City of Simi Valley
Staff Report
J
une 8, 2026
To: Cit
y Council
Fr
om: City Manager’s Office
Luis Garibay, Assistant City Manager
Subj
ect: Approval of an Exclusive Negotiation Agreement and Ground Lease Agreement with SV TC Property , LLC for property located at the northeast corner of Jefferson Way and Simi Town Center Way
Sta
ff Recommendation
I
t is recommended that the City Council:
1. A
uthorize the City Manager to execute an Exclusive Negotiation Agreement (ENA) with SV TC Property, LLC (substantially as set forth in Attachment A) , in a form approved by the City Attorney, for a project located at the northeast corner of Jefferson Way and Simi Town Center Way;
2. A
uthorize the City Manager to execute a Ground Lease Agreement (GLA) with SV TC Property, LLC (substantially as set forth in Attachment B), in a form approved by the City Attorney, for approximately 6.5 acres (APN 612-0-240-175 (portion) and 612-0-240-115); and
3. T
ake such additional, related, action that may be desirable.
B
ackground
O
n May 19, 2025, the City Council provided direction to the City Manager regarding a contemplated development associated with a requested G eneral Plan Amendment Pre- Screening Review (GPPS) for portions of the Mall District within the Simi Valley Town Center Specific Plan (GPPS-2025-0001). That GPPS was proposed by SteelWave, LLC.
The conceptual development – which was not part of the City Council’s consideration at that time and remains entirely conceptual – proposed renovation of approximately 106,000 square feet of existing retail space, and construction of 42,000 square feet of new ground-up retail space (Project). Additionally, the concept was to develop 376 high- and medium-density for-sale housing units.
S
ince that time, the Assistant City Manager and Planning staff have engaged in conceptual discussions regarding a path forward for a potential project discussed as part of the GPPS. Among other things, staff discussed whether a development agreement (DA) would be an appropriate vehicle for eventual City Council consideration of a project.
The proposed ENA and GLA will allow the City and property owner to continue these Agenda Item No.
9F
discussions before investing significant resources including, without limitation, design plans and environmental analysis.
Di
scussion
T
he ENA establishes a 12-month period of exclusive negotiations between the City and Developer regarding Project entitlements, environmental review, a development agreement, and related implementation documents. During the t erm, the Parties must use good-faith efforts to negotiate, as applicable:
• A
development agreement covering vesting, permitted uses, public benefits, timing, and implementation.
• A deposit or reimbursement agreement for City Costs.
• A possible option for City to ground lease approximately 6.5 acres at the SVTC. • Any reciprocal restrictive covenant, purchase right, parking agreement, or similar implementing document.
T
he proposed GLA encompasses the former Macy’s West building and a portion of the adjacent parking area (Parcel X) as shown in Attachment C. Under the terms of the GLA, the City would lease Parcel X (approximately 6.5 acres) from the Developer for $1.00 per year. Parcel X is not currently an individual parcel; therefore, a new parcel must be created. The GLA, included as Attachment B, contains the primary terms of the agreement. However, agreement wording and other minor non- material items still need to be finalized. Therefore, the City Manager requests City Council authorization to finalize and execute the agreement.
N
othing in the recommended actions commits the City to a particular course of approvals.
While the terms and conditions to be negotiated are part of the ENA, any additional consideration of this project would first require CEQA analysis and recommendations to the Planning Commission and City Council. All future decisions considered by the City Council are entirely legislative and discretionary.
Fin
ancial Impact
$1
per year. Should additional City expenditures be required as the Project advances, Staff will return to the City Council with a separate funding request for consideration.
C
ity Council Priority
Th
is item supports the City Council’s Economic Vitality and Thriving Community Pillars of Excellence. In addition, this item supports the Council’s Focus Area Goal of pursuing economic development opportunities to attract investment, support business growth, and revitalize key commercial areas, starting with the Simi Valley Town Center. 2 Suggested Motion
I mo
ve to:
1. Aut
horize the City Manager to execute an Exclusive Negotiation Agreement with SV TC Property, LLC (substantially as set forth in Attachment A), in a form approved by the City Attorney, for a project located at the northeast corner of Jefferson Way and Simi Town Center Way;
2. Aut
horize the City Manager to execute a Ground Lease Agreement with SV TC Property, LLC (substantially as set forth in Attachment B), in a form approved by the City Attorney, for approximately 6.5 acres (APN 612-0- 240-175 (portion) and 612-0-240-115); and,
3. Aut
horize the City Manager to take such additional, related, action that may be desirable.
Summa
ry
On May 19, 2025, the City Council provided direction to the City Manager regarding a contemplated development associated with a requested G eneral Plan Amendment Pre- Screening Review for portions of the Mall District within the Simi Valley Town Center Specific Plan. The conceptual development – which was not part of the City Council’s consideration at that time and remains entirely conceptual – proposed renovation of existing retail space, construction of new ground-up retail space and the development of 376 high- and medium-density for-sale housing units.
An ENA will allow the City and property owner to continue discussions regarding a path forward for a potential project. The ENA establishes a 12- month period of exclusive negotiations between the City and Developer regarding Project entitlements, environmental review, a Development Agreement, and related implementation documents.
The proposed GLA encompasses the former Macy’s West building and a portion of the adjacent parking area (Parcel X). Under the terms of the GLA, the City would lease Parcel X (approximately 6.5 acres) from the Developer for $1.00 per year.
Nothing in the recommended actions commits the City to a particular course of approvals.
While the terms and conditions to be negotiated are part of the ENA, any additional consideration of this project would first require CEQA analysis and recommendations to the Planning Commission and City Council. All future decisions considered by the City Council are entirely legislative and discretionary.
P
repared by: Luis Garibay, Assistant City Manager
Attachments:
Attachment A - Exclusive Negotiation Agreement
Attachment B - Ground Lease Agreement
Attachment C - Map
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Exclusive Negotiation Agreement
This Exclusive Negotiation Agreement (“Agreement”) is made as of __________, 2026 (“Effective Date”), by and between the City of Simi Valley, a general law city and municipal corporation (“City”), and xx, a __________ (“Developer”). City and Developer are the “Parties” and each is a “Party.” The Parties agree as follows:
Recitals
A. Developer owns the Simi Valley Town Center property (“Property”) and is pursuing a mixed-use redevelopment project known as the Simi Valley Town Center Development Project (“Project”). The Project area includes Parcel A (former Macy’s West parking lot), Parcel B, Parcel C, Parcel D, and Parcel X, the western portion of about 6.5 acres.
B. The Parties want an orderly period of exclusive, good-faith negotiations about a possible development agreement and related implementing documents for the Project.
C. The Parties expect the Project to require discretionary approvals, including a General Plan Amendment, an amendment to the Simi Valley Town Center Specific Plan (“SVTCSP”), a vesting tentative map or parcel map, and other ministerial or discretionary approvals City determines are required. The Project is also subject to the California Environmental Quality Act (“CEQA”).
D. This Agreement does not commit City Council to approve any CEQA document, land use entitlement, development agreement, disposition document, option agreement, lease, or any other legislative, quasi-judicial, or administrative act.
E. City finds that this Agreement serves the public interest because it will support a structured evaluation and negotiation process for possible redevelopment of the Property.
1. Term
1.1 The term of this Agreement (“Term”) starts on the Effective Date and ends on the earliest of these events:
4 Attachment A
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• 12 months after the Effective Date.
• Termination under Section 3.
• Execution of a mutually acceptable development agreement, disposition agreement, purchase and sale agreement, ground lease, option agreement, or other implementing agreement approved by City Council.
1.2 The Parties may extend the Term by a mutual written amendment approved by City Council.
1.3 If the City, as lead agency, determines an environmental impact report is required for the Project, the Term automatically extends for up to 12 additional months to the extent reasonably needed to complete CEQA review.
1.4 Within 60 days after the Effective Date, the Parties must prepare and attach a milestone schedule as Exhibit B.
2. Exclusive Negotiations
2.1 During the Term, and while Developer is not in uncured default, City must negotiate exclusively and in good faith with Developer about the Project and the Property, except for communications required by law and communications with third parties that do not amount to active negotiations for development rights or acquisition rights pertaining to the Project or the Property.
2.2 During the Term, the Parties must use good-faith efforts to negotiate, as applicable:
• A development agreement covering vesting, permitted uses, public benefits, timing, and implementation.
• A deposit or reimbursement agreement for City Costs.
• A possible option for City to ground lease Parcel X.
• A possible long-term ground lease for Parcel X.
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• Any reciprocal restrictive covenant, purchase right, parking agreement, or similar implementing document.
2.3 The terms in Exhibit A are incorporated into this Agreement by reference.
Exhibit A states the business terms the Parties will use as the framework for negotiations under this Agreement. If a term in the body of this Agreement conflicts with Exhibit A, the body of this Agreement controls for purposes of this Agreement. Both Parties acknowledge that the Agreement, inclusive of Exhibit A, does not necessarily address all key terms relating to the Project and that the development agreement or other implementing documents may address certain terms and conditions that are not set forth in this Agreement, inclusive of Exhibit A.
2.4 Exhibit A does not by itself create an obligation to approve or sign a development agreement, ground lease, purchase agreement, or other definitive agreement. Developer acknowledges and agrees that if negotiations culminate in a development agreement or other implementing agreement that is recommended to the City Council, such agreement(s) become final only after and if the agreement(s) have are considered and approved by the City Council in its sole and absolute discretion.
3. Termination
This Agreement ends on the first to occur of these events:
• Expiration of the Term.
• A written agreement signed by both Parties.
• A Party’s written notice after the other Party’s uncured default. • Developer’s written notice to City given at least 30 days before the termination date.
• Execution of a definitive agreement described in Section 1.1. • Failure of the Parties to agree on material business terms for a definitive agreement including, without limitation, the items set forth in Section 2.2, within 150 days after the Effective Date, unless the Parties extend that period in writing and City Council approves the extension. 6 4
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4. Default and Cure
4.1 A Party claiming default must give written notice describing the claimed default, the action needed to cure it, and a cure period of at least 30 days.
4.2 A default is not grounds for termination if the defaulting Party cures within the cure period.
4.3 If the default cannot reasonably be cured within 30 days, the cure period extends for the time reasonably needed to complete the cure, so long as the defaulting Party promptly starts the cure and diligently pursues it.
5. Scope of Negotiations
5.1 During the Term, the Parties must negotiate in good faith about a possible development and implementation framework for the Project, including the matters described in Exhibit A.
6. Developer’s Work
During the Term, Developer must:
• Use diligent, good-faith efforts to evaluate the Project and prepare the applications, studies, plans, and supporting materials reasonably needed for City review.
• Within 30 days after the Effective Date, give City the names of its architect, engineers, other key development team members, and authorized lead negotiators.
• Prepare and submit conceptual site plans, elevations, landscape plans, signage concepts, and related materials.
• Conduct tests, surveys, borings, and analyses Developer considers necessary, subject to City’s prior written approval for invasive work and any right-of-entry agreement City requires.
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• Restore the Property after any entry or testing and comply with applicable law.
• Give City the information and assistance City reasonably requests for CEQA review and Project processing.
• Prepare, at Developer’s cost unless the Parties later agree otherwise in writing, the SVTCSP update and amendment and any vesting tentative map or parcel map needed for the Project.
• Include in the Project applications and supporting studies the contemplated venue on Parcel X.
7. City Costs and Deposit
7.1 Developer must reimburse City for reasonable administrative and other costs City incurs to review, analyze, and process the Project and to negotiate implementing documents, including staff time, consultant fees, and legal fees (“City Costs”).
7.2 Within five business days after this Agreement is signed, Developer must deposit $50,000 with City as the initial deposit for City Costs (“Initial Deposit”). City must keep the Initial Deposit in a separate account and use it only for City Costs actually incurred.
7.3 City must give Developer periodic statements describing City Costs paid from the Initial Deposit and must provide supporting invoices, subject to redaction of privileged or protected material.
7.4 Developer must replenish the deposit within 10 business days after City gives written notice that the remaining balance is $5,000 or less, in the amount City reasonably requests to maintain enough funds for continued processing.
7.5 Except for general entitlement costs such as the specific plan amendment and vesting tentative map, City must bear the cost of environmental review and permitting associated with Parcel X, unless the Parties later agree otherwise in writing. 8 6
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7.6 Within 30 days after this Agreement ends, City must return any unused deposit balance, after deducting unpaid City Costs actually incurred.
8. Parcel X Framework
8.1 The Parties acknowledge that one purpose of this Agreement is to evaluate and, if acceptable to both Parties, prepare definitive agreements for Parcel X using the framework in Exhibit A.
9. Confidentiality and Public Records
9.1 City is subject to the California Public Records Act. Information a Party gives the other Party and clearly marks “Confidential and Proprietary” must be treated as confidential to the extent the law allows.
9.2 If City receives a request to disclose material Developer marked confidential, City must, to the extent the law allows, notify Developer before disclosure so Developer may seek protective relief.
9.3 Developer must defend, indemnify, and hold harmless City and its officials, officers, employees, and agents from claims arising out of City’s withholding or disclosure of material Developer marked confidential, except to the extent caused by City’s negligence or willful misconduct.
10. Insurance and Indemnity
10.1 Developer must maintain insurance in the types and amounts City reasonably requires, including commercial general liability and automobile liability coverage of at least $2,000,000 combined single limit per occurrence, and must name City and its officials, volunteers, and employees as additional insureds where appropriate.
10.2 Developer must defend, indemnify, and hold harmless City and its officials, officers, employees, attorneys, agents, and representatives from claims, liabilities, losses, and expenses arising from Developer’s development of the Project, which excludes the development of Parcel X, Developer’s studies and plans, CEQA or land use challenges 9 7
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tied to approval of the Project or this Agreement, and related litigation, except to the extent caused by City’s negligence or willful misconduct.
10.3 This Section survives termination of this Agreement.
11. Miscellaneous
11.1 Assignment. Developer may not assign this Agreement, in whole or in part, without City Council’s prior written approval, except to a wholly owned successor entity formed to carry out Developer’s obligations under this Agreement. City may not assign this Agreement, in whole or in part, without prior written approval from Developer.
11.2 Notices. Notices under this Agreement must be in writing and sent to the addresses the Parties specify before signing.
11.3 Governing Law; Venue. California law governs this Agreement. Exclusive venue is the Superior Court in Ventura County, California, unless the Parties later agree otherwise in writing.
11.4 Remedies. The Parties’ remedies for breach of this Agreement are limited to declaratory relief, injunctive relief, and specific performance. But City may recover damages for physical damage to Parcel X to the extent City ultimately enters into a ground lease for Parcel X or Developer’s failure to pay amounts due under this Agreement, and Developer may recover damages for City’s failure to return an undisputed deposit balance when due.
11.5 Entire Agreement. This Agreement, including Exhibit A and Exhibit B, is the entire agreement between the Parties about exclusive negotiations for the Project.
11.6 Amendment. A change to this Agreement must be in a written amendment signed by both Parties and approved by City Council.
11.7 Severability. If a court finds part of this Agreement invalid or unenforceable, the rest remains in effect to the fullest extent the law allows. 10 8
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11.8 Counterparts. The Parties may sign this Agreement in counterparts, and each counterpart is an original.
11.9 Force Majeure. A Party is not in default for delay caused by events beyond that Party’s reasonable control. But lack of financing, market conditions, or economic conditions do not extend Developer’s time to perform.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the day and year first above written.
A
ttest: City of Simi Valley, A Municipal Corporation
By:
Lucy Blanco, City Clerk Dee Dee Cavanaugh, Mayor of the City of Simi Valley, California
A
pproved as to Form: [Developer]
By:
Algeria R. Ford, City Attorney
A
pproved as to Content:
By:
Samantha C. Argabrite, City Manager
Luis Garibay, Assistant City Manager
City Attorney
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EXHIBIT A
T
ERM SHEET FOR DEVELOPMENT AGREEMENT
Simi Valley Town Center Development Project
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EXHIBIT B
M
ILESTONE SCHEDULE
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GROUND LEASE
By and Between
CITY OF SIMI VALLEY
and
STEERPOINT/STEELWAVE
T
his Ground Lease (“Lease”) is dated ________, 20, and is between the City of Simi Valley, a general law city and municipal corporation (“City”), and Steerpoint/SteelWave, a [ENTITY TYPE] (“Developer”). The City and the Developer are the Parties, and each is a Party. The Parties agree as follows:
RECITALS
This Lease is predicated upon the following facts, understandings, and intentions of the Parties:
A. Developer owns real property commonly known as the Simi Valley Town Center (“SVTC”), which includes the parcel that is the subject of this Lease (the “Premises”).
B. Developer and City agreed to enter into this ground lease to facilitate the development and operation of a venue on the Premises, to promote economic development, create public amenities, and further the public welfare of the City and its residents.
C. The Premises consist of approximately 6.5 acres on the western portion of the SVTC, including the former Macy’s West property and a portion of the adjacent parking area, to be legally described as “Parcel X” upon completion of the applicable subdivision process.
D. Developer is responsible for legally creating Parcel X.
E. The City intends to sublease or license the Premises to a user (the “Venue Operator”) under a long-term sublease or operating agreement, the execution of which is a condition to the effectiveness of this Lease.
F. The Parties desire to enter into this ground lease upon the terms and conditions set forth herein and in the exhibits attached hereto.
14 Attachment B
2 ARTICLE 1 - DEFINITIONS
1.1 Applicable Laws. “Applicable Laws” means all federal, state, and local laws, statutes, codes, ordinances, rules, regulations, orders, and official policies applicable to the Premises or this Lease, as they exist from time to time, including the Simi Valley Municipal Code.
1.2 Appraised Value. “Appraised Value” means the fair market value of the Premises as determined by a licensed MAI appraiser mutually agreed upon by the Parties, or, if the Parties cannot agree, as determined by the appraisal procedure set forth in Article 17.
1.3 Commencement Date. “Commencement Date” means the date on which this Lease becomes effective, which is the date on which both of the following conditions have been satisfied: (a) City and a user have executed a long-term lease or operating agreement for the Venue; and (b) City has delivered written notice to Developer confirming satisfaction of the foregoing condition.
1.4 Hazardous Materials. “Hazardous Materials” means any substance, chemical, waste, or material that is or becomes regulated by any federal, state, or local governmental authority because of its toxicity, infectiousness, radioactivity, explosiveness, ignitability, corrosiveness, or reactivity, including petroleum products, asbestos, polychlorinated biphenyls, and any substances defined as hazardous substances, hazardous materials, hazardous wastes, or toxic substances under any Applicable Law.
1.5 Improvements. “Improvements” means all buildings, structures, facilities, fixtures, landscaping, parking areas, utilities, and other improvements constructed, installed, or placed on the Premises during the Term, including the Venue.
1.6 Lease Year. “Lease Year” means each consecutive twelve-month period during the Term, with the first Lease Year commencing on the Commencement Date.
1.7 Option Agreement. “Option Agreement” means that certain Option to Ground Lease Agreement between City and Developer, dated [DATE], under which City held an initial two-year option to ground lease the Premises at a rate of $1.00 per year, with the right to extend the option period by one additional year upon achievement of certain milestones.
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1.8 Permitted Use. “Permitted Use” means the development, construction, and operation of a venue and ancillary uses compatible with the planned uses for the remainder of the SVTC property, but expressly excluding any residential or housing development. Permitted Use includes any use that City may identify as benefitting public welfare in its proprietary capacity including, without limitation, filming, special events, and similar uses.
1.9 Premises. “Premises” means that certain real property consisting of approximately 6.5 acres on the western portion of the SVTC, including the former Macy’s West property and a portion of the adjacent parking area, to be legally created as “Parcel X” through the applicable subdivision process, as more particularly described in Exhibit A attached hereto.
1.10 Rent. “Rent” means the annual rent payable by City to Developer as set forth in Article 4.
1.11 Reversion Event. “Reversion Event” has the meaning set forth in Section
16.1. 1.12 Stipulated Price. “Stipulated Price” means the purchase price for the Premises established by the Parties, as set forth in Section 16.4.
1.13 SVTC. “SVTC” means the Simi Valley Town Center.
1.14 Term. “Term” means the period of time for which this Lease is effective, as set forth in Article 3.
1.15 Venue. “Venue” means the venue to be developed and operated on the Premises.
1.16 Venue Operator. “Venue Operator” means the third-party operator that enters into a long-term sublease or operating agreement with City for the operation of the Venue on the Premises.
ARTICLE 2 - EXHIBITS
The following documents are referred to in this Lease, attached, and made a part by this reference:
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Exhibit Description
A Legal Description of Premises
B Site Plan
C Additional exhibits as may be added by the Parties
ARTICLE 3 - LEASE OF PREMISES; TERM
3.1 Lease of Premises. Developer leases to City, and City leases from Developer, the Premises for the Term and upon the conditions set forth in this Lease.
3.2 Effective Date. This Lease becomes effective on the Commencement Date.
The Parties will execute a written memorandum confirming the Commencement Date promptly after it occurs.
3.3 Initial Term. The initial term of this Lease is 50 years and begins on the Commencement Date.
3.4 Renewal Term. This Lease will automatically renew for 1 additional term of 49 years unless City gives notice of nonrenewal at least 12 months before the initial term expires. The initial term and renewal term together are the Term.
3.5 Condition Precedent. This Lease is expressly conditioned upon the execution of a long-term lease or operating agreement between City and any users for the Venue. If such agreement is not executed within the time period specified in the Option Agreement, this Lease will be null and void and of no further force or effect, and the Premises will revert to Developer in accordance with Article 16.
ARTICLE 4 - RENT
4.1 Base Rent. The City must pay the Developer annual rent of $1.00 in advance on or before the Commencement Date and each anniversary of that date during the Term.
4.2 Net Lease. This Lease is an absolute net lease. City must pay all costs, charges, and expenses of every kind and nature relating to the Premises that may arise or become due during the Term, including all taxes, assessments, insurance premiums, utility charges, maintenance and repair costs, and all other costs and expenses related to 17 5
the Premises, the Improvements, and City’s use and occupancy thereof, except as expressly set forth in this Lease.
4.3 Additional Rent. All taxes, assessments, charges, and other amounts the City must pay under this Lease, other than Base Rent, are Additional Rent.
ARTICLE 5 - USE OF PREMISES
5.1 Permitted Use. The City may use and occupy the Premises only for the Permitted Use. This includes, without limitation, utilizing any existing facilities on the Premises for a public purpose. A public purpose may include City acting in its proprietary capacity to generate revenue by utilizing the facilities for a commercial purpose.
5.2 Housing Prohibition. Except for maintaining, expanding, or demolishing the existing structures on the Premises, no residential or housing development is allowed on the Premises.
5.3 Compatibility with SVTC. City must ensure that all operations conducted on the Premises, including parking and access, are compatible with the planned uses for the remainder of the SVTC property. The Parties must cooperate in good faith to coordinate operations, access, parking, and other matters of mutual concern.
5.4 Compliance with Laws. City must, at its sole cost and expense, promptly comply with all Applicable Laws relating to the Premises and City’s use and occupancy thereof.
5.5 No Nuisance. City may not use or permit the Premises to be used in any manner that creates a nuisance, unreasonably interferes with any other tenant or occupant of the SVTC, or violates Applicable Laws.
ARTICLE 6 - PARCEL CREATION AND CONDITION OF PREMISES
6.1 Parcel Creation. Developer is responsible, at Developer’s sole cost and expense, for legally creating Parcel X as part of the project’s vesting tentative map and parcel map approvals. Developer must use diligent efforts to complete the parcel creation process within [____] months from the date of this Lease. City must cooperate in connection with the parcel creation process, including providing necessary governmental approvals in a timely manner.
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6.2 Condition of Premises. City accepts the Premises in their “as-is” condition existing as of the Commencement Date, without any representation or warranty by Developer regarding the condition of the Premises, except as expressly set forth in this Lease.
6.3 Environmental Review. All costs associated with the Premises, including environmental review and permitting, are to be borne by City.
ARTICLE 7 - IMPROVEMENTS
7.1 Construction of Improvements. City has the right, at City’s sole cost and expense, to construct, install, and maintain Improvements on the Premises in accordance with the Permitted Use and all Applicable Laws.
7.2 Plans and Specifications. Before commencing construction of any Improvements, City must submit detailed plans and specifications to Developer for Developer’s review and approval, which approval may not be unreasonably withheld, conditioned, or delayed. Developer’s review is limited to confirming compatibility with the remainder of the SVTC property.
7.3 Governmental Approvals. City must obtain all necessary governmental permits, approvals, and entitlements for the construction of any Improvements, at City’s sole cost and expense.
7.4 Construction Standards. All construction and improvement plans for the Premises must comply with applicable governmental rules, regulations, and design guidelines in effect when the project plans are approved.
7.5 Ownership During Term. All Improvements constructed on the Premises by or on behalf of City will remain the property of City during the Term, subject to Article 16 and Article 24.
7.6 Liens. City may not permit any mechanic’s lien or other lien to be filed against the Premises or any Improvements arising out of work performed by or on behalf of City.
If any such lien is filed, City must cause the lien to be discharged or bonded within 30 days after notice.
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ARTICLE 8 - MAINTENANCE AND REPAIRS
8.1 City Obligations. Throughout the Term, City must, at City’s sole cost and expense, maintain the Premises and all Improvements in good order, condition, and repair, consistent with the standards of a first-class venue.
8.2 Scope of Maintenance. City’s maintenance obligations include the repair, replacement, and maintenance of all structural and nonstructural elements of the Improvements.
8.3 Compatibility. City must perform all maintenance and repair activities in a manner that is compatible with the planned uses for the remainder of the SVTC property and does not unreasonably interfere with the operation of the SVTC.
ARTICLE 9 - TAXES AND ASSESSMENTS
9.1 Payment by City. City must pay, before delinquency, all real property taxes, personal property taxes, assessments, and other governmental charges levied or assessed against the Premises, the Improvements, and any personal property located on the Premises during the Term.
9.2 Right to Contest. City has the right, at its sole cost and expense, to contest any tax or assessment in good faith by appropriate proceedings, provided City first pays the contested amount or posts adequate security as required by law.
ARTICLE 10 - INSURANCE
10.1 Required Coverage. City must, at its sole cost and expense, procure and maintain throughout the Term the insurance coverages described below, or equivalent self-insurance programs consistent with City’s risk management practices:
• Commercial General Liability Insurance with limits of not less than $1,000,000 per occurrence and $2,000,000 aggregate.
• Property insurance covering the Improvements and fixtures in an amount not less than full replacement cost.
• Workers’ compensation insurance as required by law, together with employer’s liability insurance with limits of not less than $1,000,000 per occurrence.
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• Builder’s risk insurance during any period of construction in an amount not less than the full replacement cost of the Improvements under construction.
• Such other insurance as may be reasonably required by Developer or any lender providing financing for the Improvements or Venue.
10.2 Policy Requirements. All insurance policies required under this Article must:
(a) name Developer and Developer’s lenders as additional insureds, except workers’ compensation; (b) be issued by insurers licensed to do business in California with an A.M. Best rating of not less than A-VII; (c) be primary and non-contributory; and (d) provide for at least 30 days’ prior written notice to Developer before cancellation or material modification.
10.3 Self-Insurance. City may satisfy its insurance obligations through a program of self-insurance, provided City maintains adequate reserves as determined by City’s risk manager and provides Developer with a certificate of self-insurance describing the scope and limits of coverage.
10.4 Evidence of Insurance. City must deliver to Developer certificates of insurance, or certificates of self-insurance, before the Commencement Date and upon each renewal thereafter.
10.5 Waiver of Subrogation. City and Developer each waive any right of recovery against the other Party for any loss or damage covered by required insurance, and each Party must cause its insurance carriers to include appropriate waiver-of-subrogation endorsements.
ARTICLE 11 - INDEMNIFICATION
11.1 City’s Indemnification. City agrees to defend, indemnify, and hold Developer, its officers, directors, members, managers, employees, agents, and contractors harmless from and against any and all claims, demands, losses, damages, liabilities, costs, and expenses, including reasonable attorneys’ fees, arising out of or relating to: (a) City’s use, occupancy, or management of the Premises; (b) any act, omission, or negligence of City and its representatives; (c) any breach or default by City 21 9
under this Lease; or (d) any Improvements constructed on the Premises by or on behalf of City, except to the extent caused by the negligence or willful misconduct of Developer.
11.2 Developer’s Indemnification. Developer agrees to defend, indemnify, and hold City, its elected and appointed officials, boards, commissions, officers, employees, and agents harmless from and against any and all claims, demands, losses, damages, liabilities, costs, and expenses, including reasonable attorneys’ fees, arising out of or relating to: (a) any act, omission, or negligence of Developer and its representatives with respect to the Premises; or (b) any breach or default by Developer under this Lease, except to the extent caused by the negligence or willful misconduct of City.
11.3 Survival. The indemnification obligations set forth in this Article survive expiration or earlier termination of this Lease.
ARTICLE 12 - HAZARDOUS MATERIALS
12.1 City Obligations. City may not cause or permit any Hazardous Materials to be used, stored, generated, released, or disposed of on, under, or about the Premises in violation of Applicable Law.
12.2 Remediation. If any Hazardous Materials are released on or from the Premises during the Term as a result of City’s activities or the activities of City’s agents, contractors, subtenants, licensees, or invitees, City must, at its sole cost and expense, promptly remediate the contamination in compliance with Applicable Law.
12.3 Pre-Existing Conditions. [Drafting note: insert treatment of pre-existing environmental conditions.]
12.4 Hazardous Materials Indemnity. City agrees to defend, indemnify, and hold Developer harmless from and against any and all claims, losses, damages, liabilities, costs, and expenses, including reasonable attorneys’ fees and remediation costs, arising out of or relating to any Hazardous Materials introduced to the Premises during the Term by City or City’s representatives.
ARTICLE 13 - EVENTS OF DEFAULT
13.1 Events of Default by City. Each of the following constitutes an Event of Default by City:
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• Failure to pay Rent or other monetary obligations within 10 days after written notice from Developer.
• Failure to maintain required insurance and failure to cure within 30 days after written notice.
• Use of the Premises for any purpose other than the Permitted Use, including any residential or housing development.
• Failure to perform any other non-monetary obligation within 30 days after written notice, subject to extension if cure cannot reasonably be completed within that period and City diligently pursues cure. • Commencement of bankruptcy, insolvency, or debtor relief proceedings that are not dismissed within 90 days.
13.2 Events of Default by Developer. Each of the following constitutes an Event of Default by Developer:
• Failure to perform any obligation under this Lease within 30 days after written notice from City, subject to extension for diligent cure.
• Commencement of bankruptcy, insolvency, or debtor relief proceedings that are not dismissed within 90 days.
ARTICLE 14 - REMEDIES
14.1 Remedies for City Default. Upon an Event of Default by City and expiration of applicable notice and cure periods, Developer may terminate this Lease, pursue any remedy available at law or in equity, including specific performance, or exercise its rights under Article 16.
14.2 Remedies for Developer Default. Upon an Event of Default by Developer and expiration of applicable notice and cure periods, City may pursue specific performance, injunctive relief, or any other remedy available at law or in equity.
14.3 No Consequential Damages Against City. Consistent with limitations applicable to public entities, City is not liable for special, consequential, or punitive damages.
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14.4 Cumulative Remedies. Remedies set forth in this Lease are cumulative and in addition to any other remedies available at law or in equity, except as expressly limited herein.
ARTICLE 15 - WAIVERS AND FORCE MAJEURE
15.1 Waiver. If a Party does not insist on strict performance of a provision of this Lease, that does not waive that Party’s right to demand strict performance later.
15.2 Force Majeure. Neither Party is deemed in default where failure or delay in performance is caused by floods, earthquakes, fires, wars, riots, epidemics, pandemics, states of emergency, strikes, labor difficulties, governmental action or inaction, supply- chain disruptions, or similar events beyond the affected Party’s reasonable control. The time for performance is extended by the period of delay.
ARTICLE 16 - REVERSION AND PURCHASE RIGHTS
16.1 Reversion. The Premises will automatically revert to Developer if: (a) a deal for the Venue is not consummated during the option period specified in the Option Agreement; or (b) a deal for the Venue is not consummated within six months after the Commencement Date of the ground lease.
16.2 Procedure for Reversion. Upon a Reversion Event, this Lease terminates and City must surrender the Premises to Developer in accordance with Article 24. City must execute and deliver any instruments reasonably necessary to evidence the termination of this Lease and the reversion of the Premises to Developer.
16.3 City Purchase Right. City holds an enforceable first right to purchase Parcel X. If Developer proposes to sell, convey, or otherwise transfer Parcel X or any interest therein at any time, City may exercise its purchase right by delivering written notice to Developer within 60 days after receipt of Developer’s notice of proposed disposition. The purchase price will be the lesser of: (a) the Appraised Value; or (b) the Stipulated Price.
16.4 Stipulated Price. The Stipulated Price is [____].
16.5 Closing. The closing of any purchase by City under this Article must occur within 180 days after City’s exercise of the purchase right, subject to customary closing conditions.
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ARTICLE 17 - APPRAISAL PROCEDURE
17.1 Selection of Appraisers. If the Parties are unable to agree upon the Appraised Value within 30 days after execution of this Lease, each Party must, within 15 days thereafter, select a licensed MAI appraiser with experience in appraising commercial properties in Ventura County. The two appraisers must, within 15 days after their selection, select a third MAI appraiser. If they fail to agree, either Party may petition the presiding judge of the Ventura County Superior Court to appoint the third appraiser.
17.2 Determination of Value. Within 60 days after selection of the third appraiser, each appraiser must independently determine the fair market value of the Premises. The Appraised Value will be the average of the two closest appraisals. The costs of the appraisal process will be shared equally by the Parties.
ARTICLE 18 - ASSIGNMENT AND SUBLETTING
18.1 City’s Right to Sublease. City has the right, without Developer’s consent, to sublease the Premises to a Venue Operator for the operation of the Venue, provided the sublease is consistent with the Permitted Use, expressly prohibits residential or housing development, requires compliance with Applicable Laws, and does not relieve City of its obligations under this Lease.
18.2 Other Transfers by City. Except for subleases to a Venue Operator as described above, City may not assign this Lease or sublease all or any portion of the Premises without the prior written consent of Developer, which consent may not be unreasonably withheld, conditioned, or delayed.
18.3 Developer’s Right to Transfer. Developer may sell, assign, or transfer its interest in the Premises and this Lease to any person or entity, subject to City’s purchase right and the condition that the transferee expressly assumes Developer’s obligations under this Lease.
18.4 Financing. Mortgages, deeds of trust, and other forms of conveyance required for financing are permitted without City’s consent, but only for the purpose of securing loans used for financing or refinancing development and construction of improvements related to this Lease, e.g., the venue.
18.5 Bond Issuance Security. Because City will not hold fee simple ownership of the Premises, Developer must cooperate with City in connection with City’s issuance of 25 13
public financing bonds for the Venue. Developer has agreed to accept a second-position security interest on Parcel X, subject to a separate subordination agreement to be negotiated by the Parties.
ARTICLE 19 - CONDEMNATION
19.1 Total Taking. If the entire Premises are taken by eminent domain or other governmental action, this Lease will terminate as of the date of the taking. The condemnation award will be allocated between the Parties based on the value of the land and reversionary interest for Developer, and the value of the Improvements, City’s leasehold interest, and any relocation or business interruption damages for City.
19.2 Partial Taking. If a portion of the Premises is taken and the remainder is sufficient for City to continue the Permitted Use, this Lease will continue as to the remainder and the Rent will be equitably adjusted. If the remainder is insufficient for the Permitted Use, either Party may elect to terminate this Lease by written notice within 60 days after the partial taking.
19.3 Temporary Taking. If the Premises or any portion thereof are temporarily taken for a period that does not extend beyond the Term, this Lease remains in effect and City is entitled to receive the entire condemnation award attributable to such temporary taking.
ARTICLE 20 - CASUALTY
20.1 Damage and Destruction. If the Improvements are damaged or destroyed by fire, earthquake, or other casualty, City must, at its sole cost and expense, promptly repair and restore the Improvements to substantially the same condition as existed immediately before the casualty, unless this Lease is terminated pursuant to Section
20.2. 20.2 Termination for Casualty. If the Improvements are damaged or destroyed to such an extent that the cost of restoration exceeds 50% of replacement cost, or if the damage occurs during the last 10 years of the Term, City may elect to terminate this Lease by delivering written notice to Developer within 90 days after the casualty.
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ARTICLE 21 - TITLE; SUBORDINATION AND NON-DISTURBANCE
21.1 Title. Developer represents and warrants that Developer holds fee simple title to the Premises, subject only to those exceptions of record disclosed to City before the date of this Lease.
21.2 Title Insurance. City may, at its sole cost and expense, obtain an ALTA leasehold title insurance policy insuring City’s leasehold interest in the Premises.
Developer must cooperate with City and the title company as reasonably necessary to issue the policy.
21.3 Subordination and Non-Disturbance. This Lease is subordinate to any mortgage, deed of trust, or other security instrument encumbering Developer’s fee interest in the Premises, provided the holder executes and delivers to City a subordination, non-disturbance, and attornment agreement in a form reasonably acceptable to City and such holder.
21.4 Estoppel Certificates. Either Party may request the other Party to certify in writing the status of this Lease, any amendments, and whether the requesting Party is in default.
ARTICLE 22 - QUIET ENJOYMENT
Developer covenants that, so long as City is not in default under this Lease beyond any applicable cure period, City will have quiet and peaceable enjoyment of the Premises throughout the Term, free from interference by Developer or any person claiming by, through, or under Developer.
ARTICLE 23 - NOTICES
All notices required or permitted under this Lease must be in writing and delivered in person, by certified mail, postage prepaid, by recognized overnight delivery service, or by email.
To City:
City of Simi Valley
Attention: Luis Garibay, Assistant City Manager
2929 Tapo Canyon Road
Simi Valley, CA 93063
Email: [email protected]
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With a copy to:
Algeria R. Ford, City Attorney
City of Simi Valley
2929 Tapo Canyon Road
Simi Valley, CA 93063
Email: [email protected]
To Developer:
Steerpoint/SteelWave
[Insert Address]
Attention: [Insert Contact Name and Title]
Email: [Insert Email Address]
Any notice given as required herein is deemed given on the 3rd business day after deposit in the United States mail if sent by certified mail, upon delivery if personally delivered, or upon transmission if sent by email. A Party may change its address for notices by giving written notice to the other Party.
ARTICLE 24 - SURRENDER OF PREMISES
24.1 Condition Upon Surrender. Upon expiration or earlier termination of this Lease, City must surrender the Premises to Developer in a clean, safe, and orderly condition, free and clear of all subleases, licenses, and occupants, except as otherwise agreed by the Parties in writing.
24.2 Ownership of Improvements Upon Expiration. Upon expiration of the Term, including any renewal term, ownership of all Improvements then located on the Premises will automatically vest in Developer, free and clear of any claim by City, without payment of additional consideration.
24.3 Removal of Personal Property. City must remove all of City’s personal property and trade fixtures from the Premises before expiration or earlier termination of this Lease. Any personal property not removed within 30 days thereafter is deemed abandoned and becomes the property of Developer.
ARTICLE 25 - RELATIONSHIP OF PARTIES
The relationship between the City and the Developer is landlord and tenant.
Nothing in this Lease may be construed to create a partnership, joint venture, or agency relationship between the Parties.
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ARTICLE 26 - NO THIRD-PARTY BENEFICIARIES
This Lease benefits only the City and the Developer. No other person or entity is a beneficiary of any obligation under this Lease.
ARTICLE 27 - SEVERABILITY
If any term, provision, condition, or covenant in this Lease, or the application thereof to any Party or circumstance, is held invalid or unenforceable, the remainder of this Lease is not affected thereby, and each term and provision remains valid and enforceable to the fullest extent permitted by law.
ARTICLE 28 - INTERPRETATION AND GOVERNING LAW
28.1 Governing Law. This Lease and any dispute arising hereunder are governed by and interpreted in accordance with the laws of the State of California. Venue for any action arising under this Lease is in Ventura County.
28.2 Section Headings. Section headings and subheadings are inserted for convenience only and do not affect any construction or interpretation of this Lease.
28.3 Time of Essence. Time is of the essence regarding each provision of this Lease of which time is an element.
28.4 Entire Agreement. This Lease and all exhibits contain the entire agreement between the Parties with respect to the subject matter hereof, and any agreement or representation not expressly set forth herein is null and void.
28.5 Recitals. The recitals are specifically incorporated into and made a part of this Lease.
28.6 Covenant of Good Faith and Fair Dealing. Neither Party may do anything that has the effect of harming or injuring the right of the other Party to receive the benefits of this Lease. Each Party must refrain from doing anything that would render its performance impossible and must do everything this Lease contemplates that such Party must do to accomplish the objectives and purposes of this Lease.
ARTICLE 29 - DISPUTE RESOLUTION
29.1 Proceedings. The Parties may agree to dispute resolution proceedings in an effort to resolve disputes or questions of interpretation under this Lease in a fair and 29 17
expeditious manner, including City procedures, mediation, arbitration, or other mutually agreed methods.
29.2 Mediation. Before initiating arbitration or litigation, the Parties must first attempt to resolve any dispute through mediation. Either Party may initiate mediation by written notice. The Parties must mutually select a mediator within 15 days after the mediation notice, and the mediation must be conducted within 45 days after selection.
Costs are shared equally.
29.3 Arbitration. Any dispute the Parties agree to resolve by arbitration must be settled by an arbitrator who is a retired judge of the Ventura County Superior Court, Appellate Justice of the Second District Court of Appeal, or Justice of the California Supreme Court, selected as provided by mutual agreement or JAMS procedures if needed.
29.4 Procedures. Upon appointment of the arbitrator, the matter must be set for arbitration at a time not less than thirty (30) nor more than 90 days from the effective date of the appointment. Arbitration must be conducted under Code of Civil Procedure section 638 et seq., or other mutually agreed procedures, with applicable discovery and evidentiary rules.
ARTICLE 30 - COOPERATION IN EVENT OF LEGAL CHALLENGE
30.1 Challenges. In the event of any legal action instituted by a third party challenging the validity of any provision of this Lease, City and Developer agree to use reasonable efforts to cooperate in defending such action. This Lease remains in full force and effect while such litigation, including appellate review, is pending.
30.2 City’s Costs. Developer agrees to pay City’s reasonable costs of defending any such third-party challenge, including court costs and reasonable attorneys’ fees, unless the challenge arises from Developer’s breach of this Lease or Developer’s independent acts unrelated to this Lease.
ARTICLE 31 - EXTENSION OF TERM FOR DISPUTES
The Term of this Lease is automatically extended for the period during which the Parties are engaged in dispute resolution, to the extent reasonably required because 30 18
activities that would have been completed before expiration of the Term are delayed as a result of such dispute resolution.
ARTICLE 32 - RECORDATION
A memorandum of this Lease, in a form mutually agreed upon by the Parties, must be recorded in the Official Records of Ventura County within 10 days after the Commencement Date. The Parties must also record any amendment or cancellation of this Lease within 10 days after its effective date. Failure to timely record is not a default and does not invalidate this Lease.
ARTICLE 33 - COUNTERPARTS
This Lease may be signed in counterparts, each of which is an original, and all of which together are 1 instrument.
ARTICLE 34 - BINDING EFFECT
This Lease binds and benefits the Parties and their respective successors and assigns.
ARTICLE 35 - EQUITABLE SERVITUDES AND COVENANTS RUNNING WITH THE LAND
All provisions of this Lease are enforceable as equitable servitudes and constitute covenants running with the land, pursuant to Sections 65865.4 and 65868.5 of the California Government Code. Each covenant to do, or refrain from doing, some act with regard to the Premises: (a) is for the benefit of and is a burden upon the Premises; (b) runs with the Premises and each portion thereof; and (c) is binding upon each Party and each successor in interest during ownership of the Premises or any portion thereof.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the Parties hereto have caused this Lease to be executed on the day and year first above written.
Attest: City of Simi Valley, A Municipal Corporation
By:
Lucy Blanco, City Clerk Dee Dee Cavanaugh, Mayor of the City of Simi Valley, California
Approved as to Form: STEERPOINT/STEELWAVE
By:
Algeria R. Ford, City Attorney
Approved as to Content:
By:
Samantha C. Argabrite, City Manager
Luis Garibay, Assistant City Manager
City Attorney
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EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
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EXHIBIT B
SITE PLAN
34 Attachment C
Parcel X
+/- 6.5 AC
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