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HomeMy WebLinkAbout1459 - RECOMMEND APPROVAL_ANNEXATION AND DEVELOPMENT_BONITA CANYONRESOLUTION NO. 1459 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH RECOMMENDING APPROVAL TO THE CITY COUNCIL OF AN ANNEXATION AND DEVELOPMENT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND THE IRVINE COMPANY (Development Agreement 11) WHEREAS, the State Legislature and the City Council have determined that the lack of certainty in the approval of development projects can result in a waste of resources, escalate the cost of housing and other development projects can result in a waste of resources, escalate the cost of housing and other development to the consumer, and discourage investment in and commitment to the comprehensive planning which would make maximum efficient utilization of resources at the least economic cost to the public; and WHEREAS, assurance that an applicant may proceed with a project in accordance with existing policies, rules and regulations, and subject to conditions of approval, will strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic costs of development; and WHEREAS, the California government Code Section 65864 et seq. authorizes cities to enter into development agreements with any person having a legal or equitable interest in property for the development of the property; and WHEREAS, the Chapter 15.45 of the Newport Beach Municipal code provides requirements and procedures for the amendment of development agreements; and WHEREAS, the Annexation and Development Agreement has been prepared in compliance with state law and the Newport Beach Municipal Code; and WHEREAS, the Planning Commission finds that said Annexation and Development Agreement is in conformance with the Newport Beach General Plan, as proposed by accompanying General Plan Amendment No. 97 -2; and WHEREAS, on October 9, 1997 and October 23, 1997, the Planning Commission of the City of Newport Beach held a public hearing regarding the Annexation and Development Agreement; and WHEREAS, the public was duly noticed of the public hearing. NOW THEREFORE BE IT RESOLVED, that the Planning Commission of the City of Newport Beach does hereby recommend that the City Council of the City of Newport Beach approve the Annexation and Development Agreement as provided in attached Exhibit V.% BE IT FURTHER RESOLVED that pursuant to the California Environmental Quality Act, it has been determined that the previously certified Environmental Impact Report (State Clearing House Number 95091032) prepared for Planning Area 26/Bonita Canyon Zone Change (Bonita Canyon) is adequate to serve as the environmental document for this project. ADOPTED this 23rd day of October, 1997, by the following vote, to wit: BY Michael C. Kranz ey, )airman AYES Adams, Ashlev, Fuller, Kranzley, Ridgeway, Selich NOES None ABSENT Gifford 2 ANNEXATION AND DEVELOPMENT AGREEMENT BETWEEN CITY OF NEWPORT BEACH m THE IRVINE COMPANY m IRVINE COMMUNITY DEVELOPMENT COMPANY CONCERNING BONITA CANYON BONITA CANYON AGREEMENT 10/17/97 ANNEXATION AND DEVELOPMENT AGREEMENT This Annexation and Development Agreement (hereinafter "Agreement ") is entered into effective as of 1997, (hereinafter the "Effective Date ") by and among the CITY OF NEWPORT BEACH (hereinafter "CITY "), and THE IRVINE COMPANY and IRVINE COMMUNITY DEVELOPMENT COMPANY (hereinafter collectively "OWNER "). RECITALS A. OWNER collectively owns all of the real property ('Property ") described on Exhibit "A" and depicted on Exhibit "B," consisting of approximately two hundred eighty (280) acres. B. The Property is currently in the City of Irvine ( "Irvine "). OWNER has obtained development approvals for the Property from Irvine, and has commenced subdivision and development of the Property under the jurisdiction of Irvine. However, Irvine and CITY have discussed detachment of the Property from Irvine, and the annexation of the Property to CITY. C. CITY and OWNER have discussed the process and terms and conditions of a detachment of the Property from Irvine and annexation to CITY, and each determined that it is in their respective best interests to pursue that detachment/annexation pursuant to the terms of this Agreement. D. In addition to the authority at common law for annexation agreements, Government Code Sections 65864 et seq. ( "Development Agreement Law "), and Newport Beach Municipal Code Chapter 15.45, authorize CITY to enter into binding development agreements with persons having a legal or equitable interest in real property for the development of such property, all for the purpose of strengthening the public planning process, encouraging private participation and comprehensive planning and reducing the economic costs of such development. OWNER has therefore asked and CITY has agreed that this Agreement shall also serve as a Development Agreement to become effective upon annexation of the Property to CITY. E. The City Council has found that this Agreement is in the best public interest of the CITY and its residents, adopting this Agreement constitutes a present exercise of its police power, and prior to and as a condition precedent to annexation of the Property this Agreement, the same will be consistent with the City's General Plan and with Newport Beach Municipal Code Chapter 15.45. BONITA CANYON AGREEMENT 10/17/97 2 COVENANTS NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1 DEFINITIONS AND EXHIBITS. 1.1 Definitions. This Agreement uses a number of terms having specific meanings, as defined below. These specially defined terms are distinguished by having the initial letter capitalized, or all letters capitalized, when used in the Agreement. The defined terms include the following: 1.1.1 "Agreement" means this Development Agreement. 1. 1.2 "CITY" means the City of Newport Beach, a California charter city. 1. 1.3 "Development," whether or not capitalized, means the improvement of the Property for the purposes of completing the structures, improvements and facilities comprising the Project including, but not limited to: grading; the construction of infrastructure and public facilities related to the Project whether located within or outside the Property; the construction of buildings and structures; and the installation of landscaping and park facilities and improvements. "Development" also includes the maintenance, repair, reconstruction or redevelopment of any building, structure, improvement, landscaping or facility after the construction and completion thereof. 1. 1.4 "Development Approvals" means all permits, licenses, consents, rights and privileges, and other actions subject to approval or issuance by Irvine or CITY in connection with Development of the Property, including but not limited to: (a) General plans and general plan amendments; (b) Specific plans and specific plan amendments; (c) Zoning and rezoning; (d) Tentative and final subdivision and parcel maps; BONITA CANYON AGREEMENT 10/17/97 3 (e) Variances, conditional use permits, master plans, public use permits and plot plans; and (e) Grading and building permits. 1. 1.5 'Development Plan" means the plan for Development of the Property, including without limitation the planning and zoning standards, regulations, and criteria for the Development of the Property, contained in and consistent with the Irvine Development Approvals. Following annexation of the Property by CITY, 'Development Plan" shall mean the plan for Development of the Property to be adopted by CITY prior to annexation of the Property, as set forth in Paragraph 3.3 below. A copy of the planning and zoning components of the Development Plan that have been adopted by CITY concurrently with this Agreement are attached as Exhibit 'D." 1.1.6 'Development Requirement" means any requirement of CITY in connection with or pursuant to any Development Approval for the dedication of land, the construction or improvement of public facilities, or the payment of fees or assessments in order to lessen, offset, mitigate or compensate for the impacts of Development on the environment or other public interest. 1.1.7 'Effective Date" means the date this Agreement is recorded with the County Recorder. 1.1.8 "Irvine" means the City of Irvine, a California charter city. 1.1.9 "Irvine Development Approvals" means those Development Approvals for the Project approved or otherwise made or issued by Irvine prior to the date of completion of the annexation of the Property by CITY, including (without limitation) the Development Approvals listed on Exhibit "C." 1.1.10 "Land Use Regulations" means all ordinances, resolutions, codes, rules, regulations and official policies of CITY governing Development and use 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. "Land Use Regulations" does not include any CITY ordinance, resolution, code, rule, regulation or official policy, governing: (a) the conduct of businesses, professions, and occupations; BONITA CANYON AGREEMENT 10/17/97 4 (b) taxes and assessments; (c) the control and abatement of nuisances; (d) the granting of encroachment permits and the conveyance of rights and interests which provide for the use of or the entry upon public property; (e) the exercise of the power of eminent domain; and (fl the amount of processing fees or Development impact fees. 1.1.11 "OWNER" means The Irvine Company and, where appropriate in context, its successors in interest to all or any part of the Property. 1.1.12 "Mortgagee" means a mortgagee of a mortgage, a beneficiary under a deed of trust or any other security- device lender and their successors and assigns. 1.1.13 'Project" means the Development of the Property consistent with the Development Plan. 1.1.14 'Property" means the real property described in Exhibit "A" and shown on Exhibit "B" to this Agreement. 1.1.15 'Reservation of Authority" means the rights and authority excepted from the assurances and rights provided to OWNER under this Agreement and reserved to CITY under Section 4.6 of this Agreement. 1.1.16 "Subsequent Development Approvals" means all Development Approvals subsequent to the Effective Date in connection with Development of the Property. 1.1.17 "Subsequent Land Use Regulations" means any Land Use Regulations adopted and effective after the Effective Date of this Agreement, other than the Development Plan. 1.1.18 "Term" shall mean the period of time from the Effective Date until the termination of this Agreement as provided in subsection 10. 1, or earlier termination as provided in Section 7. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" Legal Description of the Property. BONITA CANYON AGREEMENT 10/17/97 5 Exhibit "B" Map showing Property and its location. Exhibit "C" List of Irvine Development Approvals Exhibit "D" CITY Planning and Zoning Exhibit "E" Mitigation Measures 2 GENERAL PROVISIONS. 2.1 Binding Effect of Agreement. From and following the later to occur of (a) the Effective Date or (b) annexation of the Property to CITY, Development of the Property and CITY actions on applications for Development Approvals respecting the Property shall be subject to the terms and provisions of this Agreement. 2.2 Ownership of Property. OWNER represents and covenants that it is the owner of the fee simple title to the Property. 2.3 Assignment. 2.3.1 Right to Assign. OWNER shall have the right to sell, transfer or assign the Property in whole or in part (provided that no such partial transfer shall violate the Subdivision Map Act, Government Code Section 66410, et S�MC.), and in so doing assign its rights and obligations under this Agreement as the same may relate to the portion of the Property being transferred, to any person, partnership, joint venture, firm or corporation at any time during the term of this Agreement. 2.3.2 Release of Transferring Owner. Upon the sale, transfer or assignment of all or a portion of the Property, the transferring OWNER shall be released of all obligations under this Agreement that relate to the portion of the Property being transferred; provided that the obligations under this Agreement that relate to the portion of the Property being transferred are assumed by and enforceable against the transferee. 2.3.3 Termination of Agreement With Respect to Individual Lots Upon Sale to Public and Completion of Construction. Notwithstanding any other provisions of this Agreement, this Agreement shall terminate with respect to any lot and such lot shall be released and no longer be subject to this Agreement upon satisfaction of both of the following conditions: BONITA CANYON AGREEMENT 10/17/97 6 (a) The lot has been finally subdivided and individually (and not in "bulk ") sold or leased (for a period longer than one year) to a member of the public or other ultimate user; and, (b) A final inspection has been conducted and approved for all structures on the lot. 3 PRE - ANNEXATION OBLIGATIONS AND COMMITMENTS. 3.1 Annexation of Property. Consistent with and subject to all of the covenants, terms and conditions of this Agreement, including without limitation paragraph 10.1 below, CITY will initiate proceedings under the Cortese -Knox Local Government Reorganization Act of 1985 for the detachment of the Property from Irvine and annexation of the Property to CITY, and take such subsequent actions as may be reasonably required of it to complete the detachment/annexation of the Property under such conditions as are imposed by or through the Orange County Local Agency Formation Commission and reasonably acceptable to OWNER and CITY. The detachment/annexation may include other property not owned by COMPANY within the area generally bounded by Ford Road, the San Joaquin Hills Transportation Corridor, and MacArthur Boulevard. 3.2 Environmental Impacts and Mitigation. The parties acknowledge that an Environmental Impact Report, State Clearinghouse Number 95091032 (the "EIR "), has been prepared and certified for the Project by Irvine. CITY has reviewed and evaluated the EIR to determine if the impacts of the Project, as represented by this Agreement, the Development Plan, and the City approvals, were fully analyzed and evaluated in the EIR and to determine if any of the events which require preparation of a subsequent or supplemental environmental document have occurred. CITY has determined based on that review that none of the events described in Section 21166 of the Public resources Code or Sections 15162 or 15163 of the CEQA Guidelines have occurred. CITY has specifically determined that the detachment of the Property from Irvine and the annexation of the Property to CITY does not require preparation of any subsequent or supplemental environmental impact report for the Project. CITY has also determined that, subject to incorporation of the mitigation measures identified in Exhibit "E," there is no current or anticipated deficiency in any municipal service or facility (including without limitation planned community and neighborhood parks, sewer service, drainage and flood control facilities, circulation system infrastructure, water service, and public safety services) resulting from Development of the Project. The mitigation measures identified in Exhibit "E" are incorporated by reference into the Development Plan. CITY shall be bound by the provisions of Section 4.6.4 below with respect to any deficiency determined to exist subsequent to the effective date of this Agreement. BONITA CANYON AGREEMENT 10/17/97 7 3.3 Adoption of Development Plan. As a condition precedent to completion of annexation of the Property, CITY agrees that it shall first have processed for adoption, and adopted, a Development Plan for the Property in form and substance approved by OWNER in writing, which approval shall not be withheld if the Development Plan adopted by CITY conforms in substance to the Irvine Development Approvals. OWNER hereby approves the planning and zoning approvals attached as Exhibit "D." 3.4 Continuation of Prior Development Approvals/ Consistent Enforcement. CITY agrees that, except for general and specific plans and zoning to be adopted by CITY as provided in Section 3.3 above, any and all Development Approvals given for the Project by Irvine prior to the annexation of the Property shall continue in full force and effect following annexation of the Property as if the same had been given by CITY immediately following the annexation. In order to provide for consistent enforcement and interpretation of the Development Approvals, CITY agrees to accept and follow Irvine's interpretation of uniform codes applicable to the project for Development Approvals issued by Irvine prior to annexation, to direct its building inspectors to inspect buildings and improvements in the Project for conformance with approved plans only, and to direct its building inspectors not to require any deviations from approved plans in inspections of buildings and improvements in the Project. CITY acknowledges that provisions of the Uniform Codes and the Newport Beach Municipal Code do not and shall not require windows in the second and third stories of residential buildings to be more than thirty (30) inches above floor level. CITY hereby empowers its City Manager to further waive strict enforcement of CITY requirements as necessary to achieve consistency in standards for the Project with the standards imposed by Irvine. 3.5 Additional Pre - Annexation Understandings. As a further inducement to OWNER to permit the annexation of the Property to CITY, CITY agrees that, as of the date of its approval of this Agreement, the potential adverse environmental effects of the Project known to CITY are as set forth in the EIR and CITY is unaware of any other anticipated adverse environmental effects of the Project. City has reviewed the Affordable Housing Implementation Plan for Planning Area 26 dated May 1997, which has been submnitted to the Irvine, and acknowledges that it satisfies affordable housing requirements that would otherwise be applicable to the Project pursuant to the CITY's General Plan. Fees payable upon issuance of a building permit will be paid to the issuer of the permit (e.g., for permits issued by Irvine, the fees shall be paid to Irvine in accordance with Irvine Codes and requirements, and following annexation, for permits issued by CITY, the fees shall be paid to CITY in accordance with CITY's Codes and requirements). BONITA CANYON AGREEMENT 10117/97 8 CITY further agrees that the Project shall not be subject to its Traffic Phasing Ordinance following annexation of the Property, CITY having determined through this Agreement that: a. Development of the Property consistent with the Development Plan within the CITY has benefits to it that outweigh the project's anticipated negative impact on transportation facilities, particularly recognizing that but for this Agreement the Project would be developed in Irvine and not be subject to the Traffic Phasing Ordinance; and, additionally, b. the Development Plan is a comprehensive phased land use development plan and circulation system improvement plan providing for, among other improvements, widening of Bonita Canyon Road, Bison Road and MacArthur Boulevard within or adjacent to the Project, traffic projected from the Project will not make the Land Use and Circulation Elements of CITY's General Plan inconsistent, based upon the EIR the Project will not cause nor make worse an unsatisfactory level of traffic service at any intersection for which there is a feasible identified improvement, and there is an overall reduction in peak hour ICU at impacted intersections having unsatisfactory levels of service taking into account the circulation improvements required for the Project. Notwithstanding anything in the foregoing to the contrary, any significant modifications of the Development Plan proposed by OWNER shall be subject to the Traffic Phasing Ordinance. 3.6 Cooperation. Subject to and in reliance upon the representations and covenants of the CITY herein, OWNER will support the annexation of the Property by the CITY. OWNER and CITY further agree to cooperate with respect to (a) obtaining the consents of other landowners whose land may be included in any proposed annexation of the Property to the CITY, and (b) providing for the orderly transfer of jurisdiction over Development Approvals from Irvine to CITY in such a way that there is no duplication of effort between those two jurisdictions, nor delay in processing by reason of the annexation, and (c) completing the annexation and subdivision and Development contemplated by this Agreement. 3.7 Termination of Annexation Proceedings. This Agreement may be terminated (i) by OWNER in the event that CITY fails to adopt Development Plan for the Property that substantially conforms with the requirements of Paragraph 3.3 above prior to the first hearing by the Orange County Local Agency Formation Commission on the Property's proposed BONUA CANYON AGREEMENT 10/17/97 9 detachment/annexation to CITY, (ii) by either party if conditions imposed by or through the Local Agency Formation Commission on the detachment/annexation are determined by either party to be unreasonable, (iii) by CITY if an acceptable property tax exchange and sales tax allocation agreement is not obtained with Irvine, or (iv) annexation is not completed by , 1998, unless extended by mutual consent of the parties. 4 DEVELOPMENT OF THE PROPERTY UPON ANNEXATION AND ADOPTION OF THE DEVELOPMENT PLAN. 4.1 Rights to Develop. Subject to the terms of this Agreement, following annexation of the Property OWNER shall have a vested right to develop the Property in accordance with, and to the extent of, the Development Plan. Pending annexation to CITY, OWNER shall have the right to seek approvals from Irvine for the Development of the Property, and to develop the Property, consistent with the Development Plan. 4.2 Effect of Agreement on Land Use Regulations. Except as otherwise provided under the terms of this Agreement, the rules, regulations and official policies governing permitted uses of the Property, the density and intensity of use of the Property, the maximum height and size of proposed buildings, and the design, improvement and construction standards and specifications applicable to Development of the Property, shall be those contained in the Development Plan and those Land Use Regulations not inconsistent with the Development Plan. 4.3 Subsequent Development Approvals. CITY shall accept for expeditious processing, review and action all applications for Subsequent Development Approvals, and such applications shall be processed in the normal manner for processing such matters, for all or a portion of the Property at OWNER's option. The CITY further agrees that, unless otherwise requested by OWNER or as authorized by this Agreement, it shall not amend or rescind any Subsequent Development Approvals respecting the Property after such approvals have been granted by the CITY, and that pursuant to Section 66452.6 (a) of the California Government Code, any tentative subdivision map approved for the Property, or any portion thereof, shall also be extended for a period equal to the Term of this Agreement. 4.4 Timing of Development. The parties acknowledge that OWNER cannot at this time predict when or the rate at which phases of the Property will be developed. Such decisions depend upon numerous factors which are not within the control of OWNER, such as market orientation and demand, interest rates, absorption, completion and other similar factors. Since the California Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal. 3d 465, that the failure of the parties therein to provide for the timing of BONITA CANYON AGREEMENT 10/17/97 10 Development resulted in a later adopted initiative restricting the timing of Development to prevail over such parties' agreement, it is the parties' intent to cure that deficiency by acknowledging and providing that OWNER shall have the right to develop the Property in such order and at such rate and at such times as OWNER deems appropriate within the exercise of its subjective business judgment. Nothing in this section is intended to alter the standard durational limits of any applicable permits issued to OWNER. 4.5 Changes and Amendments. The parties acknowledge that Development of the Project will likely require Subsequent Development Approvals, and that in connection therewith OWNER may determine that changes are appropriate and desirable in the existing Development Approvals or Development Plan. In the event OWNER finds that such a change is appropriate or desirable, OWNER may apply in writing for an amendment to prior Development Approvals or the Development Plan to effectuate such change, and CITY shall process and act on such application notwithstanding anything in this Agreement that may be to the contrary. CITY shall have no obligation to grant any such application by OWNER that modifies the overall intensity or density of Development, or otherwise is a substantial modification of the Development Plan having significant adverse environmental impacts. If approved in a form to which OWNER has consented in writing, any such change in the Development Approvals or Development Plan shall be incorporated herein as an addendum, and may be further changed from time to time as provided in this Section. Any change in the Development Approvals or Development Plan made in accordance with the procedures required by the Land Use Regulations and with the written consent of the OWNER shall be conclusively deemed to be consistent with this Agreement, without any further need for any amendment to this Agreement or any of its Exhibits. 4.6 Reservation of Authority. 4.6.1 Limitations, Reservations and Exceptions. Notwithstanding any other provision of this Agreement, except as may be specifically provided in Exhibit "D," the following Subsequent Land Use Regulations shall apply to the Development of the Property: (a) Processing fees and charges of every kind and nature imposed by CITY to cover the estimated actual costs to CITY of processing applications for Development Approvals or for monitoring compliance with any Development Approvals granted or issued. (b) Procedural regulations not inconsistent with this Agreement relating to hearing bodies, petitions, applications, notices, findings, BONITA CANYON AGREEMENT 10/17/97 11 records,.hearing, reports, recommendations, appeals and any other matter of procedure. (c) Changes adopted by the International Conference of Building Officials as part of the then most current versions of the Uniform Building Code, Uniform Fire Code, Uniform Plumbing Code, Uniform Mechanical Code, or National Electrical Code, and also adopted by CITY as Subsequent Land Use Regulations. (d) Regulations which may be in conflict with the Development Plan but which are reasonably necessary to protect the public health and safety. To the extent possible, any such regulations shall be applied and construed consistent with Section 4.6.4 below so as to provide OWNER with the rights and assurances provided under this Agreement. (e) Regulations which are not in conflict with the Development Plan and this Agreement. Any regulation, whether adopted by initiative or otherwise, limiting the rate or timing of Development of the Property, or attempting to assess any additional fees or taxes on Development of the Property, or imposing architectural or landscaping requirements or reviews, shall be deemed to conflict with the Development Plan and this Agreement and shall therefore not be applicable to Development of the Property. (f) Regulations which are in conflict with the Development Plan provided OWNER has given written consent to the application of such regulations to Development of Property. (g) Federal and State laws and regulations which CITY is required to enforce as against the Property or the Development of the Property. 4.6.2 Future Discretion of CITY. This Agreement shall not prevent CITY, in acting on Subsequent Development Approvals, from applying Subsequent Land Use Regulations which do not conflict with the Development Plan, nor shall this Agreement prevent CITY from denying or conditionally approving any Subsequent Development Approval on the basis of the existing Land Use Regulations or any Subsequent Land Use Regulation not in conflict with the Development Plan. 4.6.3 Modification or Suspension by State or Federal Law. In the event that State or Federal laws or regulations, enacted after the Effective Date of this Agreement, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall BONITA CANYON AGREEMENT 10/17/97 12 be modified or suspended as may be necessary to comply with such State or Federal laws or regulations, and this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provision impractical to enforce. 4.6.4 Intent. The CITY acknowledges that OWNER has reasonably entered into this Agreement and will proceed with the Project on the assumption that CITY has adequately provided for the public health, safety and welfare through the Land Use Regulations in effect as of the annexation of the Property to CITY. In the event that any future, unforeseen public health or safety emergency arises, CITY agrees that it shall attempt to address such emergency in such a way as not to impact Development of the Property in accordance with the Development Plan, and if that is not possible, to select that option for addressing the emergency which has the least adverse impact on Development of the Property in accordance with the Development Plan. CITY specifically also agrees that it will not adopt any Development moratorium applicable to the Property except as a last resort response to such an emergency, and then shall maintain any such moratorium with respect to the Property only for so long as required for the CITY to address the emergency in such a way as to permit the Project to be completed according to OWNER's timetable. 4.7 Regulation by Other Public Agencies. It is acknowledged by the parties that other public agencies not subject to control by CITY possess authority to regulate aspects of the Development of the Property, and this Agreement does not limit the authority of such other public agencies. 4.8 Vesting Tentative Maps. If any tentative or final subdivision map, or tentative or final parcel map, heretofore or hereafter approved in connection with Development of the Property, is a vesting map under the Subdivision Map Act (Government Code Section 66410, et sue.), and if this Agreement is determined by a final judgment to be invalid or unenforceable insofar as it grants a vested right to develop to OWNER, then and to that extent the rights and protection afforded OWNER under the laws and ordinances applicable to vesting maps shall supersede the provisions of this Agreement. Except as set forth immediately above, Development of the Property shall occur only as provided in this Agreement, and the provisions in this Agreement shall be controlling over any conflicting provision of law or ordinance concerning vesting maps. 5 FINANCING OF PUBLIC IMPROVEMENTS FOLLOWING ANNEXATION. BONITA CANYON AGREEMENT 10/17/97 13 5.1 Formation of Financing Districts. If so requested by OWNER, CITY will cooperate in the formation of any special assessment district, community facilities district or alternate financing mechanism ( "CFD ") to pay for the construction, acquisition, and/or maintenance and operation of public and/or quasi- public infrastructure, lighting, landscape, or any other public facilities required as part of the Development Approvals; provided, however, CITY shall have no obligation to authorize or to cause any such CFD to issue debt or sell bonds prior to the completion of the annexation of the Property to CITY. In the event that such a CFD is formed and sells bonds for those purposes, OWNER may be reimbursed from such bonds to the extent that OWNER has spent funds or dedicated land for the establishment of such facilities and creation of the CFD. While it is acknowledged that this Agreement cannot require CITY or the City Council to form any such CFD or to issue and sell bonds, CITY represents that it can, and does hereby, agree that it shall not refuse OWNER's request to form such a CFD and to issue and sell bonds following completion of annexation of the Property to CITY, except for good and reasonable cause. 5.2 OWNER's Right to Construct Facilities. It is understood and agreed that, subject to CITY review and approval of plans and specifications, the OWNER may elect, and reserves the right, to construct, or cause the construction of, any public or quasi- public facility for which the CITY intends to collect a fee, and to dedicate the completed facility to the CITY, in lieu of payment of the fee. Additionally, subject to CITY review and approval of plans and specifications, OWNER may elect, and reserves the right, to construct or cause the construction of any public or quasi- public facility for which the CITY intends to form a CFD, in which case the CFD shall be formed for purposes of acquiring rather than constructing such public facilities, subject to the provisions of Section 5.1 above. 5.3 Provision of Real Property Interests by CITY. In any instance where OWNER is required to construct any public improvement on land not owned by OWNER, CITY shall first have acquired the necessary real property interests to allow OWNER to construct such public improvements. Costs associated with such acquisition or condemnation proceedings, if any, shall be OWNER's responsibility, and may be included in the district on a fair share basis. 5.4 Joint Powers Agreement With Newport Mesa Unified School District/ Acquisition of Land For Parks/Schools. CITY agrees to cooperate with the Newport Mesa Unified School District ( "NMUSD ") to form a joint powers authority for the formation of a CFD for the purposes, among other things, of acquiring all of that land in the Property owned by OWNER southerly of Bonita Canyon Road and zoned for residential development, as well as that area known as Freeway Reservation North. The land south of Bonita Canyon Road between Prairie Road and Harbor View is to be acquired for school and/or park purposes, and the remainder for park and open space purposes. The land to be acquired EONITA CANYON AGREEMENT 10/17/97 14 pursuant to the joint powers authority and CFD is to be acquired at fair market value, appraised for residential purposes consistent with the zoning for the land designated for acquisition. OWNER agrees to cooperate in the formation of the CFD and the sale of such land for school and/or park purposes. 6 REVIEW FOR COMPLIANCE FOLLOWING ANNEXATION. 6.1 Periodic Review. Following annexation of all or any portion of the Property, the City Council shall review this Agreement annually, on or before the anniversary of the Effective Date, in order to ascertain the good faith compliance by OWNER with the terms of the Agreement. As part of that review, OWNER shall submit an annual monitoring review statement describing its actions in compliance with this Agreement, in a form acceptable to the City Manager, within 30 days after written notice from the City Manager requesting that statement. The statement shall be accompanied by an annual review and administration fee sufficient to defray the estimated costs of review and administration of the Agreement during the succeeding year. The amount of the annual review and administration fee shall be set annually by resolution of the City Council. 6.2 Special Review. The City Council may order a special review of compliance with this Agreement at any time at CITY's sole cost. OWNER shall cooperate with the CITY in the conduct of such special reviews. 6.3 Procedure. In connection with any periodic or special review, each party shall have a reasonable opportunity to assert matters which it believes have not been undertaken in accordance with the Agreement, to explain the basis for such assertion, and to receive from the other party a justification of its position on such matters. If on the basis of the parties' review of any terms of the Agreement, either party concludes that the other party has not complied in good faith with the terms of the Agreement, then such party may issue a written "Notice of Non - Compliance" specifying the grounds therefor and all facts demonstrating such non - compliance. The party receiving a Notice of Non - Compliance shall have thirty (30) days to respond in writing to said Notice. If the response to the Notice of Non - Compliance has not been received in the offices of the party alleging the default within the prescribed time period, the Notice of Non - Compliance shall be conclusively presumed to be valid. If a Notice of Non - Compliance is contested, the parties shall have up to sixty (60) days to arrive at a mutually acceptable resolution of the matter(s) occasioning the Notice. In the event that the parties are not able to arrive at a mutually acceptable resolution of the matter(s) by the end of the sixty (60) day period, the party alleging the non - compliance may thereupon pursue the remedies provided in Section 7. BONITA CANYON AGREEMENT 10/17/97 15 6.4 Certificate of Agreement Compliance. If, at the conclusion of a periodic or special review, OWNER is found to be in compliance with this Agreement, CITY shall, upon request by OWNER, issue a Certificate of Agreement Compliance ( "Certificate ") to OWNER stating that after the most recent Periodic or Special Review and based upon the information known or made known to the City Manager and City Council that (1) this Agreement remains in effect and (2) OWNER is not in default. The Certificate shall be in recordable form, shall contain information necessary to communicate constructive record notice of the finding of compliance, shall state whether the Certificate is issued after a Periodic or Special Review and shall state the anticipated date of commencement of the next Periodic Review. OWNER may record the Certificate with the County Recorder. Additionally, OWNER may at any time request from the CITY a Certificate stating, in addition to the foregoing, which obligations under this Agreement have been fully satisfied with respect to the Property, or any lot or parcel within the Property. 7 DEFAULT AND REMEDIES. 7.1 Specific Performance Available. The parties acknowledge that money damages and remedies at law generally are inadequate and specific performance is a particularly appropriate remedy for the enforcement of this Agreement and should be available to OWNER and CITY because due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, OWNER and/or CITY may be foreclosed from other choices it may have had to utilize or condition the Property or portions hereof. OWNER and CITY have invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, such that it would be extremely difficult to determine the sum of money which would adequately compensate OWNER and/or CITY for such efforts. Except as provided in the Section 7.2 below, neither OWNER nor CITY shall not be entitled to any money damages, including attorney fees, from the other party by reason of any default under this Agreement. 7.2 Restitution of Improper Development Fees. In the event any Development fees or taxes are imposed on Development of the Property other than those authorized pursuant to this Agreement, OWNER shall be entitled to recover from CITY restitution of all such improperly assessed fees or taxes, together with interest thereon at the maximum allowable non - usurious rate from the date such sums were paid to CITY to the date of restitution 7.3 Termination of Agreement. BONITA CANYON AGREEMENT 10/17/97 16 7.3.1 Termination of Agreement for Default of OWNER. CITY in its discretion may terminate this Agreement for any failure of OWNER to perform any material duty or obligation of OWNER hereunder or to comply in good faith with the terms of this Agreement (hereinafter referred to as "default'); provided, however, CITY may terminate this Agreement pursuant to this Section only after following the procedure set forth in Section 6.3 and thereafter providing written notice to OWNER of the default setting forth the nature of the default and the actions, if any, required by OWNER to cure such default and, where the default can be cured, OWNER has failed to take such actions and cure such default within 30 days after the effective date of such notice or, in the event that such default cannot be cured within such 30 day period but can be cured within a longer time, as reasonably determined by the CITY in its sole discretion, OWNER has failed to commence the actions necessary to cure such default within such 30 day period and to diligently proceed to complete such actions and cure such default. 7.3.2 Termination of Agreement for Default of CITY. OWNER in its discretion may terminate this Agreement by written notice to CITY after the default by CITY in the performance of a material term of this Agreement and only after following the procedure set forth in Section 6.3 and thereafter providing written notice by OWNER thereof to CITY and, where the default can be cured, the failure of CITY to cure such default within 30 days after the effective date of such notice or, in the event that such default cannot be cured within such 30 day period, the failure of CITY to commence to cure such default within such 30 day period and to diligently proceed to complete such actions and to cure such default. 7.3.3 Rights and Duties Following Termination. Upon the termination of this Agreement, no party shall have any further right or obligation hereunder except with respect to (i) any obligations to have been performed prior to said termination, or (ii) any default in the performance of the provisions of this Agreement which has occurred prior to said termination. 7.4 OWNER's Right To Terminate Upon Specified Events. Notwithstanding any other provisions of this Agreement to the contrary, OWNER retains the right to terminate this Agreement upon thirty (30) days written notice to CITY in the event that OWNER reasonably determines that continued Development of the Project consistent with the Development Plan has become economically infeasible due to changed market conditions, increased Development costs, burdens imposed by the CITY or other governmental entity as conditions to future discretionary approvals of the Project consistent with this BONITA CANYON AGREEMENT 10/17/97 17 Agreement, the CITY's exercise of its Reserved Authority in a way deemed by OWNER to be inconsistent with the Development Plan, or similar factors. In the event OWNER exercises this right, it shall nonetheless be responsible for mitigation of impacts to CITY resulting from Development that may have occurred on the Property prior to the notice of termination, on a fair share or nexus basis, and within the thirty (30) day notice period CITY and OWNER shall meet to identify any such mitigation obligation that may remain to be satisfied. If the parties are in disagreement at the end of the thirty (30) day notice period, the Agreement shall be terminated as to all matters except for the remaining mitigation obligation in dispute, and with respect thereto the parties shall have the remedies provided in Section 7. 8 THIRD PARTY LITIGATION. CITY shall promptly notify OWNER of any claim, action or proceeding filed and served against CITY to challenge, set aside, void, annul, limit or restrict the approval and continued implementation and enforcement of this Agreement. CITY and OWNER agree to cooperate in the defense of such action(s). 9 MORTGAGEE PROTECTION. The parties hereto agree that this Agreement shall not prevent or limit OWNER, in any manner, at OWNER's sole discretion, from encumbering the Property or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Property. CITY acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with OWNER and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. Subject to compliance with applicable laws, CITY will not unreasonably withhold its consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement. Any Mortgagee of the Property shall be entitled to the following rights and privileges: (a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Property made in good faith and for value, unless otherwise required by law. (b) The Mortgagee of any mortgage or deed of trust encumbering the Property, or any part thereof, which Mortgagee, has submitted a request in writing to the CITY in the manner specified herein for giving notices, shall be entitled to receive written notification from CITY of any default by OWNER in the performance of OWNER's obligations under this Agreement. BONITA CANYON AGREEMENT 10117/97 18 (c) If CITY timely receives a request from a Mortgagee requesting a copy of any notice of default given to OWNER under the terms of this Agreement, CITY shall provide a copy of that notice to the Mortgagee within ten (10) days of sending the notice of default to OWNER. The mortgagee shall have the right, but not the obligation, to cure the default during the remaining cure period allowed such party under this Agreement. (d) Any Mortgagee who comes into possession of the Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Property, or part thereof, subject to the terms of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, no Mortgagee shall have an obligation or duty under this Agreement to perform any of OWNER's obligations or other affirmative covenants of OWNER hereunder, or to guarantee such performance; except that (i) to the extent that any covenant to be performed by OWNER is a condition precedent to the performance of a covenant by CITY, the performance thereof shall continue to be a condition precedent to CITY's performance hereunder, and (ii) in the event any Mortgagee seeks to develop or use any portion of the Property acquired by such Mortgagee by foreclosure, deed of trust, or deed in lieu of foreclosure, such Mortgagee shall strictly comply with all of the terms, conditions and requirements of this Agreement and the Development Plan applicable to the Property or such part thereof so acquired by the Mortgagee. 10 MISCELLANEOUS PROVISIONS. 10.1 Term of Agreement. In the event that, despite its best efforts, the CITY is unable to complete the annexation of the Property on or before 1998, then this Agreement shall terminate and be of no further force and effect as to any portions of the Property then not annexed to the CITY, except that the running of this time period shall be tolled during the pendency of any litigation that has as the relief sought or as its practical effect the prevention of the annexation proceedings from being successfully completed, but in no event longer than five years. Following completion of the annexation of the Property, or any portion thereof, to the City within the preceding time periods, this Agreement shall continue in full force and effect with respect to such annexed land for a period of twenty (20) years from the effective date of that annexation. 10.2 Recordation of Agreement. This Agreement shall be recorded with the County Recorder by the City Clerk upon annexation of the Property to CITY within the period required by Section 65868.5 of the Government Code. Similarly, amendments approved by the parties, and any cancellation, shall also be recorded. BONITA CANYON AGREEMENT 10/17/97 19 10.3 Entire Agreement. This Agreement sets forth and contains the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 10.4 Severability. Except as provided in section 4.6.3, if any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, then this Agreement shall terminate in its entirety, unless the parties otherwise agree in writing, which agreement shall not be unreasonably withheld. 10.5 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party or in favor of CITY shall not be employed in interpreting this Agreement, all parties having been represented by counsel in the negotiation and preparation hereof. 10.6 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 10.7 Singular and Plural. As used herein, the singular of any word includes the plural. 10.8 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. 10.9 Waiver. Failure of a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter. 10.10 No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit for the parties and their successors and assigns. No other person shall have any right of action based upon any provision of this Agreement. BONITA CANYON AGREEMENT 10/17/97 20 10.11 Force Majeure. Neither party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the party's control (including the party's employment force), government regulations, court actions (such as restraining orders or injunctions), or other causes beyond the party's control. If any such events shall occur, the term of this Agreement and the time for performance shall be extended for the duration of each such event, provided that the term of this Agreement shall not be extended under any circumstances for more than five (5) years. 10.12 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the parry benefited thereby of the covenants to be performed hereunder by such benefited party. 10.13 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to Development of the Property: (a) is for the benefit of and is a burden upon the Property; (b) runs with the Property and each portion thereof; and (c) is binding upon each party and each successor in interest during ownership of the Property or any portion thereof. 10.14 Counterparts. This Agreement may be executed by the parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the parties had executed the same instrument. 10.15 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by any party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, and the parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 10.16 Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the Development of the Project is a private Development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No . partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between CITY and OWNER is that of a BONITA CANYON AGREEMENT 10/17/97 21 government entity regulating the Development of private property and the owner of such property. 10.17 Further Actions and Instruments. Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreement. Upon the request of either party at any time, the other party shall promptly execute, with acknowledgment or affidavit if reasonably required, and file or record such required instruments and writings and take any actions as may be reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions contemplated by this Agreement. Subject to Section 3 above, OWNER will cooperate with the CITY in the processing of the annexation of the Project through the Local Agency Formation Commission including advocating the application of the existing AB 8 Master Property Tax Transfer Agreement. OWNER acknowledges the importance of maintaining the fiscal benefits of the Project assuming that the current method of allocating sales tax revenues (i.e., point of sale) is utilized. OWNER will consult with the CITY regarding legislative proposals to adjust this procedure with the goal of supporting CITY efforts to maintain the fiscal benefits of the Project through the legislative process. 10.18 Eminent Domain. No provision of this Agreement shall be construed to limit or restrict the exercise by CITY of its power of eminent domain. 10.19 Amendments in Writing /Cooperation. This Agreement maybe amended only by written consent of both parties specifically approving the amendment and in accordance with the Government Code provisions for the amendment of Development Agreements. The parties shall cooperate in good faith with respect to any amendment proposed in order to clarify the intent and application of this Agreement, and shall treat any such proposal on its own merits, and not as a basis for the introduction of unrelated matters. 10.20 Authority to Execute. The person or persons executing this Agreement on behalf of OWNER warrants and represents that he /they have the authority to execute this Agreement on behalf of his /their corporation, partnership or business entity and warrants and represents that he /they has/have the authority to bind OWNER to the performance of its obligations hereunder. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first set forth above. CITY: CITY OF NEWPORT BEACH IM BONITA CANYON AGREEMENT 10/17/97 22 ATTEST: By City Clerk APPROVED AS TO FORM: By City Attorney (SEAL) Mayor OWNER: THE IRVINE COMPANY Sm Title By Title OWNER: IRVINE COMMUNITY DEVELOPMENT COMPANY By Title By Title [ALL SIGNATURES SHALL BE NOTARIZED. EXECUTION ON BEHALF OF ANY CORPORATION SHALL BE BY TWO CORPORATE OFFICERS.] BONITA CANYON AGREEMENT 10117/97 23