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HomeMy WebLinkAboutGOLDEN WEST PARTNERS - 1999-05-17• oftRtld Council/Agency Meeting Held: S Deferred!Continued to: Approved �J Conditionally Approved` ❑ Denied Council Meeting Date: May 17, 1999 f City Clerk's Signature Department ID Number: CA 99-14 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION Z SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS T SUBMITTED BY: RAY SILVER, City Administrator PREPARED BY: IL HUTTON, CITY ATTORNEY ROBERT BEARDSLEY, DIRECTOR OF PUBLIC WORKS �7, SUBJECT: CITY OF HUNTINGTON BEACH v. DAVID DAHL, GOLDEN EAGLE INSURANCE COMPANY, et al. (OCSC Case No. 775726) Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(sj Statement of Issue: Should the City Council enter into several settlement agreements resolving the litigation against the subdivider and his bonding company, regarding the public improvements at the Southwest corner of Ellis and Goldenwest. Fundinq Source: 1. $32,395.64 from David Dahl 2. Golden Eagle insurance Company to install the Ellis Avenue water line. 3. The City to release the remaining Mello -Roos funds (approximately $212,000) to Golden West Partners to complete the remaining Ellis/Golden West improvements. Recommended Action: That the City Council authorize the Mayor to execute and the City Clerk to attest the following agreements: 1. Settlement of Action and Release between the City of Huntington Beach and David Dahl, and Golden Eagle Insurance Company. 2. Settlement of Action and Release between the City of Huntington Beach and William Landis and Golden West Properties. 3. Acquisition Agreement between the City of Huntington Beach and Golden West Partners, LLC. Alternative Action(s): Do not approve the Agreement. •QUEST FOR COUNCIL ACTION MEETING DATE: May 17, 1999 DEPARTMENT ID NUMBER: CA 99-14 Analysis: Defendant David Dahl constructed several residential subdivisions at the south of Ellis Avenue between Edwards and Goldenwest Street. As a condition of development, the City required the widening of Ellis Avenue from Goldenwest to Edwards and installing a twelve -inch water main down the middle of the street. As is typical in land subdivisions, Dahl was not required to improve Ellis Avenue in order to begin his development. Instead, Dahl signed "subdivision agreements" with the City agreeing to install the improvements, and also posted bonds issued by Golden Eagle Insurance Company to insure that the improvements were installed. The Subdivision Agreements required the work to be completed in August 1991. Further, in order to assist Dahl in developing the projects, the City established a Mello -Roos financing district, which mortgaged the underlying land and used the resulting bond proceeds to finance the subdivision improvements. As part of this Mello -Roos transaction, Dahl entered into an "Acquisition Agreement" providing that, although he could draw down upon the bond proceeds to install the subdivision improvements, to the extent that there were inadequate monies to pay for the improvements, then Dahl was personally responsible for installing them. Dahl did not own all the property mortgaged as park of the Mello -Roos district. For example, William Landis agreed to include his land in the district, although it was only in escrow to be sold to Dahl. (Dahl never closed the escrow.) Ultimately, Dahl developed the subdivisions and sold the homes. He also installed all the required subdivision improvements except for completing the final asphalt "lift" for Ellis Avenue and installing the water main. To obtain completion of these improvements, the City filed a lawsuit seeking relief under four basic theories: The City sued David Dahl and his related business entities for breach of the subdivision agreements, specifically for failing to construct the water main and complete Ellis from Saddleback Lane to Edwards. 2. The City sued the bonding company, Golden Eagle Insurance Company, for breach of the bond obligations. These bonds covered the Ellis Avenue improvements. 3. The City sued Dahl for breach of the Acquisition Agreement under the Mello - Roos district. This Agreement required Dahl to improve Ellis and Goldenwest, between Saddleback and Goldenwest. These are improvements that would prepare Landis' property for development. (However, neither Dahl's subdivision agreements nor Golden Eagle's bonds covered these additional improvements.) 99-14DAH -2- 05/13/99 9:15 AM REQUEST FOR COUNCIL ACTION MEETING DATE: May 17, 1999 DEPARTMENT ID NUMBER: CA 99-14 4. The City sued William Landis for a declaratory relief action to determine what obligation the City had to expend the Mello -Roos money as between the Ellis Avenue improvements and those specifically benefiting Landis' property. Until recently, the chief obstacle in obtaining relief in this action was that Golden Eagle Insurance Company was in conservatorship. However, Golden Eagle recently came out of conservatorship, and consequently, the City was then able to negotiate a settlement. Simultaneously, Landis is currently selling his land to Golden West Partners (dba "Heritage Homes"). Golden West has been conditioned to complete all the outstanding improvements to Saddleback Lane, Ellis Avenue and Goldenwest. Though the escrow for the sale has not yet closed, grading work has already begun so it appears certain that the escrow will close. Finally, there still remains over $200,000 in the Mello -Roos trust account that could be used for completing Ellis and for the Landis improvements. On Monday, February 1, 1999, the City Council convened in close session to discuss the settlement of the above -referenced litigation. At that time, the City Council authorized the case to be settled on the following grounds: Golden Eagle to install the Ellis Avenue water line. 2. Golden Eagle pays the City the estimated cost to install the final asphalt "lift" on Ellis Avenue in an amount to be determined by the Assistant City Engineer. This money will be retained in the City's interest -bearing account. The work will be completed in conjunction with PLC completing the north side of Ellis. 3. The City would dismiss the case against Dahl and Golden Eagle, including waiving costs plus attorneys fees. 4. The City releases the remaining Mello -Roos funds (approximately $200,000) to Landis/Heritage Homes and they complete all the remaining Ellis/Goldenwest improvements, in connection with the development of the southeast corner of Ellis and Goldenwest. The attached Settlement Agreements implement these four points. The first Settlement Agreement between the City and David Dahl and Golden Eagle provides that Golden Eagle Insurance Company will install the Ellis Avenue water line. It further provides that Golden Eagle or David Dahl will pay the City the estimated cost to install the final asphalt lift on Ellis Avenue. The City Engineer had determined that this amount is $32,000. A check for this amount has already been received from David Dahl. In exchange, this Settlement Agreement provides that the City would dismiss its case against Dahl and Golden Eagle. 99-14DAH -3- 05/13/99 9:15 AM 9 0 REQUEST FOR COUNCIL ACTION MEETING DATE: May 17, 1999 DEPARTMENT ID NUMBER: CA 99-14 The second Settlement Agreement between the City and William Landis and Golden West Partners provides that the remaining funds in the Mello -Roos trust account will be released to the buyer of the Landis property, Golden West Properties. They will use this money to pay for some of the EIIis/Goldenwest improvements. The remainder of the improvements will be installed persuant to normal conditions of approval for the subdivision. In addition, the Acquisition Agreement between the City and Golden West Partners implements this release of funds. Originally, the City had entered into a virtually identical Acquisition Agreement in connection with the original formation of the Mello -Roos district. That Acquisition Agreement was between the City and David Dahl. This new Acquisition Agreement will replace the prior one, and will be between the City and Golden West Partners. Environmental Status: Exempt Attachment(s): 1 ettlement Agreement between City and David Dahl, Golden Eagle Insurance Co. Settlement Agreement between the City and William Landis, 2. Golden West Partners. Acquisition Agreement between the City and Golden West 3- Partners. Memo from Gail Hutton to Close Session file summarizing 4. City Council Close Session of February 1, 1999 regarding the City v. Dahl/Golden Eagle Insurance Co. 5 1 Copy of Settlement Check from David Dahl's attorney. RCA Author; Scott Field, Deputy City Attorney 99-14DAH -4- 05/13/99 9:15 AM ATTACHMENT 3 Quint & Ttummig LLP 4/21 /99 J 5/5/99 ACQUISITION AGREEMENT by and between the CITY OF HUNTINGTON BEACH and GOLDENWEST PARTNERS, LLC, a California limited liability company Dated as of May 6,1999 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.1990-1 (GOLDENWESTIELLIS AREA) 08003.02: J4349 ACQUISMON AGREEMENT Ci i Y OF HUNTIi\iG T ON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDEI\WEST/ELLIS AREA) THIS AGREEMENT, dated as of May 6, 1999, is by and between the City of Huntington Beach, a municipal corporation and a political subdivision of the State of California (the "City"), for the benefit of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"), and Goldenwest Partners, LLC, a California limited liability company (the "Developer"). WHEREAS, the City Council at the City has established the District pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982, as amended, (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the "Act") to provide financing for, among other things, the public facilities described on Exhibit A attached hereto and by this reference incorporated herein (the "Facilities"); and WHEREAS, the Developer is an owner of land within the District and is developing single-family homes thereon; and WHEREAS, the Facilities are adjacent to said homes and the City will benefit from a common plan of construction of the Facilities and the homes; and WHEREAS, the Developer has expertise in the construction of homes and public facilities of the character of the Facilities; and WHEREAS, the City has determined that it will obtain no advantage from undertaking the construction of the Facilities pursuant to public bid and will realize economic benefit if the Developer constructs the Facilities as provided herein; and WHEREAS, the City has issued bonds for the District (the "Bonds") to finance the Facilities pursuant to the Act; and WHEREAS, the City has entered into a Settlement of Action and Release with William Landis and the Developer, and this Agreement has been entered into in furtherance of the provisions of said agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 1. Rya. Each of the parties hereto represent and warrant, each to the other, that the above recitals are true and correct. 2. The Bonds. The City has issued the Bonds in the initial principal amount of $2,400,000. 3. completion of the Facilities. The Developer reasonably expects to complete the Facilities and request payment therefor hereunder within four (4) months of the date of this Agreement. 4. Refunding- Bond. The City may, in the future, issue bonds to refund the Bonds and/or issue bonds to purchase the Bonds in lieu of the redemption of the Bonds. The Developer shall have no rights to any proceeds of ally such tunas by reason of this .agreement or otherwise, or any right to participate in any way in the structuring of any such refinancing. 5. Use of Bond Procegds. The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the fiscal agent agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement") pursuant to which the Bonds were issued. S218,278.00 is currently on deposit in a separate improvement fund (the "Improvement Fund") under the Fiscal Agent Agreement, which are the sole monies available under this Agreement to pay the cost of the acquisition of the Facilities, as provided below, and such amount shall be used solely to make payments to the Developer of the acquisition prices of Facilities under and pursuant to the terms of this Agreement. a. Plans and S ecific tions: Prevailing Wages. The Developer represents that it has obtained or will obtain approval by all appropriate City departments of the plans and specifications for the Facilities that are to be acquired by the City and that all of such Facilities have been or will be constructed by the Developer in full compliance with the current City standards applicable to the construction of public improvements and that all such Facilities that are purchased by the City with amounts in the Improvement Fund under this Agreement shall be constructed in compliance with any applicable Iaw or regulation with respect to the payment of prevailing wages. The City and the Developer agree that the Facilities are of local, not statewide concern, and that the provisions of the Public Contracts Code shall not apply to the construction of the Facilities. The City and the Developer agree that this Agreement is necessary to assure timely and satisfactory completion of the Facilities and that compliance with the Public Contracts Code with respect to the Facilities would work an incongruity and would not produce an advantage to the City or the District. The Developer agrees to comply with all City or other applicable bonding requirements applicable to construction of the Facilities, and to provide the City Director of Public Works (all references herein to the City Director of Public Works include any official of the City acting in such capacity or any designee of the City Director of Public Works) with copies of any change orders relative to the construction of any Facilities to be acquired by the City and the plans and specifications therefor. The City hereby acknowledges that funds on deposit in the Improvement Fund will be considered the equivalent of a construction bond for a commensurate portion of the Purchase Price (as defined below) of the Facilities to be acquired with such funds. b. Purchase Price. The amount to be paid by the City for the Facilities (hereafter the "Purchase Price" as to each such Facility), shall be determined by the City Director of Public Works and shall not exceed and shall be substantially the cost thereof, including the reasonable cost of appurtenant facilities and of preparing plans and specifications as well as the construction contracts and all costs of construction reasonably determined by the City Director of Public Works to be eligible under the Act to be part of the Purchase Price (said determination to be made consistent with the terms of this Agreement), such as fees and costs incurred in obtaining permits, licenses, rights of way or easements, the costs of change orders, engineering, legal, fiscal and inspection fees constituting a part of the public improvements. The Purchase Price may include a reasonable charge for contract administration by the Developer, not to exceed 4% of the related construction cost. 2 The Developer shall provide any documentation substantiating the cost of the Facilities reasonably requested by the City Director of Public Works or the City Finance Director. There shall be a presumption of reasonableness as to costs incurred under a construction contract entered into as a result of a call for bids by the Developer, provided that no extraordinary limitations or requirements (such as short time frame) are imposed by the Developer on the performance of such contract. C. Inspection and Acceptance. The Facilities to be acquired by the City, when fully completed, shall be accepted in accordance with adopted City policy, and the Purchase Price for each such Facility promptly paid from Bond proceeds if completed substantially in accordance with the approved plans and specifications for such Facilities and pursuant to the requirements of Section 53313.5 of the Act. The City shall accept no liability or responsibility for any such Facility or the maintenance thereof until all work with respect thereto has been completed to the satisfaction of the City Director of Public Works. Any Facilities to be acquired by other public agencies, shall be accepted subject to the relevant public agencies' policies and procedures. The Facilities shall be subject at all reasonable times prior to their acquisition to inspection by the City Director of Public Works, which inspection shall be accomplished in a timely manner. Prior to acceptance of any Facility by the City, the Developer shall provide as -built drawings or other similar plans and specifications of such Facility in the form required under City standards applicable to the construction of public improvements and otherwise by applicable law or regulation, along with evidence satisfactory to the City Director of Public Works that all costs of the Facility have been fully paid by the Developer to the party or parties entitled to be paid for such costs. The Developer shall obtain from any public agency (other than the City) acquiring a Facility a written statement to the effect that such Facility has been accepted by such public agency and all costs with respect thereto have been paid. All warranties, guarantees or other evidence of contingent obligations of third persons with respect to Facilities to be acquired by the City shall be delivered to the City Director of Public Works prior to acceptance thereof. If applicable, all documentation evidencing dedication and/or transfer of ownership of the Facilities shall be delivered to the City prior to the acceptance thereof and payment therefor, as further provided in Section 6e below. d. Payments to Developer. The Developer may request in writing a payment on the Purchase Price of any Facility described in Exhibit A hereto. Such payments shall be made only in the amount determined reasonable by the City Director of Public Works with respect to the Facility to be acquired, as specified in a cost certificate for each Facility or group of related Facilities completed by the City Director of Public Works, and in any event subject to the last paragraph of this Section 6.d. A ten percent retainage shall be held by the City in the Improvement Fund with respect to the cost of any Facility acquired by the City (no such retainage being required with respect to any Facility to be acquired by a public agency other than the City) pending final completion and acceptance of the related Facility and a one-year maintenance period for each such Facility. In lieu of such retainage, the Developer shall be permitted to provide to the City a letter of credit or performance bond in form and substance satisfactory to the City Director of Public Works and the City Finance Director. Any such Facility or portion thereof to be acquired by the City must be completed in accordance with the approved plans and specifications. Any Facility to be accepted by the City must be in such condition that it is ready for use by the City or the public as determined by the City Director of Public Works (said determination to be 3 based on current City standards applicable to the construction of public improvements, wherever relevant). Any claim for a payment to the Developer from the $218,278.00 in the Improvement Fund shall be in a form acceptable to the City and include supporting documentation (including, with respect to any Facility to be acquired by a public agency other than the City, evidence that such agency has so accepted the Facility). The Director of Public Works shall review each claim for payment and inform the Developer, in writing, within 15 business days of receipt by the Director of Public Works of the claim and all supporting documentation, of the denial of any claim for payment in whole or in part, setting forth the reasons for such denial. The Developer shall be entitled to resubmit any claim or portion thereof so denied, if it is able to address the objections to such claim. The City shall make payment within forty-five (45) days of receipt of any claim or portion thereof which is not so denied, subject to the provisions of the last sentence of the next paragraph and the last paragraph of this Section 6.d. If requested by the City Director of Public Works, the Developer shall prepare and execute a Notice of Completion in form acceptable to the City Director of Public Works as to any Facility to be acquired by the City and record such notice with the office of the Recorder of the County of Orange, State of California and cause its contractor to provide general lien releases in form acceptable to the City Director of Public Works for such Facility. The City shall be entitled to delay payment to the Developer for any Facility to be acquired by the City until 35 days after a Notice of Completion with respect thereto has been so filed by the Developer. If any of the Facilities to be acquired hereunder were or are financed, in whole or in part, from the proceeds of any loan secured by a mortgage or deed of trust upon any lands within the District, and in the absence of contrary written instructions by any mortgagee or beneficiary of such mortgage or deed of trust, the Purchase Price shall be paid to the Developer and to such mortgagee or beneficiary, as their interests may appear. The Developer shall provide evidence to the City Director of Public Works as to the source of funds, if any, to pay the costs of construction of the Facilities. Notwithstanding any other provision of this Agreement, the total payments by the City to the Developer under this Agreement (including any retainages described in the second paragraph of this Section 6.d.) shall not, in any event, exceed an aggregate of $218,278. e. Ownership and -Transfer of Facilities. The conveyance of any Facilities to be owned by a public agency other than the City, shall be in accordance with such agency's policies and procedures. The provision or conveyance to the City of any Facilities to be acquired by the City shall take place as follows: 0) . The Developer shall cause the owners of the real property within the District to transfer to the City the appropriate rights, title and interest in and to said land to be acquired. The Developer agrees to cause the owners of the real property within the District to execute and deliver to the City those documents required to complete the transfer of Acceptable Tide (as defined herein) to the land. Acceptable Tide means title to the land delivered free and clear of all liens, encumbrances, assessments, easements or leases, whether any such item is recorded or unrecorded, and taxes, except those matters which are determined by the City Director of Public Works in his reasonable discretion not to interfere with the intended use of the land and therefore are not required to be cleared from the tide. Completion of transfer 4 shall be evidenced by the recordation of an acceptance of the interest(s) in the land by the City Council or their designee. (ii) Imploverneals Constructpda n by Eroperty Owners. If Facilities to be acquired by the City are located on land which is owned by the owners of the real property within the District, then such property owners shall retain the title to said. land and the improvements constructed thereon until the land and improvements are acquired by the City pursuant to the provision of this Agreement.. Until title to the land and the Facilities are acquired by the City, the Developer shall maintain the land and improvements in good and safe condition. Transfer of title to the land and the Facilities thereon shall be in accordance with clause (i) above. (iii) Improvements Constructed on Land Owngd Easement. If Facilities to be acquired by the City are on land on which the City holds fee title or easement rights, the Developer is hereby granted a license to enter said land for purposes related to the construction and maintenance (prior to acquisition by the City hereunder) of the said improvements. Upon completion of construction of any such Facility, the City Director of Public Works shall inspect the improvements m accordance with City standards applicable to the construction of public improvements, and if approved by the City Director of Public Works, the City shall give written notice of its acceptance of the Facility. (iv) Personal Property. If the Developer provides any personal property identified on Exhibit A hereto, transfer by the Developer to the City shall be accomplished by a bill of sale. (v) Funds. If the Developer provides funds for Facilities, the provision of such funds to the City shall be acknowledged with a written receipt from the Finance Director. f. Paymtof Excess Costs. The Developer hereby agrees to pay all costs of the Facilities in excess of the proceeds of the Bonds available therefore in the Improvement Fund established under the Fiscal Agent Agreement. 7. Indemnification and Huld Harmless. The Developer shall defend, hold harmless and indemnify the City and its elective and appointive boards, commissions, its officers, agents and employees and agents, against any liability or claim for damage of any kind allegedly suffered, incurred or threatened, including personal injury, death, property damage, inverse condemnation, or any combination of these, and resulting from any act or omission (negligent or non -negligent) in connection with the matters covered by this Agreement, but save and except those that arise from the sole active negligence or willful misconduct of City. The promise and agreement in this Section are not conditioned or dependent on whether or not the City has prepared, supplied, or reviewed any plan(s) or specification(s) in connection with the Facilities, or has insurance or other indemnification covering any of these matters. 8. Au_dit. The City Director of Public Works and Finance Director shall have the right, during normal business hours and upon the giving of ten days written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing any of the Facilities. 9. Relationship to Public Works. The parties hereto agree that this Agreement is for the acquisition of certain public facilities by the City from the proceeds of the sale of the Bonds deposited in the Improvement Fund and is not, nor is it intended to be, a public works contract. In performing this Agreement, the Developer is an independent contractor and not the agent of the City or the District. Neither the City nor the District shall have responsibility for pay -rent to any contractor or supplier of the Developer. All contracts related to the construction of the Facilities, and all change orders related thereto, shall be submitted to the City Director of Public Works for review and approval as to cost, and quantity and quality of work. Unless the City Director of Public Works submits a written denial of approval of any contract or change order to the Developer (stating the reasons therefor) within 15 business days of receipt by the City Director of Public Works of the contract or change order, the City Director of Public Works shall be deemed to have approved the contract or change order with respect to cost. 10. Attorney's Fees. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees. 11. N!2�ce5. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified mail, postage prepaid, addressed as follows: Developer: Goldenwest Partners, LLC 5620 East Santiago Canyon Road Orange, California 92869 Attention: President with a copy to: Luce, Forward, Hamilton & Scripps, LLP 600 West Broadway, Suite 2600 San Diego, California 92101 Attention: Brian C. Fish, Esq. City or District: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Finance Director with a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Director of Public Works and a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: City Attorney Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. 12. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Tilis Agreement may not be assigned by the Developer without the prior written consent of the City. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. 14. LiMited Liability. Any and all obligations of the City arising out of or related to this Agreement are the special and limited obligations of the City, in any event payable only from the S218,278 on deposit in the Improvement Fund described in Section 5 and the last paragraph of Section 6 hereof. In no event shall the City be obligated to advance any of its own funds hereunder, except pursuant to the provisions of Section 10 hereof. No Councilmember, staff member or agent of the City shall incur any liability hereunder to the Developer or any other patty in their individual capacities by reason of their actions hereunder or execution hereunder. 15. Jyaiver. Failure by 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. 16. Counterl2arta. This Agreement may be executed in counterparts, each of which shall be deemed an original. 17. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto. 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first -above written. ATTEST: �r7`TiyLG�" City Clerk 0,4003.02:f4349 CITY OF HUNTINGTON BEACH, for itself and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Go' est/Ellis Area) By: Mayor APPROVED AS TO FORM: Scott F. Field, Deputy City Attorney City of Huntington Beach Its Attorney of Record GOLDENWEST PARTNERS, LLC BY HERITAGE COMMUNITIES, INC., a California Corporation, Its Managing Mem r By: Mark Jac , President APPROVED AS TO FORM: Its Attoirtw of Luce, Forward, )vs. LLP EXHIBIT A LIST OF FACILITIES TO BE ACQUIRED I. Installation of reclaimed water system on Ellis Avenue, including, a new 12" subpotable water pipeline in Ellis Avenue from the connection at the existing 12" subpotable line to Goldenwest Street to the connection point in Saddleback Lane. 2. Improvements to Ellis Avenue to the centerline to City Standards, including 45 lowering/relocation of any interfering oil/fuel lines and existing utility relocation/modification necessary tc) install said improvements .M 3. Design and construction of signing and striping on Ellis Avenue in accordance with Public Works Standards and Ellis Goldenwest Specific Plan. A-1 Quint & Thirnrtug LLP • • 4/21/99 5/5/99 ACQUISITION AGREEMENT by and between the CITY OF HUNTINGTON BEACH TIT GOLDENWEST PARTNERS, LLC, a California limited liability company Dated as of May 6,1999 CITY OF HUNTINGTON BEACH COMMUNITY FACILITIES DISTRICT NO.1990-1 (GOLDENWEST/ELLIS AREA) 08603.02:J4349 ACQUISITION AGREEMENT CITY OF HUNT 1UNGTON BEACH COMMUNITY FACILITIES DISTRICT NO. 1990-1 (GOLDENWEST/ELLIS AREA) THIS AGREEMENT, dated as of May 6, 1999, is by and between the City of Huntington Beach, a municipal corporation and a political subdivision of the State of California (the "City"), for the benefit of Community Facilities District No. 1990-1 (Goldenwest/Ellis Area) (the "District"), and Goldenwest Partners, LLC, a California limited liability company (the "Developer"). WHEREAS, the City Council at the City has established the District pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982, as amended, (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the "Act") to provide financing for, among other things, the public facilities described on Exhibit A attached hereto and by this reference incorporated herein (the "Facilities"); and WHEREAS, the Developer is an owner of land within the District and is developing single-family homes thereon; and WHEREAS, the Facilities are adjacent to said homes and the City will benefit from a common plan of construction of the Facilities and the homes; and WHEREAS, the Developer has expertise in the construction of homes and public facilities of the character of the Facilities; and WHEREAS, the City has determined that it will obtain no advantage from undertaking the construction of the Facilities pursuant to public bid and will realize economic benefit if the Developer constructs the Facilities as provided herein; and WHEREAS, the City has issued bonds for the District (the "Bonds") to finance the Facilities pursuant to the Act; and WHEREAS, the City has entered into a Settlement of Action and Release with William Landis and the Developer, and this Agreement has been entered into in furtherance of the provisions of said agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other valuable consideration the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 1. Recitals. Each of the parties hereto represent and warrant, each to the other, that the above recitals are true and correct. 2. The Bonds. The City has issued the Bonds in the initial principal amount of $2,400,000. 3. Completion of the Facilities. The Developer reasonably expects to complete the Facilities and request payment therefor hereunder within four (4) months of the date of this Agreement. 0 4. Refujading Bonds. The City may, in the future, issue bonds to refund the Bonds and/or issue bonds to purchase the Bonds in lieu of the redemption of the Bonds. The Developer shall have no rights to any proceeds of any such bonds by reason of this Agreement or otherwise, or any right to participate in any way in the structuring of any such refinancing. 5. Use of &Qnd Proceeds. The proceeds of the Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the fiscal agent agreement, dated as of June 1, 1990 (the "Fiscal Agent Agreement") pursuant to which the Bonds were issued. $218,278.00 is currently on deposit in a separate improvement fund (the "Improvement Fund") under the Fiscal Agent Agreement, which are the sole monies available under this Agreement to pay the cost of the acquisition of the Facilities, as provided below, and such amount shall be used solely to make payments to the Developer of the acquisition prices of Facilities under and pursuant to the terms of this Agreement. a. Plans and S=ificatiqus Prevailing Wages. The Developer represents that it has obtained or will obtain approval by all appropriate City departments of the plans and specifications for the Facilities that are to be acquired by the City and that all of such Facilities have been or will be constructed by the Developer in full compliance with the current City standards applicable to the construction of public improvements and that all such Facilities that are purchased by the City with amounts in the Improvement Fund under this Agreement shall be constructed in compliance with any applicable law or regulation with respect to the payment of prevailing wages. The City and the Developer agree that the Facilities are of local, not statewide concern, and that the provisions of the Public Contracts Code shall not apply to the construction of the Facilities. The City and the Developer agree that this Agreement is necessary to assure timely and satisfactory completion of the Facilities and that compliance with the Public Contracts Code with respect to the Facilities would work an incongruity and would not produce an advantage to the City or the District. The Developer agrees to comply with all City or other applicable bonding requirements applicable to construction of the Facilities, and to provide the City Director of Public Works (all references herein to the City Director of Public Works include any official of the City acting in such capacity or any designee of the City Director of Public Works) with copies of any change orders relative to the construction of any Facilities to be acquired by the City and the plans and specifications therefor. The City hereby acknowledges that funds on deposit in the Improvement Fund will be considered the equivalent of a construction bond for a commensurate portion of the Purchase Price (as defined below) of the Facilities to be acquired with such funds. b. Purchase Price. The amount to be paid by the City for the Facilities (hereafter the "Purchase Price" as to each such Facility), shall be determined by the City Director of Public Works and shall not exceed and shall be substantially the cost thereof, including the reasonable cost of appurtenant facilities and of preparing plans and specifications as well as the construction contracts and all costs of construction reasonably determined by the City Director of Public Works to be eligible under the Act to be part of the Purchase Price (said determination to be made consistent with the terms of this Agreement), such as fees and costs incurred in obtaining permits, licenses, rights of way or easements, the costs of change orders, engineering, legal, fiscal and inspection fees constituting a part of the public improvements. The Purchase Price may include a reasonable charge for contract administration by the Developer, not to exceed 4% of the related construction cost. The Developer shall provide any documentation substantiating the cost of the Facilities reasonably requested by the City Director of Public Works or the City Finance Director. There shall be a presumption of reasonableness as to costs incurred under a construction contract entered into as a result of a call for bids by the Developer, provided that no extraordinary limitations or requirements (such as short time frame) are imposed by the Developer on the performance of such contract. C. Inspection and Acceptance. The Facilities to be acquired by the City, when fully completed, shall be accepted in accordance with adopted City policy, and the Purchase Price for each such Facility promptly paid from Bond proceeds if completed substantially in accordance with the approved plans and specifications for such Facilities and pursuant to the requirements of Section 53313.5 of the Act. The City shall accept no liability or responsibility for any such Facility or the maintenance thereof until all work with respect thereto has been completed to the satisfaction of the City Director of Public Works. Any Facilities to be acquired by other public agencies, shall be accepted subject to the relevant public agencies' policies and procedures. The Facilities shall be subject at all reasonable times prior to their acquisition to inspection by the City Director of Public Works, which inspection shall be accomplished in a timely manner. Prior to acceptance of any Facility by the City, the Developer shall provide as -built drawings or other similar plans and specifications of such Facility in the form required under City standards applicable to the construction of public improvements and otherwise by applicable law or regulation, along with evidence satisfactory to the City Director of Public Works that all costs of the Facility have been fully paid by the Developer to the party or parties entitled to be paid for such costs. The Developer shall obtain from any public agency (other than the City) acquiring a Facility a written statement to the effect that such Facility has been accepted by such public agency and all costs with respect thereto have been paid. All warranties, guarantees or other evidence of contingent obligations of third persons with respect to Facilities to be acquired by the City shall be delivered to the City Director of Public Works prior to acceptance thereof. If applicable, all documentation evidencing dedication and/or transfer of ownership of the Facilities shall be delivered to the City prior to the acceptance thereof and payment therefor, as further provided in Section 6e below. d. Payments to Developer. The Developer may request in writing a payment on the Purchase Price of any Facility described in Exhibit A hereto. Such payments shall be made only in the amount determined reasonable by the City Director of Public Works with respect to the Facility to be acquired, as specified in a cost certificate for each Facility or group of related Facilities completed by the City Director of Public Works, and in any event subject to the last paragraph of this Section 6.d. A ten percent retainage shall be held by the City in the Improvement Fund with respect to the cost of any Facility acquired by the City (no such retainage being required with respect to any Facility to be acquired by a public agency other than the City) pending final completion and acceptance of the related Facility and a one-year maintenance period for each such Facility. In lieu of such retainage, the Developer shall be permitted to provide to the City a letter of credit or performance bond in form and substance satisfactory to the City Director of Public Works and the City Finance Director. Any such Facility or portion thereof to be acquired by the City must be completed in accordance with the approved plans and specifications. Any Facility to be accepted by the City must be in such condition that it is ready for use by the City or the public as determined by the City Director of Public Works (said determination to be 0 based on current City standards applicable to the construction of public improvements, wherever relevant). Any claim for a payment to the Developer from the $218,278.00 in the Improvement Fund shall be in a form acceptable to the City and include supporting documentation (including, with respect to any Facility to be acquired by a public agency other than the City, evidence that such agency has so accepted the Facility). The Director of Public Works shall review each claim for payment and inform the Developer, in writing, within 15 business days of receipt by the Director of Public Works of the claim and all supporting documentation, of the denial of any claim for payment in whole or in part, setting forth the reasons for such denial. The Developer shall be entitled to resubmit any claim or portion thereof so denied, if it is able to address the objections to such claim. The City shall make payment within forty-five (45) days of receipt of any claim or portion thereof which is not so denied, subject to the provisions of the last sentence of the next paragraph and the last paragraph of this Section 6.d. If requested by the City Director of Public Works, the Developer shall prepare and execute a Notice of Completion in form acceptable to the City Director of Public Works as to any Facility to be acquired by the City and record such notice with the office of the Recorder of the County of Orange, State of California and cause its contractor to provide general lien releases in form acceptable to the City Director of Public Works for such Facility. The City shall be entitled to delay payment to the Developer for any Facility to be acquired by the City until 35 days after a Notice of Completion with respect thereto has been so filed by the Developer. If any of the Facilities to be acquired hereunder were or are financed, in whole or in part, from the proceeds of any loan secured by a mortgage or deed of trust upon any lands within the District, and in the absence of contrary written instructions by any mortgagee or beneficiary of such mortgage or deed of trust, the Purchase Price shall be paid to the Developer and to such mortgagee or beneficiary, as their interests may appear. The Developer shall provide evidence to the City Director of Public Works as to the source of funds, if any, to pay the costs of construction of the Facilities. Notwithstanding any other provision of this Agreement, the total payments by the City to the Developer under this Agreement (including any retainages described in the second paragraph of this Section 6.d.) shall not, in any event, exceed an aggregate of $218,278. e. S?W_ucrshi fer of Facilities. The conveyance of any Facilities to be owned by a public agency other than the City, shall be in accordance with such agency's policies and procedures. The provision or conveyance to the City of any Facilities to be acquired by the City shall take place as follows: W Land (Fee or Easement). The Developer shall cause the owners of the real property within the District to transfer to the City the appropriate rights, title and interest in and to said land to be acquired. The Developer agrees to cause the owners of the real property within the District to execute and deliver to the City those documents required to complete the transfer of Acceptable Tide (as defined herein) to the land. Acceptable Tide means title to the land delivered free and clear of all liens, encumbrances, assessments, easements or leases, whether any such item is recorded or unrecorded, and taxes, except those matters which are determined by the City Director of Public Works in his reasonable discretion not to interfere with the intended use of the land and therefore are not required to be cleared from the tide. Completion of transfer 4 shall be evidenced by the recordation of an acceptance of the interest(s) in the land by the City Council or their designee. (ii) Improvements Constructed on Land Owned by Property Owners. If Facilities to be acquired by the City are located on land which is owned by the owners of the real property within the District, then such property owners shall retain the title to said land and the improvements constructed thereon until the land and improvements are acquired by the City pursuant to the provision of this Agreement. Until title to the land and the Facilities are acquired by the City, the- Developer shall maintain the land and improvements in good and safe condition. Transfer of title to the land and the Facilities thereon shall be in accordance with clause (i) above. (iii) Improvements Constructed on Land Owned _by City in _Fee or Edscmcnt. If Facilities to be acquired by the City are on land on which the City holds fee title or easement rights, the Developer is hereby granted a license to enter said land for purposes related to the construction and maintenance (prior to acquisition by the City hereunder) of the said improvements. Upon completion of construction of any such Facility, the City Director of Public Works shall inspect the improvements m accordance with City standards applicable to the construction of public improvements, and if approved by the City Director of Public Works, the City shall give written notice of its acceptance of the Facility. (iv) Pmonal Property. If the Developer provides any personal property identified on Exhibit A hereto, transfer by the Developer to the City shall be accomplished by a bill of sale. (v) Funds. If the Developer provides funds for Facilities, the provision of such funds to the City shall be acknowledged with a written receipt from the Finance Director. f. Payment_of Excess Costs. The Developer hereby agrees to pay all costs of the Facilities in excess of the proceeds of the Bonds available therefore in the Improvement Fund established under the Fiscal Agent Agreement. 7. Indemnification -and Hold Harmless. The Developer shall defend, hold harmless and indemnify the City and its elective and appointive boards, commissions, its officers, agents and employees and agents, against any liability or claim for damage of any kind allegedly suffered, incurred or threatened, including personal injury, death, property damage, inverse condemnation, or any combination of these, and resulting from any act or omission (negligent or non -negligent) in connection with the matters covered by this Agreement, but save and except those that arise from the sole active negligence or willful misconduct of City. The promise and agreement in this Section are not conditioned or dependent on whether or not the City has prepared, supplied, or reviewed any plan(s) or specification(s) in connection with the Facilities, or has insurance or other indemnification covering any of these matters. 8. Audit. The City Director of Public Works and Finance Director shall have the right, during normal business hours and upon the giving of ten days written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing any of the Facilities. 9. Relationship to Public Works. The parties hereto agree that this Agreement is for the acquisition of certain public facilities by the City from the proceeds of the sale of the Bonds 5 deposited in the Improvement Fund and is not, nor is it intended to be, a public works contract. In performing this Agreement, the Developer is an independent contractor and not the agent of the City or the District. Neither the City nor the District shall have responsibility for payment to any contractor or supplier of the Developer. All contracts related to the construction of the Facilities, and all change orders related thereto, shall be submitted to the City Director of Public Works for review and approval as to cost, and quantity and duality of work. Unless the City Director of Public Works submits a written denial of approval of any contract or change order to the Developer (stating the reasons therefor) within 15 business days of receipt by the City Director of Public Works of the contract or change order, the City Director of Public Works shall be deemed to have approved the contract or change order with respect to cost. 10. Attorney's FCes. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees. 11. Nobces. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified mail, postage prepaid, addressed as follows: Developer: Goldenwest Partners, LLC 5620 East Santiago Canyon Road Orange, California 92869 Attention: President with a copy to: Luce, Forward, Hamilton & Scripps, LLP 600 West Broadway, Suite 2600 San Diego, California 92101 Attention: Brian C. Fish, Esq. City or District: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Finance Director with a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Director of Public Works and a copy to: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: City Attorney Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. 12. Seve_ Tability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 0 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may not be assigned by the Developer without the prior written consent of the City. In connection with any such consent of the City, the City may condition its consent upon the acceptability of the financial condition of the proposed assignee and upon any other factor which the City deems relevant in the circumstances. 14. Limited Liability. Any and all obligations of the City arising out of or related to this Agreement are the special and limited obligations of the City, in any event payable only from the $218,278 on deposit in the Improvement Fund described in Section 5 and the last paragraph of Section 6 hereof. In no event shall the City be obligated to advance any of its own funds hereunder, except pursuant to the provisions of Section 10 hereof. No Councilmember, staff member or agent of the City shall incur any liability hereunder to the Developer or any other patty in their individual capacities by reason of their actions hereunder or execution hereunder. 15. , aiver. Failure by 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 parry's right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter. 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. 17. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto. 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first -above written. AMST: CITY OF HUNTINGTON BEACH, for itself and on behalf of COMMUNITY FACILITIES DISTRICT NO. 1990-1 (Goldenwest/Ellis Area) City Clerk By: Mayor APPROVED AS TO FORM: Scott F. Field, Deputy City Attorney City of Huntington Beach Its Attorney of Record 08003.02:f4349 GOLDENWEST PARTNERS, LLC BY HERITAGE COMMUNITIES, INC., a California Corporation, Its Managing Member By: Mark Jacobs, President APPROVED AS TO FORM: Brian C. Fish for Luce, Forward, Hamilton & Scripps, LLP Its Attorney of Record 9 .7 • EXHIBIT A LIST OF FACILITIES TO BE ACQUIRED 1. Installation of reclaimed water system on Ellis Avenue, including, a new 12" subpotable water pipeline in Ellis Avenue from the connection at the existing 12" subpotable line to Goldenwest Street to the connection point in Saddleback Lane. 2. Improvements to Ellis Avenue to the centerline to City Standards, including lowering/relocation of any interfering oil/fuel lines and existing utility relocation/modification necessary to install said improvements 3. Design and construction of signing and striping on Ellis Avenue in accordance with Public Works Standards and Ellis Goldenwest Specific Plan. a A-1