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HomeMy WebLinkAboutMakallon Atlanta Huntington Beach, LLC - Makar Properties - 2008-12-15Council/Agency Meeting Held: S D�/ Deferred/Continued to: prov d Ll Condit' n ly Ap rovedi Denie Cit er ' Signa e Council Mee ing Date 12/15/08 NJ Department ID Number: AD 08-19 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL/REDEVELOPMENT AGENCY ACTION SUBMITTED TO: Honorable Mayor/Agency Chairman d City Council/Agency Members SUBMITTED BY: Fred A. Wilson, City Administrator/ tive Director PREPARED BY: Paul Emery, Deputy City Administra or SUBJECT: Approve the Implementation Agreement and Escrow Agreement between the City of Huntington Beach, the Redevelopment Agency and Makallon Atlanta Huntington Beach, LLC to implement the provisions of the Owner Participation Agreement that govern the design, development and construction of the Senior Center. Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: The City of Huntington Beach, the Redevelopment Agency and Makallon Atlanta Huntington Beach, LLC entered into an Owner Participation Agreement (OPA) for the Pacific City Project in 2006. It is now necessary to approve an implementation agreement and escrow agreement for the Senior Center component of the OPA. Funding Source: The development, design and construction of the Senior Center is being funded by the Park In -Lieu Fee assessed against the residential portion of the Pacific City Project as calculated pursuant to Zoning and Subdivision Ordinance Section 254.08. Recommended Action: Motion to: Approve and authorize the Mayor/Chairman and City Clerk/Agency Secretary execute the Implementation Agreement and Escrow Agreement between the City of Huntington Beach, the Redevelopment Agency and Makallon Atlanta Huntington Beach, LLC. Alternative Action(s): Do not approve the Agreements and direct staff accordingly. Analysis: On October 16, 2006 the City of Huntington Beach, Redevelopment Agency and Makallon Atlanta Huntington Beach LLC entered into an Owner Participation Agreement (OPA) that included the provisions for the construction of a Senior Center. It has become necessary to implement the provisions of the OPA that govern the design, development and construction for the Senior Center. The implementation agreement identifies the schedules of performance, project budget submissions and escrow deposit obligations. The Escrow Agreement defines the escrow fund and the disbursement and release of funds. REQUEST FOR CITY COUNCIL ACTION CITY COUNCIL MEETING DATE: December 15, 2008 DEPARTMENT ID NUMBER: The Implementation Agreement identifies four schedules — schematic design, street and utility design, building design, and construction. Based on the proposed schedules and the opportunity for extension, the outside date for construction completion of the Senior Center is April 2011. There are a number of additional terms in the agreement including status and reporting requirements and remedies for delays. The Escrow Agreement is to be established within 5 days of execution and is funded by a deposit of $2,000,000 by Makallon Atlanta Huntington Beach, LLC. These funds will be utilized throughout the design schedules identified above. Upon commencement of construction the escrow account will be increased to $3,000,000 and drawn down for construction expenses. Each of these agreements set forth the implementation of the design and construction of the Senior Center in furtherance of the Owner Participation Agreement. Strategic Plan Goal: (C-2) Provide quality public services with the highest professional standards to meet community expectations and needs, assuring that the city is sufficiently staffed and equipped overall. Environmental Status: Not Applicable Attachment(s): 1. Implementation Agreement between the City of Huntington Beach, the Redevelopment Agency and Makallon Atlanta Huntington Beach, LLC. 2 Escrow Agreement between the City of Huntington Beach, the Redevelopment Agency and Makallon Atlanta Huntington Beach, LLC. -2- 12/5/2008 8:20 AM � d � � ���� ju 1 � i e i ,� ,_ � v — — .. �; y EXECUTION COPY IMPLEMENTATION AGREEMENT THIS IMPLEMENTATION AGREEMENT (this "Agreement") is entered into as of !)G-'CC-1n6r--e /S, 2008, by and among the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic ("Agency"), the CITY OF HUNTINGTON BEACH, a charter city ("City"), and MAKALLON ATLANTA HUNTINGTON BEACH, LLC, a Delaware limited liability company ("Participant"). RECITALS A. The parties to this Agreement are parties to that certain Owner Participation Agreement ("OPA") for the Pacific City Project, executed and delivered pursuant to Agency Resolution No. 364 and City Resolution 2006-67 approved and adopted at the October 16, 2006 City Council meeting, as supplemented by letter dated February 1, 2008. B. This Agreement is intended to implement the provisions of the OPA that govern the design, development and construction of the Senior Center. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Definitions; Acknowledgments. Capitalized terms used in this Agreement without definition have the respective meanings assigned to such terms in the OPA or in the Conditions of Approval therein referenced. The parties hereby acknowledge that (i) Final Tract Map No. 16338 was recorded in the Recorder's Office of the County of Orange on August 30, 2007, (ii) the "Effective Date" of the OPA is August 30, 2007 and (iii) Environmental Impact Report No. 07-002, and related Conditional Use Permit No. 07-39 and Findings and Conditions of Approval, for the Senior Center were approved and adopted at the February 4, 2008 City Council meeting. 2. Schedules of Performance. In furtherance of Section 607.a of the OPA, the Participant hereby proffers, and the City and the Agency hereby approve, the four (4) separate performance schedules attached to and made a part of this Agreement as Schedule 1 [Schematic Design Approval], Schedule 2 [Street and Utility Design], Schedule 3 [Building Design] and Schedule 4 [Construction] (individually, a "Schedule" and collectively, whether all or less than all, the "Schedules"). The Schedules in material part provide as follows: Schedule 1 is a schedule to process and obtain schematic building design approval of the Senior Center by applicable City authorities ("Schematic Approval"); the effective date of Schematic Approval constitutes the "commencement date" for Schedule 2 [Street and Utility Design]and Schedule 3 [Building Design]; Schedule 2 [Street and Utility Design] is a time -line for the design, permitting and utility contracting (as applicable), for public streets and wet and dry utilities, including 3/20/02 6051-00004 CADocuments and Settings\lisac\Local Settings\Temporary Internet Files\Content.Outlook\ISUT787L\makar_hb_opa supplement.DOC WAS01 4175150700 320288-00018 the submission, processing and issuance of a rough grading plan and permit; the effective date of Schematic Approval constitutes the "commencement date" for the Schedule; Schedule 3 [Building Design] is a time -line for the design of the Senior Center building, including the submission, processing and issuance of building permits; the effective date of Schematic Approval constitutes the "commencement date" for the Schedule and the Schedule runs concurrently with Schedule 2; and Schedule 4 [Construction] is a time -line for contract bidding and construction of the Senior Center; the effective date of issuance of the last of all requisite building permits, approvals and utility agreements for the Senior Center and attendant public streets and utilities by all applicable governmental, public and quasi -public authorities under Schedules 2 and 3 constitutes the "commencement date" for the Schedule. 3. Schedule Extensions. At the election and in the sole discretion of Participant from time to time, Schedule 1 permissively may be extended for a maximum period of sixty (60) days in the aggregate, Schedule 2 permissively may be extended for a maximum period through to the first anniversary of the effective date of Schematic Approval (with such 1-year anniversary date inclusive of the Schedule 2 time -line), Schedule 3 permissively may be extended for a maximum period through to the first anniversary of the effective date of Schematic Approval (with such 1-year anniversary date inclusive of the Schedule 3 time -line), and Schedule 4 permissively may be extended for a maximum period of one hundred eighty (180) days in the aggregate. In addition, each Schedule shall be extended: (a) For each day of any prevention, delay or stoppage proximately resulting from the occurrence of a Force Majeure event (as the term "Force Majeure" is defined under the OPA); and/or (b) For each day of prevention, delay or stoppage proximately resulting from (1) any delay by any governmental, public or quasi -public authority in any processing and/or approval of any good faith submission in excess of the time period(s) provided therefor in the applicable Schedule(s) and/or (ii) any request or requirement by any governmental, public or quasi -public authority in addition to the Conditions of Approval and Mitigation Measures in effect as of the date hereof with respect to the Senior Center and/or (iii) any plan check or approval submission to any governmental, public or quasi - public authority not provided for on Schedule 2, Schedule 3 or Schedule 4 and not proximately resulting from any failure by Participant to submit previously requested changes or information ("City Del and/or (c) For each day of continuance of any unrelated third party legal or equitable suit or action respecting or involving the Senior Center (in any instance, "Litigation"). The City, by and through the City Administrator, and the Participant, by and through its designated representative from time to time, shall meet and confer biannually and execute and initial effective as of each 6-month anniversary of this Agreement a memorandum of the status of -2- WASOI 41751507v10 320288-00018 performance under the then applicable Schedule(s) specifying any extension(s) to such Schedule(s) desired by the Participant and/or arising under the preceding provisions of this Section 3. For purposes hereof, the first 6-month anniversary of this Agreement shall be deemed to be April 30, 2009 and each 6-month subsequent anniversary shall be each succeeding October 31 and April 30 until substantial completion of the Senior Center (as defined in Section 5 hereof). Effective as of each such 6-month anniversary, the Participant also shall deliver to the City a statement of the aggregate of funds expended to date and costs and expenses incurred to date in furtherance of the design, development, installation and/or construction of the Senior Center, including the Management Fee to the extent of such funds and expenses (as of any specified date, the "Participant Interim Costs"). 4. Senior Center Completion. The Participant hereby agrees to use good faith efforts in order to complete the design, development and construction of the Senior Center in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof or with the prior written consent of the City in its sole discretion) and further agrees to give to the City monthly status reports during the pendency of Schedule 1, quarterly status reports during the pendency of Schedule 2 and Schedule 3, and monthly status reports during the pendency of Schedule 4. By execution of this Agreement, the Agency and the City acknowledge that this Agreement is in furtherance of Section 607.a of the OPA, hereby accept the performance obligations reflected in the Schedules (as the same may be extended pursuant to Section 3 hereof or with the prior written consent of the City in its sole discretion) and further agree this Agreement and the time lines and time periods hereby created, proffered and accepted supersede any contrary provision, express or implied, of the OPA. (a) Subject to paragraph (b) below, if the scope of performance provided for in any Schedule(s) shall not be completed within the time period(s) provided for in such Schedule(s) (as such Schedule(s) may be extended as provided for in Section 3 hereof or with the prior written consent of the City in its sole discretion), then Participant shall be relieved of its obligation to design, develop and construct the Senior Center as set forth in the OPA and this Agreement and the Participant shall instead pay the entire Park In -Lieu Fee to the City, due and payable in immediately available funds no later than sixty (60) days from approval of the Certified Cost Statement, subject, however, to a credit against the Park In -Lieu Fee to the extent of the then aggregate of Participant Interim Costs, as the same shall be substantiated in the Certified Cost Statement (such Park In -Lieu Fee, less such credit at any time, being the "Park In -Lieu Fee Balance"). If the Participant is obligated under this paragraph (a) to pay the Park In -Lieu Fee Balance, then: (A) If the Participant disputes its obligation under this paragraph (a) to pay the Park In -Lieu Fee Balance, then, the Participant nevertheless shall deliver the Park In -Lieu Fee Balance to its duly appointed legal counsel or title company, and the same shall be held, in escrow, pending resolution of such dispute either (1) by final unappealable order issued in legal or equitable proceedings, or mediation or arbitration, or (2) by mutual agreement of the parties and joint written instructions given to the escrow agent. If such dispute is resolved by adversarial action (whether judicial proceedings, or mediation or arbitration), the prevailing parry shall be entitled to an award of its reasonable legal costs -3- WAS01 4175150700 320288-00018 and expenses and the cost of such proceedings from the others (with the City and the Participant being treated hereunder as the primary parties entitled to or obligated for the payment of such award, as the case may be). All funds at any time and from time to time held in escrow in accordance with this paragraph (A) shall be invested with such financial institution and with such investments as from time to time in writing are approved by the Participant and all such funds shall bear interest for the benefit and in the name of the Participant. The parties shall indemnify and agree to hold harmless and defend the escrow agent hereunder in the good faith performance of its duties, (ii) release the escrow agent from and against any liability to the parties except for fraud, gross negligence or willful misconduct, (iii) authorize the escrow agent to rely upon any signature, notice, demand, waiver, consent or other instrument in good faith believed by it to be genuine, and, (iv) in the event of a dispute between or among the parties respecting the proper disposition of escrowed funds hereunder, authorize the escrow agent to pay the same into the registry of any court having jurisdiction over the Participant and the City. (B) The amount of the Park In -Lieu Fee Balance shall be subject to adjustment to the extent of the Index Adjustment for the period from August 31, 2009 to the date of payment, which period shall be shortened in time for the aggregate number of days (if any) of prevention, delay and/or stoppage proximately resulting from any Force Majeure, City Delay or Litigation under Sections 3(a), 3(b) and/or 3(c) but shall not be shortened for the period, if any, that the Park In -Lieu Fee Balance is held in escrow in accordance with paragraph (A) above. For purposes of the foregoing, "Index Adjustment" means the arithmetic average of the percentage changes for the applicable time in the McGraw Park Engineering News (1) 20-City Materials Cost Index arithmetic average for cement and lumber (excluding structural steel) and (ii) 20-City Building Cost Index for Skilled Labor (excluding Building Cost and Wage$/hr). (b) If (i) a Force Majeure event or Litigation shall occur, and (ii) such occurrence reasonably prohibits the right of the City or the Participant to construct the Senior Center (a "Restrainin Event"), and (iii) such Restraining Event continues in effect for ten (10) months or more (but in no event beyond December 31, 2009), then at any time after the expiration of such 10-month period (or December 31, 2009, as the case may be), the City shall have the right upon thirty (30) days prior written notice given to the Participant to instruct the Participant to cease all work in furtherance of the Senior Center and instead to pay the Park In -Lieu Fee Balance, in which event the Participant shall be relieved of its obligation to design, develop and construct the Senior Center as set forth in the OPA and this Agreement and the Participant shall instead pay the Park In -Lieu Fee Balance, due and payable ratably over the 516 approved residential condominium units of the Project and at the time of issuance of building permits for such units, but in no event later than February 1, 2015. In addition and not in limitation of the foregoing provisions of this Section 4(b): (A) If under this Section 4(b) a Restraining Event shall occur and the Participant shall be relieved of its obligation to design, develop and construct the Senior Center and instead pay the Park In -Lieu Fee Balance and if less than the 516 approved residential condominium units for the Project in fact are constructed, then the deficiency -4- WASOI 41751507v10 3Z0388-00018 in the payment of Park -In -Lieu Fee Balance resulting as a consequence of the shortfall in the number of condominium units to be so constructed shall be paid (to the extent then known) at the time of issuance of the first building permit for the final building phase of the Project and any further deficiency shall be paid with the issuance of the final building permit in such final building phase. (B) If under this Section 4(b) a Restraining Event shall occur and the Participant shall be relieved of its obligation to design, develop and construct the Senior Center and instead pay the Park In -Lieu Fee Balance, then the amount of Park In -Lieu Fee Balance for each condominium unit shall be subject to Index Adjustment for the period from February 1, 2011 to the date of payment for such condominium unit. (C) Upon the occurrence of a Restraining Event, the City shall have the right upon thirty (30) days prior written notice given to the Participant to instruct the Participant to stay all work in furtherance of the Senior Center pending the outcome of such Restraining Event and the determination by the City of its right under the preceding provisions of this Section 4(b). Any such instruction by the City to stay work shall constitute a continuance of the Force Majeure event or Litigation giving rise to such Restraining Event and a continued extension of the affected Schedule(s). (D) For purposes of this paragraph 4(b), a "Restraining Event" shall be deemed to have occurred upon the issuance in that certain pending litigation (the "Parks Liti ag tion") captioned PARKS LEGAL DEFENSE FUND, a California non-profit organization, et al., v. THE CITY OF HUNTINGTON BEACH et al., as filed in the Superior Court of the State of California for the County of Orange, Case No. 00051261, of an order (1) restraining the construction of the Senior Center, (2) requiring with respect to the Senior Center the conduct of a new Environmental Impact Report under the California Environmental Quality Act, or (3) requiring approval of the Senior Center by a new Measure C vote under Section 612 of the City Charter. (E) If under this Section 4(b) a Restraining Event shall occur but the City does not exercise its right to stay work under paragraph (C) above and either (1) the Restraining Event does not continue in effect for ten (10) months or more (or beyond December 31, 2009), or (2) the Restraining Event continues in effect for ten (10) months or more (or beyond December 31, 2009) but the City does not exercise its right to relieve the Participant of its obligation to design, develop and construct the Senior Center and instead pay the Park In -Lieu Fee Balance as herein provided for, then and in any such event the Participant shall be obligated to continue performance in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof) to the extent such performance in the good faith judgment of Participant and its professional advisors proximately is not prevented, delayed or stopped by such Restraining Event. By way of example, if the Participant is obligated to continue performance as aforesaid and if as part of the Parks Litigation construction of the Senior Center shall be the subject of a restraining order, then the Participant nevertheless shall continue performance under -5- WAS01 41751507v10 320288-00018 Schedule 2 [Street and Utility Design] and Schedule 3 [Building Design] to the extent the same is not thereby so prevented, delayed or stopped. (c) If the Participant completes the design, development and construction of the Senior Center in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof), then, subject to the remainder of this paragraph (c), the amount of the Park In - Lieu Fee Balance existing as of August 31, 2009 shall be subject to Index Adjustment for the period (but only for the period) from August 31, 2009 through to the date of substantial completion of the Senior Center. For purposes of this Agreement, the Senior Center shall be deemed "substantially complete" and the "date of substantial completion" shall be deemed to have occurred when substantial completion occurs under the terms of the general construction contract or is certified by the project architect, provided, however, that, for purposes of calculating the Index Adjustment under this Section 4(c) and liquidated damages under Section 4(d) hereof, the date of substantial completion (or the date of certification thereof, as the case may be) shall be reduced in time for the aggregate number of days (if any) of prevention, delay and/or stoppage proximately resulting from any Force Majeure, City Delay or Litigation. (d) In addition and not in lieu of the preceding provisions of this Section 4, if the Participant completes the design, development and construction of the Senior Center and if the date of substantial completion occurs after April 22, 2011, then, the Participant shall pay to the City liquidated damages for the period from April 22, 2011 to and including such date of substantial completion (the "Liquidated Damages Period"), with such Liquidated Damages Period reduced in time for the aggregate number of days (if any) of prevention, delay and/or stoppage proximately resulting from any Force Majeure, City Delay or Litigation, and with such liquidated damages calculated at the rate of $2,500 per day for each business day of the Liquidated Damages Period and due and payable within thirty (30) days of the expiration of the Liquidated Damages Period. For purposes of this Section 4(d), a "business day" shall mean any day other than a Saturday or Sunday or day on which national banks doing business in the State of California are closed for business. (e) If at any time the Participant is obligated to pay the Park In -Lieu Fee or any Park In -Lieu Fee Balance hereunder or under the OPA and such obligation is a deferred obligation, then the Participant nevertheless shall have the right to prepay the same in whole or in part at any time or from time to time, without penalty. 5. Project Budget Submissions. Consistent with the Schedules adopted hereunder, the proforma proposed Project Budget provided for in the first sentence of Section 305.6.b shall be submitted to the City within sixty (60) days of the effective date of Schematic Approval and the Project Budget shall be submitted within the later of ninety (90) days from final plan approval of the Senior Center and sixty (60) days from award of bids under Schedule 4. 6. Deposit Obligations. Attached to this Agreement as an Exhibit is a copy of an Escrow Agreement (the "Escrow Agreement') dated of even date herewith, made by and among the Participant, the City and Fidelity National Title Insurance Company, as escrow agent (the "Escrow Agent"), and simultaneously herewith executed and delivered by the parties thereto. In -6- W.ASOI 11751507c10 320288-00018 furtherance of the provisions of this Agreement, within five (5) days from and after the date this Agreement shall have been executed and delivered by the parties hereto, the Participant shall deliver to the Escrow Agent the sum of $2,000,000 to be held, invested, disbursed and/or released in accordance with the terms and provisions of the Escrow Agreement. The Participant hereby agrees to deliver the following additional funds to the Escrow Agent at the following times, in each instance to be held under and in accordance with the terms and provisions of the Escrow Agreement: (a) Within ten (10) business days from and after the delivery of the proforma Project Budget to the City pursuant to Section 305.6.b (as amended by Section 5 of this Agreement, above), the difference (if any) between the aggregate of the proforma Project Budget line item allocations for all work to be performed under Schedules 1, 2 and 3 [respectively, Schematic Approval, Street and Utility Design and Building Design], and the arithmetic total of (i) then aggregate Participant Interim Costs and (ii) the $2,000,000 delivered to the Escrow Agent as hereinabove provided for (such initial $2,000,000, together with any such additional amount, the "Design Escrow"); (b) The sum of $3,000,000 (the "Construction Escrow") within ten (10) business days from and after notice of commencement of performance under the general construction contract for the Senior Center building improvements shall have been given by the Participant; and (c) The difference between the sum of $3,000,000 (or, if less, the unpaid balance under the general construction contract for the Senior Center building improvements, including retainage) and the then balance of the Construction Escrow, within ten (10) business days from and after the date the balance of the Construction Escrow falls below $300,000. The parties acknowledge that, as more fully provided for in the Escrow Agreement, the Design Escrow and the Construction Escrow each may and shall be drawn by the Participant to pay for costs incurred in furtherance of the design, development and construction of the Senior Center pursuant to the scope of work reflected under the applicable Schedules, proforma Project Budget, Project Budget, and the OPA and this Agreement (as the same from time to time may be modified, amended and/or supplemented). 7. Bonds. This Implementation Agreement and the Escrow Agreement are in lieu of the performance bond obligation of the Participant as set forth in Section 614.1 of the OPA with respect to the Senior Center, and such bonding obligation hereby is deleted. The labor and materials bond obligation of the Participant as set forth in Section 614.2 of the OPA with respect to the Senior Center shall be included in the construction contract as subcontractor requirements based upon then existing market conditions and bonding availability. 8. Authority. Each individual executing this Agreement on behalf of a party hereto represents that he or she has full authority to do so and to bind such party to perform pursuant to the terms and conditions of this Agreement. WASOI 41751507v10 320288-00018 9. Ratification; Inconsistence. The parties ratify and affirm the OPA as hereby supplemented. In the event of any inconsistency between the terms of the OPA and this Implementation Agreement, the terms of this Implementation Agreement shall control. 10. Effective Date. This Agreement shall not be effective unless and until this Agreement has been executed by the Agency and the City and the Participant. Date:'>ECL=m6eyL ) 6 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Chairman ATTEST: INIT '?IEWED y Secretary AND APPROVED AS TO FORM: Age cy General Counsel 1 \R n 2 � loln� Date:1'&__C..,=_Vn60L /b , :ADD? ATTEST: Clerk REVIEWED AND APPROVED AS TO FORM: City Attorney to cutive APPROVED: rector THE CITY OF HUNTINGTON BEACH B d� Y• Mayor INITIATE/AjP APPROVED: strator, -8- WAS01 4175150700 320288-00018 MAKALLON ATLANTA HUNTINGTON BEACH, LLC, a Delaware limited liability company, its Member By: Makar Properties, LLC, a Delaware limited liability company, its Authorized Member By: Paul Makarechian Chief Executive Officer Date: STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , 2008, bZme,dersigned, a Notary Public in and for the Sate of California, personally appeareechian, personally know to me to be the person whose name is subscribed to thement and acknowledged to me that he executed the same in his authorized capaby his signature on the instrument, the persons or entities upon behalf of whom th executed the instrument. WITNESS my hand a� official seal. (�/doe4flWa �� . Signature,Kf Notary Public -9- WASO1 41751507v10 320288-00018 CALIFORNIA•ACKNOWLEDGMENT �� tiTZ<�u,�. ��,s��,.�C,�. �.,�a�> oa<,:�.�.-'aY*aea �.•A�.,� �> .�S!T hsat ^S�e�.�S,7><aS/'�.,� A�.� .,,�aC,�4'aS,�',�r.C,�N,_-�u!�:a��.'S!�a.,:�.;�aS State of California County of &Wase, OnAe,-eiyllJ'f- if 2M6 before me, j 4-1alt, S Date I `Here Insert Name and Title of the 01fer personally appeared Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person* whose name(&) is/are subscribed to the within instrument and acknowledged to me that .r�.� helshe4egt executed the same in hisA4er+h& authorized MAR M. SOLANO ca aci and that b his/herRhwir si nature on the CammWdon * 1667240 P tYf i, Y 9 ` Notary Public - Ca#kxft instrument the person( , or the entity upon behalf of Orange County which the person(*'acted, executed the instrument. My Carnm. Ex0M MaV )8, 201 I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my ha cl 9ffi ' ea . Signature Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Individual ❑ Individual ❑ Corporate Officer — Title(s): ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Partner — ❑ Limited ❑ General _ ❑ Attorney in Fact • ❑ Attorney in Fact • ❑ Trustee Top of thumb here ❑ Trustee Top of thumb here ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other: ❑ Other: Signer Is Representing: Signer Is Representing: 02007 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth, CA 91313-2402 • www.NationaiNotaryorg Item #5907 Reorder: Call Toll -Free 1-800-876-6827 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) On December 16, 2008 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Keith Bohr who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. R L. ESPARZA L110 Commission * i wqi 79 ter FWk • caMmic ono W County My Comm. Expires Aug 4. (Notary Signature) Schedule 1 - Schematic Design Approval Schedule 2 - Street and Utility Design Schedule 3 - Building Design Schedule 4 - Constuction Senior Certer Schedule 1 (Sche=Uc Design Approval) ID ask Name Start Finish Duration 12009 2010 Apr Ma Jun Jul A Sep Od Nov Dec Jan Feb Mar Apr Ma Jun Jul A Sep Oct Nov Dec Jan Feb Mar i Schematic Design 4118/08! 1/16/091 193 days --- G -- 2 i Stan Schematic Design 3 4 n In 1 50% Schemat c Design — Prepare 50% SD Cost Estimate 4/18/OBi 6/18l08 10/23/08 44 days 30 days 5 T 50%SD Value Engineering 10/24/OB! 11/13/081 15 days 6 t C ty Approval and Authorization to Continue Design 11/13/08 11/13/OBI 0 days 7 i Schematic Design Arch 100% 11/14/081 11/27/081 10 days — 8 100% Schematic Design Completed -- - ----- 11/27/08 11/27/OB - 0 days 9 1 �! -- -- City Review of D 100% S -- --- —11/27/08� 12111/08! 11 days 10 Res nit to dit Comments and Re -Submission po y -- 12/12/08 _ 1/6l091 1 � 16 days 11 City Review of Re -Submission 1/7/09 1/16/09I 8 days i 12 — — G ty Approval and Authorzation to Continue Desi n 1/16 09 1/16/091 0 days Critical - Task Progress o Summary Progress r„ r, r r r r i r r i Task o Baseline Milestone Critical Split ' ' ' Baseline Summary Split Milestone — — - Project: Huntungton Date: 12111 /08 Beach S Critical Progress Baseline Split , , , , , , , , , , , , Project Summary c}�-= = Task Progress ' • • ' ' ' ' ' SummaryProgress <> Task ""' Baseline Milestone O Critical Split - Baseline Summary d Split ' ' ' ' ' ' ' ' ' ' ' ' ' Milestone ® Critical Progress ' ' ' ' ' ' ' ' ' ' ' ' ' Baseline Split -- September 5, 2008 Schedule Is based on working days (M • F) Senior Center Schedule 2 [Street and Utility Design] ID Task Narita (Street Improvement Design IL Plan Check_,. Duration 145 days M-5_ (M-4_ IM-3 IM-2 1M-1 IMI I1—M2 M3 M4 M5 -I1 Mti IM7 � �1�—L�_ I1-M-8—hM9 'M10 M11 � M72 M13 M74 _'MS �M16 IM17�M18 �M19 _ _��___ 1 2 Design 60 days 3 City Approval of Schematic Design and Authorization to Continue Design 0 days O 4 Potholing 5 days q ., Pothole Existing Uliiiles Senior Center Grading, Street Improvements 5 days 55 days----�7 6 h Entry Street improvement Design Goldenwest Street Improvement Design Goldenwest Traffic Signal Modlifcation and Striping Design 25 days 25 days=--• 30 days ---I 7 - 0 9 10 Wet Utilities 25 days 11 Storm Drain / Water Quality Sewer 8 Water 25 clays- 25 days 12 13 Plan Chech 115 days 14 Street Improvements 116 days�- Entry Street Improvements Plan Check 1st Round 65 days 30 days - 15 16 Plan Check 2nd Round 30 days- 17 Plan Check 3rd Round 25 days I - 18 Permit Issuance 0 days r-0O 19 20 Goldenwest Street Improvements Plan Check tsl Round 85 days 30 days - 21 Plan Check 2nd Round Plan Check 3rd Round 30 days 25 days 22j 23 2� Permit Issuance 0 days 1-0O 25 Goldenwest Traffic Signal ModiiFication and Striping 85 days y - -26 Plan Chock 1 st Round 30 days Plan Chark 2ru1 P.ramd 30 days- 27 Plan Check 31d Round Permit Issuance 25 days 0 days l-0O 28 29 30 Wet Utilities Design S Plan Check 85 days--�� 31 Storm Drain 1 Water quality 85 days 3 32 Plan Check 1 at Round i Plan Check 2nd Round 30 days 30 days( 33 34 Plan Check 3rd Round 25 days Permii Issuance 0 days- 33 36 37 Sewer & Water Plan Check 1 at Round 86 days 30 days Plan Chuck 2ud Ruund 30 days -� ' Plan Check 3rd Round 25 days 39 Critical Split ' ' ' ' ' ' ' ' ' ' ' ' Baseline Milestone 0, Project Summary '-_'-----_�_�'-=`� Split Baseline Milestone •:• Project: Huntungton Beach S Date: 10/10/08 Critical Split ' ' ' ' ' ' ' ' Task Progress Critical Progress Baseline Milestone O Critical split - _��-„�,� Summary Progress , ; , , . . . , , . r , , , Critical Progress ' ' ' • ' ' ' ' ' ' ' ' Task Progress Baseline • ' ' ' ' ' ' ' ' ' Milestone © Summary Progress Task - - Baseline Split , , , , , , , , , , Summary Task Baseline Split c•.c'-----------. Summary Schedule is based on working days (M - r) September 5, 2008 Rmrgh grading plantpermit is In prncass Start of Street Improvement and Utility Design coincides with City approval of Schematic Design Senior Center Schedule 2 [Street and Utility Design] ID AO Task Name Permit Issuance Duration 'M-5 0 days-bO IM-4 M-3 iM-2 jM-1 IMI M2 IM3_ M4 MS M6 M7 1MO M9 IM70 Mil 1M12 IM13 M14 IM15 jM16 IM17 M10 M19 41 Dry Utility Design & Plan Check 121 days 42 Electric 121 days jnJc' Submittal Preparation 2 wks-) 43 Utility Preliminary Design Project entry and set up Planner Review and meeting with consultant Planner prepares redline design 40 days 1 wk 2 wks 5 wks r-EJ �--1 44 45 46 47 Review Utility Preliminary Design Utility Final Design 2 wks 36 days 40 49 Utility Contracts and Easements 3 wks 54 55 Execute Contracts, Payments and Easements Telephone & CAN 2 wks 70 days 56 Submittal Preparation Utility Design 2 wks 40 days '`D - 57 58 Project entry and set up 2 wks j 59 60 Planner review and meeting with consultant 2 wks � J Planner prepares redline design Coordinator Prepares Agreements 4 wks 2 wks 61 62 Execute Contracts and Payments Gas 2 wks 70 days Imo 63 64 65 Submittal Preparation 2 wks 6G Planner Review and meeting with consultant 4 wks 67 Utility Design 25 days 6E1 Planner prepares redline design 4 wks-I 69 Management Approval I wk I -j Agreement Preparation 2 wks -� 70 Execute contracts, payments 2 wks-0� i1 Critical Split ' ' ' ' ' ' ' ' ' ' ' ' ' Baseline Milestone Project Summary =''-----_—�-', Spill Baseline Milestone"• Project: Huntungton Beach S Critical Split ' ' ' ' ' ' ' ' Task Progress Milestone O Critical Split - - Task Progress ' ' ' ' ' ' ' ' Milestone Dais: 10110lO8 Critical Progress Baseline ___---.--._-.-�_—.- Summary Progress ... , , , , , . Critical Progress ' ' ' ' ' ' ' ' ' ' Baseline �'� Summary Progress ' Task - Baseline Split , , , , , , , , , , , , Summary— Task �—" Baseline Split Summary' September 5, 2008 Schedule is based on working days (M - F) Rough grading planlpermit Is in process Start of Street Improvement and Utility Design coincides with City approval of Schematic Design Senior Center Schedule 3 [Building Design] ID ®jTask Name `senior Duralron !M6 M5,_LM-4 (M-3_I M-2_I M-1_ M1_iM2 �M3 �M4 M5_M6 M7Mfi M9 IM10 'M11 'M12 M131M14 M1.5 M16 �M17 M1ti _.. _� _.�--_ . 1._ _-_ 4._ __ _ --_ .. -_ . __. I I Center Design 16B days 1 - _ T 2 Design Development 1 60 days 31 City Approval of Schematic Design and Authorization to Continue Design 0 days 4 rp Start Design Development 0 days I Design Development to 100 % i 55 days 5 6 100"/o DD Complete 0 days 7 City Review of 100 % DD Appiuvul and Auilwiizalion to Continue Design 5 days 0 days DO B Construction Drawings 35 days 9 10 Stan CD Design 0 days 11 i 50% CD Complete City Review of 50 % CD 20 days 5 days 1L 00% CD Complete - Bldg Dept. Plan Check Submittal 15 days 13 Plan Check/Permits TB days - 14 15 A&E Plancheck 1st Round 15 days 1 st Round Plan Check Corrections A&E Plancheck 2nd Round 10 days 15 days I �--I 16 17 18 2nd Round Plan Check Corrections A&E Plancheck 3rd Round 3n1 Round Plan Check Cnmerlions 10 days- 10 days 10 days I 10 20 _I 21 A&E Plancheck 41hRound 5 days 22 Building Permit Issued 3 days I c Critical - Task Progress o Summary Progress . . . . . . . . . . . . . Task Baseline Milestone Critical Split ' ' ' ' ' ' ' ' ' ' ' ' Baseline .. Summary Split Milestone Project: Fluntungton Beach S Date: 10110108 Critical Progress---- Baseline Split , , , , , , , , , , , , , , • Project Summary Task Progress ' ' ' ` ' ' ' ' ' ' ' ' Summary Progress ti Task Baseline Milestone O Critical Split Baseline Summary 1'' Split ' ' ' ' ' ' ' ' ' ' ' ' ' ' Milestone O Critical Progress ' ' ' ' ' ' ' ' ' ' ' ' ' Baseline Split September 5, 2008 Schedule is based on working days (M - P) Builidng Design coincides with City approval of Schematic Design Senior Center Schedule 4 [Construction] ID ! !Task Name Duration -Ml IM2 'M3 I M4 IM5 IM6 JM7 M8 Mq M19 -10 1 i Senior Center Construction 387 days 0 2 I Public Bid Process 48 days Advertise for Bids 10 days 4 Bid Period Review/Award 30 days 10 days 5 Mass Grading 60 day. 7 �jjNotice to Tenants Mobilize Project Rough Grading 0 days 5 days 45 days 8 —i—1 --1 CA Certify Pad 5 days 11 Street Improvement and Utilities Mobilize Project 100 days 5 days CP 12 T— Sewer Install Storm Drain Water Service 15 days 15 days 15 days 14 15 16 Irrigation Sleeving Curb & Gutter 5 days 15 days 17 is Dry Utilities Asphalt 1st Lift Street Improvement Golden West 8 days 3 days 35 days 10 20 21 Building Construction Mobilize Project 269 days 5 days 22 23 Foundation / SOG 45 days 24 Framing 70 days 25 Exterior 90 days 6 —27 Interior FF&E , OS8,E 80 days 15 days 20 Hardscape, Landscape FqijipmP.ntqnr1 Utility Commi.qqinning 20 days 40 days-- 211 days 29 30 Punch Building 20 days City Complete Raptor Foraging Habitat MM 4.3-2 1 day =3 TCO Final Inspection & Project Closeout 0 days 5 days I V—D 34 Senior Center Grand Opening 81 days _.J,q 36 Grand Opening 0 days 37 Maker submits Certified Cost Statement to City 80 days Critical Task Progress Summary Progress i Task Baseline Milestone Critical Split Baseline Summary Split Milestone Project: Huntungton Beach S Critical Progress Baseline Split Project Summary 7, Task Progress Summary Progress Date: 10/10/08 Test( Baseline Milestone Critical Split Baseline Summary ji Split Milestone 0 Critical Progress .... Baseline Split September 5, 2008 Schedule is based on wothing days (M - F) This SrhRriiilR rnmMAnr.RA with 1hR r.nmplellad performanno nrider Schedule 7 and Srhndule 3 EXECUTION COPY ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Escrow Agreement") is made as of 200 9 by and among MAKALLON ATLANTA HUNTINGTON BEACH, LLC, a Delaware limited liability company (the "Participant"), and the CITY OF HUNTINGTON BEACH, a charter city (the "City"), and is accepted by FIDELITY NATIONAL TITLE INSURANCE COMPANY, as escrow agent hereunder (the 'Escrow Agent"). RECITALS: A. The parties to this Escrow Agreement inter alia are parties to that certain Owner Participation Agreement ("OPA") for the Pacific City Project that was executed and delivered pursuant to Agency Resolution No. 364 and City Resolution 2006-67 approved and adopted at the October 16, 2006 City Council meeting, as supplemented by letter dated February 1, 2008, and further supplemented by that certain Implementation Agreement of even date herewith implementing the provisions of the OPA governing the design, development and construction of the Senior Center (the "Implementation Agreement"). B. In accordance with Section 6 of the Implementation Agreement, within five (5) days from and after the date hereof, the Participant shall deliver to the Escrow Agent the sum of TWO MILLION DOLLARS ($2,000,000), to be held, invested, disbursed and released in accordance with the terms and provisions of this Escrow Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Participant and the City agree as follows: 1. Definitions. Capitalized terms used in this Escrow Agreement without definition have the respective meanings assigned to such terms in the OPA and the Implementation Agreement (as applicable). 2. The Escrow Fund. Simultaneously herewith, the Participant is delivering to the Escrow Agent, and by its execution hereof the Escrow Agent hereby accepts, good funds in the amount of TWO MILLION DOLLARS ($2,000,000) and represents an initial design escrow fund hereunder. The Participant agrees to deliver, and the Escrow Agent agrees to accept, the following additional funds at the following times: (a) Within ten (10) business days from -and after the delivery of the proforma Project Budget pursuant to Section 305.6.b of the OPA (as amended by Section 5 of the Implementation Agreement), a one-time addition to the foregoing $2,000,000 design escrow fund equal to the difference (if any) between the aggregate of the proforma Project Budget allocation for the work to be performed under Schedules 1, 2 and 3 [respectively, Schematic Approval, Street and Utility Design and Building Design], and the arithmetic total of (i) then aggregate Participant Interim Costs and (ii) the $2,000,000 initial design escrow fund WAS01 41757865v2 320288-00018 12/3/2008 7:23 PM delivered to the Escrow Agent as hereinabove recited (such initial $2,000,000 initial design escrow fund and any such addition, collectively, the "Design Escrow"); (b) The sum of $3,000,000 as a construction escrow fund, within ten (10) business days from and after the date notice of commencement of performance- under the general construction contract for the Senior Center building improvements shall have been given to the general contractor by the Participant; and (c) As additions to the foregoing $3,000,000 construction escrow fund, on a continuing basis, the difference between the sum of $3,000,000 (or, if less, the then unpaid balance under the general construction contract for the Senior Center building improvements, including retainage) and the then balance of such construction escrow fund, within ten (10) business days from and after the date the balance of the Construction Escrow (as herein defined) at any time falls below $300,000 (such initial $3,000,000 construction escrow fund and any and all such additions, collectively, the "Construction Escrow"). The Design Escrow and Construction Escrow as existing from time to time (in either instance or collectively, the "Escrow Fund") shall be held, invested, disbursed and released by the Escrow Agent under and in accordance with the terms and provisions of this Escrow Agreement, and shall be deposited by the Escrow Agent in a federally insured financial institution doing business in the State of California, in an insured money market or other interest bearing account or investment, as from time to time in writing may be available by and shall be approved or directed by the Participant. No interest earned on the Escrow Fund shall be deemed a part of the Escrow Fund and shall belong to Participant, and shall be disbursed to the Participant as from time to time requested (but no more frequently than on a calendar quarter basis) and in any event upon termination of this Escrow Agreement. 3. Disbursements and Release of Escrow Fund. (a) Subject to the terms and conditions of this Agreement, upon the written request of the Participant (a "Disbursement Request") and the satisfaction by the Participant of the requirements of this Section 3, the Escrow Agent shall release portions of the Escrow Fund to the Participant or any third party professional, consultant or contractor designated by the Participant for the payment of costs incurred in furtherance of the design, development and construction of the Senior Center pursuant to the scope of work reflected under the applicable Schedules,. proforma Project Budget, Project Budget, and the OPA and this Agreement (as the same from time to time may be modified, amended and/or supplemented). The Design Escrow shall be released only for the scope of work to be performed under Schedules 1, 2 and/or 3 [respectively, Schematic Approval, Street and Utility Design and Building Design], and the Construction Escrow shall be released only for the scope of work to be performed under Schedule 4 [Construction], except, that, as provided for under Section 3(e) hereof, any balance of the Design Escrow remaining after completion of the scope of work to be performed under Schedules 1, 2 and 3 [respectively, Schematic Approval, Street and Utility Design and Building Design] at the election and the written WASOl_41757865v2_320288-0001812/3/20087:23PM - 2 - direction of the Participant may be added to and thereupon shall be and become a part of the Construction Escrow hereunder. (b) Each Disbursement Request shall include: (i) a description of the scope of work for which such Disbursement Request is made and for which payment is sought, (ii) invoices in support of such Disbursement Request and, for Disbursement Requests of the Construction Escrow, written certification from the general contractor or project architect that the invoiced work is in place and was constructed in substantial compliance with approved plans and specifications, and (iii) a written certification of the Participant that (y) such Disbursement Request is in compliance with line item allocations set forth in the proforma Project Budget or Project Budget from time to time (as the case may be), (z) all costs described in such Disbursement Request have been incurred in furtherance of the design, development and/or construction of the Senior Center as reflected under the applicable Schedules and the OPA and Implementation Agreement (as the same from time to time may be modified, amended and/or supplemented). (c) If pursuant to any professional, consulting, or development or construction contract, the payee thereunder is entitled to periodic payments or a deposit payment is required prior to the delivery of goods or completion of services, then a Disbursement Request rightfully may be made in accordance with the terms of such contract and, if applicable, prior to the commencement of work under such contract. Except as otherwise provided in the preceding sentence, a Disbursement Request shall be made only after completion of that portion of the work for which payment is sought. (d) The Participant shall provide to the City a copy of each Disbursement Request and supporting documentation delivered to the Escrow Agent concurrently with its delivery to Escrow Agent. With respect to any Disbursement Request received by Escrow Agent, funds shall be disbursed from the Escrow Fund, by federal wire transfer or good check, no more frequently than once each month, within no more than twenty (20) days following receipt by Escrow Agent of a completed Disbursement Request. For purposes of facilitating the performance of the Escrow Agent hereunder, as part of the submission of a Disbursement Request and supporting documentation to the Escrow Agent, the Participant shall certify to the Escrow Agent its compliance with the requirements of this Section 3 in all material respects and the Escrow Agent shall have the right to rely upon such certification for the purpose of making disbursements of the Escrow Fund hereunder. (e) Upon completion of the scope of work to be performed under Schedules 1, 2 and 3 [respectively, Schematic Approval, Street and Utility Design and Building Design], any balance of the Design Escrow then remaining shall be released to the Participant, provided, that, at the election and in the discretion of the Participant, upon written direction given to the Escrow Agent, such balance instead shall be added to and thereupon shall be and become a part of the Construction Escrow hereunder. Promptly after the Participant shall give written certification to the Escrow Agent that the Senior Center has been substantially completed (as defined in Section 4(c) of the Implementation Agreement), all funds remaining in the Escrow Fund that are not to be disbursed pursuant to any pending Disbursement Request shall be immediately released by the Escrow Agent to the Participant. A copy of such certification of substantial completion shall be delivered to the WAS01_41757865v2_320288-00018 12/3/2008 7:23 PM - 3 - City. Notwithstanding any provision of this Agreement, the OPA or the Implementation Agreement express or implied to the contrary, in no event shall the City have the right or authority to prohibit or delay any disbursement of any portion of the Escrow Fund hereunder pursuant to any Disbursement Request or otherwise pursuant to the terms hereof, and any notice or instruction given by the City to the Escrow Agent contrary to the foregoing restriction shall be void, provided, however, that, the foregoing restriction shall not estop or otherwise limit right of the City to make or initiate any independent claim, demand or action against the Participant based upon an alleged wrongful Disbursement Request or release of any portion of the Escrow Fund. (f) If the Participant is relieved or excused under the terms of the OPA and/or the Implementation Agreement from the obligation to design, develop and/or construct the Senior Center and instead becomes obligated to pay the Park In -Lieu Fee or Park In -Lieu Fee Balance, then all funds remaining in the Escrow Fund that are not to be disbursed pursuant to any pending Disbursement Request immediately shall be released to the Participant. If under Section 4(b)(C) of the Implementation Agreement, the City shall stay work in furtherance of the Senior Center pending the outcome of a Restraining Event, then, during the tenure of such stay, the Participant shall have no obligation to fund (and the City shall have no right to require the funding of) any additional amounts into the Escrow Fund hereunder for any reason. (g) For purposes of clarity, the parties acknowledge that no Disbursement Request and no release of any portion of the Escrow Fund shall be deemed to amend or modify, or supersede, the provisions of the OPA controlling the determination of "Senior Center Costs" thereunder. 5. Escrow Agent. (a) The reasonable fees and expenses of the Escrow Agent hereunder shall be paid for, in full, by the Participant and shall not constitute a Senior Center Cost under the OPA. (b) The City and Participant hereby (i) agree to indemnify, hold harmless and defend the Escrow Agent, as escrow agent hereunder, in the good faith performance of its duties hereunder as such escrow agent, and release the Escrow Agent from and against any liability to the City or Participant hereunder except for fraud, gross negligence or willful misconduct, (ii) authorize the Escrow Agent to rely upon any signature, certification, notice, demand, waiver, consent or other instrument reasonably believed by the Escrow Agent to be genuine, and, (iii) in the event of a dispute between the City and Participant respecting the proper disposition of the Escrow Fund, authorize the Escrow Agent to pay the Escrow Fund into the registry of any court asserting jurisdiction over this Escrow Agreement, whereupon the Escrow Agent thereupon shall be fully released and discharged from all obligations to perform any and all duties or obligations under this letter respecting such funds. (c) Without limiting the right of the Escrow Agent under clause (iii) of the preceding paragraph 5(b), the Escrow Agent shall have the right to resign its position as Escrow Agent hereunder upon thirty (30) days prior notice of resignation given to the Participant and the City, whereupon the Participant shall have the right to replace such Escrow Agent upon prior written notice given to the City. The Participant shall have the right to remove and replace the WASOl_41757865v2_320288-00018 12/3/2008 7:23 PM - 4 - Escrow Agent upon thirty (30) days prior notice of removal and appointment of a successor Escrow Agent to serve hereunder. Any successor Escrow Agent hereunder may be (and only may be) a attorney in good standing licensed to practice law in and a resident of the State of California or a national title insurance company or agency doing business in the State of California and, as a requirement of appointment, shall execute an escrow agreement in all material respects the substance of this Escrow Agreement, with any proposed substantive amendment or modification to this Escrow Agreement subject to the prior consent of the Participant and the City, each in the exercise of their respective discretion. 6. Miscellaneous. (a) This Escrow Agreement shall be governed by the laws of the State of California, without regard to conflicts of laws principles. (b) Time is of the essence of this Escrow Agreement. (c) No provision of this Escrow Agreement may be waived except by instrument signed by the party against whom enforcement is sought. This Escrow Agreement may not be amended except by written instrument executed by the City, the Participant and the Escrow Agent. (d) This Escrow Agreement shall terminate as of the date of payment and release of the entire Escrow Fund. (e) This Escrow Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument. (f) All notices and other communications required or permitted to be given under this Escrow Agreement shall be in writing and shall be sent by either recognized overnight courier or personal delivery or electronic mail (and, in such instance, with a copy of such -electronic mail notice simultaneously given by either recognized overnight courier or personal delivery), in all cases addressed to the parties as and at the addresses set forth below, with copies to the other parties there noted, or at such other address, and to the attention of such person, of which Participant, the City or the Escrow Agent shall have given notice as therein provided. If to Participant: c/o Makar Properties, LLC 4100 Macarthur Boulevard Suite 200 Newport, CA 92660 Attention: Executive Vice President for Development Telephone: 949/255-1100 e-mail: michaelg_@makarproperties.com WASOI_41757865v2_320288-00018 12/3/2008 7:23 PM - 5 - With a copy to: Wendy L. Fields, Esquire Katten Muchin Rosenman LLP 2900 K Street, N.W. Washington, DC 20007 Telephone: 202/625-3800 email: wend .folds cr,kattenlaw.com If to the City: If to the Escrow Agent: Fidelity National Title Insurance Company 4041 MacArthur Boulevard, Suite 490 Newport Beach, CA 92660 Attention: Valerie Vona, Senior Commercial Escrow Officer Telephone: 949/477-3646 e-mail: VDVona ,fnfcom Notices shall be deemed given on the date delivered or attempted in good faith to be delivered to the primary addressee during normal working hours on business days. SIGNATURES BEGIN ON FOLLOWING PAGE WAS01_41757865v2_320288-00018 12/3/2008 7:23 PM - 6 - IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement as of the date first set forth above. Date: ATTEST: Ci lerk ' REVIEWED AND APPROVED AS TO FORM: City Attorney (0 "A- a �(2,110105 THE CITY OF HUNTINGTON BEACH oe By: ��� 6 G'4_ Mayor INITIATID AM APPROVED: MAKALLON ATLANTA HUNTINGTON BEACH, LLC, a Delaware limited liability company, its Member By: Makar Properties, LLC, a Delaware limited liability company, its Authorized Member By: Paul Makarechian Chief Executive Officer nistrator By execution below, FIDELITY NATIONAL TITLE INSURANCE COMPANY hereby agrees to act as Escrow Agent hereunder in accordance with the terms hereof and hereby acknowledge receipt of eefffied true copies of the OPA and Implementation Agreement from the Participant and the City. FIDELITY NATIONAL TITLE INSURANCE COMPANY By: �—', Date: 2008 Name: s Title:%° WAS01_41757865v2_320288-00018 12/3/2008 7:23 PM — 7 — INITIATING DEPARTMENT: Administration SUBJECT: IMPLEMENTATION AGREEMENTWITH MAKALLON ATLANTA HUNTINGTON BEACH, LLC COUNCIL MEETING DATE: December 15, 2008 _ A4 TTA HM NT � � � S�'ATU �� Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Ap licable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map, Location Map and/or other Exhibits Attached ❑ Not Ap licable Contract/Agreement (w/exhibits if applicable) Attached ❑ (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. Attached ❑ (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Ap licable Bonds (If applicable) Attached ❑ Not Ap licable Staff Report (If applicable) Attached ❑ Not Applicable Commission, Board or Committee Report (If applicable) Attached ❑ Not Ap licable Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable Administrative Staff Deputy City Administrator (Initial City Administrator (Initial) Citv Clerk RCA Author: Emery CITY OF ITUN TING'TON BEACH Interdepartmental Communication TO: JOAN FLYNN, City Clerk FROM: JENNIFER MCGRATH, City Attorney DATE: October 12, 2006 SUBJECT: City Council Meeting 12/15/08, Agenda Item On behalf of Makallon Atlanta Huntington Beach, LLC and this office, we request the following: (1) Please replace Schedule 1 included on page 35-17 of the agenda with the revised Schedule I attached to this Late Communication as Attachment 41; and (2) Please replace agenda pages 35-6 though 35-11, which consists of pages 2-7 of the proposed Implementation Agreement, with pages 2-7 attached hereto as Attachment #2. The reason for the replacement of these pages is so that the Implementation Agreement recognizes that the schedules may be extended as a result of additional plan check or approval submission to any governmental, public or quasi -public authority not already provided for on Schedule 2, Schedule 3 or Schedule 4 and not proximately resulting from any failure by Participant to submit previously requested changes or information. JENNIFER MCGRATH, City Attorney /k Attachment as above c: Administration Jim Engle, Director of Community Services 06476.002/29138 Senior Center Schedule 1 [Schematic Design Approval] ID Task Name Start Finish Duration �Ju-1 2009un ----Au - ..--- 10L 2Jan May pp OctINovIAPr JcNov De Dec FebMar Apr.Mi Feb t Mar_ Jan _ g schematic Design 4118108 121308 163 days - 2 Start Schematic Design 4118108 1213108 163 days i 3 50"/ Schematic Design 4118/00 6/10/08 44 days III - ��------0�:"--I 4� Prepare 50:fi SD Cost Estimate 9/12/08 10/23/08 30 days 5 80 % SD Value Engineering 10/24/08 11/13/08 15 days 6� 7 ( City Approval and Authorization to Conlinue Design Schematic Design Arch 100% 11/13/08 11l14108 11/13/08 11/27/08 0 days 10 days - a — I 0 100% Schematic Design Completed City Review 100% SD 11/27/08 11/27/08 0 days of 11/27/08 12/3/08 5 days 10 City Approval and Authorzation to Continue Design 12/3108 1213/08 0 days Cps t�w Critical - Task Progress Summary Progress i i i Task - -""` Baseline Milestone C Critical Split Baseline ._ Summary Split Milestone Project: Huntungton Beach S Date:10l10f08 Critical Progress Baseline Split Project Summary --Task Progress ...... SummaryProgress • Task Baseline Milestone Critical Split Baseline '---' Summary -_ Split Milestone 4> Critical Progress ... • .... Baseline Split September 0, 2008 Schedule is based on working days (M - F) A0 ACTIOtj 44JJ , A K E N the submission, processing and issuance of a rough grading plan and permit; the effective date of Schematic Approval constitutes the "commencement date" for the Schedule; Schedule 3 [Building Design] is a time -line for the design of the Senior Center building, including the submission, processing and issuance of buildin permits; the effective date of Schematic Approval constitutes the "commenceme t date" for the Schedule and the Schedule runs concurrently with Schedule 2; and Schedule 4 [Construction] is a time -line for contract biddink and construction of the Senior Center; the effective date of issuance of the last /er all requisite building permits, approvals and utility agreements for the Senior Ce/ and attendant public streets and utilities by all applicable governmental, public � d quasi -public authorities under Schedules 2 and 3 constitutes the "commencement date" for the Schedule. 3. Schedule Extensions. At the election and iVr sole discretion of Participant from time to time, Schedule 1 permissively may be extendeda maximum period of sixty (60) days in the aggregate, Schedule 2 permissively m/een ed for a maximum period through to the first anniversary of the effective date of Scproval (with such 1-year anniversary date inclusive of the Schedule 2 time -line), Sermissively may be extended for a maximum period through to the first anniversafective date of Schematic Approval (with such 1-year anniversary date inclusive edule 3 time -line), and Schedule 4 permissively may be extended for a maximum ne hundred eighty (180) days in the aggregate. In addition, each Schedule shall be ex (a) For each day of any 'Plevention, delay or stoppage proximately resulting from the occurrence of a Force Mjeure event (as the term "Force Maieure" is defined under the OPA); and/or / (b) For each day of/prevention, delay or stoppage proximately resulting from (i) any delay by any governmental, public or quasi -public authority in any processing and/or approval of any good faith submission in excess of the time period(s) provided therefor in the applicab e Schedule(s) and/or (ii) any request or requirement by any governmental, public or quasi -public authority in addition to the Conditions of Approval and Mitigation Measures in effect as of the date hereof with respect to the Senior Center ("City Delay"); and/or (c) For'each day of continuance of any unrelated third party legal or equitable suit or action respecting or involving the Senior Center (in any instance, "Liti ag tion"). The City, by and through the City Administrator, and the Participant, by and through its designated representative from time to time, shall meet and confer biannually and execute and initial effective as of each 6-month anniversary of this Agreement a memorandum of the status of performance under the then applicable Schedule(s) specifying any extension(s) to such Schedule(s) desired by the Participant and/or arising under the preceding provisions of this Section 3. For purposes hereof, the first 6-month anniversary of this Agreement shall be deemed -2- WASO1 41751507v10 320288-00018 'Al RACTIO. to be April 30, 2009 and each 6-month subsequent anniversary shall be each succeeding October 31 and April 30 until substantial completion of the Senior Center (as defined in Section 5 hereof). Effective as of each such 6-month anniversary, the Participant also shall deliver to the City a statement of the aggregate of funds expended to date and costs and expenses incurred to date in furtherance of the design, development, installation and/or construction of the Senior Center, including the Management Fee to the extent of such funds and expenses (as of any specified date, the "Participant Interim Costs"). 4. Senior Center Completion. The Participant hereby agrees to use goo faith efforts in order to complete the design, development and construction of the Senior Cent in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof r with the prior written consent of the City in its sole discretion) and further agrees to give t the City monthly status reports during the pendency of Schedule 1, quarterly status reports during the pendency of Schedule 2 and Schedule 3, and monthly status reports during the pende �y of Schedule 4. By execution of this Agreement, the Agency and the City acknowledge t t this Agreement is in furtherance of Section 607.a of the OPA, hereby accept the performan e obligations reflected in the Schedules (as the same may be extended pursuant to Section 3 hereof or with- the prior written consent of the City in its sole discretion) and further agree this Agreement and the time lines and time periods hereby created, proffered and accepted su rsede any contrary provision, express or implied, of the OPA. (a) Subject to paragraph (b) below, if the scope/of performance provided for in any Schedule(s) shall not be completed within th/dedn eriod ) provided for in such Schedule(s) (as such Schedule(s) may be extended as provin S ction 3 hereof or with the prior written consent of the City in its sole discretion), tic- ant shall be relieved of its obligation to design, develop and construct the Senior Cet forth in the OPA and this Agreement and the Participant shall instead pay the entire -Lieu Fee to the City, due and payable in immediately available funds no later than ) days from approval of the Certified Cost Statement, subject, however, to a credit agPark In -Lieu Fee to the extent of the then aggregate of Participant Interim Costs, as tshall be substantiated in the Certified Cost Statement (such Park In -Lieu Fee, less such credit at any time, being the "Park In -Lieu Fee Balance"). If the Participant is obligat� under this paragraph (a) to pay the Park In -Lieu Fee Balance, then: (A) If the Participant disputes its obligation under this paragraph (a) to pay the Park In -Lieu Fee Balance, then, the Participant nevertheless shall deliver the Park In -Lieu Fee Balance to its duly appointed legal counsel or title company, and the same shall be held, in escrow, pendi T resolution of such dispute either (1) by final unappealable order issued in legal or equitable proceedings, or mediation or arbitration, or (2) by mutual agreement of the parts and joint written instructions given to the escrow agent. If such dispute is resolved by adversarial action (whether judicial proceedings, or mediation or arbitration), the prevailing parry shall be entitled to an award of its reasonable legal costs and expenses and the cost of such proceedings from the others (with the City and the Participant being Heated hereunder as the primary parties entitled to or obligated for the payment of such award, as the case may be). All funds at any time and from time to time -3- WASO1 41751507v10 320288-00018 NO ACTION T A K E Nn held in escrow in accordance with this paragraph (A) shall be invested with such financial institution and with such investments as from time to time in writing are approved by the Participant and all such funds shall bear interest for the benefit and in t�ddefend ame of the Participant. The parties shall indemnify and agree to hold harmless the escrow agent hereunder in the good faith performance of its duties, (ii) release the escrow agent from and against any liability to the parties except for fraud, gross negligence or willful misconduct, (iii) authorize the escrow agent to rely upon a Y signature, notice, demand, waiver, consent or other instrument in good faith believed by it to be genuine, and, (iv) in the event of a dispute between or among the parti respecting the proper disposition of escrowed funds hereunder, authorize the escrow gent to pay the same into the registry of any court having jurisdiction over the Participa and the City. (B) The amount of the Park In -Lieu Fee Balance shall be subject to adjustment to the extent of the Index Adjustment for the period frfrm August 31, 2009 to the date of payment, which period shall be shortened in time for the aggregate number of days (if any) of prevention, delay and/or stoppage proximately resulting from any Force Majeure, City Delay or Litigation under Sections 3(a), 3(b) and/or 3(c) but shall not be shortened for the period, if any, that the Park In -Lieu F�ecBalance is held in escrow in accordance with paragraph (A) above. For purposes of the foregoing, "Index Adjustment" means the arithmetic average of the percentage cha#s for the applicable time in the McGraw Park Engineering News (i) 20-City Materials Cost Index arithmetic average for cement and lumber (excluding structural steel) and/(ii) 20-City Building Cost Index for Skilled Labor (excluding Building Cost and Wage$%hr). (b) If (i) a Force Majeure evvent or Litigation shall occur, and (ii) such occurrence reasonably prohibits the right of the/City or the Participant to construct the Senior Center (a "Restraining Event"), and (iii) such/Restraining Event continues in effect for ten (10) months or more (but in no event beyond December 31, 2009), then at any time after the expiration of such 10-month period (or DecembeV31, 2009, as the case may be), the City shall have the right upon thirty (30) days prior written notice given to the Participant to instruct the Participant to cease all work in furtherance of the enior Center and instead to pay the Park In -Lieu Fee Balance, in which event the Participan shall be relieved of its obligation to design, develop and construct the Senior Center as set forth in the OPA and this Agreement and the Participant shall instead pay the Park In -Lieu Fee/Balance, due and payable ratably over the 516 approved residential condominium units of the Project and at the time of issuance of building permits for such units, but in no event late. than February 1, 2015. In addition and not in limitation of the foregoing provisions of this Section 4(b): (A) If under this Section 4(b) a Restraining Event shall occur and the Participant shall be relieved of its obligation to design, develop and construct the Senior Center and instead pay the Park In -Lieu Fee Balance and if less than the 516- approved residential condominium units for the Project in fact are constructed, then the deficiency in the payment of Park -In -Lieu Fee Balance resulting as a consequence of the shortfall in the number of condominium units to be so constructed shall be paid (to the extent then known) at the time of issuance of the first building permit for the final building phase of -4- WAS01 4175150700 320288-00018 1 0 0, r ;a.3t G:. TAKEN the Project and any further deficiency shall be paid with the issuance of the final building permit in such final building phase. (B) If under this Section 4(b) a Restraining Event shaIJ/-6ccur and the Participant shall be relieved of its obligation to design, develop and c nstruct the Senior Center and instead pay the Park In -Lieu Fee Balance, then the amoun6f Park In -Lieu Fee Balance for each condominium unit shall be subject to Index Adj//dstment for the period from February 1, 2011 to the date of payment for such condominium unit. (C) Upon the occurrence of a Restraining Event, Ile City shall have the right upon thirty (30) days prior written notice given to th , articipant to instruct the Participant to stay all work in furtherance of the Senior Center pending the outcome of such Restraining Event and the determination by the Citxof its right under the preceding provisions of this Section 4(b). Any such instruction by the City to stay work shall constitute a continuance of the Force Majeure event or Litigation giving rise to such Restraining Event and a continued extension of the/,affected Schedule(s). (D) For purposes of this paragraph 4(b), a "Restraining Event" shall be deemed to have occurred upon the issuance 'n that certain pending litigation (the "Parks Litigation") captioned PARKS LEGAL EFENSE FUND, a California non-profit organization, et al., v. THE CITY OF/ UNTINGTON BEACH et al., as filed in the Superior Court of the State of California for the County of Orange, Case No. 00051261, of an order (1) restraining the const �tion of the Senior Center, (2) requiring with respect to the Senior Center the conduct7of a new Environmental Impact Report under the California Environmental Quality/Act, or (3) requiring approval of the Senior Center by a new Measure C vote under Section 612 of the City Charter. (E) If under this Section 4(b) a Restraining Event shall occur but the City does not exercise its right to7stay work under paragraph (C) above and either (1) the Restraining Event does not continue in effect for ten (10) months or more (or beyond December 31, 2009), r (2) the Restraining Event continues in effect for ten (10) months or more (or beyond December 31, 2009) but the City does not exercise its right to relieve the Participant of its obligation to design, develop and construct the Senior Center and instead pay the P// rk In -Lieu Fee Balance as herein provided for, then and in. any such event the Participant shall be obligated to continue performance in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof) to the extent such performance in the good faith judgment of Participant and its professional advisors proximately is not prevented, delayed or stopped by such Restraining Event. By way of example, i the Participant is obligated to continue performance as aforesaid and if as part of the Parks Litigation construction of the Senior Center shall be the subject of a restraining order, then the Participant nevertheless shall continue performance under Schedule'2 [Street and Utility Design] and Schedule 3 [Building Design] to the extent the same is not thereby so prevented, delayed or stopped. -5- WAS01 4175150700 320288-00018 (c) If the Participant completes the design, development and construction of the Senior Center in accordance with the Schedules (as the same may be extended pursuant to Section 3 hereof), then, subject to the remainder of this paragraph (c), the amount of the Park In - Lieu Fee Balance existing as of August 31, 2009 shall be subject to Index Adjustment for the period (but only for the period) from August 31, 2009 through to the dat of substantial completion of the Senior Center. For purposes of this Agreement, the Seniyir Center shall be deemed "substantially complete" and the "date of substantial completion" shall be deemed to have occurred when substantial completion occurs under the terms of the general construction contract or is certified by the project architect, provided, however, that, for purposes of calculating the Index Adjustment under this Section 4(c) and liquidate damages under Section 4(d) hereof, the date of substantial completion (or the date of certif, at ion thereof, as the case may be) shall be reduced in time for the aggregate number of days f any) of prevention, delay and/or stoppage proximately resulting from any Force Majeure, City Delay or Litigation. (d) In addition and not in lieu of the preceding provisions of this Section 4, if the Participant completes the design, development and construction of the Senior Center and if the date of substantial completion occurs after April 22, 2011/ then, the Participant shall pay to the City liquidated damages for the period from April �2/2, 2011 to and including such date of substantial completion (the "Liquidated Damages Period"), with such Liquidated Damages Period reduced in time for the aggregate number f days (if any) of prevention, delay and/or stoppage proximately resulting from any Force ajeure, City Delay or Litigation, and with such liquidated damages calculated at the rate of $2,500 per day for each business day of the Liquidated Damages Period and due and pay le within thirty (30) days of the expiration of the Liquidated Damages Period. For purposes of this Section 4(d), a "business day" shall mean any day other than a Saturday or Sunday or day on which national banks doing business in the State of California are closed for business. (e) If at any time the Participant is obligated to pay the Park In -Lieu Fee or any Park In -Lieu Fee Balance hereunder orunderthe OPA and such obligation is a deferred obligation, then the Participant nevertheless shall have the right to prepay the same in whole or in part at any time or from time to time, wit, ut penalty. 5. Project Budget Submissions. Consistent with the Schedules adopted hereunder, the proforma proposed P oject Budget provided for in the first sentence of Section 305.6.b shall be submitted to the City within sixty (60) days of the effective date of Schematic Approval and the Project Budget shall be submitted within the later of ninety (90) days from final plan approval of the Senior Center 4nd sixty (60) days from award of bids under Schedule 4. 6. Denbsit Oblijzations. Attached to this Agreement as an Exhibit is a copy of an Escrow Agreement (the "Escrow Agreement") dated of even date herewith, made by and among the Participant, the City and Fidelity National Title Insurance Company, as escrow agent (the "Escrow Agent" , and simultaneously herewith executed and delivered by the parties thereto. In furtherance of the provisions of this Agreement, within five (5) days from and after the date this Agreement shall have been executed and delivered by the parties hereto, the Participant shall deliver to the Escrow Agent the sum of $2,000,000 to be held, invested, disbursed and/or -6- WASO1 41751507v10 320288-00018 released in accordance with the terms and provisions of the Escrow Agreement. T�e Participant hereby agrees to deliver the following additional funds to the Escrow Agent at/ the following times, in each instance to be held under and in accordance with the terms and provisions of the Escrow Agreement: (a) Within ten (10) business days from and after the del}kery of the proforma Project Budget to the City pursuant to Section 305.6.b (as amended by Section 5 of this Agreement, above), the difference (if any) between the aggregat of the proforma Project Budget line item allocations for all work to be performed u er Schedules 1, 2 and 3 [respectively, Schematic Approval, Street and Utility Desig and Building Design], and the arithmetic total of (i) then aggregate Participant Interi Costs and (ii) the $2,000,000 delivered to the Escrow Agent as hereinabove provided for (such initial $2,000,000, together with any such additional amount, the "Design liscrow"); (b) The sum of $3,000,000 (the "Consstruction Escrow") within ten (10) business days from and after notice of commencement of performance under the general construction contract for the Senior Center bui ing improvements shall have been given by the Participant; and (c) The difference between the sum of $3,000,000 (or, if less, the unpaid balance under the general construction contract for the Senior Center building improvements, including retainage) and the then balance of the Construction Escrow, within ten (10) business days from/and after the date the balance of the Construction Escrow falls below $300,000. The parties acknowledge that, as Escrow and the Construction Esc costs incurred in furtherance of 1 pursuant to the scope of work ref] Project Budget, and the OPA� modified, amended and/or supple 7e"ach fully provided for in the Escrow Agreement, the Design may and shall be drawn by the Participant to pay for design, development and construction of the Senior Center -.d under the applicable Schedules, proforma Project Budget, this Agreement (as the same from time to time may be 7. Bonds. TVs Implementation Agreement and the Escrow Agreement are in lieu of the performance bond obligation of the Participant as set forth in Section 614.1 of the OPA with respect to the Senior Center, and such bonding obligation hereby is deleted. The labor and materials bond obligation of the Participant as set forth in Section 614.2 of the OPA with respect to the Senior Cenyr shall be included in the construction contract as subcontractor requirements based upon then existing market conditions and bonding availability. 8. /Authori . Each individual executing this Agreement on behalf of a party hereto represents t at he or she has full authority to do so and to bind such party to perform pursuant to . the terms acid conditions of this Agreement. y+, -7-� u WASOl 41751507v10 320288-00018 Page 1 of 1 Lugar, Robin From: Karla Moreno [karla@luch.com] Sent: Monday, December 15, 2008 3:27 PM To: Fujii, John _ Cc: city.clerk@surfcity-hb.org Subject: Re: Parks Legal Defense Fund, et al. v. City of Huntington Beach, et al. - Agenda Item No. 35 Attachments: City of HB_ Letter to Fujii - Agenda Item No. 35.PDF Dear Mr. Fujii: Please see the attached letter. Thank you, Karla E. Moreno, Legal Secretary LAQUER, URBAN, CLIFFORD & HODGE LLP 225 South Lake Avenue, Suite 200 Pasadena, California 91101 Telephone: (626) 449-1882 Facsimile: (626) 449-1958 karla@luch.com This communication constitutes an electronic communication within Electronic Communications Act, 18 USC 2510, and its disclosure is the recipient intended by the sender of this message. This commu confidential and privileged material for the sole use of the inte receipt by anyone other than the intended recipient does not cons confidential or privileged mature of the communication. Any revi by others is strictly prohibited. If you are not the intended re contact sender by return electronic mail and delete all copies of 12/15/2008 CHRISTOPHER M. LAQUER* MICHAEL A. URBAN*•Y ROBERT SCOT CLIFFORD BRIAN RAY HODGE* MARK C. ALLEN III* SUSAN GRAHAM LOVELACE L.AQUER, URBAN, CLIFF®RD & HODGE LLP ATTORNEYS 225 SOUTH LAKE AVENUE, SUITE 200 PASADENA, CALIFORNIA 91101-3030 (626) 449-1882 FAX (626) 449-1958 www.luch.com MANA F. BOLOURCHI DENISE E. CARTER MARIIA KRISTICH DECKERO EMILY Z. MANNINGER4 1. PAUL MOORHEAD JACQUELINE L. NORLIN.`. DOUGLAS V. RITCHIEO A PROFESSIONAL CORPORATION •S ADMITTED IN CA. NV & WA O ADMITTED IN CA & DC .; ADMITTED IN CA & NV O ADMITTED IN NV & UT December 15, 2008 VIA E-MAIL, John Fujii Office of the City Attorney P.O. Box 190 2000 Main Street Huntington Beach, California 92468 Ike: Parks Legal Defense Fund, et al. v. City of Huntington Beach, et al. Agenda Item No. 35 Dear Mr. Fujii: LONG BEACH. CALIFORNIA LAS VEGAS. NEVADA BELLEVUE. WASHINGTON allen@luch.com FILE NO.: 1122.0000 Thank you for your email earlier today regarding the new "Implementation Agreement" with Makallon Atlanta Huntington Beach, LLC. As you know, my client, Parks Legal Defense, does not oppose building of the Senior Center. My client is in favor of building the Senior Center just not in the location specified in the current agreement. Because of the extremely short time to review, I can only make a few points based on my, very limited, analysis of what you sent. 1. It does not appear that the notice is correct. This Agreement contemplates a definite construction of a public building. Both state law and the City Charter have specific notice provisions which do not seem to have been complied with here. 2. The Agreement would appear to violate the Subdivision Map Act. Under the Map Act (and under CEQA as well), the developer's performance of the park obligations must be secured by adequate security, usually a performance bond issued by an admitted carrier. Here there is no security. Even if one were to agree, which we do not, that this project is a proper use of park fees, the structure 179165.1 John Fujii Office of the City Attorney December 15, 2008 Page 2 proposed in the Agreement would allow such fees to be encumbered with no adequate assurance that the work of improvement will ever actually be built. 3. Based on what records I can find, Makallon Atlanta Huntington Beach, LLC appears, to be a single purpose LLC that owns but one asset, an interest in the Pacific City project. As with most single purpose entities set up by developers, it appears that this entity's assets are limited, or nonexistent. Therefore, its promise to pay money in the future is essentially nothing more than an optimistic expectation. Both CEQA and the Map Act require more. 4. It appears that the Agreement violates the Public Contract Code both procedurally and substantively in that the construction neither calls for appropriate bidding and protection of workers nor satisfies the requirements for issuing public work on a "cost plus basis". In conclusion, we find it hard to understand the City's logic in tying itself to an entity that has already not performed. This seems especially indefensible when the Agreement would allow the developer to put money in an account and simply write checks back to itself. We ask that the City Council put this matter over a few weeks to allow itself and the public to more adequately analyze the Agreement. Very truly yours, C zz� Mark C. Allen III �— MCA:rmd cc: Client Counsel Members c/o City Clerk, Joan Flynn (Via E-mail: city.clerk@surfcity-hb.org) 179165.1