HomeMy WebLinkAbout09 - Amendment to Revocable License Agreement for Use of City -Owned Property at 1499 Monrovia AvenueQ �EwPpRT
CITY OF
O �
z NEWPORT BEACH
<,FORN'P City Council Staff Report
March 8, 2022
Agenda Item No. 9
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232,
sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator,
Iwooding@newportbeachca.gov
PHONE: 949-644-3236
TITLE: Amendment No. One to Revocable License Agreement with PCHS
Facilities, LLC, for Use of City -Owned Property at 1499 Monrovia
Avenue
ABSTRACT:
The City of Newport Beach (City) owns an approximately 12,700 -square -foot parcel of
land at the terminus of West 15th Street and Monrovia Avenue (Property). The Property
is currently utilized by the adjacent property owner, PCHS Facilities, LLC (Licensee), and
used as a parking lot for operation of Pacifica Christian High School at 1499 Monrovia
Avenue under a Revocable License Agreement (Agreement). The Agreement was set to
expire in February 2022. For the City Council's consideration is an extension of the
Agreement for 10 years, pursuant to the terms of the proposed Amendment No. One to
the Revocable License Agreement.
Nx0101LhI TT I=10117_111[a]►F
a) Determine this action exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and Section 15060(c)(3) (the
activity is not a project as defined in Section 15378) of the CEQA Guidelines, California
Code of Regulations, Title 14, Chapter 3, because this action will not result in a
physical change to the environment, directly or indirectly;
b) Approve a waiver of City Council Policy F-7 — Income Property based on the findings
contained in this staff report, that conducting an open bid process or changing the
licensee would result in excessive vacancy and costs, and the use of the property
provides a unique service to the community and might not otherwise be provided
where an open bid or fair market value of the property be required; and
c) Authorize the City Manager and City Clerk to execute Amendment No. One to
Revocable License Agreement Between the City of Newport Beach and PCHS
Facilities, LLC, Assignee of Kobe Studios, LLC, for the Use of City Property.
9-1
Amendment No. One to Revocable License Agreement with PCHS Facilities, LLC, for
Use of City -Owned Property at 1499 Monrovia Avenue
March 8, 2022
Page 2
DISCUSSION:
In 2010, the City rezoned the property at 1499 Monrovia Avenue from industrial to
multi -family residential. The then owner of the property was granted a 10 -year abatement
order in 2012, allowing continued use of the parcel pursuant to the previous industrial
zoning designation.
In late 2012, the City purchased the property and marketed the property for lease. Then
in 2014, the City Council approved an agreement to sell the office building. The sale
excluded an approximately 12,700 -square -foot area of the parcel at 1499 Monrovia
Avenue, which was retained by the City as future right-of-way, to extend West 15th Street.
As part of the transaction, the City Council approved a separate, Revocable License
Agreement (Agreement) (Attachment B) to allow the buyer to continue use of the future
right-of-way parcel as it had been originally developed for parking, landscaping, signage,
and circulation around the office building. The Agreement was set to expire in February
2022, concurrently with the expiration of an abatement period which allowed use of the
building for commercial/office industrial.
In 2017, the 1499 Monrovia Avenue parcel was sold again and the City consented to
assignment of the Agreement to the current Licensee, PCHS Facilities LLC, which
operates Pacifica Christian High School Orange County, a private high school with its
main campus located nearby at 883 West 15th Street. The Licensee purchased the office
building and has processed entitlements to change the zoning to Private Institution (PI)
(Ordinance No. 2021-21) and remodel the building to use as part of its school campus
with faculty and administrative offices, and off-site student parking.
Pursuant to City Council Policy A-1, at the regular meeting of the City Council on January
25, 2022, Councilmember O'Neill requested an item be placed on a future agenda for the
Council to "consider extension of the revocable license agreement dated October 1, 2014,
between the City of Newport Beach and Kobe, Inc., which was later assigned to Pacifica
Christian High School, for use of the City property located at 1499 Monrovia Avenue."
PCHS Facilities LLC has reviewed and approved the proposed Amendment, and their
signatures are included on Attachment A.
City Council Policy F-7 — Income Property
Due to the Licensee's ownership and operation of the adjacent parcel, and the Property
being originally developed to serve the Licensee's parcel, staff did not conduct an open
bid process to solicit proposals from other users. Fair market value rent for the Property
is estimated at $28,665.00 per year. The Licensee provides a unique service to the
community in the operation of a private high school, and staff believes the following
findings can be made, as required by City Council Policy F-7, Income Property
(Attachment C):
9-2
Amendment No. One to Revocable License Agreement with PCHS Facilities, LLC, for
Use of City -Owned Property at 1499 Monrovia Avenue
March 8, 2022
Page 3
Redevelopment or converting the property to another use or changing the licensee
would result in excessive vacancy, expenses or other costs which would outweigh
other financial benefits; and
2. The Licensee provides a unique service to the community that might not otherwise
be provided were full market value of the property be required.
Proposed Amendment
The proposed Amendment No. One to the Revocable License Agreement (Amendment)
with PCHS Facilities LLC will extend the term of the Agreement for 10 years, through
February 1, 2032. The Amendment does not modify any other terms of the Agreement.
FISCAL IMPACT:
The City does not currently budget for or receive any revenue from this property, which
would continue for an additional 10 years if the proposed Amendment No. One is
approved.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Amendment No. One to the Revocable License Agreement
Attachment B — Revocable License Agreement, as assigned
Attachment C — City Council Policy F-7 — Income Property
9-3
Attachment A
Amendment No. One to Revocable License Agreement Between the City of Newport
Beach and PCHS Facilities LLC
AMENDMENT NO. ONE TO REVOCABLE LICENSE AGREEMENT
BETWEEN THE CITY OF NEWPORT BEACH
AND PCHS FACILITIES LLC, ASSIGNEE OF KOBE STUDIOS, LLC,
FOR THE USE OF CITY PROPERTY
THIS AMENDMENT NO. ONE TO REVOCABLE LICENSE AGREEMENT
BETWEEN THE CITY OF NEWPORT BEACH AND PCHS FACILITIES, LLC, FOR THE
USE OF CITY PROPERTY ("Amendment No. One") is made and entered into as of this
31st day of January, 2022 ("Effective Date"), by and between the CITY OF NEWPORT
BEACH, a California municipal corporation and charter city ("City"), and PCHS
FACILITIES LLC, a California limited liability company ("Licensee"), individually referred
to as "Party" or collectively "Parties".
RECITALS
A. On October 1, 2014, City and Kobe, Inc., a California corporation ("Kobe"), entered
into a Revocable License Agreement for the Use of City Property ("License
Agreement'), which granted Kobe an exclusive license over certain real property
as described in the License Agreement ("License Area"), on the terms and
conditions provided therein.
B. On December 31, 2014, Kobe and Kobe Studios -HQ, LLC (formerly Kobe Studios,
LLC), a Delaware limited liability company, ("Kobe Studios") entered into an
Assignment and Assumption Agreement, whereby Kobe assigned to Kobe Studios
all rights, title, and interest, legal or equitable, it had in and to the License
Agreement, including the license to use the License Area.
C. On August 30, 2017, Kobe Studios and Licensee entered into an Assignment and
Assumption Agreement, whereby Kobe Studios assigned to Licensee all rights,
title, and interest, legal or equitable, it had in and to the License Agreement,
including the license to use the License Area.
D. The Parties desire to allow Licensee the continued use the License Area on an
exclusive basis for an extended term, subject to the covenants and conditions set
forth in this Amendment No. One,
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. TERM
Section 4 of the License Agreement is amended in its entirety and replaced with
the following: "The term of this License shall commence on the Effective Date and
continue until February 1, 2032, unless terminated earlier as set forth herein."
9-5
2. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the License Agreement shall remain unchanged and shall be in full force and
effect.
The Parties may execute this Amendment No. One in multiple counterparts, each
of which constitutes an original, and all of which, collectively, constitute only one
Amendment.
[SIGNATURES ON NEXT PAGE]
PCHS Facilities LLC Page 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. One to be
executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: 21 y1ZZ
By:
a,,P6 n C. rp 4,J&9 2- t 14 tiz
itv Attornev
ATTEST:
Date:
Bv:
Leilani I. Brown
City Clerk
LESSOR: CITY OF NEWPORT BEACH,
a California municipal corporation and
charter city
Date:
in
Grace K. Leung
City Manager
LICENSEE: PCHS FACILITIES LLC, a
California limited liability company
By: PACIFICA CHRISTIAN HIGH
SCHOOL — ORANGE COUNTY, INC., a
California nonprofit religious corporation
Date:
By: /&4 t,16t
Keith Carlson
Chief Executive Officer / President
Date:
By:
Michael Hill
Secretary
[END OF SIGNATURES]
PCHS Facilities LLC Page 3
9-7
PACIFICA CHRISTIAN
Luis Garcia <Igarcia@pacificaoc.org>
FW: Pacifica Christian High School - license at 1499 Monrovia
Hill, Michael A. <mhill@garrettllp.com> Fri, Feb 18, 2022 at 9:24 AM
To: Luis Garcia <Igarcia@pacificaoc.org>, Keith Carlson <Keith@cjattorneys.com>
Cc: David O'Neil <doneil@pacificaoc.org>, Michael Torres <michael@newportpacificlaw.com>
Thanks, Michael T!
Luis—Attached is a copy of the original license agreement (my copy is undated and executed only by the City) and a copy of the assignment of that
agreement to us when we purchased the site (I can't find a copy of the prior assignment from the original Kobe entity to the Kobe entity that was our
seller).
I've signed the amendment and will leave it with my receptionist so you can pick it up at your convenience today or next week. I'm leaving town for 10
days tomorrow, so I don't think I'll be able to make it over to drop it off and save you the trip—sorry.
Thx,
Mike
Michael A Hit I Partner
Garrett Stiepel Ryder LLP
3200 iris o! irr:r-.I, suite 850. Costa mesa. ,'A 92526
-R-m. 714.384.43001 Direct, 714.384.43132 1 Fax'. 714 31,4,4320
�nh_i1�i?caarretlip.com � .wraw.s3arr�l Ui;�.crm
From: Luis Garcia Igarcia@pacificaoc.org
Sent: Friday, February 18, 2022 6:08 AM
To: Keith Carlson <Keith@cjattorneys.cnin>
[Quoted text hidden]
[Quoted text hidden]
2 attachments
yw 15th Street Parking License (City -executed) (10686218xA2799).pdf
763K
15th Street Parking License Assignment (fully -executed) (10627191xA2799).pdf
1623K
ASSIGNMENT AND ASSUMP'T'ION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Second Assignment
Agreement") is entered into as ofpcL,usv 3a , 2017 ("Effective Date"), by and between Kobe
Studios - HQ, LLC (formerly Kobe Studios, LLC), a Delaware limited liability company
("Assi nor"), and PCHS Facilities LLC, a California limited liability company ("Assi nee").
RECITALS
A. Kobe, Inc., a California corporation ("KI"), and the City of Newport Beach, a
municipal corporation ("City"), entered into that certain Revocable License Agreement dated
October 1, 2014 ("License Agreement"), which granted KI an exclusive license over certain real
property as described in the License Agreement ("License Area"), on the terms and conditions
provided therein.
B. By way of that certain Assignment and Assumption Agreement between KI and
Assignor dated December 31, 2014 (which City consented to on April 29, 2015) ("First
Assignment Agreement"), KI assigned to Assignor all rights, title, and interest, legal or equitable,
it had in and to the License Agreement, including the License to use the License Area.
C. Assignor conveyed to Assignee, pursuant to that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions between Assignor and Assignee dated March
20, 2017, certain real property in the City located at 1499 Monrovia Avenue, County of Orange,
State of California, which adjoins the License Area.
D. Assignor now desires to assign to Assignee all rights, title and interest it has under
the License Agreement, including the License to use the License Area as provided therein.
NOW, THEREFORE, in consideration of the benefits set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
I. DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this Second Assignment Agreement
and not otherwise defined herein are used herein as defined in the License Agreement.
• •
II. ASSIGNMENT OF LICENSE AGREEMENT
2.1 Assignment. Assignor hereby grants, conveys, assigns, and transfers to Assignee,
its successors and assigns, all of the rights, title, and interest, legal or equitable, of Assignor in
and to the License Agreement, including the License to use the License Area as provided therein.
2.2 Assumption of Liabilities. Assignee hereby assumes all Assignor's obligations
and liabilities under the License Agreement to the extent the obligations and liabilities arise
on or after the Effective Date of this Second Assignment. Without limitation, Assignee
agrees to comply with and perform the obligations of Licensee under the License Agreement
to the extent the obligations arise on or after the Effective Date of this Second Assignment
Agreement.
Assignor hereby retains all obligations and liabilities under the License
Agreement, including, without limitation, Licensee's obligations under the License
Agreement, to the extent the obligations and liabilities arose before the Effective Date
of this Second Assignment Agreement.
2.3 Acknowledgement. Assignee hereby agrees to be bound to the agreed upon and
acknowledged conditions of the License Area as set forth in the Agreement for Purchase and Sale
of Real Property And Escrow Instructions dated July 24, 2014, between the City and KI, which is
incorporated herein by this reference as though fully set forth herein.
2.4 No Modification of License Agreement. Nothing in this Assignment shall be
construed to enlarge, restrict, or otherwise modify the terms of the License Agreement, or
constitute a waiver or release by Assignee or Assignor of any liabilities, duties, or obligations
imposed upon any of thein by the terms of the License Agreement. In the event of any conflict
or ambiguity between the provisions of this Assignment and the License Agreement, the
provisions in the License Agreement shall control to the extent of the conflict.
2.5 Enforceability. This Assignment is being executed by Assignee and Assignor and
shall be binding upon each of them, and their respective successors and assigns, for the uses and
for the purposes above set forth and referred to, and shall be effective as of the date hereof.
2.6 Governing Law. This Assignment shall be governed by and enforced in accordance
with the laws of the State of California, without regard to the conflict of laws principles thereof.
2.7 Counterparts. This Assignment may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Facsimile and e-mailed signatures shall
be treated as if they were originals.
[Signatures on following page]
2
9-10
IN WITNESS WHEREOF, this Assignment is executed and delivered as of the date first
written above.
ASSIGNOR: KOBE STUDIOS - 11Q, LLC, a Delaware limited
liability company
BY: ''`ter '"J .•�
N I' obe Bryant
T'tle: Manager
ASSIGNEE: PCHS FACILITIES LLC, a California limited
liability company
By: PACIFICA CHRISTIAN HIGH SCHOOL
- ORANGE COUNTY, INC., a California
nonprofit religious corporation
Its: Sole Member
a, /Gsa uV
Name: Keith Carlson
Title: . Chief Executive Officer / President
By: -1/L
Name: Michael Hill
Title: Secretary
9-11
CONSENT TO ASSIGNMENT AND RELEASE
In connection with the attached Assignment and Assumption Agreement dated as of
buc.usT 3 0 , 2017 (the "Second Assignment Agreement") between KOBE STUDIOS —
HQ, LLC, a Delaware limited liability company ("Assignor"), and PCHS FACILITIES LLC, a
California limited liability company ("Assi ig lee"), the undersigned, CITY OF NEWPORT
BEACH, a municipal corporation ("City"), hereby: (a) consents to the assignment of all of
Assignor's rights, title and interest under that certain Revocable License Agreement between the
City and Kobe, Inc., a California corporation ("KI"), dated October 1, 2014 ("License
Agreement"), obtained by way of that certain Assignment and Assumption Agreement between
KI and Assignor (which was consented to by City on April 29, 2015), to Assignee including the
License (as defined in the License Agreement) to use the License Area (as defined in the License
Agreement) as provided in the License Agreement; and (b) releases Assignor and KI from all of
their respective obligations and liabilities under the License Agreement to the extent the
obligations and liabilities arise on or after the Effective Date of this Second Assignment
Agreement.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
OFFICE OF THE CITY ATTORNEY A California municipal corporation
Date: 14 (t? Date: FlzZ i -7
r
By: By:
Aaro . aip UM FYI+`+I+? Dave Kiff
City Attorney City Manager
ATTEST:
Date:
By:
Leilani PTrowi
City Clerk
9-12
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Second Assi mment
Agreement") is entered into as of AV6U5,T 3-0 , 2017 ("Effective Date"), by and between Kobe
Studios - HQ, LLC (formerly Kobe Studios, LLC), a Delaware limited liability company
("Assi nor"), and PCHS Facilities LLC, a California limited liability company ("Assi nee").
RECITALS
A. Kobe, Inc., a California corporation ("KI"), and the City of Newport Beach, a
municipal corporation ("City"), entered into that certain Revocable License Agreement dated
October 1, 2014 ("License Agreement"), which granted KI an exclusive license over certain real
property as described in the License Agreement ("License Area"), on the terms and conditions
provided therein.
B. By way of that certain Assignment and Assumption Agreement between KI and
Assignor dated December 31, 2014 (which City consented to on April 29, 2015) ("First
Assignment Agreement"), KI assigned to Assignor all rights, title, and interest, legal or equitable,
it had in and to the License Agreement, including the License to use the License Area.
C. Assignor conveyed to Assignee, pursuant to that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions between Assignor and Assignee dated March
20, 2017, certain real property in the City located at 1499 Monrovia Avenue, County of Orange,
State of California, which adjoins the License Area.
D. Assignor now desires to assign to Assignee all rights, title and interest it has under
the License Agreement, including the License to use the License Area as provided therein.
NOW, THEREFORE, in consideration of the benefits set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
DEFINITIONS
1.1 Defined Terms. Capitalized terns used in this Second Assignment Agreement
and not otherwise defined herein are used herein as defined in the License Agreement.
9-13
II. ASSIGNMENT OF LICENSE AGREEMENT
2.1 Assignment. Assignor hereby grants, conveys, assigns, and transfers to Assignee,
its successors and assigns, all of the rights, title, and interest, legal or equitable, of Assignor in
and to the License Agreement, including the License to use the License Area as provided therein.
2.2 Assumption of Liabilities. Assignee hereby assumes all Assignor's obligations
and liabilities under the License Agreement to the extent the obligations and liabilities arise
on or after the Effective Date of this Second Assignment. Without limitation, Assignee
agrees to comply with and perform the obligations of Licensee under the License Agreement
to the extent the obligations arise on or after the Effective Date of this Second Assignment
Agreement.
Assignor hereby retains all obligations and liabilities under the License
Agreement, including, without limitation, Licensee's obligations under the License
Agreement, to the extent the obligations and liabilities arose before the Effective Date
of this Second Assignment Agreement.
2.3 Acknowledgement. Assignee hereby agrees to be bound to the agreed upon and
acknowledged conditions of the License Area as set forth in the Agreement for Purchase and Sale
of Real Property And Escrow Instructions dated July 24, 2014, between the City and KI, which is
incorporated herein by this reference as though fully set forth herein.
2.4 No Modification of License Agreement. Nothing in this Assignment shall be
construed to enlarge, restrict, or otherwise modify the terms of the License Agreement, or
constitute a waiver or release by Assignee or Assignor of any liabilities, duties, or obligations
imposed upon any of thein by the terms of the License Agreement. In the event of any conflict
or ambiguity between the provisions of this Assignment and the License Agreement, the
provisions in the License Agreement shall control to the extent of the conflict.
2.5 Enforceability. This Assignment is being executed by Assignee and Assignor and
shall be binding upon each of them, and their respective successors and assigns, for the uses and
for the purposes above set forth and referred to, and shall be effective as of the date hereof.
2.6 Governiniz Law. This Assignment shall be governed by and enforced in accordance
with the laws of the State of California, without regard to the conflict of laws principles thereof.
2.7 Counterparts. This Assignment may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Facsimile and e-mailed signatures shall
be treated as if they were originals.
[Signatures on following page]
2
9-14
IN WITNESS WHEREOF, this Assignment is executed and delivered as of the date first
written above.
ASSIGNOR: KOBE STUDIOS - HQ, LLC, a Delaware limited
liability company
By:
1 i I obe Bryant
Tittle: Manager
ASSIGNEE: PCHS FACILITIES LLC, a California limited
liability company
By: PACIFICA CHRISTIAN HIGH SCHOOL
— ORANGE COUNTY, INC., a California
nonprofit religious corporation
Its: Sole Member
By: _
Name:
Title:
Naive:
Title:
Keith Carlson
Chief Executive Officer / President
Michael Hill
Secretary
9-15
CONSENT TO ASSIGNMENT AND RELEASE
In connection with the attached Assignment and Assumption Agreement dated as of
tAuc.us'r 3 0 , 2017 (the "Second Assignment Agreement") between KOBE STUDIOS —
HQ, LLC, a Delaware limited liability company ("Assignor"), and PCHS FACILITIES LLC, a
California limited liability company ("Assi nee"), the undersigned, CITY OF NEWPORT
BEACH, a municipal corporation ("City"), hereby: (a) consents to the assignment of all of
Assignor's rights, title and interest under that certain Revocable License Agreement between the
City and Kobe, Inc., a California corporation ("KI"), dated October 1, 2014 ("License
Agreement"), obtained by way of that certain Assignment and Assumption Agreement between
KI and Assignor (which was consented to by City on April 29, 2015), to Assignee including the
License (as defined in the License Agreement) to use the License Area (as defined in the License
Agreement) as provided in the License Agreement; and (b) releases Assignor and KI from all of
their respective obligations and liabilities under the License Agreement to the extent the
obligations and liabilities arise on or after the Effective Date of this Second Assignment
Agreement.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
OFFICE OF THE CITY ATTORNEY A California municipal corporation
Date: �91/y 11-7 Date: ? Zz
By: � By: I
Aaro arp UM nYV'j III Dave Kiff
City Attorney City Manager
ATTEST:
Date: Z
Leilani VBrowi
City Clerk
9-16
Attachment B
Revocable License Agreement Between the City of Newport Beach and Kobe, Inc., as
assigned to PCHS Facilities LLC
9-17
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT ("Second Assignment
Agreement") is entered into as of pvCusr 3a , 2017 ("Effective Date"), by and between Kobe
Studios - HQ, LLC (formerly Kobe Studios, LLC), a Delaware limited liability company
("Assignor'), and PCHS Facilities LLC, a California limited liability company ("Assignee").
RECITALS
A. Kobe, Inc., a California corporation ("KI"), and the City of Newport Beach, a
municipal corporation ("City"), entered into that certain Revocable License Agreement dated
October 1, 2014 ("License Agreement"), which granted KI an exclusive license over certain real
property as described in the License Agreement ("License Area"), on the terms and conditions
provided therein.
B. By way of that certain Assignment and Assumption Agreement between KI and
Assignor dated December 31, 2014 (which City consented to on April 29, 2015) ("First
Assignment Agreement"), KI assigned to Assignor all rights, title, and interest, legal or equitable,
it had in and to the License Agreement, including the License to use the License Area.
C. Assignor conveyed to Assignee, pursuant to that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions between Assignor and Assignee dated March
20, 2017, certain real property in the City located at 1499 Monrovia Avenue, County of Orange,
State of California, which adjoins the License Area.
D. Assignor now desires to assign to. Assignee all rights, title and interest it has under
the License Agreement, including the License to use the License Area as provided therein.
NOW, THEREFORE, in consideration of the benefits set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
I. DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this Second Assignment Agreement
and not otherwise defined herein are used herein as defined in the License Agreement.
9-18
II. ASSIGNMENT OF LICENSE AGREEMENT
2.1 Assignment. Assignor hereby grants, conveys, assigns, and transfers to Assignee,
its successors and assigns, all of the rights, title, and interest, legal or equitable, of Assignor in
and to the License Agreement, including the License to use the License Area as provided therein.
2.2 Assumption of Liabilities. Assignee hereby assumes all Assignor's obligations
and liabilities under the License Agreement to the extent the obligations and liabilities arise
on or after the Effective Date of this Second Assignment. Without limitation, Assignee
agrees to comply with and perform the obligations of Licensee under the License Agreement
to the extent the obligations arise on or after the Effective Date of this Second Assignment
Agreement.
Assignor hereby retains all obligations and liabilities under the License
Agreement, including, without limitation, Licensee's obligations under the License
Agreement, to the extent the obligations and liabilities arose before the Effective Date
of this Second Assignment Agreement.
2.3 Acknowledgement. Assignee hereby agrees to be bound to the agreed upon and
acknowledged conditions of the License Area as set forth in the Agreement for Purchase and Sale
of Real Property And Escrow Instructions dated July 24, 2014, between the City and KI, which is
incorporated herein by this reference as though fully set forth herein.
2.4 No Modification of License Agreement. Nothing in this Assignment shall be
construed to enlarge, restrict, or otherwise modify the terms of the License Agreement, or
constitute a waiver or release by Assignee or Assignor of any liabilities, duties, or obligations
imposed upon any of them by the terms of the License Agreement. In the event of any conflict
or ambiguity between the provisions of this Assignment and the License Agreement, the
provisions in the License Agreement shall control to the extent of the conflict.
2.5 Enforceability. This Assignment is being executed by Assignee and Assignor and
shall be binding upon each of them, and their respective successors and assigns, for the uses and
for the purposes above set forth and referred to, and shall be effective as of the date hereof.
2.6 Governing Law. This Assignment shall be governed by and enforced in accordance
with the laws of the State of California, without regard to the conflict of laws principles thereof.
2.7 Counterparts. This Assignment may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Facsimile and e-mailed signatures shall
be treated as if they were originals.
[Signatures on following page]
2
9-19
IN WITNESS WHEREOF, this Assignment is executed and delivered as of the date first
written above.
ASSIGNOR: KOBE STUDIOS - HQ, LLC, a Delaware limited
liability company
By
'b6—Bryant
T•tle: Manager
ASSIGNEE: PCHS FACILITIES LLC, a California limited
liability company
By: PACIFICA CHRISTIAN HIGH SCHOOL
— ORANGE COUNTY, INC., a California
nonprofit religious corporation
Its: Sole Member
/�A W` C�
B 1�
Y•
Name: Keith Carlson
Title:.. Chief Executive Officer / President
By:
Name: Michael Hill
Title: Secretary
9-20
CONSENT TO ASSIGNMENT AND RELEASE
In connection with the attached Assignment and Assumption Agreement dated as of
AUC.UST 3 0 , 2017 (the "Second Assignment Agreement") between KOBE STUDIOS —
HQ, LLC, a Delaware limited liability company ("Assignor"), and PCHS FACILITIES LLC, a
California limited liability company ("Assignee"), the undersigned, CITY OF NEWPORT
BEACH, a municipal corporation ("City"), hereby: (a) consents to the assignment of all of
Assignor's rights, title and interest under that certain Revocable License Agreement between the
City and Kobe, Inc., a California corporation ("KI"), dated October 1, 2014 ("License
Agreement"), obtained by way of that certain Assignment and Assumption Agreement between
KI and Assignor (which was consented to by City on April 29, 2015), to Assignee including the
License (as defined in the License Agreement) to use the License Area (as defined in the License
Agreement) as provided in the License Agreement; and (b) releases Assignor and KI from all of
their respective obligations and liabilities under the License Agreement to the extent the
obligations and liabilities arise on or after the Effective Date of this Second Assignment
Agreement.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
OFFICE OF THE CITY ATTORNEY A California municipal corporation
Date: ?l/y 11-7 Date:
By: f"' By:
Aaro arp ChM o0l,-Ila Dave Kiff
City Attorney City Manager
ATTEST:
Date: gl,,7 7
By: .�
Leilani row
City Clerk
9-21
REVOCABLE LICENSE AGREEMENT
BETWEEN THE CITY OF NEWPORT BEACH AND KOBE, INC.
FOR THE USE OF CITY PROPERTY
THIS REVOCABLE LICENSE AGREEMENT FOR USE OF CITY PROPERTY
("Agreement") is made and entered into as of this St day ofoM�/, 2014 ("Effective Date"),
by and between the CITY OF NEWPORT BEACH, a California Municipal corporation ("City"),
and KOBE, INC., a California corporation ("Licensee"), and is made with reference to the
following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being conducted
under the statutes of the State of California and the Charter of the City.
B. City is the owner of real property in the City of Newport Beach located at 1499
Monrovia Avenue, County of Orange, State of California, and further depicted in Exhibit "A"
and incorporated herein by this reference ("Premises").
C. Licensee is the owner of the adjacent real property acquired pursuant to the Grant
Deed recorded bWAV t , 2014, by the County Recorder of Orange County, California as
Instrument No.`1A�W)0JT343 , and further depicted in Exhibit `B" and incorporated herein by
this reference ("Property").
D. Licensee has requested that it be allowed to use a portion of the Premises
("License Area") for parking of vehicles and other uses to the benefit of the Property as those
uses exist pursuant to that certain Agreement For Purchase And Sale Of Real Property And
Escrow Instructions dated July 24, 2014 between City and Licensee ("Purchase Agreement").
E. City and Licensee desire to enter into this Agreement to allow Licensee to use the
License Area on an exclusive basis, subject to the covenants and conditions set forth in this
Agreement and pursuant to the Purchase Agreement.
F. In consideration of the mutual promises and obligations contained in this
Agreement, the receipt and sufficiency of which is hereby acknowledged, City hereby grants to
Licensee the revocable right to occupy and use the License Area, and Licensee accepts the same
on the following terms and conditions.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
1. LICENSE
City grants an exclusive license ("License") to Licensee for the term of this Agreement
for Licensee -to use the License Area, which is twelve thousand seven hundred seventy (12,770)
square feet in size, for the uses and activities set forth in Section 6 of this Agreement. The
LA2380366.2 223603-10001
9-22
License granted herein is subject to the terms, covenants and conditions hereinafter set forth, and
Licensee covenants, as a material part of the consideration for this License, to keep and perform
each and every term, covenant and condition of this Agreement.
2. USE OF THE LICENSE AREA
Licensee's use of the License Area shall be limited to the uses set forth in Section 6 of
this Agreement. No expansion or change of uses of the License Area from that existing as of the
date of the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated
July 24, 2014, shall be permitted.
3. PERMITS AND LICENSES
Licensee, at its sole expense, shall obtain and maintain during the term of this
Agreement, all appropriate permits, licenses and certificates that may be required by any
governmental agency including Licensor.
4. TERM
The term of this License shall commence on the Effective Date, and continue until such
time as the License Area is developed, the expiration of the Abatement Period (February 1,
2022) related to the Property; or unless terminated earlier as set forth herein, whichever occurs
first.
5. LICENSE FEE/CONSIDERATION
Pursuant to the Agreement For Purchase And Sale Of Real Property And Escrow
Instructions, dated July 24, 2014, there shall be no fee for this License Agreement during the
entire term of the License because adequate consideration was received by Licensor pursuant to
the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24,
2014.
6. THE PURPOSE OF THIS LICENSE
6.1 The purpose of this License is to provide for the use of the License Area within
the Premises pursuant to the Agreement For Purchase And Sale Of Real Property And Escrow
Instructions, dated July 24, 2014. Licensee agrees to use the License Area only for the activities
described herein, and not to use or permit the use of the License Area for any other purpose
without first obtaining the prior written consent of City, which consent may be withheld in City's
sole discretion. Acceptable activities include:
6.1.1 For the parking of vehicles associated with, and to meet the parking needs
of, the existing office building located on the Property.
6.1.2 Circulation of vehicles between the public right-of-way, the Pren ices, and
the Property;
LA2380366.2 223603-10001 2
9-23
6.1.3 Sidewalk and pedestrian access from the public right-of-way, the
Premises, and the Property; and
6.1.4 ReplacernentlRe-Use of the existing monument sign located on the
Premises, for the benefit of the Property.
6.1.5 Maintenance, repair and replacement of all surfaces, coatings and paints,
landscaping, lighting, parking barriers and stops, walkways, and planters currently existing on
the Premises.
6.1.6 The provision of security on the Premises.
7. CONDITIONS OF LICENSE
7.1 Licensee shall comply with the following conditions prior to the commencement
of use of the License Area.
7.1.1 Prohibited Activities: Parking and storage of constriction vehicles or
equipment is expressly prohibited. Except as set forth in Sections 6.1.5 and 7.1.2, no
improvements to the License Area are permitted without prior written approval of the City
Manager.
7.1.2 Maintenance: Licensee shall be responsible for maintenance of the
License Area including, but not limited to, the routine removal of foreign material, waste, and
debris. Licensee's obligation to maintain the License Area shall include a regular preventative
maintenance program, together with routine repairs caused by normal wear and tear, to be
provided by a licensed service company acceptable to City. Licensee shall obtain approval from
the City Manager for projects valued at more than five thousand dollars ($5,000), and shall
obtain all required Building permits necessary for such repair.
7.1.2.1 City shall be entitled, with a Licensee representative, to inspect the
License Area for compliance with the terms of this Agreement, and with all applicable Federal,
State and local (including those of the City) government regulations.
7.1.3 Licensee shall be bound to the agreed upon and acknowledged conditions
of the License Area as set forth in the Agreement For Purchase And Sale Of Real Property And
Escrow Instructions, dated July 24, 2014.
7.1.4 Security; Licensee shall be solely responsible for security of the Premises,
as it relates to the ownership and operation of the Property.
8. TERMINATION OF LICENSE
8.1 Notwithstanding the tern of this License, this License may be terminated during
the term or any extended term in the following manner:
8.1.1 By Licensee: At any time, without cause upon the giving of ninety (90)
days written notice of termination to City;
LA2380366.2 223603-10001 3
9-24
8.1.2 By City: At any time, without cause upon the giving of ninety (90) days
written notice of termination to Licensee; or
8.1.3 If, after written notice of default to Licensee of any of the teens or
conditions of this License, Licensee fails to cure or correct the default within twenty (20)
business days of receipt of written notice, City may immediately terminate the License.
8.1.4 Upon termination of License all improvements installed by Licensee after
the date of this License, if any, shall be removed by Licensee upon request by the City.
9. ADMINISTRATION
This Agreement will be administered by the Community Development Department. The
Community Development Director or his/her designee shall be the Project Administrator and
shall have the authority to act for City under this Agreement. The Project Administrator or
his/her authorized representative shall represent City in all matters pertaining to this License.
10. INDEMNITY AND LIABILITY FOR DAMAGES
10.1 Licensee shall indemnify, defend and hold harmless City, its City Council, boards
and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified
Parties") from and against any and all claims (including, without limitation, claims for bodily
injury, death or damage to property), demands, obligations, damages, actions, causes of action,
suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without
limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever
(individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate
(directly or indirectly) to any breach of the teens and conditions of this License by Licensee, its
agents, employees, vendors, etc., any work performed or services provided under this License by
Licensee, its agents, employees, vendors, etc., including, without limitation, defects in
workmanship or materials or Licensee's presence or activities conducted that relate in any way to
this License (including the negligent and/or willful acts, errors and/or omissions of Licensee,
employees, vendors, suppliers, and anyone employed directly or indirectly by any of them or for
whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing
herein shall be construed to require Licensee to indemnify the Indemnified Parties from any
Claim arising from the sole negligence or willful misconduct of the Indemnified Parties.
Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any
action on or to enforce the terms of this License. This indemnity shall apply to all claims and
liability regardless of whether any insurance policies are applicable. The policy limits do not act
as a limitation upon the amount of indemnification to be provided by the Licensee.
10.2 Licensee shall be liable and responsible for the security, repair and maintenance
of the License Area to the extent necessitated by Licensee's use of the License Area under this
License, for such time as this License is in effect. Licensee shall use care to protect the License
Area and restore it to its original condition to the satisfaction of the City when the License Area
is not in use by Licensee.
11. PROHIBITION AGAINST ASSIGNMENT AND TRANSFER
LA2380366.2 223603-10001 4
9-25
This License shall not be assigned, transferred contracted or subcontracted out without
the prior written approval of City which approval may be withheld in the City's sole discretion.
12. CONFLICT OF INTEREST
The Licensee or its employees may be subject to the provisions of the California Political
Refonn Act of 1974 ("Act"), which (a) requires such persons to disclose any financial interest
that may foreseeably be materially affected by the work performed under this License, and (b)
prohibits such persons from making, or participating in making, decisions that will foreseeably
financially affect such interest. If subject to the Act, Licensee shall conform to all requirements
of the Act Notwithstanding Section 9.1.3, failure to conform to the requirements of the Act
constitutes a material breach and is grounds for immediate termination of this License by City.
Licensee shall indemnify and hold harmless City for any and all claims for damages resulting
from Licensee's violation of this Section.
13. NOTICE
13.1 All notices, demands, requests or approvals to be given under the terms of this
License shall be given in writing, and conclusively shall be deemed served when delivered
personally, or on the third business day after the deposit thereof in the United States mail,
postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands,
requests or approvals from Licensee to City shall be addressed to City at:
Attn: Real Property Administrator
City of Newport Beach
Community Development
100 Civic Center Drive
P.O. Box: 1768
Newport Beach, CA, 92658
Phone: (949) 644-3309
13.2 All notices, demands, requests or approvals from City to Licensee shall be
addressed to Licensee at:
Attn: Andrea Fairchild, President
Kobe, Inc.
341 Bayside Drive, Suite 4
Newport Beach, CA 92660
Phone: (708) 203-5433
14. STANDARD PROVISIONS
14.1 Compliance with all Laws. Licensee shall at its own cost and expense comply
with all statutes, ordinances, regulations and requirements of all governmental entities, including
federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all
work prepared by Licensee shall conform to applicable City, county, state and federal laws,
rules, regulations and permit requirements and be subject to approval of the Project
Administrator.
LA2380366.2 223603-10001
9-26
14.2 Waiver. A waiver by either party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition contained herein, whether of the same or a
different character,
14.3 Integrated Agreement. This Agreement represents the full and complete
understanding of every bind or nature whatsoever between the parties hereto, and all preliminary
negotiations and agreements of whatsoever kind or nature are merged herein. No verbal
agreement or implied covenant shall be held to vary the provisions herein.
14.4 Interpretation. The terms of this Agreement shall be construed in accordance with
the meaning of the language used and shall not be construed for or against either party by reason
of the authorship of the License or any other rule of construction which might otherwise apply.
14.5 Amendments. This Agreement may be modified or amended only by a written
document executed by both Licensee and City and approved as to form by the City Attorney.
14.6 Severability. If any term or portion of this Agreement is held to be invalid,
illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions
of this Agreement shall continue in full force and effect.
14.7 Controlling Law and Venue. The laws of the State of California shall govern this
Agreement and all matters relating to it and any action brought relating to this Agreement shall
be adjudicated in a court of competent jurisdiction in the County of Orange.
14.8 Taxes. Licensee acknowledges that the License granted herein may be subject to
possessory interest taxes. Licensee shall have the sole obligation to pay any taxes, fees and
assessments, plus applicable penalties and interest, which may be imposed by law and arise out
of Licensee's License hereunder. Licensee shall indemnify, defend and hold hannless City
against any and all such taxes, fees, penalties or interest assessed, or imposed against City
hereunder.
149 No Third Party Rights. The Parties do not intend to create rights in or grant
remedies to, any third party as a beneficiary of this Agreement, or of any duty, covenant,
obligation or undertaking established herein.
14.10 No Attorneys' Fees. In the event of any dispute under the terms of this
Agreement the prevailing party shall not be entitled to attorneys' fees.
14.11 Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall constitute one and the
same instrument.
[SIGNATURES ON NEXT PAGE]
LA2380366.2 223603-10001 6
9-27
IN WITNESS WHEREOF, the parties have caused this License to be executed on the
dates written below.
APPROVED AS TO FORM:
OFFIC�(( F THE CITY ATTORNEY
Date: 11
By
Aaron C. Harp
City Attorney
ATTEST:
Date:
By: 46-
4 omw"
Leilani I. Brown
City Clerk
F
L
kh:�1P09r'%
CITY OF NEWPORT BEACH,
A Califpzni a�_municipal corporation
Date: (•
By:_
Rush N. Hill, II
Mayor
LICENSEE: Kobe, Inc., a California
corporation
Date:
By:_
Name
Title:
Date:
By:
Name:
Title:
Andrea Fairchild
President
[END OF SIGNATURES]
Attachments: Exhibit A: License Area
Exhibit B: Adjacent Property
Exhibit C: Insurance Requirements
LA2380366.2 223603-10001
IN WITNESS WHEREOF, the parties have caused this License to be executed on the
dates written below.
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
OFFICE OF THE CITY ATTORNEY A California municipal corporation
Date: Date:
By: By:
Aaron C. Harp Rush N. Hill, II
City Attorney Mayor
ATTEST: LICENSEE: Kobe, Inc., a California
Date: corporation
Date:
By: By:
Leilani I. Brown Name An rea Fairchild
City Clerk Title: Presiders
Date: 9
By:
arae:
Title:
[END OF SIGNATURES]
Attachments: Exhibit A: License Area
Exhibit B: Adjacent Property
Exhibit C: Insurance Requirements
LA2380366.2_223603-10001
9-29
EXHIBIT A
LICENSE AREA
LA2380366.2 223603-10001 Exhibit A
9-30
Coast Surveying, Inc
-
July 14, 2014
EXHIBIT A-1
LEGAL DESCRIPTION
THE NORTHERLY 60.00 FEET OF PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA
2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS
INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, BEING MORE PARTICULARLY
DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS
VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF
SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF
WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF
OFFICIAL RECORDS OF SAID ORANGE COUNTY.
CONTAINING 12,770 SQUARE FEET, MORE OR LESS.
ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT A-2 ATTACHED HERETO
AND MADE A PART HEREOF.
DATED THIS 14TH DAY OF JULY, 2014. SAND
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15TH STREET (601.00 FEET WIDE) AS VACATED
AND ABANDONED 8Y RESOLUTION N0, 67-•863
OF THE BOARD OF SUPERVISORS OF ORANGE
COUNTY, CALIFORNIA, A CERTIFIED COPY OF
WHICH WAS RECORDED AUGUST 11, 1967 IN
BOOK 8339, WAGE 301 OF OFFICIAL RECORDS
OF SAID ORANGE COUNTY.
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AND ABANDONED 8Y RESOLUTION N0, 67-•863
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COUNTY, CALIFORNIA, A CERTIFIED COPY OF
WHICH WAS RECORDED AUGUST 11, 1967 IN
BOOK 8339, WAGE 301 OF OFFICIAL RECORDS
OF SAID ORANGE COUNTY.
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9-32
EXHIBIT B
ADJACENT PROPERTY
LA23 80366.2223603-10001 Exhibit B
9-33
Coast Surveyi3tr, Ittc.
hily 10, 2014
EXHIBIT B-1
LEGAL DESCRIPTION
PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF
NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER
DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO, 2007000598931
OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT THEREFROM THE NORTHERLY 60.00 FEET, BEING MORE
PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH
STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE
BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED
COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801
OF OFFICIAL RECORDS OF SAID ORANGE COUNTY.
CONTAINING 35,021 SQUARE FEET, MORE OR LESS.
ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT B-2 ATTACHED HERETO
AND MADE A PART HEREOF.
DATED -THIS 14" DAY OF JULY, 2014. 1 AND
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AND ABANDONED BY RESOLUTION NO. 67-863
OF 'THE BOARD OF SUPERVISORS OF ORANGE
COUNTY, CALIFORNIA, A CERTIFIED COPY OF
WHICH WAS RECORDED AUGUST 11, 1967 IN
BOOK 8339, PACE 801 OF OFFICIAL RECORDS
OF SAID ORANGE COUNTY,
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DATE: 7Z1 �I 14 E x N I I " B - 2 O,�-t
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SCALE: I"=100' 15031 PARKWAY LOOP, SUITE 9
SHEET 1 OF 1 1 TUSTIN, CA 92760-65527 (714) 9tBw6266
9-35
EXHIBIT C
INSURANCE REQUIREMENTS
Provision of Insurance. Without limiting Licensee's indemnification of City, and prior to
commencement of work, Licensee shall obtain, provide and maintain at its own expense
during the term of this Agreement, policies of insurance of the type and amounts
described in the attached Exhibit B
2. Acceptable Insurers. All insurance policies shall be issued by an insurance company
currently authorized by the Insurance Commissioner to transact business of insurance in
the State of California, with an assigned policyholders' Rating of A- (or higher) and
Financial Size Category Class VII (or larger) in accordance with the latest edition of
Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager.
3. Coverage Requirements.
A. Workers' Compensation _ Insurance. Licensee shall maintain Workers'
Compensation Insurance, statutory limits, and Employer's Liability Insurance
with limits of at least one million dollars ($1,000,000) each accident for bodily
injury by accident and each employee for bodily injury by disease in accordance
with the laws of the State of California, Section 3700 of the Labor Code.
B. Licensee shall submit to City, along with the certificate of insurance, a Waiver of
Subrogation endorsement in favor of City, its officers, agents, employees and
volunteers,
C. General Liability Insurance. Licensee shall maintain commercial general. liability
insurance, and if necessary umbrella liability insurance, with coverage at least as
broad as provided by Insurance Services Office form CG 00 01, in an amount not
less than one million dollars ($1,000,000) per occurrence, two million dollars
($2,000,000) general aggregate. The policy shall cover liability arising from
premises, operations, products -completed operations, personal and advertising
injury, and liability assumed under an insured contract (including the tort liability
of another assumed in a business contract) with no endorsement or modification
limiting the scope of coverage for liability assumed under a contract.
D. Automobile Liability Insurance. Licensee shall maintain automobile insurance at
least as broad as Insurance Services Office form CA 00 01 covering bodily injury
and property damage for all activities of the Licensee arising out of or in
connection with Work to be performed under this Agreement, including coverage
for any owned, hired, non -owned or rented vehicles, in an amount not less than
one million dollars ($1,000,000) combined single limit each accident.
E. Property Insurance — Construction. In the event Licensee installs any
improvements, this coverage will be required in the amounts requested by City.
LA2380366.2 223603-10001 Exhibit C
9-36
4. Other Insurance Requirements. The policies are to contain, or be endorsed to contain, the
following provisions:
A. Waiver of Subrogation. All insurance coverage maintained or procured pursuant
to this agreement shall be endorsed to waive subrogation against City, its elected
or appointed officers, agents, officials, employees and volunteers or shall
specifically allow Licensee or others providing insurance evidence in compliance
with these requirements to waive their right of recovery prior to a loss. Licensee
hereby waives its own right of recovery against City, and shall require similar
written express waivers from each of its contractors.
B. Additional Insured Status. All liability policies including general liability, excess
liability, pollution liability, and automobile liability, if required, but not including
professional liability, shall provide or be endorsed to provide that City and its
officers, officials, employees, and agents shall be included as insureds under such
policies.
C. Primary and Non Contributory. All liability coverage shall apply on a primary
basis and shall not require contribution from any insurance or self-insurance
maintained by City.
D. Notice of Cancellation. All policies shall provide City with thirty (30) calendar
days notice of cancellation (except for nonpayment for which ten (10) calendar
days notice is required) or nonrenewal of coverage for each required coverage.
5. Additional Agreements Between the Parties. The parties hereby agree to the following:
A. Evidence of Insurance. Licensee shall provide certificates of insurance to City as
evidence of the insurance coverage required herein, along with a waiver of
subrogation endorsement for workers' compensation and other endorsements as
specified herein for each coverage. Insurance certificates and endorsement must
be approved by City's Risk Manager prior to commencement of performance.
Current certification of insurance shall be kept on file with City at all times during
the term of this Agreement. City reserves the right to require complete, certified
copies of all required insurance policies, at any time.
B. City's Right to Revise Requirements. The City reserves the right at any time
during the term of the Agreement to change the amounts and types of insurance
required by giving the Licensee sixty (60) days advance written notice of such
change. If such change results in substantial additional cost to the Licensee, the
City and Licensee may renegotiate Licensee's compensation.
C. Enforcement _of Agreement Provisions. Licensee acknowledges and agrees that
any actual or alleged failure on the part of the City to inform Licensee of non-
compliance with any requirement imposes no additional obligations on the City
nor does it waive any rights hereunder.
LA2380366.2 223603-10001. Exhibit C
9-37
D. Requirements not Limiting. Requirements of specific coverage features or limits
contained in this Section are not intended as a limitation on coverage, limits or
other requirements, or a waiver of any coverage normally provided by any
insurance. Specific reference to a given coverage feature is for purposes of
clarification only as it pertains to a given issue and is not intended by any party or
insured to be all inclusive, or to the exclusion of other coverage, or a waiver of
any type.
E. Self-insured Retentions. Any self-insured retentions must be declared to and
approved by City. City reserves the right to require that self-insured retentions be
eliminated, lowered, or replaced by a deductible. Self-insurance will not be
considered to comply with these requirements unless approved by City.
F. City Remedies for Non -Com 1p iance, If Licensee or any subcontractor fails to
provide and maintain insurance as required herein, then City shall have the right
but not the obligation, to purchase such insurance, to terminate this agreement, or
to suspend Licensee's right to proceed until proper evidence of insurance is
provided. Any amounts paid by City shall, at City's sole option, be deducted
from amounts payable to Licensee or reimbursed by Licensee upon demand.
G. Timely Notice of Claims. Licensee shall give City prompt and timely notice of
claims made or suits instituted that arise out of or result from Licensee's
performance under this Agreement, and that involve or may involve coverage
under any of the required liability policies.
H. Licensee's Insurance. Licensee shall also procure and maintain, at its own cost
and expense, any additional kinds of insurance, which in its own judgment may
be necessary for its proper protection and prosecution of the Work.
LA2380366.2 223603-10001 Exhibit C
UM
Attachment C
City Council Policy F-7 — Income Property
9-39
F-7
INCOME AND OTHER PROPERTY
The City owns and manages an extensive and valuable assortment of property including
streets, parks, beaches, public buildings and service facilities. The City also owns or
ground leases and/or operates a yacht basin, resort hotel and apartment property, a
luxury residential development and various other income-producing properties. Much
of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee
value of income property is substantial.
As owner/manager of property, the City is the steward of a public trust, and state law
requires the City to maximize its returns on state -managed property or be subject to a
charge of making a gift of public funds. Nevertheless, the City Council recognizes the
importance of this property not only as a revenue generator, but also as a means to
provide otherwise financially less feasible uses and facilities that benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing or licensing unused land,
renting vacant space, and establishing concessions in recreation areas or other similar
techniques. The City Council will evaluate the appropriateness of establishing new
income generating opportunities on City controlled areas using sound business
principles and after receiving input from neighbors, users and the public.
The policy of the City Council is that income and other property be held and managed in
accordance with the following:
A. Whenever a lease, license, management contract, concession or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property. This
analysis shall be conducted using appraisals or other techniques to determine the
highest and best use of the property and the highest income generating use of the
property.
B. All negotiations regarding the lease, license, management contract, concession, or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable and
independent professional appraiser, real estate consultant, or business consultant.
C. The City shall seek, whenever practical and financially advantageous, both in the
short and long term, to operate or manage all property and facilities directly with
City staff or contractors, provided staff have the expertise needed to competently
do so, or to oversee the work of contractors.
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D. In most negotiations regarding the lease, license, management contract,
concession, or similar action regarding an income or other property, the City shall
seek revenue equivalent to the open market value of the highest and best use; and,
whenever practicable the City shall conduct an open bid or proposal process to
ensure the highest financial return.
E. However, in some circumstances the City may determine that use of a property by
the public for recreational, charitable or other nonprofit purpose is preferred and
has considerable public support, in which case the City may determine that non-
financial benefits justify not maximizing revenue from such property. In such
circumstances, the City has a vested interest in ensuring that the lessee of such
property operates the activities conducted on or from the property in the manner
that has been represented to the City throughout the duration of any lease or
contract with the City.
F. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines
or other restrictions from converting the property to another use.
2. Redevelopment of the property would require excessive time, resources,
expertise and costs, which would outweigh other financial benefits.
3. Converting the property to another use or changing the operator, manager,
concessionaire, licensee, or lessee of the property would result in excessive
vacancy, relocation or severance costs, real estate commissions, tenant
improvement allowances, expenses or rent concessions which would
outweigh other financial benefits.
4. Converting residential property to another use or opening residential leases
to competitive bid would create recompensable liabilities and other
inequities for long-term residents.
5. The property provides an essential or unique service to the community or
a clearly preferred use that enjoys substantial support in the community
that might not otherwise be provided were full market value of the
property be required.
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6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space, uses available to the public or marine
related services.
7. If the lessee is not (a) a statewide or national nonprofit organization, or (b)
a public entity or subdivision thereof, then the City finds that the By -Laws
and charter documents of such lessee (i) establishes a procedure wherein
the election of directors of such lessee is accomplished by an open,
democratic and transparent process that allows members to vote, (ii) has a
governance and operational structure that is consistent with best practices
for non-profit public benefit corporations as determined by the City
Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the
prior written consent of the City as lessor.
G. Generally, lengths of licenses, leases, management contracts, concessions, or
similar agreements will be limited to the minimum necessary to meet market
standards or encourage high quality improvements and will contain appropriate
reappraisal and inflation protection provisions. Also, all agreements shall contain
provisions to assure complete audits periodically through their terms.
H. All negotiations regarding the license, lease, management contract, concession or
similar action regarding income property shall be conducted by the City Manager
or his/her designee under the direction of any appropriate City committees.
I. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs directly attributable or allocable to the management of
a specific income property shall be charged against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs so chargeable
include, but are not limited to, property repairs and maintenance, property
appraisals, and consultant fees, as authorized by the City Council, City Manager,
or by this Income Property Policy.
J. The City Manager or his/her designee is authorized to sign a license, lease,
management contract, concession, or similar agreement or any amendment
thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager
or his/her designee, or a City Council member, may refer any license, lease,
management contract, concession or similar agreement or any amendment
thereto, to the City Council for its consideration and/or action.
K. The City's portfolio of quality income producing properties adds an element of
diversification to a portfolio otherwise invested primarily in financial assets.
Certain of those income properties are restricted from sale by their terms of grant,
state agency regulations or rules, other federal and state guidelines, private
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covenant or agreement or otherwise. For those properties not so restricted from
sale, an analysis shall be prepared to determine the following prior to such
income producing property being offered for sale:
1. The maximum open market value of the City's interest in the property in
its as is condition.
2. If the property is in an important location, a determination of the possible
future consequences of the City no longer controlling that property.
3. If the current rent is contractually low and significant rent increases are
likely within a finite period.
4. The likelihood of significant increases in the ability of the property to
generate income after the expiration of any current lease of the property.
5. The likelihood of a lease extension being requested by the tenant and the
ability to substantially increase rents or require significant improvements
to enhance the utility and the value of the property as consideration for
granting such an extension.
6. The value of the revenue stream from (i) lease income over the life of an
existing lease and/or (ii) likely lease revenue if an existing lease were to be
renewed or the property re -let to a different tenant; and/or (iii) lease
income from the property if it were to be converted to its highest and best
use, compared with the financial benefits of the use of the proceeds of a sale
and if, considering the totality of the circumstances, such use of the
proceeds of a sale is preferable to retaining the property in question.
Adopted - July 27,1992
Amended - January 24,1994
Amended - February 27,1995
Amended - February 24,1997
Amended - May 26,1998
Amended - August 11, 2009
Amended - May 14, 2013
Amended - February 12, 2019
Formerly F-24
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