San Clemente City Council
November 1, 2022

ORDINANCE NO. ___

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

SAN CLEMENTE, CALIFORNIA APPROVING AND

ADOPTING AN ADDENDUM TO THE SAN CLEMENTE

HOUSING AND SAFETY ELEMENTS UPDATE PEIR

UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY

ACT, AND APPROVING GENERAL PLAN AMENDMENT
(GPA) 22-097, ZONING AMENDMENT (ZA) 22-098, AND A

DEVELOPMENT AGREEMENT FOR A MIXED-USE
PROJECT WITH 250 FOR-RENT SENIOR RESIDENTIAL
UNITS AND A 7,500 SQUARE FOOT MEDICAL OFFICE; TO
SUBDIVIDE ONE LOT INTO TWO LOTS; TO REZONE THE
PROPERTY FROM REGIONAL MEDICAL FACILITIES 1
(RMF1) TO COMMUNITY COMMERCIAL 4 (CC4); AND TO

CHANGE THE GENERAL PLAN DESIGNATION FROM RMF
TO CC, LOCATED AT 654 CAMINO DE LOS MARES
WHEREAS, on March 21, 2022, an application was submitted by Hunsaker & Associates Irvine, Inc., 24451 Health Center Drive, Laguna Hills, CA, for Master Project (MP) 22-089, Architectural Permit (AP) 22-101, Conditional Use Permit (CUP) 22-100, General Plan Amendment (GPA) 22-097, Site Plan Permit (SPP) 22-103, Tentative Parcel Map (TPM) 22-099, Zoning Amendment (ZA) 22-098, and Development Agreement and deemed complete on September 29, 2022; to demolish an existing medical building and surface parking lot; construct a mixed-use project with 250 for-rent senior residential units and a 7,500 square foot medical office; subdivide one lot into two lots; rezone the property from Regional Medical Facilities 1 (RMF1) to Community Commercial 4 (CC4); and change the General Plan designation from RMF to CC at 654 Camino De Los Mares (collectively, the Project).

WHEREAS, the Planning Division prepared an Addendum to the San Clemente Housing and Safety Elements Update PEIR (State Clearinghouse No. 2021020256) that was adopted by the City Council on October 5, 2021 for the project in accordance with the California Environmental Quality Act (CEQA) Guidelines Section 15164 which allows an addendum to a previously certified EIR or Negative Declaration in instances when “only minor technical changes or additions are necessary” and when the new information does not involve new significant environmental effects beyond those identified in the previous EIR;
WHEREAS, the City's Development Management Team (DMT) reviewed the proposed project on three different occasions for compliance with the General Plan, Zoning Ordinance, and other applicable City regulations, and the DMT recommends approval with conditions contained in Exhibit A;
WHEREAS, on May 25, 2022, July 27, 2022, and August 24, 2022, the City’s ATTACHMENT 2
Ordinance No. ______ Page 2
Design Review Subcommittee (DRSC) reviewed the project’s architecture and compliance with the Design Guidelines, and forwarded the project to the Planning Commission;
WHEREAS, on August 31, 2022, the Planning Commission and City Council of the City of San Clemente held a study session on the subject applications, and information presented by the applicant, City staff, and other interested parties; WHEREAS, on October 5 and October 19, 2022, the Planning Commission of the City of San Clemente held duly noticed public hearings on the subject applications, considered written and oral comments, and facts and evidence presented by the applicant, City staff, and other interested parties;
WHEREAS, on November 1, 2022, the City Council of the City of San Clemente held a duly noticed public hearing on the subject applications, considered written and oral comments, and facts and evidence presented by the applicant, City staff, and other interested parties; and,
WHEREAS, all legal prerequisites to the adoption of this Ordinance have occurred.

NOW, THEREFORE, the City Council of the City of San Clemente does hereby resolve as follows:

Section 1. Incorporation of Recitals.

The City Council hereby finds that all of the facts in the Recitals are true and correct and are incorporated and adopted as findings of the City Council as fully set forth in this Ordinance.

Section 2. CEQA Findings.

Based upon its review and consideration of the entire record, including the Staff Report, the Program Environmental Impact Report (EIR) for the Housing and Safety Elements Update (State Clearinghouse No. 2021020256, adopted by the City Council on October 5, 2021, hereafter referred to as “2021 EIR”), the Addendum to the 2021 EIR (“Addendum”), any public comments or testimony presented to the City Council, and the facts outlined below, the City Council hereby finds and determines that an addendum is the appropriate environmental document under the California Environmental Quality Act (CEQA) and State CEQA Guidelines Section 15164. The Addendum to the 2021 EIR was prepared by the City of San Clemente Community Development Department to evaluate whether development of senior housing and medical office at 645 Camino de los Mares would result in any new significant impacts or increased severity of impacts beyond those identified in the 2021 EIR. As Lead Agency under CEQA, and based on the findings contained in the Addendum, the City has determined that the project would not have any new or more severe impacts that were not previously identified in the 2021 EIR, , and that none of the conditions described in State CEQA Guidelines section 15162 have Ordinance No. ______ Page 3
occurred. The City also finds that the Addendum reflects the City’s independent judgment.

Under CEQA Guidelines Section 15164 of the State CEQA Guidelines, an Addendum to a previously certified EIR or Negative Declaration is the appropriate environmental document in instances when “only minor technical changes or additions are necessary” and when the new information does not involve new significant environmental effects beyond those identified in the previous EIR. The analysis contained in the Addendum demonstrates that the proposed Addendum involves only minor technical changes to the 2021 EIR and the Project would not result in any new or increased severity significant environmental effects beyond those identified in the 2021 EIR. As such, an addendum is the appropriate environmental document under CEQA and the City Council hereby approves and adopts the Addendum to the 2021 EIR.

Section 3. General Plan Amendment Findings
With respect to General Plan Amendment (GPA) 22-097, the City Council finds as follows:

A. The proposed amendment is internally consistent with those portions of the General Plan which are not being amended.

1. GPA 22-097 would amend the Land Use map (Figure LU-1A), changing the General Plan Land Use designation from Regional Medical Facilities to Community Commercial for the site located at 654 Camino de los Mares.

2. The amendment would be internally consistent with the following Goal and Policies of the Camino de los Mares Focus Area in that the project would enhance a community hub, collaborates with health care providers based on changing needs, maintains landscaped edges, and provides a Spanish architectural design. i. Goal: Maintain and improve the area as a community hub that provides diverse retail opportunities and commercial services for local residents and high quality medical services and related employment opportunities for San Clemente and surrounding communities.
ii. LU-7.03. Collaboration with Health Care Providers. We collaborate with local health care providers and facilities to understand their changing requirements and help meet the needs of our residents.
iii. LU-7.04. Entryways and Landscaped Corridors. We maintain entryways and an attractive, well-defined landscaped edge along Caminos Estrella and de los Mares to signify arrival to the City of San Clemente and the Camino de los Mares area.
iv. LU-7.06. Design Treatment. Within the Camino de los Mares Focus Area, development projects, including major remodels, shall have a Spanish architectural design, consistent with the Design Guidelines.

3. The amendment is consistent with the General Plan Housing Element in that the Ordinance No. ______ Page 4
Housing Element identified the site as a potential housing opportunity site and the project would provide housing, including affordable housing to very low income households.

B. The proposed amendment will not adversely affect the public health, safety, and welfare.

1. The proposed amendment would create a land use designation consistent with the Community Commercial land use designation adjacent to the west and east, and across the street to the north.

2. An Addendum was prepared for the proposed project and concluded that potential impacts would be reduced to less than significant with the mitigation measures required as part of the project approval.

3. Prior to construction, the project will be reviewed during the building permit process to ensure compliance with building, engineering, health, and safety codes. This includes but is not limited to regulations on emergency services, utility connections, easement access, and traffic design standards.

Section 4. Zoning Amendment Findings
With respect to Zoning Amendment (ZA) 22-098, the City Council finds as follows:

A. The proposed amendment is consistent with the General Plan.

1. The Zoning Amendment would be consistent with the General Plan including but not limited to the following goals and policies:
i. Land Use Plan Primary Goal: “…8) provide a diversity of land use areas that complement one another and are characterized by differing functional activities and intensities of use...” in that the project would add to the diversity of uses in the Camino de los Mares focus area. ii. Residential Land Use Goal: “Achieve a mix of residential neighborhoods and housing types that meets the diverse economic and physical needs of residents, that is compatible with existing neighborhoods and the surrounding environmental setting, and that reflects community expectations for high quality” in that the project would add to the variety of housing types available in the City, and provide a high quality architectural style.
iii. LU-1.01. General. We accommodate the development of a variety of housing types, styles, tenure and densities that are accessible to and meet preferences for different neighborhood types (e.g., mixed use pedestrian environments and traditional suburban neighborhoods), physical abilities and income levels, pursuant to the Land Use Plan and Housing Element in that the project would add to the variety of housing available in the City, including a variety of income levels, as part of a horizontal mixed-use project.
iv. Goal: Maintain and improve the area as a community hub that provides Ordinance No. ______ Page 5
diverse retail opportunities and commercial services for local residents and high quality medical services and related employment opportunities for San Clemente and surrounding communities in that the proposed use adds to the Camino de los Mares community hub with senior housing next to food, retail, and medical amenities, and the proposed use adds medical office uses.
v. LU-7.03. Collaboration with Health Care Providers. We collaborate with local health care providers and facilities to understand their changing requirements and help meet the needs of our residents in that the project would support the needs of the health care property owner and add medical offices to help meet the needs of residents.
vi. LU-7.04. Entryways and Landscaped Corridors. We maintain entryways and an attractive, well-defined landscaped edge along Caminos Estrella and de los Mares to signify arrival to the City of San Clemente and the Camino de los Mares area in that the project would provide an attractive and well-defined landscaped edge along Camino de los Mares with additional parkway trees, private landscaping along the sidewalk, and seating area at the pedestrian paseo entry.
vii. LU-7.06. Design Treatment. Within the Camino de los Mares Focus Area, development projects, including major remodels, shall have a Spanish architectural design, consistent with the Design Guidelines in that the project’s senior housing buildings and medical office building would provide Spanish architectural style.

B. The proposed amendment will not adversely affect the public health, safety and welfare.

1. The proposed amendment would be the same Community Commercial zoning as that zoning for the properties adjacent to the west and east, and across the street to the north.

2. An Addendum was prepared for the proposed project and concluded that potential impacts would be reduced to less than significant with the mitigation measures required as part of the project approval.

3. Prior to construction, the project will be reviewed during the building permit process to ensure compliance with building, engineering, health, and safety codes. This includes but is not limited to regulations on emergency services, utility connections, easement access, and traffic design standards.

Section 5. Development Agreement Findings.

With respect to the Development Agreement, the City Council finds as follows:

A. The provisions of the agreement are consistent with the general plan and any applicable specific plan.

Ordinance No. ______ Page 6
a. The provisions of the Development Agreement are consistent with the goals and policies of the General Plan, including but not limited to:
i. Land Use Plan Primary Goal: “…8) provide a diversity of land use areas that complement one another and are characterized by differing functional activities and intensities of use...” in that the project would add to the diversity of uses in the Camino de los Mares focus area. ii. Residential Land Use Goal: “Achieve a mix of residential neighborhoods and housing types that meets the diverse economic and physical needs of residents, that is compatible with existing neighborhoods and the surrounding environmental setting, and that reflects community expectations for high quality” in that the project would add to the variety of housing types available in the City, and provide a high quality architectural style.
iii. LU-1.01. General. We accommodate the development of a variety of housing types, styles, tenure and densities that are accessible to and meet preferences for different neighborhood types (e.g., mixed use pedestrian environments and traditional suburban neighborhoods), physical abilities and income levels, pursuant to the Land Use Plan and Housing Element in that the project would add to the variety of housing available in the City, including a variety of income levels, as part of a horizontal mixed-use project.
iv. Goal: Maintain and improve the area as a community hub that provides diverse retail opportunities and commercial services for local residents and high quality medical services and related employment opportunities for San Clemente and surrounding communities in that the proposed use adds to the Camino de los Mares community hub with senior housing next to food, retail, and medical amenities, and the proposed use adds medical office uses. b. The Development Agreement is consistent with the General Plan Housing Element in that the Housing Element identified the site as a potential housing opportunity site and the project would provide housing, including affordable housing to very low income households.

B. The agreement provides that any tentative map will comply with Government Code Section 66473.7 in that the Development Agreement includes provisions that the tentative map will comply with Government Code Section 66473.7.

Section 6. The documents and materials associated with this Ordinance that constitute the record of proceedings on which the City Council’s findings and determinations are based are located at San Clemente City Hall, 910 Calle Negocio, San Clemente, CA 92673.

Section 7. Planning Commission Recommendation. Based on the foregoing recitals and findings, and the written and oral comments, facts, and evidence presented, the City of San Clemente City Council approves Master Project (MP) 22-089, Architectural Ordinance No. ______ Page 7
Permit (AP) 22-101, Conditional Use Permit (CUP) 22-100, General Plan Amendment (GPA) 22-097, Site Plan Permit (SPP) 22-103, Tentative Parcel Map (TPM) 22-099, Zoning Amendment (ZA) 22-098, and Development Agreement for a request to develop a mixed-use project with 250 for-rent senior residential units and a 7,500 square foot medical office; subdivide one lot into two lots; rezone the property from Regional Medical Facilities 1 (RMF1) to Community Commercial 4 (CC4); and change the General Plan designation from RMF to CC, located at 654 Camino De Los Mares, subject to the Conditions of Approval set forth in Exhibit A.

Section 8. The San Clemente General Plan Land Use Map is hereby amended to update the Zoning Designation for 654 Camino de los Mares (Assessor’s Parcel Number 675-072-19) from Regional Medical Facility (RMF) to Community Commercial (CC).

Section 9. The San Clemente Zoning Map is hereby amended to update the Zoning District for 654 Camino de los Mares (Assessor’s Parcel Number 675-072-19) from Regional Medical Facility (RMF1) to Community Commercial 4 (CC4).

Section 10. City Council Adoption of Ordinance. Based on the entire record, including all written and oral evidence presented to the City Council, and the findings made and evidence discussed in the staff report and this Ordinance, the City Council hereby approves and adopts General Plan Amendment 22-097, Zoning Amendment 22- 098, and the Development Agreement included as Exhibit A.

Section 11. If any section, subsection, sentence, clause, or phrase of this Ordinance is, for any reason, held to be invalid or unenforceable, such decision shall not affect the validity or enforceability of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, clause, or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, and phrases would be declared invalid or unenforceable.

Section 12. The City Clerk shall certify to the passage of this Ordinance and publish the same in the manner required by law, and this Ordinance shall take effect as provided by law.

APPROVED AND ADOPTED this _____day of _________________, ________.

ATTEST:
_______________________________ ___________________________ City Clerk of the City of Mayor of the City of San
San Clemente, California Clemente, California
Ordinance No. ______ Page 8

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.

CITY OF SAN CLEMENTE )
I, JOANNE BAADE, City Clerk of the City of San Clemente, California, hereby certify that Ordinance No. _______ having been regularly introduced at the meeting of November 1, 2022, was again introduced, the reading in full thereof unanimously waived, and duly passed and adopted at a regular meeting of the City Council held on the _____day of _____________, _______, and said ordinance was adopted by the following vote:

AYES:

NOES:

ABSENT:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of ______________________, ________.
__________________________
CITY CLERK of the City of
San Clemente, California
APPROVED AS TO FORM:
__________________________

CITY ATTORNEY
Ordinance No. ______ EXHIBIT A

DEVELOPMENT AGREEMENT
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(ABOVE SPACE FOR RECORDER'S USE ONLY)

DEVELOPMENT AGREEMENT

BY AND BETWEEN

CITY OF SAN CLEMENTE, A CALIFORNIA MUNICIPAL CORPORATION AND

SADDLEBACK MEMORIAL MEDICAL CENTER, A CALIFORNIA NON-PROFIT

PUBLIC BENEFIT CORPORATION

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City Clerk
City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Exempt From Recorder's Fees Pursuant
to GOVERNMENT CODE § 6103

EXHIBIT A
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DEVELOPMENT AGREEMENT
This DEVELOPMENT AGREEMENT dated for reference purposes only as of , 2022 (“Agreement”), is made and entered into by and between the CITY OF SAN CLEMENTE, a California municipal corporation (“City”) and SADDLEBACK MEMORIAL MEDICAL CENTER, a California non-profit public benefit corporation (“Owner”).

RECITALS
A. All initially-capitalized words, terms, and phrases used, but not otherwise defined, in the Recitals shall have the meanings assigned to them in Section 1 of this Agreement, unless the context clearly indicates otherwise.

B. To strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development, the legislature of the State of California adopted the Development Agreement Act. Pursuant to the Development Agreement Act and the San Clemente Municipal Code, the City is authorized to enter into an agreement with any person having a legal or equitable interest in real property to provide for the development of such property and to vest certain development rights therein. City enters into this Agreement pursuant to the provisions of the Development Agreement Act, the City’s General Plan, the City Municipal Code, and applicable City policies.

C. Owner is the owner of the Property.

D. Property is a 6.63 acre area of real property generally located at 654 Camino de Los Mares in the City of San Clemente, California (the “Property”), which real property is legally described in the Legal Description attached hereto as Attachment No. 1 of this Agreement and by this reference incorporated herein.

E. Owner desires to develop the Project including Private Improvements of commercial, residential, open space and ancillary uses on the Property in the City of San Clemente.

F. On October 5, 2021, the City Council approved amendments to the Housing Element of the City’s General Plan in which the Property was designated as a candidate site for a mixed-income housing project that would materially enhance City compliance with certain affordable and other housing mandates imposed on City by the State of California including, but not limited to, obligations of City to comply with the regional housing needs requirements as set forth in Government Code Section 65584, et seq.

G. Additionally, to develop the Project, Owner has submitted applications to the City for approval of a General Plan Amendment, Zone Change, Vesting Tentative Map, Architectural Permit, Site Plan Permit, a Conditional Use Permit, and this Agreement.

H. The Parties desire to enter into this Agreement in order to vest the development standards, fees, exactions, and applicable regulations governing the proposed uses on the Property.

I. The Parties also desire to enter into this Agreement in order to provide sufficient funding to ensure that adequate and appropriate community facilities and benefits are provided to the City and

EXHIBIT A
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its residents in connection with the development of the Project and that the Project site will be developed in accordance with City’s General Plan and zoning.

J. This Agreement constitutes a current exercise of City’s police powers to provide predictability to Owner in the development approval process by vesting the permitted uses(s), density, intensity of use, and timing and phasing of development in exchange for Owner’s commitment to provide significant public benefits to City. This Agreement allows City to realize these public benefits and meet the needs of the City’s residents and visitors to a greater extent than the land uses permitted under the General Plan.

K. On October 19, 2022, as required by California Government Code Section 65867 and San Clemente Municipal Code Section 17.16.230, the Planning Commission of City held a duly-noticed public hearing on this Agreement. On November 1, 2022, the City Council held a duly-noticed public hearing to consider this Agreement and found and determined that this Agreement:
1) Is within the scope of the CEQA Compliance Documents; 2) Is consistent with the City's General Plan pursuant to Government Coder Section 65867.5(b); 3) Is compatible with the orderly development of the Property and the surrounding area; 4) Will have an overall positive effect on the health, safety, and welfare of the residents of the City by providing 20 very low income housing units (or 8% of 250 units) at the Property; 5) Constitutes a lawful, present exercise of the City's police power and authority under the Development Agreement Act and the Municipal Code; and
6) Is entered into pursuant to and in compliance with the requirements of the Development Agreement Act and the Municipal Code.
7) Will ensure a desirable and functional community environment, provide effective and efficient development of public and community facilities, assure attainment of maximum effective utilization of resources within the City, make a significant contribution toward the availability of very low income housing units in an area where real estate prices and other economic pressure make such housing very difficult to provide, the waiver of the right to settlement agreement payments as set forth in Section 2.1 of the Development Agreement, and provide other significant benefits to the City and its residents; and
8) Strengthens the public planning process, encourages private participation in comprehensive planning, particularly with respect to the implementation of the City’s General Plan, and reduces the economic costs of development and government.

Based on these findings, the City Council finds that the best interests of the citizens of the City and the public health, safety and welfare will be served by entering into this Agreement.

L. On November 1, 2022, the City Council introduced for first reading of the Enabling Ordinance. On November 15, 2022, the City Council conducted the second reading of the Enabling Ordinance and thereafter adopted the Enabling Ordinance, thereby approving this Agreement.

EXHIBIT A
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M. The City and Owner wish to enter into this Agreement in order to set forth the terms and conditions of the vesting of certain development rights and to effectuate and memorialize the Owner's payment of various City fees and exactions for the Project. By electing to enter into this Agreement, the City shall be bound by the obligations specified herein. The terms and conditions of this Agreement have undergone extensive review by the City's Planning Commission and the City Council and have been found to be fair, just, and reasonable.

N. All of the procedures required by CEQA have been satisfied based on the Environmental Impact Report Addendum (cite Addendum title, date and identifying number, if any) and the completion of certain studies evaluating the environmental impacts of the Project (the “EIR Addendum”). The City has made certain findings and determinations that this Agreement and the Project have been adequately analyzed and are supported by the CEQA Compliance Documents in compliance with all applicable requirements of CEQA.

O. This Agreement and the Project are consistent with the City’s General Plan, Municipal Code, and the applicable Land Use Regulations.

Q. The various exchanges contemplated in this Agreement are in the vital and best interest of the City and the welfare of its residents and are in accordance with the public purposes and provisions of applicable Laws.

The foregoing Recitals constitute a substantive part of and are hereby incorporated into this Agreement.

AGREEMENT

1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

Affordable Unit(s) is defined in Section 2.8.1 of this Agreement.

Affordable Units Complex is defined in Section 2.8.2 of this Agreement.

Agreement means this Development Agreement.

Annual Review is defined in Section 12.1 of this Agreement.

Applicable Land Use Regulations meansthe Land Use Regulations in effect on the date this Agreement is executed by all Parties in accordance with Government Code Section 65866 including, but not limited to, the Entitlements.

Applicable Rules means this Agreement, the Applicable Land Use Regulations, the Development Agreement Act and the Municipal Code+.

Building Codes means standard, uniform codes governing construction then in effect at the time of submittal of the Development plans by Owner in connection with the Project.

Building Permit means the permit issued by the City for the construction of the foundations, footings, subterranean and vertical Private Improvements and required Public

EXHIBIT A
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Improvements for each element of the Project.

Business Day means Monday through Friday, excepting holidays.

CC&Rs is defined in Section 2.9 of this Agreement.

CEQA means the California Environmental Quality Act (Pub. Res. Code § 21000, et seq. and the implementing regulations promulgated thereunder as set forth in Title 14 Cal. Code Regs.

Section 15000, et seq.

CEQA Compliance Documents means the EIR Addendum, as defined in Recital N of this Agreement above as well as the CEQA findings made in connection with the approval of this Agreement. The CEQA findings concluded that: (1) with implementation of the mitigation measures identified in the EIR Addendum, the Project will result in no new significant impacts that were not analyzed in the Program EIR nor would the Project cause a substantial increase in the severity of any previously identified environmental impacts in the Program EIR; (2) the potential impacts associated with the Project would be the same or less than those described in the Program EIR; (3) there are no substantial changes to the circumstances under which the Project will be undertaken that would result in new or more severe significant environmental impacts than previously addressed in the Program EIR; and (4) no new information regarding the potential for new or more severe environmental impacts were identified since the Program EIR was approved.

City means the City of San Clemente, California, a municipal corporation.

City Agency means each and every agency, department, board, commission, authority, employee, and/or official acting under the authority of the City, including without limitation the City Council and Planning Commission.

City Council means the City's duly-elected and/or appointed City Council.

City Manager means the City Manager of the City and his or her authorized designees.

Convey and Conveyance means the sale, transfer or assignment, but not the leasing, of any portion of the Property or the sale, transfer or assignment of more than fifty percent (50%), cumulatively, of the ownership interests in Owner; provided, however, that a sale, transfer or assignment of the Property or any portion thereof or of the ownership interests in Owner to any corporation, partnership, limited liability company or other entity controlling, under the control of or in common control with Owner shall not constitute a Conveyance hereunder; provided further, expressly excluded from the definition of Convey and/or Conveyance is (a) any granting by Owner of any easements, access or use rights to any third party for utilities, right of way, reciprocal access or parking rights to adjacent or nearby property owners or occupants or other similar rights reasonably and customarily granted to third parties in connection with similar development projects and due diligence studies and/or inspections by prospective purchasers or tenants; (b) any Dedications or Reservations; (c) any sale, transfers or assignments of the Property or any portion thereof by Owner to any Financier for security purposes or otherwise included within the definitions of Encumber or Encumbrance; and/or (d) any sale, transfer or assignment of the Property to an entity in which Owner and/or Owner's affiliates has a direct or indirect ownership interest.

EXHIBIT A
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County means the County of Orange, California.

Dedication and Dedicate means Owner's grant of real property or an interest therein to the City or another governmental agency or public or private utility for a public purpose.

Default means the failure of a Party to perform any action or covenant required by this Agreement within the time periods provided, if applicable, following notice and opportunity to cure, as set forth in Section 13 of this Agreement.

Development shall have the same definition as in California Government Code Section 65927, as that statute exists on the date the Enabling Ordinance is adopted.

Development Agreement Act means Government Code Section 65864, et seq.

Development Agreement Ordinance means San Clemente Municipal Code Section

17.16.230 which the City adopted for considering, approving and administering development agreements including the Agreement.

Development Exaction means and include Development Impact Fees, Dedications, Reservations, special taxes, general taxes as they pertain to development of the Property (but not including ad valorem property taxes or other taxes that are applicable City-wide), improvements, and any other obligation to pay money, construct facilities, or Dedicate land as a condition of Development of the Project or of obtaining an Entitlement.

Development Impact Fee means any impact fee or exaction or other similar fee or charge (whether collected as a condition of issuance of a demolition, grading, building or certificate of occupancy permit, or otherwise) imposed by the City on and in connection with Development of the Project in accordance with this Agreement. Development Impact Fees do not include (a) Processing Fees and Charges, (b) impact fees, exactions, assessments or fair share charges or other similar fees or charges imposed by other governmental entities regardless of whether the City is required to collect or assess such fees pursuant to applicable Laws (e.g., school district impact fees pursuant to Gov. Code § 65995) or (c) Fair Share Fees. The Development Impact Fees to be imposed on the Project pursuant to Section 3.3 of this Agreement are set forth in Attachment 2 of this Agreement and by this reference incorporated herein.

Discretionary Action means an action proposed by Owner which requires the exercise of judgment, deliberation and a decision on the part of the City as distinguished from an activity such as the issuance of Ministerial Permits and Approvals, which merely requires the City and/or any City Agency to determine whether there has been compliance with applicable, objective statutes, ordinances and/or regulations.

Effective Date means thirty (30) calendar days after the City Council's final approval of the Enabling Ordinance following the second reading thereof.

Enabling Ordinance means City Ordinance No. by which this Agreement was approved by the City Council and as described in Recital M of this Agreement.

Encumber and Encumbrance means mortgages, deeds of trust, and any other device by which Owner pledges all or any portion of Owner's interest in the Property to secure a loan.

EXHIBIT A
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Entitlements means (a) this Agreement; (b) Master Project (MP) 22-089, (c) General Plan Amendment (GPA) 22-097, (d) Zoning Amendment (ZA) 22-098, (e) Tentative Parcel Map (TPM) 22-099, (f) Conditional Use Permit (CUP) 22- 100, (g) Site Plan Permit (SPP) 22-103, and (h) Architectural Permit (AP) 22-101: together with all other statutes, ordinances, decisions, resolutions, permits, rules, regulations, and official policies of the City that govern permitted uses, density, design, construction standards and specifications, density or intensity of use, height and size of buildings, Reservation or Dedication of land for public purposes, growth management, Development Impact Fees, Fair Share Fees, special taxes and special assessments used to mitigate the impacts of Development of the Project, other conditions, environmental analyses, and/or environmental mitigation, applicable to the Property or prerequisite to the Development and occupancy of the Project in effect on the Effective Date.

Fair Share Fees means the fees described in Section 3.2 and Attachment No. 2 of this Agreement, attached hereto and by this reference incorporated herein.

Financier means any mortgagee, beneficiary, or trustee as to an Encumbrance.

Force Majeure means problems or occurrences beyond the control of the affected Party that delay a Party's performance of its obligations under this Agreement. Examples of Force Majeure include, but are not limited to, floods, earthquakes, adverse weather conditions (with respect to weather sensitive work), pandemics, and other Acts of God; fires; wars; civil commotion, riots, and similar hostilities; strikes, picketing, and other labor difficulties; shortages of materials or supplies; inability of any government agency, including but not limited to the City, to provide adequate levels of public services or facilities to the Property, including, by way of illustration only, a lack of water caused by drought; Laws of other agencies (including, but not limited to, voter initiative or referenda, moratoria, and judicial decisions); and Litigation brought by a third party challenging the validity of this Agreement, an Entitlement or an existing Law.

Hazardous Materials means any substance, material or waste which is or becomes regulated by any Laws, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "acutely hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and SafetyCode, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (ix) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq. (42 U.S.C. § 6903), (x) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq. (42 U.S.C. § 9601), (xi) Methyl-Tertiary Butyl Ether, or (xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Laws either requires special handling in its use,

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transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the environment.

Hospital Litigation means Owner’s lawsuit disputing the validity of certain City land use regulations on the Property limiting its use to hospital-related uses (USDC, Cen. Dist., Case No. 8116-cv-00852-DOC-JCG). Owner and City subsequently entered into that certain Settlement Agreement dated as of June 18, 2019 which settled the case under which City and Owner have certain obligations (as amended and modified from time to time) (“Settlement Agreement”).

Indemnitees means the City and its elected and appointed officials, employees, volunteers, agents, and representatives.

Indemnitor means, at the time of the accrual of any Liability (as defined in Section 15 of this Agreement) Owner or its successors in interest, whichever owns the Property and/or the Project, upon the date or dates on which such Liability shall have accrued.

Land Use Regulations means all ordinances, resolutions, codes, rules, regulations, official policies of the City adopted by ordinance or resolution governing the development and use of land, including, without limitation, the Development Agreement Ordinance and/or any other ordinance or resolution governing the permitted use of land, the density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, encroachment permits and the conveyance of rights and interests that provide for the use of or the entry upon public property and the design, improvement and construction standards and specifications applicable to the Development of the Project. Land Use Regulations does not include any City ordinance, resolution, code, rule, regulation or official policy governing:
(a) the conduct of businesses, professions, and occupations except subdivisions;
(b) taxes and assessments;
(c) the control and abatement of nuisances; and/or
(d) the exercise of the power of eminent domain.

Law means any official legislative or administrative enactment or decision of a governmental agency or decision or ruling of a court that binds the Parties. The term Laws includes but is not limited to, case law, constitutional provisions, statutes, ordinances, initiatives, resolutions, policies, orders, rules, and regulations. A matter is a Law regardless of whether it was imposed by a legislative body (such as the City Council or State Legislature), an administrative agency (such as the Public Utilities Commission), the electorate (as by initiative or referendum), court (by judgment, order or opinion), or any other official body (such as the Planning Commission), and regardless of whether it is federal, state, or local.

Legal Description means the description of the Property set forth in Attachment No. 1 of this Agreement, attached hereto and by this reference incorporated herein.

Liabilities is defined in Section 15 of this Agreement.

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Litigation means all forms of judicial or quasi-judicial proceedings, including but not limited to complaints (for damages, declaratory relief, or otherwise), arbitrations, judicial references, petitions (for traditional mandate, administrative mandate, or otherwise), and appeals, no matter how denominated.

Material Change in the Project means any change in the Project as described in the Entitlements that the City determines would require preparation of a subsequent or supplemental environmental impact report or mitigated negative declaration in accordance with Sections 15162 and 15163 of Title 14 of the California Code of Regulations, and such subsequent or supplemental environmental impact report or mitigated negative declaration concludes that the impact from such change in the Project would result in a new significant adverse environmental impact or a substantial increase in the severity of previously identified significant impact, and such new impact cannot be mitigated to a less than significant level.

Ministerial Permits and Approvals means the permits, approvals, plans, inspections, certificates, documents, licenses, and all other actions required to be taken by the City in connection with the implementation of the Entitlements which merely require the City and/or any City Agency to determine whether there has been compliance with applicable, objective provisions of statutes, ordinances and/or regulations, including without limitation, building permits, public works permits, grading permits, encroachment permits and other similar permits and approvals.

The term Ministerial Permits and Approvals shall not include any Discretionary Actions.

Municipal Code means the City's Municipal Code.

Notice means any approval, disapproval, demand, appeal, document or other communication to be delivered to a Party or otherwise pursuant to this Agreement.

Owner means Saddleback Memorial Medical Center, a California non-profit public benefit corporation or its successors in interest in the Property and to this Agreement.

Parties means City and Owner.

Party means City or Owner as the context dictates.

Permits means all grading, building, and other permits required to be obtained by Owner prior to and as a condition precedent to the commencement of construction of the Private Improvements or the Required Public Improvements.

Planning Commission means the City's duly-appointed Planning Commission.

Private Improvements means the mix of commercial, residential, open space and ancillary uses that will be Developed on the Property as depicted on the Site Plan, which may be amended from time to time in accordance with this Agreement.

Processing Fees and Charges means all fees and charges required by the City uniformly in connection with review and approval of Entitlement applications, new construction, including, but not limited to, Project permits, building permit applications, building permits, grading permits, encroachment permits, tract maps, parcel maps, lot line adjustments, air right lots, street vacations,

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certificates of occupancy and other similar permits. Processing Fees and Charges shall not include Development Impact Fees, Fair Share Fees or any exaction or impact fee.

Project means the Development of the Private Improvements and the Required Public Improvements pursuant to this Agreement.

Property means the real property legally described in Attachment No. 1 of this Agreement, attached hereto and by this reference incorporated herein.

Required Public Improvements means and includes all public improvements required as a condition of approval of the Project and/or required by the CEQA Compliance Documents approved for the Project, which are described in Attachment No. 4 of this Agreement, attached hereto and by this reference incorporated herein.

Reservation means the setting aside of land for future public use, without any legal right, title, or interest being conveyed other than the promise to convey an interest upon payment of fair market value for such land.

Reserved Powers means the rights and authority excepted from the assurances and rights provided to Owner under this Agreement and reserved to the City under Section 5 of this Agreement.

Site Plan means the Site Plan depicted in Attachment No. 3 of this Agreement, attached hereto and by this reference incorporated herein.

Special Review is defined in Section 12.2 of this Agreement.

State means the State of California.

Term is defined in Section 9.2 of this Agreement.

2. Obligations Under the Settlement Agreement and Development of the Property. During the Term, Owner shall have the vested right to develop the Project at the Property as provided for in Section 4.1 of this Agreement and in accordance with the terms, provisions and conditions of this Agreement.

2.1 Waiver of Right to Settlement Agreement Payments. Upon approval of the Entitlements vested in accordance with this Agreement and following the running and expiration of any applicable period of administrative, arbitrative, judicial or electoral action, appeal, suit challenge, referendum, initiative, moratorium, vote, ballot or plebiscite that could be initiated or brought by any person or entity with respect to any of the Entitlements without the initiation, bringing, filing, notice, service, qualification or other commencement of any such action, appeal, suit, challenge, referendum, moratorium, initiative, vote, ballot or plebiscite, each of the foregoing in accordance with applicable Law and so long as none of the Entitlements shall have been revoked or modified without the written consent of Owner, which consent may be withheld in Owner’s sole and absolute discretion, and Ownershall otherwise be entitled to develop the Project in accordance with this Agreement (whether or not any revocation, modification or inability to develop and operate the Property in accordance with this Agreement is caused by the exercise or existence of any of the Reserved Powers), Owner shall be deemed to have waived its right to

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receive any amount from City for costs incurred to maintain and secure the Property and the facilities thereon up to Fifteen Thousand Dollars ($15,000.00) per month, whenever accruing, under Section 2(c)(4) of the Settlement Agreement.

2.2 Uses. Development of the Property shall occur in accordance with the Applicable Land Use Regulations, which uses shall include 250 senior housing units for persons qualifying under Civil Code Section 51.3(b)(1), (2) and (3) for occupancy of a senior citizen housing development (one (1) of which is a manager unit, and twenty (20) of which must be rented to very low income household seniors) and a medical office building.

2.3 Intensity. Permitted density and intensity of use vested hereby shall be the maximum permitted by the Applicable Land Use Regulations, specifically 250 senior residential units (one a manager’s unit, and 20 units for very low income households) on a 6.16 acre parcel resulting in density of 40.6 units per acre, and Building 3 consisting of 7,500 square feet of medical office on a 0.47 acre parcel resulting in 0.36 floor area ratio.

2.4 Size and Design. The maximum height and size of buildings vested hereby shall be as set forth in the Applicable Land Use Regulations, specifically Building 1 consisting of 90,473 square feet of residential with height up to 51’-9” feet (a partial 3- and 4-story, see plans for details) and Building 2 consisting of 141,150 of residential with height up to 49’-5” feet (a partial 3- and 4-story, see plans for details), and Building 3 consisting of 7,500 square feet of medical office with a maximum height of 31’-0”.

2.5 Description of the Development. Development of the Project at the Property shall be in accordance with all Applicable Rules and any and all other documents submitted by Owner and approved by the City as set forth herein; provided, however, nothing contained herein shall be deemed or construed as requiring Owner to construct the Private Improvements, which may be constructed or not in accordance with Owner's complete and absolute discretion. In connection with and as a condition of approval for the Development of the Project, except as provided in Section 3.4 of this Agreement, Owner will be required to construct the Required Public Improvements in connection with the Private Improvements. All construction on the Property shall adhere to the Building Codes in effect at the time a Building Permit is approved for such construction.

This Agreement, the Entitlements and the Development of the Project have been determined to be consistent with the current City’s General Plan, the existing zoning restrictions affecting the Property and all other ordinances, policies and standards of the City in effect as of the Effective Date of this Agreement, along with exceptions permitted in accordance with City regulation and policy, and along with concessions permitted in accordance with State Density Bonus Law, all of which shall govern Development of the Project for the Term. No moratorium, whether adopted by the City or by initiative or referendum, shall apply to the Project for the entire Term.

During the Term, to the extent there is a conflict between this Agreement and any amendments to the City’s General Plan, zoning requirements, other Land Use Regulations or moratoria, whether adopted or imposed by the City or the electorate of the City by initiative or referendum, affecting Development of the Project, this Agreement shall control and supersede all such amendments.

2.6 Issuance of Building Permits. No building permit or certificate of occupancy shall be withheld from Owner if Owner has complied with the requirements of this Agreement. If necessary, the City shall use reasonable, good faith efforts to process in a prompt

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and timely manner any other Entitlements that are necessary for the completion of construction and occupancy of the Project, or any portion thereof.

2.7 Timing of Development. Owner shall obtain all Entitlements at its own cost for approval of the Project. City warrants that the City’s General Plan and Zoning Code permit Development of the Project, and operation, and use of the Project, subject only to (i) those Development approvals yet to be obtained, if any; provided, however, that it is expressly understood by the parties hereto that City makes no representations or warranties with respect to approvals required by any other governmental entity and, except as otherwise provided in this Agreement, City hereby reserves full police power authority over the Project. In order to avoid the result in Pardee Construction Co. v. City of Camarillo, 37 Cal. 3d 465 (1984), Owner shall have the right, in the exercise of its sole and absolute discretion and subjective business judgment, to develop the Project in accordance with this Agreement at such rates and at such times as Owner deems appropriate.

2.8 Tentative Subdivision Maps. With respect to applications by Owner for approval of tentative subdivision maps for the Property, Owner may file and process vesting tentative maps in accordance with Government Code Section 66498.1, et seq., and the applicable provisions of City's Subdivision Code in effect on the Effective Date.

2.9 Water Supply and Sanitary Sewer Service Infrastructure. The City shall provide sufficient water, if available, and water delivery and sanitary sewer service infrastructure to serve the entire Project. Consistent with Government Code Sections 65864 and 66473.7, proof of the availability of a sufficient water supply shall be requested by the subdivision applicant or local agency, at the discretion of the local agency, and shall be based on written verification from the applicable public water system within 90 days of a request.

2.10 Affordable Housing.

2.10.1 Development of Affordable Housing Units. Owner shall construct or cause to be constructed eight percent (8%) of the residential units developed with the Project (twenty (20) of the residential units) as rental dwelling units affordable to very low income households, as defined Health and Safety Code Section 50105, (“Affordable Unit(s)”), which shall be built within the Property and completed and ready for occupancy (as evidenced by the issuance of certificates of occupancy) according to the phasing plan contained in the Affordable Housing Agreement described below. The unit mix for these Affordable Units shall consist of studios, one bedroom and two bedroom units. Owner shall require any operator or manager of the Affordable Units to screen all tenants for eligibility with the affordable housing income requirements described in this Section 2.8.1 and certify compliance with same to the City and perform annual income recertification of all tenants of the Affordable Units. Following such annual certification, Owner shall advise City of the occupancy of the Affordable Units by delivering a “Certificate of Continuing Program Compliance” in a form to be approved by the City Attorney certifying: (i) the income of each household occupying an Affordable Unit; (ii) the number of Affordable Units in the Project which were occupied or deemed occupied by a individuals or families meeting the above income requirements, separated by each income level, during such period; (iii) the number of months during which each Affordable Unit was occupied; and (iv) any other reasonable requirement imposed by City to assure compliance with the provisions of this Section 2.10.1, as may be further described in the approved covenants required by Section 2.10.2 of this Agreement.

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2.10.2 Affordable Housing Agreement. Prior to issuance of any grading or building permit, whichever comes first, Owner and City shall enter into an affordable housing agreement governing each Affordable Unit or complex of Affordable Units (“Affordable Units Complex”) to (1) include a phasing plan identifying that the market rate units will be issued occupancy approvals concurrent with or after the date on which affordable units are issued occupancy approvals and (2) maintain the mix of affordable units for fifty-five (55) years, (3) to impose maximum occupancy limits of 2 occupants per bedroom plus 1 additional occupant per dwelling unit, and (4) to properly maintain each Affordable Unit. The agreement shall further require the manager and operator of the Affordable Units Complex to maintain such Affordable Units Complex in good condition and repair at all times, provide adequate security, and impose leasing conditions on all tenants to maintain each Affordable Unit and the Affordable Units Complex free of any criminal activity, including but not limited to, drug-related criminal activity, on or near the Affordable Units or Affordable Units Complex. “Drug-related criminal activity” means the illegal manufacture, sale, storage, distribution, use, or possession with intent to manufacture, sell, distribute, or use a controlled substance as defined in Section 102 of the Controlled Substance Act (21 U.S.C. 802). The terms of such agreement requiring each Affordable Unit and the Affordable Units Complex to be free of criminal activity shall further provide that violation of such requirements shall be a material violation of the lease of an Affordable Unit and good cause for immediate termination of the tenancy.

2.11 Master Maintenance Association. In the event the individual residential units within the Project, or any portion thereof, will be offered for sale, prior to recordation of the first final subdivision map for the residential portion of the Project, Owner shall provide draft covenants, conditions and restrictions (“CC&Rs”) for the residential portion of the Project to be offered for sale to the City in a form and substance reasonably acceptable to City’s Community Development Director and City Attorney for approval. The final approved CC&Rs shall be recorded with the Orange County Recorder’s Office. The CC&Rs shall provide that a master homeowners association shall be created and provisions made to adequately fund in perpetually maintenance in good condition and repair all common, park, recreation, parking and open space areas within the Project. The master homeowners association shall have the authority to transfer maintenance obligations to Project component homeowners associations in a form and substance reasonably acceptable to the City’s Community Development Director and City Attorney.

Additionally, prior to recordation of the first final subdivision map for a commercial development within the Project containing more than one commercial unit, Owner shall provide draft CC&Rs to the City in a form and substance reasonably acceptable to the City’s Community Development Director and City Attorney for the perpetual, full and adequate maintenance in good condition and repair all common areas within any such complex of commercial units. The final Community Development Director and City Attorney-approved CC&Rs shall be recorded with the Orange County Recorder’s Office.

2.12 Compliance with Laws. Owner shall carry out the design and construction of the Project in conformity with all Land Use Regulations and applicable Laws to the extent they do not conflict with the Applicable Rules.

2.12.1 Public Works Requirements. To the extent Owner elects to construct the Required Public Improvements and Owner receive Development Impact Fee credit for same pursuant to Section 2.11.2 of this Agreement, Owner shall design and construct the

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Required Public Improvements in conformity with all applicable Laws (including, without limitation, with respect to the Required Public Improvements only, and not the Private Improvements, the requirements under California Law to pay prevailing wages and to hire apprentices and all applicable public bidding requirements) (collectively "Labor Laws"). The City and Owner acknowledge and agree that, due to the provision of reimbursements by the City for the Required Public Improvements, the construction and installation of the Required Public Improvements shall be considered "public works" pursuant to Labor Code Section 1720, et seq.

Owner hereby agrees that, with respect to Owner's construction and installation of the Required Public Improvements, Owner and its contractors and subcontractors shall pay prevailing wages and employ apprentices in compliance with Labor Code Section 1770, et seq., and shall be responsible for the keeping of all records required pursuant to Labor Code Section 1776, complying with the maximum hours requirements of Labor Code Sections 1810 through 1815, and complying with all regulations and statutory requirements pertaining thereto. Upon the periodic request of the City, Owner shall certify to the City that it is in compliance with these requirements.

Nothing herein shall be deemed to make any part of the Project other than the Required Public Improvements a public work.

2.12.2 Reimbursement of City Development Impact Fees. To the extent that Owner constructs a Required Public Improvement for which a Development Impact Fee is otherwise imposed, Owner shall be eligible to receive a fee credit against the Development Impact Fee imposed on the Project for the same type of public facility so constructed.

3. Development Exactions.

3.1 Reservations, Dedications, and Improvements. Reservations and Dedications of land and the provision of Required Public Improvements for public purposes shall be only those required by this Agreement.

3.2 Owner's Obligation to Pay Fees. Upon issuance of each Building Permit for the Private Improvements, Owner shall pay all required Development Impact Fees (subject to the provisions of Section 3.3 of this Agreement), Fair Share Fees (fees assessed by City for Required Public Improvements, the cost of which is shared by other private and governmental entities), Processing Fees and Charges imposed by the City all other fees and charges imposed by all other governmental agencies with jurisdiction over the Property or the Project within the time and in the manner prescribed by such agency and Owner shall receive such credits and/or reimbursements for Required Public Improvements constructed in accordance with the applicable provisions set forth in the Municipal Code and this Agreement.

3.3 Development Impact Fees. Development of the Project shall be subject to all Development Impact Fees imposed by the City in accordance with the applicable provisions of the Municipal Code or other City Council enactment; provided, however, City shall impose only those Development Impact Fees required to be paid and in the amount established by City as of the Effective Date. As further set forth in Sections 5.8 and 5.10 of this Agreement, nothing in this Agreement is intended to prevent the assessment of fees or other exactions by any governmental entity not affiliated with City.

3.4 Provision of Real Property Interests. Subject to the provisions of this Section 3.4, in any instance where Owner is required to construct Required Public Improvement

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on land not owned by Owner, City shall, at its sole cost and expense, provide or cause to be provided, the real property interests necessary for the construction of such Required Public Improvements. To the extent real property owned by the City as of the Effective Date is needed for right-of-way for Required Public Improvements, the City shall Dedicate such property for public right-of-way at no cost to Owner unless prevented from doing so by applicable Laws. Owner shall construct all Required Public Improvements as contemplated by Attachment No. 4 of this Agreement; provided, however, Owner's obligations with respect to Required Public Improvements on such public right-of-way shall be conditioned upon City providing access to the public right-of-way as required to fulfill Owner's obligations under this Agreement. If Owner is unable to obtain such required right of way, Owner shall request that the City obtain such required right-of-way (at City's sole cost and expense) subject to the time limitations set forth in Government Code Section 66462.5. Thereafter, the City shall use good faith efforts to obtain such required right-of-way. Nothing herein shall obligate the City to pursue eminent domain proceedings to acquire such public right-of-way. In the event City is unable to obtain the right-ofway necessary to construct and install a Required Public Improvement, the condition of approval or other requirement to construct and install such Required Public Improvement shall be waived by City.

4. Vested Rights. The following provisions shall apply to the Project until the expiration of the Term:

4.1 Project Entitlements/Density. Owner is hereby granted the vested right to Development of the Project in accordance with this Agreement including, but not limited to, the Applicable Rules, subject only to the terms, provisions and conditions hereof.

4.2 Enforcement. Except to the extent this Agreement has been amended, modified, suspended or terminated in accordance with its terms, this Agreement shall be enforceable by either Party notwithstanding any change in any Applicable Land Use Regulations.

5. Reserved Powers. Notwithstanding any other provision of this Agreement, the following regulations shall apply to the Development of the Project as and to the extent that such regulations apply generally to similar developments proposed or approved within the City:

5.1 Processing Fees and Charges. The City's Processing Fees and Charges at the rates in effect when each application and decision subject thereto is deemed complete.

5.2 Procedural Regulations. Procedural regulations related to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals and/or any other matter of procedure so long as such procedural regulations are uniformly and consistently applied by the City in a non-discriminatory manner.

5.3 Uniform Building Codes. Written regulations, policies and rules governing objective engineering and construction standards and specifications applicable to public and private improvements, including, without limitation, all Building Codes and similar codes adopted by the City and any local amendments to such codes adopted by the City.

5.4 Police Power. Any City ordinance, resolution, regulation, or official policy which is reasonably necessary to protect persons on the Property and in the community, or both, from conditions dangerous to their health, safety, or both, shall apply to the Project

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notwithstanding that the application of such ordinance, resolution, regulation, or official policy which would result in the impairment of Owner's vested rights under this Agreement. Any such regulations must constitute a valid exercise of the City's police power, applied and enforced in a uniform, consistent and non-discriminatory manner and must be applied and construed so as to provide the Owner, to the maximum extent possible, with the rights and assurances provided under this Agreement.

5.5 Non-Conflicting Ordinances, Regulations and Official Policies. Written regulations approved by the City that are not in material conflict with the Applicable Rules and do not materially and adversely impact Development of the Project. Any ordinance, regulation or policy adopted after the Effective Date, whether adopted by initiative or otherwise, limiting the rate or timing of Development of the Property or impacting and/or increasing any Development Exaction shall be deemed to materially conflict with the Applicable Rules and shall therefore not be applicable to Development of the Project.

5.6 Conflicting Ordinances, Regulations and Official Policies. Ordinances, regulations and official policies approved by the City that are in material conflict with the Applicable Rules shall be applicable and binding upon Owner and the Project only if Owner has given its written consent to the application of such Ordinances, regulations and official policies to Development of the Property and/or the Project.

5.7 End Users. Ordinances, regulations and official policies of the City that impose, levy, alter or amend fees, charges, or Land Use Regulations relating solely to postDevelopment conduct of consumers or end users of Development on the Property, so long as the City applies and enforces such ordinances, regulations and official policies in a uniform, consistent and non-discriminatory manner and such enactments do not impair Owner's vested rights to Develop or operate the Project.

5.8 Laws. Laws of the state and/or federal governments, including those of regional agencies or departments such as the Regional Water Quality Control Board, which override Owner's vested rights set forth in this Agreement shall apply to the Project and the Property, together with any City ordinances, resolutions, regulations and official policies to the extent necessary to enable the City to comply with such overriding Laws; provided, however, that (i) Owner does not hereby waive its right to challenge or contest the validity of any Laws; and (ii) in the event that any such Law (or City ordinances, resolutions, regulations or official policies adopted or enacted pursuant thereto) prevents or precludes compliance with one or more provisions of this Agreement, the Parties shall negotiate in good faith the amendment or suspension of such provisions of this Agreement to ensure the minimal necessary interference with Owner's rights hereunder; provided, however, that no Party shall be bound to approve any amendment to this Agreement unless this Agreement is amended in accordance with the procedures applicable to the adoption and amendment of development agreements as set forth in the Development Agreement Act, the Development Agreement Ordinance, and this Agreement and each Party retains full discretion with respect thereto.

5.9 Immediate Threat. If the City Council finds that there is a severe and immediate threat to the health or safety of the City's residents due to the Development of the Project, the City may unilaterally suspend this Agreement for a period not to exceed the time required for notice and a public hearing before the City Council to determine whether suspension

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of this Agreement shall be extended; provided, however, that all applicable time limits set forth herein shall be extended for any such period of suspension, including, but not limited to, the Term.

5.10 Regulation by Other Public Agencies. The Parties acknowledge that other public agencies, not within the control of the City, may possess authority to regulate aspects of Development of the Project and the Property separately from the City. This Agreement does not limit the authority of such other public agencies. Nothing contained in this Agreement shall be construed as limiting, in any way, the authority of the City to impose on the Project any new or increased development impact fees or other fees or charges imposed by any other public agency with jurisdiction over the Property or Project, but collected by the City.

6. Amendments. This Agreement may be amended or terminated in whole or in part only in the manner provided for in Government Code Section 65868, the Development Agreement Ordinance and this Agreement. This provision shall not limit any remedy of the City or Owner as provided by this Agreement.

6.1 Material Changes. Owner may request amendments to the Entitlements without risk to any rights that have vested pursuant to this Agreement. Any such requested changes shall be subject to the City's standard and generally applicable review and approval procedures then in effect; provided, however, only a Material Change in the Project shall require an amendment to this Agreement. The City may condition such Material Change approval to ensure compliance with CEQA.

6.2 Operating Memoranda. This Agreement requires a close degree of coordination between the City and Owner. Refinements of planned Development of the Property may demonstrate that clarifications are appropriate with respect to the details of the City's and Owner's performance under this Agreement. City and Owner may effectuate such clarifications through operating memoranda approved by both Parties which, after execution, shall be attached hereto and made a part of this Agreement. No such operating memoranda shall constitute an amendment to this Agreement requiring public notice and hearing pursuant to Section 6 of this Agreement. Upon the City Attorney’s reasonable approval, the City Manager may execute any operating memoranda without City Council action.

6.3 Nature of Change in Law. The provisions of this Agreement shall apply to the Development of the Project regardless of whether a change in the Entitlements is the result of the City Council or voter action, whether by initiative or referendum. The Parties intend hereby to avoid the result in Pardee Construction Co. v. City of Camarillo, 37 Cal.3d 465 (1984) as provided in Section 2.6 of this Agreement.

7. Owner Obligations.

7.1 Compliance With Law. Owner shall comply with all Laws and the Entitlements.

7.2 Nature of Dedications. All Dedications made by Owner to the City shall be made free and clear of liens and encumbrances, other than easements or restrictions that in the reasonable determination of the City do not preclude or interfere with the dedicated purpose.

7.3 Processing Fees. Owner shall pay all Processing Fees and Charges

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pursuant to the fee schedules in effect at the time of application for such City approval. Owner shall also pay any additional third party, out-of-pocket costs reasonably incurred by the City for expedited processing requested by Owner.

7.4 Costs of City Actions. Owner shall pay all third party, out-of-pocket costs City reasonably incurs as authorized by and in furtherance of this Agreement within thirty (30) calendar days following receipt of appropriate documentation (including, for example, invoices) showing such costs. Such costs include, but are not limited to, the City's out-of-pocket, third party costs incurred to in connection with the City's efforts to seek assistance from other governments pursuant to Section 8.3 of this Agreement; and monitoring and review costs pursuant to Section 12 of this Agreement.

7.5 Obligation to Construct the Required Public Improvements.

Notwithstanding anything to the contrary contained in this Agreement, (i) nothing contained in this Agreement shall be deemed or construed as creating any obligation on Owner to construct the Required Public Improvements unless and until the date the City issues a Building Permit(s) for the Private Improvements ("Building Permit Date"); and provided, further, prior to the Building Permit Date, Owner shall not be deemed to be in Default under this Agreement for the failure to commence construction of the Required Public Improvements for the Project. Until the Building Permit Date, or at any time after the completion and acceptance of the Required Public Improvements, Owner shall have the absolute right, exercisable upon the delivery of written notice to the City, to terminate this Agreement, in which event (i) Owner shall reimburse the City for all out-of-pocket third party costs actually incurred by the City in connection with and as required by this Agreement prior to the delivery of such termination notice; and (ii) the City shall execute and deliver to Owner for recordation a notice of termination of this Agreement, and thereafter this Agreement shall be of no further force or effect and neither Party shall have any further obligations hereunder.

8. City Obligations.

8.1 Processing. The City shall accept and process all completed applications for Permits for the Project in accordance with its standard policies and procedures applicable to all applications for Permits and in accordance with the Permit Streamlining Act (Gov. Code § 65920, et seq.).

8.2 Review. The City shall provide sufficient staff to review compliance with this Agreement.

8.3 Assistance From Other Governments. The City shall use reasonable good faith efforts to seek, assist and cooperate with Owner in seeking all of the following as requested by Owner for Development of all or any part of the Project:

8.3.1 Necessary permits under the jurisdiction of or issued by the state or federal governments or any instrumentalities thereof.

8.3.2 Available tax benefits from the state or federal governments, including but not limited to affordable housing tax incentives and credits, sales tax exemptions and other tax benefits.

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8.3.3 Available grants, loans, proceeds of bond issues and subsidies from the state or federal governments for affordable housing and other portions of the Project.

8.4 Mitigation Fee Act. The City shall comply with Government Code Section 66006 with respect to any fee it receives or cost it recovers pursuant to Development of the Property.

8.5 Recordation of Agreement. The City Clerk shall file this Agreement for recordation with the County Recorder of the County of Orange within ten (10) days after the Effective Date and execution of this Agreement by City and Owner. In connection with the expiration of the Term or any earlier termination of this Agreement, the City shall execute and deliver to Owner a recordable notice of termination of this Agreement in form and substance reasonably acceptable to Owner.

9. Term.

9.1 Commencement. This Agreement shall become effective on the Effective Date.

9.2 Duration. Unless terminated earlier pursuant to another provision hereof, the term this Agreement shall commence on the Effective Date and be in full force and effect until the twentieth (20th) anniversary of the Effective Date (“Term”). All Entitlements shall be valid and vested for the Term.

9.3 Termination. This Agreement shall be deemed terminated and of no further effect upon the occurrence of any of the following events:

9.3.1 Automatic Termination. If not previously terminated in accordance with this Agreement, this Agreement shall automatically terminate and be of no further force or effect upon completion of the Project in accordance with the terms, provisions and conditions of this Agreement and any further amendments thereto and the issuance of all occupancy permits and acceptance by the City of all dedications and improvements required by Development of the Project.

9.3.2 Expiration. Expiration of the Term.

9.3.3 Final Judgment. Entry of a final judgment setting aside, voiding or annulling the adoption of the Enabling Ordinance.

9.3.4 Referendum. The timely adoption of a referendum measure overriding or repealing the Enabling Ordinance. Owner acknowledges that, pursuant to Article 2, Section 11 of the California Constitution and California Elections Code Section 9235, et seq. (collectively, the "Referendum Laws"), the electors of the City may, within thirty (30) days after adoption of the Enabling Ordinance, file a petition in accordance with Elections Code Section 9237 to require the City to either repeal the Enabling Ordinance or hold an election to obtain voter approval of such and this Agreement. In the event a valid referendum petition challenging adoption of the Enabling Ordinance is timely filed in accordance with the Referendum Laws, the City shall submit the Enabling Ordinance to the voters for approval in accordance with the Referendum Laws.

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9.3.5 Termination Based on Default. Termination of this Agreement based on any material Default of any Party (except as otherwise provided in this Agreement) after complying with the termination proceedings required by this Agreement.

9.3.6 Termination Under Section 7.5. Termination of this Agreement pursuant to Section 7.5 of this Agreement.

9.4 Effect of Agreement on Title. The Parties shall record an appropriate release upon termination of this Agreement as to all or any part of the Property, in form and substance acceptable to Owner.

9.5 Force Majeure Extensions. The Term of this Agreement and the time for performance by either Party of any of its obligations hereunder shall be extended by the period of time that a Force Majeure event exists. Such delay shall not be deemed to be a Default. In addition, the Term of this Agreement shall be extended day-for-day by delays arising from the pendency of Litigation relating to this Agreement or to the Development contemplated hereby. There shall be no extension for Force Majeure unless the Party claiming that a Force Majeure event exists shall give notice thereof to the other Party within thirty (30) days of actually learning of a Force Majeure event.

10. Financing, Transfer, and Assignment.

10.1 Right to Encumber. Owner may, in its sole and absolute discretion, obtain or allow one or more Encumbrances. Unless otherwise required by Law, neither entering into nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any Encumbrance made in good faith and for value. In connection with any Encumbrance, the City shall execute and deliver to a Financier of any Encumbrance an estoppel certificate as requested by such Financier in accordance with Section 13.8 of this Agreement.

10.2 Mortgagee Protection. This Agreement shall be superior and senior to the lien of any Encumbrance. Notwithstanding the foregoing, no breach of this Agreement shall defeat, render invalid, diminish, or impair the lien of any Encumbrance made in good faith and for value, and any acquisition or acceptance of title or any right or interest in or with respect to the Property or any portion thereof, or to this Agreement, by a Financier (whether pursuant to foreclosure, lease termination or otherwise) shall upon written election by the Financier within sixty (60) days after receipt of such right, title or interest, be subject to all of the terms and conditions of this Agreement and any such Financier who takes title to the Property or any portion thereof, or to this Agreement, shall also be entitled to the rights and obligations arising under this Agreement.

10.3 Financier Not Obligated. Notwithstanding the provisions of this Section 10, a Financier will not have any rights, obligations or duties pursuant to the terms set forth in this Agreement to perform the obligations of Owner or other affirmative covenants of Owner hereunder or to guarantee such performance, unless such Financier expressly assumes the rights and obligations of the Owner and except that (a) the Financier shall, upon written election by the Financier within sixty (60) days after receipt of such right, title or interest, have no right to develop the Project without materially complying with the terms of this Agreement, and (b) to the extent that any covenant to be performed by Owner is a condition to the performance of any covenant by

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the City, the performance thereof by Owner or Financier or any other person or entity shall continue to be a condition precedent to the City’s performance hereunder. If a Financier so expressly assumes the rights and obligations of the Owner under this Agreement, such Financier shall not be liable for any interest, penalties, fines or any damages from any breach or default accruing prior to the date or such notice. Although not obligated to do so, upon written election by the Financier within sixty (60) days after receipt of such right, title or interest, any Financier may do any act or thing required of Owner hereunder, and do any act or thing which may be necessary and properly done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Agreement in accordance with Section 10.4 below. Any Financier and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Financier shall be as effective to prevent a termination of this Agreement as if the same would have been done by the Owner.

10.4 Notice of Default to Financier; Right of Financier to Cure. Each Financier shall, upon written request to City be entitled to receive written notice from City of the result of the Annual Review and of any default by Owner of its obligations set forth in this Agreement simultaneously with the delivery of such notices to the Owner. Each Financier shall have the right, but not an obligation, to cure such default within ninety (90) days after receipt of such notice or, if such default can only be remedied or cured by such Financier upon obtaining possession of the Property, such Financier shall have the right to seek or obtain possession with diligence and continuity through a receiver or otherwise, and to remedy or cure such default within ninety (90) days after obtaining possession, and, except in case of emergency or to protect the public health or safety as determined by the City in its reasonable discretion, City may not exercise any of its remedies set forth in this Agreement until expiration of such ninety (90) day period whether commencing upon receipt of notice or upon obtaining possession of the interests covered by a Encumbrance, as applicable; provided, however, that in the case of a default which cannot reasonably be remedied or cured or the remedy or cure of which cannot be commenced within such ninety (90) day period, the Financier shall have such additional time as is reasonably necessary to remedy or cure such default. Any notice of termination delivered in violation of this Section 10.4 shall be rendered void. In any case where, sixty (60) days after receipt by the Financier of the notice of the Owner’s default, the holder of any Encumbrance creating a lien or encumbrance upon the Property, or any part thereof, has not exercised the option to cure, or, if it has exercised the option, is not proceeding diligently with the cure, the City may proceed with termination of this Agreement and any further obligations of City hereunder.

10.5 Bankruptcy. Notwithstanding the foregoing provisions of this Section 10, if any Financier is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Owner, the times specified in Section 10.4 for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of the prohibition. In addition, if this Agreement is rejected or otherwise terminated in connection with any such proceeding, then upon the request of any Financier, a new development agreement upon the same terms and conditions set forth in this Agreement shall, at the election of Financier, be entered into between such Financier and City.

10.6 Termination Subject to Financier’s Rights. All rights of City to terminate this Agreement, vis-a-vis the Financier, as a result of the occurrence of any default shall be subject

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to, and conditioned upon, City having first given to each Financier written notice of the default as required under Section 10.4 above, and all Financiers having failed to remedy such default or acquire Owner’sinterests hereunder, or having failed to commence foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 10.4 above.

10.7 No Cancellation. There shall be no cancellation, surrender or modification of this Agreement by joint action of the Parties without a minimum of ninety (90) days prior written notice to each Financier who has requested such notice.

10.8 Notice. Owner and/or any Financier shall have the right to give notice to the City of the existence of an Encumbrance. Thereafter, the City shall serve each Financier with copies of all Notices given to Owner pursuant to this Agreement.

10.9 Transfer or Assignment. Subject to Section 10.10, Owner shall have the right to sell, transfer, or assign its rights and obligations under this Agreement (collectively, an “Assignment”) in connection with a transfer of Owner’s interest in all or any portion of the Property or Owner’s lease of all or substantially all of the residential or commercial portions of the Property, or both, each as designated by the Applicable Rules (such interest transferred or leased, the “Transferred Property”). No Assignment shall be made unless made together with the sale, transfer, lease or assignment of all or part of the Property. Any mortgage, deed of trust, or other form of conveyance for financing of the Project (other than a lease of the type described in the first sentence of this Section 10.9) shall not be considered an Assignment for purposes of this Section 10.9. Within fifteen (15) business days after any Assignment, Owner shall notify City in writing of the Assignment and provide City with an agreement, in a form reasonably acceptable to City, executed by the purchaser, transferee, lessee or assignee (collectively, the “Assignee”) to expressly and unconditionally assume all duties and obligations of Owner under this Agreement.

10.10 Effect of Assignment. Subject to Section 10.9, upon an Assignment the Assignee shall be liable for the performance of all obligations of Owner with respect to Transferred Property, but shall have no obligations with respect to the portions of the Property, if any, not transferred or leased (the “Retained Property”). The owner or lessee of the Retained Property shall be liable for the performance of all obligations of Owner with respect to Retained Property, but shall have no further obligations or Liabilities (as defined in Section 15 of this Agreement) with respect to the Transferred Property. The Assignee’s exercise, use and enjoyment of the Property shall be subject to the terms of this Agreement to the same extent as if the Assignee were the Owner.

10.11 City’s Consent to Assignment. The City’s consent shall not be required to an Assignment unless, at the time of the Assignment, Owner has been determined to be in default of this Agreement and the default has not been cured. If Owner is in default, City shall consent to any Assignment which provides adequate security to City, in the reasonable exercise of City’s discretion, to guarantee the cure of the default upon completion of the Assignment.

11. Binding Effect.

11.1 Entirety of Property. Except as otherwise provided in this Agreement, all of the Property shall be and remain subject to this Agreement throughout the Term unless sooner terminated in accordance with this Agreement.

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11.2 Property and Agreement Remain Linked. Owner shall have the right to sell, transfer, lease or assign the Property or any portion thereof and its rights under the Agreement.

However, except as otherwise provided in this Agreement, any person acquiring any interest in the Property shall do so subject to this Agreement. Conversely, no sale, transfer, lease or assignment of any right or interest under this Agreement shall be made unless made together with a corresponding sale, transfer, lease or assignment as to the Property or any portion thereof. If less than all of the Property is sold or leased, the purchaser or lessee of that portion of the Property shall be responsible for all Development related to the acquired portion, including Development Exactions and the Required Public Improvements applicable to that portion of the Property or Project acquired by such purchaser or lessee, and the original Owner (or its successors as to the entire Property) shall remain responsible for all such matters outside such portion of the Property or Project unless such obligations are (i) assigned by Owner; (ii) assumed by the purchaser or lessee as documented in writing; or (iii) no longer applicable because such obligations have been completed prior to the date of such transfer; provided, however, the obligations of Owner under this Agreement shall not apply to the purchaser or lessee of any portion of the Property where Development has been completed.

11.3 Binding on Financiers. This Agreement shall bind all Financiers and every owner of the Property, or part thereof, whose title is acquired by foreclosure or deed-in-lieu of foreclosure; provided, however, such Financier and their respective successors and assigns shall not be liable for any interest, penalties, fines or any damages from any pre-foreclosure (or deedin-lieu of foreclosure) Default accruing prior to the date such party takes title to the Property or any portion thereof through completion of a foreclosure action or execution and delivery of a deedin-lieu of foreclosure.

12. Compliance Review.

12.1 Annual Review. This Agreement shall be subject to annual review ("Annual Review") by the City pursuant to the applicable provisions of the Municipal Code on or before each anniversary of the Effective Date and/or conduct a Special Review, as described in Section 12.2 of this Agreement, in order to ascertain the good faith compliance by Owner with the terms, provisions and conditions of this Agreement. Within thirty (30) days of receipt of written notice from the City Manager of the City's intent to conduct a Special Review and/or Annual Review, Owner shall submit a report, in a form reasonably required by the City Manager, describing its compliance with this Agreement during the immediately preceding twelve (12) month period.

12.2 Special Review. A Special Review of compliance with this Agreement may be made either by agreement of the Parties or by initiation in one or more of the following ways:

12.2.1 City Manager. Recommendation of the City Manager, based on an alleged default of Owner;

12.2.2 City Council. Action of the City Council.

12.3 Procedure for Annual Review and/or Special Review. With respect to either Annual Review or Special Review, the provisions of the applicable provisions of the

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Municipal Code shall be followed.

12.4 Certificate of Agreement Compliance. If, at the conclusion of an Annual Review or Special Review, Owner is found to be in compliance with this Agreement, the City shall, upon request by Owner, issue a Certificate of Agreement Compliance ("Certificate") to Owner (and any Financier) stating that, after the most recent Annual Review or Special Review and based upon the information known or made known to the City Manager and City Council that (i) this Agreement remains in full force and effect; and (ii) Owner is not in Default under this Agreement. The Certificate shall be in recordable form, shall contain information necessary to communicate constructive record notice of the finding of compliance, shall state whether the Certificate is issued after an Annual Review or Special Review and shall state the anticipated date of commencement of the next Annual Review. Owner may record the Certificate with the County Recorder of the County of Orange.

12.5 Failure by the City. The failure of the City to conduct any Annual Review shall not constitute a Default under this Agreement, affect Owner's obligations hereunder, or render this Agreement or any portion thereof invalid or void.

13. Default.

13.1 Default by Owner. Owner shall be in Default under this Agreement if it does any or any combination of the following and does not cure the same within the applicable Notice and cure period, if any, set out below:

13.1.1 Fraud. Practices any intentional fraud or deceit upon the City, as reasonably determined by the City Council, in which case no right to cure shall apply; provided, however, Owner shall be given prior Notice of such determination and the opportunity to respond to any allegations at a duly noticed public hearing before the City Council at which evidence may be submitted and testimony received.

13.1.2 Material Default. Fails to cure a material Default of this Agreement of the type described in this Section 13.1.2 within the time required by this Agreement following a written notice of Default from the City to Owner. With respect to any payment default involving an obligation to pay money to the City, such cure period shall be fifteen (15) Business Days following Owner's receipt of written notice from the City of failure to pay when due, and with respect to all other events of Default, such cure period shall not be less than thirty (30) calendar days from Owner's receipt of written notice from the City; provided, further, if a Default not involving the payment of money to City cannot reasonably be cured within such thirty (30) day period, then Owner shall not be deemed in Default under this Agreement if Owner commences such cure within such thirty (30) day period and thereafter diligently pursues such cure to completion within a reasonable period of time.

13.2 Default by the City. The City shall be in Default under this Agreement only if it fails to cure a material breach of this Agreement within the time set forth in a written notice of Default from Owner to the City; provided, however, with respect to any payment Default, such cure period shall not be less than fifteen (15) Business Days following the City's receipt of written Notice from Owner, and with respect to all other events of Default, such cure period shall not be less than thirty (30) calendar days following the City's receipt of written Notice from Owner; provided, further, if such Default cannot reasonably be cured within such thirty (30) day period,

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then the City shall not be deemed in Default under this Agreement if the City commences such cure within such thirty (30) day period and thereafter diligently pursues such cure to completion within a reasonable period; provided, further, the Term and the time for Owner's performance of its obligations hereunder shall be extended on a day-for-day basis during such cure period to the extent Owner is actually prejudiced by the City's Default hereunder.

13.3 Notice of Default. A Party alleging a Default shall serve written notice thereof on the other Party. Each such notice shall state with specificity all of the following:

13.3.1 Nature of Default. The nature of the alleged Default.

13.3.2 Manner of Cure of Default. The manner in which the alleged Default may be satisfactorily cured.

13.3.3 Time to Cure Default. Subject to the provisions of Sections 13.1 and 13.2 of this Agreement, a period of time in which the Default may be cured.

13.4 Remedies for Default. The Parties acknowledge and agree that the nature of the Project and the terms of this Agreement render ordinary remedies at law inadequate for a Default under this Agreement. The Parties also acknowledge and agree that it would not be feasible or possible to restore the Property to its pre-Development condition once implementation of the Agreement has begun. Therefore, the Parties agree that, except as otherwise expressly provided in this Agreement, the remedies for a Default under this Agreement shall be limited to one or more of the following:

13.4.1 Default by City. The remedies for Default by the City shall be limited to injunctive relief, mandate (traditional and/or administrative), specific performance, and/or restitution/reimbursement for unused fees and for Dedications and improvements to the extent not required for Development completed as of the date Owner gave the City Notice of Default pursuant to Section 13.3 of this Agreement.

13.4.2 Default by Owner. The remedies for Default by Owner shall be limited to injunctive relief, specific performance, termination, and/or restitution.

13.5 Service of Process. In the event that any legal action is commenced by Owner against the City or City against Owner, service of process shall be made in such manner as may be provided by Law.

13.6 Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other Party.

13.7 Inaction Not a Waiver of Default. Any failures or delays by either Party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

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13.8 Estoppel Certificate. Each of the Parties shall at any time and from time to time upon not less than thirty (30) days prior notice by the other Party, execute, acknowledge and deliver to such other Party a certificate in writing certifying that this Agreement is in full force and effect, stating which provisions of this Agreement have been fully performed, and stating whether or not to the actual knowledge of the signer of such certificate such other Party is in Default in performing or observing any provision of this Agreement, and, if in Default, specifying each such Default of which the signer may have knowledge, and such other matters as such other Party may reasonably request. It is intended that any such certificate delivered by Owner to City may be relied upon by the City or any successor in interest to the City, and it is further intended that any such certificate delivered by the City to Owner may be relied upon by Owner or any prospective assignee of Owner's interest in the Project, Property or this Agreement and any Financier. Reliance on any such certificate shall not extend to any Default as to which the signer of the certificate had no actual knowledge at the time the statement was signed.

14. Appeal of Administrative Decisions. Owner may appeal directly to the City Council any decision by City staff, including, but not limited to, the City Manager, concerning an interpretation and/or administration of this Agreement or any part hereof. Owner shall file any such appeal with the City Clerk within twenty (20) Business Days after Owner receives Notice of the staff decision; provided, however, that a failure to timely file an appeal shall not nullify the right to such appeal except to the extent the City is actually prejudiced by such failure to timely appeal. The City Council shall render a decision at an open, public meeting held within sixty (60) calendar days following Owner's delivery of the appeal to the City Clerk.

15. Indemnification. Indemnitor shall pay for, save, protect, defend, indemnify and hold harmless the Indemnitees from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, third party tort claims, civil or criminal penalties, fines and/or monetary sanctions), losses, costs or expenses (including, without limitation, consultant’s fees, investigation and laboratory fees, attorney’s fees and remedial and response costs) (the foregoing are hereinafter collectively referred to as "Liabilities”) which may now or in the future be incurred or suffered by the Indemnitees (or any of them) by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of any of the following: (i) any claim, action or proceeding brought by a third party against any Indemnitee to attack, set aside, void or annul the approval of this Agreement or the Entitlements except any such claim, action or proceeding to attack, review or set aside the City’s General Plan; (ii) any Indemnitor's release of water from the Property or the Project; and/or (iii) Development of the Project; provided, however, that the foregoing indemnity shall not apply to any Liabilities to the extent arising or occurring as a result of the negligence or willful misconduct of any Indemnitee.

The City shall have the right to reject or consent to any particular law firm or attorney engaged by Owner to represent the City; provided, however, the City's consent shall not be unreasonably withheld; and further provided that if the City elects to retain separate counsel following assumption of defense by Owner under this Section 15, all fees and expenses associated with retention of such separate counsel shall be at the City’s sole cost and expense. The City shall cooperate in good faith with Owner when Owner is acting pursuant to this Section 15. Indemnitor's obligations under this Section 15 shall survive termination of this Agreement with respect to any Liabilities covered by this Section 15 that arose during the Term and shall terminate upon the expiration of the statute of limitation applicable to such surviving Liabilities covered under this Section 15.

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16. Insurance Requirements. Owner shall purchase and maintain in full force and effect until completion of all Development contemplated by this Agreement policies of insurance in accordance with this Section 16 and shall cause its contractors to purchase and maintain in full force and effect in accordance with Section 16.2 of this Agreement, the following policies of insurance:

16.1 Owner's Liability Insurance. Liability insurance with the minimum insurance coverages set forth below:

16.1.1 Commercial General Liability. Commercial General Liability Insurance with a combined single limit of liability of Two Million Dollars ($2,000,000.00) for bodily injury, personal injury and property damage, arising out of any one occurrence. The City shall be named as an "additional insured" under such policy as it applies to Owner's activities under this Agreement. The insurance provided herein shall be considered "primary" insurance.

16.1.2 Workers Compensation. Workers compensation and employer's liability insurance as required by Law.

16.2 Insurance During Construction. Prior to commencing Project construction activities within the Property, Owner shall obtain and require its contractors and their subcontractors to obtain and thereafter maintain, so long as such Project construction activity is occurring and until the completion of such Project construction, the minimum insurance coverages set forth below:

16.2.1 Workers Compensation. Workers compensation and employer's liability insurance as required by any applicable law or regulation.

16.2.2 Commercial General Liability. Commercial General Liability insurance covering all operations by or on behalf of the contractors and subcontractors, which shall include the following minimum limits of liability and coverages:
(a) Required coverages:
(i) Premises and Operations.
(ii) Products and Completed Operations.
(iii) Contractual Liability, insuring the indemnity
obligations assumed by contractor under the contract
documents.
(iv) Broad Form Property Damage (including Completed
Operations).
(v) Explosion, Collapse and Underground Hazards.
(vi) Personal Injury Liability.
(b) Minimum limits of liability:
(i) $2,000,000 each occurrence (for bodily injury and
property damage).
(ii) $2,000,000 for Personal Injury Liability.

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(iii) $2,000,000 aggregate for Products and Completed
Operations.
(iv) $2,000,000 general aggregate applying separately to this Project.

16.2.3 Automobile Liability. Automobile liability insurance, including coverage for owned, hired and non-owned automobiles. The limits of liability shall not be less than $1,000,000 combined single limit each accident for bodily injury and property damage.

Owner’s contractors shall require each of its subcontractors to include in their liability insurance policies coverage for automobile contractual liability.

16.3 Terms of Insurance. All insurance required by this Section 16 shall be written on an occurrence basis and procured from companies rated by Best's Rating Guide not less than A-VIII, and which are authorized to do business in California. All insurance may be provided under (i) a combination of primary and excess policies; (ii) an individual policy covering the Property; (iii) a blanket policy or policies which includes other liabilities, properties and locations of Owner; provided, however, that if such blanket commercial general liability insurance policy or policies contain a general policy aggregate of less than Two Million Dollars ($2,000,000), then Owner shall also maintain excess liability coverage necessary to establish a total liability insurance limit of Two Million Dollars ($2,000,000); (iv) a plan of self-insurance, provided that Owner notifies the City of its intent to self-insure (which notice shall be deemed to have been delivered to City upon the full execution of this Agreement) and shall, upon request, deliver to the City each calendar year a copy of its annual report that is audited by an independent certified public accountant which discloses that Owner has One Hundred Million Dollars ($100,000,000) of both net worth and net current assets; or (v) a combination of any of the foregoing insurance programs.

To the extent any deductible is permitted or allowed as a part of any insurance policy pursuant to this Section 16, Owner shall be deemed to be covering the amount thereof under an informal plan of self-insurance; provided, however, that in no event shall any deductible exceed One Hundred Thousand Dollars ($100,000.00) unless Owner complies with the requirements regarding selfinsurance pursuant to Subsection (iv) of this Section 16.3. Owner shall furnish to the City, upon request, a certificate(s) or memorandum(s) of insurance, or statement of self-insurance evidencing that the insurance required to be carried by Owner in accordance with this Section 16 is in full force and effect.

16.4 Additional Insured. Any insurance policy under which the City is an additional insured shall include the following provisions:

16.4.1 Severability. Severability of interests.

16.4.2 Reduction or Voidability. An act or omission of one (1) of the insureds or additional insureds which would void or otherwise reduce coverage, shall not reduce or void the coverage as to the other insureds.

16.4.3 Contractual Liability. Contractual liability coverage with respect to any indemnity obligation set forth in this Agreement.

The procurer of such insurance shall promptly serve Notice on (and in any event within five (5) Business Days) the City of any intent to cancel, reduce (in amount or in coverage provided) or other material modification of insurance coverage required by this Section 16 as soon as such

EXHIBIT A
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procurer has actual knowledge thereof and shall deliver a copy of any Notices received from the insurer related thereto.

17. Representations and Warranties.

17.1 City Representations. The City represents and warrants to Owner as follows, which warranties and representations are effective as of the date of this Agreement:

17.1.1 Existence. The City is a municipal corporation, duly incorporated pursuant to the laws of the State of California.

17.1.2 Authority. The execution, performance, and delivery of this Agreement by the City have been fully authorized by all requisite actions on the part of the City required by Law.

17.1.3 No Default. The City's execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which the City is a party or by which it is bound.

17.2 Owner's Representations. Owner represents and warrants to the City as follows, which warranties and representations are effective as of the date of this Agreement:

17.2.1 Authority. Owner has full right, power and lawful authority to develop the Private Improvements, the Required Public Improvements and to undertake all obligations as provided in this Agreement. The execution, performance, and delivery of this Agreement by Owner has been fully authorized by all requisite actions on the part of Owner required by Law.

17.2.2 Interest in Property. Owner represents that Owner (or its affiliates) owns or has entered into agreements to acquire fee title to the Property. Owner further represents that it (or its affiliates) has the legal authority to encumber the Property by recordation of this Agreement.

17.2.3 No Conflict. To the best of Owner's knowledge, Owner's execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which Owner is a party or by which it is bound.

17.2.4 No Owner Bankruptcy. To the best of Owner's knowledge, Owner is not the subject of a current or threatened bankruptcy proceeding.

18. Miscellaneous.

18.1 Time of Essence. Time is of the essence of each provision of this Agreement in which time is an element.

18.2 Further Documents. The City and Owner shall sign, deliver and if appropriate record any additional documents necessary to effectuate the purposes of this Agreement.

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18.3 Notices. All Notices and other communications given pursuant to this Agreement shall be in writing and shall be deemed received when delivered upon the first Business Day after prepayment with a recognized overnight delivery service with instructions to deliver the next Business Day, or upon the fifth calendar day after deposit in the United States mail, firstclass, registered or certified, postage prepaid, return receipt requested at the following addresses:

If to City: City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Attn: City Manager
Tel: (949) 361-8200
Email: [email protected]
With a copy to: Best Best & Krieger, Attorneys at Law
18101 Von Karman Avenue
Suite 1000
Irvine, CA 92612
Attn: Scott C. Smith, City Attorney
Tel: (949) 263-6561
Email: [email protected]
If to Owner: Saddleback Memorial Medical Center
24451 Health Center Drive
Laguna Hills, CA 92653
Attn: Thomas Leary,
Senior Vice President & Chief Legal Officer
Tel: 714-377-3245
Email: [email protected]
With a copy to: Nossaman, LLP
18101 Von Karman Avenue
Suite 1800
Irvine, CA 92612
Attn: Gregory W. Sanders, Esq.

Tel: (949) 833-7800
Email: [email protected]
Any Party may, from time to time by written Notice to the other designate a different address which shall be substituted for the one specified above.

18.4 Entire Agreement. This Agreement contains the entire agreement between the Parties regarding the subject matter hereof, and all prior agreements or understandings, oral or written, are hereby merged herein.

18.5 Waiver. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, whether or not similar, nor shall any such waiver constitute a continuing or subsequent waiver of the same provision. No waiver shall be binding, unless it is

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executed in writing by a duly authorized representative of the Party against whom enforcement of the waiver is sought.

18.6 Relationship of the Parties. Nothing contained herein, nor any action taken or document created pursuant hereto, shall be construed as creating the relationship of partners, joint venturers, or any other association of any kind or nature between the City and Owner.

18.7 No Third Party Beneficiaries. This Agreement is made and entered into for the sole benefit of the Parties, any Financiers and their respective successors in interest. No other person (such as a taxpayer or citizens' group) shall have any right of action based upon any provision of this Agreement.

18.8 Non Liability of Certain Individuals.

18.8.1 Officials and Employees of the City. No official or employee of the City shall be personally liable to Owner or any successor in interest in the event of any Default by the City or for any amount which may become due to Owner or its successors or on any other obligations under the terms of this Agreement.

18.8.2 Owner Parties. No officer, director, manager, member, or employee of Owner (or any of their respective officers, directors, shareholders, partners, members, managers, employees, trustees, or beneficiaries) shall be personally liable to the City or its successor in interest in the event of any Default by Owner or for any amount which may become due from Owner or its successors or on any other obligations of Owner under the terms of this Agreement.

18.9 City Approvals and Actions. The City shall maintain authority under this Agreement and the authority to implement this Agreement through the City Manager (or his or her duly authorized representative). The City Manager shall have the authority to make approvals, issue interpretations, waive provisions, execute implementing documents and/or make and execute further agreements on behalf of the City (collectively, “City Manager Action”) so long as such City Manager Action(s) does not materially change the uses or Development permitted on the Property, or materially or substantially add to the costs incurred or to be incurred by the City or Owner as specified herein, and such interpretations, waivers and/or further agreements may include extensions of time to perform; provided, however, in the event Owner disagrees with any City Manager Action(s), Owner may appeal such City Manager Action(s) to the City Council and shall be entitled to a public hearing on such appeal. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the City Council. The City Manager retains full discretion to submit any matter to the City Council for approval notwithstanding that such matters may be considered immaterial.

18.10 Counterparts. This Agreement may be signed in multiple counterparts which together shall constitute a binding agreement.

18.11 Rules of Construction. Captions and headings in this Agreement are for convenience only and are not guides for interpretation. This Agreement is the result of negotiations between Parties who were each represented by counsel. No ambiguity in this Agreement, if any, shall be interpreted against one Party. This Agreement has been prepared and negotiated jointly

EXHIBIT A
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and equally by the Parties. This Agreement shall not be construed against either Party on the ground that a Party prepared the Agreement.

18.12 Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday, Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Sections 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time.

18.13 Legal Advice. Each Party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any rights which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other Party, or their respective agents, employees or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise.

18.14 Governing Law and Venue. This Agreement is entered into and will be performed in the County of Orange, California, and shall be governed by the laws of the State of California. Any legal action or proceeding concerning this Agreement shall be filed and prosecuted in the Superior Court in the County of Orange, California or the United States District Court for the Central District of California.

18.15 Attorneys' Fees. In any action between the Parties to interpret, enforce, reform, modify, rescind or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing Party in such action shall be entitled, in addition to injunctive relief or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs, expert witness fees and attorneys' fees.

18.16 Severability. If a Court invalidates part of this Agreement, the remainder shall remain in force and effect unless the invalidation materially impairs a Party's consideration, in which event this entire Agreement shall terminate.

18.17 Recitals and Attachments. All recitals and attachments to this Agreement are incorporated herein.

18.18 Mutual Covenants. The covenants contained herein are mutual covenants which constitute conditions to the concurrent or subsequent performance of the other covenants.

ATTACHMENTS
Attachment No. 1 Legal Description of the Property
Attachment No. 2 Fair Share Fees

EXHIBIT A
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Attachment No. 3 Site Plan
Attachment No. 4 Required Public Improvements
[Signatures appear on following page.]

EXHIBIT A
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IN WITNESS WHEREOF, Owner and the City have executed this Agreement on the date first above written.

CITY:

CITY OF SAN CLEMENTE,
a California municipal corporation
, Mayor
ATTEST:
, City Clerk
APPROVED AS TO FORM:

Scott C. Smith, City Attorney
OWNER:

SADDLEBACK MEMORIAL MEDICAL
CENTER, a California non-profit public benefit
corporation

EXHIBIT A
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STATE OF CALIFORNIA )
) ss.

COUNTY OF )
On
Public,
before me, , Notary
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

SIGNATURE OF NOTARY PUBLIC
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

EXHIBIT A
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STATE OF CALIFORNIA )
) ss.

COUNTY OF )
On
Public,
before me, , Notary
personally appeared , who
proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

SIGNATURE OF NOTARY PUBLIC
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

EXHIBIT A
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Attachment No. 1

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ATTACHMENT NO. 1

LEGAL DESCRIPTION OF THE PROPERTY

EXHIBIT A
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Attachment No. 2

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ATTACHMENT NO. 2

FAIR SHARE FEES
Sidewalk fees?
Parks Development
fees?
Sewer Connection fees
Drainage Facilities fees
Water Acreage fees
Regional Circulation Financing and Phasing Program

EXHIBIT A
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Attachment No. 3

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ATTACHMENT NO. 3

SITE PLAN

EXHIBIT A
Attachment No. 4

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ATTACHMENT NO. 4

REQUIRED PUBLIC IMPROVEMENTS

EXHIBIT A