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DRAINAGE FEE CREDIT
DRAINAGE FEE CREDIT AGREEMENT
THIS DRAINAGE FEE CREDIT AGREEMENT (this “Agreement”), is entered into this ____ day of _____________, 2025, by and between the CITY OF LAKE ELSINORE, a municipal corporation, hereinafter referred to as the “City,” and TRI POINTE HOMES IE-SD, Inc., a California corporation, hereinafter referred to as the “Developer.”
RECITALS
A. Developer is the owner of property located within the City, which property has received development entitlements approvals from the City in connection with Planning Application No. 2021-43, including Tentative Tract Map No. 34249, Revision No. 1, and Residential Design Review No. 2022-06 (the “Entitlements”). The Entitlements contemplate the construction of certain improvements more particularly described therein, located on an approximately 81.32-acre site within the Canyon Hills Estates Specific Plan located south of Canyon Hills Road and west of Cottonwood Canyon Road (APNs: 365-230-005, 365-230-006, 365-230-009, 365-230-011, and 365-230-012) (collectively, the “Development”). A legal description of such property is attached as Exhibit “A” (the “Property”). A map of the Property is attached as Exhibit “B”.
B. Chapter 16.72 of the Lake Elsinore Municipal Code establishes a Drainage District Fee to be paid prior to the approval of any final subdivision map or parcel map subdividing property within any drainage district designated in the master plan of drainage (the “Drainage Fees”), and establishes a mechanism for providing credits and reimbursement to Developer for constructing eligible capital improvements.
C. As a condition of the Entitlements, the Developer is required to construct certain new storm drain facilities collecting and conveying off-site flows through the property as provided in Condition of Approval No. 95, one of which is described in Exhibit “C” hereto (the “Improvement”). The design of the Improvement has or will be submitted directly to the City and the estimated cost of the Improvement is also set forth on Exhibit “C.” D. The Developer has requested that City enter into this Agreement by the terms of which it can be reimbursed from and/or receive credit against the Drainage Fees that the City has collected or will collect in the future in an amount not to exceed the amount determined pursuant to Section 5 below (the “Credit Amount”).
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and the mutual promises contained herein, it is agreed as follows:
Section 1. Purpose of the Agreement. Following execution of this Agreement, the Developer shall cause the Improvement to be designed, engineered, permitted and constructed and the City shall issue to Developer a credit against Drainage Fees (the “Drainage Fee Credit”) equal to the Credit Amount, as determined pursuant to Section 5 below.
Section 2. Preparation and Approval of Plans and Specifications. The Developer has or shall cause plans and specification (the “Plans”) to be prepared for the Improvement and obtain all of the permits (“Permits”) required for construction of the Improvement. The Developer shall
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provide a copy of the Plans to the City Engineer and shall obtain the written approval of the Plans from City.
Section 3. Duty of Developer to Construct. The Developer shall construct or cause the Improvement to be constructed in accordance with the approved Plans and the specifications approved by the City Engineer. The Developer shall perform all of its obligations hereunder and shall conduct all operations with respect to the construction of the Improvement in a good, workmanlike and commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons utilizing commercially reasonable efforts in the performance of comparable work and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall not be relieved of its obligation to construct the Improvement and cause title to the Improvement to be conveyed to the City even if the Credit Amount is less than the actual cost of the Improvement. Notwithstanding the foregoing, nothing set forth in this Agreement shall be construed to require the Developer to perform any work requiring a contractor’s license, nor shall the Developer be deemed to be performing construction services pursuant to this Agreement.
Section 4. Acquisition of City Facilities. The Developer hereby agrees to convey to the City and the City hereby agrees to accept the Improvement and to credit Developer the Credit Amount for the Improvement, subject to the terms and conditions hereof.
The Credit Amount is to be applied solely to satisfy Drainage Fees applicable to the Development. Nothing in this Agreement shall preclude the financing of the acquisition of the Improvement with the proceeds of bonds of a community facilities district established by the City with respect to the Development and any Drainage Fee credit granted pursuant to this Agreement shall be irrespective of such financing.
Section 5. Determination of the Credit Amount.
(a) The Developer acknowledges that as of the date of this Agreement the Drainage Fee for the Development is $669,589.89. This obligation is currently less than or equal to the estimated cost of the Improvement set forth in Exhibit “C”: the combined engineer’s estimated costs is $_______________________. The Developer further acknowledges that this Agreement does not serve to estop the City from making further adjustments to the Drainage Fee, consistent with Chapter 16.72 and State law, and the Developer acknowledges that the City Council may consider adjustments to the Drainage Fee. The parties agree that the dollar amount of any Drainage Fee Credit to be earned by the Developer pursuant to this Agreement will not exceed the actual cost of the Improvement.
(b) Upon recordation of a Notice of Completion for the Improvement and acceptance of the Improvement by the City Engineer, the Developer shall submit a billing to the City Engineer requesting determination of the actual cost of the Improvement and the Credit Amount (“Payment Request”). The “Credit Amount” shall equal the actual cost incurred by the Developer in designing, engineering, permitting and constructing the Improvement. The Developer shall supply all documentation requested by the City Engineer in determining the actual cost of the Improvement. The City Engineer shall use commercially reasonable efforts to determine the Credit Amount within thirty (30) calendar days of receipt of the documentation submitted by the Developer.
(c) The City Engineer will provide the Developer written notice (the “Credit Notice“) of the Credit Amount. If the Credit Amount exceeds the dollar amount of the Drainage Fees that would otherwise be due from the Developer for the Development (the “Fee Credit Excess”), the
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City Engineer will identify in the Notice that the Fee Credit Excess will generate either: (i) a cash reimbursement to the Developer if Developer has paid Drainage Fees as provided in subsection (e) below or (ii) an earned Drainage Fee Credit to offset the Drainage Fees required on another approved tract or parcel map to be developed by the Developer. Once completed, the Credit Notice is to be executed and dated by the City Engineer and the Developer. (d) If the Credit Amount is less than the Drainage Fees that would be due from the Developer, the Credit Notice will so note the amount of the Drainage Fee Credit to be applied with each Drainage Fee payment on either a per unit or per acre basis will be identified. (e) If one or more building permits are issued by City to Developer during a period in which Developer does not have any available Drainage Fee Credit (i.e., prior to the issuance of the Credit Notice), then the Developer shall pay the full Drainage Fee for each permit issued, and upon acceptance of Improvement by the City Engineer, the City Engineer will note on the Credit Notice the full Drainage Fee paid to date of acceptance, make the appropriate adjustment for the application of the earned Drainage Fee Credit consistent with subsection (d) above and the City shall reimburse the Developer all previously-paid Drainage Fees up to the Credit Amount.
Section 6. Construction Requirements.
(a) The Developer shall require, and the specifications and contract documents shall require all contractors, subcontractors, vendors, equipment operators and owner operators, in each such case to the extent such individuals or entities are engaged to perform work on the Improvement, to pay at least general prevailing wage rates to all workers employed in the execution of the contract, to post a copy of the general prevailing wage rates at the job -site in a conspicuous place available to all employees and applicants for employment, and to otherwise comply with applicable provisions of the California Labor Code, the California Government Code and the California Public Contracts Code relating to general prevailing wage rates as required by the specifications approved by the City Engineer.
(b) The Developer shall require each contractor, subcontractor, vendor, equipment operator and owner operator, in each such case to the extent such individual or entity is engaged to perform work on the Improvement, to provide proof of insurance coverage satisfying the requirements of Section 11 hereof throughout the term of the construction of the Improvement.
Rather than requiring its contractors to provide such insurance, the Developer may elect to provide the same for the benefit of its contractors.
(c) The Developer shall comply, and shall cause each contractor, subcontractor, vendor, equipment operator and owner operator, in each such case to the extent such individual or entity is engaged to perform work on the Improvement, to comply with such other requirements relating to the construction of the Improvement as the City may impose by written notification delivered to the Developer, to the extent legally required as a result of changes in applicable federal, state or City laws, rules or procedures.
(d) The Developer shall require, and the specifications and bid and contract documents shall require, all contractors, subcontractors, vendors, equipment operators and owner operators, in each such case to the extent such individuals or entities are engaged to perform work on the Improvement, to submit certified weekly payroll records to the City Engineer promptly upon request.
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The Developer shall provide proof to the City Engineer, at such intervals and in such form as the City Engineer may require, that the foregoing requirements have been satisfied as to the Improvement.
Section 7. Licenses and Permits. The Developer shall have secured (or shall have caused to be secured) any and all permits which may be required by the City or any other governmental agency affected by the construction of the Improvement. The Developer shall be responsible for paying all applicable fees and charges to the City to obtain any land use entitlements and permits that are necessary to construct the Improvement.
Section 8. Change Orders. If during the course of construction of the Improvement, the Developer is presented with a change order or set of change orders that would increase the construction cost by more than 15%, then the Developer must receive the approval of the City Engineer before approving the change order(s). Failure to comply with this provision will result in the City not including the amount of the change order in the determination of the Credit Amount.
Section 9. Inspection; Completion of Construction. The City Engineer shall be responsible for inspecting the work of construction of the Improvement to ensure that the work of construction is accomplished in accordance with the Plans approved by the City Engineer. City personnel shall have access to the construction work site at all reasonable times for the purpose of accomplishing such inspection.
No later than ten business days after receiving notification from the City that the Improvement has been constructed in accordance with the Plans, the Developer shall forthwith file with the Lake Elsinore City Clerk a Notice of Completion pursuant to the provisions of Section 3093 of the California Civil Code.
Section 10. Maintenance of Facilities; Warranties. The Developer shall maintain the Improvement in good and safe condition until its acceptance by the City. Prior to the acceptance of the Improvement, the Developer shall be responsible for maintaining the Improvement in proper operating condition and shall perform such maintenance as the City Engineer reasonably determines to be necessary. As of the date of acceptance of the Improvement, the Developer shall assign to the City all of the Developer’s rights in any warranties, guarantees, maintenance obligations or other evidence of contingent obligations of third persons with respect to the Improvement.
Section 11. Insurance Requirements. Without limiting or diminishing the Developer’s obligation to indemnify or hold the City harmless, the Developer shall procure and maintain or cause to be maintained, at its sole cost and expense, the following insurance coverages during the term of this Agreement.
(a) Commercial General Liability: Developer shall maintain commercial general liability insurance coverage, including but not limited to, premises liability, contractual liability, products and completed operations, explosion, collages, use of cranes, and other heavy equipment and underground hazards, personal and advertising injury covering claims which may arise from or out of Developer’s performance of its obligations hereunder (“Policy”). The Policy shall name by endorsement the City and its special districts, respective directors, officers, Board of Supervisors, elected officials, employees, agents or representatives as Additional Insureds.
The Policy’s limit of liability shall not be less than $1,000,000 per occurrence combined single limit. If such insurance Policy contains a general aggregate limit, it shall apply separately to this Agreement or be no less than two (2) times the occurrence limit.
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(b) Vehicle Liability: Developer shall maintain liability insurance for all owned, non -owned or hired vehicles in an amount not less than $1,000,000 per occurrence combined single limit. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or be no less than two (2) times the occurrence limit. Policy shall name by endorsement the City, its special districts, their respective directors, officers, Board of Supervisors, elected officials, employees, agents or representatives as Additional Insureds. (c) Worker’s Compensation Insurance: Developer shall maintain Workers’ Compensation Insurance (Coverage A) as prescribed by the laws of the State of California.
Section 12. Ownership of Facilities. Notwithstanding the fact that a portion or all of the Improvement may be constructed in dedicated rights-of-way or on property that has been or will be dedicated to the City, the Improvement shall be and remain the property of the Developer until acceptable title thereto is conveyed to the City as provided herein. Such ownership by the Developer shall likewise not be affected by any agreement that the Developer may have entered into or may enter into with the City pursuant to the provisions of the Subdivision Map Act, Section 66410 et seq. of the Code, and the provisions of this Section shall control.
Section 13. Representations, Warranties and Covenants of the Developer. The Developer makes the following representations, warranties and covenants for the benefit of the City, as of the date hereof and as of the date of the Payment Request is delivered to the City hereunder:
(a) Organization. The Developer represents and warrants that the Developer is a California corporation duly organized and validly existing under the laws of the State of California, is in good standing under the laws of the State, 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.
(b) Authority. The Developer represents and warrants that the 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, and this Agreement has been duly and validly executed and delivered on behalf of the Developer.
(c) Binding Obligation. The Developer represents and warrants that this Agreement is a valid and binding obligation of the Developer and is enforceable against the Developer in accordance with its terms, subject to bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights in general and by general equity principles. (d) Completion of Improvement. The Developer covenants that it will use its reasonable and diligent efforts to do all things that may be lawfully required of it in order to cause the Improvement to be completed in accordance with this Agreement. (e) Compliance with Laws. The Developer covenants that, while the Improvement is owned by the Developer or required pursuant to this Agreement to be maintained by the Developer, it will not commit, suffer or permit any of its agents, employees or contractors to commit any act to be done in, upon or to the Improvement in violation in any material respect of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the Property or the Improvement. (f) Payment Request. The Developer represents and warrants that it will diligently follow all procedures set forth in this Agreement with respect to the Payment Request.
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(g) Financial Records. Until the final acceptance of the Improvement, the Developer covenants to maintain proper books of record and account for the Improvement and all costs related thereto. The Developer covenants that such accounting books will be maintained in accordance with generally accepted accounting principles and will be available for inspection by the City and the City Engineer, at any reasonable time during regular business hours on two business days’ prior written notice, subject to mutually acceptable arrangements regarding the confidentiality of proprietary data.
(h) Permits. The Developer covenants that it will obtain all governmental or other permits required to proceed with the construction of the Improvement and that it will pay all fees relating thereto. The Developer and the City mutually represent and warrant to each other that to their actual knowledge, as of the date hereof, there is no material legal impediment to the Developer’s proceeding with and completing the construction of the Improvement or to the development of the Property as contemplated by the Developer. (i) Environmental Matters. The Developer represents and warrants that it has complied with, has caused compliance with, or will cause compliance with, the California Environmental Quality Act (“CEQA”) as required for the construction of the Improvement and its conveyance to the City.
Section 14. Representations, Warranties and Covenants of City. City makes the following representations, warranties and covenants for the benefit of the Developer:
(a) Authority. City represents and warrants that 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, and this Agreement has been duly and validly executed and delivered on behalf of the City.
(b) Binding Obligation. City represents and warrants that this Agreement is a valid and binding obligation of City and is enforceable against City in accordance with its terms, subject to bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights in general and by general equity principles. (c) Completion of the Improvement. The City covenants that it will use its reasonable and diligent efforts to expeditiously take all actions that may be lawfully required of it in issuing permits, processing and approving plans and specifications and inspecting the Improvement in accordance with this Agreement.
(d) Payment Request. City represents and warrants that it will diligently follow all procedures set forth in this Agreement with respect to the Payment Request and determination of the Credit Amount and application of the Drainage Fee Credit.
Section 15. Indemnification. The Developer agrees to protect, indemnify, defend and hold the City, and its respective officers, employees and agents, and each of them, harmless from and against any and all claims, losses, expenses, suits, actions, decrees, judgments, awards, attorney’s fees, and court costs which the City, or its respective officers, employees and agents, or any combination thereof, may suffer or which may be sought against or recovered or obtained from the City, or its respective officers, employees or agents, or any combination thereof, as a result of or by reason of or arising out of or in consequence of:
(a) the acquisition, construction, or installation of the Improvement;
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(b) the untruth or inaccuracy of any representation or warranty made by the Developer in this Agreement or in any certifications delivered by the Developer hereunder; or (c) any act or omission of the Developer or any of its subcontractors, or their respective officers, employees or agents, in connection with the Improvement. If the Developer fails to do so, the City shall have the right, but not the obligation, to defend the same and charge all of the direct or incidental costs of such defense, including any attorneys’ fees or court costs, to and recover the same from the Developer. The parties acknowledge and agree that the Developer shall be released from the indemnity obligation set forth herein upon the acceptance of the Improvement by the City.
Section 16. Developer as a Private Developer. In performing under this Agreement, it is mutually understood that the Developer is acting as a private developer, and not as an agent of the City. The City shall have no responsibility for payment to any contractor, subcontractor or supplier of the Developer. Accordingly, this Agreement does not constitute a debt or liability of the City. Other than as provided in Section 5, the City shall not be obligated to advance any of its own funds or any other costs incurred in connection with the Improvement. No member, official or employee of the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement.
Section 17. Other Agreements. Nothing contained herein shall be construed as affecting the City’s or the Developer’s respective duty to perform its respective obligations under other agreements, land use regulations or subdivision requirements relating to the development of the Property, which obligations are and shall remain independent of the Developer’s rights and obligations, and the City’s rights and obligations, under this Agreement; provided, however, that the Developer shall use its reasonable and diligent efforts to perform each and every covenant to be performed by it under any lien or encumbrance, instrument, declaration, covenant, condition, restriction, license, order, or other agreement, the nonperformance of which could reasonably be expected to materially and adversely affect the design, acquisition, construction and installation of the Improvement.
Section 18. Binding on Successors and Assigns. Neither this Agreement nor the duties and obligations of the Developer hereunder may be assigned to any person or legal entity other than an affiliate of the Developer without the written consent of the City, which consent shall not be unreasonably withheld or delayed. Neither this Agreement nor the duties and obligations of the City hereunder may be assigned to any person or legal entity, without the written consent of the Developer, which consent shall not be unreasonably withheld or delayed. The agreements and covenants included herein shall be binding on and inure to the benefit of any partners, permitted assigns, and successors -in- interest of the parties hereto.
Section 19. Amendments. This Agreement can only be amended by an instrument in writing executed and delivered by the City and the Developer.
Section 20. Waivers. No waiver of, or consent with respect to, any provision of this Agreement by a party hereto shall in any event be effective unless the same shall be in writing and signed by such party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
Section 21. No Third Party Beneficiaries. No person or entity, other than the City, shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City and the Developer
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(and their respective successors and assigns), any rights, remedies, obligations or liabilities under or by reason of this Agreement.
Section 22. Notices. Any written notice, statement, demand, consent approval, authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely:
City: City of Lake Elsinore
Attn: City Manager
130 South Main Street
Lake Elsinore, CA 92530
Developer: Tri Pointe Homes IE-SD, Inc.
Attn: Denise Williams
1250 Corona Pointe Court, Suite 600
Corona, CA 92879
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopy, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section.
Section 23. Jurisdiction and Venue. City and the Developer (a) agrees that any suit action or other legal proceeding arising out of or relating to this Agreement shall be brought in state or local court in the County of Riverside or in the Courts of the United States of America in the district in which the City is located, (b) consents to the jurisdiction of each such court in any suit, action or proceeding, and (c) waives any objection that it may have to the laying of venue or any suit, action or proceeding in any of such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Each of the City and the Developer agrees that a final and non - appealable judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 24. Attorneys’ Fees. If any action is instituted to interpret or enforce any of the provisions of this Agreement, the prevailing party in such action shall be entitled to recover from the other party thereto reasonable attorney’s fees and costs of such suit (including both prejudgment and post judgment fees and costs) as determined by the court as part of the judgment.
Section 25. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California.
Section 26. Usage of Words. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine.
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Section 27. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
[Signatures On Next Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the respective dates set forth below.
“CITY”
CITY OF LAKE ELSINORE, a municipal
corporation
Date: _______________________, 2025 By:_______________________________ Jason Simpson, City Manager
ATTEST:
CITY CLERK
__________________________________
Candice Alvarez, City Clerk
APPROVED AS TO FORM:
LEIBOLD McCLENDON & MANN, P.C.
__________________________________
David Mann, Acting City Attorney
“DEVELOPER”
TRI POINTE HOMES IE-SD, INC., a
California corporation
Date: _______________________, 2025 By:________________________________ Name:____________________________
Its:_______________________________
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#223868 v2 4000.2 A-1
EXHIBIT “A”
LEGAL DESCRIPTION
[See Attached]
#223868 v2 4000.2 A-1
#223868 v2 4000.2 B-1
EXHIBIT `B”
MAP
[See Attached]
#223868 v2 4000.2 C-1
EXHIBIT “C”
IMPROVEMENT
Line A commencing at northern boundary of the Development with approximately 443 linear feet of 48” RCP running southerly along a proposed detention basin near Lot A into Zenith Drive, then transitioning to approximately 685 linear feet of 36” RCP within Calm Ridge Drive and Symphony Street, then transitioning to approximately 221 linear feet of 24” RCP then 287 linear feet of 18” RCP within Symphony Drive until terminating at a collection point south of the Development. A total of approximately 1,637 linear feet of reinforced concrete pipe and associated manholes, outlet and inlet structures.
Estimated Construction Cost: $768,078.00
#223868 v2 4000.2 C-1
#223868 v2 4000.2 C-2