and conditions of this Agreement and specifically this Subsection, CITY may, in one annexation proceeding or several annexation proceedings, annex the Property under such conditions as are imposed by or through the Orange County Local Agency Formation Commission and reasonably acceptable to OWNER. Conditions shall be deemed to be reasonably acceptable to OWNER unless the conditions impair or interfere with OWNER's rights to develop or materially increase the cost of development. OWNER's consent to annexation of all or a portion of the Property is contingent on, and OWNER has reasonably relied on, CITY's commitments in Section 3 and 4 of this Agreement. 3.1.1 Annexation Before Project Completion. OWNER will support CITY's annexation of the Property in its entirety before project completion, provided that the Property may be fully developed to the full extent permitted in the Development Plan and as evidenced by satisfaction of each of the following conditions: (a) The Legislature has approved, and the Governor has signed, legislation that clarifies provisions of the Coastal Act such that annexation of the Property (1) will not alter or affect the validity and enforceability of the Newport Coast Local Coastal Program, Second Amendment, including any amendments applicable to the Property and any related coastal development permits; or (ii) deprive the County of authority to issue coastal development permits pursuant to the terms of this Agreement, any ordinance, joint powers agreement, or other mechanism that confers municipal land use authority to the County after annexation and the Newport Coast Local Coastal Program, Second Amendment or any subsequent amendments that are certified by the California Coastal Commission; (b) The City adopts, and maintains during the term of this Agreement, general plan and zoning desginations for the Property that are essentially identical to the general plan and zoning designations adopted by the County and in effect as of the Effective Date. Page 9 of 23 (c) The City transfers municipal land use authority (including the issuance of building and grading permits) to the County pursuant to a joint powers or similar agreement and /or ordinance until such time as the Project is complete or until OWNER consents, in writing, to an assumption of municipal land use authority over all or a portion of the Property. 3.1.2 Ultimate Annexation. OWNER will fully support CITY annexation of all or a portion of the Property without satisfying the provisions of Section 3.1.1, provided that all lots and /or parcels to be annexed have received building permits for construction of structure(s) consistent with the Development Approvals, a certificate of occupancy has been issued or a final building inspection has been conducted and annexation will not interfere with, affect, or impair the Development Approvals or OWNER's ability to complete the Project. 3.2 Environmental Impacts and Mitigation. The parties acknowledge that Environmental Impact Reports, environmental documents and functional equivalents ( "Environmental Documents - described in Exhibit C) have been prepared and certified for the Project by County and /or approved by the Coastal Commission. CITY has reviewed and evaluated the Environmental Documents to determine if the impacts of the Project, as represented by this Agreement, the Development Plan, and the CITY approvals, were fully analyzed and evaluated. CITY has also reviewed the Environmental Documents and all relevant existing facts and circumstances to determine if any of the events that require preparation of a subsequent or supplemental environmental document have occurred. CITY has determined based on that review that none of the events described in Section 21166 of the Public Resources Code or Sections 15162 or 15163 of the CEQA Guidelines have occurred. CITY has specifically determined that the detachment of the Property from County and the annexation of the Property to CITY do not require preparation of any subsequent or supplemental environmental impact report for the Project because the reorganization will not increase, decrease, or modify any development of dedication when compared to the entitlement prior to annexation. CITY has also determined that, subject to incorporation of the mitigation measures identified in Exhibit "E" and except as specifically provided in this Agreement, there is no current or anticipated deficiency in any municipal service or facility (including without limitation planned community and neighborhood parks, drainage and flood control facilities, circulation system infrastructure, and public safety services) resulting from Development of the Project. The mitigation measures identified in Exhibit "E" are incorporated by reference into the Development Plan. Page 10 of 23 3.3 Additional Pre - Annexation Understandings. As a further inducement to OWNER to support the annexation of the Property to CITY, CITY agrees that, as of the date of its approval of this Agreement. CITY acknowledges that all County affordable housing requirements associated with development of the Property have been satisfied. CITY also acknowledges that the OWNER has a vested right to proceed with development pursuant to the County Agreement and that no additional affordable housing requirements shall be imposed on development of the Property pursuant to the CITY's General Plan or otherwise. The Affordable Housing Implementation Plans approved by the County, describing the manner in which affordable housing requirements have been satisfied for development of the Property, are attached to this Agreement as Exhibit "F." Fees payable upon issuance of any development permit (e.g., building permit or occupancy permit) will be paid to the issuer of the permit in accordance with County Codes, fee schedules and requirements for original improvements. Following annexation, fees shall continue to be paid to the issuer in accordance with the codes and requirements for additions, remodels and rebuilds of the jurisdiction with land use authority. CITY agrees that the Project is in full compliance with, and shall not be further subject to, CITY's Traffic Phasing Ordinance following annexation of the Property, CITY having determined through this Agreement that: a. Development of the Property will not cause or make worse any unsatisfactory level of service at any critical intersection as defined in the Traffic Phasing Ordinance; b. Development of the Property has been considered a committed project which has been incorporated into the CITY's traffic model and Circulation Element traffic projections and all resulting levels of service have been accepted in the Circulation Element; and c. There is an overall reduction in peak hour ICU at impacted intersections having unsatisfactory levels of service taking into account the circulation improvements constructed or facilitated by OWNER pursuant to conditions imposed for development of the Project, including construction of Newport Coast Drive, extension of San Joaquin Hills Road, widening of Pacific Coast Highway, and facilitation of construction of the San Joaquin Hills Transportation Corridor. 3.4 Cooperation. Subject to and in reliance upon the representations and covenants of the CITY herein, OWNER will support the annexation of the Property by the CITY. Page 11 of 23 3.5 Termination of Annexation Proceedings. This Agreement may be terminated by OWNER in the event that CITY fails to comply with the requirements of Paragraph 3.1 above with respect to any proposed annexation of Property to CITY, or if conditions imposed by or through the Local Agency Formation Commission on the annexation are determined by either party to conflict materially with its rights and obligations under any provision of this Agreement. 4. DEVELOPMENT OF THE PROPERTY UPON ANNEXATION AND ADOPTION OF THE DEVELOPMENT PLAN. Following annexation of the Property by CITY, the following provisions shall apply 4.1 Rights to Develop. Subject to the terms of this Agreement, following annexation of the Property OWNER shall have a vested right to develop the Property in accordance with, and to the extent of, the Development Plan. Pending annexation to CITY, OWNER shall have the right to seek approvals from County for the Development of the Property, and to develop the Property, consistent with the Development Plan. CITY expressly agrees to take no action that would or could (a) interfere with or impair the Development Approvals; (b) interfere with or impair the OWNER's ability to complete the project; (c) materially increase the cost of completing the project without the OWNER's express written consent; or (d) cause the transfer of any permitting or development review authority pursuant to State or local law, including Government Code section 30519, from the County to the City or any other agency until such time as that portion of the Property affected by the transfer is fully developed pursuant to the Development Plan and provided the transfer would not interfere or impair OWNER's ability to develop any other portion of this Property. 4.2 Effect of Agreement on Land Use Regulations. Except as otherwise provided under the terms of this Agreement, the rules, regulations and official policies governing permitted uses of the Property, the density and intensity of use of the Property, the maximum height and size of proposed buildings, and the design, improvement and construction standards and specifications applicable to Development of the Property, shall be those contained in the Development Plan and those Land Use Regulations not inconsistent with the Development Plan and that were in full force and effect as of June 26, 2001. 4.3 Timing of Development. The parties acknowledge that OWNER cannot at this time predict when or the rate at which phases of the Property will be developed. Such decisions depend upon numerous factors which are not within the control of OWNER, such as market orientation and demand, interest rates, absorption, completion and other similar factors. Since the California Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal. 3d 465, Page 12 of 23 that the failure of the parties therein to provide for the timing of Development resulted in a later adopted initiative restricting the timing of Development to prevail over such parties' agreement, it is the parties' intent to cure that deficiency by acknowledging and providing that OWNER shall have the right to develop the Property in such order and at such rate and at such times as OWNER deems appropriate within the exercise of its subjective business judgment. Nothing in this section is intended to alter the standard durational limits of any permits issued to OWNER pursuant to Development Approvals. 4.4 Changes and Amendments. The parties acknowledge that Development of the Project may require Subsequent Development Approvals. OWNER may determine that changes in the existing Development Approvals or Development Plan are appropriate and desirable. In the event OWNER finds that such a change is appropriate or desirable, OWNER may apply in writing for an amendment to Development Approvals or the Development Plan to effect such change and the application shall be processed for approval by County. CITY shall expressly permit and authorize modifications of any proposed changes in the existing Development Approvals or Development Plan unless the proposed modifications: (a) would materiallyreduce the amount of open space intended for dedication to the public, or (b) would materially alter the cost of providing municipal services to the Property subsequent to annexation, or (c) would materially reduce the amount of property tax or other revenue available to the CITY after annexation, or (d) would materially increase the density and /or intensity of development allowed in the Project as a whole, resulting in unacceptable intersection impacts outside of the Project that cannot be mitigated pursuant to the CITY's Traffic Phasing Ordinance. Any change in the Development Approvals or Development Plan made in accordance with the procedures required by the Land Use Regulations and with the written consent of the OWNER shall be conclusively deemed to be consistent with this Agreement, without any further need for any amendment to this Agreement or any of its Exhibits. 4.5 Continuation of Irvine Coast Development Agreement. CITY acknowledges and agrees that the County Development Agreement entered into between OWNER and County shall continue to govern the rights and obligations of OWNER and County with respect to the Coastal Zone Area preceding annexation, and following annexation to the maximum extent permitted pursuant to the joint powers agreement or similar arrangement. If for any reason this Page 13 of 23 Agreement is found to be invalid or unenforceable or OWNER's ability to proceed with the Development Plan is impaired or delayed for any reason, then the Coastal Zone Area shall be and remain subject to the terms and protections of the Irvine Coast Development Agreement. 4.6 Monitoring of Project. City shall, subsequent to annexation of all or a portion of the Property, have the right, pursuant to a standard right of entry permit issued by OWNER, to enter the Property for the limited purpose of ensuring that development of the Property proceeds in substantial compliance with the Development Approvals and all conditions to those approvals that are material to the issue of water quality and aesthetics. OWNER shall designate a Project Manager to provide CITY with access to all grading and building plans and specifications at or before submittal to the County. CITY shall conduct all monitoring activities in a manner that does not unduly burden OWNER's rights to develop the Property in compliance with Development Approvals. Any report prepared pursuant to monitoring shall be lodged with the City Manager and City shall provide OWNER with the opportunity to review and comment on the report prior to submittal to the City Manager. The monitoring authorized by this Subsection is not intended, and shall not be construed, to create any procedure, right or process on the part of the CITY to review or evaluation the development of the Property. City shall make available to any person, upon request, any report or document lodged with the City Manager that is prepared by any professional retained to conduct the monitoring authorized by this Section. 5. FINANCING OF PUBLIC IMPROVEMENTS AFTER ANNEXATION. 5.1 Formation of Financing Districts. If so requested by OWNER, CITY will cooperate in the formation of any special assessment district, community facilities district or alternate financing mechanism ( "CFD ") to pay for the construction, acquisition, and /or maintenance and operation of public and /or quasi - public infrastructure, lighting, landscape, or any other public facilities required as part of the Development Approvals; provided, however, CITY shall have no obligation to authorize or to cause any such CFD to issue debt or sell bonds prior to the completion of the annexation of the Property to CITY. In the event that such a CFD is formed and sells bonds to pay for the construction or acquisition of public or quasi - public facilities which were provided, in whole or in part, by OWNER, OWNER may be reimbursed from such bonds to the extent that OWNER has spent funds or dedicated land for the establishment of such facilities and creation of the CFD. While it is acknowledged that this Agreement cannot require CITY or the City Council to form any such CFD or to issue and sell bonds, CITY represents that it can, and does hereby, agree that it shall not refuse OWNER's request to form such a CFD and to issue and sell bonds following completion of annexation of the Property to CITY, except for good and reasonable cause. In no event shall CITY have any obligation or duty to refinance, repay, reduce the amount of, or assume any financial relationship to, any bonds or other Page 14 of 23 debt issued by any CFD prior to annexation. 5.2 OWNER's Right to Construct Facilities. It is understood and agreed that, subject to CITY or County review and approval of plans and specifications, as appropriate, the OWNER may elect, and reserves the right, to construct, or cause the construction of, any public or quasi - public facility for which the CITY intends to collect a fee, and to dedicate the completed facility to the CITY, in lieu of payment of the fee. 6. REVIEW FOR COMPLIANCE FOLLOWING ANNEXATION. 6.1 Periodic Review. Following annexation of all or any portion of the Property, the City Council shall review this Agreement annually, on or before the anniversary of the Effective Date, in order to ascertain the good faith compliance by OWNER with the terms of the Agreement. As part of that review, OWNER shall submit an annual monitoring review statement describing its actions in compliance with this Agreement, in a form acceptable to the City Manager, within 30 days after written notice from the City Manager requesting that statement. The statement shall be accompanied by an annual review and administration fee sufficient to defray the estimated costs of review and administration of the Agreement during the succeeding year. The amount of the annual review and administration fee shall be set annually by resolution of the City Council. 6.2 Special Review. The City Council may order a special review of compliance with this Agreement at any time at CITY's sole cost. OWNER shall cooperate with the CITY in the conduct of such special reviews. 6.3 Procedure. In connection with any periodic or special review, each party shall have a reasonable opportunity to assert matters which it believes have not been undertaken in accordance with the Agreement, to explain the basis for such assertion, and to receive from the other party a justification of its position on such matters. If on the basis of the parties' review of any terms of the Agreement, either party concludes that the other party has not complied in good faith with the terms of the'Agreement, then such party may issue a written "Notice of Non - Compliance" specifying the grounds therefor and all facts demonstrating such non - compliance. The party receiving a Notice of Non - Compliance shall have thirty (30) days to respond in writing to said Notice. If the response to the Notice of Non - Compliance has not been received in the offices of the party alleging the default within the prescribed time period, the Notice of Non - Compliance shall be conclusively presumed to be valid. If a Notice of Non - Compliance is contested, the parties shall have up to sixty (60) days to arrive at a mutually acceptable resolution of the matter(s) occasioning the Notice. In the event that the parties are not able to arrive at a mutually acceptable resolution of the matter(s) by the end of the sixty (60) day period, the party alleging the non - compliance may thereupon pursue the remedies provided in Section 7. Page 15 of 23 6.4 Certificate of Agreement Compliance. If, at the conclusion of a periodic or special review, OWNER is found to be in compliance with this Agreement, CITY shall, upon request by OWNER, issue a Certificate of Agreement Compliance ( "Certificate ") to OWNER stating that after the most recent Periodic or Special Review and based upon the information known or made known to the City Manager and CITY Council that (1) this Agreement remains in effect and (2) OWNER is not in default. The Certificate shall be in recordable form, shall contain information necessary to communicate constructive record notice of the finding of compliance, shall state whether the Certificate is issued after a Periodic or Special Review and shall state the anticipated date of commencement of the next Periodic Review. OWNER may record the Certificate with the County Recorder. Additionally, OWNER may at any time request from the CITY a Certificate stating, in addition to the foregoing, which obligations under this Agreement have been fully satisfied with respect to the Property, or any lot or parcel within the Property. 7. DEFAULT AND REMEDIES. 7.1 Specific Performance Available. The parties acknowledge that money damages and remedies at law generally are inadequate and specific performance is a particularly appropriate remedy for the enforcement of this Agreement and should be available to OWNER and CITY because due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, OWNER and /or CITY may be foreclosed from other choices it may have had to utilize or condition the Property or portions hereof. OWNER and CITY have invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, such that it would be extremely difficult to determine the sum of money which would adequately compensate OWNER and /or CITY for such efforts. Except as provided in the Section 7.2 below, neither OWNER nor CITY shall be entitled to any money damages, including attorney fees, from the other party by reason of any default under this Agreement. 7.2 Restitution of Improper Development Fees. In the event any Development fees or taxes are imposed on Development of the Property other than those authorized pursuant to this Agreement, OWNER shall be entitled to recover from CITY restitution of all such improperly assessed fees or taxes, together with interest thereon at the maximum allowable non - usurious rate from the date such sums were paid to CITY to the date of restitution. Page 16 of 23 7.3 Termination of Agreement. 7.3.1 Termination of Agreement for Default of OWNER. CITY in its discretion may terminate this Agreement as to any non - annexed portions of the Property for any failure of OWNER to perform any material duty or obligation of OWNER hereunder or to comply in good faith with the terms of this Agreement related to its annexation (hereinafter referred to as "default'); provided, however, CITY may terminate this Agreement pursuant to this Section only after following the procedure set forth in Section 6.3 and thereafter providing written notice to OWNER of the default setting forth the nature of the default and the actions, if any, required by OWNER to cure such default and, where the default can be cured, OWNER has failed to take such actions and cure such default within 30 days after the effective date of such notice or, in the event that such default cannot be cured within such 30 day period, the failure of CITY to commence to cure such default within such 30 day period and to diligently proceed to complete such actions and to cure such default. 7.3.2 Termination of Agreement for Default ofClTY. OWNER in its discretion may terminate this Agreement by written notice to CITY after the default by CITY in the performance of a material term of this Agreement and only after following the procedure set forth in Section 6.3 and thereafter providing written notice by OWNER thereof to CITY and, where the default can be cured, the failure of CITY to cure such default within 30 days after the effective date of such notice or, in the event that such default cannot be cured within such 30 day period, the failure of CITY to commence to cure such default within such 30 day period and to diligently proceed to complete such actions and to cure such default. 7.3.3 Rights and Duties Following Termination. Upon the termination of this Agreement, no party shall have any further right or obligation hereunder except with respect to (i) any obligations to have been performed prior to said termination, (ii) any default in the performance of the provisions of this Agreement which has occurred prior to said termination, or (iii) obligations that have vested through the annexation of the Property, or any annexed portion thereof. 7.4 OWNER's Right To Terminate Upon Specified Events. Notwithstanding any other provisions of this Agreement to the contrary, OWNER retains the right to terminate this Agreement (but not the provisions of Section 3) upon thirty (30) days written notice to CITY in the event that OWNER reasonably determines that continued Development of the Project consistent with the Development Plan has become economically infeasible due to changed market conditions, increased Development costs, burdens imposed as conditions to future discretionary approvals of the Project consistent with this Agreement, or similar factors. Page 17 of 23 8. THIRD PARTY LITIGATION. CITY shall promptly notify OWNER of any claim, action or proceeding filed and served against CITY to challenge, set aside, void, annul, limit or restrict the approval and continued implementation and enforcement of this Agreement. CITY and OWNER agree to cooperate in the defense of such action(s). 9. MORTGAGEE PROTECTION. The parties hereto agree that this Agreement shall not prevent or limit OWNER, in any manner, at OWNER's sole discretion, from encumbering the Property or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Property. CITY acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with OWNER and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. Subject to compliance with applicable laws, CITY will 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 Mortgagee of the Property shall be entitled to the following rights and privileges: (a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Property made in good faith and for value, unless otherwise required by law. (b) The Mortgagee of any mortgage or deed of trust encumbering the Property, or any part thereof, which Mortgagee, has submitted a request in writing to the CITY in the manner specified herein for giving notices, shall be entitled to receive written notification from CITY of any default by OWNER in the performance of OWNER's obligations under this Agreement. (c) If CITY timely receives a request from a Mortgagee requesting a copy of any notice of default given to OWNER under the terms of this Agreement, CITY shall provide a copy of that notice to the Mortgagee within ten (10) days of sending the notice of default to OWNER. The mortgagee shall have the right, but not the obligation, to cure the default during the remaining cure period allowed such party under this Agreement. Page 18 of 23 (d) Any Mortgagee who comes into possession of the Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Property, or part thereof, subject to the terms of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, no Mortgagee shall have an obligation or duty under this Agreement to perform any of OWNER's obligations or other affirmative covenants of OWNER hereunder, or to guarantee such performance; except that (i) to the extent that any covenant to be performed by OWNER is a condition precedent to the performance of a covenant by CITY, the performance thereof shall continue to be a condition precedent to CITY's performance hereunder, and (ii) in the event any Mortgagee seeks to develop or use any portion of the Property acquired by such Mortgagee by foreclosure, deed of trust, or deed in lieu of foreclosure, such Mortgagee shall strictly comply with all of the terms, conditions and requirements of this Agreement and the Development Plan applicable to the Property or such part thereof so acquired by the Mortgagee. 10. MISCELLANEOUS PROVISIONS. 10.1 Term of Agreement. Following completion of the annexation of the Property, or any portion thereof, to the CITY within the preceding time periods, this Agreement shall continue in full force and effect with respect to such annexed land for a period of fifteen (15) years from the effective date of that annexation. 10.2 Recordation of Agreement. This Agreement shall be recorded with the County Recorder by the City Clerk upon annexation of the Property to CITY within the period required by Section 65868.5 of the Government Code. Similarly, amendments approved by the parties, and any cancellation, shall also be recorded. 10.3 Entire Agreement. This Agreement sets forth and contains the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 10.4 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, then this Agreement shall terminate in its entirety, unless the parties otherwise agree in writing, which agreement shall not be unreasonably withheld. Page 19 of 23 10.5 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party or in favor of CITY shall not be employed in interpreting this Agreement, all parties having been represented by counsel in the negotiation and preparation hereof. 10.6 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 10.7 Singular and Plural. As used herein, the singular of any word includes the plural. 10.8 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. 10.9 Waiver. Failure of a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter. 10.10 Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit for the parties and their successors and assigns. No other person shall have any right of action based upon any provision of this Agreement; provided, however, that the fee owners of any non - residential parcels in the annexation area may elect to be covered by this Agreement. 10.11 Force Majeure. Neither party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the party's control (including the party's employment force), government regulations, court actions (such as restraining orders or injunctions), or other causes beyond the party's control. If any such events shall occur, the term of this Agreement and the time for performance shall be extended for the duration of each such event, provided that the term of this Agreement shall not be extended under any circumstances for more than five (5) years. Page 20 of 23 10.12 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefited thereby of the covenants to be performed hereunder by such benefited party. 10.13 Counterparts. This Agreement may be executed by the parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the parties had executed the same instrument. 10.14 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by any party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, and the parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 10.15 Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the Development of the Project is private Development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between CITY and OWNER is that of a government entity regulating the Development of private property and the owner of such property. 10.16 Further Actions and Instruments. Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreement. Upon the request of either party at any time, the other party shall promptly execute, with acknowledgment or affidavit if reasonably required, and file or record such required instruments and writings and take any actions as may be reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions contemplated by this Agreement. Subject to Section 3 above, OWNER will cooperate with the CITY in the processing of the annexation of the Project through the Local Agency Formation Commission including advocating the application of the existing AB 8 Master Property Tax Transfer Agreement. OWNER acknowledges the importance of maintaining the fiscal benefits of the Project assuming that the current method of allocating sales tax revenues (i.e., point of sale) is utilized. OWNER will consult with the CITY regarding legislative proposals to adjust this procedure with the goal of supporting CITY efforts to maintain the fiscal benefits of the Project through the legislative process. Page 21 of 23 10.17 Eminent Domain. No provision of this Agreement shall be construed to limit or restrict the exercise by CITY of its power of eminent domain. 10.18 Amendments in Writing /Cooperation. This Agreement may be amended only by written consent of both parties specifically approving the amendment and in accordance with the Government Code provisions for the amendment of Development Agreements. The parties shall cooperate in good faith with respect to any amendment proposed in order to clarify the intent and application of this Agreement, and shall treat any such proposal on its own merits, and not as a basis for the introduction of unrelated matters. 10.19 Authority to Execute. The person or persons executing this Agreement on behalf of OWNER warrants and represents that he /they have the authority to execute this Agreement on behalf of his /their corporation, partnership or business entity and warrants and represents that he /they has /have the authority to bind OWNER to the performance of its obligations hereunder. 10.20 Notice. All notices, demands, requests or approvals to be given under this Agreement shall be given in writing and shall be deemed served when delivered personally or on the third business day after deposit in the United States mail, postage prepaid, first class mail, addressed as follows: All notices, demands, requests or approvals to CITY shall be addressed to CITY at: City of Newport Beach City Manager's Office 3300 Newport Boulevard PO Box 1768 Newport Beach, California 92658 -8915 All notices, demands, requests or approvals to OWNER shall be addressed to OWNER at: Vice President of Entitlements The Irvine Company 550 Newport Center Drive Newport Beach, California 92660 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first set forth above. Page 22 of 23 ATTEST: By LaVonne Harkless, City Clerk APPROVED AS TO FORM: a CITY: CITY OF NEWPORT BEACH By Robert Burnham, City Attorney (SEAL) GAROLD B. ADAMS, Mayor OWNER: THE IRVINE COMPANY a Title By Title OWNER: IRVINE COMMUNITY DEVELOPMENT COMPANY By Title By Title Page 23 of 23 STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing ordinance, being Ordinance No. 2001 -13 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 24th day of July 2001, and that the same was so passed and adopted by the following vote, to wit: Ayes: Heffernan, O'Neil, Ridgeway, Glover, Bromberg, Proctor, Mayor Adams Noes: None Absent: None Abstain: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 25th day of July 2001. (Seal) City Clerk City of Newport Beach, California CERTIFICATE OF PUBLICATION STATE OF CALIFORNIA } COUNTY OF ORANGE CITY OF NEWPORT BEACH } I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach, California, do hereby certify that Ordinance No. 2001 -13 has been duly and regularly published according to law and the order of the City Council of said City and that same was so published in The Daily Pilot, a daily newspaper of general circulation on the following date, to wit: July 28, 2001. In witness whereof, I have hereunto subscribed my name this 1�2nL day of 2001. City Clerk City of Newport Beach, California