extension request. In particular, the City found that the extension (I) was consistent with the objectives, policies and programs specified in the General Plan, (2) was compatible with the uses authorized in, and the regulations prescribed for, the zone in which the real property is located, (3) would not be detrimental to the health, safety, and general welfare of the public, and (4) would promote the orderly development of the preservation of the properties in accordance with good land use practices. These findings were primarily based on the fact that no changes were being made to the previously approved land uses and conditions of approval, including payment of the increased Public Facility Payment of$ 3.9 million. In addition, the terms of the Third Amended and Restated Development Agreement includes findings that the Development Agreement, as amended,(!) will promote the orderly development of the subject property and the preservation of property values in accordance with good land use practices, and (2) contains a term that is reasonably necessary to assure the realization of the public benefits from the project (see, Recital J and Section 3).
These same findings apply equally to the pending extension request because the undeveloped portions of the project, and in particular the 138 senior housing units, continue to help meet the housing needs of the City. In fact, the need for the senior housing units and senior recreation center appeared to be an important factor in the City's willingness to grant the 2019 extension. The additional time to construct the remaining units is further justified by the fact that market conditions have not supported construction of the senior housing units as previously approved, and that the Developer spent a substantial portion of the most recent extension period pursuing a redesign of the senior housing units to better meet the market demand for senior housing. However, after years of redesign efforts, with the encouragement of City Staff, the City Council ultimately denied the requested redesign in response to community opposition. Accordingly, the only way to obtain the previously approved and needed senior housing units is to allow completion under the existing entitlements.
3. Effect of a Denial of the Extension Request:
Should the City Council deny the pending extension request, despite the merits of the request and the support of City Staff, the project could still be completed under the existing entitlements, but additional requirements could apply to those remaining units. While in effect, the Development Agreement vests the Developer's right to complete the project under the terms and conditions specified in the Development Agreement, including the applicable fees and procedural obligations. Once the Development Agreement expires, the existing zoning will still apply to the site and the recorded final maps will remain valid subdivisions of the property. However, development of the remaining units will be subject to all other applicable development requirements in effect as of the date the building permit is requested. In addition to all applicable fees, these requirements may include obtaining new Planned Development Permits to cover all remaining units and obtaining new grant allocations under the City's Residential Building Permit Allocation System.
One important aspect of the project that will not be affected by expiration of the Development Agreement is the Second Amended and Restated Affordable Housing Agreement, which has a term of fifty-five (55) years from the initial sale date of the first senior housing unit in the project. Under this agreement, the 138 senior housing units must be constructed, marketed 728
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and sold only to qualified senior buyers, and these same restrictions will apply to all re-sales of the 13 8 senior housing units for the life of the agreement. The agreement also provides for an in lieu affordable housing payment of $4 million, in lieu of all other affordable housing obligations that would otherwise be applicable to the project or the subject property. That in lieu payment has now been paid in full satisfaction of the requirements of the Development Agreement and the Affordable Housing Agreement. Accordingly, even if the term of the Development Agreement is not extended, the City cannot modify or impose any new affordable housing obligations for the remaining units in the project for the life of the Second Amended and Restated Affordable Housing Agreement, which will not expire before 2057, at the earliest (55 years following the first sale of a senior housing unit in the project).
Please let me know if you have any questions or would like any fmiher information regarding this assessment.
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MEMORANDUM
To: Dafne Gokcen
Haggai Mazler
Fro
m: J ames D. Vaughn, Esq.
Dat
e: March 30, 2022
Re:
Development Schedule Requirements under Development Agreement. _________________________________________________________________________ Issue:
Under the terms of the existing Development Agreement for Runkle Canyon, does the Developer need to complete construction and obtain City approval of occupancy of all units within the project prior to expiration of the Development Agreement? Short Answer: No, once the Developer has pulled all building permits and commenced construction of all units, the Developer has a vested right to complete those buildings under California Law. Nothing in the Development Agreement modifies that right.
Discussion: The Third Amended and Restated Development Agreement addresses the project development schedule in several places, but none of the provisions requires completion and approval of occupancy of all units prior to expiration of the Development Agreement term. For example, Part II.A.2 of the “Development Schedule” in Exhibit C provides that “Developer shall pursue to completion the development of the 138 senior units within the Project consistent with Section 25 (Timing of Development) of this Agreement. Section 25 provides as follows:
“Developer shall have the right to develop the Property in such order and at such rate and at such times as Developer deems appropriate within the exercise of its subjective business judgment, including with respect to single-family and senior housing units to be developed as part of the project. The timing or phasing requirements set forth in the Development Approvals with respect to the senior housing units, specifically Conditions of Approval A-16 and A-17, are superseded by this Section 25.”
In
addition, Recital O specifies that all modifications to the Planned Development Permit must be obtained “by the end of the Agreement’s term.” The inclusion of this requirement, and no reference to completing all residential units, further supports the conclusion that the parties did not intend to include any such requirement.
California courts recognize a common law vested right to complete development of a building project once the public agency has issued a valid building permit and the developer has commenced construction in reliance thereon. See Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal. 3d 785, 791-792. This vested rights doctrine is specific to each building, so to preserve Developer’s vested right to complete development of the entire project, all building permits would need to be issued and at least some construction on each unit EXHIBIT 3
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commenced in reliance on those building permits, prior to expiration of the Development Agreement. Please note that while both the Development Agreement and the Staff Report for the pending extension request occasionally refer to “complete construction of the project,” such generic references are not sufficient to overcome Developer’s common law vested rights and the express provisions of the Development Agreement quoted above.
Please feel free to contact me should you have any further questions on this issue.
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