City of Simi Valley
Staff Report
July 27, 2026
To: City Council
From: Samantha C. Argabrite, City Manager
Algeria R. Ford, City Attorney
Subject: Consideration of the Permitted Delay Notice submitted by Runkle Canyon, LLC for the Runkle Canyon/Woodlands Project, which declares a Force Majeure Delay under Section 29(b) of the Fifth Amendment to Development Agreement DA -04-01 and requests a day -for-day extension of all Hard Milestones, and a recommendation that the City Council deny the request
Recommendation
The City Manager and the City Attorney recommend that the City Council deny the request of Runkle Canyon, LLC (the “Developer”) for force majeure relief under Section 29(b) of the Fifth Amendment to Development Agreement DA -04-01 (the “Development Agreement”). The Developer asks the City to toll every Hard Milestone on a day -for-day basis for at least one year and to confirm that no penalty payment will accrue during that period. It is recommended the Council deny that request and affirm the written objection the City delivered on July 9, 2026. The Developer’s own unresolved slope -stability obligations and incomplete permit submittals, not any act of the City, are creating the delay between the Developer and the building permits it seeks.
Background
The Runkle Canyon/Woodlands Project (the “Project”), now marketed as Arroyo Vista at the Woodlands, is a 1,595-acre master-planned community first approved in 2004. When complete, the Project will include 461 residential units—25 custom estate lots, 298 single- family homes, and 138 senior condominiums (including 62 affordable units) —along with a neighborhood park and open space. The Developer, Runkle Canyon, LLC, is a joint venture of KB Home and Lennar Homes.
The City and the Developer are parties to the Development Agreement, most recently amended by the Fifth Amendment, which the parties executed on October 20, 2025, and recorded in Ventura County. The Fifth Amendment extends the term of the Development Agreement to October 6, 2028, and allows an automatic extension to October 6, 2030, if the Developer timely meets each “Hard Milestone” in the attached schedule adopted by the Council during the October 6, 2025, meeting (Attachment A). Section 29 governs force majeure: the Developer must give the City written notice of a claimed delay within 30 days, and the claimed delay is deemed to occur unless the City objects in writing within 10 days. Section 29(a) requires the Developer to pay $ 300,000 toward the Affordable Housing In -Lieu Fee for each missed Hard Milestone. Two Hard Milestones are immediately in play: the first estate -lot building-permit inspection, and the issuance, by
Agenda Item No.
9B
September 30, 2026, of permits and zoning clearances for the Senior Units and Recreation Center, which carries a $250,000 partial in-lieu payment.
The Project has advanced under this framework, but one issue remains unresolved: the geotechnical stability of the estate-lot slopes, particularly Lots 244 through 248. The City’s geotechnical reviewer first questioned the stability of these slopes in 2016, and the analyses for the controlling cross-sections have repeatedly shown factors of safety below the minimum the City requires. The City may not issue building permits for these lots until a qualified professional confirms that the slopes are stable, and the Developer must cure these conditions before any permit can be issued.
The Sandy Fire began on May 18, 2026, near the Project and burned roughly 2,183 acres.
Because the fire could affect slope stability, the City, on June 22, 2026, extended the affected Hard Milestone by 120 days so that the fire’s impact could be assessed. That post-fire assessment is not yet complete. The Milestone Schedule included as Attachment A does not include any updated dates to reflect this recent change.
The Developer’s Permitted Delay Notice
On July 7, 2026, the Developer’s counsel delivered a Permitted Delay Notice to the City Manager under Section 29(b) of the Development Agreement. A copy is included as Attachment B. The Notice declares a Force Majeure Delay on two independent grounds:
(1) the Sandy Fire, which the Developer characterizes as an unanticipated act of nature; and (2) claimed “Processing Delays” by the City and its consultants. The Developer requests that the City toll every Hard Milestone on a day -for-day basis until the parties agree in writing that the delay has abated, and that the City confirm no penalty will accrue under Section 29(a) during that period. The Developer estimates that the delay will last at least one year —until at least May 18, 2027—and reserves the right to seek specific performance under Section 19 of the Development Agreement.
The City’s Response and Objection
The City responded on July 9, 2026. A copy is included as Attachment C. The City objected in writing to the purported Permitted Delay within the 10-day period that Section 29(b) allows. Because the City objected in time, no portion of the asserted Force Majeure Delay may be deemed to occur. The response also explains why neither ground supports the relief the Developer seeks.
Discussion
Staff has reviewed both grounds asserted in the Notice. Neither ground justifies the open- ended, day-for-day extension of every Hard Milestone that the Developer requests.
A. The Sandy Fire has already been addressed
The City has already accounted for the Sandy Fire. On June 22, 2026, the City extended the affected Hard Milestone by 120 days for the specific purpose of allowing the fire’s effect on slope stability to be assessed. That assessment is not complete. Until it is, the City cannot determine whether any time beyond the 120 days already granted is 2 warranted. The Developer’s request for a further, open- ended extension of every Hard Milestone is therefore premature. To the extent the Notice claims a Force Majeure Delay attributable to the Sandy Fire beyond the 120 days already granted, the City proper ly objected under Section 29(b).
B. The processing-delay claim is not supported
The Notice recasts the pending geotechnical review as a City-caused Processing Delay.
The record does not support that characterization. The slope-stability questions affecting the estate lots—particularly Lots 244 through 248—have been open for roughly a decade, and the Developer has been on notice of them since at least 2016. The City’s reviewer, GeoDynamics, Inc., first raised these concerns in 2016, and through the 2024 –2026 review cycle the analyses for the controlling cross -sections continued to show factors of safety below the required minimum. These are conditions the Developer must cure before permits can be issued. The time needed to resolve them is not a Permitted Delay within the meaning of Section 29(b); the Developer had more than a decade to address them.
The geotechnical review is not the only matter standing between the Developer and a building permit. The Developer’s own submittals remain incomplete. Its applications for the estate-lot homes, submitted in October 2024, have awaited approval of the soils report and completion of the Supplemental Zoning Clearance since November 2025. Its applications for the recreation center and the senior -housing buildings, submitted in October 2025, did not reach the City as a complete submittal until July 7, 2026. And approval of the Master Prototype Plans remains pending because the Developer has not yet responded to the Planning Division’s comments issued on July 2, 2026. These are the Developer’s delays, not the City’s.
The Notice also asserts that the introduction of a geotechnical advisor to the City Attorney was a precipitating cause of delay. The advisor’s role and qualifications were disclosed to the Developer’s counsel months earlier, in March 2026, and the Developer raised no objection at that time. The advisor conducted the only post -fire inspection of the slopes at issue, on June 20, 2026; to the City’s knowledge, no representative of the Developer has been on those slopes since the fire.
C. Public health and safety
The City’s insistence on verified slope stability protects public health and safety. The City may not responsibly issue building permits for homes on slopes that qualified professionals have not confirmed to be stable, particularly after a wildfire and with a strong El Niño forecast for later in 2026. Granting the requested extension would not resolve that concern; it would only relieve the Developer of the milestone obligations it agreed to while the underlying safety questions—questions the Developer must resolve—remain open.
The following alternatives are available to the City Council:
1. Deny the Developer’s request for force majeure relief and affirm the City’s written objection under Section 29(b);
3 2. Grant, in whole or in part, the requested day -for-day extension of the Hard Milestones; or,
3. Provide staff with other direction.
Staff recommends Alternative 1.
Financial Impact
No financial impact. This action concerns enforcement of the Development Agreement, not a new program, so it does not generate permit-revenue or program-cost beyond what was previously estimated.
Suggested Motion
I move to deny the request of Runkle Canyon, LLC for a Permitted Delay and a day -for- day extension of the Hard Milestones under Section 29(b) of the Fifth Amendment to Development Agreement DA -04-01, and to affirm the City’s written objection to the asserted Force Majeure Delay.
Summary
On July 7, 2026, the Developer delivered a Permitted Delay Notice declaring a Force Majeure Delay on two grounds —the Sandy Fire and alleged City Processing Delays — and requested a day-for-day extension of every Hard Milestone for at least one year. The City objected in writing on July 9, 2026, within the time Section 29(b) allows. The Sandy Fire has already been addressed through the 120- day extension the Council granted on June 22, 2026, and any further extension is premature until the post -fire assessment is complete. The claimed Processing Delays are not City -caused; they reflect decade- old slope-stability obligations the Developer must satisfy and the Developer’s own incomplete submittals. The City Manager and the City Attorney recommend that the Council deny the request and affirm the City’s objection.
Prepared by: Karl H. Berger, Senior Assistant City Attorney, Office of the City Attorney
Attachments
Attachment A - Runkle Canyon Milestone Schedule
Attachment B - Permitted Delay Notice from Runkle Canyon, LLC, dated July 7, 2026 Attachment C - City of Simi Valley response letter to the Developer’s counsel, dated July 9, 2026
4 Attachment A
Runkle Canyon Milestone Schedule
Date Milestone Milestone
Type
10/06/25 City Council events DA Extension approved
10/31/25 Senior Units/Recreation Center Submit for Building Plan check to Building & Safety. KB to provide an At-Risk letter if Administrative Action approvals have not been obtained or appeal period exhausted.
Soft
12/01/25 Planned Development Permit Estate Lot PD Application for 21 lots submitted Soft 12/01/25 City Council First Quarterly Update
12/31/25 Estate Lots Building Permits and Zoning Clearances issued for four (4) estate lots.
Soft
03/26/26 City Council Second Quarterly Update
03/31/26 Planned Development Permit Estate Lot PD for 21 Lots Deemed Complete Soft 07/31/26 Planned Development Permit Estate Lot PD approved at Planning Commission for 21 lots
Soft
07/31/26 Estate Lots First Building Permit Inspection on Estate Lots Hard 06/01/26 City Council Third Quarterly Update
09/01/26 City Council Fourth Quarterly Update
09/30/26 Senior Units/Recreation Center Building Permits and Zoning Clearances issued for all Senior Units and Recreation Center. Partial in-lieu
payment of $250,000 will be due with the issuance of first zoning/building permit of Senior Unit/Recreation Center building permit.
Hard
12/01/26 Estate Lots Building Permits for the four (4) estate lots finaled Soft 12/01/26 City Council Fifth Quarterly Update
01/15/27 Planned Development Permit First Building Permit inspection for 1-4 PD Lots Hard 03/01/27 City Council Sixth Quarterly Update
06/01/27 City Council Seventh Quarterly Update
06/30/27 Senior Units/Recreation Center First Building Permit inspection on Phase I of Senior Units/Recreation Center.
Soft
09/01/27 City Council Eighth Quarterly Update
09/01/27 Planned Development Permit Building Permits on 5-12 PD Lots finaled Hard 09/30/27 Senior Units/Recreation Center Final payment of $650,000 in-lieu fee Hard 12/01/27 City Council Ninth Quarterly Update
03/01/28 City Council Tenth Quarterly Update
03/30/28 Planned Development Permit Building Permits finaled on PD Lots 13-16 Soft 06/01/28 City Council Eleventh Quarterly Update
06/30/28 Senior Units/Recreation Center Building Permits for Senior units Phase 1 finaled Hard 06/30/28 Senior Units/Recreation Center First Building Permit inspection on Senior Phase 2 and Rec Center
Soft
09/01/28 City Council Twelfth Quarterly Update to City Council 09/30/28 Planned Development Permit First Building Permit inspection on PD lots 17-21 Hard 09/30/28 City Council 2-Year DA Extension if all hard deadlines are met. 12/01/28 City Council Thirteenth Quarterly Update to City Council Terminology: Building Permits finaled = Construction completed and ready for occupancy First Building Permit inspection = Inspection for setbacks and foundation/footings At-Risk = Submitting for building permit plan check prior to full entitlement approval 5 6
Attachment B
7 �Procopio�
Developer did not cause or contribute to the Sandy Fire Event, and Developer has taken all reasonable steps within its control to minimize the impact of the fire, including without limitation allowing Lot 244 to be used as a staging area for Ventura County Fire during its efforts to control and extinguish the fire.
As Developer is sure the City will agree, the impacts of the Sandy Fire Event are not limited to the period of active burning. Post-fire impacts include without limitation mandatory safety clearances, site reassessment by geotechnical and civil engineering consultants, re-inspection and repair of erosion control and slope stability measures, re-scheduling of construction activities and inspections that are suspended as a result of the Sandy Fire Event. These post-fire impacts constitute a continuing Force Majeure Delay that commenced on or about May 18, 2026, and whose full duration and scope are still being ascertained as of the date of this Notice.
Processing Delays
Separate from and independent of the Sandy Fire Event, Developer has been subjected to, and continues to be subjected to, ongoing delays in the City's processing of Developer's submissions, applications, and requests for approvals necessary to advance the Project. Developer would like to be clear at the outset that this is not intended to point fingers at staff or any consultants; rather, we raise these issues to reflect the reality of processing a complex and multi-faceted Project that has spanned more than two decades from commencement to its current status. We firmly believe City staff and consultants are working in good faith to process all requests in a timely manner, but the fact remains that required approvals are taking far longer than Developer, or City staff, contemplated when the Development Agreement was approved and the Hard Milestones were agreed to.
These Processing Delays have occurred across multiple work streams, including, but not limited to: 1) the grading plan application and related geotechnical review for the Phase I Estate Lots; 2) the plan check and resubmittal review process on the Senior Units and Recreation Center; 3) review of the Master Prototype Set by the Building Department; and 4) issuance of Supplemental Zoning Clearances necessary to achieve the September 30, 2026 Hard Milestone.
Developer does not believe it is productive or warranted to document at length the nature of these delays, though this can be done in subsequent correspondence if the City prefers greater detail into the nature of the Processing Delays. Suffice to say that Developer has diligently submitted, resubmitted, and followed up on all pending applications and submissions in accordance with agreed timelines, and has attended and participated in monthly "all hands" meetings pursuant to the obligations of both parties under Section 26(1) of the Development Agreement.
Notwithstanding the good-faith efforts of both Parties, the City's review timelines have extended well beyond the periods anticipated in the Parties' shared milestone planning, and multiple review cycles remain open as of the date of this notice. The ongoing nature of the Processing Delays has independently impacted Developer's ability to achieve Hard Milestones. The processing Delays qualify as Force Majeure Delays under one or more of the following provisions of Section 29(b): (vii) the failure, delay, or inability of the City to provide adequate levels of public services, facilities, or infrastructure to the Project; and/or (x) governmental action or inaction (including, without limitation, the arbitrary or capricious failure, refusal, or delay in processing submissions, issuing permits, or granting other approvals).
135084-00000001/10936840.2 3 procopio.com
8 9
10 July 9, 2026
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND ELECTRONIC MAIL Jordan Ferguson, Partner
Procopio, Cory, Hargreaves & Savitch LLP
200 Spectrum Center Drive, Suite 1650
Irvine, CA 92618
Re: Response to Letter dated July 7, 2026 Asserted Permitted Delay Notice Dear Mr. Ferguson:
Your letter dated July 7, 2026 (Letter) addressed to the City Manager was forwarded to me for a response. Thank you for your correspondence. I am, once again, disappointed in your client’s poor choices regarding this project.
The Letter seeks relief on two grounds: the Sandy Fire and asserted Processing Delays. The City Council already addressed the first through the force majeure mechanism on June 22, 2026. The second does not withstand scrutiny. This response provides the City’s position and the process by which your client’s request will be considered. It is submitted without waiver of any of the City’s rights, remedies, or defenses under the Development Agreement, at law, or in equity.
To the extent the Letter constitutes a Permitted Delay Notice under Section 29(b) of the Development Agreement, the City objects in writing to the purported Permitted Delay. This written objection is delivered within 10 days after the City’s receipt of the Letter. Accordingly, no portion of the asserted Force Majeure Delay may be deemed to occur for the period stated in the Letter.
A. The Sandy Fire Already Resulted in an Extension
In recognition of the Sandy Fire (which began on May 18, 2026), the City Council extended the affected Hard Milestone deadline in the Development Agreement by 120 days to allow the slope- stability impact of the fire to be assessed. That occurred at the June 22, 2026, City Council meeting and was granted based upon the City Attorney’s recommendation to the City Council — which was shared with you in advance. It is the only reason the hard deadline moved.
That fire prompted the City Council to require additional information on the stability of the slopes adjacent to the Estate Lots before the Building Official can consider issuing building permits. The post-fire assessment is not complete. Until it is, there is no way to determine 11 Attachment C
whether any time beyond the 120 days already granted is warranted. Your client’s request for a further, open-ended, day-for-day extension of every Hard Milestone is therefore premature.
Consequently, to the extent the Letter asserts a Force Majeure Delay attributable to the Sandy Fire beyond the 120 days already granted, the City objects to that asserted delay under Section 29(b).
B. The Processing Delay Claim Is Disingenuous
The Letter recasts the pending geotechnical review as a City-caused Processing Delay. Nothing in the record supports this assertion. The slope-stability questions affecting the Estate Lots — particularly Lots 244 through 248 — have been pending for approximately a decade and remain unresolved; your client has been on notice of these issues since at least 2015.
The City’s geotechnical reviewer, GeoDynamics, Inc. (GDI), first raised slope-stability concerns in a letter dated February 9, 2016, questioning the analysis for Cross-Section E-E at Lot 244. The tract was rough-graded and approved in 2016 subject to caveats that assigned the risk of unresolved estate-lot slope issues to your client. Those concerns are not resolved. And are only compounded because of the Sandy Fire and the projected “super” El Niño in late 2026.
Through the 2024–2026 review cycle — GeoTek’s June 27, 2024 updated report, GDI’s June 13, 2025 review, and the successive exchanges culminating in GDI’s January 26 and March 16, 2026 reviews — the analyses for the controlling cross-sections continued to show factors of safety below the minimum required levels. These are conditions your client must cure before permits can issue. The time required to resolve them is not a Permitted Delay within the meaning of Section 29(b): your client had more than a decade to resolve these matters. Your client’s historical failure to address known slope-stability concerns and to protect the homeowners on this site is well documented. Against that record, the suggestion that the City’s insistence on verified slope stability is a Permitted Delay is, at best, unpersuasive. Accordingly, the City objects under Section 29(b) to the asserted Permitted Delay in the Letter, and that asserted delay will not be deemed to occur.
In any event, the geotechnical questions are not the only matters standing between your client and any building permit. Your client’s applications for the homes on the Estate Lots at 162–198 Redwood Grove Court were submitted on October 11, 2024, and have remained pending since November 13, 2025, awaiting both formal approval of the soils report by the City’s soils consultant and completion of the Supplemental Zoning Clearance. The applications for the recreation center and the senior housing buildings, submitted on October 24, 2025, likewise remain in plan check: your client’s second-review resubmittal was made in piecemeal fashion and failed to address the City’s first-review comments, so Building & Safety did not receive a complete submittal until July 7, 2026. And approval of the Master Prototype Plans remains pending until your client addresses the Planning Division’s outstanding comments, which were issued on July 2, 2026. These are your client’s own delays; they are not attributable to the City. 12 C. The City Attorney’s Advisor
The Letter asserts that
a precipitating event for seeking relief is the introduction of a “new” third- party consultant to the geotechnical process (the Letter asserts that the consultant started June 15, 2026). That characterization is false.
The City Attorney’s advisor was retained following a telephone call on March 25, 2026 with you. Neither his role nor his qualifications are a revelation. While I was not required to — under any circumstance — I communicated with you then (verbally and in writing) that breaking the geotechnical impasse might be best achieved with a third-party advisor for the City Attorney. As the City Attorney’s expert, the findings provided by the advisor are privileged communications and not disclosable. Despite being informed that the advisor was not an engineer (he is a certified geologist) and being provided a written overview regarding the preliminary findings for collecting field data from the slopes, you raised no objections until three months later – and only after the City Council acted to extend the July 1st hard milestone.
Since the Sandy Fire, the only person to have visited and assessed the slope stability issues is the City Attorney’s advisor, who conducted an onsite inspection on June 20, 2026 (after my written communication with you dated … June 15, 2026 … seeking access to the property). To the City’s knowledge, no representative of your client has set foot on the slopes that are at issue since the fire.
Neither you nor your client is in any position to challenge the City Attorney’s choice as to choosing an expert, receiving objective (and privileged) advice, or otherwise interfering with our ability to fully advise our client.
D. Next Steps
Since the Letter has abandoned the thoughtfully planned and (until June 23, 2026) successful path toward completing this project, there will be no more meetings between your client’s representatives and City staff. Processing your client’s project will continue in strict conformance with applicable law. While the City will continue its analysis regarding the slope stability — and whether building permits may be issued — your clients will receive no further accommodations. The cessation of meetings described above applies only to the voluntary all- hands coordination meetings and not to any meet-and-confer required by Section 29(b).
As to that meet and confer requirement, consideration of the matter will be scheduled for the City Council meeting on July 27, 2026. The City Manager’s and City Attorney’s recommendation is for the City Council to deny your client’s request. In sum, your client’s inability to complete its building permit application is the issue, not the City’s purported delay.
Among other things, your client has – for more than 10 years – been aware of the slope-stability 13 conditions and did not resolve them; the post-fire assessment the Council directed is not yet complete, so any need for additional time cannot yet be determined; and the City’s actions are necessary to protect public health and safety. Should your client choose to inadvisably take legal action against the City, this office will seek to recover defense costs, including attorney’s fees, pursuant to Code of Civil Procedure § 1038.1
Notwithstanding the above, the City Council’s previous direction to the City Manager and City Attorney remains paramount: to process the project expeditiously while protecting public health and safety. Accordingly, I offer your client — one last time — an opportunity to get back on course. If the City receives a written rescission of the Letter not later than July 22, 2026, the matter will be taken off the City Council agenda. We may then resume the plans I previously laid out regarding resolving the geotechnical issues.
Please direct any questions to me in writing only. There will be no further verbal discussions.
Very truly yours,
Karl H. Berger
Senior Assistant City Attorney
c: Samantha C. Argabrite, City Manager
Algeria R. Ford, City Attorney
James Vaughn, Procopio, Cory, Hargreaves & Savitch LLP
1 See Kobzoff v. Los Angeles County Harbor/UCLA Medical Center (1998) 19 Cal.4th 851. 14