HomeMy WebLinkAboutPoseidon Resources (Surfside) LLC - 2010-09-07 (3) I PPRDVED
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2000 Main Street,
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File #: 22-961 MEETING DATE: 11/15/2022
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Ursula Luna-Reynosa, Director of Community Development
PREPARED BY: Ricky Ramos, Principal Planner
Subject:
Adopt Resolution No. 2022-77 approving the decertification of Subsequent Environmental
Impact Report (SEIR) No. 10-001; rescission of Conditional Use Permit (CUP) No. 02-004,
Entitlement Plan Amendment (EPA) No. 10-001, Coastal Development Permit (CDP) No. 10-014,
and Tentative Parcel Map (TPM) No. 10-130; and termination of related agreements (Poseidon)
Statement of Issue:
In May 2022, the California Coastal Commission denied a Coastal Development Permit for the
Poseidon Desalination Plant proposed at 21730 Newland Street. This denial effectively prevents the
plan's construction and operation in Huntington Beach. As such, City Council is requested to adopt
Resolution No. 2022-77,which would rescind local project approvals: decertify SEIR No. 10-001;
rescind CUP No. 02-004, EPA No. 10-001, CDP No. 10-014, and TPM No. 10-130; and terminate
related agreements for the Poseidon seawater desalination project.
Financial Impact:
Not applicable.
Recommended Action:
Approve decertification of SEIR No. 10-001; rescission of CUP No. 02-004, EPA No. 10-001, CDP
No. 10-014, and TPM No. 10-130; and termination of related agreements by adopting Resolution No.
2022-77 "A Resolution of the City Council of the City of Huntington Beach Decertifying Final
Subsequent Environmental Impact Report No. 10-001 and Repealing Resolution No. 2010-63 and
Rescinding all City Entitlement Approvals and Terminating All Agreements (Attachment No. 1)."
Alternative Action(s):
The City Council may make the following alternative motion(s):
Do not approve the recommended action, and direct staff accordingly. This may include not
accepting any or all of the recommendations listed above.
City of Huntington Beach Page 1 of 2 Printed on 11/10/2022
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File #: 22-961 MEETING DATE: 11/15/2022
Analysis:
In May 2022, the California Coastal Commission denied a CDP for the Poseidon Desalination Plant,
ending its bid to construct and operate in Huntington Beach. On November 1, 2022, the City Council
directed staff to prepare an agenda item to decertify the EIR and withdraw all local approvals issued
by the City for the Poseidon project. On November 7, 2022 Poseidon Water submitted a letter
requesting termination of all City agreements and permits (see Attachment 2), which include:
• SEIR No. 10-001
• Conditional Use Permit No. 02-004
• Entitlement Plan Amendment No. 10-001
• Coastal Development Permit No. 10-014
• Tentative Parcel Map No. 10-130
• Franchise agreement
• Owner participation agreement
• Exchange agreement and escrow instructions and lease agreement for water storage
purposes
As such, staff has prepared Resolution No. 2022-77, which will withdraw local approvals for each of
the items above, since the subject project is no longer viable on the proposed project site.
Environmental Status:
The recommended action is not subject to further environmental review because there is no project
being approved.
Strategic Plan Goal:
Financial Sustainability, Public Safety or Other
Attachment(s):
1. Resolution No. 2022-77
2. November 7, 2022 Poseidon Water Letter
City of Huntington Beach Page 2 of 2 Printed on 11/10/2022
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RESOLUTION NO. 2022-77
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH DECERTIFYING FINAL
SUBSEQUENT ENVIRONMENTAL IMPACT REPORT NO.
10-001 AND REPEALING RESOLUTION NO. 2010-63 AND
RESCINDING ALL CITY ENTITLEMENT APPROVALS AND
TERMINATING ALL AGREEMENTS
WHEREAS, the City of Huntington Beach("City"), as lead agency,has completed and certified
that certain Final Subsequent Environmental Impact Report(SEIR)No. 10-001 for the Poseidon
Seawater Desalination project("Project"),which project is more fully described in Final SEIR
No. 10-001 which has been assigned State Clearinghouse#2001051092; and
WHEREAS,on September 7,2010,the City Council adopted Resolution No. 2010-63,which
certified Final SEIR No. 10-001 for the Project; and
WHEREAS,on September 7 and September 20,2010,the City Council approved the Project,
pursuant to Entitlement Plan Amendment No. 10-001 to Conditional Use Permit No. 02-004,
Coastal Development Permit No. 10-014, and Tentative Parcel Map No. 10-013 to permit a 50
million gallons per day seawater desalination project on a 13-acre site and to subdivide three
parcels totaling 19.5 acres info four parcels conditioned upon California Coastal Commission
approval; and
WHEREAS,on September 7,2010,the City Council approved an Amended and Restated Owner
Participation Agreement, an Exchange Agreement and Escrow Instructions,and a Pipeline
Franchise Agreement with Poseidon Resources (Surfside)LLC; and
WHEREAS, in May 2022,the California Coastal Commission denied a Coastal Development
Permit for the Project;and
WHEREAS,on November 7,2022, Poseidon Water submitted a letter requesting termination of
all approvals,permits and agreements with the City of Huntington Beach(Attached hereto and
incorporated herein by this reference).
NOW,THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington
Beach as follows:
1. The Above recitals are incorporated herein.
2. The final SEIR No. 10-001 for the Project is decertified.
3. Resolution No. 2010-63,which certified Final SEIR No. 10-001 for the Project,is
[ repealed.
RESOLUTION NO. 2022-77
4. Conditional Use Permit No. 02-004,Entitlement Plan Amendment No. 10-001,
Coastal Development Permit No. 10-014, and Tentative Parcel Map No. 10-130 are
rescinded.
5. The Amended and Restated Owner Participation Agreement, Exchange Agreement
and Escrow Instructions, and Pipeline Franchise Agreement with Poseidon Resources
(Surfside) LLC are hereby terminated.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 15th day of - November ,2022.
etWA
426
Mayor 111
REVIE ' D AND APP? 4 ED: INITIATED AND APPROVED:
—itVC413. ager Director of Community Development
APPROVED AS FORM:
City Attorney &W
ATTACHMENTS
Exhibit A: November 7, 2022 Poseidon Water Letter of Termination
2
{ 22-12038/95384
EXHIBIT A Resolution No. 2022-77
Exhibit A
POSEIDON WATER
November 7, 2022
VIA EMAIL ONLY
City of Huntington Beach
Public Works Department
2000 Main Street
Huntington Beach, CA
Dear City of Huntington Beach:
On May 12,2022,the California Coastal Commission voted to deny Poseidon Resources
(Surfside) LLC ("Poseidon") the Huntington Beach Desalination Facility's ("Facility")
Coastal Development Permit application following a public hearing on the issue. As a
result, the Facility will not be constructed, and Poseidon has terminated its interest in the
Facility. Poseidon therefore requests termination of the agreements/permits listed below,
between Poseidon and the City of Huntington Beach.
• SEIR No. 10-001
• Conditional Use Permit No. 02-004
• Entitlement Plan Amendment No. 10-001
• Coastal Development Permit No. 10-014
• Tentative Parcel Map No. 10-130
• Franchise agreement
• Owner participation agreement
• Exchange agreement and escrow instructions and lease agreement for water
storage purposes
Poseidon waives the right to any noticing and opportunity to be heard before City Council
on the termination of the Franchise Agreement, dated September 7, 2010.
Thank you for your attention to this matter.
A'a.z i 4. .9cii,rv4 .
Keith A. Bukowski
Poseidon Water
Corporate Controller
cc: [Via email only]
Ricky Ramos, City of Huntington Beach (rramos@surfcity-hb.orq)
Poseidon Water LLC
5780 Fleet Street,Ste 140,Carlsbad,CA 92008 Phone:(760)655-3900 www.poseidonwater.com
Res. No. 2022-77
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on November 15, 2022 by the following vote:
AYES: Peterson, Bolton, Delgleize, Moser, Kalmick
NOES: Posey
ABSENT: Carr
RECUSE: None
AW4141,, Q4zaiJ4u)
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
Council/Agency Meeting Held:�ZA29zo
Deferred/Continued to:
Id Appr v d2:21❑ nditi n II�A o ed ❑ Den it le Signat/ e
Council Meeting Date: September 20, 2010 Department ID Number: ED 10-41
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Chairman and Agency Members
SUBMITTED BY: Fred A. Wilson, Executive Director
PREPARED BY: Stanley Smalewitz, Deputy Executive Director/Director of Economic
Development
SUBJECT: Approve the Amended and Restated Owner Participation Agreement
by and between the Redevelopment Agency of the City of Huntington
Beach and Poseidon Resources (Surfside) LLC
Statement of Issue: Poseidon Resources (Surfside) LLC (Poseidon) has requested an
amendment to the construction and operation of a seawater desalination plant at a site in the
Southeast Coastal Redevelopment Area. The Redevelopment Agency of the City of
Huntington Beach would like to ensure projected revenues are protected to the greatest
extent possible.
Financial Impact: Not applicable.
Recommended Action: Motion to:
A. Waive the Resolution No. 214 requirement for thirty (30) day review of the Owner
Participation Agreement; and,
B. Approve the Amended and-Restated Owner Participation Agreement by and between the
Redevelopment Agency of the City of Huntington Beach and Poseidon Resources (Surfside)
LLC; and,
C. The City Council finds that the Final SEIR serves as adequate and appropriate
environmental documentation for approval of the Amended and Restated Owner Participation
Agreement. The City Council finds that the unavoidable significant adverse effects of the
Project as identified in Section 5.0 of the Statement of Facts and Findings (growth
inducement outside of Orange County and short-term construction related impacts in regards
to air quality) have been lessened in their severity by the application of standard conditions,
the inclusion of Project design features and the imposition of the mitigation measures. The
City Council finds that the remaining unavoidable significant impacts are clearly outweighed
by the economic, social, and other benefits of the Project, as set forth in the "Statement of
Overriding Considerations" included as Section 7.0 of the Statement of Facts and Findings.
The City Council adopts the recitation of overriding considerations which justify approval of
the Project notwithstanding certain unavoidable significant environmental effects which
cannot feasibly be substantially mitigated as set forth in the Statement of Overriding
Considerations; and, i
-291- �J
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/20/2010 DEPARTMENT ID NUMBER: ED 10-41
D. Authorize the Chairperson, Executive Director, and Agency Secretary to sign all related
documents.
Alternative Action(s):
Do not approve the Amended and Restated Owner Participation Agreement and direct staff
accordingly.
Analysis:
In February 2006, the Redevelopment Agency approved an Owner Participation Agreement
(OPA) with Poseidon for the construction and operation of a seawater desalination plant
located in the Southeast Coastal Redevelopment Project Area. Poseidon has requested
changes to the development of the desalination plant. The Planning Department is
processing a subsequent Environmental Impact Report-(EIR) and changes to the Conditional
Use Permit and Coastal Development Permit. As part of the changes to the approval, an
Amended and Restated Owner Participation Agreement (Attachment 1) is being
recommended.
Improvements in the redevelopment project area result in increased property values within
those areas. As such, tax increment generated by the increase in property value would be
revenue to the City's Redevelopment Agency, after accounting for State-mandated pass-
through revenue to other entities, including the City of Huntington Beach. A description of
the tax increment and additional deal points included in the OPA are described below:
Property Tax/in Lieu
The OPA commits the project developer and any future property owner, public or private, to
pay property taxes or an equivalent property tax in-lieu fee, to the Redevelopment Agency for
30 years from the issuance of a Certificate of Occupancy. Through the OPA, the minimum
amount of the assessed value has been increased from $185,000,000 to $200,000,000.
After pass through payments, the revenue is estimated to be $1,200,000/year to the Agency
and $400,000/year to the Housing Set Aside Fund. In addition, the City, will also receive
$62,500/in property tax revenue.
The baseline assessed value of $200,000,000 is guaranteed by Poseidon to the Agency, but
may also increase annually by up to 2%. In addition, Poseidon can not appeal the property
tax amount below the baseline of $200,000,000. Should the assessed value be higher than
the estimated construction cost, the higher assessment would be applied to the property. The
event that the property for any reason is removed from the tax rolls, including the sale to a
public agency, then the participant shall pay the Redevelopment Agency an amount equal to
the term left in the Agreement or pay an in-lieu fee amount for the duration of the Agreement.
City Improvement Funds
Poseidon has agreed to pay the City $2,000,000. These funds may be used at the sole
discretion of the City Council for projects that will improve the quality of life in the City of
Huntington Beach. These funds must be paid prior to the Certificate of Occupancy. This is
the same as the original OPA.
-292-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/20/2010 DEPARTMENT ID NUMBER: ED 10-41
Right of Way Improvement Funds
Included in the conditions of approval and the OPA, is the requirement that Poseidon pay
$1,900,000 for improvements adjacent to the subject property and along the pipeline route,
including tree-damaged sidewalk repair/replacement, vacant tree well planning, median
planting restoration/enhancement, and frontage road landscaping
replacement/enhancement. Payment of these funds is required within five (5)-days after the
closing of the participant's construction financing for the project. This is the same as the
original OPA.
As in 2006, the OPA is the most effective vehicle to guarantee these revenues, should a sale
of the project to a public entity occur. The OPA could be subject to a challenge, should the
successor-in-interest to the project be a public entity. However, the City has a greater
likelihood of success in defending terms of the OPA based on state law and the assignment
provisions of an OPA.
Pursuant to Resolutions No. 214 adopted by the Redevelopment Agency in June 1991, the
Agency requested that all Owner Participation Agreements and Disposition and Development
Agreements be forwarded copies at least thirty (30) prior to any required action by the
Agency, unless by a majority vote, such members waive this requirement. This has not
occurred for this Amended OPA, therefore we are asking for the thirty days to be waived for
the OPA, due to the minor changes that are being recommended.
Environmental Status: The Planning Department is processing all related environmental
documents including the Subsequent EIR_
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
Description1. Amended and Restated Owner Participation Agreement by and between the
Redevelopment Agency of the City of Huntington Beach and Poseidon Resources
Surfside LLC
-293-
ATTACHMENT # 1
AMENDED AND RESTAT'b
OWNER PARTICIPATION AG'i EMENT
by and betw--n
REDEVELOP► ENT AGENCY OF THE
CITY O` HUNTINGTON BEACH,
Agency,
and
POSEIDON RESOURCES (SURFSIDE)LLC
Participant.
TABLE OF CONTENTS
Page
PART 1. SUBJECT OF AGREEMENT 1
Section 101 Purpose of the Agreement 1
Section 102 The Redevelopment Plan 1
Section 103 The Redevelopment Project Area 2
Section 104 The Site 2
Section 105 The Agency 2
Section 106 Participant 3
Section 107 Transfer of Project and Assignment o • greement 3
Section 108 Effect on the City Entitlements 5
PART 2. DEVELOPMENT OF THE SITE 6
Section 201 Scope of Development 6
Section 202 Construction Drawings 6
Section 203 Construction Schedule; ,nd 6
Section 204 Cost of Construction... 7
Section 205 Construction Pursua to Plans and Laws 7
Section 206 Equal Opportunity. 7
Section 207 Condition of the to 8
Section 208 Construction R:.ponsibilities 8
Section 209 Zoning and L, d Use Requirements 8
Section 210 Indemnific. on; Bodily Injury and Property Damage Insurance 8
Section 211 Local, St. - and Federal Laws 11
Section 212 Permits .nd Approvals 12
Section 213 Rights .f Access 13
Section 214 Disc imer of Responsibility by Agency 13
Section 215 C 4 A Review; Compliance with Environmental Laws 13
Section 216 vironmental Indemnification by the Developer 13
Section 217 ' .ghts of Obligees 15
PART 3. US' OF THE SITE 16
Section 3 1 Uses 16
Sectio 02 Maintenance of Site and Environs; Payment of Taxes and Assessments 16
Secti• 303 Obligation to Refrain from Discrimination 18
Sec on 304 Form of Nondiscrimination and Nonsegregation Clauses 18
S- tion 305 Effect and Duration of Covenants 19
`ection 306 Agreement Containing Covenants Affecting Real Property 19
Section 307 Relationship of Agency and Participant 19
Section 308 Representations and Warranties 19
'ART 4. DEFAULTS AND REMEDIES 22
Section 401 Defaults - General 22
Section 402 Defaults-Notice 23
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Section 403 Automatic Stay—Waiver,Non-Executory Contract./ 23
PART 5. GENERAL PROVISIONS 24
Section 501 Notices, Demands and Communications betwee,, the Parties 24
Section 502 Conflict of Interest 24
Section 503 Nonliability of Agency Officials and Emplo ees 24
Section 504 Approvals 25
Section 505 Time of Essence 25
Section 506 No Partnership 25
Section 507 Compliance with Law 25
Section 508 No Third Party Beneficiaries;Non 'ability of AES 25
Section 509 Authority to Sign 26
Section 510 Incorporation by Reference 26
Section 511 Counterparts 26
Section 512 No Merger 26
Section 513 Enforced Delay; Extensio of Times of Performance 26
PART 6. ENTIRE AGREEMENT, WA,► ERS AND AMENDMENTS 27
PART 7. TIME FOR ACCEPTANC r OF AGREEMENT BY THE AGENCY; TERM 27
ATTACHMENTS
ATTACHMENT NO. 1 SITE MAP
ATTACHMENT NO. 2 LEGAL DESCRIPTION
ATTACHMENT NO. 3 SCOPE OF DEVELOPMENT
ATTACHMENT NO. 4 AGREEMENT CONTAINING COVENANTS
AFFECTING REAL PROPERTY
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/ ii
16-2405/52143
d
AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT //
THIS AMENDED AND RESTATED OWNER PARTICIPATION AGREY ENT (the
"Agreement") is entered into by and between the REDEVELOPMENT AGE OF THE
CITY OF HUNTINGTON BEACH (the "Agency") and POSEIDO RESOURCES
(SURFSIDE) LLC, a Delaware limited liability company (the "Participant" The Agency and
the Participant agree as follows:
PART 1. SUBJECT OF AGREEMENT
Section 101 Purpose of the Agreement
The purpose of this Agreement is to effectuate the Re, velopment Plan for the Southeast
Coastal Redevelopment Project by providing for the d; elopment by the Participant of a
seawater desalination facility(the "Facility"), on that cert 'n real property described as the "Site"
in Section 104 of this Agreement, below, as well as a Iter transmission line from the Site to an
existing regional transmission system (the "Pipe. e," collectively with the Facility, the
"Project"). This Agreement does not grant any ea ment or permit or approve any development
of the Project and does not contemplate or aut,.rize any development of the Project beyond
those entitlements and approvals listed in and s .ject to the conditions of Sections 108, 202, 207,
209, 212, and 215 of this Agreement. All ap, ovals, easements or permits necessary to construct
and operate the Project must be granted i dependently of this Agreement by the entities with
jurisdiction thereof. This Agreement is . ely a finance mechanism to ensure the benefits of the
Project that become due and payable u•i er this Agreement accrue to the Agency and the City of
Huntington Beach ("City"), and do•. not provide any entitlement to construct or operate the
Project. The development of the ite and the Project pursuant to this Agreement, and the
fulfillment generally of this Agreement are in the vital and best interests of the City and the
health, safety and welfare of it esidents, and in accord with the public purposes and provisions
of applicable federal, state . d local laws and requirements. In particular, this project will
provide a reliable drought-► oof water supply along with the ability to obtain additional water
supplies in case of emery-ncies. The project provides the City access to a 10-million gallon
water storage tank for e, ergency water supply to be constructed by the Participant at no cost to
the City. The projec n particular will provide the Agency the ability to build infrastructure,
develop and fund •-w affordable housing and create jobs through the property tax/in-lieu
property fees. W. h the additional funds available, the Agency can partner with other property
owners to rehab' itate and redevelop property for the public benefit of the Southeast Coastal
Area. The Ag: cy will be able to provide additional projects and services that will improve the
health safety .nd welfare of its residents. The project will help improve disabled access across
intersectio by constructing or reconstructing wheelchair ramps and will improve safety on the
affected s eets by replacing deteriorated pavement.
/
,i Section 102 The Redevelopment Plan
/ This Agreement is subject to the provisions of the Redevelopment Plan for the Southeast
oastal Redevelopment Project, which was approved and adopted on June 17, 2002, by the City
10-2405/52143 1
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Council of the City of Huntington Beach by Ordinance No. 3561 (the "Redev opment Plan").
The Redevelopment Plan is incorporated herein by reference and made a pahereof as though
fully set forth herein.
Section 103 The Redevelopment Project Area
The Southeast Coastal Redevelopment Project area is loc ed in the City of Huntington
Beach, California. The exact boundaries of the Redevelopmen . 'roject area are specifically and
legally described in the Redevelopment Plan.
Section 104 The Site
a. The "Site" is that certain real •roperty located in the City of Huntington
Beach, illustrated and designated as Parcels 1 and ;on the Tentative Parcel Map (attached hereto
and incorporated herein as Attachment No. 1) a' i as described in the "Legal Description of the
Site" (said attachment will be incorporated her in as Attachment No. 2 upon final recordation of
map). As shown on the Site Map, the S' e consists of property currently owned by AES
Huntington Beach Development, LLC (the AES property") and property currently owned by the
City(the "City Property").
b. The Particip. hereby represents that it owns an equitable interest in the
Site (the "Participant's Interest"). he Participant's Interest is documented by way of a written
option with the fee owner of tip AES Property, AES Huntington Beach Development, LLC,
("AES")to lease or buy the AE Property, and by way of a written exchange agreement with the
fee owner of the City Prope , the City of Huntington Beach, to exchange additional property
that will be purchased by t . Participant from AES for the City Property. AES has consented to
the Participant entering i o this Agreement and to the recordation of the document set forth in
Attachment 4 hereto re'.uired hereby against the fee ownership interest of AES in the AES
Property, if the Partic..ant is not the fee owner of the AES Property at the time such recording
must occur.
Section 1 I Agency
The Agency is a public body, corporate and politic, exercising
government. functions and powers, and organized and existing under Chapter 2 of the
Communit 'edevelopment Law of the State of California.
b. The address of the Agency for purposes of receiving notices pursuant to
this A, eement is as follows:
Redevelopment Agency of the City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attn: Executive Director
10-2405/52143 2
c. "Agency" as used in this Agreement includes the Redevelopment Agency
of the City of Huntington Beach, California and any assignee or successor to its rights, powers
and responsibilities. All of the terms, covenants and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the Agency and any such assige or successor of
the Agency.
it
Section 106 Participant .,
a. The Participant is Poseidon Resources (Surf .1 e) LLC, a Delaware limited
liability company. The Project will be developed, owned and m. aged by Participant.
b. The address of Participant for purpo -s of receiving notices pursuant to
this Agreement is as follows:
Poseidon Resources(Surfside) LLC,
501 West Broadway, Suite 2020
San Diego, CA 92101
Attn: Chief Executive Officer
With a copy to:
Poseidon Resources(Sur .ide) LLC
1055 Washington Boul: and
Stamford, CT 06901
Attn: Chief Executi . Officer
c. "Particip• t" as used in this Agreement means Poseidon Resources
(Surfside) LLC, and any assigliee or successor to its rights, powers and responsibilities which is
permitted as such under the erms of this Agreement or which acquires any interest in the Site or
the Project under the power of eminent domain or by a voluntary conveyance in lieu of or under
threat of eminent domain: All of the terms, covenants and conditions of this Agreement shall be
binding upon and shall,inure to the benefit of the Participant and any such assignee or successor
of the Participant.
Section 107 Transfer of Project and Assignment of Agreement
The qualifications and identity of the Participant are of particular concern to the City and
the Agency. The Participant recognizes that it is because of such qualifications and identity that
the Agency is entering into the Agreement with the Participant. Therefore, no voluntary or
involuntary transferee of the Project or the Participant's Interest in the Site shall acquire any
rights or powers under this Agreement except as expressly set forth herein. Except as provided
in paragraph(a)below,prior to Completion, the Participant shall not assign all or any part of this
Agreement nor make any total or partial sale or transfer of Participant's Interest in the Site or the
Project without the prior written approval of the Agency pursuant to paragraph (b) below. Such
approval shall not be unreasonably withheld, conditioned or delayed, provided that the proposed
transferee has demonstrated to the Agency that it has the experience and financial capability to
10-2405/52143
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complete the Project, pursuant to paragraph (b) below. "Completion" for purposes of this/
Agreement shall mean the point in time when: (i) the Participant has completed construction pf
the Project as set forth in this Agreement (including without limitation the Scop rof
Development) and in accordance with all laws, rules, regulations, standards, guidelines an other
requirements issued by any federal, state, county, municipal (including the City) r other
governmental authority having jurisdiction over the Site and/or the Pipeline route,ptfd all land
use, development and building approvals, entitlements, and/or permits as may be r uired by the
City and any other governmental body having jurisdiction over the Site for the evelopment of
and construction of the Facility on the Site or as may be required by the y and any other
governmental body having jurisdiction over the Pipeline route for the %evelopment of and
construction of the Pipeline, and(ii) a final certificate of occupancy, or a• .ivalent document, has
been issued by the City for the Facility, and by the City and any other =overnment body having
jurisdiction over the Pipeline route for the Pipeline (collec ' ely, the "Certificate of
Occupancy"), (iii) the Participant has received all governmental p rmits required to operate the
Project and to distribute the water produced therein for public .nsumption., and the Participant
has paid all obligations to the City as listed in Section 303(1).
(a) Permitted Transfers
Notwithstanding any other provision •f this Agreement to the contrary, Agency
approval of an assignment of this Agreement or ••nveyance of the Participant's Interest in the
Site or the Project or any portion thereof shal of be required in connection with any of the
following(each a"Permitted Transfer"):
(i) the conveyance or dedicat',:n of any portion of the Site to the City or the granting
of easements or permits 4 facilitate construction of the Project;
(ii) any assignment oft • Agreement or the Project for financing purposes related to
this Agreement, uding,without limitation,the grant of a deed of trust to secure
the funds necess' for land acquisition, construction and/or permanent financing
of the Project;
(iii) contracts .r the management of the development upon the Site or the Pipeline
route, or •roviding services necessary or incidental for its management;
(iv) any ansfer of the Project to (i) any holding company, corporation, association or
en ' y which is or becomes a parent, subsidiary or affiliate of the Participant or(ii)
y successor of the Participant by reason of merger, consolidation, public
offering, reorganization, dissolution, or sale of stock or assets (any such entity
described in clause (i) or (ii) is a "Related Company"), provided that not less than
thirty (30) days prior to the effective date of any such proposed transfer, the
/ Agency is provided with (1) documentation sufficient in the reasonable judgment
of the Agency to demonstrate that the transferee is a Related Company, and (2) an
2143
/113-24°5/5instrument of assignment and novation acceptable to the Agency's legal counsel
at its reasonable discretion (including failure to pay any and all future obligations
2143 4
set forth herein) containing the express assumption by the proposed transferee of
the rights and obligations of the Participant under this Agreement;
(b) Agency Consideration of Requested Transfer or Assignment'
If a request is made for an assignment of this Agreeneiit or a conveyance of the
Participant's Interest in the Site or the Project or any portion th eof other than a Permitted
Transfer during the period in which this Section 107 applies, thAgency agrees that it will not
unreasonably withhold approval of a request, provided the Pacipant delivers written notice to
the Agency requesting such approval, together with the foll$ving documentation: (1) sufficient
evidence, as reasonably determined by the Agency, , garding the proposed transferee's
development qualifications and experience, qualifica 'ins and experience in operating the
applicable type and respective portion of the Projec proposed for transfer, and its financial
resources, in sufficient detail to enable the Agency ..a evaluate the proposed transferee pursuant
to the criteria set forth in this paragraph(b); and(, an instrument of assignment and novation in
a form acceptable to the Agency's legal counse .t its reasonable discretion (including failure to
pay any and all future obligations set forth erein)containing the express assumption by the
proposed transferee of the rights and obi;_ations of the Participant under this Agreement,
including without limitation the payme• of outstanding past, present or future monetary
obligations, fees etc. in whatever form. ithin thirty (30) days after receipt of such a written
notice, the Agency shall respond i riting by stating that the request is complete or by
describing such further information .s the Agency requires in order to determine the request is
complete. Such additional info • ation shall be provided within (30) days of the Agency's
response, or the request shall b- deemed withdrawn. Within thirty (30) days of the Agency
obtaining a completed reque , the Agency shall either approve, conditionally approve, or
disapprove the proposed tra• fer, pursuant to the criteria set forth in this paragraph (b). The
Agency shall evaluate eac •roposed transferee on the basis of its operational qualifications and
experience and its firm ial commitments and resources, and may disapprove any proposed
transferee which the • ency determines, in its sole and absolute judgment, does not possess
qualifications that en. .le the proposed transferee to meet the obligations of the Participant under
this Agreement, or ay condition approval of a proposed transfer upon such conditions as the
Agency determin are necessary to assure that the proposed transferee will meet the obligations
of the Particip. under this Agreement. The provisions of this paragraph (b) shall not apply to
any Permitted ransfer set forth in paragraph(a), above.
Sec on 108. Effect of City Entitlements
he Project which is the subject of this Agreement is the subject of Entitlement Plan
Amerlment No. 10 001, approved by the City on,.T. 01,ZD/D(collectively, the "City
Entiements"). Nothing in this Agreement shall be deemed to vary, waive or affect in any way
an/term or condition of either City Entitlement.
/
/
f,, 10-2405/52143 5
i
PART 2. DEVELOPMENT OF THE SITE
Section 201 Scope of Development
The Participant agrees to diligently pursue the necessary permits an, entitlements
required for development of the Project in addition to the City Entitlements, d to commence
and complete construction of the Project in a timely manner upon obtaini such permits and
entitlements, and in conformance with the provisions of the Scope of 1 velopment (attached
hereto and incorporated herein as Attachment No. 3).
Section 202 Construction Drawings
a. The Participant shall cause its architect,'sr engineer to prepare the plans
and drawings necessary to obtain a building permit("Constr tion Drawings")for the Project.
b. The Participant shall have no oblation to submit Construction Drawings
to the Agency for review and approval, but shall sub • t plans and Construction Drawings to the
City in compliance with all applicable City rules . •: procedures, and shall develop the Project
on the Site and Pipeline route in accordance w' any Construction Drawings approved and
permits and entitlements issued and approv-.a by the City, and no further filing by the
Participant, or approval by the Agency, as to r onstruction Drawings, shall be required except as
provided in subsection c.,below.
c. Following issu. •e of a building permit for the Project, the Participant
shall submit to the Agency's Exec ye Director (the "Executive Director") for review and
reasonable approval any proposed aterial changes to the Construction Drawings that do not
conform to the Scope of Develo ent. Approval of such changes by the Executive Director
shall not be deemed to relieve `e Participant form the requirement to obtain approval of such
changes from any other gov,ernmental entity which has jurisdiction over the portion of the
Project to be so changed.
Section 203 Construction Schedule;Bond
Prior to issu rice of any building permit for the Facility, the Participant shall provide the
Agency with the anticipated date for completion of construction of the Project (the "Projected
Completion Date'). The Participant shall commence construction of the Project and shall
diligently prosecute construction of the Project to completion. If the Project is not completed
within two (2) years after the Projected Completion Date, the Participant shall be required to
demolish arid remove all construction on the Site and to return the Site to the state it was in prior
to the start of construction. The Projected Completion Date shall be extended for the time of any
enforced delay pursuant to Section 513, and may also be extended upon request of the Participant
for reasons which do not constitute an enforced delay upon the reasonable determination of the
Executive Director that the Participant has been proceeding with reasonable diligence in light of
then present circumstances. Prior to the commencement of construction of the Project, the
Participant shall obtain, and thereafter shall maintain at all times prior to the issuance of the
Certificate of Occupancy a bond or other form of security reasonably acceptable to the Agency
10-2405/52143 6
in such amount reasonably as is reasonably necessary to pay for the costs of demolition and
removal and renovation of the Site required by this Section, as determinecbby the City's Director
of Public Works.
Section 204 Cost of Construction
It is the responsibility of the Participant, at the Particip is sole cost and expense, to pay
(or cause to be paid) all Development Costs, without any co or liability to Agency or the City.
"Development Costs" shall collectively mean: dev- •pment, construction, operational,
maintenance and management costs in connection wit, the Project and the Site, including,
without limitation, all offsite improvements and on e improvements required by the City
Entitlements in connection therewith, and including, ; ithout limitation all hard costs, soft costs,
the cost of services, wages required to be paid to ,' y person employed by the Participant, any
contractor or subcontractor, and any cost overrun
Section 205 Construction Pursuant Plans and Laws
a. The Participant s 11 construct the Project in conformance with the
Construction Drawings approved by t City in issuing a building permit for the Project, all
conditions of approval imposed upo the Project by any governmental entity with jurisdiction
over the Project or any portion the of, and any modifications thereof pursuant to any change
order(s) permitted or approved by e Agency, the City, or such other governmental entities (the
"Approved Plans").
b. The P icipant shall cause all work performed in connection with the
Project to be performed i• compliance with the Approved Plans and (1) all applicable laws,
ordinances, rules and re m ations of federal, state, county or municipal governments or agencies
now in force or that ma, be enacted hereafter, and (2) all directions, rules and regulations of any
fire marshal, health o' icer, building inspection, or other officer of every governmental agency
now having or here, ter acquiring jurisdiction. The work shall proceed only after procurement
of each permit, lie, se, or other authorization that may be required by any governmental agency
having jurisdicti' , and the Participant shall be responsible for causing the procurement and
maintenance t reof, as may be required of the Participant and all entities engaged in work on
the Project.
c. All construction work and professional services shall be performed by
persons • entities licensed or otherwise authorized to perform the applicable construction work
or serv. e in the State of California.
Section 206 Equal Opportunity
During the construction of the Project there shall be no discrimination on the basis of
ace, color, creed, religion, age, disability, sex, marital status, national origin, or ancestry, in the
hiring, firing,promoting, or demoting of any person engaged in the construction work.
10-2405/52143 7
Section 207 Condition of the Site
As to all portions of the Site and Project, the Site and Project and,any portion thereof
shall be held by the Participant with no warranty, express or implied by/the Agency as to the
condition of the soil or water, its geology, or the presence of known or`unknown faults or the
condition of the Project. It shall be the sole responsibility of the Par ipant, at the Participant's
expense, to investigate and determine the soil and water conditions, the Site and the suitability
of the Site and the Project for the development to be constructed lyy the Participant. If the soil or
water conditions of the Site, or any part thereof, or the condi ton of the Project, are not in all
respects entirely suitable for the use or uses to which the Sit- .nd Project will be put pursuant to
the Scope of Development (Attachment No. 3), and the P icipant determines to proceed with
the development of the Project, then it is the sole respo •ility and obligation of the Participant
to take such action as may be necessary to place t Site and the soil and water conditions
thereof, and the Project, in all respects in a conditio entirely suitable for the development of the
Site. The provisions of this Section 207 shall not a deemed to imply or create any warranty of
the Agency or the City regarding the Pipeline ro e or any portion thereof, which may be utilized
by the Participant only in accordance with franchise granted by the City or such other
governmental entity as has jurisdiction there," .
Section 208 Construction Res••nsibilities
a. It shall be the esponsibility of the Participant to coordinate and schedule
the work to be performed so that c mmencement and completion of construction will take place
in accordance with this Agree ent. The cost of developing the Project shall be the sole
responsibility of the Particip a t. The Participant shall be responsible for obtaining and
complying with any conditi e' relating to any and all permits which may be required by any
governmental agency havi jurisdiction over the work to be performed.
b. T e Participant shall be solely responsible for all aspects of the
Participant's conduct n connection with the development of the Project, including (but not
limited to) the qu. ity and suitability of the Construction Drawings, the supervision of
construction work nd the qualifications, financial condition, and performance of all architects,
engineers, contr.' ors, subcontractors, suppliers, consultants, and property managers.
Sectio 209 Zoning and Land Use Requirements
It .. the responsibility of the Participant, without cost to the Agency, to ensure that zoning
of the S' - and all applicable City land use requirements and franchises will be such as to permit
the de elopment of the Project in accordance with the provisions of this Agreement. The
Parti• pant acknowledges that this Agreement is not a Development Agreement pursuant to
Go -rnment Code Section 65865 et seq.
Section 210 Indemnification; Bodily Injury and Property Damage Insurance
a. In the event of any legal action instituted by a third party or any
governmental entity or official (other than the Agency, the City or an official of the Agency or
10-2405/52143
8
the City), challenging the validity of any provision of this Agreement or the City Entitlements,
the parties hereby agree to cooperate in defending said action; provided, however the Participant
shall indemnify and hold harmless the Agency, the City, and their respective officers, employees,
contractors and agents from all litigation expenses, including reasonable attorneys' fees'and costs
arising out of any legal action instituted by such third party, or governmental entity or official
(other than the Agency, the City or an official of the Agency or the City) challenging the validity
of any provision of this Agreement or the City Entitlements, except if and to tye extent that such
action arises out of or relates to an act or omission by the Agency, the Ci , or an official of the
Agency or the City in violation of any applicable laws or regulatio '. The Agency shall
promptly notify the Participant of any such action and shall cooperate i. the defense thereof.
b. The Participant agrees to and shall deft d, indemnify and hold the
Agency, the City, and their respective officers, employees, con ctors and agents harmless from
and against all liability, loss, damage, costs, or expenses (', eluding attorneys' fees and court
costs) arising from or as a result of the death of any per ,n or any accident, injury, loss, and
damage whatsoever caused to any person or to the prop- 'y of any person which shall occur on
or adjacent to the Site or on or adjacent to the Pipe;'' e route and which shall be directly or
indirectly caused by or result from any acts, errors o omissions of the Participant or its officers,
employees, contractors or agents, except if and to e extent that such accident, injury, loss or
damage shall be directly or indirectly caused 'y or result from any negligent act, error or
omission by the Agency,the City or their resp- tive officers, employees, contractors and agents.
c. Indemnification Pro edure. In any situation in which the Participant is
required to indemnify a party (the "I. emnified Party") pursuant to this Agreement, as a
condition thereto the Indemnified Pa shall give the Participant reasonably prompt notice of
any matter for which indemnifica on is sought hereunder. The Indemnified Party shall
cooperate in the defense of such ;'aim (and pending assumption of defense, the Indemnified
Party, in its good faith judgment/may take steps to defend itself against such claim as it deems
appropriate to protect its interests). The Participant shall pay the Indemnified Party's reasonable
out-of-pocket expenses incutred in connection with such cooperation and such steps taken to
defend itself pending the Participant's assumption of defense. The Participant shall keep the
Indemnified Party reasonably informed as to the status of the defense of such claim. After notice
from the Participant to the Indemnified Party of the assumption and the defense of a claim, the
Participant shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense thereof other than
those expressly referred to above and expenses of Separate Counsel referred to below. The
Participant, at its own expense and through counsel chosen by it (which counsel shall be
reasonably acceptable to the Indemnified Party), shall defend any such claim; provided,
however, that if, in the Indemnified Party's reasonable judgment at any time, either a conflict
arises between the Participant and the Indemnified Party or if there are defenses which are
different from or in addition to those available to the Participant and/or the Indemnified Party
and the representation of both parties by the same counsel would be inappropriate, then in each
such case the Indemnified Party shall have the right to employ a separate law firm in each
applicable jurisdiction (if necessary) ("Separate Counsel"), to represent the Indemnified Party in
any action or group or related actions (which firm or firms shall be reasonably acceptable to the
Participant), and in that event: (a) the reasonable fees and expenses of such Separate Counsel
10-2405/52143 9
shall be paid by the Participant; and (b) the Participant shall have the right to,conduct its own
defense in respect of such claim. If the Participant does not defend against a claim, the
Indemnified Party may defend, compromise and settle such claim and,eYhall be entitled to
indemnification hereunder (to the extent permitted by this Agreement):' Notwithstanding the
foregoing, the Participant shall not, without the Indemnified Party's pric f written consent (which
shall not be unreasonably withheld, conditioned or delayed), settle off compromise any claim or
consent to the entry of judgment unless: (x) there is no finding or,:ddmission of any violation of
law or any violation of the rights of any person by the Indemned Party and no effect on any
other claims that may be made against the Indemnified Partynd (y) the sole relief provided is
monetary damages that are paid in full by the Participant.
d. Prior to commencing construct on the Site and continuing until
Completion, the Participant shall furnish or cause ', be furnished to the Agency duplicate
originals or appropriate certificates (countersigne I `sy an authorized agent of the insurer) of
insurance as follows:
1. Comprehensive eneral liability (bodily injury and property
damage), auto obile liability (including owned, hired, and non-
owned vehic s), blanket contractual liability, and personal injury
liability, al ith limits not less than $5,000,000 combined single
limit per currence. All such policies shall contain a waiver of
subroga;'en for the benefit of the Agency and the City.
2. All • ch insurance policies shall contain the following three
en.4 rsement provisions:
Additional Insureds:
"The City of Huntington Beach and the Redevelopment Agency of
the City of Huntington Beach (the "Agency"), their elective and
appointive boards, officers, and employees are added as additional
insureds with respect to this subject project and contract with the
Agency."
(ii) Notice:
"Said policy shall not terminate, be canceled, nor the coverage
reduced until after thirty (30) days written notice is given to the
Redevelopment Agency of the City of Huntington Beach."
3. Primary Coverage:
"Said policy and coverage as is afforded to the City of Huntington
Beach and the Redevelopment Agency of the City of Huntington
Beach, their elective and appointed boards, officers and employees
shall be primary insurance and not contributing with any other
10-2405/52143 1
0
insurance maintained by the City of Huntington Beach or the
Redevelopment Agency of the City of Huntington Beach."
e. All such insurance policies shall be provided by insurers adp>3itted and
authorized to do business in the State of California with a minimum rating of :VIII. The
Participant must deliver proof of the insurance required under this Section 2l7to the Agency
prior to the Agency's execution of this Agreement. /At
f. The insurance coverage and limits required herei shall not be construed
as a limit of the Participant's liability. The Participant agrees to respo for any losses subject to
indemnification under this Agreement incurred by the Agency or th ity and not covered by the
Participant's insurance, whether by reason of coverage being ina icable or by the Participant's
failure to obtain coverage. The Participant agrees to provide i ediate notice to the Agency and
the City of any claim or loss against the Participant that i • udes the Agency or the City as a
defendant. The Agency and the City assume no obligation..y the receipt of such notice,but have
the right (but not the duty) to monitor the handling of . • such claim or claims if they are likely
to involve the Agency or the City.
Section 211 Local State and Federal L. s
The Agency acknowledges that it is n• providing any financial assistance with respect to
acquisition of the Participant's Interest in t Site by the Participant or with respect to the Project
in any other way and that this Agreem- t is entered into solely for the purpose of complying
with the Redevelopment Plan. Notwit tanding the foregoing, the Participant agrees to carry out
development and construction (as d:fined by applicable law) of the Project, including, without
limitation, any and all public w. ' s (as defined by applicable law), in conformity with all
applicable local, state and feder laws, including, without limitation, all applicable federal and
state labor laws(including,wi t[out limitation, any requirement to pay state prevailing wages).
The Participant herby expressly acknowledges and agrees that neither the City nor the
Agency has ever previously affirmatively represented to the Participant or its contractor(s) for
the Project in writing of otherwise, in a call for bids or otherwise, that the Project or any portion
thereof is, or is not, a "public work," as defined in Section 1720 of the Labor Code. Should the
Project or any portion thereof be determined to be a "public work" as defined in the Labor Code,
the Participant hereby agrees that the Participant shall have the obligation to provide any and all
disclosures, representations, statements, rebidding, and/or identifications which may be required
by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from
time to time, or any other provision of law.
The Participant hereby further agrees that the Participant shall have the obligation to
maintain or cause to be maintained any and all bonds to secure the payment of contractors
(including the payment of wages to workers performing any public work) which may be required
by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended
from time to time, or any other provision of law. The Participant hereby further agrees that the
Participant shall have the obligation, at the Participant's sole cost, risk and expense, to obligate
10-2405/52143 11
any party as may be required by Labor Code Sections 1726 and 1781, as tl same may be
enacted, adopted or amended from time to time, or any other provision of law/
The Participant shall indemnify, protect, defend and hold harmle the Agency, the City
and their respective officers, employees, contractors and agents, ith counsel reasonably
acceptable to the Agency and the City, from and against any and 111 loss, liability, damage,
claim, cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable
attorneys fees, court and litigation costs, and fees of expert witn-:ses) which, in connection with
the development, construction (as defined by applicable law °and/or operation of the Project,
including, without limitation, any and all public works (as .- med by applicable law), results or
arises in any way from any of the following: (1) the none pliance by the Participant with any
applicable local, state and/or federal law, including, w' out limitation, any applicable federal
and/or state labor laws (including, without limitation,;'. applicable, the requirement to pay state
prevailing wages): (2) the implementation of Sectio 1726 and 1781 of the Labor Code, as the
same may be enacted, adopted or amended fro time to time, or any other similar law; (3)
failure by the Participant to provide any requiredisclosure, representation, statement, rebidding
and/or identification which may be required by/Labor Code Sections 1726 and 1781, as the same
may be enacted, adopted or amended from titre to time, or any other provision of law; (4) failure
by the Participant to provide and maintain, r to cause to be provided and maintained, any and all
bonds to secure the payment of cont ctors (including the payment of wages to workers
performing any public work) which y be required by the Civil Code, Labor Code Section
1781, as the same may be enacted, adopted or amended from time to time, or any other provision
of law; and/or (5) failure by the Participant to obligate any party as may be required by Labor
Code Sections 1726 and 1781, as/the same may be enacted, adopted or amended from time to
time, or any other provision of;law; provided, however, that the foregoing indemnity shall not
apply to or cover any such loss, liability, damage, claim, cost, expense and/or"increased costs" if
and to the extent arising out.6f or resulting from a violation of applicable laws or regulations by
the Agency, the City or other indemnified party or a negligent act, error or omission by the
Agency, the City or othet indemnified party. It is agreed by the parties that, in connection with
the development, construction (as defined by applicable law) and operation of the Project,
including, without limitation, any and all public works (as defined by applicable law), the
Participant shall bear all risks of payment or non-payment of state prevailing wages and/or Labor
Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to
time, and/or any other provision of law. "Increased costs" as used in this Section shall have the
meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or
amended from time to time. The foregoing indemnity shall survive termination of this
Agreement and shall continue after Completion.
Section 212 Permits and Approvals
Before commencement of construction, the Participant, without cost or expense to the
Agency, shall obtain any and all permits which may be required by the City or any other
governmental agency having jurisdiction over the work to be performed. As applicable, the
Agency shall provide appropriate assistance to the Participant in obtaining these permits and
other City approvals,provided such assistance imposes no cost or expense on the Agency.
10-2405/52143
12
Section 213 Rights of Access /
Representatives of the Agency shall have the reasonable right of access to the Site and
Project without charges or fees, at normal construction hours during the period of construction
and without interfering with business operations on the Site for the purpose of inspecting the Site
to determine the Participant's compliance with this Agreement. Such representatives of the
Agency shall be those who are so identified in writing by the Executive Director.!
Section 214 Disclaimer of Responsibility by Agency
The Agency neither undertakes nor assumes nor will have any esponsibility or duty to
the Participant or to any third party to review, inspect, supervise, pa judgment upon or inform
the Participant or any third party of any matter in connectio ' with the development or
construction of the Project or Site, whether regarding the quali adequacy or suitability of the
plans, any labor, service, equipment or material furnished to e Site or in connection with the
Project, any person furnishing the same, or otherwise. Parti• pant and all third parties shall rely
upon its or their own judgment regarding such matters, . any review, inspection, supervision,
exercise of judgment or information supplied to the P, icipant or to any third party by the
Agency in connection with such matter is for the pu. 'c purpose of redeveloping the Site, and
neither the Participant (except for the purposes set fs h in this Agreement) nor any third party is
entitled to rely thereon. The Agency shall not be r ponsible for any of the work of construction,
improvement or development of the Site.
Section 215 CE•A Review. Coms ance with Environmental Laws
In connection with its adoption ' 2002 of the Redevelopment Plan, the Agency caused
an environmental impact report (St.. Clearinghouse No. 2001-091144) to be prepared in
accordance with the requirements of • e California Environmental Quality Act(Public Resources
Code § 21000 et seq.; "CEQA" , the Guidelines for Implementation of CEQA (Title 14,
California Code of Regulations/ • 15000 et seq.; "CEQA Guidelines"), and local regulations
enacted pursuant thereto. Purant to Public Resources Code § 21090 and CEQA Guidelines §
15180, development of the ,Site with the Project constitutes private activities and undertakings
pursuant to and in furthers e of the Redevelopment Plan.
In connection ith its approval of the City Entitlements, the City Council of the City
certified Subsequent nvironmental Impact Report No 10-001, The State Clearinghouse Number
2001-051092 (the "SEIR") and adopted a mitigation monitoring plan (the "Mitigation
Monitoring Plan . The Participant agrees to comply with all conditions in the SEIR and the
Mitigation Motoring Plan at its sole cost and expense.
The,''articipant shall also comply with all environmental laws and environmental permits
applicable to the operations of the Project and the ownership or use of the Site and the Project,
shall inimediately pay or cause to be paid all costs and expenses incurred by reason of such
compliance, shall keep the Site and Project free and clear of any environmental claims or liens
imp6sed pursuant to any environmental law as a result of the Participant's development or use of
tile Project (subject to the Participant having a reasonable time to contest any such claims or
1 0-2 40 5/52 1 43
13
2
remove any such liens), and shall obtain and renew all environmental permits requi `d for
ownership or use of the Project or the Site.
Section 216 Environmental Indemnification by the Participant
The Participant agrees to defend, indemnify and hold harmless the A!•` cy, the City, and
their respective officers, employees, contractors and agents (collectively th- `Indemnities") from
and against any and all obligations (including removal and remedial .ctions), losses, claims
(including third party claims), suits, judgments, liabilities, pena es, damages (including
consequential and punitive damages), costs and expenses (includin consultants' and attorneys'
fees and expenses) of whatever kind or nature whatsoever that y at any time be incurred by,
imposed on, or asserted against the Indemnitees directly or •, irectly based on, or arising or
resulting from: (a) the actual or alleged presence of Hazardo Substances on the Site as a result
of development or operation of the Project, including, wit •ut limitation, Hazardous Substances
presently on the Site required to be removed upon d- elopment of the Project, or (b) any
environmental claim with respect to the Project, exce p in each case if and to the extent directly
or indirectly caused by or resulting from any neglig. t act, error or omission by the Agency, the
City or their respective officers, employees, contr. tors and agents. "Hazardous Substances" as
used herein shall mean any substance regulated ► applicable law as hazardous or toxic and shall
include, without limitation, the following:
a. a "Hazardous S e stance" as defined by Section 9601 of the
Comprehensive Environmental Respons-, Compensation and Liability Act of 1980, 42 U.S.C. §§
9601, et seq., or as "Hazardous aste" as defined by Section 6903 of the Resource
Conservation and Recovery Act, 42 J.S.C. §§ 6901, et seq.;
b. an "Extre'"ely Hazardous Waste," a "Hazardous Waste," or a "Restricted
Hazardous Waste," as defined .y The Hazardous Waste Control Law under §§ 25115, 25117 or
25122.7 of the California H;=lth and Safety Code, or as listed or identified pursuant to § 25140
of the California Health a Safety Code;
c. . 'Hazardous Material," "Hazardous Substance," "Hazardous Waste," or
"Toxic Air Contami .nt," as defined by the California Hazardous Substance Account Act, law
pertaining to the derground storage of hazardous substances, hazardous materials release
response plans, or e California Clean Air Act under §§ 25316, 25281, 25501, 25501.1 or 39655
of the Californi. ealth and Safety Code;
d. "Oil" or a "Hazardous Substance" listed or identified pursuant to §311 of
the Federa ater Pollution Control Act, 33 U.S.C. §1321;
e. "Hazardous Waste," "Extremely Hazardous Waste," or an "Acutely
Haz. ' ous Waste" listed or defined pursuant to Chapter 11 of Title 22 of the California Code of
Rey lations Sections 66261.166261.126;
10-2405/52143 14
f. any chemical listed by the State of California under Proposition 65 Safe
Drinking Water and Toxic Enforcement Act of 1986 as a chemical known by tre State to cause
cancer or reproductive toxicity pursuant to § 25249.8 of the California Health, nd Safety Code;
g• a material that, due to its characteristics or inter. tion with one or more
other substances, chemical compounds, or mixtures, materially +'amages or threatens to
materially damage, health, safety, or the environment, or is require. y any law or public agency
to be remediated, including remediation which such law or gove P i. ent agency requires in order
for the property to be put to any lawful purpose;
h. any material whose presence woul. °require remediation pursuant to the
guidelines set forth in the State of California Leaking nderground Fuel Tank Field Manual,
whether or not the presence of such material resulted f an a leaking underground fuel tank;
i. pesticides regulated uncle• the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §§ 136 et seq.;
j. asbestos, PCBs, an.' other substances regulated under the Toxic
Substances Control Act, 15 U.S.C. §§ 260 -'et seq.;
k. any radioactive material including, without limitation, any "source
material," "special nuclear materi. ,' "byproduct material," "lowlevel wastes," "highlevel
radioactive waste," "spent nucle. fuel" or "transuranic waste," and any other radioactive
materials or radioactive wastes, a wever produced, regulated under the Atomic Energy Act, 42
U.S.C. §§ 2011 et seq., the Nuc -ar Waste Policy Act, 42 U.S.C. §§ 10101 et seq., or pursuant to
the California Radiation Cont +1 Law, California Health and Safety Code §§ 114960 et seq.;
1. haz.,dous substances regulated under the Occupational Safety and Health
Act, 29 U.S.C. §§ 651 e'seq., or the California Occupational Safety and Health Act, California
Labor Code §§ 6300 et..eq.; and/or
m. materials, substances and wastes regulated under the Clean Air Act, 42
U.S.C. §§ 7401 e seq. or pursuant to the California Clean Air Act, Sections 3900 et seq. of the
California Healt and Safety Code.
Secti' 217 Rights of Obligees
T.- provisions of this Agreement do not limit the right of any mortgagee or other obligee
to forec I se or otherwise enforce any mortgage, deed of trust or other encumbrance upon the Site
and Project, or the right of any obligee to pursue any remedies for the enforcement of any pledge
or li=, upon the Site and Project, provided, however, the foregoing shall not be deemed to vary,
wa' 'e, or otherwise affect the order of priority of any documents recorded in connection with
t 's Agreement.
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PART 3. USE OF THE SITE
Section 301 Uses
jr
The Participant covenants and agrees for itself, its successors, it assigns and every
successor in interest to the Participant's Interest in the Site or any part ereof, that during the
period referred to in Section 305, the Participant, such successors and ch assigns shall devote
the Participant's Interest in the Site to the uses specified in t Scope of Development
(Attachment No. 3) and the Agreement Containing Covena s Affecting Real Property
(Attachment No. 4).
Section 302 Maintenance of Site and Pi s elin; Area• Pa ent of Taxes and
Assessments
a. The Participant covenants and •trees for itself, its successors and assigns,
and every successor in interest to the Site or any p. r thereof that it shall maintain the Site, and to
the extent required pursuant to the franchise agre- ent referred to below, the area of the Pipeline
route, or cause the Site and, to the extent requir; pursuant to the franchise agreement referred to
below, such Pipeline area to be maintained in ccord with the following criteria and conditions:
1. The Site . d the Project shall be operated and maintained in
conformi with all applicable laws, rules, regulations and
ordin. •es, including without limitation, all applicable federal and
state 'or standards.
2. T'e Site and all improvements thereon shall be maintained and
ept free from any accumulation of debris or waste materials.
3. All landscaping on the Site shall be maintained in a healthy
condition.
4. The Pipeline shall be maintained as specified in the franchise
agreement to be approved by the City for use of City rights-of-
way, and any other applicable franchise agreement or other
entitlement approved by any governmental entity with jurisdiction
over the Pipeline or any portion thereof.
5. The Participant shall help ensure that construction of the project
including but not limited to the Pipeline, has no adverse impact on
the quality of life in the City by paying the City, within five (5)
days after the closing of the participants construction financing for
the project, the sum of One Million Nine Hundred Thousand
Dollars ($1,900,000), which may be used by the City in its sole
discretion for improvements adjacent to the site or along the route
of the pipeline.
10-2405/52143 16
.o`
6. The Participant shall pay to the City the suW'of Two Million
Dollars ($2,000,000) which may be used bythe City in its sole
discretion for such improvements as the city Council determines
will improve the quality of life in the C4 of Huntington Beach.
These funds shall be paid by Particip. at such time as it elects
after the closing of the Participant's 'Instruction financing for the
Project but prior to Completion.
b. As a material part of the considerat':n for this Agreement, the Participant
covenants and agrees for itself, its successors and assig i and every successor in interest to the
Site or any part thereof,
1. the Participant shal pay when due all real estate or possessory
interest taxes and ssessments assessed and levied on the Site or
any portion ther of or any improvements thereon or any interest
therein, and all waive and refrain from making any appeal,
challenge o contest of the validity of any tax assessment,
encumbra e or lien on the Site, in part or in full, whether by
property x assessment appeal or otherwise; provided, however,
that s waiver shall not apply until after the Certificate of
Occu' .ncy has been issued, and provided further that such waiver
sha not apply to the extent that such assessment (or encumbrance
or ien relating thereto) exceeds Two Hundred Million Dollars
,,200,000,000); and
2. if the real estate or possessory interest taxes on the Participant's
Interest in the Site in any fiscal year(July 1 through June 30) after
the Certificate of Occupancy has been issued are less than Two
Million Dollars($2,000,000), then on July 1 of the next fiscal year,
the Participant shall pay to the City the difference between (i) the
total real estate or possessory interest taxes paid by the Participant
in such fiscal year and(ii)Two Million Dollars ($2,000,000).
c. In the event that by reason of any property tax exemption or otherwise the
Site is not c ied on the County Assessment Roll and/or real property taxes are not levied and
collected • the Site for any reason, the Participant covenants for itself, its successors and
assigns, . d every successor in interest to the Site or any part thereof or any interest therein that
the Pa ipant shall pay to the Agency an amount equal to the product of the Site Tax Increment
Reve 'e (as hereafter defined) payable to the Agency for the fiscal year immediately preceding
the R ssation of the levy or collection of taxes on the Site (the "Base Year Revenue Amount")
m tiplied by the number of years remaining in the term of this Agreement (or, if less, the
tuber of years during which such exemption or cessation will continue to be applicable). At
he option of the Participant, such payment shall be payable either(i) by a lump sum which shall
be due within thirty (30) days after the occurrence of the event which has caused or will cause
10-2405/52143 17
the Site not to be carried on the County Assessment Roll and/or real property taxes not to be
levied and collected on the Site, or (ii) by annual payments made on July 1 oice each year, in
which case the first such payment shall be made on the July 1 after the occurree of such event
and shall be in the amount of the Base Year Revenue Amount, and eac ubsequent annual
payment shall be increased by the permitted statutory rate (presently two rcent (2%) per year).
The "Site Tax Increment Revenues" from the Site shall be defined to ,= that portion of the ad
valorem property tax increment revenues attributable to the Site a.1 payable to the Agency
pursuant to Section 33670(b) of the California Health and Safety 'ode (as said statute may be
amended from time to time), including without limitation the wenty percent (20%) of said
revenues that the Agency is required to set aside for afforda e housing purposes pursuant to
California Health and Safety Code Section 33334.2. In the event that the payment required by
this subsection 302 c. is due at a time when the Agency no longer legally entitled to receive
Site Tax Increment Revenues from the Site, the Base Y: r Revenue Amount shall be deemed to
be the amount of Site Tax Increment Revenues whic he Agency was entitled to receive in the
last full fiscal year preceding termination of its ght to receive such Site Tax Increment
Revenues. Notwithstanding the foregoing, in det ining the Site Tax Increment Revenues for
purposes of this subsection 302 c. for any cal year (July 1 through June 30) after the
Certificate of Occupancy has been issued, th-:.d valorem property taxes attributable to the Site
shall be calculated at the greater of(i) the . tual amount of such taxes prior to the obtaining of
the property tax exemption or removal of e Site from the County Assessment Roll or(ii)the ad
valorem property taxes due at the then a plicable rate for property with an assessed valuation of
Two Hundred Million Dollars ($200,1.0,000). This subsection 302 c. shall apply regardless of
whether a public entity acquires an '' Brest in or title to the Site and/or the Project.
Section 303 Obli'atio o Refrain from Discrimination
The Participant cove ants and agrees for itself, its successors and assigns and every
successor in interest to the 'articipant's Interest in the Site or any part thereof that there shall be
no discrimination against .r segregation of any person, or group of persons, on account of race,
color, creed, religion, s , marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupan'. , tenure or enjoyment of the Participant's Interest in the Site nor shall the
Participant itself or y person claiming under or through it establish or permit any such practice
or practices of di• rimination or segregation with reference to the selection, location, number,
use or occupancy'of tenants, lessees, subtenants, sublessees, or vendees of the Site.
Section 304 Form of Nondiscrimination and Nonsegregation Clauses
Tlie Participant shall refrain from restricting the rental, sale, or lease of the Site on the
basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person.
All dieds, leases or contracts with respect to the rental, sale or lease of the Participant's Interest
in he Site shall contain or be subject to substantially the following nondiscrimination or
nohsegregation clauses:
a. In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
10-2405/52143 18
religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, us /
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or.ttny
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or 9upancy
of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. T foregoing
covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for • elf, its successors
and assigns, and all persons claiming under or through them, and this leas- s made and accepted
upon and subject to the following conditions: That there shall be no • scrimination against or
segregation of any person or group of persons on account of race, olor, creed, religion, sex,
marital status, national origin or ancestry in the leasing, sub asing, transferring, use or
enjoyment of the land herein leased nor shall the lease itself, o any person claiming under or
through it, establish or permit any such practice or practice of discrimination or segregation
with reference to the selection, location, number, use or occ ,ancy of tenants, lessees, subtenants
or vendees in the land herein leased."
c. In contracts: "There shall be • discrimination against or segregation of,
any person, or group of persons on account of rac;', color, creed, religion, sex, marital status,
national origin or ancestry in the sale, lease, • blease, transfer, use, occupancy, tenure or
enjoyment of the land, nor shall the transferee ' elf or any person claiming under or through it,
establish or permit any such practice or practi' s of discrimination or segregation with reference
to the selection, location, number, use or oc• pancy of tenants, lessees, subtenants, sublessees or
vendees of the land."
Section 305 Effect and Dura on of Covenants
The covenants establishes in this Agreement shall, without regard to technical
classification and designation, b- •inding for the benefit and in favor of the Agency and the City
and their successors and assi s. Such covenants as are to survive Completion shall be as
contained in the Agreement i ontaining Covenants Affecting Real Property (Attachment No. 4)
and shall remain in effect f• the periods specified therein.
Section 306 •,_reement Containin• Covenants Affectin. Real Pro'pert
a. Concurrent with the transfer of fee ownership of the Site to the Participant,
the Participant a • the Agency shall enter into and cause the recordation of an Agreement
Containing Coy nants Affecting Real Property substantially in the form attached hereto and
incorporated rein as Attachment No. 4. Such Agreement Containing Covenants Affecting Real
Property sh. establish the covenants, conditions and restrictions pertaining to the Site, as set
forth in Se'tion 300 to 305 of this Agreement, for the period of time set forth in the Agreement
Containi g Covenants Affecting Real Property, and shall run in favor of the City as well as the
Agenc
b. The Agreement Containing Covenants Affecting Real Property shall be
corded against both the Participant's Interest in the AES Property and AES's fee interest in the
10-2405/52143 19
..-
/
AES Property (should the Participant not be the fee owner of the AES Property at the ti
recordation is required pursuant to subsection a., above) and shall not be subordinated to ny
liens and encumbrances applicable to the Site except those applicable to AES's fee • erest
which have been recorded prior to the Effective Date of this Agreement. AES has co ented to
the recordation of the Agreement Containing Covenants Affecting Real Property, a et forth at
the end of this Agreement.
Section 307 Relationship of the Agency and the Participant
Nothing contained in this Agreement or in any other documen or instrument made in
connection with this Agreement shall be deemed or construed to crea . a partnership, tenancy in
common, joint tenancy, joint venture or coownership by or b- een the Agency and the
Participant. The Agency shall not be in any way responsible r liable for the debts, losses,
obligations or duties of the Participant with respect to the Site o otherwise.
Section 308 Representations and Warranties
a. As an inducement to the A:- cy to enter into this Agreement, the
Participant hereby represents and warrants to the A:-ncy, which representations and warranties
are true and correct as of the date of this Agreeme i :
1. The Participant as the legal power, right and authority to enter
into this Agreement and the instruments re .renced herein, and to satisfy all obligations of the
Participant in this Agreement or in any i•strument or document referred to herein (referred to
collectively as the "Participant's Obliga •ens");
2. This eement and all documents required hereby to be executed
by Participant are, and shall be, v. id, legally binding obligations of and enforceable against the
Participant in accordance with • eir terms, subject only to applicable bankruptcy, insolvency,
reorganization, moratorium la s or similar laws or equitable principles affecting or limiting the
rights of contracting parties -nerally;
3. There is no provision of any indenture, instrument, or agreement,
written or oral, to whi the Participant is a party or which governs the actions of the Participant
or which is otherwis: •inding upon the Participant or the Participant's property, nor is there any
statute, rule or re: ation, or any judgment, decree, or order of any court or the Agency binding
on the Participa or the Participant's property which would be contravened by the execution,
delivery or per 4rmance of any of Participant's Obligations;
4. There is no action, suit, or proceeding at law or in equity or by or
before . governmental instrumentality or other agency now pending, or, to the knowledge of
the P. cipant, threatened against or affecting the Participant, or any properties or rights of the
Parti• pant, which, if adversely determined, would materially impair the right of the Participant
to : ecute or perform any of the Participant's Obligations, or would materially adversely affect
t•- financial condition of the Participant;
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5. Neither the execution and delivery of this Agreement and
documents referenced herein, nor the incurrence of the Participant's Obligations, nor the
consummation of the transactions herein contemplated, nor compliance with tile terms of this
Agreement and the documents referenced herein conflict with or result in theiaterial breach of
any terms, conditions or provisions of, or constitute a default under, an ond, note or other
evidence of indebtedness or any contract, indenture, mortgage, deed o rust, loan, partnership
agreement, lease or other agreements or instruments to which the Parti • ant is a party;
6. To the best of the Participant's kn ledge, there are no pending,
threatened or contemplated actions, suits, arbitrations, claims o roceedings, at law or in equity,
affecting the Participant's Interest in the Site or in which rticipant is, or to the best of the
Participant's knowledge will be, a party by reason of the P icipant's Obligations, including, but
not limited to, judicial, municipal or administrative proceedings in eminent domain, unlawful
detainer or tenant evictions, collections, alleged bu''•ing code, health and safety or zoning
violations, employment discrimination or unfair 'or practices, or workers' compensation,
personal injuries or property damages;
7. No attachment., execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy;reorganization or other proceedings are pending or
threatened against the Participant, nor re any of such proceedings contemplated by the
Participant;
8. All rvorts, documents, instruments, information and forms of
evidence delivered to the Agency oncerning or required by this Agreement were accurate and
correct at the time of delivery in 1 material respects;
9. o representation, warranty or statement of the Participant in this
Agreement contains or wil contain any untrue statement of a material fact or omits or will omit
to state a material fac necessary to make the statements or facts contained therein not
misleading.
b. As an inducement to the Participant to enter into this Agreement and
develop the Site s provided herein, the Agency hereby represents and warrants to the
Participant, whi•, representations and warranties are true and correct as of the date of this
Agreement:
1. The Agency has the legal power, right and authority to enter into
this Agre: ent and the instruments referenced herein, and to consummate the transactions
contemp ted hereby;
2. This Agreement and all documents required hereby to be executed
by t r Agency are, and shall be, valid, legally binding obligations of and enforceable against the
A: ncy in accordance with their terms, subject only to applicable bankruptcy, insolvency,
r=organization, moratorium laws or similar laws or equitable principles affecting or limiting the
ghts of contracting parties generally;
10-2405/52143 21
•
3. No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other proceedingare pending or
threatened against the Agency, nor are any of such proceedings contemplated tithe Agency;
c. The truth and accuracy of each party's representations and warranties
made herein shall constitute a condition for the benefit of the other pdrty to the performance of
such other party's obligations hereunder.
PART 4. DEFAULTS AND REMEDIES
Section 401 Defaults- General
Failure or delay by either party to perfo ny term or provision of this Agreement
constitutes a default under this Agreement. The @arty who fails or delays must immediately
commence to cure, correct or remedy such f. ure or delay and shall complete such cure,
correction or remedy with reasonable diligenc , and during any period of curing shall not be in
default, so long as it endeavors to comple ' such cure, correction or remedy with reasonable
diligence, and provided such cure, correct'en or remedy is completed within the applicable time
period set forth herein after receipt of w,'tten notice (or such additional time as may be deemed
by the complaining party in its reaso.4 ble discretion to be reasonably necessary to correct the
default).
Section 402 Defaults- s otice
a. The i ed party shall give written notice of default to the party in
default, specifying the def. i It complained of by the injured party. Failure or delay in giving
such written notice shall of constitute a waiver of any default, nor shall it change the time of
default. Except as oth: ise expressly provided in this Agreement, any failures or delays by
either party in asserti• any of its rights and remedies as to any default shall not operate as a
waiver of any defau or of any such rights or remedies. Delays by either party in asserting any
of its rights and re• edies shall not deprive either party of its right to institute and maintain any
actions or procee ings which it may deem necessary to protect, assert or enforce any such rights
or remedies.
b. If a monetary event of default occurs, prior to exercising any remedies
hereunder he injured party shall give the party in default written notice of such default. The
party in •efault shall have a period of thirty (30) calendar days after such written notice is
receive,, or deemed received within which to cure the default prior to exercise of remedies by the
injur- party.
c. If a non-monetary event of default occurs,prior to exercising any remedies
-reunder, the injured party shall give the party in default written notice of such default. If the
default is reasonably capable of being cured within thirty (30) calendar days after such written
notice is received or deemed received, the party in default shall have such period to effect a cure
prior to exercise of remedies by the injured party. If the default is such that it is not reasonably
capable of being cured within thirty (30) days, and the party in default (i) initiates corrective
10-2405/52143 22
action within said period, and(ii) diligently, continually, and in good faith works to effect a re
as soon as possible, then the party in default shall have such additional time as is reasohably
necessary to cure the default prior to exercise of any remedies by the injured party, not,10 exceed
ninety(90) days after the first written notice of default is given.
d. Any notice of default that is transmitted by ele ronic facsimile
transmission followed by delivery of a "hard" copy, shall be deemed elivered upon its
transmission; any notice of default that is personally delivered (inclding by means of
professional messenger service, courier service such as United Parcel S- ice or Federal Express,
or by U.S. Postal Service), shall be deemed received on the docume. ed date of receipt; and any
notice of default that is sent by registered or certified mail, pa tage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
Section 403 Automatic Sta —Waiver Non-Executor C• tract
a. In consideration of the Agency's exec •on and performance of this Agreement,
the City's inherent police power relating to the publi ealth and safety of the citizens of the City
as recognized by 11 U.S.C. Section 362, and consideration of the recitals and mutual
covenants contained herein, and for other go.d and valuable consideration, including the
agreement of the City to afford Participant a p: 'od in excess of 10 (ten) years to perform under
the terms of the Exchange Agreement as pro 'ided therein, the receipt and sufficiency which are
hereby acknowledged, Participant hereby •grees that in the event that Participant (by its own
action or by the action of its members, s. . eholders or creditors, if applicable), shall at any time
during the term of this Agreement (a) e with any bankruptcy court of competent jurisdiction or
be the subject of any petition for rel. f under the Bankruptcy Code of 1978 as amended, or any
amended or successor statutory pr• isions (the "Bankruptcy Code"), (b) be the subject of any
order for relief issued under the :ankruptcy Code, (c) file or be the subject of a petition seeking
a reorganization, arrangement ,composition, readjustment, liquidation, dissolution, or similar
relief under any present or fu P.re federal or state act of law relating to bankruptcy, insolvency, or
other relief for debtors, (d) ave sought or consented to or acquiesced in the appointment of any
trustee, receiver, conserv. or, or liquidator, (e) be the subject of any order,judgment or decree
entered by any court of ompetent jurisdiction approving a petition filed against such party for
the reorganization, a ngement, composition, readjustment, liquidation, dissolution, or similar
relief under any pres nt or future federal or state act or law relating to bankruptcy, insolvency, or
relief for debtors, en, in any such event, the Agency and the City shall thereupon be entitled to
relief from any . .tomatic stay imposed by Section 362 of the Bankruptcy Code, or any similar
stay to the exte-. necessary for the exercise of the rights and remedies otherwise available to the
Agency or th; City as provided in this Agreement and as otherwise provided by law. Participant
hereby waiv s the benefit of such stay to the extent provided herein and does hereby consent to
the entry .f an order of any court of competent jurisdiction granting immediate relief from,
modific. on or termination of such stay, and Participant does hereby further agree to raise no
object' in to any motion or proceeding seek relief from,modification or termination of such stay.
b. Participant further acknowledges that upon execution of this Agreement, the
• _ency and the City shall have performed its material obligations as provided herein, leaving
•erformance remaining solely with Participant. In the event of a bankruptcy proceeding as
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23
described in the preceding paragraph, Participant acknowledges and agrees that this Agreement
is not executory as that term is defined in the Bankruptcy Code and in particular section 365
thereof.
PART 5. GENERAL PROVISIONS
Section 501 Notices Demands and Communications betwee e Parties
Formal notices, demands and communications between t s Agency and the Participant
shall be deemed sufficiently given if dispatched by registered o• certified mail, postage prepaid,
return receipt requested, to the respective addresses of the A cy and the Participant set forth in
Sections 105 and 106 hereof. Such written notices, demans and communications may be sent in
the same manner to such other addresses as either party s y from time to time designate by mail.
Section 502 Conflict of Interest
a. No member, official, or e. ployee of the Agency shall have any personal
interest, direct or indirect, in this Agreement, or shall any such member, official, or employee
participate in any decision relating to the A eement which affects his personal interests or the
interests of any corporation, partnership, sr association in which he is, directly or indirectly,
interested.
b. The Particip. warrants that it has not paid or given, and will not pay or
give, any third person any money o other consideration for obtaining this Agreement.
Section 503 Nonliabi of A.enc Officials and Em.lo ees
No member, offici. or employee of the Agency shall be personally liable to the
Participant, or any success,r in interest in the event of any default or breach by the Agency or for
any amount which may . -come due to the Participant or successor or on any obligation under the
terms of this Agreeme
No member, official or employee of the Participant shall be personally liable to the
Agency, or any s cessor in interest in the event of any default or breach by the Participant or for
any amount w • may become due to the Agency or successor or on any obligation under the
terms of this • _reement.
Sec on 504 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals
requi d of the Agency or the Participant in this Agreement, including the attachments hereto,
sha not be unreasonably withheld, conditioned or delayed. All approvals shall be in writing.
Except as otherwise expressly provided in this Agreement, failure by either party to approve a
matter within the time provided for approval of the matter shall not be deemed a disapproval, and
failure by either party to disapprove a matter within the time provided for approval of the matter
shall not be deemed an approval.
10-2405/52143 24
b. Except as otherwise expressly provided in this Agreement, approvals
required of the Agency shall be deemed granted by the written approval of the Executive
Director or his/her designee. The Agency agrees to provide notice to the Participant of the name
of the Executive Director's designee on a timely basis, and to provide updates from time to time.
Notwithstanding the foregoing, the Executive Director or designee may,; in his or her sole
discretion, refer to the governing body of the Agency any item requiring the Agency's approval;
otherwise, "Agency approval" shall mean and refer to approval by tyre Executive Director or
designee.
Section 505 Time of Essence
Time is of the essence with respect to the perfo s :nce of each of the covenants and
agreements contained in this Agreement.
Section 506 No Partnership
Nothing contained in this Agreement hall be deemed or construed to create a
partnership,joint venture, or any other similar elationship between the parties hereto or cause
the Agency to be responsible in any way for.i e debts or obligations of Participant or any other
Person.
Section 507 Com.liance wit aw
The Participant agrees to c. ply with all the requirements now in force, or which may
hereafter be in force, of all mu 'cipal, county, state and federal authorities, pertaining to the
development of the Site and the roject. The judgment of any court of competent jurisdiction, or
the admission of the Participa, or any lessee or permittee of the Participant's Interest in the Site
in any action or proceeding gainst them, or any of them, whether the Agency be a party thereto
or not, that the Participan lessee or permittee has violated any such ordinance or statute in the
development and use of e Site shall be conclusive of that fact as between the Agency and the
Participant.
Section 50: No Third Party Beneficiaries;Nonliability of AES
(a) ' e parties to this Agreement acknowledge and agree that the provisions of this
Agreement a for the sole benefit of the Agency and the Participant, and not for the benefit,
directly or ' directly, of any other person or entity, provided, however, that the City shall be
deemed a third party beneficiary of each term or condition except as otherwise expressly
provide. erein, and AES shall be deemed a third party beneficiary of this Section 508 and
Sectio. 702 of this Agreement.
(b) The parties to this Agreement acknowledge and agree that, notwithstanding
a. hing herein to the contrary, neither AES, nor any member (or other affiliate), official or
•mployee of AES, shall be liable to the Participant, the Agency, the City or any of their
respective officers, employees, contractors and agents or any successors or assigns of any of the
10-2405/52143 25
foregoing, for any obligations or responsibilities of the Participant or the Agency arising under or
in connection with this Agreement or the Agreement Containing Covenants Affecting: Real
Property or the development, construction, operation and maintenance of the Projector any
portion thereof unless AES develops and/or operates the Project under the City Entitlements, in
which event AES shall be deemed the Participant for all purposes thereafter arising'under or in
connection with this Agreement and the Agreement Containing Covenants ,Affecting Real
Property. The parties further acknowledge and agree that AES shall not he deemed to be a
successor to the Participant's interests and obligations under this Agreement as a result of the
AES's ownership of the AES Property or its repossession of the S Property from the
Participant following any termination, expiration or breach of the P icipant's Interest in the
AES Property unless AES were to develop and/or operate t Project under the City
Entitlements, in which event AES shall be deemed the Particip t for all purposes thereafter
arising under or in connection with this Agreement and the ?agreement Containing Covenants
Affecting Real Property.
Section 509 Authority to Sign
The Participant hereby represents that the p- ons executing this Agreement on behalf of
the Participant have full authority to do so and to +md the Participant to perform pursuant to the
terms and conditions of this Agreement. Conc . ently with the Participant's submission of this
Agreement to the Agency for execution, th:. 'articipant will submit to the Agency a copy of
documents evidencing the due formatio and nature of the Participant and the signatory's
authority to sign on behalf of the Particip ` t.
Section 510 Inco 8 oration •, Reference
Each of the attachment and exhibits attached hereto is incorporated herein by this
reference.
Section 511 Couerparts
/
This Agreement`may be executed by each party on a separate signature page, and when
the executed signature pages are combined, shall constitute one single instrument.
Section 512 No Merger
There shall be no merger of this Agreement or the Agreement Containing Covenants
Affecting Real Property.
Section 513 Enforced Delay; Extension of Times of Performance
In addition to specific provisions of this Agreement, performance by either party
hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond
the control and without the fault of the party claiming an extension of time to perform, including
war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts
of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation,
10-2405/52143
26
governmental restrictions or priority, unusually severe weather, inability to secure necessary
labor, materials or tools, delays of any contractor, subcontractor or suppliers, acts of the other
party, or acts or failure to act of City or any other public or governmental agency or entity
(except that an act or failure to act of Agency shall not excuse performance by Agency). An
extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time of the commencement of the cause, if notjloe by the party
claiming such extension is sent to the other party within thirty (30) days opknowledge of the
commencement of the cause. Times of performance under this Agreement ay also be extended
in writing by the mutual agreement of the Participant and the Agency. R
PART 6. ENTIRE AGREEMENT, WAIVERS AND AMEND NTS
This Agreement is executed in five (5) duplicate origina , each of which is deemed to be
an original. This Agreement includes twenty-nine (29) pa and four (4) attachments, which
constitute the entire understanding and agreement of the payties.
This Agreement integrates all of the terms and onditions mentioned herein or incidental
hereto, and supersedes all negotiations or previous reements between the parties with respect
to all or any part of the subject matter hereof.
All waivers of the provisions of this ' greement must be in writing and signed by the
appropriate authorities of the Agency or th= 'articipant, and all amendments hereto must be in
writing and signed by the appropriate auth' 'ties of the Agency and the Participant.
PART 7. TIME FOR ACCEPT' ,+CE OF AGREEMENT BY THE AGENCY; TERM
Section 701 Time for Ac e.tance of A.reement
This Agreement, when -xecuted by the Participant and delivered to the Agency, must be
authorized, executed and de ered by the Agency within sixty(60) days after date of consent to
this Agreement by AES o this Agreement may be terminated by the Participant upon written
notice to the Agency. T e effective date of this Agreement (the "Effective Date") shall be the
date when this Agree t has been executed by the Agency.
Section 70 Term
f
Except .is set forth below, this Agreement shall be effective for a period of thirty (30)
years from tl}e issuance of the Certificate of Occupancy.
Notwithstanding the foregoing, this Agreement and the Agreement Containing Covenants
Affecting Real Property described in Section 306 shall be deemed terminated and of no further
force or effect upon the happening of either of the following:
E (a) if prior to the commencement of any construction on the Site, either City
/` Entitlement terminates or expires for any reason including but not limited to a
// determination by any court or governmental entity with jurisdiction thereof that such City
/ 10-2405/52143
27
Entitlement is void or of no force or effect, in which event thereafter neither the Agency
nor the Participant shall have any rights against, or obligations to, the other hereunder; or
(b) if, whether prior to or after the issuance of the Certificate of Occupancy, the
Participant provides written notice to the Agency that the Participant is abandoning or has
abandoned the development and/or operation of the Project under the City Entitlements;
provided, however, that termination of this Agreement and the Agreement Containing
Covenants Affecting Real Property under this paragraph(b) shall hot be deemed to affect
any obligation of the Participant to complete the demolition removal, and restoration
work required by Section 203 of this Agreement not to mainhin the bond required therein
until such work is completed.
IN WITNESS WHEREOF, the Agency and the Participant have signed this Agreement
as of the dates set opposite their signatures.
REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH
Dated: 0e,,----024.z, l l 010/0
Name: Chy een
Its: Chairperson
APPROVED AS TO FORM:
A ncy Gen ral Counsel
POSEIDON RESOURCES (SURFSIDE) LLC,
a Delaware li ' liability company
Dated: 61 i iy By:
Its: t r�+-
Dated: By:
Its:
10-2405/52143 28
ATTACHMENT NO. 1
TENTATIVE PARCEL MAP
1
TENTATIVE PARCEL MAP No. 2010 - 130
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ATTACHMENT NO. 2 ,✓
LEGAL DESCRIPTION .
(TO BE INSERTED) r
2
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
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3
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
The Project shall consist of a seawater desalination plant and water transmiselon line as
approved by the City of Huntington Beach in Entitlement Plan Amendment 10-00V.
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ATTACHMENT N(l4
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PRO RTY
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ATTACHMENT NO. 4 ,
OFFICIAL BUSINESS
Document entitled to free `,,
recording per Government
Code Section 6103
Recording Requested by
and When Recorded Return to: ,/'
REDEVELOPMENT AGENCY OF THE �`
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: Agency Secretary
SPACE ABOVE THIS LINE F RECORDER'S USE
AGREEMENT CONTAINING COVEN NTS AFFECTING REAL PROPERTY
THIS AGREEMENT CONTAIN ► G COVENANTS AFFECTING REAL PROPERTY
("Agreement") is entered into as of by and between the
REDEVELOPMENT AGENCY OF ' E CITY OF HUNTINGTON BEACH a public body
corporate and politic ("Agency") an• OSEIDON RESOURCES (SURFSIDE) LLC, a Delaware
limited liability company ("Partici•. t").
A. Participant owns ertain property within the City of Huntington Beach, California
(the "Site"). The Site is le:ally described in the "Legal Description" attached hereto and
incorporated herein as Exhib. A.
B. The Site s within the Southeast Coastal Redevelopment Project area (the
"Redevelopment Projec• ) in the City of Huntington Beach and is subject to the provisions of the
Redevelopment Plan f.r the Redevelopment Project adopted by Ordinance No. 3561 on June 17,
2002,by the City Co, cil of the City of Huntington Beach(the "Redevelopment Plan").
C. P. icipant has requested the City of Huntington Beach ("City") to approve
Entitlement Pla, Amendment 10-001 (the "City Entitlements") to permit the development and
operation of . seawater desalination facility (the "Facility") on the Site, as well as a water
transmission ine from the Site to an existing regional transmission system (the "Pipeline,"
collectively ith the Facility, the "Project"). Upon approval by the City, the City Entitlements
will run th the land and therefore will be of benefit to any person or entity which develops
and/or •aerates the Project (a "Beneficiary"), subject to the conditions of approval imposed
/
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
thereon. The interest of Participant (or any Beneficiary) in the Site is hereinafter referred to as,.
the "Participant's Interest".
D. In furtherance of the Redevelopment Plan, Agency and Participant have.entered
into that certain Amended and Restated Owner Participation Agreement, dated as of$'eptember
_, 2010 (the "OPA"), and AES-HBD has consented to the OPA. Any capital' }d term not
otherwise defined in this Agreement shall have the meaning ascribed to such to n the OPA.
E. This Agreement is entered into and recorded in ac•.rdance with the
Redevelopment Plan and the OPA and to fulfill any condition(s) of .pproval of the City
Entitlements which requires an owner participation agreement.
NOW, THEREFORE, in consideration of the foregoin., "Participant" and Agency
hereby agree that: (i) upon approval by the City, the City Entitl- ents will run with the Site and
therefore will be of benefit to any person or entity which dev-. .ps and/or operates the Project (a
"Beneficiary"), subject to the conditions of approval imp•.ed thereon, and (ii) the following
covenants and conditions shall run with the Site and be bi ing on any and all parties having any
right, title or interest in the Site, their respective -ifs, legatees, devisees, administrators,
executors, successors and assigns (including,without mitation, any Beneficiary), which develop
and/or operate the Project on the Site pursuant to e City Entitlements, and shall inure to the
benefit of Agency, City and their respective succ-.sors and assigns:
1. Participant, on behalf of itsel and its successors, assigns, and each successor in
interest to the Site or any part thereof (i uding, without limitation, any Beneficiary), which
develops and/or operates the Project o the Site pursuant to the City Entitlements, hereby
covenants and agrees as follows:
a Participant all develop the Project on the Site in accordance with the
OPA (including the Scope o Development, Attachment No. 3 to the OPA), the City
Entitlements, and the Approve. 'lans.
b. Part' 'pant shall use the Site only for the development permitted and the
uses specified in the OP• and this Agreement,namely, a seawater desalination facility.
c. articipant shall maintain the Site and, to the extent required pursuant to
the franchise agree ent referred to below,the area of the Pipeline route, or cause the Site and, to
the extent requir- pursuant to the franchise agreement referred to below, such Pipeline area to
be maintained, ' accord with the following criteria and conditions:
(1) The Site and the Project shall be operated and maintained in
conformity with all applicable laws, rules, regulations and
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
J /
ordinances, including without limitation, all applicable federal and
state labor standards.
(2) The Site and all improvements thereon shall be maintained'`and
kept free from any accumulation of debris or waste materia1S.
(3) All landscaping on the Site shall be maintained/i a healthy
condition.
(4) The Pipeline shall be maintained as specif :d in the franchise
agreement to be approved by City for use • City's rights-of-way,
and any other applicable franchise agree ent or other entitlement
approved by any governmental enti with jurisdiction over the
pipeline or any portion thereof.
(5) Participant shall help assure at construction of the Project,
including but not limited to t• - Pipeline, has no adverse impact on
the quality of life in the C. by paying City, within five (5) days
after the closing of P. - cipant's construction financing for the
Project, the sum of O• • Million Nine Hundred Thousand Dollars
($1,900,000), which ay be used by City in its sole discretion for
improvements ad'.cent to the Site or along the route of the
Pipeline.
(6) Participant • all pay to City the sum of Two Million Dollars
($2,000,01 d) which may be used by City in its sole discretion for
such i srovements as the City Council of City determines will
impro e the quality of life in the City of Huntington Beach. These 7fun shall be paid by Participant at such time as it elects after the
cl sing of the Participant's construction financing for the Project
But prior to Completion.
/
i
d. For/each year of the term of the OPA that real property taxes are levied on
the Site or any portion thereof:
(1) Participant shall pay when due all real estate or possessory interest
taxes and assessments assessed and levied on the Site or any
portion thereof or any improvements thereon or any interest
therein, and shall waive and refrain from making any appeal,
challenge or contest of the validity of any tax assessment,
encumbrance or lien on the Site, in part or in full, whether by
property tax assessment appeal or otherwise; provided, however,
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
that such waiver shall not apply until after the Certificate of
Occupancy has been issued, and provided further that such waiver
shall not apply to the extent that such assessment (or encumbrance
or lien relating thereto) exceeds Two Hundred Million Dollars
($200,000,000); and
(2) if the real estate or possessory interest taxee;on the Participant's
Interest in the Site in any fiscal year (July through June 30) after
the Certificate of Occupancy has beet ssued are less than Two
Million Dollars ($2,000,000), then o my 1 of the next fiscal year,
Participant shall pay to City the dif rence between(i)the total real
estate or possessory interest taxe •aid by Participant in such fiscal
year and (ii)Two Million Doll„s($2,000,000).
e. In the event that during the term o he OPA, by reason of any property tax
exemption or otherwise, the Site is not carried on e County Assessment Roll and/or real
property taxes are not levied and collected on the ' to for any reason, Participant shall pay to
Agency an amount equal to the product of the Site ° ax Increment Revenue (as hereafter defined)
payable to Agency for the fiscal year imme• ately preceding the cessation of the levy or
collection of taxes on the Site (the "Base Ye. evenue Amount") multiplied by the number of
years remaining in the term of the OPA (• , if less, the number of years during which such
exemption or cessation will continue to .e applicable). At the option of Participant, such
payment shall be payable either (i) by . ump sum which shall be due within thirty (30) days
after the occurrence of the event whic as caused or will cause the Site not to be carried on the
County Assessment Roll and/or real operty taxes not to be levied and collected on the Site, or
(ii) by annual payments made on J y 1 of each year, in which case the first such payment shall
be made on the July 1 after the 0, urrence of such event and shall be in the amount of the Base
Year Revenue Amount, and eac . subsequent annual payment shall be increased by the permitted
statutory rate (presently two • rcent (2%) per year). The "Site Tax Increment Revenues" from
the Site shall be defined to .e that portion of the ad valorem property tax increment revenues
attributable to the Site an• payable to Agency pursuant to Section 33670(b) of the California
Health and Safety Code :s said statute may be amended from time to time), including without
limitation the twenty p rcent (20%) of said revenues that Agency is required to set aside for
affordable housing p •oses pursuant to California Health and Safety Code Section 33334.2. In
the event that the p ent required by this subsection e. is due at a time when Agency is no
longer legally ent' ed to receive Site Tax Increment Revenues from the Site, the Base Year
Revenue Amo shall be deemed to be the amount of Site Tax Increment Revenues which
Agency was e tied to receive in the last full fiscal year preceding termination of its right to
receive such ` to Tax Increment Revenues. Notwithstanding the foregoing, in determining the
Site Tax In. ement Revenues for purposes of this subsection e. for any fiscal year (July 1
through J e 30) after the Certificate of Occupancy has been issued, the ad valorem property
taxes att.'•utable to the Site shall be calculated at the greater of (i) the actual amount of such
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
7
taxes prior to the obtaining of the property tax exemption or removal of the Site from the County
Assessment Roll or (ii)the ad valorem property taxes due at the then-applicable rate for property
with an assessed valuation of Two Hundred Million Dollars ($200,000,000). This subsection e.
shall apply regardless of whether a public entity acquires an interest in or title to the Site and/or
the Project.
f. There shall be no discrimination against or segregatio of any person, or
group of persons, on account of race, color, creed, religion, sex, marital sta s, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenur'• or enjoyment of the
Participant's Interest in the Site nor shall Participant itself or any P-rson claiming under or
through it establish or permit any such practice or practices of discri ination or segregation with
reference to the selection, location, number, use or occupancy w tenants, lessees, subtenants,
sublessees, or vendees of the Site. /
g. Participant shall refrain from restring the rental, sale, or lease of the
Site, or any portion thereof, on the basis of race, color, creed, religion, sex, sexual orientation,
marital status, national origin, or ancestry of any person:'`Every deed, lease, and contract entered
into with respect to the rental, sale or lease of the Paicipant's Interest in the Site, or any portion
thereof, after the date of this Agreement shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses: /1
y
(1) In deeds: " ' grantee herein covenants by and for itself, its
successors and assigns, and all persons cl ming under or through them, that there shall be no
discrimination against or segregation o, any person or group of persons on account of race,
color, creed, religion, sex, sexual orie ation, marital status, national origin, or ancestry in the
sale, lease, sublease, transfer, use, o upancy, tenure or enjoyment of the land herein conveyed,
nor shall the grantee itself or any erson claiming under or through it, establish or permit any
such practice or practices of disc mination or segregation with reference to the selection, loca-
tion, number, use or occupancy 4f tenants, lessees, subtenants, sublessees or vendees in the land
herein conveyed. The foregoirk covenants shall run with the land."
.,
A`
(2) ' In leases: "The lessee herein covenants by and for itself, its
successors and assigns,, d all persons claiming under or through them, and this lease is made
and accepted upon an object to the following conditions: That there shall be no discrimination
against or segregate* of any person or group of persons on account of race, color, creed,
religion, sex, sex s 1 orientation, marital status, national origin, or ancestry in the leasing,
subleasing, trans, rring, use or enjoyment of the land herein leased nor shall the lease itself, or
any person clai f'ing under or through it, establish or permit any such practice or practices of dis-
crimination o, segregation with reference to the selection, location, number, use or occupancy of
tenants, less :es, subtenants or vendees in the land herein leased."
/
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
/
(3) In contracts: "There shall be no discrimination against or segr,'a-
tion of, any person, or group of persons on account of race, color, creed, religion, sex .exual
orientation, marital status, national origin, or ancestry in the sale, lease sublease, tr. 1-:'er, use,
occupancy,tenure or enjoyment of the land, nor shall the transferee itself or any per$'n claiming
under or through it, establish or permit any such practice or practices of discimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees,subtenants, sublessees or vendees of the land."
2. All conditions, covenants and restrictions contained in/this Agreement shall be
covenants running with the land, and shall, in any event, and thout regard to technical
classification or designation, legal or otherwise, be, to the fulles extent permitted by law and
equity, binding for the benefit and in favor of, and enforceabl;`•y Agency, its successors and
assigns, and City and its successors and assigns, against P. °` ipant, and its successors and as-
signs to or of the Site or any portion thereof or any interes i erein, and any party in possession
or occupancy of said Site or any portion thereof(includi _ without limitation, any Beneficiary)
which develops and/or operates the Project on the "to pursuant to the City Entitlements,.
Agency and City shall be deemed the beneficiaries • ' the covenants, conditions and restrictions
of this Agreement both for and in their own rights . d for the purposes of protecting the interests
of the community. The covenants, conditions, . a restrictions shall run in favor of Agency and
City, without regard to whether Agency or Cit as been, remains, or is an owner of any land or
interest therein in the Site or the Redeye •ment Project area. Except as provided in the
preceding sentence, the covenants, conditi• s and restrictions contained in this Agreement shall
not benefit nor be enforceable by any • ' ner of any other real property within or outside the
Redevelopment Project area or any p- on or entity having any interest in any such other real
property.
3. No sale, convey. . e, assignment, leasing or other transfer of any kind of the
Participant's Interest in the Sit- or any portion thereof shall be permitted, except as expressly
authorized by the OPA.
4. Agency . Participant shall have the right, in the event of any breach of any
agreement or covenant contained herein by the other party, to exercise all the rights and
remedies, and to mai• ain any actions at law or suit in equity or other proper proceedings to
enforce the curing o uch breach of agreement or covenant.
5. N. violation or breach of the covenants, conditions, restrictions, provisions or
limitations con .fined in this Agreement shall defeat or render invalid or in any way impair the
lien or charg- •f any deed of trust recorded on the Site, provided, however, that any subsequent
successor t• he Participant's Interest in the Site (including, without limitation, any Beneficiary)
shall be ••und by the covenants, conditions, restrictions, limitations and provisions of this
Agreem- t, whether such successor in interest's title to the Participant's Interest in the Site was
acquir-. by foreclosure, deed in lieu of foreclosure,trustee's sale or otherwise.
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
6. The covenants set forth in subparagraph l.a. and Section 3 shall remain in effect
until Completion. The covenants against discrimination set forth in subparagraph 1.f. and 1.g. of
this Agreement shall remain in effect in perpetuity. Every other covenant and condition and
restriction contained in this Agreement shall remain in effect for a period of thirty (30) years
from the issuance of the Certificate of Occupancy.
Notwithstanding the foregoing, this Agreement shall be deemed terminated and of no
further force or effect upon the happening of either of the following:
(a) if prior to the commencement of any constructio• on the Site, either City
Entitlement terminates or expires for any reason .'eluding but not limited to a
determination by any court or governmental en with jurisdiction thereof that
such Entitlement is void or of no force or effe , in which event thereafter neither
Agency nor Participant shall have any right- against, or obligations to, the other
hereunder; or
(b) if, whether prior to or after the i ance of the Certificate of Occupancy,
Participant provides written notice t• Agency that the Participant is abandoning or
has abandoned the development ,•f the Project and operation of the Facility;
provided, however, that termin. ion of this Agreement under this paragraph (b)
shall not be deemed to aff- t any obligation of Participant to complete the
demolition, removal, and storation work required by Section 203 of the OPA
nor to maintain the bond r- uired therein until such work is completed.
Termination of any coy- ant in accord with this paragraph 6 shall not be deemed to
affect the obligations or dutie mposed upon Participant by any other term or condition of any
other entitlement or permit.
7. If a vi' ation of any of the foregoing covenants occurs or is attempted, and such
occurrence or atte .t is uncorrected for the applicable period described in Section 402 of the
OPA, Agency, Ci , and their successors and assigns, without regard to whether Agency or City
or their succes •rs and assigns is an owner of any land or interest therein to which these
covenants rel. e, may institute and prosecute any proceedings at law or in equity to abate,
prevent or e• oin any such violation or attempted violation or to compel specific performance by
Participant •f its obligations hereunder. No delay in enforcing the provisions hereof as to any
breach o• violation shall impair, damage or waive the right of any party entitled to enforce the
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
provisions hereof or to obtain relief against or recover for the continuation or repetition of such
breach or violations or any similar breach or violation hereof at any later time.
8. There shall be no merger of this Agreement or the OPA.
9. The parties to this Agreement acknowledge and agree that, notwitstanding
anything herein to the contrary, neither AES-HBD, nor any member (or other affiliae), official
or employee of AES-HBD, shall be liable to the Participant, the Agency, the City r any of their
respective officers, employees, contractors and agents or any successors or assi s of any of the
foregoing, for any obligations or responsibilities of the Participant or the Age y arising under or
in connection with this Agreement or the OPA or the development, const,'i ction, operation and
maintenance of the Project or any portion thereof unless AES-HBD dev: ops and/or operates the
Project under the City Entitlements, in which event AES-HBD shall .e deemed the Participant
for all purposes thereafter arising under or in connection with this • _reement and the OPA. The
parties further acknowledge and agree that AES-HBD shall not deemed to be a successor to
the Participant's interests and obligations under this Agreeme or the OPA as a result of AES-
HBD's ownership of the Site or its repossession of the Sit- rom the Participant following any
termination, expiration or breach of the Participant's Intere- in the Site unless AES-HBD were to
develop and/or operate the Project under the City E '"dements in which AES-HBD shall be
deemed the Participant for all purposes thereafter .rising under or in connection with this
Agreement and the OPA.
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
IN WITNESS WHEREOF, Agency and Participant have signed this Agreement as of the
dates set opposite their signatures.
REDEVELOPMENT AGENCY OF THE CITY VF
HUNTINGTON BEACH
Dated:
Chairman
Dated:
Executive Director
Dated:
Agency Clerk
APPROVED AS TO FORM: APPROVED AS FORM:
Agency General Counsel Special ty/Agency Counsel
Kane, allmer& Berkman
P' EIDON RESOURCES (SURFSIDE) LLC,
Delaware limited liability company
Dated:
By:
Name:
Its:
Dated:
By:
Name:
Its:
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
y
/
STATE OF CALIFORNIA ) //
) ss.
COUNTY OF ) ii
,
,
On before me, , personally appeared
personally known to me (or proved to me on the basis of satisfactory evidenc0 to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowleced to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and t by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of ich the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On before me, , personally appeared
personally known to me (or p oved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/ar subscribed to the within instrument and acknowledged to me that
he/she/they executed the s e in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted,executed the instrument.
WITNESS mr hand and official seal.
Signature
i
A
e`
i
,
i
/
1."
Exhibit A
LEGAL DESCRIPTION OF THE SITE
(To be Inserted)
•
•
X
-12-
t9.:.
CONSENT TO AGREEMENT AND RECORDATION OF DQUMENTS
/
AES Huntington Beach Development, LLC ("AES"), as fee,Ovner of the AES Property,
hereby consents (i) to the Participant's entry into this Agreement,"is the Participant's Interest in
the AES Property is subject of this Agreement, and (ii) to t recordation of the Agreement
Containing Covenants Affecting Real Property (Attachment o. 4) against its fee ownership in
the AES Property in accordance with Section 306 of thiVAgreement. AES further agrees to
execute such other and further documents as the Agency1determines in its reasonable di retion
are necessary to effectuate the terms and conditions of s Areement
Dated: q - 1 Z010 AV:Its: p —5/AeRj
/
Dated: /
By:
Its:
��.
1
/
1
'ea'
/
/�
/
/
J/
/
/
/
10-2405/52143 29
/
CONSENT TO AGREEMENT AND RECORDATION OF DOCUMENTS
y/
AES Huntington Beach Development, LLC ("AES"), as fecawner of the AES Property,
hereby consents (i) to the Participant's entry into this Agreement/as the Participant's Interest in
the AES Property is subject of this Agreement, and (ii) to tie recordation of the Agreement
Containing Covenants Affecting Real Property (Attachment$No. 4) against its fee ownership in
the AES Property in accordance with Section 306 of thipsi Agreement. AES further agrees to
execute such other and further documents as the Agenc, determines in its reasonable discretion
are necessary to effectuate the terms and conditions of is Agreement.
Dated: -2-0/ Y %-��/ PR-6-5,L e4.......,74
7"�� Its:
Dated: fi By:
Its:
f,
I
10-2405/52143 29
CITY OF HUNTINGTON BEACH
;a InterOffice Communication
TO: Honorable Mayor and Members of the City Council
VIA: Fred A. Wilson, City Administrator
FROM: Travis Hopkins, Director of Public Wyk—s°J
Stanley Smalewitz, Director of Economic Development5�
DATE: September 7, 2010
SUBJECT: Late Communication for Items 4-3, 4-4,4-5 Regarding Poseidon
Agreement Additional Language
Based upon further review of the Owner Participation Agreement (Agency), Exchange
Agreement and Escrow Instructions (City) and the Pipeline Franchise Agreement(City), the
City Attorney's Office would like to include the following language for each motion, if the
three items are approved by the Redevelopment Agency/City Council.
Item 4-3 —Owner Participation Agreement
The City Council finds that the Final SEIR serves as adequate and appropriate environmental
documentation for approval of the Amended and Restated Owner Participation
Agreement. The City Council finds that the unavoidable significant adverse effects of the
Project as identified in Section 5.0 of the Statement of Facts and Findings (growth inducement
outside of Orange County and short-term construction related impacts in regards to air
quality)have been lessened in their severity by the application of standard conditions,the
inclusion of Project design features and the imposition of the mitigation measures. The City
Council finds that the remaining unavoidable significant impacts are clearly outweighed by
the economic, social, and other benefits of the Project, as set forth in the"Statement of
,Overriding Considerations"included as Section 7.0 of the Statement of Facts and Findings.
The City Council adopts the recitation of overriding considerations which justify approval of
the Project notwithstanding certain unavoidable significant environmental effects which
cannot feasibly be substantially mitigated as set forth in the Statement of Overriding
Considerations.
Item 4-4—Exchange Agreement and Escrow Instructions
The City Council finds that the Final SEIR serves as adequate and appropriate environmental
documentation for approval of the Exchange Agreement/Escrow Instructions,including the
Lease Agreement. The City Council finds that the unavoidable significant adverse effects of
the Project as identified in Section 5.0 of the Statement of Facts and Findings (growth
inducement outside of Orange County and short-term construction related impacts in regards
to air quality) have been lessened in their severity by the application of standard conditions,
the inclusion of Project design features and the imposition of the mitigation measures. The
City Council finds that the remaining unavoidable significant impacts are clearly outweighed
by the economic, social, and other benefits of the Project, as set forth in the "Statement of
Overriding Considerations"included as Section 7.0 of the Statement of Facts and Findings.
The City Council adopts the recitation of overriding considerations which justify approval of
the Project notwithstanding certain unavoidable significant environmental effects which
cannot feasibly be substantially mitigated as set forth in the Statement of Overriding
Considerations.
Item 4-5 —Pipeline Franchise Agreement
The City Council finds that the Final SEIR serves as adequate and appropriate environmental
documentation for approval of the Pipeline Franchise Agreement. The City Council finds that
the unavoidable significant adverse effects of the Project as identified in Section 5.0 of the
Statement of Facts and Findings (growth inducement outside of Orange County and short-
term construction related impacts in regards to air quality)have been lessened in their severity
by the application of standard conditions, the inclusion of Project design features and the
imposition of the mitigation measures. The City Council finds that the remaining unavoidable
significant impacts are clearly outweighed by the economic, social, and other benefits of the
Project, as set forth in the "Statement of Overriding Considerations" included as Section 7.0
of the Statement of Facts and Findings. The City Council adopts the recitation of overriding
considerations which justify approval of the Project notwithstanding certain unavoidable
significant environmental effects which cannot feasibly be substantially mitigated as set forth
in the Statement of Overriding Considerations.
Council/Agency Meeting Held:_
Deferred Contin a 912,01110
❑Approved ❑ Conditionally Approved ❑ Denied CoCle 's ' nature
Council Meeting Date: September 7, 2010 Department ID Number: ED 10-41
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: Honorable Chairman and Agency Members
SUBMITTED BY: Fred A_Wilson, Executive Director
PREPARED BY: Stanley Smalewitz, Deputy Executive Director/Director of Economic
Development
SUBJECT: Approve the Amended and Restated Owner Participation Agreement
by and between the Redevelopment Agency of the City of Huntington
Beach and Poseidon Resources (Surfside) LLC
Statement of Issue: Poseidon Resources (Surfside) LLC (Poseidon) has requested an
amendment to the construction and-operation of a seawater desalination plant at a site in the
Southeast Coastal Redevelopment Area. The Redevelopment Agency of the City of
Huntington Beach would like to ensure projected revenues are protected to the greatest
extent possible.
Financial Impact: Not applicable.
Recommended Action: Motion to:
1. Waive the Resolution No. 214 requirement for thirty (30) day review of the Owner
Participation Agreement.
2. Approve the Amended and Restated Owner Participation Agreement by and between the
Redevelopment Agency of the City of Huntington Beach and Poseidon Resources (Surfside)
LLC; and
3. Authorize the Chairperson, Executive Director, and Agency Secretary to sign all related
documents.
Alternative Action(s):
Do not approve the Amended and Restated Owner Participation Agreement and direct staff
accordingly.
-435- Item 6® - Page 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/7/2010 DEPARTMENT ID NUMBER: ED 10-41
Analysis:
In February 2006, the Redevelopment Agency approved an Owner Participation Agreement
(OPA) with Poseidon for the construction and operation of a seawater desalination plant
located in the South-east Coastal Redevelopment Project Area. Poseidon has requested
changes to the development of the desalination plant. The Planning Department is
processing a subsequent Environmental Impact Report=(EIR) and changes tathe Conditional
Use Permit and Coastal Development Permit. As part of the changes to the approval, an
Amended and Restated Owner Participation Agreement (Attachment 1) is being
recommended.
Improvements in the redevelopment project area result in increased property values within
those areas. As such, tax increment generated by the increase in property value would be
revenue to the City's Redevelopment Agency, after accounting for State-mandated pass-
through revenue to other entities, including the City of Huntington Beach. A description of
the tax increment and additional deal points included in the OPA are described below:
Property Tax/in Lieu
The OPA commits the project developer and any future property owner, public or private, to
pay property taxes or an equivalent property tax in-lieu fee, to the Redevelopment Agency for
30 years from the issuance of a Certificate of Occupancy. Through the OPA, the minimum
amount of the assessed value has been increased from $185,000,000 to $200,000,000.
After pass through payments, the revenue is estimated to be $1,200,000/year to the Agency
and $400,000/year to the Housing Set Aside Fund. In addition, the City, will also receive
$62,500/in property tax revenue.
The baseline assessed value of $200,000,000 is guaranteed by Poseidon to the Agency, but
may also increase annually by up to 2%. In addition, Poseidon can not appeal the property
tax amount below the baseline of $200,000,000. Should the assessed value be higher than
the estimated construction cost, the higher assessment would be applied to the property. The
event that the property for any reason is removed from the tax rolls, including the sale to a
public agency, then the participant shall pay the Redevelopment Agency an amount equal to
the term left in the Agreement or pay an in-lieu fee amount for the duration of the Agreement.
City Improvement Funds
Poseidon has agreed to pay the City $2,000,000. These funds may be used at the sole
discretion of the City Council for projects that will improve the quality of life in the City of
Huntington Beach. These funds must be paid prior to the Certificate of Occupancy. This is
the same as the original OPA.
Right of Way Improvement Funds
Included in the conditions of approval and the OPA, is the requirement that Poseidon pay
$1,900,000 for improvements adjacent to the subject property and along the pipeline route,
including tree-damaged sidewalk repair/replacement, vacant tree well planning, median
planting restoration/enhancement, and frontage road landscaping
replacement/enhancement. Payment of these funds is required within five (5) days after the
Item 60 - Page 2 -436-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/7/2010 DEPARTMENT ID NUMBER: ED 10-41
closing of the participant's construction financing for the project. This is the same as the
original OPA.
As in 2006, the OPA is the most effective vehicle to guarantee these revenues, should a sale
of the project to a public entity occur. The OPA could be subject to a challenge, should the
successor-in-interest to the project be a public entity. However, the City has a greater
likelihood of success in defending terms of-the OPA based on state law and the assignment
provisions of an OPA.
Pursuant to Resolutions No. 214 adopted by the Redevelopment Agency in June 1991, the
Agency requested that all Owner Participation Agreements and Disposition and Development
Agreements be forwarded copies at least thirty (30) prior to any required action by the
Agency, unless by__a majority vote, such members waive this requirement. This has not-
occurred for this Amended OPA, therefore we are asking for the thirty days to be waived for
the OPA, due to-the minor changes that are being-recommended.
Environmental Status: The Planning Department is processing all related environmental
documents including the Subsequent EIR.
Strategic Plan Goal: Maintain financial viability and our reserves
Attachment(s):
Noii D6scHotiori
1. Amended and Restated Owner Participation Agreement by and
between the Redevelopment Agency of the City of Huntington
Beach and Poseidon Resources Surfside LLC
-437- Item 6. - Page 3
ATTACHMENT # 1
AMENDED AND RESTATED
OWNER PARTICIPATION AGREEMENT
by and between
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH,
Agency,
and
POSEIDON RESOURCES (SURFSIDE)LLC
Participant.
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TABLE OF CONTENTS
Page
PART 1. SUBJECT OF AGREEMENT........................................................................................ 1
Section 101 Purpose of the Agreement........................................................................... 1
Section 102 The Redevelopment Plan............................................................................ I
Section 103 The Redevelopment Project Area...............................................................2
Section104 The Site.......................................................................................................2
Section105 The Agency.................................................................................................2
Section106 Participant...................................................................................................3
Section 107 Transfer of Project and Assignment of Agreement....................................3
Section 108 Effect on the City Entitlements...................................................................5
PART 2. DEVELOPMENT OF THE SITE................................................;..........................6
Section 201 Scope of Development................................................................................6
Section 202 Construction Drawings...............................................................................6
Section 203 Construction Schedule; Bond .....................................................................6
Section 204 Cost of Construction...................................................................................7
Section 205 Construction Pursuant to Plans and Laws...................................................7
Section206 Equal Opportunity.......................................................................................7
Section 207 Condition of the Site...............................................:...................................8
Section 208 Construction Responsibilities.....................................................................8
Section 209 Zoning and Land Use Requirements...........................................................8
Section 210 Indemnification; Bodily Injury and Property Damage Insurance...............8
Section 211 Local, State and Federal Laws.................................................................. 11
Section 212 Permits and Approvals.............................................................................. 12
Section213 Rights of Access....................................................................................... 13
Section 214 Disclaimer of Responsibility by Agency.................................................. 13
Section 215 CEQA Review; Compliance with Environmental Laws .......................... 13
Section 216 Environmental Indemnification by the Developer.................................... 13
Section 217 Rights of Obligees............................................
PART3. USE OF THE SITE............................................................................................... 16
Section301 Uses........................................................................................................... 16
Section 302 Maintenance of Site and Environs; Payment of Taxes and Assessments. 16
Section 303 Obligation to Refrain from Discrimination............................................... 18
Section 304 Form of Nondiscrimination and Nonsegregation Clauses........................ 18
Section 305 Effect and Duration of Covenants............................................................. 19
Section 306 Agreement Containing Covenants Affecting Real Property..................... 19
Section 307 Relationship of Agency and Participant ................................................... 19
Section 308 Representations and Warranties................................................................ 19
PART 4. DEFAULTS AND REMEDIES ...........................................................................22
Section 401 Defaults-General.....................................................................................22
Section 402 Defaults-Notice.......................................................................................23
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Section 403 Automatic Stay y Waiver,Non-Executory Contract................................23
PART 5. GENERAL PROVISIONS! ................................................................................24
Section 501 Notices,Demands and Communications between the Parties..................24
Section 502 Conflict of Interest.:..................................................................................24
Section 503 Nonliability of Agency Officials and Employees.....................................24
Section 504 Approvals................
PP ..................................................................................25
Section 505 Time of Essence........................................................................................25
Section 506 No Partnership.......................................
Section 507 Compliance with Law...............................................................................25
Section 508 No Third Party Beneficiaries;Nonliability of AES..................................25
Section 509 Authority to Sign....:..................................................................................26
Section 510 Incorporation by Reference.......................................................................26
Section511 Counterparts...........:..................................................................................26
Section 512 No Merger.....
26
Section 513 Enforced Delay;Extension of Times of Performance..............................26
PART 6. ENTIRE AGREEMENT,WAIVERS AND AMENDMENTS............................27
PART 7. TIME FOR ACCEPTANCE OF AGREEMENT BY THE AGENCY;TERM...27
ATTACHMENTS
ATTACHMENT NO. I SITE MAP
ATTACHMENT NO. 2 LEGAL DESCRIPTION
ATTACHMENT NO. 3 SCOPE OF DEVELOPMENT
ATTACHMENT NO. 4 AGREEMENT CONTAINING COVENANTS
AFFECTING REAL PROPERTY
10-2405/52143 ii
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AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT (the
"Agreement") is entered into by and between the REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH (the "Agency") and POSEIDON RESOURCES
(SURFSIDE) LLC, a Delaware limited liability company (the "Participant"). The Agency and
the Participant agree as follows:
PART 1. SUBJECT OF AGREEMENT
Section 101 Purpose of the Agreement
The purpose of this Agreement is to effectuate the Redevelopment Plan for the Southeast
Coastal Redevelopment Project by providing for the development by the Participant of a
seawater desalination facility(the "Facility"), on that certain real property described as the"Site"
in Section 104 of this Agreement, below, as well as a water transmission line from the Site to an
existing regional transmission system (the "Pipeline," collectively with the Facility, the
"Project"). This Agreement does not grant any easement or permit or approve any development
of the Project and does not contemplate or authorize any development of the Project beyond
those entitlements and approvals listed in and subject to the conditions of Sections 108,202,207,
209,212, and 215 of this Agreement. All approvals, easements or permits necessary to construct
and operate the Project must be granted independently of this Agreement by the entities with
jurisdiction thereof. This Agreement is solely a finance mechanism to ensure the benefits of the
Project that become due and payable under this Agreement accrue to the Agency and the City of
Huntington Beach ("City"), and does not provide any entitlement to construct or operate the
Project. The development of the Site and the Project pursuant to this Agreement, and the
fulfillment generally of this Agreement are in the vital and best interests of the City and the
health, safety and welfare of its residents, and in accord with the public purposes and provisions
of applicable federal, state and local laws and requirements. In particular, this project will
provide a reliable drought-proof water supply along with the ability to obtain additional water
supplies in case of emergencies. The project provides the City access to a 10-million gallon
water storage tank for emergency water supply to be constructed by the Participant at no cost to
the City. The project in particular will provide the Agency the ability to build infrastructure,
develop and fund new affordable housing and create jobs through the property tax/in-lieu
property fees. With the additional funds available, the Agency can partner with other property
owners to rehabilitate and redevelop property for the public benefit of the Southeast Coastal
Area. The Agency will be able to provide additional projects and services that will improve the
health safety and welfare of its residents. The project will help improve disabled access across
intersections by constructing or reconstructing wheelchair ramps and will improve safety on the
affected streets by replacing deteriorated pavement.
Section 102 The Redevelopment Plan
This Agreement is subject to the provisions of the Redevelopment Plan for the Southeast
Coastal Redevelopment Project, which was approved and adopted on June 17, 2002, by the City
10-2405/52143
1
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Council of the City of Huntington Beach by Ordinance No. 3561 (the "Redevelopment Plan").
The Redevelopment Plan is incorporated!,herein by reference and made a part hereof as though
fully set forth herein.
Section 103 The Redevelopment Project Area
The Southeast Coastal Redevelopment Project area is located in the City of Huntington
Beach, California. The exact boundaries of the Redevelopment Project area are specifically and
legally described in the Redevelopment Plan.
Section 104 The Site
a. The "Site" is that certain real property located in the City of Huntington
Beach, illustrated and designated as Parcels 1 and 3 on the Tentative Parcel Map (attached hereto
and incorporated herein as Attachment No. 1) and as described in the "Legal Description of the
Site" (said attachment will be incorporated herein as Attachment No. 2 upon final recordation of
map). As shown on the Site Map, the', Site consists of property currently owned by AES
Huntington Beach Development, LLC (the:"AES property")and property currently owned by the
City(the "City Property").
b. The Participant hereby represents that it owns an equitable interest in the
Site (the "Participant's Interest"). The Participant's Interest is documented by way of a written
option with the fee owner of the AES Property, AES Huntington Beach Development, LLC,
("AES")to lease or buy the AES Property, and by way of a written exchange agreement with the
fee owner of the City Property, the City of Huntington Beach, to exchange additional property
that will be purchased by the Participant from AES for the City Property. AES has consented to
the Participant entering into this Agreement and to the recordation of the document set forth in
Attachment 4 hereto required hereby against the fee ownership interest of AES in the AES
Property, if the Participant is not the fee owner of the AES Property at the time such recording
must occur.
Section 105 Agency
a. The Agency is a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under Chapter 2 of the
Community Redevelopment Law of the State of California.
b. The address of the Agency for purposes of receiving notices pursuant to
this Agreement is as follows:
Redevelopment Agency of the City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
Attn: Executive Director
10-2405/52143
2
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C. "Agency" as used in this Agreement includes the Redevelopment Agency
of the City of Huntington Beach, California and any assignee or successor to its rights, powers
and responsibilities. All of the terms, covenants and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the Agency and any such assignee or successor of
the Agency.
Section 106 Participant
a. The Participant is Poseidon Resources (Surfside)LLC, a Delaware limited
liability company. The Project will be developed, owned and managed by Participant.
b. The address of Participant for purposes of receiving notices pursuant to
this Agreement is as follows:
Poseidon Resources(Surfside)LLC,
501 West Broadway, Suite 2020
San Diego,CA 92101
Attn: Chief Executive Officer
With a copy to:
Poseidon Resources(Surfside)LLC
1055 Washington Boulevard
Stamford,CT 06901
Attn: Chief Executive Officer
C. "Participant" as used in this Agreement means Poseidon Resources
(Surfside) LLC, and any assignee or successor to its rights, powers and responsibilities which is
permitted as such under the terms of this Agreement or which acquires any interest in the Site or
the Project under the power of eminent domain or by a voluntary conveyance in lieu of or under
threat of eminent domain. All of the terms, covenants and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the Participant and any such assignee or successor
of the Participant.
Section 107 Transfer of Project and Assignment of Agreement
The qualifications and identity of the Participant are of particular concern to the City and
the Agency. The Participant recognizes that it is because of such qualifications and identity that
the Agency is entering into the Agreement with the Participant. Therefore, no voluntary or
involuntary transferee of the Project or the Participant's Interest in the Site shall acquire any
rights or powers under this Agreement except as expressly set forth herein. Except as provided
in paragraph (a)below,prior to Completion,the Participant shall not assign all or any part of this
Agreement nor make any total or partial sale or transfer of Participant's Interest in the Site or the
Project without the prior written approval of the Agency pursuant to paragraph (b) below. Such
approval shall not be unreasonably withheld, conditioned or delayed,provided that the proposed
transferee has demonstrated to the Agency that it has the experience and financial capability to
10-2405/52143
3
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complete the Project, pursuant to paragraph (b) below. "Completion" for purposes of this
Agreement shall mean the point in time when: (i) the Participant has completed construction of
the Project as set forth in this Agreement (including without limitation the Scope of
Development) and in accordance with all laws, rules, regulations, standards, guidelines and other
requirements issued by any federal, state, county, municipal (including the City) or other
governmental authority having jurisdiction over the Site and/or the Pipeline route, and all land
use, development and building approvals, entitlements, and/or permits as may be required by the
City and any other governmental body having jurisdiction over the Site for the development of
and construction of the Facility on the Site or as may be required by the City and any other
governmental body having jurisdiction over the Pipeline route for the development of and
construction of the Pipeline, and(ii) a final certificate of occupancy, or equivalent document,has
been issued by the City for the Facility, and by the City and any other government body having
jurisdiction over the Pipeline route for the Pipeline (collectively, the "Certificate of
Occupancy"), (iii) the Participant has received all governmental permits required to operate the
Project and to distribute the water produced therein for public consumption., and the Participant
has paid all obligations to the City as listed in Section 303(1).
(a) Permitted Transfers
Notwithstanding any other provision of this Agreement to the contrary, Agency
approval of an assignment of this Agreement or conveyance of the Participant's Interest in the
Site or the Project or any portion thereof shall not be required in connection with any of the
following(each a"Permitted Transfer"):
(i) the conveyance or dedication of any portion of the Site to the City or the granting
of easements or permits to facilitate construction of the Project;
(ii) any assignment of this Agreement or the Project for financing purposes related to
this Agreement,including,without limitation,the grant of a deed of trust to secure
the funds necessary for land acquisition, construction and/or permanent financing
of the Project;
(iii) contracts for the management of the development upon the Site or the Pipeline
route,or providing services necessary or incidental for its management;
(iv) any transfer of the Project to (i) any holding company, corporation, association or
entity which is or becomes a parent, subsidiary or affiliate of the Participant or(ii)
any successor of the Participant by reason of merger, consolidation, public
offering, reorganization, dissolution, or sale of stock or assets (any such entity
described in clause (i)or(ii)is a "Related Company"),provided that not less than
thirty (30) days prior to the effective date of any such proposed transfer, the
Agency is provided with (1),documentation sufficient in the reasonable judgment
of the Agency to demonstrate that the transferee is a Related Company, and(2)an
instrument of assignment and novation acceptable to the Agency's legal counsel
at its reasonable discretion(including failure to pay any and all future obligations
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set forth herein) containing the express assumption by the proposed transferee of
the rights and obligations of the Participant under this Agreement;
(b) Agency Consideration of Requested Transfer or Assignment
If a request is made for an assignment of this Agreement or a conveyance of the
Participant's Interest in the Site or the Project or any portion thereof other than a Permitted
Transfer during the period in which this Section 107 applies, the Agency agrees that it will not
unreasonably withhold approval of a request, provided the Participant delivers written notice to
the Agency requesting such approval, together with the following documentation: (1) sufficient
evidence, as reasonably determined by the Agency, regarding the proposed transferee's
development qualifications and experience, qualifications and experience in operating the
applicable type and respective portion of the Project proposed for transfer, and its financial
resources, in sufficient detail to enable the Agency to evaluate the proposed transferee pursuant
to the criteria set forth in this paragraph(b); and(2)an instrument of assignment and novation in
a form acceptable to the Agency's legal counsel at its reasonable discretion (including failure to
pay any and all future obligations set forth herein)containing the express_ assumption by the
proposed transferee of the rights and obligations of the Participant under this Agreement,
including without limitation the payment of outstanding past, present or future monetary
obligations, fees etc. in whatever form. Within thirty (30) days after receipt of such a written
notice, the Agency shall respond in writing by stating that the request is complete or by
describing such further information as the Agency requires in order to determine the request is
complete. Such additional information shall be provided within (30) days of the Agency's
response, or the request shall be deemed withdrawn. Within thirty (30) days of the Agency
obtaining a completed request, the Agency shall either approve, conditionally approve, or
disapprove the proposed transfer, pursuant to the criteria set forth in this paragraph (b). The
Agency shall evaluate each proposed transferee on the basis of its operational qualifications and
experience and its financial commitments and resources, and may disapprove any proposed
transferee which the Agency determines, in its sole and absolute judgment, does not possess
qualifications that enable the proposed transferee to meet the obligations of the Participant under
this Agreement, or may condition approval of a proposed transfer upon such conditions as the
Agency determines are necessary to assure that the proposed transferee will meet the obligations
of the Participant under this Agreement. The provisions of this paragraph (b) shall not apply to
any Permitted Transfer set forth in paragraph(a),above.
Section 108. Effect of City Entitlements
The Project which is the subject of this Agreement is the subject of Entitlement Plan
Amendment No. 10 001, approved by the City on (collectively, the "City
Entitlements"). Nothing in this Agreement shall be deemed to vary, waive or affect in any way
any term or condition of either City Entitlement.
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PART 2. DEVELOPMENT OF THE SITE
Section 201 Scope of Development
The Participant agrees to diligently pursue the necessary permits and entitlements
required for development of the Project in addition to the City Entitlements, and to commence
and complete construction of the Project!in a timely manner upon obtaining such permits and
entitlements, and in conformance with the provisions of the Scope of Development (attached
hereto and incorporated herein as Attachment No. 3).
Section 202 Construction Drawings
a. The Participant shall cause its architect or engineer to prepare the plans
and drawings necessary to obtain a building permit("Construction Drawings")for the Project.
b. The Participant shall have no obligation to submit Construction Drawings
to the Agency for review and approval, but shall submit plans and Construction Drawings to the
City in compliance with all applicable City rules and procedures, and shall develop the Project
on the Site and Pipeline route in accordance with any Construction Drawings approved and
permits and entitlements issued and approved by the City, and no further filing by the
Participant, or approval by the Agency, as to Construction Drawings, shall be required except as
provided in subsection c.,below.
C. Following issuance of a building permit for the Project, the Participant
shall submit. to the Agency's Executive ''Director (the "Executive Director") for review and
reasonable approval any proposed material changes to the Construction Drawings that do not
conform to the Scope of Development. Approval of such changes by the Executive Director
shall not be deemed to relieve the Participant form the requirement to obtain approval of such
changes from any other governmental entity which has jurisdiction over the portion of the
Project to be so changed.
Section 203 Construction Schedule; Bond
Prior to issuance of any building permit for the Facility, the Participant shall provide the
Agency with the anticipated date for completion of construction of the Project (the "Projected
Completion Date"). The Participant shall commence construction of the Project and shall
diligently prosecute construction of the Project to completion. If the Project is not completed
within two (2) years after the Projected Completion Date, the Participant shall be required to
demolish and remove all construction on the Site and to return the Site to the state it was in prior
to the start of construction. The Projected Completion Date shall be extended for the time of any
enforced delay pursuant to Section 513, and may also be extended upon request of the Participant
for reasons which do not constitute an enforced delay upon the reasonable determination of the
Executive Director that the Participant has been proceeding with reasonable diligence in light of
then present circumstances. Prior to thell commencement of construction of the Project, the
Participant shall obtain, and thereafter shall maintain at all times prior to the issuance of the
Certificate of Occupancy a bond or other form of security reasonably acceptable to the Agency
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in such amount reasonably as is reasonably necessary to pay for the costs of demolition and
removal and renovation of the Site required by this Section, as determined by the City's Director
of Public Works.
Section 204 Cost of Construction
It is the responsibility of the Participant, at the Participant's sole cost and expense,to pay
(or cause to be paid) all Development Costs, without any cost or liability to Agency or the City.
"Development Costs" shall collectively mean: development, construction, operational,
maintenance and management costs in connection with the Project and the Site, including,
without limitation, all offsite improvements and onsite improvements required by the City
Entitlements in connection therewith, and including, without limitation all hard costs, soft costs,
the cost of services, wages required to be paid to any person employed by the Participant, any
contractor or s-ubcontractor, and any cost overruns.
Section 205 Construction Pursuant to Plans and Laws
a. The Participant shall construct the Project in conformance with the
Construction Drawings approved by the City in issuing a building permit for the Project, all
conditions of approval imposed upon the Project by any governmental entity with jurisdiction
over the Project or any portion thereof, and any modifications thereof pursuant to any change
order(s) permitted or approved by the Agency, the City, or such other governmental entities (the
"Approved Plans").
b. The Participant shall cause all work performed in connection with the
Project to be performed in compliance with the Approved Plans and (1) all applicable laws,
ordinances, rules and regulations of federal, state, county or municipal governments or agencies
now in force or that may be enacted hereafter, and (2) all directions, rules and regulations of any
fire marshal, health officer, building inspection, or other officer of every governmental agency
now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement
of each permit, license, or other authorization that may be required by any governmental agency
having jurisdiction, and the Participant shall be responsible for causing the procurement and
maintenance thereof, as may be required of the Participant and all entities engaged in work on
the Project.
C. All construction work and professional services shall be performed by
persons or entities licensed or otherwise authorized to perform the applicable construction work
or service in the State of California.
Section 206 Equal Opportunity
During the construction of the Project there shall be no discrimination on the basis of
race, color, creed, religion, age, disability, sex, marital status, national origin, or ancestry, in the
hiring, firing,promoting,or demoting of any person engaged in the construction work.
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Section 207 Condition of the Site
As to all portions of the Site and Project, the Site and Project and any portion thereof
shall be held by the Participant with no warranty, express or implied by the Agency as to the
condition of the soil or water, its geology, or the presence of known or unknown faults or the
condition of the Project. It shall be the sole responsibility of the Participant, at the Participant's
expense, to investigate and determine the isoil and water conditions of the Site and the suitability
of the Site and the Project for the development to be constructed by the Participant. If the soil or
water conditions of the Site, or any part thereof, or the condition of the Project, are not in all
respects entirely suitable for the use or uses to which the Site and Project will be put pursuant to
the Scope of Development (Attachment No. 3), and the Participant determines to proceed with
the development of the Project, then it is the sole responsibility and obligation of the Participant
to take such action as may be necessary to place the Site and the soil and water conditions
thereof, and the Project, in all respects in a condition entirely suitable for the development of the
Site. The provisions of this Section 207 shall not be deemed to imply or create any warranty of
the Agency or the City regarding the Pipeline route or any portion thereof, which may be utilized
by the Participant only in accordance with a franchise granted by the City or such other
governmental entity as has jurisdiction thereof.
Section 208 Construction Responsibilities
a. It shall be the responsibility of the Participant to coordinate and schedule
the work to be performed so that commencement and completion of construction will take place
in accordance with this Agreement. The cost of developing the Project shall be the sole
responsibility of the Participant. The Participant shall be responsible for obtaining and
complying with any condition relating to any and all permits which may be required by any
governmental agency having jurisdiction over the work to be performed.
b. The Participant shall be solely responsible for all aspects of the
Participant's conduct in connection with I the development of the Project, including (but not
limited to) the quality and suitability of the Construction Drawings, the supervision of
construction work, and the qualifications, financial condition, and performance of all architects,
engineers, contractors, subcontractors, suppliers,consultants, and property managers.
Section 209 Zoning and Land Use Requirements
It is the responsibility of the Participant,without cost to the Agency, to ensure that zoning
of the Site and all applicable City land use requirements and franchises will be such as to permit
the development of the Project in accordance with the provisions of this Agreement. The
Participant acknowledges that this Agreement is not a Development Agreement pursuant to -
Government Code Section 65865 et seq.
Section 210 Indemnification; Bodily Injury and Property Damage Insurance
a. In the event of any legal action instituted by a third party or any
governmental entity or official (other than the Agency, the City or an official of the Agency or
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the City), challenging the validity of any provision of this Agreement or the City Entitlements,
the parties hereby agree to cooperate in defending said action; provided, however the Participant
shall indemnify and hold harmless the Agency,the City, and their respective officers, employees,
contractors and agents from all litigation expenses, including reasonable attorneys' fees and costs
arising out of any legal action instituted by such third party, or governmental entity or official
(other than the Agency, the City or an official of the Agency or the City)challenging the validity
of any provision of this Agreement or the City Entitlements, except if and to the extent that such
action arises out of or relates to an act or omission by the Agency, the City or an official of the
Agency or the City in violation of any applicable laws or regulations. The Agency shall
promptly notify the Participant of any such action and shall cooperate in the defense thereof.
b. The Participant agrees to and shall defend, indemnify and hold the
Agency, the City, and their respective officers, employees, contractors and agents harmless from
and against all liability, loss, damage, costs, or expenses (including attorneys' fees and court
costs) arising from or as a result of the death of any person or any accident, injury, loss, and
damage whatsoever caused to any person or to the property of any person which shall occur on
or adjacent to the Site or on or adjacent to the Pipeline route and which shall be directly or
indirectly caused by or result from any acts, errors or omissions of the Participant or its officers,
employees, contractors or agents, except if and to the extent that such accident, injury, loss or
damage shall be directly or indirectly caused by or result from any negligent act, error or
omission by the Agency,the City or their respective officers, employees, contractors and agents.
C. Indemnification Procedure. In any situation in which the Participant is
required to indemnify a party (the "Indemnified Party") pursuant to this Agreement, as a
condition thereto the Indemnified Party shall give the Participant reasonably prompt notice of
any matter for which indemnification is sought hereunder. The Indemnified Party shall
cooperate in the defense of such claim (and pending assumption of defense, the Indemnified
Party, in its good faith judgment, may take steps to defend itself against such claim as it deems
appropriate to protect its interests). The Participant shall pay the Indemnified Party's reasonable
out-of-pocket expenses incurred in connection with such cooperation and such steps taken to
defend itself pending the Participant's assumption of defense. The Participant shall keep the
Indemnified Party reasonably informed as to the status of the defense of such claim. After notice
from the Participant to the Indemnified Parry of the assumption and the defense of a claim, the
Participant shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense thereof other than
those expressly referred to above and expenses of Separate Counsel referred to below. The
Participant, at its own expense and through counsel chosen by it (which counsel shall be
reasonably acceptable to the Indemnified Party), shall defend any such claim; provided,
however, that if, in the Indemnified Party's reasonable judgment at any time, either a conflict
arises between the Participant and the Indemnified Party or if there are defenses which are
different from or in addition to those available to the Participant and/or the Indemnified Party
and the representation of both parties by the same counsel would be inappropriate, then in each
such case the Indemnified Party shall have the right to employ a separate law firm in each
applicable jurisdiction (if necessary) ("Separate Counsel"), to represent the Indemnified Party in
any action or group or related actions (which firm or firms shall be reasonably acceptable to the
Participant), and in that event: (a) the reasonable fees and expenses of such Separate Counsel
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shall be paid by the Participant; and (b) the Participant shall have the right to conduct its own
defense in respect of such claim. If the Participant does not defend against a claim, the
Indemnified Party may defend, compromise and settle such claim and shall be entitled to
indemnification hereunder (to the extent permitted by this Agreement). Notwithstanding the
foregoing,the Participant shall not, without the Indemnified Party's prior written consent(which
shall not be unreasonably withheld, conditioned or delayed), settle or compromise any claim or
consent to the entry of judgment unless: (x) there is no finding or admission of any violation of
law or any violation of the rights of any person by the Indemnified Party and no effect on any
other claims that may be made against the Indemnified Party; and (y) the sole relief provided is
monetary damages that are paid in full by the Participant.
d. Prior to commencing construction on the Site and continuing until
Completion, the Participant shall furnish or cause to be furnished to the Agency duplicate
originals or appropriate certificates (countersigned-by an authorized.-agent of the insurer) of
insurance as follows: _ ..
1. Comprehensive general liability (bodily injury and property
damage), automobile liability (including owned, hired, and non-
owned vehicles), blanket contractual liability, and personal injury
liability, all with limits not less than $5,000,000 combined single
limit per occurrence. All such policies shall contain a waiver of
subrogation for the benefit of the Agency and the City.
2. All such insurance policies shall contain the following three
endorsement provisions:
(i) Additional Insureds:
"The City of Huntington Beach and the Redevelopment Agency of
the City of Huntington Beach (the "Agency"), their elective and
appointive boards, officers, and employees are added as additional
insureds with respect to this subject project and contract with the
Agency."
(ii) Notice:
"Said policy shall not terminate, be canceled, nor the coverage
reduced until after thirty (30) days written notice is given to the
Redevelopment Agency of the City of Huntington Beach."
3. Primary Coverage:
"Said policy and coverage as is afforded to the City of Huntington
Beach and the Redevelopment Agency of the City of Huntington
Beach, their elective and appointed boards, officers and employees
shall be primary insurance and not contributing with any other
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insurance maintained by the City of Huntington Beach or the
Redevelopment Agency of the City of Huntington Beach."
e: All such insurance policies shall be provided by insurers admitted and
authorized to do business in the State of California with a minimum rating of A:VIII. The
Participant must deliver proof of the insurance required under this Section 210 to the Agency
prior to the Agency's execution of this Agreement.
f. The insurance coverage and limits required herein shall not be construed
as a limit of the Participant's liability. The Participant agrees to respond for any losses subject to
indemnification under this Agreement incurred by the Agency or the City and not covered by the
Participant's insurance, whether by reason of coverage being inapplicable or by the Participant's
failure to obtain coverage. The Participant agrees to provide immediate notice to the Agency and
the City of any claim or loss against the Participant that includes the Agency or the City as a
defendant. The Agency and the City assume no obligation by the receipt of such notice,but have
the right (but not the duty) to monitor the handling of any such claim or claims if they are likely
to involve the Agency or the City.
Section 211 Local, State and Federal Laws
The Agency acknowledges that it is not providing any financial assistance with respect to
acquisition of the Participant's Interest in the Site by the Participant or with respect to the Project
in any other way and that this Agreement is entered into solely for the purpose of complying
with the Redevelopment Plan. Notwithstanding the foregoing, the Participant agrees to carry out
development and construction (as defined by applicable law) of the Project, including, without
limitation, any and all public works (as defined by applicable law), in conformity with all
applicable local, state and federal laws, including, without limitation, all applicable federal and
state labor laws(including,without limitation, any requirement to pay state prevailing wages).
The Participant hereby expressly acknowledges and agrees that neither the City nor the
Agency has ever previously affirmatively represented to the Participant or its contractor(s) for
the Project in writing or otherwise, in a call for bids or otherwise, that the Project or any portion
thereof is, or is not, a "public work," as defined in Section 1720 of the Labor Code. Should the
Project or any portion thereof be determined to be a"public work" as defined in the Labor Code,
the Participant hereby agrees that the Participant shall have the obligation to provide any and all
disclosures, representations, statements, rebidding, and/or identifications which may be required
by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from
time to time, or any other provision of law.
The Participant hereby further agrees that the Participant shall have the obligation to
maintain or cause to be maintained any and all bonds to secure the payment of contractors
(including the payment of wages to workers performing any public work)which may be required
by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended
from time to time, or any other provision of law. The Participant hereby further agrees that the
Participant shall have the obligation, at the Participant's sole cost, risk and expense, to obligate
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any party as may be required by Labor Code Sections 1726 and 1781, as the same may be
enacted, adopted or amended from time to time,or any other provision of law.
The Participant shall indemnify, protect, defend and hold harmless the Agency, the City
and their respective officers, employees, contractors and agents, with counsel reasonably
acceptable to the Agency and the City, from and against any and all loss, liability, damage,
claim, cost, expense, and/or "increased costs" (including labor costs, penalties, reasonable
attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with
the development, construction (as defined by applicable law) and/or operation of the Project,
including, without limitation, any and all public works (as defined by applicable law), results or
arises in any way from any of the following: (1).the noncompliance by the Participant with any
applicable local, state and/or federal law, including, without limitation, any applicable federal
and/or state labor laws (including, without limitation, if applicable, the requirement to pay state
prevailing wages): (2) the implementation of Sections 1726 and 17&-1- of the Labor Code, as the
same may be enacted, adopted or amended from time to time, or any other similar law; (3)
failure by the Participant to provide any required disclosure, representation, statement,rebidding
and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same
may be enacted, adopted or amended from time to time, or any other provision of law;(4)failure
by the Participant to provide and maintain,or to cause to be provided and maintained,any and all
bonds to secure the payment of contractors (including the payment of wages to workers
performing any public work) which may be required by the Civil Code, Labor Code Section
1781, as the same may be enacted, adopted or amended from time to time, or any other provision
of law; and/or (5) failure by the Participant to obligate any party as may be required by Labor
Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to
time, or any other provision of law; provided, however, that the foregoing indemnity shall not
apply to or cover any such loss, liability,damage, claim, cost,expense and/or"increased costs" if
and to the extent arising out of or resulting from a violation of applicable laws or regulations by
the Agency, the City or other indemnified parry or a negligent act, error or omission by the
Agency, the City or other indemnified party. It is agreed by the parties that, in connection with
the development, construction (as defined by applicable law) and operation of the Project,
including, without limitation, any and all public works (as defined by applicable law), the
Participant shall bear all risks of payment or non-payment of state prevailing wages and/or Labor
Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to
time, and/or any other provision of law. "Increased costs" as used in this Section shall have the
meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or
amended from time to time. The foregoing indemnity shall survive termination of this
Agreement and shall continue after Completion.
Section 212 Permits and Approvals
Before commencement of construction, the Participant, without cost or expense to the
Agency, shall obtain any and all permits which may be required by the City or any other
governmental agency having jurisdiction over the work to be performed. As applicable, the
Agency shall provide appropriate assistance to the Participant in obtaining these permits and
other City approvals,provided such assistance imposes no cost or expense on the Agency.
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Section 213 Rights of Access
Representatives of the Agency shall have the reasonable right of access to the Site and
Project without charges or fees, at normal construction hours during the period of construction
and without interfering with business operations on the Site for the purpose of inspecting the Site
to determine the Participant's compliance with this Agreement. Such representatives of the
Agency shall be those who are so identified in writing by the Executive Director.
Section 214 Disclaimer of Responsibility by Agency
The Agency neither undertakes nor assumes nor will have any responsibility or duty to
the Participant or to any third party to review, inspect, supervise, pass judgment upon or inform
the Participant or any third party of any matter in connection with the development or
construction of the Project or Site, whether regarding the quality, adequacy or suitability of the
plans, any labor, service, equipment or material furnished to the Site or in connection with the
Project, any person furnishing the same, or otherwise. Participant and all third parties shall rely
upon its or their own judgment regarding such matters, and any review, inspection, supervision,
exercise of judgment or information supplied to the Participant or to any third parry by the
Agency in connection with such matter is for the public purpose of redeveloping the Site, and
neither the Participant(except for the purposes set forth in this Agreement) nor any third party is
entitled to rely thereon. The Agency shall not be responsible for any of the work of construction,
improvement or development of the Site.
Section 215 CEQA Review; Compliance with Environmental Laws
In connection with its adoption in 2002 of the Redevelopment Plan, the Agency caused
an environmental impact report (State Clearinghouse No. 2001-091144) to be prepared in
accordance with the requirements of the California Environmental Quality Act(Public Resources
Code § 21000 et seq.; "CEQA"), the Guidelines for Implementation of CEQA (Title 14,
California Code of Regulations § 15000 et seq.; "CEQA Guidelines"), and local regulations
enacted pursuant thereto. Pursuant to Public Resources Code § 21090 and CEQA Guidelines §
15180, development of the Site with the Project constitutes private activities and undertakings
pursuant to and in furtherance of the Redevelopment Plan.
In connection with its approval of the City Entitlements, the City Council of the City
certified Subsequent Environmental Impact Report No 10-001, The State Clearinghouse Number
2001-051092 (the "SEIR") and adopted a mitigation monitoring plan (the "Mitigation
Monitoring Plan"). The Participant agrees to comply with all conditions in the SEIR and the
Mitigation Monitoring Plan at its sole cost and expense.
The Participant shall also comply with all environmental laws and environmental permits
applicable to the operations of the Project and the ownership or use of the Site and the Project,
shall immediately pay or cause to be paid all costs and expenses incurred by reason of such
compliance, shall keep the Site and Project free and clear of any environmental claims or liens
imposed pursuant to any environmental law as a result of the Participant's development or use of
the Project (subject to the Participant having a reasonable time to contest any such claims or
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remove any such liens), and shall obtain and renew all environmental permits required for
ownership or use of the Project or the Site.
Section 216 Environmental Indemnification by the Participant
The Participant agrees to defend, indemnify and hold harmless the Agency, the City, and
their respective officers, employees, contractors and agents (collectively the "Indemnities") from
and against any and all obligations (including removal and remedial actions), losses, claims
(including third party claims), suits, judgments, liabilities, penalties, damages (including
consequential and punitive damages), costs and expenses (including consultants' and attorneys'
fees and expenses) of whatever kind or nature whatsoever that may at any time be incurred by,
imposed on, or asserted against the Indemnitees directly or indirectly based on, or arising or
resulting from: (a)the actual or alleged presence of Hazardous Substances on the Site as a result
of development or operation of the Project, including, without limitation, Hazardous Substances
presently on the Site required to be removed upon development of the Project, or (b) any
environmental claim with respect to the Project, except in each case if and to the extent directly
or indirectly caused by or resulting from any negligent act, error or omission by the Agency, the
City or their respective officers, employees, contractors and agents. "Hazardous Substances" as
used herein shall mean any substance regulated by applicable law as hazardous or toxic and shall
include,without limitation,the following:
a. a "Hazardous Substance" as defined by Section 9601 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C. §§
9601, et seq., or as "Hazardous Waste" as defined by Section 6903 of the Resource
Conservation and Recovery Act,42 U.S.C. §§ 6901, et seq.;
b. an "Extremely Hazardous Waste," a "Hazardous Waste," or a "Restricted
Hazardous Waste," as defined by The Hazardous Waste Control Law under §§ 25115, 25117 or
25122.7 of the California Health and Safety Code, or as listed or identified pursuant to § 25140
of the California Health and Safety Code;
C. a "Hazardous Material," "Hazardous Substance," "Hazardous Waste," or
"Toxic Air Contaminant," as defined by the California Hazardous Substance Account Act, law
pertaining to the underground storage of hazardous substances, hazardous materials release
response plans, or the California Clean Air Act under§§ 25316, 25281,25501,25501.1 or 39655
of the California Health and Safety Code;
d. "Oil" or a "Hazardous Substance" listed or identified pursuant to §311 of
the Federal Water Pollution Control Act, 33 U.S.C. §1321;
e. "Hazardous Waste," "Extremely Hazardous Waste," or an "Acutely
Hazardous Waste" listed or defined pursuant to Chapter 11 of Title 22 of the California Code of
Regulations Sections 66261.166261.126;
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f. any chemical listed by the State of California under Proposition 65 Safe
Drinking Water and Toxic Enforcement Act of 1986 as a chemical known by the State to cause
cancer or reproductive toxicity pursuant to § 25249.8 of the California Health and Safety Code;
g. a material that, due to its characteristics or interaction with one or more
other substances, chemical compounds, or mixtures, materially damages or threatens to
materially damage, health, safety, or the environment, or is required by any law or public agency
to be remediated, including remediation which such law or government agency requires in order
for the property to be put to any lawful purpose;
h. any material whose presence would require remediation pursuant to the
guidelines set forth in the State of California Leaking Underground Fuel Tank Field Manual,
whether or not the presence of such material resulted from a leaking underground fuel tank;
i. pesticides regulated under the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §§ 136 et seq.;
j. asbestos, PCBs, and other substances regulated under the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 et seq.;
k. any radioactive material including, without limitation, any "source
material," "special nuclear material," "byproduct material," "lowlevel wastes," "highlevel
radioactive waste," "spent nuclear fuel" or "transuranic waste," and any other radioactive
materials or radioactive wastes, however produced, regulated under the Atomic Energy Act, 42
U.S.C. §§ 2011 et seq.,the Nuclear Waste Policy Act, 42 U.S.C. §§ 10101 et seq., or pursuant to
the California Radiation Control Law, California Health and Safety Code §§ 114960 et seq.;
1. hazardous substances regulated under the Occupational Safety and Health
Act, 29 U.S.C. §§ 651 et seq., or the California Occupational Safety and Health Act, California
Labor Code §§ 6300 et seq.; and/or
M. materials, substances and wastes regulated under the Clean Air Act, 42
U.S.C. §§ 7401 et seq. or pursuant to the California Clean Air Act, Sections 3900 et seq, of the
California Health and Safety Code.
Section 217 Rights of Obligees
The provisions of this Agreement do not limit the right of any mortgagee or other obligee
to foreclose or otherwise enforce any mortgage, deed of trust or other encumbrance upon the Site
and Project, or the right of any obligee to pursue any remedies for the enforcement of any pledge
or lien upon the Site and Project, provided, however, the foregoing shall not be deemed to vary,
waive, or otherwise affect the order of priority of any documents recorded in connection with
this Agreement.
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PART 3. USE OF THE SITE
Section 301 Uses
The Participant covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Participant's Interest in the Site or any part thereof, that during the
period referred to in Section 305, the Participant, such successors and such assigns shall devote
the Participant's Interest in the Site to the uses specified in the Scope of Development
(Attachment No. 3) and the Agreement Containing Covenants Affecting Real Property
(Attachment No. 4).
Section 302 Maintenance of Site and Pipeline Area-, Payment of Taxes and
Assessments
a. The Participant covenants and agrees for itself, its successors and assigns,
and every successor in interest to the Site or any part thereof that it shall maintain the Site, and to
the extent required pursuant to the franchise agreement referred to below,the area of the Pipeline
route, or cause the Site and,to the extent required pursuant to the franchise agreement referred to
below,such Pipeline area to be maintained in accord with the following criteria and conditions:
1. The Site and the Project shall be operated and maintained in
conformity with all applicable laws, rules, regulations and
ordinances, including without limitation, all applicable federal and
state labor standards.
2. The Site and all improvements thereon shall be maintained and
kept free from any accumulation of debris or waste materials.
3. All landscaping on the Site shall be maintained in a healthy
condition.
4. The Pipeline shall be maintained as specified in the franchise
agreement to be approved by the City for use of City rights-of-
way, and any other applicable franchise agreement or other
entitlement approved by any governmental entity with jurisdiction
over the Pipeline or any portion thereof.
5. The Participant shall help ensure that construction of the project
including but not limited to the Pipeline, has no adverse impact on
the quality of life in the City by paying the City, within five (5)
days after the closing of the participants construction financing for
the project, the sum of One Million Nine Hundred Thousand
Dollars ($1,900,000), which may be used by the City in its sole
discretion for improvements adjacent to the site or along the route
of the pipeline.
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6. The Participant shall pay to the City the sum of Two Million
Dollars ($2,000,000) which may be used by the City in its sole
discretion for such improvements as the City Council determines
will improve the quality of life in the City of Huntington Beach.
These funds shall be paid by Participant at such time as it elects
after the closing of the Participant's construction financing for the
Project but prior to Completion.
b. As a material part of the consideration for this Agreement, the Participant
covenants and agrees for itself, its successors and assigns, and every successor in interest to the
Site or any part thereof,
1. the Participant shall pay when due all real estate or possessory
interest taxes and assessments assessed and levied on the Site or
any portion thereof or any improvements thereon or any interest
therein, and shall waive and refrain from making any appeal,
challenge or contest of the validity of any tax assessment,
encumbrance or lien on the Site, in part or in full, whether by
property tax assessment appeal or otherwise; provided, however,
that such waiver shall not apply until after the Certificate of
Occupancy has been issued, and provided further that such waiver
shall not apply to the extent that such assessment (or encumbrance
or lien relating thereto) exceeds Two Hundred Million Dollars
($200,000,000); and
2. if the real estate or possessory interest taxes on the Participant's
Interest in the Site in any fiscal year(July 1 through June 30) after
the Certificate of Occupancy has been issued are less than Two
Million Dollars($2,000,000), then on July 1 of the next fiscal year,
the Participant shall pay to the City the difference between (i) the
total real estate or possessory interest taxes paid by the Participant
in such fiscal year and(ii)Two Million Dollars ($2,000,000).
C. In the event that by reason of any property tax exemption or otherwise the
Site is not carried on the County Assessment Roll and/or real property taxes are not levied and
collected on the Site for any reason, the Participant covenants for itself, its successors and
assigns, and every successor in interest to the Site or any part thereof or any interest therein that
the Participant shall pay to the Agency an amount equal to the product of the Site Tax Increment
Revenue (as hereafter defined) payable to the Agency for the fiscal year immediately preceding
the cessation of the levy or collection of taxes on the Site (the "Base Year Revenue Amount")
multiplied by the number of years remaining in the term of this Agreement (or, if less, the
number of years during which such exemption or cessation will continue to be applicable). At
the option of the Participant, such payment shall be payable either(i)by a lump sum which shall
be due within thirty (30) days after the occurrence of the event which has caused or will cause
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the Site not to be carried on the County Assessment Roll and/or real property taxes not to be
levied and collected on the Site, or (ii) by annual payments made on July 1 of each year, in
which case the first such payment shall be made on the July 1 after the occurrence of such event
and shall be in the amount of the Base Year Revenue Amount, and each subsequent annual
payment shall be increased by the permitted statutory rate (presently two percent (2%)per year).
The "Site Tax Increment Revenues" from the Site shall be defined to be that portion of the ad
valorem property tax increment revenues attributable to the Site and payable to the Agency
pursuant to Section 33670(b) of the California Health and Safety Code (as said statute may be
amended from time to time), including without limitation the twenty percent (20%) of said
revenues that the Agency is required to set aside for affordable housing purposes pursuant to
California Health and Safety Code Section 33334.2. In the event that the payment required by
this subsection 302 c. is due at a time when the Agency is no longer legally entitled to receive
Site Tax Increment Revenues from the Site, the Base Year Revenue Amount shall be deemed to
be the amount of Site Tax Increment Revenues which the Agency was entitled to receive in the
last full fiscal year preceding termination of its right to receive such Site Tax Increment
Revenues. Notwithstanding the foregoing, in determining the Site Tax Increment.Revenues for
purposes of this subsection 302 c. for any fiscal year (July I through June 30) after the
Certificate of Occupancy has been issued, the ad valorem property taxes attributable to the Site
shall be calculated at the greater of(i) the actual amount of such taxes prior to the obtaining of
the property tax exemption or removal of the Site from the County Assessment Roll or(ii)the ad
valorem property taxes due at the then-applicable rate for property with an assessed valuation of
Two Hundred Million Dollars ($200,000,000). This subsection 302 c. shall apply regardless of
whether a public entity acquires an interest in or title to the Site and/or the Project.
Section 303 Obligation to Refrain from Discrimination
The Participant covenants and agrees for itself, its successors and assigns and every
successor in interest to the Participant's Interest in the Site or any part thereof that there shall be
no discrimination against or segregation of any person, or group of persons, on account of race,
color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy,tenure or enjoyment of the Participant's Interest in the Site nor shall the
Participant itself or any person claiming under or through it establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number,
use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site.
Section 304 Form of Nondiscrimination and Nonsegregation Clauses
The Participant shall refrain from restricting the rental, sale, or lease of the Site on the
basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person.
All deeds, leases or contracts with respect to the rental, sale or lease of the Participant's Interest
in the Site shall contain or be subject to substantially the following nondiscrimination or
nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them,that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
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religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,number, use or occupancy
of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing
covenants shall run with the land."
b. In leases: "The lessee herein covenants by and for itself, its successors
and assigns, and all persons claiming under or through them, and this lease is made and accepted
upon and subject to the following conditions: That there shall be no discrimination against or
segregation of any person or group of persons on account of race, color, creed, religion, sex,
marital status, national origin or ancestry in the leasing, subleasing, transferring, use or
enjoyment of the land herein leased nor shall the lease itself, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location,number,use or occupancy of tenants, lessees, subtenants
or vendees in the land herein leased."
C. In contracts: "There shall be no discrimination against or segregation of,
any person, or group of persons on account of race, color, creed, religion, sex, marital status,
national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the land, nor shall the transferee itself or any person claiming under or through it,
establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees of the land."
Section 305 Effect and Duration of Covenants
The covenants established in this Agreement shall, without regard to technical
classification and designation, be binding for the benefit and in favor of the Agency and the City
and their successors and assigns. Such covenants as are to survive Completion shall be as
contained in the Agreement Containing Covenants Affecting Real Property (Attachment No. 4)
and shall remain in effect for the periods specified therein.
Section 306 Agreement Containing Covenants Affecting Real Property
a. Concurrent with the transfer of fee ownership of the Site to the Participant,
the Participant and the Agency shall enter into and cause the recordation of an Agreement
Containing Covenants Affecting Real Property substantially in the form attached hereto and
incorporated herein as Attachment No. 4. Such Agreement Containing Covenants Affecting Real
Property shall establish the covenants, conditions and restrictions pertaining to the Site, as set
forth in Section 300 to 305 of this Agreement, for the period of time set forth in the Agreement
Containing Covenants Affecting Real Property, and shall run in favor of the City as well as the
Agency.
b. The Agreement Containing Covenants Affecting Real Property shall be
recorded against both the Participant's Interest in the AES Property and AES's fee interest in the
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AES Property (should the Participant not be the fee owner of the AES Property at the time
recordation is required pursuant to subsection a., above) and shall not be subordinated to any
liens and encumbrances applicable to the Site except those applicable to AES's fee interest
which have been recorded prior to the Effective Date of this Agreement. AES has consented to
the recordation of the Agreement Containing Covenants Affecting Real Property, as set forth at
the end of this Agreement.
Section 307 Relationship of the Agency and the Participant
Nothing contained in this Agreement or in any other document or instrument made in
connection with this Agreement shall be deemed or construed to create a partnership, tenancy in
common, joint tenancy, joint venture or coownership by or between the Agency and the
Participant. The Agency shall not be in any way responsible or liable for the debts, losses,
obligations or duties of the Participant with respect to the Site or otherwise.
Section 308 Representations and Warranties
a. As an inducement to the Agency to enter into this Agreement, the
Participant hereby represents and warrants to the Agency, which representations and warranties
are true and correct as of the date of this Agreement:
1. The Participant has the legal power, right and authority to enter
into this Agreement and the instruments referenced herein, and to satisfy all obligations of the
Participant in this Agreement or in any instrument or document referred to herein (referred to
collectively as the"Participant's Obligations");
2. This Agreement and all documents required hereby to be executed
by Participant are, and shall be, valid, legally binding obligations of and enforceable against the
Participant in accordance with their terms, subject only to applicable bankruptcy, insolvency,
reorganization, moratorium laws or similar laws or equitable principles affecting or limiting the
rights of contracting parties generally;
3. There is no provision of any indenture, instrument, or agreement,
written or oral, to which the Participant is a party or which governs the actions of the Participant
or which is otherwise binding upon the Participant or the Participant's property, nor is there any
statute, rule or regulation, or any judgment, decree, or order of any court or the Agency binding
on the Participant or the Participant's property which would be contravened by the execution,
delivery or performance of any of Participant's Obligations;
4. There is no action, suit, or proceeding at law or in equity or by or
before any governmental instrumentality or other agency now pending, or, to the knowledge of
the Participant, threatened against or affecting the Participant, or any properties or rights of the
Participant, which, if adversely determined, would materially impair the right of the Participant
to execute or perform any of the Participant's Obligations, or would materially adversely affect
the financial condition of the Participant;
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5. Neither the execution and delivery of this Agreement and
documents referenced herein, nor the incurrence of the Participant's Obligations, nor the
consummation of the transactions herein contemplated, nor compliance with the terms of this
Agreement and the documents referenced herein conflict with or result in the material breach of
any terms, conditions or provisions of, or constitute a default under, any bond, note or other
evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership
agreement,lease or other agreements or instruments to which the Participant is a party;
6. To the best of the Participant's knowledge, there are no pending,
threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity,
affecting the Participant's Interest in the Site or in which Participant is, or to the best of the
Participant's knowledge will be, a party by reason of the Participant's Obligations, including,but
not limited to, judicial, municipal or administrative proceedings in eminent domain, unlawful
detainer or tenant evictions, collections, alleged building code, health and safety or zoning
violations, employment discrimination or unfair labor practices, or workers' compensation,
personal injuries or property damages;
7. No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or
threatened against the Participant, nor are any of such proceedings contemplated by the
Participant;
8. All reports, documents, instruments, information and forms of
evidence delivered to the Agency concerning or required by this Agreement were accurate and
correct at the time of delivery in all material respects;
9. No representation, warranty or statement of the Participant in this
Agreement contains or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements or facts contained therein not
misleading.
b. As an inducement to the Participant to enter into this Agreement and
develop the Site as provided herein, the Agency hereby represents and warrants to the
Participant, which representations and warranties are true and correct as of the date of this
Agreement:
1. The Agency has the legal power, right and authority to enter into
this Agreement and the instruments referenced herein, and to consummate the transactions
contemplated hereby;
2. This Agreement and all documents required hereby to be executed
by the Agency are, and shall be, valid, legally binding obligations of and enforceable against the
Agency in accordance with their terms, subject only to applicable bankruptcy, insolvency,
reorganization, moratorium laws or similar laws or equitable principles affecting or limiting the
rights of contracting parties generally;
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3. No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or
threatened against the Agency,nor are any of such proceedings contemplated by the Agency;
C. The truth and accuracy of each party's representations and warranties
made herein shall constitute a condition for the benefit of the other party to the performance of
such other party's obligations hereunder.
PART 4. DEFAULTS AND REMEDIES
Section 401 Defaults-General
Failure or delay by either party to perform any term or provision of this Agreement
constitutes a default under this Agreement. The party who fails or delays must immediately
commence to cure, correct or remedy such failure or delay and shall complete such cure,
correction or remedy with reasonable diligence, and during any period of curing shall not be in
default, so long as it endeavors to complete such cure, correction or remedy with reasonable
diligence, and provided such cure, correction or remedy is completed within the applicable time
period set forth herein after receipt of written notice (or such additional time as may be deemed
by the complaining party in its reasonable discretion to be reasonably necessary to correct the
default).
Section 402 Defaults-Notice
a. The injured party shall give written notice of default to the party in
default, specifying the default complained of by the injured parry. Failure or delay in giving
such written notice shall not constitute a waiver of any default, nor shall it change the time of
default. Except as otherwise expressly provided in this Agreement, any failures or delays by
either party in asserting any of its rights and remedies as to any default shall not operate as a
waiver of any default or of any such rights or remedies. Delays by either party in asserting any
of its rights and remedies shall not deprive either party of its right to institute and maintain any
actions or proceedings which it may deem necessary to protect, assert or enforce any such rights
or remedies.
b. If a monetary event of default occurs, prior to exercising any remedies
hereunder, the injured parry shall give the party in default written notice of such default. The
party in default shall have a period of thirty (30) calendar days after such written notice is
received or deemed received within which to cure the default prior to exercise of remedies by the
injured party.
C. If a non-monetary event of default occurs,prior to exercising any remedies
hereunder, the injured party shall give the party in default written notice of such default. If the
default is reasonably capable of being cured within thirty (30) calendar days after such written
notice is received or deemed received,the party in default shall have such period to effect a cure
prior to exercise of remedies by the injured party. If the default is such that it is not reasonably
capable of being cured within thirty (30) days, and the party in default (i) initiates corrective
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action within said period, and(ii) diligently, continually, and in good faith works to effect a cure
as soon as possible, then the party in default shall have such additional time as is reasonably
necessary to cure the default prior to exercise of any remedies by the injured party, not to exceed
ninety(90)days after the first written notice of default is given.
d. Any notice of default that is transmitted by electronic facsimile
transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its
transmission; any notice of default that is personally delivered (including by means of
professional messenger service, courier service such as United Parcel Service or Federal Express,
or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and any
notice of default that is sent by registered or certified mail, postage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
Section 403 Automatic Stay—Waiver,Non-Executory Contract
a. In consideration of the Agency's execution and performance of this Agreement,
the City's inherent police power relating to the public health and safety of the citizens of the City
as recognized by 11 U.S.C. Section 362, and in consideration of the recitals and mutual
covenants contained herein, and for other good and valuable consideration, including the
agreement of the City to afford Participant a period in excess of 10 (ten) years to perform under
the terms of the Exchange Agreement as provided therein, the receipt and sufficiency which are
hereby acknowledged, Participant hereby agrees that in the event that Participant (by its own
action or by the action of its members, shareholders or creditors, if applicable), shall at any time
during the term of this Agreement(a) file with any bankruptcy court of competent jurisdiction or
be the subject of any petition for relief under the Bankruptcy Code of 1978 as amended, or any
amended or successor statutory provisions (the "Bankruptcy Code"), (b) be the subject of any
order for relief issued under the Bankruptcy Code, (c) file or be the subject of a petition seeking
a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act of law relating to bankruptcy, insolvency, or
other relief for debtors, (d) have sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator, or liquidator, (e) be the subject of any order,judgment or decree
entered by any court of competent jurisdiction approving a petition filed against such party for
the reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to bankruptcy, insolvency,or
relief for debtors, then, in any such event, the Agency and the City shall thereupon be entitled to
relief from any automatic stay imposed by Section 362 of the Bankruptcy Code, or any similar
stay to the extent necessary for the exercise of the rights and remedies otherwise available to the
Agency or the City as provided in this Agreement and as otherwise provided by law. Participant
hereby waives the benefit of such stay to the extent provided herein and does hereby consent to
the entry of an order of any court of competent jurisdiction granting immediate relief from,
modification or termination of such stay, and Participant does hereby further agree to raise no
objection to any motion or proceeding seek relief from,modification or termination of such stay.
b. Participant further acknowledges that upon execution of this Agreement, the
Agency and the City shall have performed its material obligations as provided herein, leaving
performance remaining solely with Participant. In the event of a bankruptcy proceeding as
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described in the preceding paragraph, Participant acknowledges and agrees that this Agreement
is not executory as that term is defined in the Bankruptcy Code and in particular Section 365
thereof.
PART 5. GENERAL PROVISIONS
Section 501 Notices Demands and Communications between the Parties
Formal notices, demands and communications between the Agency and the Participant
shall be deemed sufficiently given if dispatched by registered or certified mail, postage prepaid,
return receipt requested, to the respective addresses of the Agency and the Participant set forth in
Sections 105 and 106 hereof. Such written notices,demands and communications may be sent in
the same manner to such other addresses as either party may from time to time designate by mail.
Section 502 Conflict of Interest
a. No member, official, or employee of the Agency shall have any personal
interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee
participate in any decision relating to the Agreement which affects his personal interests or the
interests of any corporation, partnership, or association in which he is, directly or indirectly,
interested.
b. The Participant warrants that it has not paid or given, and will not pay or
give, any third person any money or other consideration for obtaining this Agreement.
Section 503 Nonliability of Agency Officials and Employ
No member, official or employee of the Agency shall be personally liable to the
Participant, or any successor in interest in the event of any default or breach by the Agency or for
any amount which may become due to the Participant or successor or on any obligation under the
terms of this Agreement.
No member, official or employee of the Participant shall be personally liable to the
Agency, or any successor in interest in the event of any default or breach by the Participant or for
any amount which may become due to the Agency or successor or on any obligation under the
terms of this Agreement.
Section 504 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals
required of the Agency or the Participant in this Agreement, including the attachments hereto,
shall not be unreasonably withheld, conditioned or delayed. All approvals shall be in writing.
Except as otherwise expressly provided in this Agreement, failure by either party to approve a
matter within the time provided for approval of the matter shall not be deemed a disapproval, and
failure by either party to disapprove a matter within the time provided for approval of the matter
shall not be deemed an approval.
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b. Except as otherwise expressly provided in this Agreement, approvals
required of the Agency shall be deemed granted by the written approval of the Executive
Director or his/her designee. The Agency agrees to provide notice to the Participant of the name
of the Executive Director's designee on a timely basis, and to provide updates from time to time.
Notwithstanding the foregoing, the Executive Director or designee may, in his or her sole
discretion, refer to the governing body of the Agency any item requiring the Agency's approval;
otherwise, "Agency approval" shall mean and refer to approval by the Executive Director or
designee.
Section 505 Time of Essence
Time is of the essence with respect to the performance of each of the covenants and
agreements contained in this Agreement.
Section 506 No Partnership
Nothing contained in this Agreement shall be deemed or construed to create a
partnership,joint venture, or any other similar relationship between the parties hereto or cause
the Agency to be responsible in any way for the debts or obligations of Participant or any other
Person.
Section 507 Compliance with Law
The Participant agrees to comply with all the requirements now in force, or which may
hereafter be in force, of all municipal, county, state and federal authorities, pertaining to the
development of the Site and the Project. The judgment of any court of competent jurisdiction, or
the admission of the Participant or any lessee or permittee of the Participant's Interest in the Site
in any action or proceeding against them, or any of them, whether the Agency be a party thereto
or not, that the Participant, lessee or permittee has violated any such ordinance or statute in the
development and use of the Site shall be conclusive of that fact as between the Agency and the
Participant.
Section 508 No Third Party Beneficiaries,Nonliability of AES
(a) The parties to this Agreement acknowledge and agree that the provisions of this
Agreement are for the sole benefit of the Agency and the Participant, and not for the benefit,
directly or indirectly, of any other person or entity, provided, however, that the City shall be
deemed a third party beneficiary of each term or condition except as otherwise expressly
provided herein, and AES shall be deemed a third party beneficiary of this Section 508 and
Section 702 of this Agreement.
(b) The parties to this Agreement acknowledge and agree that, notwithstanding
anything herein to the contrary, neither AES, nor any member (or other affiliate), official or
employee of AES, shall be liable to the Participant, the Agency, the City or any of their
respective officers, employees, contractors and agents or any successors or assigns of any of the
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foregoing, for any obligations or responsibilities of the Participant or the Agency arising under or
in connection with this Agreement or the Agreement Containing Covenants Affecting Real
Property or the development, construction, operation and maintenance of the Project or any
portion thereof unless AES develops and/or operates the Project under the City Entitlements, in
which event AES shall be deemed the Participant for all purposes thereafter arising under or in
connection with this Agreement and the Agreement Containing Covenants Affecting Real
Property. The parties further acknowledge and agree that AES shall not be deemed to be a
successor to the Participant's interests and obligations under this Agreement as a result of the
AES's ownership of the AES Property or its repossession of the AES Property from the
Participant following any termination, expiration or breach of the Participant's Interest in the
AES Property unless AES were to develop and/or operate the Project under the City
Entitlements, in which event AES shall be deemed the Participant for all purposes thereafter
arising under or in connection with this Agreement and the Agreement Containing Covenants
Affecting Real Property.
Section 509 Authority to Sign
The Participant hereby represents that the persons executing this Agreement on behalf of
the Participant have full authority to do so and to bind the Participant to perform pursuant to the
terms and conditions of this Agreement. Concurrently with the Participant's submission of this
Agreement to the Agency for execution, the Participant will submit to the Agency a copy of
documents evidencing the due formation and nature of the Participant and the signatory's
authority to sign on behalf of the Participant.
Section 510 Incorporation by Reference
Each of the attachments and exhibits attached hereto is incorporated herein by this
reference.
Section 511 Counterparts
This Agreement may be executed by each party on a separate signature page, and when
the executed signature pages are combined, shall constitute one single instrument.
Section 512 No Merger
There shall be no merger of this Agreement or the Agreement Containing Covenants
Affecting Real Property.
Section 513 Enforced Delay; Extension of Times of Performance
In addition to specific provisions of this Agreement, performance by either party
hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond
the control and without the fault of the party claiming an extension of time to perform, including
war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts
of the public enemy, epidemics, quarantine restrictions, freight embargoes,lack of transportation,
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governmental restrictions or priority, unusually severe weather, inability to secure necessary
labor, materials or tools, delays of any contractor, subcontractor or suppliers, acts of the other
party, or acts or failure to act of City or any other public or governmental agency or entity
(except that an act or failure to act of Agency shall not excuse performance by Agency). An
extension of time for any such cause shall be for the period of the enforced delay and shall
commence to run from the time of the commencement of the cause, if notice by the party
claiming such extension is sent to the other party within thirty (30) days of knowledge of the
commencement of the cause. Times of performance under this Agreement may also be extended
in writing by the mutual agreement of the Participant and the Agency.
PART 6. ENTIRE AGREEMENT,WAIVERS AND AMENDMENTS
This Agreement is executed in five(5) duplicate originals, each of which is deemed to be
an original. This Agreement includes twenty-nine (29) pages and four (4) attachments, which
constitute the entire understanding and agreement of the parties.
This Agreement integrates all of the terms and conditions mentioned herein or incidental
hereto, and supersedes all negotiations or previous agreements between the parties with respect
to all or any part of the subject matter hereof.
All waivers of the provisions of this Agreement must be in writing and signed by the
appropriate authorities of the Agency or the Participant, and all amendments hereto must be in
writing and signed by the appropriate authorities of the Agency and the Participant.
PART 7. TIME FOR ACCEPTANCE OF AGREEMENT BY THE AGENCY; TERM
Section 701 Time for Acceptance of Agreement
This Agreement, when executed by the Participant and delivered to the Agency, must be
authorized, executed and delivered by the Agency within sixty(60) days after date of consent to
this Agreement by AES or this Agreement may be terminated by the Participant upon written
notice to the Agency. The effective date of this Agreement (the "Effective Date") shall be the
date when this Agreement has been executed by the Agency.
Section 702 Term
Except as set forth below, this Agreement shall be effective for a period of thirty (30)
years from the issuance of the Certificate of Occupancy.
Notwithstanding the foregoing, this Agreement and the Agreement Containing Covenants
Affecting Real Property described in Section 306 shall be deemed terminated and of no further
force or effect upon the happening of either of the following:
(a) if prior to the commencement of any construction on the Site, either City
Entitlement terminates or expires for any reason including but not limited to a
determination by any court or governmental entity with jurisdiction thereof that such City
10-2405/52143
27
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Entitlement is void or of no force or effect, in which event thereafter neither the Agency
nor the Participant shall have any rights against,or obligations to,the other hereunder; or
(b) if, whether prior to or after the issuance of the Certificate of Occupancy, the
Participant provides written notice to the Agency that the Participant is abandoning or has
abandoned the development and/or operation of the Project under the City Entitlements;
provided, however, that termination of this Agreement and the Agreement Containing
Covenants Affecting Real Property under this paragraph(b) shall not be deemed to affect
any obligation of the Participant to complete the demolition, removal, and restoration
work required by Section 203 of this Agreement not to maintain the bond required therein
until such work is completed.
IN WITNESS WHEREOF, the Agency and the Participant have signed this Agreement
as of the dates set opposite their signatures.
REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH
Dated:
Name:
Its:
APPROVED AS TO FORM:
Agency General Counsel
POSEIDON RESOURCES (SURFSIDE)LLC,
a Delaware li liability company
Dated: + l By:
Its: N -
Dated: By:
Its:
10-2405/52143 28
-325-
CONSENT TO AGREEMENT AND RECORDATION OF DOCUMENTS
AES Huntington Beach Development, LLC ("AES"), as fee owner of the AES Property,
hereby consents (i) to the Participant's entry into this Agreement, as the Participant's Interest in
the AES Property is subject of this Agreement, and (ii) to the recordation of the Agreement
Containing Covenants Affecting Real Property (Attachment No. 4) against its fee ownership in
the AES Property in accordance with Section 306 of this.Agreement. AES further agrees to
execute such other and further documents as the Agency determines in its reasonable di retion
are necessary to effectuate the terms and conditions of this Agreement
Dated: By:
Its:
Dated: By:
Its:
10-2405/52143
29
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ATTACHMENT NO. 1
TENTATIVE PARCEL MAP
1
-327-
TENTATIVE PARCEL MAP No. 2010- 130
IN THE CITY OF HUNTINGTON BEACH,COUNTY OF ORANGE.STATE OF CALIFORNIA
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VICINITY MAP REV' 2010- a-to
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ATTACHMENT NO. 2
LEGAL DESCRIPTION
(TO BE INSERTED)
2
-329-
ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
3
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ATTACHMENT NO. 3
SCOPE OF DEVELOPMENT
The Project shall consist of a seawater desalination plant and water transmission line as
approved by the City of Huntington Beach in Entitlement Plan Amendment 10-00L.
-331
ATTACHMENT NO.4
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
4
-332-
ATTACHMENT NO. 4
OFFICIAL BUSINESS
Document entitled to free
recording per Government
Code Section 6103
Recording Requested by
and When Recorded Return to:
REDEVELOPMENT AGENCY OF THE.
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
Attn: Agency Secretary
SPACE ABOVE THIS LINE FOR RECORDER'S USE
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
THIS AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
("Agreement") is entered into as of by and between the
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH a public body
corporate and politic ("Agency") and POSEIDON RESOURCES (SURFSIDE)LLC, a Delaware
limited liability company("Participant').
A. Participant owns certain property within the City of Huntington Beach, California
(the "Site"). The Site is legally described in the "Legal Description" attached hereto and
incorporated herein as Exhibit A.
B. The Site is within the Southeast Coastal Redevelopment Project area (the
"Redevelopment Project") in the City of Huntington Beach and is subject to the provisions of the
Redevelopment Plan for the Redevelopment Project adopted by Ordinance No. 3561 on June 17,
2002,by the City Council of the City of Huntington Beach (the"Redevelopment Plan").
C. Participant has requested the City of Huntington Beach ("City") to approve
Entitlement Plan Amendment 10-001 (the "City Entitlements') to permit the development and
operation of a seawater desalination facility (the "Facility") on the Site, as well as a water
transmission line from the Site to an existing regional transmission system (the "Pipeline,"
collectively with the Facility,the "Project'). Upon approval by the City, the City Entitlements
will run with the land and therefore will be of benefit to any person or entity which develops
and/or operates the Project (a "Beneficiary"), subject to the conditions of approval imposed
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-333-
thereon. The interest of Participant (or any Beneficiary) in the Site is hereinafter referred to as
the"Participant's Interest".
D. In furtherance of the Redevelopment Plan, Agency and Participant have entered
into that certain Amended and Restated Owner Participation Agreement, dated as of September
2010 (the "OPA'), and AES-HBD has consented to the OPA. Any capitalized term not-
otherwise defined in this Agreement shall have the meaning ascribed to such term in the OPA.
E. This Agreement is entered into and recorded in accordance with the
Redevelopment Plan and the OPA and to fulfill any condition(s) of approval of the City
Entitlements which requires an owner participation agreement.
NOW, THEREFORE, in consideration of the foregoing, "Participant" and Agency
hereby agree that: (i) upon approval by the City, the City Entitlements will run with the Site and
therefore will be of benefit to any person or entity which develops and/or operates the Project(a
`Beneficiary"), subject to the conditions of approval imposed. thereon, and (ii) the following
covenants and conditions shall run with the Site and be binding on any and all parties having any-
right, title or interest in the Site, their respective heirs, legatees, devisees, administrators,
executors, successors and assigns (including,without limitation, any Beneficiary), which develop-
and/or operate the Project on the Site pursuant to the City Entitlements, and shall inure to the
benefit of Agency, City and their respective successors and assigns:
1. Participant, on behalf of itself and its successors, assigns, and each successor in
interest to the Site or any part thereof (including, without limitation, any Beneficiary), which
develops and/or operates the Project on the Site pursuant to the City Entitlements, hereby
covenants and agrees as follows:
a Participant shall develop the Project on the Site in accordance with the
OPA (including the Scope of Development, Attachment No. 3 to the OPA), the City
Entitlements, and the Approved Plans.
b. Participant shall use the Site only for the development permitted and the
uses specified in the OPA and this Agreement,namely,a seawater desalination facility.
C. Participant shall maintain the Site and, to the extent required pursuant to
the franchise agreement referred to below,the area of the Pipeline route,or cause the Site and,to
the extent required pursuant to the franchise agreement referred to below, such Pipeline area to
be maintained,in accord with the following criteria and conditions:
(1) The Site and the Project shall be operated and maintained in
conformity with all applicable laws, rules, regulations and
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-334-
ordinances, including without limitation, all applicable federal and
state labor standards.
(2) The Site and all improvements thereon shall be maintained and
kept free from any accumulation of debris or waste materials.
(3) All landscaping on the Site shall be maintained in a healthy
condition.
(4) The Pipeline shall be maintained as specified in the franchise
agreement to be approved by City for use of City's rights-of-way,
and any other applicable franchise agreement or other entitlement
approved by any governmental entity with jurisdiction over the
pipeline or any portion thereof.
(5) Participant shall help assure that construction of the Project,
including but not limited to the Pipeline, has no adverse impact on
the quality of life in the City by paying City, within five (5) days
after the closing of Participant's construction financing for the
Project, the sum of One Million Nine Hundred Thousand Dollars
($1,900,000), which may be used by City in its sole discretion for
improvements adjacent to the Site or along the route of the
Pipeline.
(6) Participant shall pay to City the sum of Two Million Dollars
($2,000,000) which may be used by City in its sole discretion for
such improvements as the City Council of City determines will
improve the quality of life in the City of Huntington Beach. These
funds shall be paid by Participant at such time as it elects after the .
closing of the Participant's construction financing for the Project
but prior to Completion.
d. For each year of the term of the OPA that real property taxes are levied on
the Site or any portion thereof.
(1) Participant shall pay when due all real estate or possessory interest
taxes and assessments assessed and levied on the Site or any
portion thereof or any improvements thereon or any interest
therein, and shall waive and refrain from making any appeal,
challenge or contest of the validity of any tax assessment,
encumbrance or lien on the Site, in part or in full, whether by
property tax assessment appeal or otherwise; provided, however,
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-335-
that such waiver shall not apply until after the Certificate of
Occupancy has been issued, and provided further that such waiver
shall not apply to the extent that such assessment (or encumbrance
or lien relating thereto) exceeds Two Hundred Million Dollars
($200,000,000); and
(2) if the real estate or possessory interest taxes on the Participant's
Interest in the Site in any fiscal year (July 1 through June 30) after
the Certificate of Occupancy has been issued are less than Two
Million Dollars($2,000,000),then on July l of the next fiscal year,
Participant shall pay to City the difference between(i)the'total real
estate or possessory interest taxes paid by Participant in such fiscal
year and.(ii)Two Million Dollars ($2,000,000).
e. In the event that during the term of the OPA,by reason of any property tax
exemption or otherwise, the Site is not.carried on the County Assessment Roll and/or real
property taxes are not levied and collected on the Site for any reason, Participant shall pay to
Agency an amount equal to the product of the Site Tax Increment Revenue (as hereafter defined)
payable to Agency for the fiscal year immediately preceding the cessation of the levy or
collection of taxes on the Site (the "Base Year Revenue Amount") multiplied by the number of
years remaining in the term of the OPA (or, if less, the number of years during which such
exemption or cessation will continue to be applicable). At the option of Participant, such
payment shall be payable either (i) by a lump sum which shall be due within thirty (30) days
after the occurrence of the event which has caused or will cause the Site not to be carried on the
County Assessment Roll and/or real property taxes not to be levied and collected on the Site, or
(ii) by annual payments made on July 1 of each year, in which case the first such payment shall
be made on the July 1 after the occurrence of such event and shall be in the amount of the Base
Year Revenue Amount, and each subsequent annual payment shall be increased by the pennitted
statutory rate (presently two percent (21/o) per year). The "Site Tax Increment Revenues" from
the Site shall be defined to be that portion of the ad valorem property tax increment revenues
attributable to the Site and payable to Agency pursuant to Section 33670(b) of the California
Health and Safety Code (as said statute may be amended from time to time), including without
limitation the twenty percent (20%) of said revenues that Agency is required to set aside for
affordable housing purposes pursuant to California Health and Safety Code Section 33334.2. In
the event that the payment required by this subsection e. is due at a time. when Agency is no
longer legally entitled to receive Site Tax Increment Revenues from the Site, the Base Year
Revenue Amount shall be deemed to be the amount of Site Tax Increment Revenues which
Agency was entitled to receive in the last full fiscal year preceding termination of its right to
receive such Site Tax Increment Revenues. Notwithstanding the foregoing, in determining the
Site Tax Increment Revenues for purposes of this subsection e. for any fiscal year (July l
through June 30) after the Certificate of Occupancy has been issued, the ad valorem property
taxes attributable to the Site shall be calculated at the greater of(i) the actual amount of such
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-336-
taxes prior to the obtaining of the property tax exemption or removal of the Site from the County
Assessment Roll or(ii)the ad valorem property taxes due at the then-applicable rate for property
with an assessed valuation of Two Hundred Million Dollars ($200,000,000). This subsection e.
shall apply regardless of whether a public entity acquires an interest in or title to the Site and/or
the Project.
f. There shall be no discrimination against or segregation of any person, or
group of persons, on account of race, color, creed, religion, sex, marital status, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
Participant's Interest in the Site nor shall Participant itself or any person claiming under or
through it establish or permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants, Iessees, subtenants,
sublessees, or vendees of the Site.
g. Participant shall refrain from restricting the rental, sale, or lease of the
Site, or any portion thereof, on the basis of race, color, creed, religion, sex, sexual orientation,
marital status, national origin, or ancestry of any person. Every deed, lease, and contract entered
into with respect to the rental, sale or lease of the Participant's Interest in the Site, or any portion.
thereof, after the date of this Agreement shall contain or be subject to substantially the following
nondiscrimination or nonsegregation clauses:
(1) In deeds: "The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race,
color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry in the
sale, lease, sublease,transfer, use, occupancy, tenure or enjoyment of the land herein conveyed,
nor shall the grantee itself or any person claiming under or through it, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection, loca-
tion, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land
herein conveyed. The foregoing covenants shall run with the land."
(2) In leases: "The lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is made
and accepted upon and subject to the following conditions: That there shall be no discrimination
against or segregation of any person or group of persons on account of race, color, creed,
religion, sex, sexual orientation, marital status, national origin, or ancestry in the leasing,
subleasing, transferring, use or enjoyment of the land herein leased nor shall the lease itself,.or
any person claiming under or through it,establish or permit any such practice or practices of dis-
crimination or segregation with reference to the selection, location, number, use or occupancy of
tenants,lessees,subtenants or vendees in the land herein leased."
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-337-
(3) In contracts: "There shall be no discrimination against or segrega-
tion of, any person, or group of persons on account of race, color, creed, religion, sex, sexual
orientation, marital status, national origins or ancestry in the sale, lease sublease, transfer, use,
occupancy,tenure or enjoyment of the land,nor shalt the transferee itself or any person claiming
under or through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees,subtenants, sublessees or vendees of the land."
2. All conditions, covenants and restrictions contained in this Agreement shall be
covenants running -with the land; and shall; in any event, and without regard to technical
classification or designation, legal or otherwise, be; to the fullest extent permitted by law and
equity, binding for the benefit and in favor of, and enforceable by Agency, its successors and
assigns, and City and its successors and assigns, against Participant; and its successors and as-
signs to or of the Site or any portion thereof or any interest therein, and any party in possession
or occupancy of said Site or any portion thereof(including without limitation, any Beneficiary)
which develops and/or operates the Project on the Site pursuant to the City Entitlements,.
Agency and City shall be deemed-the beneficiaries of the covenants, conditions and restrictions
of this Agreement both for and in their own rights and for the purposes of protecting the interests
of the community. The covenants, conditions, and restrictions shall run in favor of Agency and
City, without regard to whether.Agency or City has been, remains, or is an owner of any land or
interest therein in the Site or the Redevelopment Project area. Except as provided in the
preceding sentence, the covenants, conditions and restrictions contained in this Agreement shall
not benefit nor be enforceable by any owner of any other real property within or outside the
Redevelopment Project area or any person or entity having any interest in any such other real
property.
3. No sale, conveyance, assignment, leasing or other transfer of any kind of the
Participant's Interest in the Site or any portion thereof shall be permitted, except as expressly
authorized by the OPA.
4. Agency and Participant shall have the right, in the event of any breach of any
agreement or covenant contained herein by the other party, to exercise all the rights and
remedies, and to maintain any actions at law or suit in equity or other proper proceedings to
enforce the curing of such breach of agreement or covenant.
5. No violation or breach of the covenants, conditions, restrictions, provisions or
limitations contained in this Agreement shall defeat or render invalid or in any way impair the
lien or charge of any deed of trust recorded on the Site, provided, however, that any subsequent
successor to the Participant's Interest in the Site (including, without limitation, any Beneficiary)
shall be bound by the covenants, conditions, restrictions, limitations and provisions of this
Agreement, whether such successor in interest's title to the Participant`s Interest in the Site was
acquired by foreclosure, deed in lieu of foreclosure,trustee's sale or otherwise.
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-338-
6. The covenants set forth in subparagraph La. and Section 3 shall remain in effect
until Completion. The covenants against discrimination set forth in subparagraph l.f and l.g. of
this Agreement shall remain in effect in perpetuity. Every other covenant and condition and
restriction contained in this Agreement shall remain in effect for a period of thirty (30) years
from the issuance of the Certificate of Occupancy.
Notwithstanding the foregoing, this Agreement shall be deemed terminated and of no
further force or effect upon the happening of either of the following:
(a) if prior to the commencement of any construction on the Site, either City
Entitlement terminates or expires for any reason including but not limited to a
determination by any court or governmental entity with jurisdiction thereof that
such Entitlement is void or of no force or effect, in which event thereafter neither
Agency nor Participant shall have any rights against, or obligations to, the other
hereunder;or
(b) if, whether prior to or after the issuance of the Certificate of Occupancy,
Participant provides written notice to Agency that the Participant is abandoning or
has abandoned the development of the Project and operation of the Facility;
provided, however, that termination of this Agreement under this paragraph (b)
shall not be deemed to affect any obligation of Participant to complete the
demolition, removal, and restoration work required by Section 203 of the OPA
nor to maintain the bond required therein until such work is completed.
Termination of any covenant in accord with this paragraph 6 shall not be deemed to
affect the obligations or duties imposed upon Participant by any other term or condition of any
other entitlement or permit.
7. if a violation of any of the foregoing covenants occurs or is attempted, and such
occurrence or attempt is uncorrected for the applicable period described in Section 402 of the
OPA, Agency, City, and their successors and assigns, without regard to whether Agency or City
or their successors and assigns is an owner of any land or interest therein to which these
covenants relate, may institute and prosecute any proceedings at law or in equity to abate,
prevent or enjoin any such violation or attempted violation or to compel specific performance by
Participant of its obligations hereunder. No delay in enforcing the provisions hereof as to any
breach or violation shall impair, damage or waive the right of any party entitled to enforce the
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-339-
provisions hereof or to obtain relief against or recover for the continuation or repetition of such
breach or violations or any similar breach or violation hereof at any later time.
8. There shall be no merger of this Agreement or the OPA.
9. The parties to this Agreement acknowledge and agree that, notwithstanding
anything herein to the contrary, neither AES-HBD, nor any member (or other affiliate), official
or employee of AES-HBD, shall be liable to the Participant, the Agency, the City or any of their
respective officers, employees, contractors and agents or any successors or assigns of any of the
foregoing,for any obligations or responsibilities of the Participant or the Agency arising under or
in connection with this Agreement or the OPA or the development,construction, operation and
maintenance of the Project or any portion thereof unless AES-HBD develops and/or operates the
Project under the City Entitlements, in which event AES=HBD shall be-deemed the Participant
for all purposes thereafter arising under or in connection with this Agreement and the OPA. The
parties further acknowledge and agree that AES-HBD shall not be deemed.to be a successor to
the Participant's interests and obligations under this Agreement or the OPA as a result of AES_
HBD's ownership of the Site or its repossession of the Site from the Participant following any
termination,expiration or breach of the Participant's Interest in the Site unless AES-HBD were to
develop and/or operate the Project under the City Entitlements in which AES-HBD shall be
deemed the Participant for all purposes thereafter arising under or in connection with this
Agreement and the OPA.
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
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IN WITNESS WHEREOF, Agency and Participant have signed this Agreement as of the
dates set opposite their signatures.
REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH
Dated:
Chairman
Dated:
Executive Director
Dated:
Agency Clerk
APPROVED AS TO FORM: APPROVED AS TO FORM:
Agency General Counsel Special City/Agency Counsel
Kane,Ballmer&Berkman
POSEIDON RESOURCES (SURFSIDE)LLC,
a Delaware limited liability company
Dated:
By:
Name:
Its:
Dated:
By:
Name:
Its:
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
-341-
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On before me, ,personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted,executed the instrument.
WITNESS my hand and official seal.
Signature
STATE OF CALIFORNIA )
)ss.
COUNTY OF )
On before me, , personally appeared
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s)whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted,executed the instrument.
WITNESS my hand and official seal.
Signature
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Exhibit A
LEGAL DESCRIPTION OF THE SITE
(To be Inserted)
-12-
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