Report to City Council
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TO: Mayor and City Council
FROM: Sean Kelleher, Assistant City Manager (Development)
AGENDA DATE: June 17, 2025
TITLE: DEVELOPER’S REQUEST TO AMEND RANCHO DEL
SOL GOLF COURSE AGREEMENT (REPORT OF: CITY
MANAGERS OFFICE) (DISTRICT 4)
TITLE SUMMARY: Developer’s Request to Amend Rancho Del Sol Golf Course Agreement
DISTRICT: District 4
Recommendation(s)
That the City Council:
1. Deny Developer’s request to amend the Rancho Del Sol Golf Course Agreement.
SUMMARY
The property owner, ROCIII CA Belago, LLC , (“Developer”) is requesting that the City Council agree to amend the Rancho Del Sol Golf Course Agreement (a.k.a. “Agreement Regarding Golf Course Property Maintenance”) to: 1) allow Developer to defer obtaining a certificate of occupancy for the new Permanent Golf Course Clubhouse (“Permanent Clubhouse”), until after the Project’s apartment units can be rented and occupied; 2) allow Developer to assign its obligations to operate and maintain the Permanent Clubhouse and Golf Course to a n unknown third party; and 3) revise the Default provisions of the Agreement to Developer’s advantage.
BACKGROUND
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Seven years ago, on June 19, 2018, the City Council approved the Rancho Belago Phase II Apartment Project (“Project”). As a condition of approval , Developer was required to enter into a Maintenance Agreement, an Escrow Agreement, and a Memorandum of Agreement and License to provide the water rights (as well as access rights to the water wells and irrigation infrastructure ) to the City for a ten-year period commencing the first day the Golf Course is opened, at no cost to the City.
History of Agreement
Developer executed the Agreement 6 ½ years ago in November 2018. Almost two years later, on September 10, 2020 , Developer executed the First Amendment to the Agreement (“First Amendment”). Then, 4 ½ years later, on March 12, 2025, Developer submitted documentation of its compliance with the First Amendment - along with an unsolicited proposed “Second Amendment. ” In the proposed Second Amendment, Developer proposes that the City Council agree to: 1) allow Developer to defer obtaining a certificate of occupancy for the Permanent Clubhouse, until after the Project’s apartment units can be rented and occupied; 2) allow Developer to assign its obligations to operate and maintain the Permanent Clubhouse and Golf Course to an unknown third party; and 3) revise the Default provisions of the Agreement to Developer’s advantage.
Construction Timeline
On August 21, 2020, a certificate of occupancy was granted for a Temporary Golf Course Clubhouse (“Temporary Clubhouse”) . Since the re-opening of the Golf Course, it has been run from the Temporary Clubhouse. 5 ½ months later, o n February 11, 2021, the Planning Commission approved a new permanent 5,000 square foot Golf Course Clubhouse (“Permanent Clubhouse”). 14 months later, o n April 6, 2022, after the City received the necessary building permit application and requisite information from Developer, the City was prepared to issue a building permit for the Permanent Clubhouse – subject to Developer completing the required on-site grading and obtaining the necessary approvals from outside agencies, including , but not limited to, the Eastern Municipal Water District (“EMWD”). On May 3, 2023, after Developer submitted the requisite grading permit application, the City issued a grading permit for the construction of the Permanent Clubhouse. Six months later, i n November 2023, City staff met with Developer’s representatives and learned that the grading for the Permanent Clubhouse would not commence until sometime in December 2023. However, it was not until seven months later, on July 2, 2024, when Developer started the required d emolition work related to th e grading p ermit for the Permanent Clubhouse. Then, 10 months later, on May 22, 20 25, after Developer completed the necessary work, the City was able to conduct the last on-site inspection associated with the grading permit issued for the construction of the Permanent Clubhouse.
With respect to the Project’s apartment buildings, the City issued the necessary grading permit on March 29, 2021. However, it was not until nearly two years later, on February 14, 2023, after Developer completed the necessary grading, that the City was ab le to issue the necessary building permit for construction of the Project’s apartment buildings.
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DISCUSSION
Again, Developer is proposing a S econd Amendment to the Agreement . Developer purports that the purpose of the Second Amendment is to allow Developer to obtain the necessary certificates of occupancy for the Project’s apartment buildings so that the apartment units can be rented and occupied prior to opening the Permanent Clubhouse.
Developer claims unexpected and unavoidable delays in completing the Permanent Clubhouse have been due to issues with EMWD. However, staff has confirmed with both representatives of Developer and EMWD that Developer actually only recently approached EMWD regarding water service, even though the Planning Commission approved the Permanent Clubhouse entitlements more than four years ago on February 11, 2021, and City Engineering issued the grading permit for the Permanent Clubhouse two years ago on May 3, 2023.
The terms of proposed Second A mendment pertain to Section 1, “Operations,” and Section 4, “Default.” The existing and proposed language of each of the above S ection are set forth below, with an analysis of the proposed changes.
Section 1. Operations
Existing Language:
“Owner, prior to receipt of any building permits for the Multifamily Parcel, shall open and operate an 18 -hole golf course on the Golf Course Parcel.
Owner may operate the golf course using a temporary clubhouse until such time that a permanent golf course clubhouse has been completed. No Certificates of Occupan cy shall issue for any portion of the Multifamily Parcel until such time that a permanent golf course clubhouse has been completed, approved by City and open to the public."
Proposed Language:
"Owner may obtain Certificates of Occupancy for the residential units prior to completion of the clubhouse, subject to the following conditions:
(a) Owner shall make a one -time payment to the City in the amount of Fifteen Thousand Dollars ($15,000) upon execution of this Second Amendment.
(b) If the clubhouse renovation is not completed within one (1) year and one (1) day from the Amendment Effective Date, Owner shall make an additional payment of Thirty Thousand Dollars ($30,000) to the City.
(c) If the clubhouse renovation is not completed within two (2) years from the Amendment Effective Date, Owner shall post a bond in an amount equal to the estimated cost of completing the clubhouse
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renovation, as determined based on an independent appraisal or market-rate construction estimates, subject to review by both Owner and City.
(d) Assignment of Clubhouse and Golf Course Operations. Owner shall retain the obligation to complete the clubhouse renovation and ensure the continued operation of the Golf Course in accordance with the terms of the Original Agreement, as amended. However, Owner may assign the right to operate the clubhouse and/or the Golf Course to a successor or assignee. Owner shall provide the City with written notice of any such assignment no later than ten (10) days after execution of the assignment agreement. Such notice sha ll include the name of the assignee and confirmation that the assignee has agreed to operate the clubhouse and/or Golf Course in compliance with the terms of the Original Agreement, as amended.
Owner shall have no further obligation for day -to-day operatio ns following such assignment, provided that Owner ensures the assignee has the financial and operational capacity to perform its obligations. City approval of such assignment shall not be required." Analysis:
The existing language requires the Permanent Clubhouse to be open and operational prior to the issuance of certificates of occupancy for any of the Project’s apartment buildings.
The proposed amendment would allow Developer to obtain certificates of occupancy for the apartments prior to completion of the Permanent C lubhouse. In other words, Developer wants to be able make the apartment units available for rent and occupancy without a Permanent Clubhouse available to the tenants.
Moreover, the proposed amendment would allow Developer to assign its obligations to operate and maintain the Golf Course to an unknown or unidentified third party. Developer is proposing that upon assignment to a third party, without the City’s consent or approval, Developer would no longer be responsible for any of the leg al obligations under the Agreement. It important to note that the dollar amounts suggested by Developer are one- time payments. Subsections b and c are related to the delayed performance of completing the construction of the Permanent Clubhouse.
The existing language in Section 1 incentivizes Developer to complete the Permanent Clubhouse.
Section 4. Default
Existing Language:
“In the event of closure of the Golf Course, the City shall have the right to access the remaining funds in the account for the continued maintenance
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of the Golf Course area in a Park-like condition, without any claim to those funds from the Owner or any third parties that were operating the Golf Course. City shall not use the funds for any other purpose. City shall also have the right to use the water from the existing wells for irrigation purposes at no cost to the City.”
Proposed Language:
"In the event of closure of the Golf Course, the City shall have the right to access the remaining funds in the account for the continued maintenance of the Golf Course area in a Park -like condition, without any claim to those funds from the Owner or any third parties that may have been operating the Golf Course. City shall not use the funds for any other purpose. City shall also have the r ight to use the water from the existing wells for irrigation purposes at no cost to the City.
In the event that Owner assigns the operation of the Golf Course pursuant to Section 1(d) above, Owner shall take reasonable steps to ensure that the assignee has the financial and operational capacity to fulfill its obligations.
Upon such assignment, Owner shall be relieved of direct operational responsibilities and shall have no liability for the assignee’s performance, provided that Owner has complied with its o bligation to ensure a qualified operator. Owner shall not be responsible for any operational failures or noncompliance by the assignee, except to the extent that such failure results from actions taken by Owner after the assignment. Any further assignment by the assignee shall require written notice to the City but shall not require City approval.
Additionally, in the event that the clubhouse renovation is not completed within two (2) years from the Amendment Effective Date, the City shall have the right to draw upon the bond required under Section 1(c) of the Original Agreement, as modified by this Second Amendment, to ensure completion of the clubhouse renovations. The City may also require the Owner to provide progress updates on the status of clubhouse r enovations on a quarterly basis, demonstrating reasonable progress toward completion." Analysis:
Paragraphs 2 and 3 of the proposed amendment remove Developer’s responsibility for the construction of the Permanent Clubhouse and maintenance of the Golf Course should Developer assign the Agreement to a third party. Again, Developer is suggesting that the City’s consent or approval of such an assignment should not and would not be required.
By allowing Developer to assign the Agreement to a third party , Developer would be relieved of all responsibility to complete the Permanent Clubhouse and maintain the Golf Course. The City’s only recourse would be to call upon the bonds and complete the construction of the Permanent Clubhouse itself and maintain the Golf Course in a park- like condition should the assignee not comply with the Agreement.
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The existing language found in the Original Agreement and the First Amendment provides the City with the greatest assurance that the Permanent Clubhouse will be completed in a timely manner and that the Golf Course will be properly maintained.
For the foregoing reasons, staff recommends that the City Council den y Developer’s proposed Second Amendment.
ALTERNATIVES
1. Deny Developer’s request for a Second Amendment , as the existing language found in the Original Agreement and the First Amendment provides the City with the greatest assurance that the Permanent Clubhouse will be completed in a timely manner and that the Golf Course will be properly maintained. Staff recommends this alternative.
2. Approve Developer’s request for a Second Amendment. This alternative relieves Developer’s responsibility to complete the Permanent Clubhouse and maintain the Golf Course, should Developer assign the Agreement to a third party. The City’s only recourse would be to call upon bonds and complete the construction of the Permanent Clubhouse itself and maintain the Golf Course in a park-like condition should the assignee not comply with the Agreement. Staff does not recommend this alternative.
NOTIFICATION
Posting of the agenda.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Sean Kelleher Brian Mohan
Assistant City Manager (Development) City Manager
Concurred By:
Steve Quintanilla
City Attorney
CITY COUNCIL GOALS
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
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Report Approval Details
Document
Title:
STAFFREPORT_CM_RANCHO_DEL_SOL_AGREEMENT_FINAL.doc
x
Attachments
:
Final
Approval
Date:
Jun 11, 2025
This report and all of its attachments were approved and signed as outlined below:
Patty Rodriguez
Natalia Lopez
Dena Heald
Launa Jimenez
Patty Rodriguez