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ACQUISITION/FINANCING AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2024-2
(MOSS STREET)
THIS AGREEMENT, dated as of ____________, 2025 (the “Agreement”), is made and entered into by and between the CITY OF CHULA VISTA, a charter city duly organized and validly existing under the Constitution and laws of the State of California, (the “City”), COMMUNITY FACILITIES DISTRICT NO. 2024 -2 (MOSS STREET), a community facilities district formed and existing pursuant to the laws of the State of California (the “CFD No. 2024-2”), and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership (the “Developer”).
WHEREAS, the Developer is the developer of certain property within that portion of the City known as 676 Moss Street described in Exhibit “B” attached hereto and incorporated herein by this reference (the “Property”) and Developer has obtained certain land use entitlements from the City which permit the development of the Property with approximately 141 attached residential dwelling units on approximately 6.92 gross acres (the “Development Project”); and
WHEREAS, in connection with the development of the Development Project, Developer is required to pay certain City fees for the construction or acquisition of certain public facilities to be owned, operated, and maintained by the City needed to serve the Development Project (the “City Fees”); and water capacity fees of the Sweetwater Authority (the “SA Fees”), a publicly - owned water agency and joint powers agency (together the City Fees and SA Fees are collectively referred to as the “Fees”) described further in Exhibit “A” attached hereto and incorporated herein by this reference; and
WHEREAS, the City and the Developer desire that this Agreement provide that CFD No. 2024-2 finance the City Fees in the amounts equal to the development impact fee obligations imposed pursuant to the applicable provisions of the Chula Vista Municipal Code in effect at the time of payment of such City Fees and as designated in Exhibit “A” hereto; and
WHEREAS, the City and the Developer agree that the City shall have no role or responsibility whatsoever in determining the Developer’s total SA Fees obligation to the Sweetwater Authority and Developer also desires that this Agreement, subject to the successful approval of a joint community facilities agreement (the “JCFA”) to be negotiated separately, provide that CFD No. 2024- 2 finance the SA Fees in the amounts as designated in Exhibit “A” hereto; and
WHEREAS, the Developer requested that the City consider and the City did consider and establish CFD No. 2024- 2 under the terms and conditions of the “Mello- Roos Community Facilities Act of 1982,” as amended (Government Code Section 53311 and following) (the “Act”), for the purpose of financing the Fees; and
WHEREAS, the City and the Developer further agree that the Fees shall be funded solely from the proceeds of special taxes of CFD No. 2024- 2 (“Special Taxes”) levied in accordance 60297.00082\44070296.1
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with the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) and bonds which are proposed to be issued by CFD No. 2024- 2 and which shall be secured by the levy of the Special Taxes (“Bonds”); and
WHEREAS, the City and CFD No. 2024 -2 are willing to have CFD No. 2024- 2 finance the Fees, subject to the requirements of the Act, the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts adopted by the City Council (the “Goals and Policies”), and this Agreement and Developer desires that CFD No. 2024-2 so finance the Fees.
NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows:
SECTION 1. Recitals. The above recitals are all true and correct and are incorporated herein by this reference.
SECTION 2. Agreement Contingent. As a precondition to the sale of each series of the Bonds of CFD No. 2024- 2, Developer shall pay in cash to City an origination charge of 1.0% of the amount of the principal amount of such series of the Bonds (“Origination Payment”). Each such Origination Payment shall be at Developer’s own expense and not recoverable from the proceeds of the Special Taxes or from the proceeds of the Bonds. In the event that any series of the Bonds are, for any reason, not sold, the amount of the Origination Payment made for such series of the Bonds shall be returned to the Developer.
The City may, at its option, suspend the performance of its obligations under this Agreement if any legal challenge is filed relating to the validity or enforceability of this Agreement, CFD No. 2024- 2 proceedings, or the issuance of the Bonds. The obligations of the City and CFD No. 2024-2 hereunder shall be reinstated upon the entry of a final judgment in any such proceedings upholding the validity and enforceability of the Agreement, CFD No. 2024 -2 proceedings, and the issuance of the Bonds. In the event that a final judgment or other final and non-appealable resolution is entered invalidating or declaring unenforceable this Agreement, CFD No. 2024-2 proceedings, or the issuance of the Bonds, the City and CFD No. 2024- 2 may, at their option, terminate this Agreement.
SECTION 3. Notice of Special Tax . Developer, or the successor or assigns of the Developer, including but not limited to all Builders (as such term is defined in Section 4 below), shall provide written notice to all potential purchasers of lots in the form required pursuant to Government Code Section 53341.5 and/or such additional requirements as may be established by the City so advising the potential owner of the fact of CFD No. 2024- 2, with said document being executed by the potential purchaser. Such notice shall be provided to the potential purchaser a reasonable time before the potential purchaser becomes contractually committed to purchase the lot so that the potential purchaser may knowingly consider the impact of the special tax in the decision to purchase the lot. A copy of all such notices executed by actual purchasers shall be sent to the Development Services Director of the City, or their designee (the “DSD Director”).
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SECTION 4. Limitation of Aggregate Taxes and Assessments . Developer agrees to include in any future agreement to sell all or any portion of the property to any person or entity for the purpose of constructing and marketing owner -occupied residential dwelling units (each, a “Builder”) provisions requiring the inclusion of the following “escrow instructions” in all sales by such Builder to residential home owners and further agrees to the inclusion of such escrow instructions in all sales by each such Builder to residential home owners:
(a). At or prior to the close of each such escrow with a residential homeowner, the escrow company shall apply a “calculation formula” previously approved by the DSD Director and deposited with the escrow company by the Builder to determine the aggregate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition of public facilities, and all assessment installments authorized to be levied to finance the construction or acquisition of public facilities, and any other tax, fee, charge, or assessment applicable to the subject property (the “Total Annual Taxes and Assessments”) applicable to the parcel subject to such escrow (the “Applicable Parcel”).
(b). If the Total Annual Taxes and Assessments exceed 2% of the sales price of the Applicable Parcel, the escrow company will make immediate written demand upon the Builder for deposit into the escrow of the funds necessary to prepay or partially prepay the special tax obligation for CFD No. 2024- 2 so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the sales price of the Applicable Parcel. Such funds must be received by the escrow company prior to the close of escrow of the sale of the Applicable Parcel. The calculation of the prepayment amount for CFD No. 2024- 2 shall be in accordance with the method of prepayment of special tax as set forth in the Rate and Method.
Upon closing of such escrow, the amount so deposited by the Builder pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance of the City, together with written instructions that such amount is to be used to prepay or partially prepay the special tax obligation of the Applicable Parcel for CFD No. 2024-2.
The provisions of this Section 4 related to sales by Builders to residential homeowners shall also apply to any sale by Developer of a parcel to a residential home owner.
In addition to any other remedy provided for by law or in equity, the City may enforce the provisions of this Section 4 by an action for specific performance or injunctive relief or both.
SECTION 5. Relationship to Public Works. This Agreement is for, among other things, the construction and acquisition of public facilities to be financed with the City Fees by City, the levy of Special Taxes, and sale of the Bonds for the payment of construction and acquisition costs for such public facilities and such other amounts as are herein provided, and is not intended to be a public works contract. In performing its obligations under this Agreement, Developer is an independent contractor and not the agent of City. City shall have no responsibility for payment of any Developer debts whatsoever.
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SECTION 6. Sale of Bonds. At the request of Developer, the City shall consider proceeding with the issuance and sale of Bonds, in one or more series as tax- exempt and/or taxable Bonds.
The Bonds shall be sized so that as of the date of issuance of such series of the Bonds the aggregate appraised value of all taxable properties within CFD No. 2024-2 for which such Bonds are being issued shall comply with the value -to-lien standards set forth in the Goals and Policies or as otherwise approved by the City Council pursuant to the Goals and Policies. In addition, as to any subsequent series of Bonds, the issuance of such Bonds shall comply with such parity bonds test as may be set forth in the bond indenture. The appraised value of taxable property for purposes of this paragraph shall be determined by an independent appraisal undertaken for the City utilizing appraisal assumptions approved by the City and, as to each subsequent series of the Bonds, consistent with the applicable parity bonds requirements.
The proceeds of each series of the Bonds shall be used in the following priority to: (i) fund a reserve fund for the payment of principal and interest with respect to such Bonds; (ii) fund capitalized interest on such Bonds in an amount not to exceed the amount required to pay interest on such Bonds until sufficient special taxes may be placed on the tax roll to pay the scheduled debt service on such Bonds; (iii) pay for costs of issuance of such Bonds including, without limitation, underwriter’s discount, bond counsel fees, printing, and paying agent fees; (iv) pay for the costs of forming CFD No. 2024- 2, including reimbursement of advances of funds to the City by Developer to pay for the City’s legal, engineering, financial, special tax, appraisal and market absorption consulting expenses incurred relating to the formation of CFD No. 2024-2 and issuance of the Bonds; (v) pay the City Fees; and (iv) pay the SA Fees.
The timing of the issuance and sale of each series of the Bonds, the terms and conditions upon which such Bonds shall be issued and sold, the method of sale of such Bonds and the pricing thereof shall be determined solely by the City and shall conform to all requirements of the Act, applicable state and federal laws, the Goals and Policies, and this Agreement. The sale of each series of the Bonds shall be subject to receipt by the City of a competitively bid or negotiated bond purchase agreement which is acceptable to the City. The sale of each series of the Bonds shall also be conditional upon the preparation of an official statement that is, in the sole judgment of the City, “deemed final” as such term is used in Rule 15c2- 12 of the Securities and Exchange Commission (the “Rule”).
The principal amount of each series of the Bonds to be issued shall be determined in accordance with the Goals and Policies such that the maximum projected annual special tax revenues securing such Bonds and all outstanding parity Bonds, equals at least 110% of the projected annual gross debt service on all of the Bonds following the issuance of such series of the Bonds. The Bonds shall be issued as tax- exempt and/or taxable bonds in the amounts determined by the City in consultation with its bond counsel and municipal advisor.
Developer, on behalf of itself, any affiliates of the Developer, and any successor or assign of the Developer including but not limited to the Builder, agrees: (a) to provide all information regarding the development of the property within CFD No. 2024- 2, including the financing plan for such development, which are necessary to ensure that the official statement for each series of the Bonds complies with the requirements of the Rule and all other applicable federal and state securities laws; (b) to enter in to a continuing disclosure agreement to provide such continuing 60297.00082\44070296.1
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disclosure pertaining to CFD No. 2024- 2, the development thereof and the Developer as necessary to ensure ongoing compliance with the continuing disclosure requirements of the Rule; and (c) to cause its counsel to provide an opinion of such counsel in a form satisfactory to the underwriter of such series of the Bonds and underwriter’s counsel or disclosure counsel, as applicable.
SECTION 7. Development Impact Fee Credit, Payment and Reimbursement.
Proceeds of the Bonds in an amount equal to the City Fees obligation of the Development Project (the “City Fees Bond Proceeds”) shall be deposited and set aside in the “City Construction Account of the Project Fund” established pursuant to the indenture or fiscal agent agreement relating to the Bonds (the “Indenture”). The City Fees obligation amount shall be established based on the amount of the City Fees at the time of payment. The use of such proceeds shall be for any lawful purpose for which the City Fees were imposed. Upon the deposit of the City Fees Bond Proceeds in the City Construction Account of the Project Fund, such amount shall be credited against the Development Project’s City Fees obligation. If and to the extent that the Development Project’s actual City Fees obligation exceeds the amount of the City Fees Bond Proceeds, the balance of the City Fees obligation shall be payable pursuant to the provisions of the City’s Municipal Code. If and to the extent that the Development Project’s actual City Fees obligation is less than the City Fees Bond Proceeds, such surplus shall remain in the City Construction Account of the Project Fund and used for any lawful purpose for which the City Fees were imposed and pursuant to the Indenture. City Fees Bond Proceeds may be drawn by the City at any time.
Proceeds of the Bonds in an amount equal to the Development Project’s SA Fees obligation (the “SA Fees Bond Proceeds”) shall be deposited and set aside in the SA Construction Account of the Project Fund established pursuant to the Indenture. The SA Fees obligation amount shall be established as provided in the JCFA and the City shall have no obligation to ensure such SA Fees Bond Proceeds satisfy the SA Fees obligation to the Authority. The SA Fees Bond Proceeds shall be distributed to the Authority pursuant to the terms of the JCFA, the Indenture, and applicable state and federal laws.
SECTION 8. Supplemental Bill for Payment of Special Taxes. Developer acknowledges that the Rate and Method provides that the annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2024-2, may directly bill the Special Tax, or may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations. The City has represented to the Developer that delinquencies in the payment of Special Taxes intended to be collected on property tax bills have occurred in other community facilities districts formed by the City as a result of difficulties experienced by the office of the Treasurer -Tax Collector of the County of San Diego (the “Tax Collector”) in the timely billing and collection of such special taxes. If and to the extent that the Tax Collector fails, for whatever reason, to timely bill the full amount of the Special Taxes levied on properties owned by the Developer or any affiliate of the Developer within CFD No. 2024- 2, the City, on behalf of CFD No. 2024- 2, may elect to directly and separately bill (“Direct Bill”) the Developer for such deficiency and Developer agrees to: (a) pay such deficiency within the time period specified in such Direct Bill which shall be no less than 60297.00082\44070296.1
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thirty calendar days from the date of mailing of such Direct Bill; or (b) provide the Director of Finance with proof of payment to the Tax Collector of such deficiency in a form satisfactory to the Director of Finance. Should the Developer pay such deficiency directly to the City pursuant to a Direct Bill, the City agrees upon receipt of such payment to timely submit an amendment of the Special Tax levy on the Developer’s property to the Tax Collector to reduce such levy by the amount of such payment. Developer shall pay all costs associated with such amendment of the Special Tax levy contemplated in the preceding sentence.
Delinquency in the payment of a Direct Bill sent pursuant to the preceding paragraph shall not be enforceable as a personal obligation of the Developer but shall be enforceable in the same manner subject to the same penalties, interest, and foreclosure provisions, as if such delinquency had been for the payment of Special Taxes billed on the property tax bill.
SECTION 9. Conflict with Other Agreements . Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer or the Builder from any condition of development or requirement imposed by any other agreement or obligation imposed by the City. Any and all other taxes, fees, assessments, or charges due from Developer to the City are not affected by this Agreement and must be paid in full prior to receiving final development approval.
SECTION 10. Indemnification by Developer . Developer shall defend, indemnify and hold harmless the City, its officers, directors, employees and agents, and CFD No. 2024-2, its officers, directors, employees and agents (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against any and all claims, losses, liabilities, damages, including court costs and reasonable attorneys’ fees by reason of, or resulting from, or arising out of any action or occurrence related to CFD No. 2024- 2 taken or omitted by the Developer, its employees, agents, independent contractors and/or representatives. Notwithstanding the foregoing, Developer shall have no obligation to defend, indemnify or hold harmless the Indemnified Parties from and against any claims, liabilities, losses or damages (including court costs and attorneys’ fees) which result from or arise out of the sole negligence or willful misconduct of an Indemnified Party.
Except as set forth in this Section 10, no provision of this Agreement shall in any way limit the extent of the responsibility of Developer for payment of damages resulting from the operations of the Developer, its agents, employees or contractors.
SECTION 11. General Standard of Reasonableness . Any provision of this Agreement which requires the consent, approval, discretion or acceptance of any party hereto or any of their respective employees, officers or agents shall be deemed to require that such consent, approval or acceptance not be unreasonably withheld or delayed, unless such provision expressly incorporates a different standard.
SECTION 12. Entire Agreement; Amendment. This Agreement and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understandings, oral or written, pertaining to any such matters shall be effective for any purpose. No provision of this 60297.00082\44070296.1
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Agreement may be modified, waived, amended or added to except by a writing signed by the party against which the enforcement of such modification, waiver, amendment or addition is or may be sought.
SECTION 13. Notices. Any notice, payment, or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy- two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows:
Developer: Shea Homes Limited Partnership
990 Mesa Rim Road, Suite 200
San Diego, CA 92121
Attn: Paul Barnes
City: City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
Attn: City Manager
Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party.
SECTION 14. Severability. If any provision of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
SECTION 15. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Developer may not assign its rights or obligations hereunder except upon written notice to City within ten (10) days of the date of such assignment indicating the name and address of the assignee. Upon such notice and the assumption by the assignee of the rights, duties and obligations of the Developer arising under or from this Agreement, Developer shall be released by City from all future duties or obligations rising under or from this Agreement. Notwithstanding the preceding sentence, Developer may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining loans to finance development within CFD No. 2024- 2, but no such assignment shall release Developer from its obligations hereunder to City.
SECTION 16. Governing Law and Venue . This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California.
Venue shall be held exclusively in San Diego County.
SECTION 17. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights under the default of any other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by any other party with the terms of this Agreement thereafter.
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SECTION 18. Singular and Plural; Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine.
SECTION 19. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
SECTION 20. Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and the Developer and shall be deemed for all purposes to have been jointly drafted by the City and the Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. The language in all parts of this Agreement, in all cases, shall be construed as a whole and in accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder.
The captions of the sections and subsections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of construction.
SECTION 21. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement.
SECTION 22. Authority of Signatories. Each signatory and party hereto hereby represents and warrants to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable such party to enter into this Agreement.
SECTION 23. Recordation. The parties shall execute, acknowledge and cause this Agreement, or a memorandum of this Agreement in a form satisfactory to the parties hereto, to be recorded against the Property in the Official Records of San Diego County.
[End of page. Next page is signature page.]
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S - 1
Signature Page to
Acquisition/Financing Agreement by and between
the City of Chula Vista and
Shea Homes Limited Partnership
EXECUTED by and between the parties hereto on the day and year first hereinabove written.
“CITY”
CITY OF CHULA VISTA
JOHN MCCANN, MAYOR
CITY OF CHULA VISTA
STATE OF CALIFORNIA
ATTEST: APPROVED AS TO FORM:
KERRY K. BIGELOW, CITY CLERK MARCO A. VERDUGO, CITY
ATTORNEY
CITY OF CHULA VISTA CITY OF CHULA VISTA
STATE OF CALIFORNIA STATE OF CALIFORNIA
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S - 2
Signature Page to
Acquisition/Financing Agreement by and between
the City of Chula Vista and
Shea Homes Limited Partnership
“DEVELOPER”
SHEA HOMES LIMITED PARTNERSHIP, a
California limited partnership
By:
Paul Barnes
Division President, San Diego
By:
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EXHIBIT “A”
ACQUISITION AND FINANCING AGREEMENT
FOR CFD 2024-2 (MOSS STREET)
FEES DESCRIPTION AND ESTIMATED COSTS
DEVELOPMENT IMPACT AND OTHER ASSOCIATED FEES
Fee Category Estimated Fees
City of Chula Vista Fees
Parkland Acq. and Dev. Fee: West $1,530,132
Traffic Signal Participation Fee $41,192
Sewer Capacity Charge $533,892
Sewer Admin. Fee: Residential $810
Western Transportation Dev. Fee $465,864
Public Facilities Fees $1,955,106
Total City of Chula Vista Fees $4,526,996
Sweetwater Authority Fees
Water Capacity Fees $744,090
Total Fees: $5,148,071
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EXHIBIT “B”
LEGAL DESCRIPTION OF PROPERTY
The property located in the City of Chula Vista, County of San Diego, State of California, identified by San Diego County Assessor's Parcel Numbers: 618-010-31-00, 618-010-32-000, 618-010-26-01.