IMPROVEMENT AND REIMBURSEMENT AGREEMENT
Relating to:
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
THIS IMPROVEMENT AND REIMBURSEMENT AGREEMENT (this “Agreement”), dated as of August 1, 2023, is by and between the CITY OF FULLERTON, a general law city organized under the laws of the State of California (the “City”), for itself and on behalf of the proposed City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village) (the “CFD”), and Sunrise Village Owner, LLC, a Delaware limited liability company (together with its permitted successors and assigns in accordance with this Agreement, the “Developer”).
RECITALS
A. The City Council of the City has completed proceedings to establish the CFD under the Mello-Roos Community Facilities Act of 1982, as amended, Part 1 (commencing with Section 53311) of Division 2 of Title 5 of the California Government Code (the “Act”) to finance the public facilities and improvements described in the City’s resolution entitled “Resolution of Formation of Community Facilities District” adopted by the City Council on August 1, 2023. This Agreement concerns the improvement of certain public infrastructure by the Developer as more particularly described in Exhibits A and A-1 hereto (the “Improvements”), and the reimbursement of the costs of the Improvements to the Developer using the proceeds of Funding Sources (as defined below), and the funding of certain City park fees and sewer fair share payments ( “Park Fees and Sewer Fair Share Payments”) as more particularly described herein.
B. The Developer is developing the land within the CFD.
C. The Improvements, and the payment of Park Fees and Sewer Fair Share Payments, are necessary to mitigate impacts arising from development in the CFD, and the City will benefit from a coordinated plan of design, engineering and construction of the Improvements and the development of the land owned by the Developer in the CFD.
D. The City has determined that it will obtain no advantage from undertaking the construction of the Improvements and that the Improvements will be constructed by the Developer as if they had been constructed under the direction and supervision, or under the authority of, the City, within the meaning of Section 53313.5 of the Act.
E. The City intends to issue one or more series of bonds or other debt (as defined in the Act) for and on behalf of the CFD (collectively, the “Bonds”) under the Act.
DEFINITIONS
Capitalized terms used in this Agreement, in addition to those defined in the Recitals to this Agreement, shall have the following meanings:
“Acceptance Date” means the date upon which the City accepts the Improvements. “Actual Cost” means an amount equal to the sum of (a) the actual, reasonable cost of constructing the Improvements, including labor, material, and equipment costs, (b) the actual, reasonable cost of preparing the Plans and Specifications for the Improvements, (c) the actual, reasonable cost for construction management services for the Improvements, and (d) the actual, reasonable cost for professional services directly related to the construction of the Improvements, including engineering, inspection, construction staking, materials testing, and similar professional services, all as specified in a Payment Request that has been reviewed and approved by the Public Works Director who will be responsible for administering the acceptance of the Improvements by the City. Notwithstanding the foregoing, no item of cost relating to the Improvements shall be included in more than one category of cost under this definition, each item of cost shall be of the type required to be capitalized under generally accepted accounting principles. “Assignee” means an assignee of all or a portion of the rights and obligations of the Developer pursuant to this Agreement who has executed an assignment agreement pursuant to Section 19 below. “Conditions of Approval” means the conditions of approvals and mitigation measures imposed in connection with the granting of the land use entitlements for the development of land for the Project, and any subdivision improvement, owner participation agreement, development or other agreement with the City relating to the development of the Project or the construction of the Improvements. “Disbursement Request (Reimbursement)” means a request for reimbursement of Park Fees and Sewer Fair Share Payments deposited with the City in the form attached hereto as Exhibit C-1. “Disbursement Request” means a request for a disbursement of Funding Sources in satisfaction of Park Fees and Sewer Fair Share Payments not yet paid in the form attached hereto as Exhibit C-2. “Fiscal Agent Agreement” means the indenture, fiscal agent agreement, resolution or other agreement under which the Bonds are issued, as such Fiscal Agent Agreement may be supplemented from time to time to accommodate additional bond issuances or as it may be amended from time to time. “Funding Sources” means, collectively, (A) the net proceeds of Bonds, prepayments of special taxes collected prior to the issuance of the first series of Bonds pursuant to the Rate and Method, and prepayments of special taxes otherwise allocated for Improvements and Park Fees and Sewer Fair Share Payments under the Rate and Method, all as further described in Section 3 herein, (B) special taxes collected to directly finance Improvements and Park Fees and Sewer Fair Share Payments under the Rate and Method and which are allocated to fund Improvements, as further described in Section 4 herein. “Goals and Policies” means the Amended and Restated Local Goals and Policies Concerning the Use of the Mello-Roos Community Facilities Act of 1982, adopted by the City Council on September 20, 2011. “Improvements” means the improvement of certain public infrastructure by the Developer as more particularly described on Exhibit A hereto. "Park Fees and Sewer Fair Share Payments” means certain City park fees and sewer fair share payments as more particularly described on Exhibit A hereto. “Payment Request” means a request for payment for the Improvements in the form attached hereto as Exhibit B. “Plans and Specifications” means the plans, specifications, schedules and related construction contracts for the Improvements approved pursuant to the applicable standards of the City. “Project” means and includes any of the development activities called for, permitted, allowed, or required pursuant to the entitlements for the Pines at Sunrise Village development within the CFD. “Public Works Director” means the Public Works Director of the City or such other official of the City acting in such capacity, or the designee of such official. “Rate and Method” means the rate and method of apportionment of the special tax for the CFD. “Reimbursement Amount” means the amount paid by the City for the Improvements determined in accordance with this Agreement. “Special Tax” has the meaning given to such term in the Rate and Method.
AGREEMENTS
In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the sufficiency of which is hereby acknowledged, the City and the Developer agree as follows:
1. Recitals. The City and the Developer represent and warrant, each to the other, that the above recitals, as applicable to each, are true and correct.
2. Sale of Bonds.
a. City Proceedings. From time to time following the Developer’s written request and deposit for non-contingent costs, the City shall commence all necessary proceedings under the Act for the issuance, sale and delivery of one or more series of Bonds. Such proceedings and the principal amount, rates, terms and conditions and timing of the sale of each series of Bonds shall at least meet then current underwriting and market standards for California land secured bonds, shall be consistent with the Goals and Policies and the following parameters, subject in all respects to the final approval of the City Council. Nothing herein shall be construed as requiring the City to issue any Bonds for the CFD or to undertake financial risk in connection with the Bonds, or that the City has in any way engaged the Developer to construct the Improvements, except as specifically provided in this Agreement and except as required by the Conditions of Approval. b. Principal Amount. The maximum principal amount of the Bonds is $9,500,000. The City provides no assurances that it will issue any or all of the authorized principal amount of the Bonds. Any risks inherent with any failure for any anticipated bond issuance to occur, including, without limitation, the amount and timing of issuance shall be borne entirely by the Developer and shall not be borne by the City or related entities. c. Termination. At any time prior to the first issuance of Bonds and closing of the sale of the first home within the CFD to an individual homebuyer, the Developer or its Assignee may request in writing that the City terminate this Agreement, dissolve the CFD and cancel the lien of the Special Tax with respect to all property within the CFD. Within 60 days following receipt of such written request, and payment by the Developer or its Assignee of all costs incurred by the City in connection with the dissolution of the CFD and cancellation of the lien of the Special Tax, the City shall record a notice of cancellation and extinguishment of the lien of the Special Tax.
Unless previously terminated pursuant to the prior paragraph, this Agreement shall terminate upon the later to occur of (a) payment in full for all eligible Improvements and Park Fees and Sewer Fair Share Payments, or (b) three years following the final issuance of Bonds.
3. Use of Funding Sources.
a. Special Taxes. The City will levy Special Taxes and allocate Special Tax revenues as a Funding Source as described in Section 4. b. Prepayments. Prior to the issuance of the first series of Bonds, the proceeds of any prepayments of special tax obligations shall be administered as provided in the Rate and Method. After the first series of Bonds is issued, the proceeds of any prepayments of special tax obligations shall be administered as provided in the Rate and Method and the Fiscal Agent Agreement. To the extent authorized under the Rate and Method or the Fiscal Agent Agreement, any prepayments of special tax obligations with respect to the CFD before the issuance of the first series of Bonds shall be placed in a special fund to be held by the City (the “Prepayment Fund”), separate and apart from the proceeds of the Bonds. Available moneys in the Prepayment Fund shall be applied, as determined by the City in consultation with the Developer, to the reimbursement for the costs of the Improvements. c. Bond Proceeds. The proceeds of each series of Bonds shall be deposited, held, invested, reinvested and disbursed as provided in the Fiscal Agent Agreement. The net proceeds of each series of Bonds shall be set aside under the Fiscal Agent Agreement in a separate improvement fund (the “Improvement Fund”). Moneys in the Improvement Fund shall be withdrawn therefrom, in accordance with this Agreement, and in accordance with the provisions of the Fiscal Agent Agreement, for the payment of all or a portion of the costs of the Improvements and payment or reimbursement of Park Fees and Sewer Fair Share Payments, as determined by the City in consultation with the Developer and as herein provided. The City makes no warranty, express or implied, that the proceeds of the Bonds deposited and held in the Improvement Fund, along with other Funding Sources, will be sufficient for payment of the Reimbursement Amount for the Improvements, or to fully pay or reimburse all Park Fees and Sewer Fair Share Payments.
The Developer agrees that the City shall direct the investment of the funds on deposit in the funds and accounts established by or pursuant to the Fiscal Agent Agreement, including the Improvement Fund, and that the Developer has no right whatsoever to direct investments under the Fiscal Agent Agreement, so long as the City directs the investment of such funds in accordance with the Fiscal Agent Agreement.
So long as the City meets the foregoing standard, the City shall have no responsibility to the Developer with respect to any investment of funds under the Fiscal Agent Agreement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment. Any such loss may diminish the amounts available in the Improvement Fund to pay the Reimbursement Amount hereunder, or to pay or reimburse Park Fees and Sewer Fair Share Payments hereunder. The Developer further acknowledges that the obligation of any owner of real property in the CFD, including the Developer to the extent it owns any real property in the CFD, to pay special taxes levied in the CFD is not in any way dependent on (i) the availability of amounts in the Improvement Fund to pay all or any portion of the Reimbursement Amount hereunder, or to pay or reimburse Park Fees and Sewer Fair Share Payments hereunder, or (ii) the alleged or actual misconduct of the City in the performance of its obligations under this Agreement, the Fiscal Agent Agreement, any subdivision agreement or amendment thereto or any other agreement to which the Developer and the City are signatories.
The Developer acknowledges that any lack of availability of amounts in the Improvement Fund to pay the Reimbursement Amount hereunder, or to pay or reimburse Park Fees and Sewer Fair Share Payments hereunder, shall in no way diminish any obligation of the Developer with respect to the construction of the Improvements, contributions for public facilities, or payment of Park Fees and Sewer Fair Share Payments hereunder required by the Conditions of Approval.
Notwithstanding anything to the contrary contained herein, the City may from time to time maintain in its sole and absolute discretion an amount in the Improvement Fund determined by the City to be necessary as a reserve for the completion of the Improvements.
4. Special Taxes. The City shall levy and collect Special Taxes on Developed Property within the CFD, all as defined in the Rate and Method, and consistent with the Rate and Method prior to the issuance of the first series of Bonds. The City shall also levy and collect Special Taxes on Developed Property subsequent to the issuance of the first series of Bonds, consistent with the Rate and Method. The proceeds of the Special Taxes shall be administered by the City and, following the issuance of Bonds, as provided in the Fiscal Agent Agreement. Any such amounts collected will be deposited in the special tax fund to be established under the Fiscal Agent Agreement to be held by the City, separate and apart from the Prepayment Fund or any fund in which Bond proceeds are deposited. The City shall allocate available Special Taxes collected prior to the issuance of the first series of Bonds, after the payment or setting aside of, or provision for, administrative expenses of the CFD, as Funding Sources to pay for all or a portion of the Reimbursement Amount, the Park Fees and the Sewer Fair Share Payments. The City shall not, however, levy Special Taxes for the direct payment of the costs of the Improvements if such additional levy increases the Special Taxes on Undeveloped Property (as defined in the Rate and Method).
5. Construction of the Improvements.
a. Plans and Specifications. The Developer warrants that it has obtained or will obtain approval of the Plans and Specifications from all appropriate departments of the City from which such approval must be obtained. The Developer further warrants that the Improvements will be constructed in full compliance with such Plans and Specifications and any change orders thereto, as approved in the same manner. Copies of all Plans and Specifications, and final construction cost estimates, shall be provided by the Developer to the Public Works Director. b. Duty of Developer to Construct. All Improvements shall be constructed by or at the direction of the Developer, or its Assignee, in accordance with the approved Plans and Specifications and the Conditions of Approval, and in accordance with City standards as if the City was constructing or having constructed the Improvements. The Developer shall perform all of its obligations hereunder and shall conduct all operations with respect to the construction of the Improvements in a good, workmanlike and commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons utilizing industry-standard efforts in the performance of comparable work and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall employ at all times adequate staff or consultants with the requisite experience necessary to administer and coordinate all work related to the design, engineering, construction and installation of the Improvements to be acquired by the City from the Developer hereunder.
The Developer shall be obligated to use its own funds to pay all costs of the Improvements in excess of the Reimbursement Amount to be paid therefor hereunder and available Funding Sources therefor, except as may be otherwise expressly provided herein or in the Conditions of Approval.
The Developer shall not be relieved of its obligation to construct the Improvements in accordance with this Agreement and the Conditions of Approval, even if there are insufficient Funding Sources to pay the Reimbursement Amount therefor, and, in any event, this Agreement shall not affect any obligation of any owner of land in the CFD under any Conditions of Approval or any governmental approval to which any land within the CFD is subject, with respect to the public improvements required in connection with the development of the land within the CFD. c. Prevailing Wages. The Developer covenants that, with respect to any contracts or subcontracts for the construction of the Improvements, it will assure complete compliance with any valid, applicable laws or regulations for the payment of prevailing wages for such construction. d. Relationship to Public Works. This Agreement is for the design and construction of the Improvements by the Developer and the reimbursement of the costs thereof by the City from Funding Sources and is not intended to be a public works contract. The City and the Developer agree that the Improvements are of local, and not state-wide concern, and that the provisions of the California Public Contracts Code shall not apply to the construction of the Improvements. The City and the Developer agree that this Agreement is necessary to assure the timely and satisfactory completion of the Improvements and that compliance with the Public Contracts Code with respect to the Improvements would work an incongruity and would not produce an advantage to the City or the CFD.
Notwithstanding the foregoing, the Developer shall solicit competitive bids for each contract for construction of the Improvements, and award all contracts for construction of the Improvements, consistent with the Plans and Specifications and the Conditions of Approval, to the lowest qualified, available, and responsible bidder among the competitive bids received. e. Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any change orders required for the construction of the Improvements. f. Independent Contractor. In performing this Agreement, the Developer is an independent contractor and not the agent or employee of the City or the CFD. Neither the City nor the CFD shall be responsible for making any payments to any contractor, subcontractor, agent, employee or supplier of the Developer, except as set forth herein. g. Periodic Meetings. From time to time at the request of the Public Works Director or the Developer, representatives of the Developer shall meet and confer with City staff, consultants and contractors regarding matters arising hereunder with respect to the Improvements and the progress in constructing and acquiring the same, and as to any other matter related to the Improvements or this Agreement. The Public Works Director or his/her designated representative shall have the right to meet and confer with individual contractors if deemed advisable by the Public Works Director to resolve disputes and/or ensure the proper completion of the Improvements.
6. Payment for the Improvements. The Developer hereby agrees to complete the Improvements, and the City hereby agrees to use available Funding Sources to pay the Reimbursement Amount therefor to the Developer, subject to the terms and conditions hereof. a. Inspection. No payment hereunder shall be made by the City to the Developer for the Improvements until the Improvements have been inspected by the City and found to be constructed in accordance with the approved Plans and Specifications by the City. The Developer agrees to pay all inspection, permit and other similar fees of the City applicable to construction of the Improvements, and such fees are subject to reimbursement under this Agreement as part of the Actual Cost of the Improvements. b. Request for Payment. Any request for payment hereunder by the Developer shall be in the form of a Payment Request and shall include such supporting documentation to substantiate such request as the City may require. For any request for payment, the following shall apply:
(i) Substantiation of Actual Costs. The Developer shall provide any documentation substantiating the Actual Cost of the Improvements reasonably requested by the Public Works Director, including but not limited to a review of the Actual Costs by the Engineer of Record and determination that they are consistent with the approved Plans and Specifications. There shall be a presumption of reasonableness as to costs incurred under a construction contract (or change order) entered into as a result of a call for bids by the Developer (or similar procedure approved by the Public Works Director), provided that no extraordinary limitations or requirements (such as a short time frame) are imposed by the Developer on the performance of such contracts. (ii) Payment of Claims. In order to receive the Reimbursement Amount for the Improvements, inspection thereof under Section 6(a) shall be made and the Developer shall deliver to the Public Works Director:
(A) a Payment Request for the Improvements, together with all supporting documentation required by this Agreement to be included therewith, (B) a copy of the recorded notice of completion (or similar document) for the Improvements, together with evidence that the time to file any stop notice or lien has expired, (C) to the extent paid for with the proceeds of the Bonds, an assignment to the City of any reimbursements that may be payable with respect to the Improvements from public or private utility reimbursements, and (D) an assignment of the warranties and guaranties for the Improvements, as described in Section 7 hereof, in a form acceptable to the City. c. Conditions for Acceptance. The City shall not be obligated to pay the Reimbursement Amount until the Improvements are constructed and the processing requirements of this Section 6 for the Improvements have occurred. In any event, the City shall not be obligated to pay the Reimbursement Amount except from the Funding Sources. d. Reimbursement Amount. The Reimbursement Amount shall be calculated in accordance with Sections 6(a)-(c) above, and submitted to the Public Works Director for final determination. The Reimbursement Amount shall include the substantiated Actual Costs related to the Improvements. The Reimbursement Amount shall be paid in full; provided, however, that if there are insufficient Funding Sources available to pay the full amount, the City shall pay the amount owing, to the extent of such Funding Sources, and thereafter shall pay the remaining balance owing, in any number of installments, as Funding Sources become available. e. Payments to the Developer. The payment of the Reimbursement Amount for the Improvements subject to the following:
(i) Compliance with Conditions. The Developer shall comply with its obligations under Subsections 6 (a) through (c) above and shall have demonstrated the ability to comply with Section 7 below, all to the satisfaction of the Public Works Director. (ii) Source of Payments. The City and the Developer expect the Reimbursement Amount may be partially from Bond proceeds and partially from other available Funding Sources. (iii) Requests for Payment. Any Payment Request shall be made to the Public Works Director and include the supporting documentation herein specified. Within 20 business days of receipt of any Payment Request, the Public Works Director shall notify the Developer whether such Payment Request is complete, and, if not, what additional documentation must be provided. If such Payment Request is complete, the Public Works Director shall provide written approval or denial of the request within 60 business days of its submittal. If the Public Works Director disapproves any Payment Request, the Public Works Director shall provide written notice of disapproval to Developer within such 60 business-day period stating in reasonable detail the reasons for such disapproval and changes to the Payment Request necessary to obtain the approval of the Public Works Director. If the Public Works Director disputes the Reimbursement Amount covered by a Payment Request, the Public Works Director shall approve for payment an amount equal to the Reimbursement Amount the Public Works Director determines is appropriate and shall deliver notice of disapproval of the remaining amount. If the Public Works Director disapproves any revised Payment Request, the Public Works Director shall provide a written notice of approval or disapproval to the Developer within 10 business days after receipt of the revised Payment Request, which shall describe in reasonable detail the reason for denial, if applicable, which shall be final. (iv) Payment by the City. The City shall cause payment to be made to the Developer pursuant to the applicable provisions of the Fiscal Agent Agreement within 60 business days of receipt of any request that is not denied. The City may make any payment jointly to the Developer and any mortgagee or trust deed beneficiary, contractor or supplier of materials as their interests may appear, or solely to any such third party, if the Developer so requests the same in writing. Notwithstanding anything to the contrary herein, if there are insufficient Funding Sources to pay the full amount of a Payment Request, then the City shall pay as much of the amount on the Payment Request as there are Funding Sources available, and the payment of the balance of the Payment Request shall be deferred until there are sufficient Funding Sources available to the remaining balance of the Payment Request. Following the availability of other Funding Sources, the City shall, promptly and in as many installments as necessary, pay the remaining balance of the Payment Request, but only to the extent that Funding Sources are available. Payment Requests may be paid (i) in installments as Funding Sources become available and (ii) irrespective of the length of time of such deferral of payment. Upon reasonable notice to the City, the City shall provide any information requested by the Developer, and shall make its books and records available to the Developer, to allow the Developer to determine the amount and status of the Funding Sources. (v) Expectations of the Parties. The City and the Developer understand and agree that (A) Developer will be constructing the Improvements prior to the availability of Funding Sources that will be used to pay for the Improvements, (B) the City will be inspecting the Improvements and processing and completing Payment Requests for the payment of the Reimbursement Amount with knowledge that there may be insufficient Funding Sources available at such time, (C) the Improvements may be accepted by the City when there are insufficient Funding Sources to pay the Reimbursement Amount therefor, and (D) in any such case, the payment of any approved Payment Request for the Reimbursement Amount of such Improvements will be deferred until there are sufficient Funding Sources available to pay the Reimbursement Amount of such Improvements, at which time the City will make such payments in accordance with this Agreement. At all times, Developer will be constructing the Improvements with the expectation that the Reimbursement Amount will be paid from the Funding Sources.
7. Warranties.
a. Warranties. Simultaneously with the City's acceptance of the Improvements, Developer shall assign to the City all of Developer’s rights in any warranties, guarantees, maintenance obligations or other similar obligations of third persons with respect to the Improvements, with all such assignments to be effective at the end of the one-year maintenance period described in the following sentence. Developer shall maintain or cause to be maintained the Improvements (including the repair or replacement thereof) for a period of one year from the Acceptance Date thereof, or, alternatively, shall provide a bond reasonably acceptable in form and substance to the Public Works Director for such period and for such purpose, to insure that defects, which appear within said period will be repaired, replaced, or corrected by the Developer, at its own cost and expense, to the satisfaction of the Public Works Director. During any such one-year period, the Developer shall commence to repair, replace or correct any such defects within 30 calendar days after written notice thereof by the City to the Developer, and shall complete such repairs, replacement or correction as soon as practicable; provided, however, that if the Public Works Director deems it necessary to require immediate repair, warning or temporary protective action prior to complete repair due to the existence of a hazard to public health and safety, the Public Works Director may provide verbal direction to Developer, to be confirmed thereafter in writing, directing the Developer to take such steps at such times as may be necessary to eliminate, demarcate, or address the hazard. After such one-year period, the City shall be responsible for maintaining the Improvements. Any warranties, guarantees or other similar obligations of third persons with respect to the Improvements shall be delivered to the Public Works Director as part of the transfer of title.
For purposes of this Section 7, after the City has accepted the Improvements, the terms “maintain” and “maintenance” mean the repair, replacement or correction of any defects in the Improvements, and shall not mean the day-to-day upkeep, which shall be the responsibility of the City, or correction of normal wear and tear of the Improvements (such as watering or weeding for landscape improvements, painting, graffiti removal, etc.), which also shall be the responsibility of the City.
8. Limitation of Liability; Excess Costs; Surplus in the Improvement Fund. Developer agrees that any and all obligations of the City arising out of or related to this Agreement are special and limited obligations of the City and the City’s obligations to make any payments hereunder are restricted entirely to the Funding Sources, as set forth herein, and from no other source. No member of the City Council, City staff member, employee or agent, in their individual capacities, shall incur any liability hereunder to the Developer or any other party by reason of their actions hereunder or execution hereof.
If the construction and installation of the Improvements have been completed and the Reimbursement Amount (including any retentions described above) with respect thereto has been paid, and Funding Sources remain or become available (including without limitation through the issuance of additional Bonds), the City and the Developer may designate in a supplement hereto, additional Improvements to be constructed and acquired with such remaining or additional Funding Sources; provided, however, the City shall determine the use of such funds consistent with the terms of the Fiscal Agent Agreement and applicable law.
9. Indemnification and Hold Harmless. The Developer shall take and assume all responsibility for the work performed in connection with the Improvements constructed pursuant to this Agreement until the acceptance by the City.
The Developer shall assume the defense of and indemnify and save harmless the City, the CFD and the City’s consultants, members of the City Council, officers, employees and agents, from and against any and all claims, losses, damage, expenses and liability of every kind, nature, and description, directly or indirectly arising from any breach by the Developer of this Agreement, the performance of the work covered by this Agreement, from the Developer’s or any other entity’s negligent design, engineering and/or construction of the Improvements, the Developer’s non-payment under contracts between the Developer and its consultants, engineer’s, advisors, contractors, subcontractors and suppliers in the provision of the Improvements, or any claims of persons employed by the Developer or its agents to construct the Improvements, and from any and all claims, losses, damage, expenses, and liability, howsoever the same may be caused, resulting directly, or indirectly from any breach by the Developer of this Agreement or the nature of the work covered by this Agreement, to the fullest extent permitted by law. In accordance with Civil Code section 2782, nothing in this Section shall require defense or indemnification for death, bodily injury, injury to property, or any other loss, damage or expense arising from the active or sole negligence or willful misconduct of the City, and its consultants, and the members of its City Council, agents, servants or independent contractors who are directly responsible to the City, or for defects in design furnished by such persons. Moreover, nothing in this Section shall apply to impose on the Developer, or to relieve the City from, liability for active negligence of the City or its consultants as delineated in Civil Code Section 2782. Any relief for determining the City’s sole or active negligence shall be determined by a court of law.
The City does not, and shall not, waive any rights against the Developer which it may have by reason of the aforesaid hold harmless agreements because of the acceptance by the City, or deposit with the City by the Developer of any insurance policies required by the City. The hold harmless agreement by the Developer set forth in this Section shall apply to all damages and claims for damages of every kind suffered, or alleged to have been suffered by reasons of any of the aforesaid operations of the Developer, or any subcontractor, regardless of whether or not such insurance policies are determined to be applicable to any of such damages or claims for damages.
No act by the City, or its representatives in processing or accepting any plans and specifications, in releasing any bond, in inspecting or accepting any work, or of any other nature, shall in any respect relieve the Developer or anyone else from any legal responsibility, obligation or liability it might otherwise have.
10. Financing of Park Fees and Sewer Fair Share Payments. The Developer may submit to the City from time to time a Disbursement Request (Reimbursement) for reimbursement from Funding Sources of any Park Fees and Sewer Fair Share Payments previously paid to the City. If the available amount of Funding Sources is less than the total amount of Park Fees and Sewer Fair Share Payments previously paid to the City and requested for reimbursement in the Disbursement Request (Reimbursement), the unpaid amount shall be reimbursed to the Owner when additional Funding Sources are subsequently available in an amount equal to or greater than such unpaid amount of the Disbursement Request (Reimbursement).
The Developer may submit to the City from time to time a Disbursement Request for payment from Funding Sources of unpaid Park Fees and Sewer Fair Share Payments. Upon receipt of a Disbursement Request, the City may withdraw from available Funding Sources the amount specified in such Disbursement Request to pay all or a portion of the Park Fees and Sewer Fair Share Payments that remain to be paid with respect to all or any portion of the Project. The City shall provide a credit against the applicable Park Fees and Sewer Fair Share Payments for the Project to Developer or its Assignee equal to the amount of the money disbursed pursuant to the Disbursement Request for a particular Park Fee or Sewer Fair Share Payment divided by the per dwelling unit/equivalent dwelling unit/acre amount of the Park Fee or Sewer Fair Share Payment at the time of the disbursement.
11. Representations and Covenants.
a. Representations and Covenants of Developer. Developer represents, warrants and covenants for the benefit of the City and the CFD as follows:
(i) Organization. Developer is a corporation duly organized and validly existing under the laws of the State of Delaware and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated. (ii) Authority. Developer has the power and authority to enter into this Agreement and has taken all action necessary to cause this Agreement to be executed and delivered. This Agreement has been duly and validly executed and delivered by Developer. (iii) Binding Obligation. This Agreement is a legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, subject to bankruptcy and other equitable principles. (iv) Requests for Payment. Developer covenants that (i) it will not request payment from the City for the construction of any improvements that are not part of the Improvements, and (ii) it will diligently follow all procedures set forth in this Agreement with respect to the payment requests. (v) Plans. The Developer represents and covenants that it has obtained or will obtain approval of the Plans and Specifications for the Improvements from all required departments of the City. The Developer further agrees that the Improvements will be constructed in material compliance with such approved plans and specifications and any supplemental agreements (change orders) thereto, as approved in the same manner. (vi) Financial Records. Until the final acceptance of the Improvements, the Developer covenants to maintain proper books of record and account for the construction of the Improvements and all costs related thereto. Such accounting books shall be maintained in accordance with generally accepted accounting principles, and shall be available for inspection by the City or its agent at any reasonable time during regular business hours on reasonable notice. (vii) Compliance with Laws. Developer shall not with knowledge commit, suffer or permit any act to be done in, upon or to the property of the Developer within the CFD or the Improvements in violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the land in the CFD or the Improvements. (viii) Land Owners. The Developer agrees that in the event that it sells any Land owned by it within the boundaries of the CFD to another builder or developer, the Developer will (A) notify the City in writing within 30 calendar days of the sale, identifying the legal name of and mailing address for the purchaser, the applicable County Assessor’s parcel number or numbers for the land sold and the acreage of the land sold, (B) notify the purchaser in writing prior to the closing of any such sale of the existence of this Agreement and, in general, the Developer’s rights and obligations hereunder with respect to the construction of and payment for the Improvements, and (C) notify the purchaser in writing of the existence of the CFD and the special tax lien in connection therewith, and otherwise comply with any applicable provision of Section 53341.5 of the Act. If the purchaser is an Assignee, the Developer shall comply with the conditions set forth in Section 19 hereof. (ix) Additional Information. Developer agrees to cooperate with all reasonable written requests for nonproprietary information by the City related to the status of construction of the Improvements and the anticipated completion dates for the Improvements. (x) Initial Disclosure; Continuing Disclosure. In connection with the issuance of the Bonds, the Developer agrees to provide such information about the development and financing plans for the property in the CFD as may reasonably be requested by the City, the City’s bond counsel and disclosure counsel, and the underwriter of the Bonds. The Developer agrees to comply with all of its obligations under any continuing disclosure agreement or certificate executed by it in connection with the offering and sale of the Bonds. (xi) Compliance With Applicable Law. The Developer shall be responsible for identification of and compliance with all applicable laws pertaining to the construction of the Improvements and the contract or contracts pertaining thereto, including but not limited to such applicable laws as may be contained in the California Labor Code, and the California Government Code. The Developer will neither seek to hold or hold the City liable for, and will hold the City harmless with respect to, any consequences of any failure by the Developer to correctly determine the applicability of any laws applicable to any contract it enters into. This paragraph shall apply with respect to any enforcement action, whether public or private, and whether brought by a public enforcement agency or by private civil litigation, against Developer, the City or the CFD, or any of them, with respect to the matters addressed by this paragraph. b. Representations and Covenants of the City. The City represents and covenants for the benefit of Developer as follows:
(i) Authority. The City has the power and authority to enter into this Agreement and has taken all action necessary to cause this Agreement to be executed and delivered. This Agreement has been duly and validly executed and delivered by the City. (ii) Binding Obligation. This Agreement is a legal, valid and binding obligation of the City, enforceable against the City in accordance with its terms, subject to bankruptcy and other equitable principles. (iii) Requests for Payment. The City covenants that it will diligently follow all procedures set forth in this Agreement with respect to the Payment Requests.
12. Removal of Non-Residential Parcels. The initial boundary of the CFD includes three parcels currently designated as Lots 3, 4 and 5 of Tract No. 19148 (“Lots 3, 4 and 5”) that are planned for the development as nonresidential uses, which will be exempt from the Special Tax under the Rate and Method. Upon the recordation of a final subdivision map creating Lots 3, 4 and 5, and upon the submission by the Developer of a written request to the City, the City shall record a notice of cancellation and extinguishment of the lien of the Special Tax with respect to Lots 3, 4 and 5.
13. Limitation. Except as specifically set forth herein, nothing in this Agreement shall be construed as affecting Developer’s or the City’s duty to perform their respective obligations under the Conditions of Approval and any other agreements, land use regulations or subdivision requirements related to the property being developed by the Developer in the CFD, if any. Any such obligations are and shall remain independent of the Developer’s and the City’s rights and obligations under this Agreement.
14. Cooperation. The City and Developer agree to cooperate with respect to the completion of the financing of the Improvements by the City through the levy of special taxes and issuance of one or more series of Bonds, as set forth in this Agreement. The City and the Developer agree to meet in good faith to resolve any differences on future matters that are not specifically covered by the Agreement.
15. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. The foregoing provision shall not apply to provisions in the Agreement which provide for decisions to be in the sole discretion of the party making the decision.
16. Audit. The Public Works Director and the City’s Administrative Services Department shall have the right, during normal business hours and upon the giving of 10 days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer in constructing the Improvements for which the City has paid Developer, and any bids taken or received for the construction thereof or materials therefor.
17. Attorney’s Fees. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment is entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys’ fees.
18. 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 one week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:
City
City of Fullerton
303 W. Commonwealth Ave.
Fullerton, CA 92832
Attention: City Manager
Developer
Sunrise Village Owner, LLC
c/o Shopoff Realty Investments, L.P.
18565 Jamboree Road, Suite 200
Irvine, CA 92612
Attention: Brian Rupp
[email protected]
Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party.
19. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
20. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.
This Agreement may be assigned by the Developer to an Assignee subject to the following conditions:
a. no assignment of any of Developer’s rights or interest under this Agreement shall be made unless made together with the transfer of all or a part of Developer’s fee simple interest in the Property to the proposed Assignee; b. prior to the effective date of any proposed assignment, the Developer shall deliver to the City a written assignment and assumption, in a form subject to the reasonable approval of the City Attorney of the City (or designee), pursuant to which the Developer assigns to the Assignee, and the Assignee assumes from the Developer, all of the rights and obligations of the Developer under this Agreement; c. the Developer shall obtain the prior written consent of the City, which may be conditioned upon the acceptability of the financial condition of the proposed Assignee; and d. the Developer is not then in default under this Agreement and no condition exists that with the passage of time or the giving of notice, or both, would constitute a default hereunder.
21. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter.
22. Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Agreement shall be binding.
23. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
24. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto.
25. Governing Law. The provisions of this Agreement shall be governed by the laws of the State of California applicable to contracts made and performed in the State of California. [SIGNATURES ON FOLLOWING PAGE]
* * * * * * * * * * * IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first-above written.
CITY OF FULLERTON, for itself and on behalf of
CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 3 (THE PINES AT SUNRISE VILLAGE) By:
City Manager
Approved as to Form:
By
City Attorney
Attest:
By
City Clerk
SUNRISE VILLAGE OWNER, LLC,
a Delaware limited liability company
By: Sunrise Village Investments, LLC,
a Delaware limited liability company,
Its: Sole Member
By: SOF-Sunrise Village, LLC,
a Delaware limited liability company,
Its: Administrative Member
By: SRI Managing Member 2, LLC
a Delaware limited liability company,
Its: Manager
By:
Name: Brian Rupp
Its: Executive Vice President – Real Estate
EXHIBIT A
IMPROVEMENTS
The Improvements consist of the following:
Estimated Amount
$4,181,740
As required by the Conditions of Approval:
(i) Camino Loma – Fullwidth improvement to Rosecrans along the property frontage; (ii) Rosecrans – Fullwidth improvements, Camino Loma to Euclid along the property frontage; (iii) Euclid Avenue – Fullwidth improvements, Rosecrans to Paseo Dorado along the property frontage; (iv) Paseo Dorado – Fullwidth improvements to a point at centerline opposite the tract boundary; and (v) Euclid Avenue (off-site) – Fullwidth improvements, Paseo Dorado to West Bastanchury Road, excluding the area within the railroad tracks.
Such improvements include, but are not limited to, grading, asphalt rehabilitation, street light upgrades along project frontage, road widening or restriping, median removal, curb, gutter and sidewalk, undergrounding of utilities, conduit for future traffic signal, drive approaches and bus stop improvements. $4,181,740
TOTAL ESTIMATED REIMBURSEMENT AMOUNT
The Park Fees and Sewer Fair Share Payments consist of the following:
Estimated Amount
$1,358,260
Park Dwelling Fee
160,000
Contribution to City Sewer Fund as required by the Conditions of Approval $1,518,260
TOTAL ESTIMATED AMOUNT
For specific items of work and quantities for the Improvements, see contracts and change orders as referenced in Exhibit B.
Notes:
The Reimbursement Amount will be the Actual Costs (as defined in this Improvement and Reimbursement Agreement) of the Improvements, including, but not limited to, eligible soft costs, permit fees, title insurance, and construction management.
The quantities, measurements, sizes and types of the components of the Improvements described above shall be those specified in the Plans and Specifications for the Improvements approved by the City, consistent with the Conditions of Approval.
This Exhibit A may be amended at any time by the mutual written agreement of the Developer and the City Public Works Director, without requiring approval by the City Council, so long as any Improvements or Park Fees and Sewer Fair Share Payments added to Exhibit A pursuant to such amendment are authorized to be financed by the CFD.
EXHIBIT A-1
DEPICTION OF IMPROVEMENTS
(map attached)
EXHIBIT B
FORM OF PAYMENT REQUEST
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
Dated: __________, 2023
________________, a _____________ (the “Developer”), hereby requests payment of the Reimbursement Amount of the Improvements (as those terms are defined in the Improvement and Reimbursement Agreement, dated as of August 1, 2023 (the “Improvement Agreement”), by and between the City of Fullerton (the “City”), for itself and on behalf of “City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village)” (the “CFD”) and Sunrise Village Owner, LLC, a Delaware limited liability company, described in Attachment 1 hereto. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Improvement Agreement.
In connection with this Payment Request, the undersigned hereby represents and warrants to the City as follows:
1. The undersigned is an authorized representative of the Developer, qualified to execute this request for payment on behalf of the Developer and knowledgeable as to the matters set forth herein.
2. The Developer has submitted or submits herewith to the Public Works Director as-built drawings or similar Plans and Specifications for the Improvements described in Attachment 1, and such drawings or Plans and Specifications, as applicable, are true, correct and complete representations of the Improvements listed in Attachment 1.
3. The Improvements described in Attachment 1 has been constructed in material compliance with the Plans and Specifications therefor, and in accordance with all applicable City standards and the requirements of the Improvement Agreement, and the as-built drawings or similar Plans and Specifications referenced in paragraph 2 above.
4. The Developer has submitted or submits herewith to the Public Works Director, as appropriate and necessary, soils reports and certifications by the Engineer of Record with respect to the Improvements described in Attachment 1.
5. The true and correct Actual Cost of the Improvements described in Attachment 1 is set forth in Attachment 1.
6. The Developer has submitted or submits herewith to the Public Works Director a copy of each construction contract for the Improvements described in Attachment 1, a copy of the bid notice for each such contract and a copy of each change order applicable to each such contract, together with the written approval of each such change order by the Public Works Director of the City.
7. The Developer has submitted or submits herewith to the Public Works Director a written confirmation from the Engineer of Record that the invoices, receipts, worksheets and other evidence of costs for the Improvements described in Attachment 1 contain sufficient detail to allow the Public Works Director to verify the Actual Cost of the Improvements and, if any of such invoices, receipts, worksheets or other evidence of costs include costs for facilities other than the Improvements, the Developer has submitted or submits herewith to the Public Works Director a written description as to how the items and amounts in such invoices, receipts, worksheets and other evidence of costs have been allocated among such other Improvements, together with a statement, along with such supporting documentation as may be requested, that such allocation is appropriate, correct and reasonable.
8. The Developer has submitted or submits herewith to the Public Works Director evidence that each of the invoices, receipts, worksheets and other evidence of costs referred to in the preceding paragraph, has been paid in full, which evidence is in the form of copies of cancelled checks or such other form as the Public Works Director of the City has approved in writing.
9. There has not been filed with or served upon the Developer notice of any lien, right to lien or attachment upon, or claim affecting the right to receive, the payment of the Reimbursement Amount described in Attachment 1 which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by operation of law.
10. Within 10 calendar days after the submission of this Payment Request, the Developer shall submit to the Public Works Director copies of unconditional lien releases from all contractors, subcontractors and materialmen for all work with respect to the Improvements described in Attachment 1, together with the written approval of each such lien release by the City Attorney of the City.
11. The representations and warranties of the Developer set forth in Section 11 of the Improvement Agreement are true and correct on and as of the date hereof with the same force and effect as if made on and as of the date hereof.
12. The Developer represents that it has satisfied the conditions specified in the Improvement Agreement for the payment of the Reimbursement Amount by the City.
13. The Developer represents that, as of the date hereof, there is not present on, under or in the Improvements described in Attachment 1, or any portion thereof, any hazardous materials, except for (i) any types or amounts that do not require remediation or mitigation under federal, state or local laws, ordinances, regulations, rules or decisions, (ii) those that have been remediated or mitigated in full compliance with applicable federal, state or local laws, ordinances, regulations, rules or decisions, (iii) those with respect to which ongoing remediation or mitigation is being performed in full compliance with applicable federal, state or local laws, ordinances, regulations, rules or decisions, (iv) any types or amounts that do not present a human health risk or hazard to the public, and (iv) if the Improvements described in Attachment 1 were, at the time of commencement of the construction and installation of the Improvements, property of the City and, from such time of commencement through and including the date hereof, remained property of the City, those hazardous substances that were present on, under or in the Improvements at such time of commencement.
14. The Developer represents that, with respect to any contracts or subcontracts for the construction of the Improvements, it assures compliance with all applicable laws or regulations for the payment of prevailing wages for such construction and assures proper documentation has been submitted to the State of California Department of Industrial Relations.
I hereby declare under penalty of perjury that the above representations and warranties are true and correct. ____________________,
a ______________________
By:_____________________________
Name: __________________________
Title:____________________________
APPROVAL BY THE PUBLIC WORKS DIRECTOR
The Public Works Director of the City of Fullerton hereby certifies as follows:
(i) ___________________, a _________________ (the “Developer”), has requested payment of the Reimbursement Amount of the Improvements described in Attachment 1 hereto. (ii) The Public Works Director has confirmed that the Improvements described in Attachment 1 are complete in accordance with the Plans and Specifications. (iii) The Developer’s Engineer of Record has provided documentation to the Public Works Director that the Improvements are consistent with those presented in the documentation of Actual Costs. (iv) The Actual Cost of the Improvements described in Attachment 1 has been reviewed, verified and approved by the Public Works Director under the terms specified in Section 5 of the Improvement and Reimbursement Agreement. As such, payment of the Reimbursement Amount described in Attachment 1 is hereby approved.
The City is obligated to pay the Reimbursement Amount from Funding Sources only, and from no other funds, as set forth more completely in the Improvement and Reimbursement Agreement (defined below).
Capitalized undefined terms shall have the meanings given in the Improvement and Reimbursement Agreement dated as of August 1, 2023, by and between the City of Fullerton, for itself and on behalf of City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village), and Sunrise Village Owner, LLC, a Delaware limited liability company.
Date: _________________ PUBLIC WORKS DIRECTOR,
CITY OF FULLERTON
By:
ATTACHMENT 1
Improvement
Actual
Cost
Reimbursement
Amount
Total
EXHIBIT C-1
FORM OF DISBURSEMENT REQUEST (REIMBURSEMENT)
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
Dated: __________, 2023
________________, a _____________ (the “Developer”), hereby requests disbursement of the payment of the amounts set forth below pursuant to the Improvement and Reimbursement Agreement, dated as of August 1, 2023 (the “Improvement Agreement”), by and between the City of Fullerton (the “City”), for itself and on behalf of City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village)” (the “CFD”) and Sunrise Village Owner, LLC, a Delaware limited liability company. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Improvement Agreement.
The Developer hereby requests reimbursement from the City of Park Fees and Sewer Fair Share Payments deposited with the City as further set forth below:
Fee Category
Date Paid
Amount Requested
No. and Description of Lots/DUs for which Fees Requested Park Fees
Sewer Fair Share Payments
In connection with this Disbursement Request (Reimbursement), the undersigned hereby represents and warrants to the City as follows:
1. The undersigned is an authorized representative of the Developer, qualified to execute this request for payment on behalf of the Developer and knowledgeable as to the matters set forth herein.
2. The Requested Amount has been paid to the City and has not formed the basis of any prior request for disbursement.
3. The Developer is in compliance with the terms and provisions of the Improvement Agreement.
I hereby declare under penalty of perjury that the above representations and warranties are true and correct.
DEVELOPER
____________________,
a ______________________
By:_____________________________
Name: __________________________
Title:____________________________
EXHIBIT C-2
FORM OF DISBURSEMENT REQUEST
City of Fullerton
Community Facilities District No. 3
(The Pines at Sunrise Village)
Dated: __________, 2023
________________, a _____________ (the “Developer”), hereby requests disbursement of the payment of the amounts set forth below pursuant to the Improvement and Reimbursement Agreement, dated as of August 1, 2023 (the “Improvement Agreement”), by and between the City of Fullerton (the “City”), for itself and on behalf of City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village)” (the “CFD”) and Sunrise Village Owner, LLC, a Delaware limited liability company. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Improvement Agreement.
The Developer hereby requests disbursement from proceeds of the Bonds of the amounts representing City of Park Fees and Sewer Fair Share Payments as further set forth below:
Fee Category
Amount Requested
No. and Description of Lots/DUs for which Fees Requested Park Fees
Sewer Fair Share Payments
In connection with this Disbursement Request, the undersigned hereby represents and warrants to the City as follows:
1. The undersigned is an authorized representative of the Developer, qualified to execute this request for payment on behalf of the Developer and knowledgeable as to the matters set forth herein.
2. The Requested Amount is due and payable, and has not formed the basis of any prior request for disbursement.
3. The Developer is in compliance with the terms and provisions of the Improvement Agreement.
I hereby declare under penalty of perjury that the above representations and warranties are true and correct.
DEVELOPER
____________________,
a ______________________
By:_____________________________
Name: __________________________
Title:____________________________
1 1
B-1
A-16
B-5
C-1
A-23
8/3/2023