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HomeMy WebLinkAbout1-14-14 Item #06CITY OF LADE � LSIAORE - -, I DREAM EXTREMEW REPORT TO CITY COUNCIL TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: GRANT YATES CITY MANAGER DATE: JANUARY 14, 2014 SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE APPROVING A DEPOSIT AND REIMBURSEMENT AGREEMENT, A CITY FEE DEPOSIT AND REIMBURSEMENT AGREEMENT AND AN EVMWD FEE DEPOSIT AND REIMBURSEMENT AGREEMENT RELATING TO THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007 -5 (RED KITE) Recommendation Adopt Resolution No. 2014- 011approving the Deposit and Reimbursement Agreement, the City Fee Deposit and Reimbursement Agreement and the EVMWD Fee Deposit and Reimbursement Agreement. Background The Cottage Lane development is generally located northwest of Riverside Avenue, southeast of Machado Street, and north of Grand Avenue. The project site lies at the terminus of Ulla Lane and Tiller Lane that both intersect with Machado Street. The development is approximately 12 acres and is subject to the Cottage Lane Specific Plan, approved by the City Council in 2005. The Specific Plan contemplates the construction of 48 single family homes. In connection with that proposed development, Community Facilities District No. 2007 -5 (Red Kite) was formed but no bonds were issued. The prior developer constructed three model homes along Tiller Lane before abandoning the project. Those model homes remain unoccupied. The current developer, LE Cottage Lane, LLC ( "Developer "), acquired the project and has begun taking steps to complete the development. AGENDA ITEM NO. 6 Page 1 of 39 Resolution Approving Deposit and Reimbursement Agreements (CFD No. 2007 -5) January 14, 2014 Page 2 Discussion The Developer has requested that the City Council consider certain changes regarding CFD No 2007 -5 to facilitate financing and development of the project. Three agreements implementing those changes are before the City Council for consideration. First, the Developer requests that the City Council approve a tri -party agreement between the Developer, the City and Elsinore Valley Municipal Water District ( "EVMWD ") that would allow the Developer to make deposits with EVMWD for certain water charges and then, if bonds are issued, seek reimbursement of those deposits upon payment of such water charges from future bond proceeds. This tri -party agreement, entitled EVMWD Fee Deposit and Reimbursement Agreement, is attached for the City Council's consideration. EVMWD approved this agreement on November 14, 2013. The Developer also requests that the City Council approve the attached City Fee Deposit and Reimbursement Agreement. The City Fee Deposit and Reimbursement Agreement is similar to the agreement with EVMWD in that it allows the Developer to deposit City- mandated development impact fees with the City and seek reimbursement of those deposits upon payment of such impact fees from future bond proceeds if bonds are issued. Finally, the City Council is requested to consider the attached Deposit and Reimbursement Agreement between the City and the Developer that acknowledges the deposit by the Developer of $32,500 in order to defer the City's costs related to these change proceedings for CFD No. 2007 -5. Such costs include legal and consultants fees, the costs of publication of notices and mailings along with reasonable charges for City staff time. The attached Resolution authorizes approval of the three aforementioned agreements and further authorizes the Mayor, City Manager and Director of Administrative Services to execute the agreements and any related documents. The agreements do not authorize the issuance of bonds. Such authorization will necessarily be subject to the City Council's full review at a future meeting date. Page 2 of 39 Resolution Approving Deposit and Reimbursement Agreements (CFD No. 2007 -5) January 14, 2014 Page 3 Fiscal Impact None. The Developer has already deposited $32,500 and the Deposit and Reimbursement Agreement allows the City to require an additional deposit if the available deposited funds fall below $10,000 and additional funds are needed to cover the City's expenses. Prepared by: Nancy Lassey Finance Administrator Barbara Leibold City Attorney Approved by: Grant Yates City Manager fir Attachments: 1. EVMWD Fee Deposit and Reimbursement Agreement 2. City Fee Deposit and Reimbursement Agreement 3. Deposit and Reimbursement Agreement 4. Resolutions No. 2014 -jot Page 3 of 39 Page 4 of 39 RESOLUTION NO. 2014 -002 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE APPROVING A DEPOSIT AND REIMBURSEMENT AGREEMENT, A CITY FEE DEPOSIT AND REIMBURSEMENT AGREEMENT AND AN EVMWD FEE DEPOSIT AND REIMBURSEMENT AGREEMENT RELATING TO THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007 -5 (RED KITE) WHEREAS, the City Council (the "Council') of the City of Lake Elsinore (the "City ") has formed the City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) (the "CFD ") pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (the "Act'); and WHEREAS, the developer with respect to the CFD intends to make a security deposit with the City and Elsinore Valley Municipal Water District ( "EVMWD ") to cover certain City capital fees and EVMWD capital fees, respectively, which are eligible for refund upon the sale of bonds by the CFD and the payment of such City capital fees and EVMWD capital fees from the proceeds of such bonds; WHEREAS, such developer will provide for the advancement of funds to be used to pay costs incurred in connection with the preparation of the agreements being considered by the Council; NOW, THEREFORE, the City Council of the City of Lake Elsinore, California, does hereby resolve as follows: Section 1. The City Council hereby approves the Deposit and Reimbursement Agreement, the City Fee Deposit and Reimbursement Agreement and the EVMWD Fee Deposit and Reimbursement Agreement (the "Agreements ") in substantially the forms presented to the Council at this meeting. The Mayor, the City Manager and the Director of Administrative Services are hereby authorized to execute the Agreements with such revisions, amendments and completions as shall be approved by the officer executing the same, such approval to be conclusively evidenced by the execution and delivery thereof. Section 2. This Resolution shall take effect from and after the date of its passage and adoption. Page 5 of 39 Resolution No. 2014 -002 Page 2 of 2 PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Lake Elsinore, California, this 14th day of January, 2014. Natasha Johnson, Mayor ATTEST: Virginia J. Bloom, City Clerk APPROVED AS TO FORM: Barbara Z. Leibold, City Attorney Page 6 of 39 EVMWD FEE DEPOSIT AND REIMBURSEMENT AGREEMENT by and among CITY OF LAKE ELSINORE, ELSINORE VALLEY MUNICIPAL WATER DISTRICT and LE COTTAGE LANE, LLC relating to CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007 -5 (RED KITE) 79275774.2 Page 7 of 39 Page 8 of 39 EVMWD FEE DEPOSIT AND REIMBURSEMENT AGREEMENT THIS EVMWD FEE DEPOSIT AND REIMBURSEMENT AGREEMENT (the "Agreement") is entered into effective as of the day of 2013, by and among the CITY OF LAKE ELSINORE, a city duly organized and existing under the laws of the State of California ( "City "), ELSINORE VALLEY MUNICIPAL WATER DISTRICT, County of Riverside, State of California, a municipal water district ( "EVMWD "), and LE COTTAGE LANE, LLC, a California limited liability company ( "Property Owner "), and relates to the City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) (the "CFD "). RECITALS: A. The property described and depicted in Exhibit "A" hereto (the "Property ") constitutes the land within the boundaries of the CFD. B. Property Owner intends to develop the Property for residential purposes and has obtained or intends to obtain the necessary development approvals to construct approximately [48] residential units on the Property, as such development may be modified from time to time (the "Project'). C. The Project will require the payment, pursuant to the rules and regulations of EVMWD, as amended from time to time, applicable to the Project (the "Project Conditions ") of certain EVMWD Charges (defined below). D. In conjunction with the recording of the final subdivision map(s) for the Project, the issuance of building permits for the construction of homes within the Project and /or receipt of water meters for such homes, Property Owner, or its successors or assigns, may elect to provide a security deposit to cover EVMWD Charges to EVMWD (the "Deposit') before any Bond Proceeds are available to pay the EVMWD Charges. In such case, Property Owner shall be entitled to (i) reimbursement of such Deposits and (ii) credit for payments made to EVMWD from Bond Proceeds of the EVMWD Charges which would otherwise be due to EVMWD in conjunction with the Project, all as further described herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: 1. Recitals. Each of the above recitals is incorporated herein and is true and correct. 2. Definitions. Unless the context clearly otherwise requires, the terms defined in this Section shall, for all purposes of this Agreement, have the meanings herein specified. (a) "Act' means the Mello -Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. 79275774.2 Page 9 of 39 (b) "Bond Proceeds" or "Proceeds of the Bonds" shall mean those net funds generated by the sale of the Bonds and investment earnings thereon. (c) "Bonds" shall mean those bonds, or other securities, issued by, or on behalf of, the CFD in one or more series, as authorized by the qualified electors within the CFD. (d) "Deposits" means an amount deposited with EVMWD by Property Owner as security for EVMWD Charges and which are eligible for refund by EVMWD upon the sale of Bonds. (e) "EVMWD Charges" means water connection fees, sewer connection fees, annexation fees, sewer treatment capacity charges and all components thereof of EVMWD imposed upon the Project to pay for the provision of water and sewer services to and the construction of EVMWD water and sewer facilities required to serve the Project. Agreement. (f) "Party" or "Parties" shall mean any one or all of the parties to this (g) "State" means the State of California. 3. Reserved. 4. No Obligation to Issue Bonds; Sale of Bonds and Use of Proceeds. The City Council acting as the legislative body of the CFD may, in its sole discretion, finance, among other things, the EVMWD Charges by issuing the Bonds. Accordingly, this Agreement shall in no way obligate the City to issue the Bonds. As required by the Project Conditions, it may be necessary for Property Owner, or its successors or assigns, to make Deposits before Bonds are issued. Upon the issuance and sale of the Bonds, Property Owner may execute and submit a payment request, in substantially the form attached hereto as Exhibit `B ", to the CFD requesting disbursement to EVMWD of an amount equal to all Deposits from Bond Proceeds. Within ten (10) business days of EVMWD's receipt of funds pursuant to such disbursement request, EVMWD shall return the Deposits to Property Owner. The execution of this Agreement shall have no effect on the schedule of EVMWD Charges governing the amount to be paid when Deposits are made. EVMWD may expend such Deposits as an inter -fund borrowing to pay for the costs eligible to be financed by the EVMWD Charges to be repaid solely from any EVMWD Charges received by EVMWD. In the event Bonds are not issued within twenty -four (24) months of the date of any Deposit, such Deposit may be applied to pay the EVMWD Charges, and shall no longer be reflected as a deposit on the accounts of EVMWD. 5. Indemnification. Property Owner shall assume the defense of, indemnify and save harmless, the City, the CFD and EVMWD, their respective officers and employees, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of Property Owner with respect to this Agreement; provided, however, that Property Owner shall not be required to indemnify any person or entity as to damages 79275774.2 2 Page 10 of 39 resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. 6. Disclosure of Special Tax; Calculation of Special Tax Requirement. (a) Delivery of Notice. From and after the date of this Agreement, Property Owner and its successors and assigns shall give a "Notice of Special Tax" (as defined in Section 6(b) below) to each prospective purchaser of a parcel in the CFD and shall deliver a fully executed copy of each notice to the CFD. Property Owner and its successors and assigns shall (i) maintain records of each Notice of Special Tax for a period of five (5) years, and (ii) shall provide copies of each notice to the CFD promptly following the giving of such notice. Property Owner and its successors and assigns shall include the Notice of Special Tax in all Property Owner's and its successors' and assigns' applications for Final Subdivision Reports required by the Department of Real Estate ( "DRE ") which are filed after the effective date of this Agreement. Property Owner and its successors and assigns shall require, as a condition precedent to close an escrow for the sale of real property to a developer acquiring lots (a "Residential Developer "), that such Residential Developer shall (i) maintain records of each Notice of Special Tax for a period of five (5) years, (ii) provide copies of each notice to the CFD promptly following the giving of such notice, and (iii) include the Notice of Special Tax in all of such Residential Developer's applications for Final Subdivision Reports required by DRE. (b) Notice of Special Tax. With respect to any parcel, the term "Notice of Special Tax" means a notice in the form prescribed by California Government Code Section 53341.5 which is calculated to disclose to the purchaser thereof (i) that the property being purchased is subject to the special tax of the CFD; (ii) the land use classification of such property; (iii) the maximum annual amount of the special tax and the number of years for which it will be levied; (iv) if available at the time such notice is delivered, an indication of the amount of special tax to be levied on such property for the following fiscal year; and (v) the types of facilities or services to be paid for with the proceeds of the special tax. (c) Notice to Subsequent Purchasers. The CFD will file with the Riverside County Recorder a notice of special tax lien that gives notice of the existence of the CFD and the levy of the special tax on property within the CFD for the benefit of subsequent property owners, pursuant to requirements of Section 3114.5 of the Streets and Highways Code. (d) Information Sheet and Sample Property Tax Bill. Property Owner and its successors and assigns shall provide each purchaser of property with a sample property tax bill in a form approved by the CFD. Property Owner and its successors and assigns shall provide prospective purchasers of homes an information sheet in the sales office in the form set forth in Exhibit C attached hereto and incorporated herein by this reference. 7. Amendment and Assignment. This Agreement may be amended at any time but only in writing signed by each party hereto. This Agreement may be assigned, in whole or in part, by the Property Owner to the purchaser of any parcel of land within the Property provided, 79275774.2 3 Page 11 of 39 however, such assignment shall not be effective unless and until the City and EVMWD have been notified, in writing, of such assignment. 8. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the parties with respect to the subject matter of this Agreement. 9. Governing Notices. and Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy -two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: City: City of Lake Elsinore 130 S. Main Street Lake Elsinore, California 92530 Attn: City Manager EVMWD: Elsinore Valley Municipal Water District 31315 Chaney Street Lake Elsinore, California 92530 Attn: General Manager Property Owner: LE Cottage Lane, LLC 2917 Canon Street San Diego, California 92106 Attn: Wade Hall Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party hereto. 10. Attorneys' Fees. In the event of the bringing of any action or suit by any Party against any other Party arising out of this Agreement, the Party in whose favor final judgment shall be entered shall be entitled to recover from the losing Party all costs and expenses of suit, including reasonable attorneys' fees. 11. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 12. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. 13. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party hereto, or the failure by a party to exercise its rights upon the default of another party, shall not constitute a waiver of such party's right to insist and demand strict compliance by such other party with the terms of this Agreement thereafter. 79275774.2 El Page 12 of 39 14. No Third Party Beneficiaries. No person or entity other than the CFD shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, the CFD, EVMWD and Property Owner (and their respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement. 15. Singular Agreement may be executed in and shall be deemed an original, Plural; of which shall constitute but one Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. 79275774.2 5 Page 13 of 39 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. 79275774.2 CITY OF LAKE ELSINORE, a municipal corporation By: Mayor ELSINORE VALLEY MUNICIPAL WATER DISTRICT By: General Manager of the Elsinore Valley Municipal Water District LE COTTAGE LANE, LLC, a California limited liability company By: Its: By: 6 Page 14 of 39 EXHIBIT A DESCRIPTION OF PROPERTY 79275794.2 Page 15 of 39 Page 16 of 39 EXHIBIT B DISBURSEMENT REQUEST FORM 1. City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) ( "CFD ") is hereby requested to pay from the CFD bond proceeds to the Elsinore Valley Municipal Water District ( "EVMWD "), as Payee, the sum set forth in 3 below. 2. The undersigned certifies that the amount requested for EVMWD Charges is due and payable and has not formed the basis of prior request or payment. 3. Amount requested: For Lot Nos: 4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the EVMWD Fee Deposit and Reimbursement Agreement by and among the CITY OF LAKE ELSINORE, ELSINORE VALLEY MUNICIPAL WATER DISTRICT and LE COTTAGE LANE, LLC, dated 2013 (the "Agreement'). Capitalized terms not defined herein shall have the meaning set forth in the Agreement 5. The City is hereby requested to refund to the Property Owner any eligible Deposits held for the Lots shown above pursuant to the Agreement. Attached are copies of building permits issued and proof of payment of Deposits made for each Lot. LE COTTAGE LANE, LLC, a California limited liability company By: By: Date: cc: City of Lake Elsinore Finance Dept. 79275774.2 Page 17 of 39 Page 18 of 39 EXHIBIT C FORM OF INFORMATION SHEET 1. WHAT IS COMMIJNITY FACILITIES DISTRICT (CFD) No. ? CFD No. was formed pursuant to the "Mello -Roos Community Facilities Act of 1982" to finance 2. WHO IS RESPONSIBLE TO PAY THE SPECIAL TAX AND HOW IS IT BILLED? The property owner is responsible for paying the CFD No. special tax, which will appear as a separate line item on your property tax bill along with your regular property taxes. 3. HOW MUCH WILL MY SPECIAL TAX BE? WILL I The special tax is based upon the size of the home. The assigned and maximum special taxes for CFD No. for the [20 __j Fiscal Year are summarized below. Residential Property Greater than sq. ft. 2 Residential Property sq. ft. — sq. ft. 3 Residential Property sq. ft — sq. ft. 4 Residential Property Less than or equal to sq. ft. $ /dwelling unit $_ /dwelling unit /dwelling unit /dwelling unit 4. HOW LONG WILL I HAVE TO PAY THE CFD NO, SPECIAL TAX? The CFD No. special tax will not be collected after calendar year 20_. 5, CAN THE SPECIAL TAXES BE PREPAID? Homeowners have the option of prepaying their CFD No. special tax anytime. For prepayment information please contact the administrator for the special taxes , 6. WHERE CAN I GET MORE INFORMATION? For more information in regards to CFD No. _, contact the the City of Lake Elsinore administrator 79275774.2 Page 19 of 39 Page 20 of 39 CITY FEE DEPOSIT AND REIMBURSEMENT AGREEMENT by and between CITY OF LAKE ELSINORE and LE COTTAGE LANE, LLC relating to CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007 -5 (RED KITE) 79275773.2 Page 21 of 39 Page 22 of 39 CITY FEE DEPOSIT AND REIMBURSEMENT AGREEMENT THIS CITY FEE DEPOSIT AND REIMBURSEMENT AGREEMENT (the "Agreement ") is entered into effective as of the day of , 2014, by and between the CITY OF LAKE ELSINORE, a city duly organized and existing under the laws of the State of California ( "City "), and LE COTTAGE LANE, LLC, a California limited liability company ( "Property Owner "), and relates to the City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) (the "CFD "). RECITALS: A. The property described and depicted in Exhibit "A" hereto (the "Property ") constitutes the land within the boundaries of the CFD. B. Property Owner intends to develop the Property for residential purposes and has obtained or intends to obtain the necessary development approvals to construct approximately [48] residential units on the Property, as such development may be modified from time to time (the "Project'). C. The Project will require the payment, pursuant to the land use entitlements, conditions of approval, existing City ordinances and resolutions and development agreement for and applicable to the Project (the "Project Conditions "), of certain City Fees (defined below). D. In conjunction with the recording of the final subdivision map(s) for the Project, applicable to issuance of grading permits and /or the issuance of building permits for the construction of homes within the Project, Property Owner, or its successors or assigns, may elect to provide a security deposit to cover City Fees to the City (the "Deposit') before any Bond Proceeds are available to pay the City Fees. In such case, Property Owner shall be entitled to (i) reimbursement of such Deposits and (ii) credit for payments made to the City from Bond Proceeds of the City Fees which would otherwise be due to the City in conjunction with the Project, all as further described herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: Recitals. Each of the above recitals is incorporated herein and is true and correct. 2. Definitions. Unless the context clearly otherwise requires, the terms defined in this Section shall, for all proposes of this Agreement, have the meanings herein specified. (a) "Act' means the Mello -Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code. 79275773.2 1 Page 23 of 39 (b) "Bond Proceeds" or "Proceeds of the Bonds" shall mean those net funds generated by the sale of the Bonds and investment earnings thereon. (c) `Bonds" shall mean those bonds, or other securities, issued by, or on behalf of, the CFD in one or more series, as authorized by the qualified electors within the CFD. (d) "Deposits" means an amount deposited with the City by Property Owner as security for City Fees and which are eligible for refund by the City upon the sale of Bonds. (e) "City Fees" means the fees and charges and all components thereof imposed by the City upon the Project pursuant to the Project Conditions. Agreement. (f) "Party" or "Parties" shall mean any one or all of the parties to this (g) "State" means the State of California. 3. Reserved. 4. No Obligation to Issue Bonds• Sale of Bonds and Use of Proceeds. The City Council acting as the legislative body of the CFD may, in its sole discretion, finance, among other things, the City Fees by issuing the Bonds. Accordingly, this Agreement shall in no way obligate the City to issue the Bonds. As required by the Project Conditions, it may be necessary for Property Owner, or its successors or assigns, to make Deposits before Bonds are issued. Upon the issuance and sale of the Bonds, Property Owner may execute and submit a payment request, in substantially the form attached hereto as Exhibit `B ", to the CFD requesting disbursement to the City of an amount equal to all Deposits from Bond Proceeds. Within ten (10) business days of the City's receipt of funds pursuant to such disbursement request, the City shall return the Deposits to Property Owner. The City may expend such Deposits as an inter -fund borrowing to pay for the costs eligible to be financed by the City Fees to be repaid solely from any City Fees received by the City. In the event Bonds are not issued within twenty -four (24) months of the date of any Deposit, such Deposit may be applied to pay the City Fees, and shall no longer be reflected as a deposit on the accounts of the City. 5. Indemnification. Property Owner shall assume the defense of, indemnify and save harmless, City and the CFD, their respective officers and employees, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any act or omission of Property Owner with respect to this Agreement; provided, however, that Property Owner shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. 79275773.2 2 Page 24 of 39 6. Amendment and Assignment. This Agreement may be amended at any time but only in writing signed by each party hereto. This Agreement may be assigned, in whole or in part, by the Property Owner to the purchaser of any parcel of land within the Property provided, 79275773.2 2 Page 24 of 39 however, such assignment shall not be effective unless and until the City has been notified, in writing, of such assignment. 7. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the parties with respect to the subject matter of this Agreement. 8. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy -two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: City: City of Lake Elsinore 130 S. Main Street Lake Elsinore, California 92530 Attn: City Manager Property Owner: LE Cottage Lane, LLC 2917 Canon Street San Diego, California 92106 Attn: Wade Hall Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party hereto. 9. Attorneys' Fees. In the event of the bringing of any action or suit by any Party against any other Party arising out of this Agreement, the Party in whose favor final judgment shall be entered shall be entitled to recover from the losing Party all costs and expenses of suit, including reasonable attorneys' fees. 10. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. 11. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. 12. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party hereto, or the failure by a party to exercise its rights upon the default of another party, shall not constitute a waiver of such party's right to insist and demand strict compliance by such other party with the terms of this Agreement thereafter. 13. No Third Party Beneficiaries. No person or entity other than the CFD shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, the CFD, and Property Owner (and their respective successors and assigns, exclusive of individual 79275773.2 3 Page 25 of 39 homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement. 14. Singular and Plural, Gender. As used herein, the singular of any word includes the plural, and terms in the masculine gender shall include the feminine. 15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. 79275773.2 CITY OF LAKE ELSINORE, a municipal corporation By: Mayor LE COTTAGE LANE, LLC, a California limited liability company By: By: Its: El Page 26 of 39 EXHIBIT A DESCRIPTION OF PROPERTY 79275773.2 Page 27 of 39 Page 28 of 39 EXHIBIT B DISBURSEMENT REQUEST FORM 1. City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) ( "CFD ") is hereby requested to pay from the CFD bond proceeds to the City of Lake Elsinore (the "City "), as Payee, the sum set forth in 3 below. 2. The undersigned certifies that the amount requested for City Fees is due and _ payable and has not formed the basis of prior request or payment. 3. Amount requested: For Lot Nos: 4. The amount set forth in 3 above is authorized and payable pursuant to the terms of the City Fee Deposit and Reimbursement Agreement by and between the CITY OF LAKE ELSINORE and LE COTTAGE LANE, LLC, dated 2014 (the "Agreement'). Capitalized terms not defined herein shall have the meaning set forth in the Agreement. 5. The City is hereby requested to refund to the Property Owner any eligible Deposits held for the Lots shown above pursuant to the Agreement. Attached are copies of building permits issued and proof of payment of Deposits made for each Lot. LE COTTAGE LANE, LLC, a limited liability company By: Date: cc: City of Lake Elsinore Finance Dept. 7)275773.2 Page 29 of 39 Page 30 of 39 DEPOSIT AND REIMBURSEMENT AGREEMENT THIS DEPOSIT AND REIMBURSEMENT AGREEMENT (this "Deposit Agreement'), dated as of January 1, 2014, is by and between the City of Lake Elsinore, California (the "City ") and LE Cottage Lane, LLC, a California limited liability company (the "Owner "). RECITALS WHEREAS, at the request of the Owner, the City has determined to cause the preparation of a City Fee Deposit and Reimbursement Agreement and an EVMWD Fee Deposit and Reimbursement Agreement and may in the future initiate change proceedings all relating to the City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) (the "Community Facilities District") under the Mello -Roos Community Facilities Act of 1982, as amended (the "Act'); and WHEREAS, Owner is the owner of the real property within the Community Facilities District; and WHEREAS, the City and the Owner desire to enter into this Deposit Agreement in order to provide for the advancement of funds by the Owner to be used to pay costs incurred in connection with the preparation of the above - described agreements or any other agreements that the parties may agree need to be prepared, and any future change proceedings relating to the Community Facilities District and issuance of special tax bonds for the Community Facilities District (the "Bonds "), and to provide for the reimbursement to the Owner of such funds advanced, without interest, from the proceeds of the Bonds; NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: Section 1. The Deposits and Application Thereof. (a) The Owner has previously deposited with the City the amount of $32,500 on September 17, 2013 (the "Initial Deposit'). The City, by its execution hereof, acknowledges receipt of, and accepts, the Initial Deposit. (b) City hereby agrees and Owner hereby acknowledges that Union Bank, N.A. ( "Union Bank ") shall hold the Initial Deposit and any subsequent deposits pursuant to (e) hereof as agent for the City. City shall, concurrently with the execution hereof, deposit the Initial Deposit in an account ( "Deposit Account') at Union Bank, 120 S. San Pedro Street, 41h Floor, Los Angeles, California 90012. Upon its receipt of the Initial Deposit, Union Bank shall be entitled to deduct therefrom its fee for holding and disbursing the Initial Deposit and any subsequent deposits pursuant to the terms of this Deposit Agreement. (c) The Initial Deposit, together with any subsequent deposit required to be made by the Owner pursuant to the terms hereof (collectively, the "Deposits "), are to be used to 79275781.2 Page 31 of 39 pay for any costs incurred for any authorized purpose in connection with the Community Facilities District and the issuance of the Bonds including, without limitation, (i) the fees and expenses of any consultants to the City employed in connection with the Community Facilities District and the issuance of the Bonds, including an engineer, special tax consultant, financial advisor, bond counsel, disclosure counsel and issuer's counsel, and any other consultant reasonably deemed necessary or advisable by the City, (ii) the costs of appraisals, market absorption and /or feasibility studies and other reports reasonably deemed necessary or advisable by the City in connection with the Community Facilities District and issuance of the Bonds, (iii) the costs of publication of notices, preparation and mailing of ballots and other costs related to any hearing, election or other action or proceeding undertaken in connection with the Community Facilities District and issuance of the Bonds, (iv) reasonable charges for City staff time incurred in connection with the Community Facilities District and the issuance of the Bonds by the Community Facilities District, including a reasonable allocation of City overhead expense related thereto, and (v) any and all other actual costs and expenses incurred by the City in connection with the Community Facilities District and the issuance of the Bonds (collectively, the "Initial Costs "). The City may draw upon the Deposits from time to time to pay the Initial Costs. Union Bank shall have no duty or responsibility to confirm that amounts withdrawn at the direction of the City have been or will be spent on Initial Costs. (d) At such time the Owner requests the City to initiate proceedings to issue Bonds, the Owner shall make an additional deposit in the amount determined by the City. If, at any time, the unexpended and unencumbered balance of the Deposits is less than $10,000, the City may request, in writing, that the Owner make an additional deposit in an amount estimated to be sufficient, together with any such unexpended and unencumbered balance, to pay for all Initial Costs. The Owner shall make such additional deposit with the City within two weeks of the receipt by the Owner of the City's written request therefor. if the Owner fails to make any such additional deposit within such two week period, the City may cease all work related to the issuance of the Bonds. (e) The Deposits shall be kept separately at Union Bank and shall be invested in a money market fund as approved by the City and the City shall at all times maintain records as to the expenditure of the Deposits. (f) The City shall draw upon the Deposits to pay the Initial Costs by presentation of a disbursement request (the "Request ") to Union Bank in the form attached hereto as Exhibit A and by this reference incorporated herein. The City shall cause Union Bank to pay such Initial Costs pursuant to the Request. (g) The City shall provide the Owner with a written monthly summary of expenditures made from the Deposits, and the unexpended balance thereof, within ten business days of receipt of the City of a written request therefor submitted by the Owner. The cost of providing any such summary shall be charged to the Deposits. Section 2. Return of Deposits; Reimbursement. (a) If proceedings for the issuance of the Bonds are terminated, the City shall, within ten business days after official action by the City or the Community Facilities District to 2 Page 32 of 39 terminate said proceedings, cause Union Bank to return the then unexpended and unencumbered portion of the Deposits to the Owner, without interest. (b) If the Bonds are issued by the Community Facilities District, the City shall reimburse the Owner, without interest, for the portion of the Deposits that has been expended or encumbered, said reimbursement to be made within ten business days after the issuance of such Bonds, solely from the proceeds of such Bonds and only to the extent otherwise permitted under the Act. The City shall, within ten business days after the issuance of such Bonds, return the then unexpended and unencumbered portion of the Deposits to the Owner, without interest. Section 3. Abandonment of Proceedings. The Owner acknowledges and agrees that the issuance of the Bonds shall be in the sole discretion of the City. No provision of this Deposit Agreement shall be construed as an agreement, promise or warranty of the City to issue the Bonds. Section 4. Deposit Agreement Not Debt or Liability of City. This Deposit Agreement does not constitute a debt or liability of the City, but shall constitute a debt and liability of the Community Facilities District. The City shall not be obligated to advance any of its own funds to pay Initial Costs or any other costs incurred in connection with the Community Facilities District and issuance of the Bonds. No member of the City Council of the City and no officer, employee or agent of the City shall to any extent be personally liable hereunder. Section 5. Notices. Any notices, requests, demands, documents, approvals or disapprovals given or sent under this Deposit Agreement from one Party to another (collectively, "Notices ") may be personally delivered, transmitted by facsimile (FAX) transmission, or deposit with the United States Postal Service for mailing, postage prepaid, to the address of the other Party as stated in this Section, and shall be deemed to have been given or sent at the time of personal delivery or FAX transmission or, if mailed, seventy -two hours following the date of deposit in the course of transmission with the United States Postal Service. Notices shall be sent as follows: If to City: City of Lake Elsinore Attn: City Manager 908 Park Avenue Lake Elsinore, CA 92530 FAX No. (951) 674 -2392 If to Owner: LE Cottage Lane, LLC Attn: Wade Hall 2917 Canon Street San Diego, CA 92106 FAX No. () 91 Page 33 of 39 If to Union Bank: Union Bank, N.A. Am: Corporate Trust Dept. 120 S. San Pedro Street, 4 °i Floor Los Angeles, California 90012 FAX No. (213) 972 -5694 Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier upon the sender's receipt of an appropriate answerback or other written acknowledgement, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section. Section 6. California Law. This Deposit Agreement shall be governed and construed in accordance with the laws of the State of California. The Parties shall be entitled to seek any remedy available at law and in equity. All legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in an appropriate municipal court in Riverside County, or in the United States District Court for the District of California in which Riverside County is located. Section 7. Successors and Assigns. This Deposit Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Section 8. Counterparts. This Deposit Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. Section 9. Other Agreements. The obligations of the Owner hereunder shall be that of a party hereto. Nothing herein shall be construed as affecting the City's or Owner's rights, or duties to perform their respective obligations, under other agreements, use regulations or subdivision requirements relating to the development. This Deposit Agreement shall not confer any additional rights, or waive any rights given, by either party hereto under any development or other agreement to which they are a party. Section 10. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Deposit Agreement or of any of its terms. Reference to section numbers are to sections in this Deposit Agreement, unless expressly stated otherwise. M Page 34 of 39 Section 11. Interpretation. As used in this Deposit Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Deposit Agreement shall be interpreted as though prepared jointly by both Parties. Section 12. No Waiver. A waiver by either Party of a breach of any of the covenants, conditions or agreements under this Deposit Agreement to be performed by the other Party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Deposit Agreement. Section 13. Modifications. Any alteration, change or modification of or to this Deposit Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each Party. Section 14. Severability. If any term, provision, condition or covenant of this Deposit Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Deposit Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. Section 15. Legal Advice. Each Party represents and warrants to the other the following: they have carefully read this Deposit Agreement, and in signing this Deposit Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Deposit Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Deposit Agreement; and, they have freely signed this Deposit 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 Deposit Agreement, and without duress or coercion, whether economic or otherwise. Section 16 Cooperation. Each Party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Deposit Agreement including, but not limited to, releases or additional agreements. Section 17. Conflicts of Interest. No member, official or employee of City shall have any personal interest, direct or indirect, in this Deposit Agreement, nor shall any such member, official or employee participate in any decision relating to the Deposit Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. Section 18. Regarding the Agent. In acting hereunder, Union Bank is acting solely as agent for the City and not in its proprietary capacity. The duties and responsibilities of Union Bank shall be limited to those expressly set forth in this Deposit Agreement. In no event shall the Union Bank be liable for any special, indirect or consequential damages. Union Bank will 5 Page 35 of 39 not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion of power conferred upon it by this Deposit Agreement, including without limitation, disbursement of funds from the Deposit Account upon receipt of instructions reasonably believed by Union Bank to have been executed by the person set forth therein. Union Bank shall receive compensation for its services as agreed between Union Bank and the City. To the extent permitted by law, the City agrees to indemnify and hold Union Bank harmless from all loss, cost, damages, expenses, liabilities, judgments and attorneys' fees (including without limitation, allocated costs of in -house counsel) suffered or incurred by Union Bank arising out of or in connection with this Deposit Agreement, except that this indemnity obligation shall not apply in the event of the gross negligence or willful misconduct of the indemnified parties or any of them. This indemnity obligation shall survive termination of this Deposit Agreement. This Deposit Agreement will terminate upon the earlier of disbursement of all funds in the Deposit Account or upon the direction of the City. C Page 36 of 39 IN WITNESS WHEREOF, the Parties have executed this Deposit Agreement as of the date set forth on the first page hereof. "CITY" CITY OF LAKE ELSINORE, a municipal corporation By: Mayor "OWNER" LE COTTAGE LANE, LLC, a California limited liability company By: By: ACKNOWLEDGED BY: UNION BANK, N.A. Bv: Title: Authorized Officer Page 37 of 39 Page 38 of 39 EXHIBIT A City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) WRITTEN REQUEST NO. _ FOR DISBURSEMENTS PURSUANT TO THE DEPOSIT AND REIMBURSEMENT AGREEMENT The undersigned hereby states and certifies: (1) that he /she is the duly qualified City Manager of the City of Lake Elsinore, a municipal corporation duly organized and existing under the laws of the State of California (the "City ") and as such, is familiar with the facts herein certified and is authorized and qualified to execute and deliver this certificate; (2) that he is authorized pursuant to the Deposit and Reimbursement Agreement, dated as of January 1, 2014 (the "Agreement'), by and between the City of Lake Elsinore and LE Cottage Lane, LLC, relating to the City of Lake Elsinore Community Facilities District No. 2007 -5 (Red Kite) (the "CFD "); (3) that pursuant to Section 1(e) of the Agreement, Union Bank is hereby directed to disburse this date from Account No. (the "Account') to the payees, designated on Exhibit 1 attached hereto and by this reference incorporated herein, the respective sums set forth opposite such payees, in payment of certain expenses related to the CFD; (4) that each obligation shown on Exhibit 1 has been properly incurred and is a proper charge against the Account; (5) that no item to be paid pursuant to this Written Request has been previously paid or reimbursed from the Account; and (6) that capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Agreement. Dated: CITY OF LAKE ELSINORE, a municipal corporation By: Title: City Manager Page 39 of 39