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HomeMy WebLinkAbout2009-8 - Approving Development Agreement no. 2005-002 between the City of Newport Beach, JGKallins Newport Investments, LLC, and Sunstone Jamboree, LLC, for the Hyatt Regency Newport Beach Hotel Expansion and Timeshare Project Located at 1107 Jamboree RoaORDINANCE NO. 2009-8 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING DEVELOPMENT AGREEMENT NO. 2005 -002 BETWEEN THE CITY OF NEWPORT BEACH, JGKALLINS NEWPORT INVESTMENTS, LLC, AND SUNSTONE JAMBOREE, LLC, FOR THE HYATT REGENCY NEWPORT BEACH HOTEL EXPANSION AND TIMESHARE PROJECT LOCATED AT 1107 JAMBOREE ROAD (PA2005 -212). WHEREAS, an application was filed by Sunstone Jamboree, LLC ( "Sunstone "), requesting approval of Parcel Map No. 2007 -003, Use Permit No. 2005 -046, Modification Permit No. 2007 -095, and Development Agreement No. 2005 -002, with respect to property located at 1107 Jamboree Road, and legally described as Parcels 1 and 2 as shown on a Parcel Map recorded in Book 17, Page 3, of Maps in the Office of the County Recorder of Orange County (`Property"), to expand the existing Hyatt Regency Newport Beach hotel. Proposed improvements include the addition of 88 timeshare units, a new 800 -seat ballroom facility, a new 10,072- square -foot spa and fitness center, a new housekeeping and engineering building, and a two -level parking garage. Project implementation requires the demolition of 12 existing hotel rooms, the existing 3,190 - square -foot Terrace ballroom, and the existing engineering and maintenance building, and removal of the existing nine -hole golf course; and WHEREAS, pursuant to Section 20.84.050 of the Newport Beach Municipal Code (Development Agreement), the City and the operator of a timeshare project are required to enter into a development agreement under the provisions of Chapter 15.45 of the Newport Beach Municipal Code to set forth the amount payable to the City by a timeshare owner for the right of occupancy of any timeshare unit; and WHEREAS, Newport Beach Municipal Code section 15.45.040 requires that development agreements include the term, permitted uses, density and intensity of development, and the maximum height and size of proposed buildings; and WHEREAS, a Development Agreement between the City of Newport Beach, JGKallins Newport Investments, LLC, the fee owner of the Property ( "JGKallins "), and Sunstone, the leaseholder of the Property (collectively Sunstone and JGKallins are referred to hereafter as the "Landowner"), has been prepared and is attached as Exhibit "A "; and WHEREAS, during the term of the Development Agreement, the Landowner shall have a vested right to develop the Property in accordance with the Development Agreement and project approvals, subject to the terms and conditions of the Development Agreement, Parcel Map No. 2007 -003, Use Permit No. 2005 -046, Modification Permit No. 2007 -095, and the Certified Final Environmental Impact Report (State Clearing House No. 2006121052); and WHEREAS, adoption of this ordinance and approval of the Development Agreement rescinds and cancels Landowner's remaining rights and obligations under the Circulation Improvement and Open Space Agreement ( "CIOSA ") upon the effective date of the Development Agreement; and WHEREAS, the Landowner has agreed to provide public benefits as consideration for the Development Agreement, including the timeshare development fee required by Chapter 20.84 of the Newport Beach Municipal Code in the amount of Three Million Dollars ($3,000,000); a visitor and recreational facilities fee in the amount of Two Million Dollars ($2,000,000) to be used for improvements that provide visitor and recreational facilities at Marina Park or at any other site designated by the City; an off - site water quality improvement fee in the amount of One Million Dollars ($1,000,000); and a bayfront walkway connection fee in the amount of One Hundred Thousand Dollars ($100,000) to be used towards the cost of public improvements that expands access to the bayfront, such as the Marine Avenue Bridge /Bayside Drive bayfront walkway connection; and WHEREAS, the Planning Commission held a public hearing on October 23, 2008 and November 6, 2008 in the City Hall Council Chambers, 3300 Newport Boulevard, Newport Beach, California, at which time the Planning Commission considered the proposed project, including the parcel map, use permit, modification permit, and development agreement, the Final Environmental Impact Report, and the full administrative record. A notice of time, place, and purpose of the hearing was given in accordance with the Municipal Code. Evidence, both written and oral, was presented to and considered by the Planning Commission at the hearing. At the conclusion of the hearing and after considering the evidence and arguments submitted by the City staff, the Landowner, and all interested parties, the Planning Commission adopted: (1) Resolution No. 1770 recommending certification of the Final Environmental Impact Report (SCH#2006121052) prepared for the project, and (2) Resolution No. 1776 recommending adoption of Statement of Overriding Considerations and approval of Parcel Map No. 2007 -003, Use Permit No. 2005 -046, Modification Permit No. 2007 -095, and Development Agreement No. 2005 -002 to the City Council; and WHEREAS, pursuant to Section 15.45.050 of the Newport Beach Municipal Code, the City Council held a noticed public hearing on February 24, 2009, in the City Hall Council Chambers, 3300 Newport Boulevard, Newport Beach, California to consider the recommendation of the Planning Commission. A notice of time, place and purpose of the meeting was given in accordance with the Municipal Code. Evidence, both written and oral, was presented to and considered by the City Council at this meeting; and WHEREAS, the Land Use Element of the General Plan designates the project site as Visitor Serving Commercial (CV), which is intended to provide for accommodation, goods, and services intended to primarily serve visitors to the City. The project site, in particular, is allocated a maximum development limitation of 479 hotel rooms (Anomaly No. 52). The demolition of the 12 traditional hotel rooms and construction of the 88 new -2- SD1611846.4 timeshare rooms results in a total room count of 479 rooms, consistent with maximum development limitation for the site. The project has also been reviewed for consistency with all applicable policies of the General Plan and been determined to be consistent each applicable policy; and WHEREAS, the Coastal Land Use Plan (CLUP) of the Local Coastal Program sets forth goals, objectives, and policies that govern the use of land and water in the coastal zone within the City and addresses land use and development, public access and recreation, and coastal resource protection in accordance with the California Coastal Act. The project site is designated as Visitor - Serving Commercial (CV -B). This designation is intended to provide for accommodations, goods, and services intended for visitors to the City. The proposed project will provide expanded accommodations and services in the City and result in a total gross floor area of 374,104 square feet. This equates to a 0.34 floor area to land area ratio, which is below the 0.50 to 1.25 floor area ratio permitted under the CV -B land use designation. The project has also been reviewed for consistency with all applicable policies of the CLUP and been determined to be consistent each applicable policy; and WHEREAS, the City Council has reviewed and considered the information in the Development Agreement and in the full administrative record, and found that: 1. The Development Agreement is entered into pursuant to, and constitutes a present exercise of, the City's police power. 2. The Development Agreement is in the best interests of the health, safety, and general welfare of the City, its residents, and the public. 3. The Development Agreement is compatible and consistent with the objectives, policies, general land uses, and programs specified in the General Plan and Coastal Land Use Plan, and does not create any direct conflict with the General Plan or Coastal Land Use Plan. 4. The Development Agreement is consistent with Newport Beach Municipal Code Sections 15.45.040 and 20.84.050, and includes all the contents required for development agreements by the City of Newport Beach. 5. The Development Agreement Amendment is consistent with provisions of state law (California Government Code Sections 65864 - 65869.5) and local law (Municipal Code chapter 15.45) that authorize binding agreements that: (i) encourage investment in, and commitment to, comprehensive planning and public facilities financing; (ii) strengthen the public planning process and encourage private implementation of the local general plan; (iii) provide certainty in the approval of projects to avoid waste of time and resources; and (iv) reduce the economic costs of development by providing assurance to the property owners that they may proceed with projects consistent with existing policies, rules, and regulations. More specifically, the Development Agreement is consistent and has been approved in -3- SDN611846.4 accordance with provisions of California Government Code Section 65867 and Municipal Code Chapters 15.45. 6. A Final Environmental Impact Report (SCH No. 2006121052) was prepared in accordance with the provisions of the California Environmental Quality Act (CEQA), Public Resources Code § §21000, et seq., and the State CEQA Guidelines, California Code of Regulations § §15000, et seq. The City Council considered and certified the Final Environmental Impact Report on February 24, 2009, by adopting certain CEQA Findings of Facts contained within Resolution No. 2009- 9 , which are hereby incorporated by reference. 7. The Development Agreement provides significant public benefits to the City of Newport Beach. WHEREAS, the City Council finds that judicial challenges to the City s CEQA determinations and approvals of land use projects are costly and time consuming. In addition, project opponents often seek an award of attorneys' fees in such challenges. As project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorney's fees, and damages which may be awarded to a successful challenger. Based thereon, the Landowner shall be required to indemnify, hold harmless and defend the City as provided for in the Development Agreement and project conditions of approval; and THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1: Development Agreement No. 2005 -002 attached hereto as Exhibit 'A," including rescission of Landowner's remaining rights and obligations under CIOSA, is adopted and approved. SECTION 2: The of this Ordinance. This the City, and the same adoption. SDW11846.4 Mayor shall sign and the City Clerk shall attest to the passage Ordinance shall be published once in the official newspaper of shall become effective thirty (30) days after the date of its 13 This Ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach held on February 24, 2009, and adopted on March 10, 2009, by the following vote, to wit: AYES, COUNCIL MEMBERS Henn, Rosansky, Curry, Webb, Gardner, Daigle, Mayor Selich NOES, COUNCIL MEMBERS ABSENT COUNCIL MAYOR ATTEST: None None CITY CLERK IF APPROVED TO AS FORM: CITY ATTORNEY -5- SD%11846.4 EXHIBIT "A" Development Agreement No. 2005 -002 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 -3884 Attn: City Clerk (Space Above This Line Is for Recorder's Use Only) This Agreement is recorded at the request and for the benefit of the City of Newport Beach and is exempt from the payment of a recording fee pursuant to Government Code §§ 6103 and 27383. DEVELOPMENT AGREEMENT Between CITY OF NEWPORT BEACH, JGKALLINS NEWPORT INVESTMENTS, LLC and SUNSTONE JAMBOREE, LLC CONCERNING THE HYATT REGENCY NEWPORT BEACH PROPERTY (1107 JAMBOREE ROAD) TABLE OF CONTENTS Pape 1. Definitions ............................................................................................. ..............................4 1.1 "Adopting Ordinances" ................................................... ..............................4 1.2 "Agreement" .................................................................. ..............................4 1.3 "Approval Date" ............................................................. ..............................4 1.4 "Cancellation" ............................................................... ............................... 5 1.5 " CEQA .......................................................................................................... 5 1.6 " CIOSA ........................................................................................................ 5 1.7 "City" .......................................................................... ..............................5 1.8 "City Council" ................................................................. ..............................5 1.9 " Develop" ....................................................................... ..............................5 1.10 "Development Fees" ...................................................... ..............................5 1.11 "Development Plan" ....................................................... ..............................5 1.12 "Effective Date" .............................................................. ..............................5 1.13 "EIR" .......................................................................... ..............................5 1.14 "ENR Index" ................................................................... ..............................5 1.15 " Exhibit" ......................................................................... ..............................6 1.16 "Existing General Regulations" ...................................... ..............................6 1.17 "Fair Share Traffic Contribution Ordinance" ....................... ............................... 6 1.18 "First Time -Share Building Permit" ................................ ..............................6 1.19 "Future General Regulations" ........................................ ..............................6 1.20 `General Plan" ............................................................... ..............................6 1.21 "General Regulations" ............................................................. ..............................6 1.22 "Governmental Reservations" ........................................ ..............................7 1.23 " Include" ........................................................................ ..............................7 1.24 " Mortgage" ..................................................................... ..............................8 TABLE OF CONTENTS Page 1.25 " Mortgagee" .............................................................................. ..............................8 1.26 "Off -Site Water Quality Fee" .......................................... ..............................8 1.27 "Party" or " Parties" ......................................................... ..............................8 1.28 " Project" ......................................................................... ..............................8 1.29 "Project Approvals" ........................................................ ..............................8 1.30 "Project Conditions" ....................................................... ..............................8 1.31 "Property" ...................................................................... ..............................9 1.32 "Single Site Time-Share Plan" ....................................... ..............................9 1.33 "Single Time -Share Property" ........................................ ..............................9 1.34 "Subsequent Approvals" ................................................ ..............................9 1.35 "Term" .......................................................................... ..............................9 1.36 "Time -Share Fee" .......................................................... ..............................9 1.37 "Time -Share Unit" .......................................................... ..............................9 1.38 "Time -Share Unit Purchaser" ......................................... ..............................9 1.39 "Time -Shan: Use" .......................................................... ..............................9 1.40 "Vested Entitlement" or " Entitlement" ............................. ..............................9 1.41 "Visitor Serving and Recreational Facilities Fee" ........... ..............................9 1.42 "Walkway Connection Fee" ........................................... ......................:.......9 2. Development of Property ................................................................... ..............................9 2.1 Development Program ................................................... ..............................9 2.2 Compliance with Project Conditions ............................. .............................11 2.3 Compliance with General Regulations .......................... .............................11 2.4 No Conflicting Enactments ........................................... .............................11 2.5 Public Health and Safety /Uniform Codes ..................... .............................12 2.6 Police Power ................................................................. .............................12 TABLE OF CONTENTS Paae 2.7 Public Works Improvements ......................................... .............................13 2.8 Overriding Federal and State Laws and Regulations ... .............................13 2.9 Procedural Regulations ................................................ .............................14 3. Benefits to Owner .............................................................................. .............................14 3.1 Right to Develop ........................................................... .............................14 3.2 Benefits to Landowner .................................................. .............................15 3.3 Reservations or Dedications of Land ............................ .............................15 3.4 No Additional Traffic Related Fees or Conditions ......... .............................15 3.5 Time for Construction and Completion of Project ......... .............................15 3.6 Tentative Maps ............................................................. .............................16 3.7 Processing and Issuance of Permits ............................ .............................16 3.8 Future Approvals .......................................................... .............................17 4. Fees ...................................................................................................... .............................17 4.1 Time -Share Development ............................................. .............................17 4.2 Visitor Serving and Recreational Facilities — Marina Park Marina ............. 17 4.3 Off-Site Water Quality Improvements ........................... .............................18 4.4 Bayfront Walkway Connection ...................................... .............................19 4.5 ENR Index .................................................................... .............................19 4.6 Development Fees ...................................................... .............................20 4.7 Permitted Increases in Development Fees Applicable to Property . ........... 21 5. CIOSA ................................................................................................. .............................21 5.1 Cancellation of CIOSA .................................................. .............................21 5.2 Maintenance of CIOSA Pre -Paid Transportation Fund . .............................21 5.3 No Payments Due from City ......................................... .............................21 6. Sales Tax ............................................................................................ .............................22 TABLE OF CONTENTS Paqe 6.1 Project Construction ..................................................... .............................22 6.2 Direct Payment Process ............................................... .............................22 6.3 Fixtures, Materials and Equipment ............................... .............................22 7. Project as Private Undertaking ....................................................... .............................23 8. Effective Date; Term .............................................................. .............................23 9. Amendment or Cancellation of Agreement ............................ .............................23 10. Enforcement .......................................................................... .............................23 11. Periodic Review of Compliance ............................................. .............................23 12. Events of Default .................................................................... .............................23 12.1 Default by Landowner ................................................... .............................23 12.2 Default by City .............................................................. .............................24 12.3 Specific Performance and Damages Remedies ........... .............................24 12.4 Limited Recovery of Legal Expenses by Prevailing Party in Any Action......................................................................... .............................24 13. Cooperation ........................................................................................ .............................25 14. Force Majeure ........................................................................ .............................25 15. Indemnity ............................................................................. ............................... 25 16. Third Party Legal Challenge .................................................. .............................25 17. Mortgagee Rights ................................................................... .............................26 17.1 Encumbrances on Property .......................................... .............................26 17.2 Mortgagee Protection ................................................... .............................26 17.3 Mortgagee Not Obligated ............................................. .............................26 17.4 Notice of Default to Mortgagee; Right of Mortgagee to Cure .....................26 18. Assignment ......................................................................................... .............................27 18.1 Right to Assign ........................................................... ............................... 27 18.2 Agreement Binding on Successors and Assigns .......... .............................27 iv TABLE OF CONTENTS Page 19. Estoppel Certificate ........................................................................... .............................28 20. Further Actions and Instruments ............................................ .............................28 21. Notices ................................................................................... .............................28 22. Rules of Construction and Miscellaneous Terms ................... .............................29 22.1 Rules of Construction ................................................... .............................29 22.2 Time Is of the Essence ................................................. .............................29 22.3 Waiver .......................................................................... .............................29 22.4 Counterparts ................................................................. .............................30 22.5 Entire Agreement .......................................................... .............................30 22.6 Severability ................................................................... .............................30 22.7 Construction ................................................................. .............................30 22.8 Constructive Notice and Acceptance ............................ .............................30 22.9 No Third Party Beneficiaries ......................................... .............................30 22.10 Applicable Law and Venue ........................................... .............................31 22.11 Non - Liability of City Officers and Employees ................ .............................31 22.12 Section Headings ......................................................... .............................31 22.13 Covenant Not To Sue ................................................... .............................31 22.14 Eminent Domain ........................................................... .............................31 22.15 No Brokers ................................................................... .............................31 23. Authority to Execute ............................................................... .............................31 24. Recordation ........................................................................... .............................32 EXHIBITA .................................................................................... ............................... A -1 EXHIBITB .................................................................................... ............................... B -1 EXHIBITC .................................................................................... ............................... C -1 v DEVELOPMENT AGREEMENT Hyatt Regency Newport Beach (Pursuant to California Government Code sections 6586465869.5) This DEVELOPMENT AGREEMENT (the "Agreement ") is entered into on March 10, 2009, by and between: (1) CITY OF NEWPORT BEACH, a municipal corporation and charter City ( "C�it "); (2) JGKALLINS NEWPORT INVESTMENTS, LLC, a California limited liability company ( "JGKallins "); and (3) SUNSTONE JAMBOREE, LLC, a Delaware limited liability company ( "Sunstone ") (JGKallins and Sunstone are collectively referred to herein as "Landowner"). City and Landowner are sometimes collectively referred to in this Agreement as the "Parties" and individually as a "Pagy." RECITALS A. Property /Ownership Status. JGKallins is the fee owner of a 25.7 -acre parcel of real property (the "Propert y ") that is described in the legal description attached hereto as Exhibit A and depicted on the site map attached hereto as Exhibit B. Sunstone is the leaseholder of the Property pursuant to an assignment of lease dated May 13, 2005 between WHP Hotel Owner -1, L.P., a Delaware limited partnership, the assignor, and Sunstone, the assignee. The Property is under the City's land use jurisdiction and is developed with the Hyatt Regency Newport Beach Hotel ( "Hyatt Hotel ") located at 1107 Jamboree Road. The Property is located in the California Coastal Zone and therefore this Agreement will require approval by the California Coastal Commission in compliance with Section 65869 of the California Government Code. B. CIOSA Agreement. On September 14, 1992, the City Council of the City of Newport Beach ( "City Council ") adopted Ordinance No. 92 -35, through which City and Landowner's predecessor -in- interest, The Irvine Company, a Michigan corporation, entered into the Circulation Improvement and Open Space Agreement pertaining to twelve (12) parcels of real property located in City, including the parcel owned by Landowner. On September 11, 1995, City adopted Ordinance No. 95 -42 approving the First Amendment to the Circulation Improvement and Open Space Agreement dated March 12, 1996 ( "CIOSA Amendment "). The original Circulation Improvement and Open Space Agreement and the CIOSA Amendment are collectively referred to herein as the "CIOSA." C. Public Benefits under the CIOSA. Under the CIOSA, Landowner: (1) Committed to road improvements adjacent to proposed projects, made an interest -free loan to City, and pre -paid required fair share road improvement fees that City used as matching funds when obtaining outside transportation funding; and (2) Committed to dedicating 138.1 acres for open space and public facilities which was more than was required for the twelve (12) parcels under the City of Newport Beach General Plan and the City of Newport Beach Park Dedication Ordinance, in effect at the time. 03.02.09 Clean D. CIOSA Building Entitlements. The CIOSA provided Landowner with certain building entitlements with respect to the Property including the right to develop 68 hotel rooms at the Property for a total of 479 hotel rooms. To date, Landowner has not developed the 68 additional hotel rooms provided for in CIOSA. E. CIOSA Status. Although Landowner did not utilize all of the building entitlements provided by CIOSA as set forth in Recital D, it fulfilled all the public benefits listed in Recital C as if it had done so. F. Proiect. Landowner has asked City to approve this Development Agreement, a Use Permit, a Modification Permit, and a Parcel Map which would authorize the Landowner to: (1) exceed the base height limit of 26 feet to allow the seven (7) buildings constructed on the Single Time -Share Property and the Ballroom, defined below, to be constructed at heights of up to 35 feet; (2) exceed the maximum height limit of 35 feet for an architectural cupola and tower feature of the proposed Ballroom, as defnied below; (3) allow commercial tandem valet parking; (4) reconfigure two existing lots allowing for a SingleTime-S hare Property to be governed by a Single Site Time -Share Plan to be located on one parcel and the hotel to remain on the other parcel; (5) establish finish grades for the purposes of measuring height; (6) construct 88 Time -Share Units within seven buildings on the SingleTime -Share Property to be governed by a Single Site Time -Share Plan and which will allow the Landowner to sell, lease or convey Time -Share Use interests in the SingleTime-S hare Property; (7) construct a new 800 -seat ballroom facility (the "Ballroom "); (8) construct a new 10,072 square - foot spa and fitness center, including a new outdoor pool facility; (9) convert an existing building used for storage to a housekeeping and engineering use; and (10) construct a new two -level parking garage (collectively the "Project "). To implement the Project without exceeding the overall entitlement cap of 479 hotel rooms, Landowner is proposing to demolish 12 existing villas (rooms) so that the net number of hotel rooms at the Property will be 391 hotel rooms and construct 88 Time -Share Units for a total of 479 hotel rooms/time -share units. In addition, implementation of the Project would require the demolition of the existing 3,190 - square -foot Terrace Ballroom as well as the existing engineering and maintenance building, and removal of the existing nine -hole golf course. The Project will also require the removal and reconfiguration of a recreational courtyard located in the center of the main hotel complex, and associated hotel parking areas, hardscape, and landscape. The majority of the Project consists of redevelopment in the northern, northwestern, and southern portions of the Property. Other upgrades included in the Project would also occur in the central portion of the Property. The total area for the Project is approximately 14 acres, or about 55 percent, of the Property. Landowner anticipates developing the Project in two phases with the ballroom, spa and garage being constructed in phase one prior to the Time -Share Units to be developed in phase two. G. CIOSA Cancellation. Given the proposed Time -Share Use of the Single Time - Share Property and that CIOSA is no longer needed for the development of the Property, this Agreement provides for the rescission and cancellation of the 03.02.09 Clean 2 Landowner's remaining rights and obligations under CIOSA on the Effective Date ( "Cancellation'). H. Public Benefit. Subject to the provisions in Section 4 below, and in exchange for the approvals, any authorization contained in Recital F and the other promises and covenants herein, Landowner has agreed to provide public benefits as consideration for this Agreement enabling City to fund and complete Visitor Serving and Recreational Facilities, Marine Avenue Bridge — Bayside Drive Bayfront Walkway Connection, as well as Off -Site Water Quality Improvements as follows: (1) Landowner's payment of Two Million Dollars ($2,000,000) in fees for Visitor Serving and Recreational Facilities; (2) Landowner's payment of One Hundred Thousand Dollars ($100,000) in fees for the Marine Avenue Bridge — Bayside Drive Bayfront Walkway Connection; and (3) Landowner's payment of One Million Dollars ($1,000,000) in fees for Off -Site Water Quality Improvements. Time -Share Developments. On March 24, 1997, the City Council adopted Ordinance No. 97 -09, which added Chapter 20.84 entitled "Time -Share Developments" to the City of Newport Beach Municipal Code (the "Time -Share Developments Ordinance "). On March 13, 2007, the City Council adopted Ordinance No. 2007 -6, entitled "Ordinance Amending Chapter 15.45 of City of Newport Beach Municipal Code Regarding Development Agreements" (the "Development Agreement Ordinance "). This Agreement is consistent with the Time -Share Developments Ordinance and the Development Agreement Ordinance, which requires the amount payable to the City by any Time -Share Unit Purchaser for the right of occupancy of any Time -Share Unit to be set forth in an approved development agreement, which has been determined to be and is set forth herein as Three Million Dollars ($3,000,000). J. Consistency with State and Local Laws. This Agreement is consistent with provisions of State law (California Government Code sections 65864- 65869.5) and local law (City of Newport Beach Municipal Code Chapter 15.45 and 20.84) that authorize binding vested rights agreements between the City and persons having a legal or equitable interest in real property to: (1) encourage investment in, and commitment to, comprehensive planning and public facilities financing; (2) strengthen the public planning process and encourage private implementation of the local General Plan; (3) provide certainty in the approval of projects to avoid waste of time and resources; and (4) reduce the economic costs of development by providing assurance to property owners that they may proceed with projects consistent with existing policies, rules, and regulations during the term of the vested rights agreements. K. Findings. In recognition of the significant public benefits that this Agreement provides, the City Council has found that this Agreement: (1) is consistent with the City of Newport Beach General Plan as of the date of this Agreement; (2) is in the best interests of the health, safety, and general welfare of City, its residents, and the public; (3) is entered into pursuant to, and constitutes a present exercise of, City's police power; (4) is consistent and has been approved consistent with the Final Environmental Impact Report for the Project (State 03.02.09 cim 3 Clearinghouse No. 2006121052), which analyzed the environmental effect of the proposed development of the Project on the Property; and (5) is consistent with and has been approved in a manner consistent with provisions of California Government Code section 65867 and City of Newport Beach Municipal Code Chapters 15.45 and 20.84. L. Planning Commission Hearing - Recommendation. On November 6, 2008, the City's Planning Commission held a public hearing to consider the terms and conditions of this Agreement, made findings and determinations with respect to this Agreement, and recommended to the City Council that the City Council approve this Agreement. M. City Council Hearing - Approval. On February 24, 2009, the City Council also held a public hearing on this Agreement and considered the Planning Commission's recommendations and the testimony and information submitted by City staff, Landowner, and members of the public. On March 10, 2009, pursuant to the applicable state law (California Government Code sections 65864- 65869.5) and local law (City of Newport Beach Municipal Code Chapters 15.45 and 20.84), the City Council adopted its Ordinance No. 2009 -8, finding this Agreement to be consistent with the City of Newport Beach General Plan and approving this Agreement. AGREEMENT NOW, THEREFORE, incorporating the Recitals and Exhibits set forth in this Agreement. City and Landowner agree as follows: Definitions. The following terms when used in this Agreement shall have the meanings set forth below: 1.1 "Adopting Ordinances" shall mean: (a) Ordinance No. 2009 -8 adopted by the City Council on March 10, 2009, approving this Agreement; (b) Resolution No. 2009 -10 adopted by the City Council on February 24, 2009 approving Use Permit No. 2005 -046, Parcel Map No. 2007 -003, and Modification Permit No. 2007 -095; (c) Resolution No. 2009 -9 adopted by the City Council on February 24, 2009 certifying the EIR as fully compliant with CEQA and the CEQA Guidelines, adopting all feasible mitigation measures. 1.2 "Agreement" shall mean this Development Agreement. 1.3 "Approval Date" shall mean March 10, 2009, the date on which the City Council approved the Adopting Ordinances. 03.02.09 dean 4 1.4 "Cancellation" shall have the meaning ascribed in Recital G of this Agreement. 1.5 "CEQA' shall mean the California Environmental Quality Act (California Public Resources Code sections 21000 - 21177). 1.6 "CIOSA" shall have the meaning ascribed in Recital B of this Agreement. 1.7 "Cshall mean the City of Newport Beach, a chartered municipal corporation. 1.8 "Gh-Council" shall mean the governing body of City. 1.9 "Develop shall mean all forms of use of the verb "develop" and the noun "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 parking facilities and improvements. "Develop" or "Development" also includes the maintenance, repair, alteration, reconstruction or redevelopment of any building, structure, improvement, landscaping or facility after the initial construction and completion so long as the work is consistent with the Project Approvals, Project Conditions, the Development Plan and this Agreement. 1.10 "Development Fees" shall mean the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, the Off -Site Water Quality Fee, and the Walkway Connection Fee all as set forth in Section 4 of this Agreement. 1.11 "Development Plan" shall mean and constitutes the plan for the development of the Property, as embodied and stated in the Project Approvals, Project Conditions and this Agreement. 1.12 "Effective Date" shall mean the date this Agreement is recorded in the Office of the Orange County Recorder. 1.13 "EIR" shall mean Final Environmental Impact Report (State Clearinghouse No. 2006121052), prepared for the Project and certified as fully compliant with CEQA and the CEQA Guidelines by the City Council on the Approval Date. 1.14 "ENR Index" shall mean the Engineering News Record Construction Cost Index. 03.02.09 cti= 5 1.15 "Exhibit" shall mean the Exhibits to this Agreement. All Exhibits are incorporated as a substantive part of this Agreement. The Exhibits to this Agreement are as follows: (a) Legal Description of the Property (Exhibit A ; (b) Map depicting the Property (Exhibit B); (c) Project Approvals and Project Conditions (Exhibit C). 1.16 "Existing General Regulations" shall mean those General Regulations approved by the City on or before the Approval Date (irrespective of their Effective Date) and not rescinded or superseded by City action taken on or before the Approval Date. 1.17 "Fair Share Traffic Contribution Ordinance" shall mean City's Fair Share Traffic Contribution Ordinance, codified in Chapter 15.35 of City's Municipal Code, together with resolutions implementing said ordinance. 1.15 "First Time -Share Building Permit" shall mean the first building permit issued for time -share development on any portion of the Property. 1.19 "Future General Regulations" shall mean those General Regulations adopted or approved by the City in any way, after the Approval Date. 1.20 "General Plan" shall mean City's 2006 General Plan adopted by the City Council on July 25, 2006, by Resolution No. 2006 -76 and any amendments thereto, excluding any amendments after the Approval Date unless specifically agreed to by Landowner in writing or authorized herein. The Land Use Plan of the Land Use Element of the General Plan was approved by City voters in a general election on November 7, 2006. 1.21 "General Regulations" shall mean all laws, ordinances, resolutions, codes, rules, regulations and official policies of City governing the development and permitted uses of land, 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 and provisions relating to applicable fees, charges, assessments and levies. General Regulations do not include any City ordinance, resolution, code, rule, regulation or official policy identified in or governing the following ( "Governmental Exceptions "): (a) The provisions of Titles 1, 3, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15 of the Newport Beach Municipal Code; 03.02.09 Ciao 6 (b) The provision of Title 19 and 20 of the Newport Beach Municipal Code to the extent Landowner seeks approval from the City to subdivide any portion of the Single Time -Share Property including, but not limited to, the subdivision of any of the Time -Share Units located on the Single Time -Share Property, which future subdivision is not contemplated, approved or entitled by this Agreement; (c) Property taxes and assessments; (d) The control and abatement of Nuisances (subject to the provisions of Section 2.5); (e) The exercise of the power of eminent domain; (f) The provision of, or charges for, water, sewer, refuse, police, fire and other municipal services that are generally applicable to all owners or lessees of commercial property in the City; (g) The manner in which Property is used that are related to the amount and time of noise from permitted activities, the use of alcohol, and the nature and timing of special events; and (h) The provisions of Chapter 3.16 and 3.28 of the Newport Beach Municipal Code shall apply to all hotel rooms located at the Property and to the occupancy of any Time -Share Unit that: (1) is occupied by any person who is not a Time -Share Unit Purchaser or a guest of the Time -Share Unit Purchaser, and (2) any portion of a Time -Share Unit not expressly sold, leased or conveyed to a Time - Share Unit Purchaser. 1.22 "Governmental Reservations" shall.mean those actions that City may take that may affect the Project or the operation of the Project, as follows: (a) Enforcement of the specific provisions, limitations and restrictions contained in the Project, Project Approvals, Development Plan and Project Conditions; (b) Enforcement of the provisions and conditions of this Agreement; (c) Enforcement of, or pursuant to, Governmental Exceptions or Governmental Reservations; and (d) Enforcement of Existing General Regulations. 1.23 " nclude" and all contexts and forms of the words "includes" and "Including" shall be interpreted to also state "but not limited to." 03.02.09 clan 7 1.24 "Mortgage" shall mean a mortgage, deed of trust, sale and leaseback arrangement, or any other form of conveyance in which the Property, or a part or interest in the Property, is pledged as security and contracted for in good faith and for fair value. 1.25 " Mortgagee" shall mean the holder of a beneficial interest under a Mortgage or any successor or assignee of the Mortgagee. 1.26 "Off -Site Water Qualitv Fee" shall have the meaning set forth in Section 4.3 of this Agreement. 1.27 "Party' or "Parties" shall mean either City or Landowner or both, as determined by the context. 1.28 `Project" shall mean the existing and proposed development of the Property described generally in Recital F and pursuant to, and consistent with the Project Approvals, consistent with and subject to Project Conditions, and as described in this Agreement. The Project includes those improvements existing on the Property as of the Effective Date. 1.29 `Project Approvals" shall mean all approvals, amendments, permits, licenses, consents, rights and privileges, and other actions required or authorized to be approved, issued or taken by City in connection with development of the Property, including but not limited to the following discretionary actions: (a) Use Permit No. 2005 -046; (b) Modification Permit No. 2007 -095; (c) Parcel Map No. 2007 -003; and (d) Environmental Impact Report (State Clearinghouse No. 2006121052). Project Approvals shall also include any Subsequent Approvals contemplated in this Agreement that are necessary to implement this Agreement and all discretionary or ministerial permits related to construction of the Project including grading permits, building permits, and occupancy permits. 1.30 " Project Conditions" shall mean all conditions to Landowner's right to proceed with Development pursuant to the Project Approvals, including the provisions of this Agreement, the mitigation measures identified in the EIR and adopted by the City Council, conditions to Project Approvals, Existing General Regulations, Governmental Exceptions and Governmental Reservations. The Project Conditions. are generally described in Exhibit C. 03.02.09 Clean 8 1.31 "Pro e "is described in Exhibit A and depicted on Exhibit B. 1.32 "Single Site Time -Share Plan" shall have the meaning set forth in California Business and Professions Code Section 11212(z)(1). 1.33 "Single Time -Share Property" shall refer to parcel 2 approved by Parcel Map No. _, the location where Landowner plans to construct the 88 Time -Share Units. 1.34 "Subsequent Approvals" shall mean all Project Approvals granted or issued by the City subsequent to the Approval Date in connection with development of the Property. 1.35 "Teo" shall have the meaning ascribed in Section 8 of this Agreement. 1.36 "Time -Share Fee" shall have the meaning set forth in Section 4.1 of this Agreement. 1.37 "Time -Share Unit" shall mean the specific and defined portion of the Single Time -Share Property that is divided into time -share intervals and sold, leased or conveyed to a Time Share Unit Purchaser. 1.38 "Time -Share Unit Purchaser" shall mean a person who has received a right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of Time -Share Unit annually or on some other seasonal or periodic basis, for a fixed period of time that has been or will be allotted from the use or occupancy periods into which the Project has been divided. 1.39 "Time -Share Use" shall mean a right to occupy a Sing leTime -Share Property by a Time -Share Unit Purchaser, which right is neither coupled with a freehold interest, nor coupled with an estate for years with a future interest in a Single Time -Share Property. 1.40 "Vested Entitlement" or "Entitlement" refers to the development rights granted Landowner pursuant to this Agreement and the Project Approvals that are subject to Project Conditions. 1.41 "Visitor Serving and Recreational Facilities Fee" shall have the meaning set forth in Section 4.2 of this Agreement. 1.42 "Walkway Connection Fee" shall have the meaning set forth in Section 4.4 of this Agreement. 2. Development of Propertv. 2.1 Development Program. This Agreement vests. Landowner's right to proceed with the development described in the Project Approvals, Development Plan and this Agreement. Landowner also acknowledges 03.02.09 Clean 9 and agrees that its right to proceed with the Vested Entitlement is subject to the Project Conditions. The Parties also expressly acknowledge and agree that this Agreement does not vest Landowner with the right to subdivide the Single Time -Share Property (or portion thereof) including, but not limited to, any of the Time -Share Units located on the Single Time - Share Property and that any proposal to subdivide the Single Time -Share Property (or portions thereof) including, but not limited to, any of the Time - Share Units located on the Single Time -Share Property would require an Amendment of this Agreement. Landowner acknowledges that City grants no assurance that Landowner will receive necessary permits or approvals from any other public agency with jurisdiction over the Project or that Project Approvals will not be subject to and affected by legal or other challenges or procedures initiated by third parties. (a) Permitted Uses. The Property shall be used and developed only in the manner provided in the Project Approvals, the Development Plan and this Agreement and shall be subject to the Project Conditions. City acknowledges that, from time -to -time, Landowner may seek and obtain, in accordance with applicable provisions of State and local law, minor amendments to the Development Plan and the Project Approvals. The Planning Director of the City ("Planning Director') shall determine, subject to appeal by Landowner to the Planning Commission, whether a proposed amendment is a "minor amendment' for purposes of this Agreement. A minor amendment is one that does not materially modify, alter or change a material term of this Agreement and one that does not increase trips, noise or other environmental impacts associated with Project Approvals or the Development Plan. City acknowledges that the tentative parcel map may require corrections or amendments prior to the approval and recording of a final parcel map. The tentative parcel map may be amended or corrected provided that Landowner complies with the applicable procedures set forth in Title 19 and this Agreement. City may impose standard conditions of approval on any subdivision or resubdivision requested by Landowner and authorized by this Agreement, so long as the condition(s) do not reduce the permitted density or intensity, or substantially increase the cost of the development, allowed in the Project Approvals and described in the Development Plan. (b) Permitted Density of Development. Landowner shall have the vested right to develop the Property consistent with the permitted density and level of intensity authorized by the Project Approvals, Development Plan and this Agreement, subject to the Project Conditions. City shall not impose any condition on any Project Approval that reduces the permitted density and level of intensity allowed in the discretionary Project Approvals. 03.02.09 Clean 10 (c) Maximum Height and Size of Structures. Landowner shall have the vested right to develop the Property with the maximum height and size of structures as set forth in the Development Plan and the Project Approvals. 2.2 Compliance with Project Conditions. Landowner acknowledges that City Council approval of the Project Approvals, the Development Plan and this Agreement is subject to compliance with the Project Conditions. The Project Conditions are, among other things, designed to minimize or eliminate any adverse impacts of the Project and protect and enhance the environment. In certain instances, the Project Conditions exceed those that might otherwise be appropriate under "nexus" and "rough proportionality" tests articulated by the courts. By entering into this Agreement, Landowner agrees to be bound by, and waives any protest of, any Project Conditions. Any Project Conditions imposed by the City after the Effective Date shall be consistent with the Project Approvals, Development Plan and this Agreement. 2.3 Compliance with General Regulations. Landowner shall comply with the Existing General Regulations. Except as otherwise specified in this Agreement, Landowner shall not be obligated to comply with any Future General Regulations that are in conflict with the Development Plan or this Agreement, Any Future General Regulation(s) that are inconsistent with this Agreement and/or the Development Plan and which do not fall within the definition of Governmental Reservations or Governmental Exceptions shall not be applicable to the development or use of the Property. With respect to Existing General Regulations that require the payment of fees, costs, and expenses, the applicable fee, cost, or expense shall be that in effect on the Approval Date subject to any increases or decreases authorized by the text of the Existing General Regulation as of the Approval Date. Landowner shall, however, comply with any Future General Regulation that does not impair or affect its ability to develop the Property in accordance with the Development Plan or impact the development of the Property at the cost, rate, timing and sequencing that the Landowner deems appropriate. Landowner shall also comply with all provisions of the Uniform Codes including, but not limited to, building, fire, plumbing, mechanical, swimming pool, and electrical, whether adopted before or after the Approval Date by the City, which are In effect at the time applications for specific Project Approvals are submitted. 2.4 No Conflicting Enactments. Except to the extent City reserves its discretion as expressly set forth in this Agreement, during the Term of this Agreement City shall not apply to the Project any ordinance, policy, rule, regulation, or other measure relating to development of the Project that is enacted or becomes effective after the Approval Date to the extent it conflicts with this Agreement. This Section shall not restrict City's ability to enact an ordinance, policy, rule, regulation, or other measure applicable to 03.02.09 Om 11 the Project pursuant to California Government Code section 65866. In Pardee Construction Co. v. City of Camarillo (1984) 37 Cal.3d 465, the California Supreme Court held that a construction company was not exempt from a City's growth control ordinance even though the City and construction company had entered into a consent judgment (tantamount to a contract under California law) establishing the company's vested rights to develop its property consistent with the zoning. The California Supreme Court reached this result because the consent judgment failed to address the timing of development. The Parties intend to avoid the result of the Pardee case by acknowledging and providing in this Agreement that Landowner shall have the vested right to develop the Property at the rate, timing, and sequencing that Landowner deems appropriate within the exercise of Landowner's sole subjective business judgment provided that such development occurs in accordance with this Agreement and the Development Regulations, notwithstanding adoption by City's electorate of an initiative to the contrary after the Approval Date. No City moratorium or other similar limitation relating to the rate, timing, or sequencing of the development of the Property or construction of all or any part of the Project and whether enacted by initiative or another method, affecting subdivision maps, use permits, modifications, EIR certification, terms of this Agreement, building permits, occupancy certificates, or other entitlement to use, shall apply to the Project to the extent such moratorium or other similar limitation restricts Landowner's vested rights in this Agreement or otherwise conflicts with the express provisions of this Agreement. 2.5 Public Health and Safety /Uniform Codes. This Agreement shall not prevent the' City from adopting, and applying to the Project, Future General Regulations, including Uniform Codes (as referred to above), that are based on recommendations of a multi -state professional organization relating to the specifications for the constructions of improvements ( "Building Codes ") and become applicable throughout the City. This Agreement shall not prevent the City from adopting, and applying to the Project, conditions inconsistent with the Development Plan or Project Approvals, when the conditions are adopted by the City Council after a noticed public hearing and pursuant to a determination by the City Council that the conditions are necessary to abate a public nuisance (Nuisance). In no event shall the City impose any condition pursuant to a determination of Nuisance unless the Landowner has been given notice of, and the right to present evidence at, a public hearing. Any determination of Nuisance, and the rational relationship between the Nuisance and the conditions imposed, must be supported by substantial evidence in the record of the hearing. 2.6 Police Power. In all respects not provided for in this Agreement, City shall retain full rights to exercise its police power to regulate the development of the Property. Any uses or developments requiring a use permit, tentative 03.02.09 Cl a 12 tract or parcel map, modification, EIR certification, or other discretionary permit or approval in accordance with the Existing Development Regulations or Future Development Regulations shall require a permit or approval pursuant to this Agreement, and, notwithstanding any other provision set forth herein, this Agreement is not intended to vest Landowner's right to the issuance of such permit or approval nor to restrict City's exercise of discretion with respect thereto, provided that pursuant to Government Code section 65865.2, "such conditions, terms, restrictions, and requirements for subsequent discretionary actions shall not prevent development of the land for the uses and to the density or intensity of development" set forth in this Agreement. Not by way of limitation of the foregoing, it is specifically understood that City reserves the right to amend, pursuant.to procedures provided by law and this Agreement, City laws, rules, regulations, and policies applicable to the Property as to which Landowner's rights are not expressly vested and such amendment or amendments shall be binding on the Property except to the extent that the same conflict with the express provisions of this Agreement. 2.7 Public Works Improvements. To the extent Landowner constructs or installs public works or facilities, the City standards in effect for such public works or facilities at the time of City's issuance of a permit, license, or other authorization for construction or installation of same shall apply. 2.8 Overriding Federal and State Laws and Regulations. Federal and state laws and regulations that override Landowner's vested rights set forth in this Agreement shall apply to the Property, together with any City ordinances, resolutions, regulations, and official policies that are necessary to enable City to comply with the overriding federal and state laws and regulations, provided that: (a) Landowner does not waive its right to challenge or contest the validity of any such federal, state, or local laws, regulations, or official policies; and (b) Upon the discovery of a federal or state law or regulation (or City ordinance, resolution, regulation, or official policy undertaken pursuant to those laws and regulations), that prevents or precludes compliance with any provision of this Agreement, City or Landowner shall provide the other Party with written notice of the state or federal law or regulation, provide a copy of the law or regulation, and a written statement of conflict(s) with the provisions of this Agreement. Promptly thereafter City and Landowner shall meet and confer in good faith in a reasonable attempt to determine whether a modification or suspension of this Agreement, in whole or in part, is necessary to comply with such federal or state law or regulation. In such negotiations, City and Landowner agree to preserve the terms of this Agreement and the rights of Landowner as derived from this Agreement to the maximum feasible extent 03.02.09 cr= 13 while resolving the conflict. City agrees to cooperate with Landowner at no cost to City in resolving the conflict in a manner which minimizes any financial impact of the conflict upon Landowner. City also agrees to process in a prompt manner Landowner's proposed changes to the Project and any of the Development Regulations as may be necessary to comply with such federal or state law; provided, however, that the approval of such changes by City shall be subject to the discretion of City, consistent with this Agreement. 2.9 Procedural Regulations. Procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals, and any other matter of procedure shall apply to the Property, provided that they are adopted and applied City -wide or to all other properties similarly situated in City. 3. Benefits to Owner. 3.1 Right to Develop. Except to the extent City reserves its discretion as expressly set forth in this Agreement, during the term of this Agreement, Landowner shall have a vested right to develop, and receive building and occupancy permits for construction on the Property to the full extent permitted by this Agreement, the Project Approvals and the Development Plan, subject to the Project Conditions. City shall only take action with respect to the Property that complies and is consistent with the Project Approval and the Development Plan unless Landowner gives its written consent to the action or City is permitted to take the action pursuant to this Agreement. Where applicable, Landowner may refuse to grant consent in Landowner's sole and absolute discretion. City shall not impose or increase any condition or requirement (whether in the form of a fee, tax, requirement for dedication or reservation of and, or any other type of exaction) on the Project, except as expressly permitted by this Agreement, Existing General Regulations, Governmental Reservations or Governmental Exceptions. However, City may impose or increase a condition or requirement when such action is required (as opposed to permitted) by state or federal law and then only to the minimum extent and duration necessary to comply with state or federal law. Except as otherwise provided by this Agreement, the ordinances, plans, resolutions, and policies governing the permitted use and development of the Property shall be those described in the Project Approvals and the Development Plan. The Parties acknowledge that the vested rights described in this Section provide that Landowner has a vested right to develop the following improvements on the Property, all as described in the Project Approvals and the Development Plan and subject to the Project Conditions: (a) Construct 88 Time -Share Units within seven building on the Single Time -Share Property to be governed by a Single Site Time -Share Plan and which will allow the Landowner to sell, lease or otherwise 03.02.00 Clean 14 convey a Time -Share Use interests in the Single Time -Share Property (provided that the total number of Time Share Units and hotel rooms does not exceed a combined total of 479 Time Share Units /hotel rooms); (b) Construct a new 800 -seat ballroom facility; (c) Construct a new 10,072 square -foot spa and fitness center, including a new outdoor pool facility; (d) Construct a new housekeeping and engineering building; and (e) Construct a new two -level parking garage. 3.2 Benefits to Landowner. Landowner has expended and will continue to expend substantial amounts of time and money on the planning of the Project and construction of infrastructure for and in conjunction with the Project. Landowner represents and City acknowledges that Landowner would not make these expenditures without this Agreement, and that Landowner makes these expenditures in reliance upon this Agreement. A benefit to Landowner under this Agreement is the assurance that Landowner will preserve the right to develop the Property in accordance with the terms of this Agreement. City acknowledges that Landowner will be investing money and planning efforts in the Project in reliance on City's covenants and representations in this Agreement. City agrees that Landowner may reasonably and justifiably rely on City's covenants and representations in this Agreement and on the enforceability of this Agreement. 3.3 Reservations or Dedications of Land. Except as may be provided in the Project Approvals, Project Conditions, Development Plan or this Agreement, no dedications or reservations of all or a portion of the Property shall be required of Landowner in conjunction with the application or issuance of any Project Approval authorizing development, construction, use, or operation of the Property. 3.4 No Additional Traffic Related Fees or Conditions. Under CIOSA, Landowner has paid all required fair share traffic fees required to be paid under the Fair Share Traffic Contribution Ordinance. City shall not impose any traffic- related fee, charge, dedication, or improvement relative to, or as a condition to, development of the Project except as provided in this Agreement, the Project Approvals or Project Conditions. 3.5 Time for Construction and Completion of Proiect. Landowner shall have the right to develop the - Project in the manner and at the time that Landowner deems appropriate in the exercise of its business judgment. The Parties acknowledge that Landowner cannot predict the timing of the development of the Project because of numerous factors not within the 03.02.09 crm 15 control of Landowner, such as market demand, economic conditions, interest rates and competition. 3.6 Tentative Maps. (a) Improvement Security. As a condition of approving a final subdivision map or any future resubdivision for all or a portion of the Property as authorized by this Agreement, the City may require the furnishing of appropriate and reasonable improvement agreements and security pursuant to the Municipal Code and the Subdivision Map Act. Nothing in this Agreement shall be construed as altering or relieving Landowner of any obligation imposed pursuant to the Municipal Code or the Subdivision Map Act. The improvement requirements, exactions or other conditions of approval of a subdivision map, parcel map or lot line adjustment shall be consistent with this Agreement but City may impose standard conditions of approval generally applicable to similar projects subject to the provisions Section 2.1(b). (b) Expiration. Any current or future tentative maps for resubdivision of the Property shall expire concurrently with the termination of this Agreement or after the maximum period for the expiration of tentative maps authorized by Government Code Section 66452.6, whichever is later. Should the time periods authorized by Government Code Section 66452.6 be lengthened after the execution of this Agreement, Landowner shall be entitled to further extensions of any tentative subdivision map applicable to the Property, to the maximum extent authorized by law. (c) Adiustments. The Parties acknowledge that lot line adjustments, or similar modifications may be necessary to develop the Project and are contemplated by this Agreement. These modifications or adjustments shall be approved provided they are in substantial conformance with the Development Plan and the Project Approvals. (d) Time -Share Units. The Parties acknowledge and agree that the subdivision of the Single Time -Share Property (or any portion thereof) including, but not limited, any of the Time -Share Units located on the Single Time -Share Property is not contemplated, authorized or entitled by this Agreement and would require an Amendment of this Agreement. 3.7 Processing and Issuance of Permits. (a) Processing of Permits. As a material term of this Agreement benefiting Landowner, the City shall promptly accept for processing /review, and expeditiously approve, permit applications for the development and use of the Property that are in substantial 03.02.09 ct= 16 conformance with the Project Approvals, Development Plan, Existing General Regulations, and this Agreement. (b) Issuance of Ministerial Proiect Approvals. City shall issue to Landowner all necessary use, building, occupancy, and other permits and approvals upon request, provided that applications are submitted in accordance with the Existing General Regulations and are in substantial conformance with the Project Approvals, Development Plan and this Agreement. (c) Vesting of Project Approvals. Any permit, license or approval issued pursuant to this Agreement shall be vested and deemed a Project Approval when granted. 3.8 Future Approvals. The future approval or issuance of any Project Approval that is determined by the Planning Director to be a minor amendment as provided in Section 2.1(a) shall not require an amendment of this Agreement. 4. Fees. 4.1 Time -Share Development. For the vested right to construct the 88 Time - Share Units on the Single Time -Share Property, which vested right is subject to the terms and conditions contained in this Agreement and the Project Conditions, Landowner shall pay Three Million Dollars ($3,000,000) ( "Time -Share Fee ") to the City. The Time -Share Fee shall be paid at the time the First Time -Share Building Permit is issued by the City. Beginning two years after the Effective Date of this Agreement and every year thereafter for the Tenn of this Agreement or until the Time - Share Fee is paid in full, the amount of the Time -Share Fee shall be adjusted in accordance with Section 4.5. 4.2. Visitor Serving and Recreational Facilities — Marina Park Mar Landowner shall pay to City the sum of Two Million Dollars ($2,000,C ( "Visitor Serving and Recreational Facilities Fee ") to be paid as follows: • Five Hundred Thousand Dollars ($500,000) at the time the final parcel map for the Project is recorded or June 30, 2013, if any building permit for the construction of any time -share is issued for the Project, whichever is sooner. • One Million Dollars ($1,000,000) at the time the City issues the Certificate of Occupancy for the Ballroom or June 30, 2013, if any building permit for the construction of any time -share is issued for the Project, whichever is sooner. • Five Hundred Thousand Dollars ($500,000) at the time the First Time -Share Building Permit is issued. 03.02.09 Clean 17 The Visitor Serving and Recreational Facilities Fee shall be used by City for improvements that provide visitor serving or recreational facilities either at Marina Park Marina or at any other site designated by City in City's sole discretion. The Visitor Serving and Recreational Facilities Fee may be used by City to provide public access to Newport Bay, public parking, picnic areas, playground equipment, basketball and tennis courts, concessions, recreational programs or any other visitor serving or recreational use. Should the California Coastal Commission require mitigation in the form of a monetary contribution to support the provision of visitor serving uses in the City's coastal zone as a condition of approval of the coastal development permit issued for the Project, all said monetary contributions that are expressly allocated to Marina Park Marina for visitor serving uses shall be applied by City to off -set and provide a credit against the Visitor Serving and Recreational Facilities Fee. Because the specific improvements that will be selected by City are not known at this time, City shall have the responsibility to conduct all appropriate environmental review as required by state or federal law, and to implement any identified mitigation measures. City shall have the responsibility to obtain any and all state and federal permits and approvals that may be required for construction, operation and maintenance of the Visitor Serving and Recreational Facilities. Beginning two years after the Effective Date of this Agreement and every year thereafter for the Term of this Agreement and until the Visitor Serving and Recreational Facilities Fee is paid in full, the amount of the Visitor Serving and Recreational Facilities Fee shall be adjusted with Section 4.5. 4.3 Off-Site Water Quality Improvements. City and the Landowner have agreed that water quality improvements beyond those required for the Project's Water Quality Management Plan would be of benefit to the City, its residents and visitors to the City. Landowner has agreed to pay to the City the sum of One Million Dollars ($1,000,000) for off -site water quality improvements ( "Off -Site Water Quality Fee'). This Off -Site Water Quality Fee shall be paid at the time the final parcel map for the Project is recorded or June 30, 2013, if any building permit for the construction of any time -share is issued for the Project, whichever is sooner. The City shall use the Off -Site Water Quality Fee to pay for water quality improvements to be selected by the City in the City's sole discretion. Because the specific improvements that will be selected by the City are not known at this time, the City shall have the responsibility to conduct all appropriate environmental review as required by state or federal law, and to implement any identified mitigation measures. The City shall have the responsibility to obtain any and all state and federal permits and approvals that may be required in order to implement the Off-Site Water Quality improvements, including but not limited to coastal development permits and Clean Water Act permits that may be required for construction, operation and maintenance of the water quality improvements. Beginning two years after the Effective Date of this Agreement and every year 03.02.09 Clean 18 thereafter for the Term of this Agreement and until the Off -Site Water Quality Fee is paid in full, the amount of the Off -Site Water Quality Fee shall be adjusted in accordance with Section 4.5. 4.4 Bayfront Walkway Connection. Landowner shall pay to the City at the time of execution of this Agreement by the Parties the sum of One Hundred Thousand Dollars ($100,000) to be used by the City towards a public improvements project that increase access to the bayfront ("Walkway Connection Fee ") including, but not limited to, projects such as the Marine Avenue Bridge Bayside Drive Bayfront walkway connection. Because the speck improvements that will be selected by the City, in its sole discretion, are not known at this time, the City shall have the responsibility to conduct all appropriate environmental review as required by state or federal law, and to implement any identified mitigation measures. The City shall have the responsibility to obtain any and all state and federal permits and approvals that may be required in order to implement the the public improvements. 4.5 ENR Index. Beginning two years after the Effective Date of this Agreement, and every year on the anniversary date of the Effective Date thereafter ( "generally referred to herein as the "Adjustment Date "), any unpaid portion of each of the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee (including prior year increases to the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee made pursuant to this Section which remain unpaid) shall be increased in proportion to changes in the ENR Index. Such adjustment to the Time - Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee shall be made on the Adjustment Date by multiplying the unpaid portion of each of the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee (including prior year increases to the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee made pursuant to this Section which remain unpaid) by a fraction, the numerator of which is the value of the ENR Index for the calendar month preceding the Adjustment Date and the denominator of which is the value of the ENR Index for the same calendar month one year prior to the Adjustment Date. However, in no event shall the amount of Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee be reduced below the amount of the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee (including prior year increases to the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, and the Off -Site Water Quality Fee made pursuant to this Section which remain unpaid) in effect immediately preceding such adjustment. 03.02.0 Clem 19 4.6 Development Fees. During the Term of this Agreement, the "Development Fees" shall be the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, the Off -Site Water Quality Fee, and Walkway Connection Fee as set forth in Sections 4.1, 4.2, 4.3 and 4.4 and subject to increase as provided in Section 4.5. City shall retain the right to increase the Development Fees or impose other monetary exactions charged by City in connection with a development project for the purpose of defraying all or a portion of the cost of public facilities related to development of the Project as it may adopt, and whatever applicable rate City may adopt, to any development of the Property beyond the development of the Property contemplated by this Agreement. The Parties acknowledge that for purposes of this Agreement, the term Development Fees is limited to the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, the Off -Site Water Quality Fee, and Walkway Connection Fee as set forth in Sections 4.1, 4.2, 4.3 and 4.4 and subject to increase as provided in Section 4.5 and that all other fees, taxes, and charges do not constitute Development Fees and that nothing in this Agreement is intended or shall be construed to release Landowner from the obligation to pay such fees, taxes, and charges, including increases, if and when they become due including, but not limited to, the following: (a) City's normal fees for processing, environmental assessment and review, tentative tract and parcel map review, plan checking, site review and approval, administrative review, building permit, grading permit, inspection, and similar fees imposed to recover City's costs associated with processing, reviewing, and inspecting project applications, plans, and specifications; (b) Fees and charges levied by any other public agency, utility, district, or joint powers authority, regardless of whether City collects those fees and charges; (c) Taxes and fees set forth in Chapter 3 of the Newport Beach Municipal Code including, sales and use taxes, Property Development Taxes under Section 3.12 of City's Municipal Cade and Transient Occupancy Taxes set forth in Chapter 3.16 and Visitor Service Fee as set forth in Chapter 3.28 of the Newport Beach Municipal Code which shall apply to all hotel rooms located at the Property and to the occupancy of any Time -Share Unit that: (1) is occupied by any person who is not a Time -Share Unit Purchaser or a guest of the Time -Share Unit Purchaser; and (2) any portion of a Time -Share Unit not expressly sold, leased or conveyed to a Time -Share Unit Purchaser, and (d) Community facility district special taxes or special district assessments or similar assessments, business license fees, bonds or other security required for public improvements, property taxes, 03.02.09 Cis 20 sewer lateral connection fees, water service connection fees, and new water meter fees. This Agreement does not authorize Landowner to transfer any fees paid or fee credits to any other property outside the Property that is the subject of this Agreement. Once the Term of this Agreement has ended, Landowner shall not receive any credit for future planned development of the Property based on the fees paid pursuant to this Agreement. 4.7 Permitted Increases in Development Fees Applicable to Property. During the Term of this Agreement, City shall not increase the amount of the Time -Share Fee, the Visitor Serving and Recreational Facilities Fee, the Off -Site Water Quality Fee, or Walkway Connection Fee except as set forth in Sections 4.1, 4.2, 4.3, 4.4 and 4.5. This Agreement does not vest Landowner against increases in any other fees other than Development Fees that are payable by Landowner, including without limitation the Property Development Tax referred to in subparagraph (c) of Section 4.6. 5. CIOSA. 5.1 Cancellation of CIOSA. Pursuant to the ordinance adopted by the City Council approving this Agreement, the CIOSA shall automatically terminate on the Effective Date ( "Cancellation "). The Parties shall cooperate in executing and recording against the Property a written instrument memorializing the termination of said agreement in such form as to permit the CIOSA to be removed as an encumbrance upon title. The Cancellation shall not affect the rights and obligations of any third parties under the CIOSA. 5.2 Maintenance of CIOSA Pre -Paid Transportation Fund. The Cancellation referred to in Section 5.1 terminates the Parties' remaining rights and obligations under the CIOSA, including any obligation of City to repay Landowner for funds that Landowner provided pursuant to the CIOSA. In connection therewith, Landowner agrees that City may retain any balance of pre -paid transportation funds City may be holding as a result of unused CIOSA mitigation. City may use any such remaining balance of prepaid transportation funds for transportation improvements in accordance with the Protocol Agreement for the Circulation Improvement and Open Space Agreement dated December 11, 1995, and the Protocol Agreement Memorandum dated December 11, 2001. 5.3 No Pavments Due from Citv. The Parties acknowledge that City is not required to make any reimbursement payments to Landowner and that no funding is otherwise due from City to Landowner for improvements under CIOSA made by or at the direction of Landowner including, but not limited 03.02.09 Glean 21 to, improvements to Back Bay View Park, located at Jamboree Road and Pacific Coast Highway. 6. Sales Tax. 6.1 Proiect Construction. Landowner will include in its general contractor construction contract a provision that Landowners general contractor and subcontractors, to the extent allowed by applicable law, will obtain a Board of Equalization sales/use tax subpermit for the jobsite for the Project at the Property and allocate all eligible sales and use tax payments for individual contracts over $5 million to the City. Landowner will provide Landowners general contractor and subcontractors with the name and contact information of the City's Revenue Manager and notice of the Revenue Managers availability to meet and confer with them on the implementation of the Board of Equalization sales /use tax subpermit procedures. Landowner will further include a notice in its general contractor construction contract that prior to beginning a qualified construction project, the general contractor and subcontractors are encouraged to meet with the City's Revenue Manager to review the process to be followed with respect to sales and use taxes. Landowner will further include a provision in its general contractor construction contract that the general contractor or subcontractors will certify in writing that the person(s) responsible for filing the tax return understands the process of reporting the tax to the City and will follow the guidelines set forth in the relevant sections of the Sales and Use Tax Regulations. Landowner shall not be responsible for failure of Landowners general contractor or subcontractors to follow the procedures set forth in this Section. Landowner, if readily available, shall provide to the City or any City designated representative the names, addresses, phone numbers and contact name of the general contractor and all subcontractors. 6.2 Direct Payment Process. Landowner will follow the Direct Payment Permit Process established in the Revenue and Taxation Code and use the permit for all qualifying individual purchases in excess of $100,000 so that the local share of its sales /use tax payments is allocated to the City as the point of sale. 6.3 Fixtures. Materials and Equipment. It is understood and agreed that any fixtures, materials and equipment with a purchase total that exceeds $100,000 purchased directly by Landowner and shipped to Landowners Newport Beach location may also be eligible for direct allocation of sales/use tax to the City. Upon request of the City, Landowner will provide City on a semi - annual basis with a list of purchases exceeding the $100,000 threshold during the preceding six -month period, including the amount of the purchase and, if readily available, the name and contact information for the vendor upon request by the City. The City agrees to review the semi - annual list of purchases made by Landowner and advise Landowner of any missed opportunities for direct allocation. Landowner 03.02.09 Cim 22 agrees to file its Direct Payment Permit with vendors identified by the City in an effort to improve the direct allocation of the local share of salestuse tax payments in future periods. 7. Protect as Private Undertaking. The development of the Project is a private undertaking. Neither Party is acting as the agent of the other in any respect, and each Party is an independent contracting entity with respect to the terms, covenants, and conditions contained in this Agreement. This Agreement forms no partnership, joint venture, or other association of any kind. The only relationship between the Parties Is that of a government entity regulating the development of private property by the owner of the property. 8. Effective Date: Terre. The terra of this Agreement ( "Term ") shall commence on the Effective Date and shall continue thereafter until the earlier of the following: (1) July 1, 2013; or (ii) the date this Agreement is terminated pursuant to Sections 9 or 12 of this Agreement. 9. Amendment or Cancellation of Agreement. This Agreement may be amended or canceled in whole or in part only by mutual written and executed consent of the Parties in compliance with California Government Code Section 65868 and City of Newport Beach Municipal Code Section 15.45.070 or by unilateral termination by City in the event of an uncured default of Landowner pursuant to Section 12.1 of this Agreement. 10. Enforcement. Unless amended or canceled as provided in Section 9 of this Agreement, or modified or suspended pursuant to California Government Code Section 65869.5, this Agreement is enforceable by either Party despite any change in any applicable general or specific plan, zoning, subdivision, or building regulation or other applicable ordinance or regulation adopted by City (including by City's electorate) that purports to apply to any or all of the Property. 11. Periodic Review of Compliance. The Parties shall review this Agreement at least once every 12 months from the Effective Date consistent with California Government Code Sections 65865 and 65865.1 and City of Newport Beach Municipal Code Section 15.45.080 ( "Annual Review"). At the Annual Reviews, Landowner shall demonstrate its good faith compliance with the terms and conditions of this Agreement. Landowner also agrees to furnish evidence of good faith compliance as City may require in the reasonable exercise of its discretion and after reasonable notice to Landowner. The City's or Landowner's failure to conduct an Annual Review shall not constitute or be asserted by either Party as a Default under this Agreement. 12. Events of Default. 12.1 Default by Landowner. Pursuant to California Government Code Section 65865.1, if City determines following a noticed public hearing and on the basis of substantial evidence that Landowner has not complied in good faith with Landowner's material obligations pursuant to this Agreement, 03.02.09 Clean 23 City shall by written notice to Landowner specify the manner in which Landowner has failed to comply and state the steps Landowner must take to bring itself into compliance. If Landowner does not commence all steps reasonably necessary to bring itself into compliance as required and diligently pursue steps to completion within forty -five (45) calendar days after receipt of the written notice from City specifying the manner in which Landowner has failed to comply, then Landowner shall be deemed to be in default under the terms of this Agreement. City may then: (1) seek a modification of this Agreement; (2) terminate this Agreement; or (3) seek any other available remedies as provided in this Agreement. 12.2 Default by Citv. If City has not complied with any of its obligations and limitations under this Agreement, Landowner shall by written notice to City specify the manner in which City has failed to comply and state the steps necessary for City to bring itself into compliance. If City does not commence all steps reasonably necessary to bring itself into compliance as required and diligently pursue steps to completion within forty -five (45) calendar days after receipt of the written notice from Landowner specifying the manner in which City has failed to comply, then City shall be deemed to be in default under the terms of this Agreement. Landowner may then exercise any or all of the following remedies: (1) withhold payments that might be otherwise due to City under this Agreement; and /or (2) seek a speck performance or similar equitable remedy including the return of any fees paid under Section 4 as provided in this Agreement. 12.3 Specific Performance and Damages Remedies. Due to the size, nature, and scope of the Project and the potential impracticality or impossibility of restoring the Property to its natural condition once implementation of this Agreement has begun, the Parties acknowledge that, except as provided in this Section 12.3 and Section 12.4 of this Agreement, money damages and remedies at law generally are inadequate and that specific performance is appropriate for the enforcement of this Agreement. The remedy of specific performance or, in the alternative, a writ of mandate, shall be the sole and exclusive remedy available to either Party in the event of the default or alleged default by the other, with the exception that City shall be entitled to damages against Landowner for Landowner's breach of its obligations under Sections 4.1, 4.2, 4.3, 4.4, 4.5, 15 or 16. The limitations on the remedy of damages in this Agreement shall not prevent City from enforcing Landowner's monetary obligations hereunder including, but not limited to, the monetary obligations of Landowner set forth in Sections 4.1, 4.2, 4.3, 4.4 and 4.5 of this Agreement. 12.4 Limited Recovery of Legal Expenses by Prevailing Party in Anv Action. In any judicial proceeding, arbitration, or mediation (collectively, "Action ") between the Parties that seeks to enforce the provisions of this Agreement, the prevailing Party shall recover all of its reasonable costs and expenses, regardless of whether they would be recoverable under 03.02.09 Om 24 California Code of Civil Procedure Section 1033.5 or California Civil Code Section 1717 in the absence of this Agreement. These costs and expenses include expert witness fees, attorneys' fees, and costs of investigation and preparation before initiation of the Action. The right to recover these costs and expenses shall accrue upon initiation of the Action, regardless of whether the Action is prosecuted to a final judgment or decision. 13. Cooperation. Each Party covenants to take reasonable actions and execute all documents that may be necessary to achieve the purposes and objectives of this Agreement. 14. Force Maleure. 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, through no fault of the Party whose performance is prevented or delayed, by floods, earthquakes, other acts of God, fires, wars, riots or similar hostilities, strikes or other labor difficulties, state or federal regulations, or court actions. Except as specked above, nonperformance shall not be excused because of the act or omission of a third person. In no event shall the occurrence of an event of force majeure operate to extend the Term of this Agreement. 15. Indemnity. Landowner agrees to indemnify, defend, and hold harmless City, City's designee, and their respective elected and appointed councils, boards, commissions, officers, agents, attorneys, and employees from all actions, suits, claims, liabilities, losses, damages, penalties, obligations, and expenses (including but not limited to attorneys' fees and costs) that may arise, directly or indirectly, from the acts, omissions, or operations of Landowner or Landowners agents, contractors, subcontractors, agents, or employees pursuant to this Agreement. City shall have the right to select and retain counsel to defend any actions, and Landowner shall pay the reasonable cost for this defense. The indemnity provisions in this Section 15 shall survive termination of this Agreement. 16. Third Party Legal Challenge. Landowner shall defend, indemnify, release and hold harmless the City, its elected officials, boards, commissions, employess and attorneys ( "Indemnified Parties ") from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever which may arise from or in any manner relate (directly or indirectly) to the Project, the Project's Approval, the City's CEQA determination and /or the City's failure to comply with the requirements of any federal, state, or local laws, including, but not limited to, CEQA, General Plan and zoning requirements. This indemnification shall include, but not be limited to, damages awarded against the Indemnified Parties, if any, costs of suit, attorneys' fees, and other expenses incurred in connection with such claim, action, or proceeding whether incurred by Landowner, the Indimnified Parties, and /or the parties initiating or bringing such proceeding. 03.02.09 Clem 25 17. Mortgagee Rights. 17.1 Encumbrances on Property. The Parties agree that this Agreement shall not prevent or limit Landowner in any manner from encumbering the Property, any part of the Property, or any improvements on the Property with any Mortgage securing financing with respect to the construction, development, use, or operation of the Project. 17.2 Mortgagee Protection. This Agreement shall be superior and senior to the lien of any Mortgage. Nevertheless, no breach of this Agreement shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and for value. Any acquisition or acceptance of title or any right or interest in the Property or part of the Property by a Mortgagee (whether due to foreclosure, trustee's sale, deed in lieu of foreclosure, lease termination, or otherwise) shall be subject to all of the terms and conditions of this Agreement. Any Mortgagee who takes title to the Property or any part of the Property shall be entitled to the benefits arising under this Agreement. 17.3 Mortgagee Not Obligated. Notwithstanding the provisions of this Section 17.3, a Mortgagee will not have any obligation or duty under the terms of this Agreement to perform the obligations of Landowner or other affirmative covenants of Landowner, or to guarantee this performance except that: (a) The Mortgagee shall have no right to develop the Property under the Development Regulations without fully complying with the terms of this Agreement; and (b) To the extent that any covenant to be performed by Landowner is a condition to the performance of a covenant by City, that performance shall continue to be a condition precedent to Cfty's performance. 17.4 Notice of Default to Mortgagee: Right of Mortgagee to Cure. Each Mortgagee shall, upon written request to City, be entitled to receive written notice from City of. (a) The results of the Periodic Review of compliance specified in this Agreement, and (b) Any default by Landowner of its obligations set forth in this Agreement. Each Mortgagee shall have a further right, but not an obligation, to cure the default within ten (10) calendar days after receiving notice of monetary defaults and within thirty (30) calendar days after receiving notice of non - monetary defaults. If Mortgagee can only remedy or cure the default by 03.02.09 c>an 26 obtaining possession of the Property, then Mortgagee shall have the right to seek to obtain possession with diligence and continuity through a receiver or otherwise, and to remedy or cure the Default within thirty (30) calendar days after obtaining possession. Except in case of emergency or to protect the public health or safety, City may not exercise any of its judicial remedies set forth in this Agreement until expiration of the thirty (30) calendar day period. But in the case of a default that cannot with diligence be remedied or cured within thirty (30) days, the Mortgagee shall have additional time as is reasonably necessary to remedy or cure the default, provided Mortgagee promptly commences to cure the default within thirty (30) calendar days and diligently prosecutes the cure to completion. Landowner shall not be released from performing its obligations as set forth in this Agreement in the event of a foreclosure by a Mortgagee. 18. Assignment. 18.1 Right to Assign. Landowner shall have the right to sell, transfer or assign the Property in whole or in part, to any person, partnership, joint venture, firm or corporation at any time during the term of this Agreement; provided, however, that any such sale, transfer or assignment shall include the assignment and assumption of the rights, duties and obligations arising under or from this Agreement and be made in compliance with the following conditions precedent: (a) No sale, transfer or assignment of any right or interest under this Agreement shall be made unless made together with the sale, transfer or assignment of all or a part of the Property; (b) Concurrent with any such sale, transfer or assignment, or within fifteen (15) business days thereafter, Landowner shall notify City, in writing, of such sale, transfer or assignment and shall provide City with an executed agreement by the purchaser, transferee or assignee and providing therein that the purchaser, transferee or assignee expressly and unconditionally assumes all the duties and obligations of Landowner under this Agreement which apply to the Property in whole or in part being sold, transferred or assigned; and (c) The provisions of this Section 18.1 shall not apply to transfers, by Landowner of an interest in all or a portion of the Property to any subsidiary or affiliate entity of Landowner. 18.2 Agreement Binding on Successors and Assigns. The burdens of this Agreement are binding upon, and the benefits of this Agreement inure to, all successors in interest of the Parties to this Agreement, and constitute covenants that run with the Property. To provide continued notice, the Parties will record this Agreement and any subsequent amendments to it. 03.02.09 cm 27 19. Est000el Certificate. At any time, either Party may deliver written notice to the other Party requesting that the Party certify in writing that, to the best of its knowledge: (a) This Agreement is in full force and effect and is binding on the Party; (b) This Agreement has not been amended or modified either orally or in writing. If this Agreement has been amended, the Party providing the certification shall identify the amendments; and (c) The requesting Party is not in default in the performance of its obligations under this Agreement. If the requesting Party is in default, the other Party must describe the nature and amount of the default, if any. The requesting Party shall execute and return the certificate within fifteen (15) calendar days following receipt from the requesting party. Any assignee of a Party's rights and obligations hereunder, as referred to in Section 18.1, and any Mortgagee; shall be entitled to rely on the certificate. 20. Further Actions and Instruments. Each Party shall cooperate with and provide reasonable assistance to the other Party to the extent consistent with and necessary to implement this Agreement. Upon the request of a Party at any time,,the other Party shall promptly execute, with acknowledgement or affidavit if reasonably required, and file or record the required instruments and writings and take any actions as may be reasonably necessary to implement this Agreement or to evidence or consummate the transactions contemplated by this Agreement. 21. Notice . Any notice or demand that shall be required or permitted by law or any provision of this Agreement shall be in writing. If the notice or demand will be served upon a Party, it either shall be: personally delivered to the Party; deposited in the United States mail, certified, return receipt requested, and postage prepaid; or delivered by a reliable courier service that provides a receipt showing date and time of delivery with courier charges prepaid. The notice or demand shall be addressed as follows: TO CITY: City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, CA 92663 -3884 Attn: City Manager 03.02.09 Clean 28 With a copy to: City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, CA 92663 -3884 TO LANDOWNER: JGKaliins Newport Investments, LLC 15747 Woodruff Avenue Bellflower, CA 90706 Attn: James G. Kallins With a copy to: Rutan & Tucker, LLP 611 Anton Boulevard, Suite 1400 Costa Mesa, CA 92626 -1931 Attn: Richard P. Sims Sunstone Jamboree, LLC c/o Sunstone Hotel Investors, Inc. 903 Calle Amanecer, Suite 100 San Clemente, CA 92673 Attn: Legal Department With a copy to: Hewitt & O'Neil LLP 19900 MacArthur Blvd., Suite 1050 Irvine, CA 92612 Attn: Dennis D. O'Neil Either Parry may change the address stated in this Section 21 by notice to the other Party in the manner provided in this Section 21, and notices shall be addressed and submitted to the new address. Notice shall be deemed to be delivered upon the earlier of: (1) the date received; or (2) three business days after deposit in the mail as provided above. 22. Rules of Construction and Miscellaneous Terms. 22.1 Rules of Construction. The singular includes the plural; the masculine and neuter include the feminine; "shall" is mandatory; "may" is permissive. 22.2 Time Is of the Essence. Time is of the essence regarding each provision of this Agreement in which time is an element. 22.3 Waiver. Failure by a Party to insist upon the strict performance, of any of the provisions of this Agreement by the other Party, and failure by a Party to exercise its rights upon a default by the other Party, shall not constitute a waiver of that Party's right to demand strict compliance by the other Party in the future. 03.02.09 cis 29 22.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be identical and may be introduced in evidence or used for any other purpose without any other counterpart, but all of which shall together constitute one and the same agreement. 22.5 Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter addressed in this Agreement. 22.6 Severabilitv. The Parties intend that each and every obligation of the Parties is interdependent and interrelated with the other, and if any provision of this Agreement or the application of the provision to any Party or circumstances shall be held invalid or unenforceable to any extent, it is the intention of the Parties that the remainder of this Agreement or the application of the provision to persons or circumstances shall be rendered invalid or unenforceable. The Parties intend that neither shall receive any of the benefits of the Agreement without the full performance of all of the obligations provided for under this Agreement. Without limiting the generality of the foregoing, the Parties intend that Landowner shall not receive any of the benefits of this Agreement if any of Landowner's obligations are rendered void or unenforceable as the result of any third party litigation, and City shall be free to exercise its legislative discretion to amend or repeal the development regulations applicable to the Property and Landowner shall cooperate as required, despite this Agreement, should third party litigation result in the nonperformance of Landowner's obligations under this Agreement. 22.7 Construction. This Agreement has been drafted after extensive negotiation and revision. Both City and Landowner are sophisticated Parties who were represented by independent counsel throughout the negotiations. City and Landowner each agree and acknowledge that the terms of this Agreement are fair and reasonable, taking into account their respective purposes, terms, and conditions. This Agreement shall therefore be construed as a whole consistent with its fair meaning, and no principle or presumption of contract construction or interpretation shall be used to construe the whole or any part of this Agreement in favor of or against either Party. 22.8 Constructive Notice and Acceptance. Every person who now or later owns or acquires any right, title, or interest in any part of the Project or the Property is and shall be conclusively deemed to have consented and agreed to every provision of this Agreement. This Section 22.8 applies regardless of whether the instrument by which the person acquires the interest references this Agreement. 22.9 No Third Partv Beneficiaries. The only Parties to this Agreement are City and Landowner. This Agreement does not involve any third party 03.02.09 ci= 30 beneficiaries, and it is not intended and shall not be construed to benefit or be enforceable by any other person or entity. 22.10 Applicable Law and Venue. This Agreement shall be construed and enforced consistent with the internal laws of the State of California. Any action at law or in equity arising under this Agreement or brought by any Party 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, or the United States District Court for the Central District of California. The Parties waive all provisions of law providing for the removal or change of venue to any other court. 22.11 Non - Liability of City Officers and Emplovees. No official, officer, employee, agent, or representative of City shall be personally liable to Landowner or its successors and assigns for any loss arising out of or connected with this Agreement or the Development Regulations and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such official, officer, employee, agent, or representative of City. 22.12 Section Headings. All section headings and subheadings are inserted for convenience. 22.13 Covenant Not To Sue. The Parties to this Agreement, and each of them, agree that this Agreement and each term hereof is legal, valid, binding, and enforceable. The Parties to this Agreement, and each of them, hereby covenant and agree that each of them will not commence, maintain, or prosecute any claim, demand, cause of action, suit, or other proceeding against any other party to this Agreement, in law or in equity, or based on an allegation, or assert in any such action, that this Agreement or any term hereof is void, invalid, or unenforceable. 22.14 Eminent Domain. No provision of this Agreement shall be construed to limit or restrict the exercise by City of its power of eminent domain. 22.15 No Brokers. City and Landowner represent and warrant to the other that neither has employed any broker and /or finder to represent its interest in this transaction. Each party agrees to indemnify and hold the other free and harmless from and against any and all liability, loss, cost, or expense (including court costs and reasonable attorney's fees) in any manner connected with a claim asserted by any individual or entity for any commission or finder's fee in connection with this Agreement arising out of agreements by the indemnifying party to pay any commission or finder's fee. 23. Authority to Execute. The persons executing this Agreement warrant and represent that they have the authority to execute this Agreement on behalf of the 03.02.09 Cis 31 entity for which they are executing this Agreement. They further warrant and represent that they have the authority to bind their respective Party to the performance of its obligations under this Agreement. 24. Recordation. This Agreement and any amendment, modification, or cancellation to it shall be recorded in the Office of the County Recorder of the County of Orange, by City Clerk within the period required by California Government Code section 65868.5 and City of Newport Beach Municipal Code section 15.45.100. (Signature page follows) 03.0209 Clean 32 IN WITNESS WHEREOF, the Parties have each executed this Agreement on the date first written above. "LANDOWNER" JGKALLINS INVESTMENTS NEWPORT, LLC, a California Limited Liability Company By: B.G.N. Kallins, LLC, a Delaware Limited Liability Company, its Manager LM James G. Kallins, Manager SUNSTONE JAMBOREE, LLC, a Delaware Limited Liability Company 0 Arthur L. Buser, Jr., President "CITY" CITY OF NEWPORT BEACH By: Edward D. Selich, Mayor ATTEST: Leilani I. Brown, City Clerk AP VED TO ORM: P� David R. Hunt, City Attorney 03.02.09 Clean 33 STATE OF CALIFORNIA ss COUNTY OF ORANGE On , before me, , a Notary Public, personally appeared , personally known to me 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 that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public 03.02.09 Clean 34 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY PARCEL A: PARCEL 1: THAT PORTION OF BLOCK 5S OF IRVINE'S SUBDIVISION IN THE CITY OF NEWPORT BEACH. COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SUBDIVISION IS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS; BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD (100.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS OF SAID COUNTY, WITH THE CENTERLINE OF SAYSIDE DRIVE ISD.OD FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 216 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 330 47' 15" EAST 353.63 FEET ALONG SAID CENTERLINE OF JAMBOREE ROAD; THENCE NORTH 51" 12'45" WEST 50.19 FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY LINE OF SAID JAMBOREE ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 330'47' 15" EAST 235.00 FEET ALONG SAID NORTHWESTERLY BOUNDARY LINE; THENCE NORTH 51 ° 12'45* WEST 39040 FEET; THENCE NORTH 850 40'23" WEST 205.95 FEET; THENCE SOUTH 330 47' 15" WEST 118.00 FEET; THENCE SOUTH 51' 12'45' EAST 570.00 FEET TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY. IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 2, A PORTION OF BLOCK 55 OF IRVINE"S SUBDIVISION, AS SHOWN ON A MAP THEREOF, RECORDED IN BOOK 1, PAGE 88 Of MISCELLANEOUS RECORDS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD 1100.00 FEET IN WIDTH) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10 OF OFFICIAL RECORDS, OF ORANGE COUNTY WITH THE CENTERLINE OF BAYSIDE DRIVE (80.00 FEET IN WIDTH), AS DESCRIBED IN DEED RECORDED IN BOOK 4288, PAGE 216, OFFICIAL RECORDS OF SAID ORANGE COUNTY; THENCE NORTH 33° 47' 15' EAST ALONG SAID CENTERLINE OF JAMBOREE ROAD 366.63 FEET; THENCE NORTH 51 ° 12" 45" WEST 50.19 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID JAMBOREE ROAD; THENCE NORTH 330 47' 15" EAST ALONG THE SAID NORTHWESTERLY LINE OF JAMBOREE ROAD 236.00 FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE NORTH 51 a 12'45' WEST 390.00 FEET; THENCE NORTH 06' 40'43' WEST 205.98 FEET; THENCE SOUTH 33' 47' 15- WEST 118.00 FEET; THENCE NORTH 61 ° 12' 45" WEST 248.42 FEET TO THE SOUTHEASTERLY LINE OF SAID BAYSIDE DRIVE, SAID SOUTHEASTERLY LINE BEING ON A CURVE CONCAVE EASTERLY HAVING A RADIUS OF 760.00 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE AND ALONG THE SAID SOUTHEASTERLY LINE THROUGH AN ANGLE OF S° 38'21 " A DISTANCE OF 74.80 FEET TO A LINE TANGENT; THENCE NORTH 269 23' 16" EAST ALONG SAID LINE TANGENT AND ALONG THE SOUTHEASTERLY LINE OF SAYSIDE DRIVE 223.43 FEET TO THE BEGINNING OF A CURVE CONCAVE WESTERLY HAVING A RADIUS OF 840.00 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE AND ALONG THE SOUTHEASTERLY LINE OF BAYSIDE DRIVE THROUGH AN ANGLE OF 120 55' 13' A DISTANCE OF 189.42 FEET; THENCE SOUTH 560 12'45* EAST 692.63 FEET; THENCE NORTH 33° 47' 16' EAST 220.00 FEET; THENCE SOUTH 560 12'46' EAST 210.00 Final 7113109 A -1 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID JAMBOREE ROAD; THENCE SOUTH 330 47' 15" WEST ALONG THE NORTHWESTERLY LINE OF JAMBOREE ROAD 535.00 FEET TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 3: THAT PORTION OF BLOCK 55 OF IRVINE'S SUBDIVISION, IN THE CITY OF NEWPORT BEACH, COUNTY Of ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD (100.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA WITH THE CENTERLINE OF BAYSIDE DRIVE (80.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 216, OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA; THENCE NORTH 330 47' 15" EAST 1140.00 FEET ALONG SAID CENTERLINE OF SAID JAMBOREE ROAD; THENCE NORTH 56 ° 12' 45" WEST 50.00 FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY LINE OF SAID JAMBOREE ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING NORTH 560 12'45" WEST 210.00 FEET FROM SAID TRUE POINT OF BEGINNING; THENCE SOUTH 330 47' 15' WEST 220.00 FEET; THENCE NORTH 56" 12'450 WEST 692.63 FEET TO A POINT ON THE EASTERLY BOUNDARY LINE OF SAID BAYSIDE DRIVE, SAID POINT BEING ON A CURVE CONCAVE WESTERLY HAVING A RADIUS OF 840.00 FEET AND A CENTRAL ANGLE OF 51 ° 00' 20" A RADIAL LINE TO SAID POINT BEARS SOUTH 760 31'570 EAST; THENCE NORTHERLY 290.20 FEET ALONG SAID CURVE AND SAID EASTERLY BOUNDARY LINE THROUGH A CENTRAL ANGLE OF 190 47'40- TO THE INTERSECTION WITH A LINE BEARS NORTH 830 40'23* EAST; THENCE LEAVING SAID CURVE AND SAID EASTERLY BOUNDARY, NORTH 830 40'230 EAST 311.16 FEET ALONG SAID LINE; THENCE SOUTH 569 12'46* EAST 810.00 FEET TO AN INTERSECTION WITH SAID NORTHWESTERLY BOUNDARY OF SAID JAMBOREE ROAD; THENCE SOUTH 33° 47' 15' WEST 230.00 FEET ALONG SAID NORTHWESTERLY BOUNDARY TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITH THE AREA SHOWN ON .A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 4: THAT PORTION OF BLOCK 65 OF IRVINE'S SUBDIVISION, IN THE COUNTY OF GRANGE, STATE OF CALIFORNIA, AS SAID SUBDIVISION IS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHEASTERLY RIGHT OF WAY LINE OF BAYSIDE DRIVE, 80.00 FEET WIDE, AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 218, OFFICIAL RECORDS OF SAID ORANGE COUNTY, WITH THE NORTHWESTERLY RIGHT OF WAY LINE OF JAMBOREE ROAD, 100.00 FEET WIDE, AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS, RECORDS OF SAID COUNTY; THENCE NORTH 33" 47' 15" EAST 330.00 FEET ALONG SAID NORTHWESTERLY RIGHT OF WAY LINE OF JAMBOREE ROAD TO THE MOST SOUTHERLY CORNER OF THE LAND DESCRIBED IN PARCEL 1 OF THE FIFTH ADDENDUM TO LEASE EXECUTED BY THE NEWPORTER RESTAURANT CORP., A CORPORATION, AS LESSEE RECORDED OCTOBER 22,1963 IN BOOK 6771, PAGE 443, OFFICIAL RECORDS, Final 7113M A -2 THENCE NORTH 510 12'46w WEST 818.42 FEET ALONG THE SOUTHWESTERLY LINE OF SAID PARCEL 1 AND THE NORTHWESTERLY PROLONGATION THEREOF TO THE EASTERLY RIGHT OF WAY LINE OF SAID BAYSIDE DRIVE, SAID EASTERLY RIGHT OF WAY LINE BEING A NON-TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 760.00 FEET; THENCE SOUTHERLY 187.64 FEET; THENCE SOUTH 06° 35' 150 WEST 3.17 FEET ALONG SAID CURVE AND EASTERLY RIGHT OF WAY LINE THROUGH AN ANGLE OF 140 09' 40" TO THE BEGINNING OF A COMPOUND CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 41 0.00 FEET; THENCE SOUTHERLY AND SOUTHEASTERLY 449.39 FEET ALONG SAID CURVE BEING ALSO SAID EASTERLY RIGHT OF WAY UNE THROUGH AN ANGLE OF 620 48'99w: THENCE TANGENT SOUTH 66° 12'45w EAST 384.75 FEET ALONG THE NORTHEASTERLY RIGHT OF WAY LINE OF SAID BAYSIDE DRIVE TO THE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM, ANY OTHER MATERIAL RESOURCES AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE OR OPERATE THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AS RESERVED BY THE IRVINE COMPANY IN DEED RECORDED JUNE 30, 1892 AS INSTRUMENT NO. 92. 441109 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM ANY AND ALL WATER, RIGHTS OR INTERESTS THEREIN, NO MATTER HOW ACQUIRED BY GRANTOR, AND OWNED OR USED BY GRANTOR IN CONNECTION WITH OR WITH RESPECT TO THE LAND, TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM THE LAND OR TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTEREST ON ANY OTHER PROPERTY OWNED OR LEASED BY GRANTOR, WHETHER SUCH WATER RIGHTS SHALL BE RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL, PERCOLATING, PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL, BUT WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE LAND IN THE EXERCISE OF SUCH RIGHTS, AS RESERVED BY THE IRVINE COMPANY IN DEED RECORDED JUNE 30, 1992 AS INSTRUMENT NO. 92-441109 OF OFFICIAL RECORDS. ALSO, EXCEPTING FROM PARCELS i THRU 4 ABOVE ALL RIGHT TITLE AND INTEREST IN AND TO ANY AND ALL STRUCTURES, BUILDINGS, INTERIORS AND/OR IMPROVEMENTS, AND ANY AND ALL ITEMS OF FIXTURES LOCATED WITHIN SUCH STRUCTURES, BUILDINGS, INTERIORS AND/OR IMPROVEMENTS, OR APPURTENANT THERETO, ALL OF WHICH ARE AND SHALL REMAIN REAL PROPERTY AND ARE NOW LOCATED OR HEREAFTER LOCATED ON THE REAL PROPERTY. PARCEL B: ALL RIGHT TITLE AND INTEREST IN AND TO ANY AND ALL STRUCTURES, BUILDINGS, INTERIORS ANDIOR IMPROVEMENTS, AND ANY AND ALL ITEMS OF FIXTURES Final 2113/09. A -3 LOCATED WITHIN SUCH STRUCTURES, BUILDINGS, INTERIORS AND/OR IMPROVEMENTS, OR APPURTENANT THERETO, ALL OF WHICH ARE AND SHALL REMAIN REAL PROPERTY AND ARE NOW LOCATED OR HEREAFTER LOCATED ON THE REAL PROPERTY DESCRIBED AS: PARCEL i : THAT PORTION OF BLOCK 65 OF IRVINE'S SUBDIVISION IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SUBDIVISION IS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD 000.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS OF SAID COUNTY, WITH THE CENTERLINE OF BAYSIDE DRIVE (80.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 10 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE NORTH 330 47' 1 S' EAST 365.63 FEET ALONG SAID CENTERLINE OF JAMBOREE ROAD; THENCE NORTH 510 12'45" WEST 50.19 FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY LINE OF SAID JAMBOREE ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 330 47' 15" EAST 236.00 FEET ALONG SAID NORTHWESTERLY BOUNDARY LINE; THENCE NORTH 61" 12'4W WEST 390.00 FEET, THENCE NORTH 850 40'23* WEST 206.96 FEET; THENCE SOUTH 330 47' 15' WEST 118.00 FEET; THENCE SOUTH 510 12'45" EAST 570.00 FEET TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 2: A PORTION OF BLOCK 55 OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP THEREOF, RECORDED IN BOOK 1, PAGE 86 OF MISCELLANEOUS RECORDS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD (100.00 FEET IN WIDTH) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10 OF OFFICIAL RECORDS, OF ORANGE COUNTY WITH THE CENTERLINE OF BAYSID9 DRIVE (80.00 FEET IN WIDTH), AS DESCRIBED IN DEED RECORDED IN BOOK 4288, PAGE 216, OFFICIAL RECORDS OF SAID ORANGE COUNTY; THENCE NORTH 330 47' 16' EAST ALONG SAID CENTERLINE OF JAMBOREE ROAD 366.63 FEET; THENCE NORTH 510 12' 45' WEST 30.19 FEET TO A POINT ON THE NORTHWESTERLY LINE OF SAID JAMBOREE ROAD; THENCE NORTH 330 47' 15" EAST ALONG THE SAID NORTHWESTERLY LINE OF JAMBOREE ROAD 235.00 FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE NORTH 510 12'45' WEST 390.00 FEET; THENCE NORTH 860 40' 43' WEST 205.96 FEET; THENCE SOUTH 330 47' 1 B' WEST 118.00 FEET; THENCE NORTH 510 12'43* WEST 24$42 FEET TO THE SOUTHEASTERLY LINE OF SAID EIAYSIDE DRIVE, SAID SOUTHEASTERLY LINE BEING, ON A CURVE CONCAVE EASTERLY HAVING A RADIUS OF 760.00 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE AND ALONG THE SAID SOUTHEASTERLY LINE THROUGH AN ANGLE OF 50 38' 21' A DISTANCE OF 74.80 FEET TO A LINE TANGENT; THENCE NORTH 260 23' 16" EAST ALONG SAID LINE TANGENT AND ALONG THE SOUTHEASTERLY LINE OF BAYSIDE DRIVE 223.43 FEET TO THE BEGINNING OF A CURVE CONCAVE WESTERLY HAVING A RADIUS OF 840.00 FEET; THENCE NORTHEASTERLY ALONG SAID CURVE AND ALONG THE SOUTHEASTERLY LINE OF BAYSIDE DRIVE THROUGH AN ANGLE OF 120 56' 13- A DISTANCE OF 189.42 FEET; THENCE SOUTH 56" 12'45' EAST 692.63 FEET; THENCE NORTH 330 47'15* EAST 220.00 FEET; THENCE SOUTH 560 12'45- EAST 210.00 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID JAMBOREE ROAD; THENCE Final 2113/09 A -4 SOUTH 330 47' 15" WEST ALONG THE NORTHWESTERLY LINE OF JAMBOREE ROAD 535.00 FEET TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 3: THAT PORTION OF BLOCK 66 OF IRVINE'S SUBDIVISION, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF JAMBOREE ROAD (100.00 FEET WIDE) AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA WITH THE CENTERLINE OF BAYSIDE DRIVE (80.00 FEET WIDEI AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 216, OFFICIAL RECORDS, RECORDS OF ORANGE COUNTY, CALIFORNIA; THENCE NORTH 330 47' 16" EAST 1140.00FEET ALONG SAID CENTERLINE OF SAID JAMBOREE ROAD; THENCE NORTH 580 12' 46" WEST 50.00 FEET TO A POINT ON THE NORTHWESTERLY BOUNDARY LINE OF SAID JAMBOREE ROAD, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING NORTH 560 12.46" WEST 210.00 FEET FROM SAID TRUE POINT OF BEGINNING; THENCE SOUTH 330 47' 15" WEST 220,00 FEET; THENCE NORTH 560 12' 46" WEST 692.63 FEET TO A POINT ON THE EASTERLY BOUNDARY LINE OF SAID BAYSIDE DRIVE, SAID POINT BEING ON A CURVE CONCAVE WESTERLY HAVING A RADIUS OF 840.00 FEET AND A CENTRAL ANGLE OF 510 00' 20" A RADIAL LINE TO SAID POINT BEARS SOUTH 760 31' 57" EAST; THENCE NORTHERLY 290.20 FEET ALONG SAID CURVE AND SAID EASTERLY BOUNDARY. LINE THROUGH A CENTRAL ANGLE OF 190 47'40" TO THE INTERSECTION WITH A LINE BEARING NORTH 630 40' 23" EAST, THENCE LEAVING SAID CURVE AND SAID EASTERLY BOUNDARY, NORTH 830 40'23' EAST 311.16 FEET ALONG SAID LINE; THENCE SOUTH 560 12' 45" EAST 810.00 FEET TO AN INTERSECTION WITH SAID NORTHWESTERLY BOUNDARY OF SAID JAMBOREE ROAD; THENCE SOUTH 330 47' 15" WEST 230.00 FEET ALONG SAID NORTHWESTERLY BOUNDARY TO THE TRUE POINT OF BEGINNING. SAID LAND IS INCLUDED WITH THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. PARCEL 4: THAT PORTION OF BLOCK 56 OF IRVINE'S SUBDIVISION, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SUBDIVISION IS SHOWN ON A MAP RECORDED IN BOOK 1, PAGE BB OF MISCELLANEOUS RECORDS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHEASTERLY RIGHT OF WAY LINE OF BAYSIDE DRIVE, 80.00 FEET WIDE, AS DESCRIBED IN A DEED RECORDED IN BOOK 4288, PAGE 216, OFFICIAL RECORDS OF SAID ORANGE COUNTY, WITH THE NORTHWESTERLY RIGHT OF WAY LINE OF JAMBOREE ROAD, 100.00 FEET WIDE, AS DESCRIBED IN A DEED RECORDED IN BOOK 4110, PAGE 10, OFFICIAL RECORDS, RECORDS OF SAID COUNTY; THENCE NORTH 330 47' 1 S" EAST 330.00 FEET ALONG SAID NORTHWESTERLY RIGHT OF WAY LINE OF JAMBOREE ROAD TO THE MOST SOUTHERLY CORNER OF THE LAND DESCRIBED IN PARCEL 1 OF THE FIFTH ADDENDUM TO LEASE EXECUTED BY THE NEWPORTER RESTAURANT CORP., A CORPORATION, AS LESSEE RECORDED OCTOBER 22, 1953 IN BOOK 6771, PAGE 443, OFFICIAL RECORDS; THENCE NORTH 51 a 12'452 WEST 818.42 FEET ALONG THE SOUTHWESTERLYLINE Fiml 2/13/09 A -5 OF SAID PARCEL 1 AND THE NORTHWESTERLY PROLONGATION THEREOF TO THE EASTERLY RIGHT OF WAY LINE OF SAID BAYSIDE DRIVE, SAID EASTERLY RIGHT OF WAY LINE BEING A NON TANGENT CURVE CONCAVE EASTERLY HAVING A RADIUS OF 780.00 FEET; THENCE SOUTHERLY 187.84 FEET; THENCE SOUTH 060 36' 1 S` WEST 3.17 FEET ALONG SAID CURVE AND EASTERLY RIGHT OF WAY LINE THROUGH AN ANGLE OF 140 09'40' TO THE BEGINNING OF A COMPOUND CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 410.00 FEET; THENCE SOUTHERLY AND SOUTHEASTERLY 449.39 FEET ALONG SAID CURVE BEING ALSO SAID EASTERLY RIGHT OF WAY LINE THROUGH AN ANGLE OF 626 48'00w; THENCE TANGENT SOUTH 660 12'450 EAST 384.75 FEET ALONG THE NORTHEASTERLY RIGHT OF WAY LINE OF SAID BAYSIDE DRIVE TO THE POINT OF BEGINNING. SAID LAND IS INCLUDED WITHIN THE AREA SHOWN ON A MAP FILED IN THE OFFICE OF THE COUNTY RECORDER SAID ORANGE COUNTY, IN BOOK 17, PAGE 3 OF PARCEL MAPS. EXCEPTING THEREFROM ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM, ANY OTHER MATERIAL RESOURCES AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELL., TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE OR OPERATE THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED. AS RESERVED BY THE IRVINE COMPANY IN DEED RECORDED JUNE 30, 1992 AS INSTRUMENT NO. 92-441109 0E OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM ANY AND ALL WATER, RIGHTS OR INTERESTS THEREIN, NO MATTER HOW ACQUIRED BY GRANTOR, AND OWNED OR USED BY GRANTOR IN CONNECTION WITH OR WITH RESPECT TO THE LAND, TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM THE LAND OR TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTEREST ON ANY OTHER PROPERTY OWNED OR LEASED BY GRANTOR, WHETHER SUCH WATER RIGHTS SHALL BE RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL, PERCOLATING, PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL, BUT WITHOUT, HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE LAND IN THE EXERCISE OF SUCH RIGHTS, AS RESERVED BY THE IRVINE COMPANY IN DEED RECORDED JUNE 30, 1992 AS INSTRUMENT NO. 92-441 1 09OF OFFICIAL RECORDS. Assessor's Parcel No: 440- 182 -41 Final 2113/09 A -6 Final 2rt3/09 B -1 STATE OF CALIFORNIA } COUNTY OF ORANGE CITY OF NEWPORT BEACH } I, Leilani I. Brown, 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. 2009 -8 was duly and regularly introduced on the 24th day of February, 2009, and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 10th day of March, 2009, and that the same was so passed and adopted by the following vote, to wit: Ayes: Henn, Rosansky, Curry, Webb, Gardner, Daigle, Mayor Selich Noes: None Absent: None Abstain: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 11th day of March, 2009. (Seal) City Clerk City of Newport Beach, California CERTIFICATE OF PUBLICATION STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, LEILANI I. BROWN, City Clerk of the City of Newport Beach, California, do hereby certify that Ordinance No. 2009 -8 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: March 14, 2009. ��A In witness whereof, I have hereunto subscribed my name this _!__� day of 2009. 4, �. City Clerk City of Newport Beach, California