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LETTER OF INTENT
December 9, 2025
The Laguna Beach Community Land Trust
Attn:
Re: Letter of Intent for Loan re Acquisition of 2307 and 2535 Laguna Canyon Road
This non-binding Letter of Intent (“LOI”) describes the principal business terms under which:
1. Purpose and Background. The City of Laguna Beach, a California municipal corporation (“City”), intends to enter into a purchase and sale agreement (the “PSA”) with the owner(s) of the real property commonly known as 2307 Laguna Canyon Road and 2535 Laguna Canyon Road, Laguna Beach, California (collectively, the “Properties”). The City anticipates assigning the PSA to The Laguna Beach Community Land Trust (“Land Trust”) pursuant to the terms of the PSA and a corresponding assignment instrument. In connection with such assignment, and to facilitate the Land Trust’s acquisition of the Properties, the City intends to make a loan to the Land Trust on the terms summarized in this LOI and a definitive loan agreement (the “Loan Agreement”), with funding to occur concurrently with the closing under the PSA (the “Loan”).
2. Loan Terms:
a. Lender: City
b. Borrower: Land Trust
c. Term/Maturity. The Loan term will be five (5) years. d. Loan Amount. The Loan amount will be Eight Million Dollars ($8,000,000).
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e. Interest Rate: Fixed 4.00% per annum.
f. Use of Loan Amount. The purchase price for both Properties under the PSA (as assigned).
g. Debt Service: Interest-only payments during the Term, payable quarterly. The full principal amount will be due at maturity of the Term. h. Closing. January 30, 2026. This is the same date as the PSA closing. In the event the PSA closing is extended, the closing date of the Loan will be similarly extended.
i. Financial/Reporting: Customary annual financial statements and rent rolls prepared by the Land Trust or applicable management company; evidence of compliance with covenants below (specifics to be addressed in the Loan Agreement).
3. Covenants and Operating Requirements.
a. Code Violation Remediation. The Land Trust will correct all identified code violations on the Properties within an agreed upon schedule to be set forth in the Loan Agreement. The City and Land Trust acknowledge and agree that as part of the agreed upon schedule, there will be required milestones for remedying these code violations as well as cure rights by the City in the event of failing to meet these milestones.
b. Redevelopment Restrictions. No redevelopment work or construction will occur on the Properties while the Loan is outstanding, without the City’s prior written approval, except for any remediation work required to address code violations on the Properties. The approval process, notice requirements, and any additional limited exceptions will be further defined in the Loan Agreement.
c. Rent Rate Covenant. The Land Trust will establish and adjust rents such that net operating income of the Properties supports ongoing debt service, while keeping rents consistent with any applicable affordability requirements. d. Affordability Covenant. The Land Trust will comply with all applicable state and federal affordability rules; any affordability covenants or regulatory agreements will be honored and, if required by City, recorded against the Properties.
e. Insurance. The Land Trust will maintain insurance naming the City as an additional insured/loss payee (as applicable), including: Property/Fire, Flood (if applicable), and Commercial General Liability. City may require 12 55852.00001\44433439.1
additional coverage (e.g., Earthquake, Business Interruption, Gap, Environmental Liability) commensurate with risk and availability.
f. Indemnification. The Land Trust will indemnify, defend, and hold harmless City from and against claims relating to the Properties, including environmental matters. To be further defined in the Loan Agreement.
4. Conditions. The Loan Agreement will include customary conditions precedent, which are expected to include:
a. Approvals. All required City approvals (including City Council approval, if applicable) and Land Trust approvals.
b. PSA Assignment & Closing Readiness. Executed assignment and assumption of the PSA to the Land Trust and evidence that all PSA conditions to close are satisfied or waived.
c. Organizational Status. Evidence of the Land Trust’s good standing, authority, and nonprofit status or active non-profit application status with the Internal Revenue Service.
d. Insurance Certificates. Evidence of required coverages and City additional insured/loss payee status.
e. Title/Closing Deliverables. Preliminary title, escrow instructions, and any required City-approved regulatory/affordability instruments (if applicable).
f. No Default/Adverse Change. Absence of material adverse change and default under the PSA or the Loan Agreement documents. g. Other Customary Items. Such other documents and opinions as are customary for transactions of this type and acceptable to City.
5. Miscellaneous.
a. Each party will bear its own costs and expenses. Borrower shall be responsible for customary third-party costs related to the Loan (e.g., escrow, title, recording, insurance, and any environmental or other third-party reports Borrower elects to obtain), as further detailed in the Loan documents. 13 55852.00001\44433439.1
b. The parties acknowledge the City’s obligations under the California Public Records Act. To the extent permitted by law, the City will endeavor to maintain the confidentiality of proprietary information appropriately designated by the Land Trust.
c. This LOI is an expression of interest only and not a binding commitment to lend, purchase, or close. Any binding obligations will arise only upon final approval and execution of definitive, mutually acceptable documents. d. This LOI and any binding provisions herein shall be governed by the laws of the State of California, without regard to conflict of law principles.
The Land Trust will comply with all applicable non-discrimination, fair housing, and equal opportunity laws.
[Signatures on following page]
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Acknowledged and Agreed:
CITY OF LAGUNA BEACH
By: _ ___
Name:
Title:
Date: ___________________
THE LAGUNA BEACH COMMUNITY LAND TRUST
By:
Name: Kristine Thalman
Title: President
Date: December 3, 2025
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