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HomeMy WebLinkAboutDCO Pacific City - 2015-05-18Dept. ID CA 15-011 Page 1 of 2 Meeting Date: 5/18/2015 op�c—t ;Z — 0 V WREM iU d*JZW1 I I W-11!1 I ej MEETING DATE: 5/18/2015 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Michael E. Gates, City Attorney PREPARED BY: Michael E. Gates, City Attorney SUBJECT: Approve and authorize execution of an Environmental Release and Indemnity Agreement between DCO Pacific City and the City of Huntington Beach relating to property located between Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No 024-271-06) Statement of Issue: DCO Pacific City LLC (Owner) is the owner and developer of approximately 17.23 acres of real property bounded by Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No. 024-271-06). This property is being developed as part of the Pacific City Development Project (Project) and the parcel(s) is the residential component of said Project. The Owner submitted to City various technical reports and recommendations relating to mitigation of potential public health and safety concerns relating to the abandoned oil wells on the property as part of the Project. The Owner has agreed to provide the City additional assurances and indemnification regarding the mitigation measures indentified in the technical reports. Financial Impact: None Recommended Action: Approve and authorize the Mayor and City Clerk to execute the "Environmental Release and Indemnity Agreement" between DCO Pacific City and the City of Huntington Beach relating to property located between Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No 024-271-06) Alternative Action(s): Do not approve the "Environmental Release and Indemnity Agreement" between DCO Pacific City and the City of Huntington Beach relating to property located between Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No 024-271-06) and direct staff accordingly. Analysis: The City (including the Fire Department (HBFD)) has completed its review of environmental issues pertaining to the oil wells for the property and Project, and determined that the wells on the property were abandoned to a previous Division of Oil, Gas and Geothermal Resources standard and the abandonment and security of the wells were found to be acceptable by the HBFD. Owner desires to enter into this Agreement to satisfy HBFD requirements relating to the abandoned oil wells on the Property and provide the City with additional indemnification from any risk of litigation regarding the mitigation of the abandoned oil wells. Item 6. - 1 HB -42- Dept. ID CA 15-011 Page 2 of 2 Meeting Date: 5/18/2015 Environmental Status: N/A Strategic Plan Goal: Strengthen economic and financial sustainability Attachment(s): 1. "Environmental Release and Indemnity Agreement" H, -43- Item 6. - 2 ENVIRONMENTAL RELEASE AND INDEAINITY AGREEMENT THIS ENVIRONMENTAL RELEASE AND s��MNIT I' AGREEMENT ("Agreement") is dated for reference purposes only as of. . 2015 (the "Agreement Date"), and is being entered into by and between DCO Pacific City LLC, a Delaware limited liability company ("O%rner"), and the City of Huntington Beach, California, a municipal corporation ("City"). Owner and City are sometimes referred to individually as a "Party" and collectively as the "Parties." RECITALS A. Owner is the owner in fee of the approximately 17.23 acres of real property located in the City of Huntington Beach, California, bounded by Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No. 024-271-06, referred to herein as the "Property'). B. Owner plans to develop a 516 unit multi -family residential apartment project and related parking, landscape, hadscape, and incidental improvements on the Property pursuant to various land use and building approvals, entitlements, and permits issued or to be issued by City and other governmental agencies with jurisdiction (collectively, as the same currently exists and as it may be amended from time to time, the "Project"). C. There are nineteen (19) previously abandoned oil wells on the Property. D. Prior to the Agreement Date, Owner submitted to City various technical reports and recommendations relating to mitigation of potential public health and safety concerns relating to the abandoned oil wells, including without limitation the following (collectively, the "Technical Reports"): (1) the "Pacific City Environmental Closure Letter" and documents referred to therein provided by Owner to City dated November 5, 2013, and collectively referred to in the HBFD Memorandum referred to in Recital E below as the "Binder"); (2) December 10, 2014, letter from Terra -Petra to Robert J. McCullough (Owner representative, Brian G. Lake (Owner consultant), and Ken Domer (Assistant City Manager); (3) November 17, 2014, Well Research Report: Production Perforation Intervals, Critical Cement Plugs, Well -Head "Sniff' Testing and P&A Compliance Comments for 10 Wells in the Chevron USA "Atlanta Avenue Community" Fee Adjacent Areas Situated Under Proposed Man -Made Structures prepared by Terra -Petra.; (4) October 6, 2013, Well Research Report: Production Perforation Intervals, Critical Cement Plugs, Well -Head "Sniff' Testing and P&A Compliance Comments for 19 Oil Wells in the Chevron USA "Atlanta Avenue Community" Fee and Adjacent Areas Proposed for Residential Development prepared by Terra -Petra; (5) October 30, 2013, Well Research and Testing Report: P&A Compliance and Fugitive Gas Emissions prepared by Terra. -Petra; (6) December 12, 2014, Pacific City Residential Pacific Coast Highway, Huntington Beach, CA-92648 Methane Gas Mitigation System (50% Construction Document) prepared by Terra -Petra; and (7) December 12, 2014, letter from Rich Manuel Consulting to Huntington Beach Fire Department. E. City's Fire Department has the responsibility and authority on behalf of City to administer and enforce City regulations and requirements with respect to the Project's compliance with applicable federal, state, regional, and local laws, statutes, ordinances, regulations, and official policies relating to the abandoned the oil wells on the Property, and, the standards for and requirements solely based on land use decisions relating thereto, and mitigation of potential public health and safety concerns relating to the previously abandoned oil wells, including, as applicable, measures such as, but not limited to, the installation of methane barriers, testing, monitoring, installation and maintenance of vents/blowers, alarms, and the like (collectively, "Oil Well Abandonment Regulations"). Prior to the Agreement Date, City's Fire Department reviewed Owner's Technical Reports and issued its January 26, 2015, Memorandum entitled "Project Implementation Code Requirements" for the Property and Project ("HBFD Memorandum"). With respect to the abandoned oil wells located on the Property, the HBFD Memorandum noted at pp. 2 and 4 that "[t]he Environmental issues pertaining to the oil wells for this project are still under review by the HBFD. . ." but the HBFD Memorandum did concur with Owner's recommendations for well venting and methane mitigation systems and for provision of a methane mitigation system complying with City Specification 429 (see conditions of approval 5 and 6 at pp. 3-4). F. Subsequent to issuance of the HBFD Memorandum and prior to the Agreement Date, City's Fire Department completed its review of Environmental issues pertaining to the oil wells for the Property and Project, it determined that the wells were abandoned to a previous Division of Oil, Gas and Geothermal Resources (DOGGR:) standard and were found to be acceptable by the HBFD in 2005. However, pursuant to California Code of Regulations, Title 14, Division 2, Chapter 4, Subchapter 4, Article 3, section1931.1. Rework/Supplementary Notice "If there is any change in the original Notice of Intention, or if the operator plans to deepen, re -drill, plug, or perform any operation that will permanently alter the well casing; a Rework/Supplementary Notice must be Bled with the Division (DOGGR). Based on the results of the DOGGR evaluation of the cutting of well casings proposed by the Owner, HBFD will review the new oil well work proposed by Owner solely from a land use standpoint and will require appropriate mitigation measures such as, but not limited to, the installation of methane barriers, well gas testing, methane monitoring, installation and maintenance of methane vents/blowers and alarms. The final HBFD-approved mitigation measures are collectively referred to herein as the "Owner's Oil Well Mitigation Obligations." G. Owner desires to enter into this Agreement to satisfy the HBFD requirements relating to the abandoned oil wells on the Property, as referred to in Recital 1~ . COVENANTS Based upon the foregoing Recitals, which are incorporated into this Agreement by reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows: 1. Release. Owner, for itself and all of its members, officers, employees, and agents, hereby frilly releases and discharges City and all City officials, employees, and agents (collectively, the "City Parties") from any and all claims, obligations, and causes of action, of any kind or nature whatsoever, known or unknown, for personal injury or death, property damage, economic loss, and fines and penalties (collectively, "Claims") relating directly or indirectly to the previously abandoned oil wells on the Property, including without limitation any costs and expenses incurred by Owner to perform the Owner's Oil Well Mitigation Obligations and any Claims arising out of Owner's actual or alleged failure to comply with the Owner's Oil Well Mitigation Obligations and/or any applicable Oil Well Abandonment Regulations. In furtherance of the release described above, Owner expressly waives the benefit of Section 1542 of the California Civil Code, which section provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 2. Indemnity. Owner shall indemnify, defend, and hold harmless the City Parties from and against any third party Claims which may be brought against any of the City Parties in any administrative or judicial proceeding relating directly or indirectly to any previously abandoned oil wells on the Property, including without limitation any such Claims arising out of the actual or alleged failure to perform any of the Oil Well Mitigation Obligations or the actual or alleged failure to comply with any applicable Oil Well Abandonment Regulations, This Indemnity is comprehensive. Not by way of limitation of the foregoing, this Indemnity is intended to cover and include Claims made by any property owners, occupants, and invitees of properties located within 500 feet of the exterior boundaries of the Property against any of the City Parties arising directly or indirectly to the previously abandoned oil wells on the Property, including any such Claims for alleged property losses and/or personal injuries involving exposure to minerals, gases, toxins, leaks, unstable ground, or any other condition in any way created by the previously abandoned oil wells on and under the Property. 3. Indemnity Procedure. (a) If a Claim.is threatened or filed against City that is within the scope of Owner's indemnity obligation set forth in Section 2 of this Agreement, City shall promptly notify Owner in writing, tender defense of the Claim against City (or the applicable City Party(ies)) to Owner, and provide a copy of all records pertaining to the Claim to Owner, and thereafter City shall cooperate with Owner in the defense of said Claim, including without limitation promptly,providing Owner access to City witnesses and copies of City records relevant to the defense of the Claim upon Owner's written request. If City fails to perform said obligations, Owner shall have no obligation to indemnify City for City costs and expenses incurred during the time that City is in default of its obligations hereunder. Upon City's notification of Owner of the Claim, as provided in the preceding sentence, Owner shall assume on behalf of City (or the applicable City Party(ies)) and conduct with due diligence and in good faith the investigation and defense of the Claim with counsel reasonably satisfactory to City; provided, however, that City additionally shall have the right to have the applicable City Party(ies) represented by advisory counsel of City's own selection at City's own expense. (b) If any Claim arises that is within the scope of Owner's indemnity obligation set forth in Section 2 of this Agreement and Owner fails to promptly assume or thereafter provide the defense of a City Party or Parties, the City shall have the right to take reasonable steps to mitigate its damages, including retention of counsel of City's choosing and settlement or contesting of the Claim, and thereafter Owner shall be responsible to pay or reimburse City's costs incurred, including without limitation attorney fees and collection costs incurred by City in seeking payment/reimbursement from Owner; provided, however, that City shall not have the right to settle a Claim that requires Owner to perform any obligation other than the payment of money without Owner's prior written consent, which consent Owner may withhold in its sole and absolute discretion. (c) Owner shall have the right to settle or resolve any third party Claims within the scope of its indemnity obligation set forth in Section 2 of this Agreement; provided, however, that Owner shall not have the right to modify or amend any of the Owner's Oil Well Mitigation Obligations in a manner that would require City approval in the first instance without obtaining City approval thereof, which approval City shall not unreasonably withhold, condition, or delay. 4. No City Representation or Warrantv Re Satisfaction of Oil Well Abandonment Regulations. Nothing in this Agreement is intended or shall be deemed to constitute a representation or warranty by City to Owner that Owner's performance of the Oil Well Mitigation Obligations referred to herein will comply with all applicable Oil Well Abandonment Regulations. 5. Successors and Assigns; Limited Class of Third Party Beneficiaries, This Agreement shall be binding upon Owner and its successors and assignees and shall inure to the benefit of and shall be enforceable by each of the City Parties and their respective successors and assignees. In this regard, the City Parties other than City and their respective successors and assignees are intended third party beneficiaries of Owner's release and indemnity obligations set forth herein but there are no other intended third party beneficiaries hereunder. 6. Notices. Any notice, demand, or request required under this Agreement shall be given in writing at the address set forth below by personal service; facsimile: overnight courier, or registered or certified, first class mail, return receipt requested. If to Owner DCO Pacific City LLC c/o UDR, Inc. 7 Harcourt Street, 2nd Floor Boston, MA 02116 Attn: Mr. Robert T. McCullough Vice President with a copy to: DCO Pacific City LLC c/o UDR, Inc. 1745 Shea Center Drive, Suite 200 Highlands Ranch, CO 80129 Attn: Legal Department Vice President If to Citv: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: William Reardon Fire Division Chief with a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Michael Gates City Attorney A Party may change its address for receipt of notices by delivery of notice to the other Party given in the same manner as required above. Any notice, demand, or request shall be deemed received as follows; (a) if sent by personal service, at the time such personal service is effected; (b) if sent by facsimile, upon the sender's receipt of a confirmation report indicating receipt by the recipient's fax machine; (c) if sent by overnight courier, on the business day immediately following deposit with the overnight courier; and (d) if sent by registered or certified mail, 3 business days following deposit in the mail. 7. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same agreement. Signatures to this Agreement may be transmitted by facsimile, including PDF, and signatures so transmitted shall be deemed to be originals for all purposes. 8. Gover ing Law. This Agreement shall be interpreted and applied in accordance with California law, with regard to conflict of law principles. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Agreement Date first specified herein. DCO PACIFIC CITY LLC, a Delaware limited liability company By: DCO REALTY, INC., a Del awa rporation, it Sol Member F�inte Name: -1 iam D. Licko Title: Secretary & Treasurer CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California INITIATED D APP OVED: Fire Division Chief REA;D APPROVED: Pp .1 00-0.0- V 4j C� • � - City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ www.huntingtonbeachca.gov Office ®f the City Clerk Joan L. Flynn, City Clerk May 20, 2015 DCO Pacific City LLC c/o UDR, Inc. Attn: Legal Department Vice President 1745 Shea Center Drive, Suite 200 Highlands Ranch, CO 80129 To Whom It May Concern: Enclosed for your records is a copy of "Environmental Release and Indemnity Agreement" relating to property located between Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No. 024-271-06). Sincerely, JF:pe Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand City Of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ www.huntingtonbeachca.gov Office of the City Clerk Joan L. Flynn, City Clerk May 20, 2015 DCO Pacific City LLC c/o UDR, Inc. Attn: Mr. Robert J. McCullough, Vice President 7 Harcourt St., 2"d Floor Boston, MA 02116 Dear Mr. McCullough: Enclosed for your records is a copy of "Environmental Release and Indemnity Agreement" relating to property located between Pacific View Avenue, First Street, Atlanta Avenue, and Huntington Street (Assessor's Parcel No. 024-271-06). Sincerely, OF Joan L. Flynn City Clerk JF:pe Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand