HomeMy WebLinkAbout2003-05-13 - AGENDA REPORTS - APPEAL PORTA BELLA DEVAGMT (2)PUBLIC HEARING
DATE:
SUBJECT:
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approval:
Item to be presented by:
May 13, 2003
Agenda Item:
Jeffrey Lambert
APPEAL OF THE PLANNING COMMISSION'S ADOPTION OF
RESOLUTION P02-12, FINDING THAT SANTA CLARITA, LLC AND
BERMITE RECOVERY, LLC HAVE NOT COMPLIED IN GOOD FAITH
WITH THE TERMS OF THE PORTA BELLA DEVELOPMENT
AGREEMENT
DEPARTMENT: Planning and Building Services
RECOMMENDED ACTION
Conduct the public hearing and adopt Resolution upholding the Planning Commission's finding that
Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with the terms of the
Porta Bella Development Agreement between the City of Santa Clarita and Whittaker Porta Bella, Inc.,
approved by the Council on February 27, 1996.
BACKGROUND
On March 14, 2002, the Planning Commission conducted a public hearing to determine whether Santa
Clarita, LLC and Bermite Recovery, LLC have complied in good faith with the provisions of the Porta
Bella Development Agreement. Following consideration of the staff report and written materials
submitted by the public and by SCLLC, a staff presentation, a presentation from SCLLC, and public
testimony, the Commission found that SCLLC and Bermite Recovery, LLC are noncompliant with four
provisions of the Porta Bella Development Agreement, as had been outlined by the City's Director of
Planning & Building Services.
At the April 2, 2002, Planning Commission meeting, the Commission adopted Resolution P02-12
finding that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with the
provisions of the Porta Bella Development Agreement. The Commission provided direction to staff on
possible actions to be used as remedies for each of the four areas of noncompliance, which were
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incorporated into the resolution. Per the terms of the Porta Bella Development Agreement, SCLLC had
120 days from April 2, 2002, to come into compliance with the Development Agreement. Since the
April 2nd meeting, the Planning Commission has received two status reports (May 7, 2002 and June
18, 2002) on SCLLC's progress with implementing the remedies specified in the resolution. It was
agreed by the Commission that staff will continue to bring monthly status reports to the Planning
Commission on SCLLC's progress.
On May 2, 2002, SCLLC submitted a letter to the City of Santa Clarita appealing the Planning
Commission's adoption of Resolution P02-12. In their letter, SCLLC states, "We believe we are
compliant with our Development Agreement in the four areas particularized by the Planning
Commission." In the analysis section below, a description of each finding of noncompliance, the
remedies, actions to date and SCLLC's response (grounds for appeal) are provided for Council
consideration.
A public hearing to consider SCLLC's appeal of the Planning Commission's decision was originally
scheduled for the June 25, 2002, City Council meeting and noticed accordingly. This item was
continued from the June 25th meeting to October 22, 2002. On September 20, 2002, RFI/SCLLC
submitted a letter requesting a further continuance of this hearing. At the October 22nd meeting, the
Council continued the public hearing on this matter to November 26, 2002. At the November 26th
meeting, the Council continued this item again to the February 25th meeting to allow additional time
for the City to conduct its due diligence process on a potential new buyer of the Whittaker-Bermite
property. The item was further continued by the Council at the February 25th meeting to tonight's
meeting for further consideration.
ANALYSIS
Resolution P02-12 reflects the remedies suggested by the Commission and discussed with
representatives of Santa Clarita, LLC and Bermite Recovery, LLC. The four findings of
noncompliance and the associated remedies are described on the following pages.
FINDING 1: FAILURE TO PROVIDE EVIDENCE OF GOOD FAITH COMPLIANCE
Santa Clarita, LLC and Bermite Recovery, LLC failed to provide evidence of good faith compliance
with the Agreement as required by Section 6(b)(x) of the Agreement.
Remedy: Santa Clarita, LLC and Bermite Recovery, LLC shall provide a letter to the City restating the
contents of the February 18th letter and also indicating that Santa Clarita, LLC and Bermite Recovery,
LLC will comply with all future Porta Bella Development Agreement compliance reviews. The new
letter shall indicate Santa Clarita, LLC's and Bermite Recovery, LLC's commitment to cooperate with
the City's initiation of the annual compliance review process.
Actions to Date: Santa Clarita, LLC submitted a letter dated April 15, 2002, to the City of Santa
Clarita, providing written evidence of all actions undertaken by Santa Clarita, LLC, and the costs
incurred to remediate the environmental contamination on the Porta Bella property. In their letter,
Santa Clarita, LLC states that the contents of the letter serve as evidence of good faith compliance with
the terms of the Porta Bella Development Agreement. In the first paragraph of this letter, it states that
both Santa Clarita, LLC and Bermite Recovery, LLC will "comply and cooperate with all future annual
reviews initiated by you and will provide information to the City in accordance with the schedule for
compliance reviews specified in our Development Agreement."
At their May 7, 2002, meeting, the Planning Commission found that SCLLC had satisfied the first area
of noncompliance by submitting April 15, 2002, letter.
SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that their letter of December
4, 2001, which provides a conclusion that SCLLC is compliant, satisfies this condition of the
Development Agreement compliance review process. SCLLC argues that the Development Agreement
does not specify the level of detail required to meet the request for compliance information.
FINDING 2: FAILURE TO PROVIDE REQUIRED INSURANCE PROTECTION FOR THE
CITY
Santa Clarita, LLC and Bermite Recovery, LLC have failed to have the City named as an additional
insured on policies covering the risks of liability from hazardous substances or materials as is required
by Paragraph 2 of Exhibit J (the Indemnification Agreement) of the Development Agreement.
Remedy: Santa Clarita, LLC and Bermite Recovery, LLC shall make an unequivocal and
unconditional request to Steadfast Insurance Company, their present insurance carrier, to name the City
of Santa Clarita as an additional insured on Santa Clarita, LLC's policy. In addition, Santa Clarita,
LLC and Bermite Recovery, LLC shall advise the City of Santa Clarita in writing of their intent to
make this same request of all future insurance carriers that write policies for the Porta Bella Project.
Santa Clarita, LLC shall provide to the City written evidence that these requests have been made. The
City also encourages Santa Clarita, LLC and Bermite Recovery, LLC to aggressively pursue
appropriate resolution of the existing lawsuit with Steadfast Insurance Company that addresses the
coverages available with the current Steadfast policy.
Actions to date: In a letter dated March 19, 2002, to Arthur J. Gallagher & Co., Santa Clarita, LLC
requested that their insurance carrier, Steadfast/Zurich, add the City of Santa Clarita as an additional
insured on the current insurance policy. In a letter to the City of Santa Clarita dated April 15, 2002,
Santa Clarita, LLC confirms that should Santa Clarita, LLC obtain insurance covering the risk of
liability arising from toxic or hazardous substances, or materials on the project site from a carrier other
than the present carrier, that Santa Clarita, LLC would make this same request to name the City as an
additional insured.
At their May 7, 2002, meeting, the Planning Commission found that although SCLLC had submitted
the letter making the request that the City be added as an additional insured, SCLLC needs to be more
assertive in pursuing insurance coverage for the City.
SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that they had submitted a
letter dated May 25, 2001, to their insurance broker, asking that the City be named as an additional
insured, therefore satisfying this requirement months before the Development Agreement compliance
review as initiated by the City.
FINDING 3: FAILURE TO COMPLY WITH THE REQUIREMENTS OF THE
DEPARTMENT OF TOXIC SUBSTANCES CONTROL
The City entered into the Development Agreement in order to facilitate the achievement of a series of
public objectives that are identified in general in Recital F of the Agreement and that are described in
additional detail throughout the Agreement. None of these objectives can be achieved without a timely
and thorough investigation and remediation of the Porta Bella project site.
Santa Clarita, LLC executed an Enforceable Agreement with the Department of Toxic Substances
Control ("DTSC") on February 14, 2001, addressing the investigation and remediation requirements
applicable to the Porta Bella Project. In a letter dated September 10, 2001, the DTSC identified
multiple deficiencies in the compliance of Santa Clarita, LLC with the Enforceable Agreement and
demanded immediate action to correct the identified deficiencies. In addition, DTSC's letter dated
December 11, 2001 specifically determines that Santa Clarita, LLC is not in compliance with the
Enforceable Agreement. Thus, Santa Clarita, LLC and Bermite Recovery, LLC continue to frustrate
the objectives of the Development Agreement to arrange for the timely development of the Porta Bella
Project by failing to bring themselves into compliance with the Enforceable Agreement requirements of
the DTSC.
Remedy: The City directed Santa Clarita, LLC and Bermite Recovery, LLC to promptly take positive
steps to resolve all issues with the DTSC. To this end, Santa Clarita, LLC and Bermite Recovery, LLC
was directed to return in 30 days from April 2, 2002, (May 7, 2002) with a strategy that lists a specific
sequence of activities to be undertaken by Santa Clarita, LLC, Bermite Recovery, LLC and others to
cause the termination of the enforcement action that DTSC has recommended to the Attorney General's
office.
Actions to Date: In a letter to the City of Santa Clarita dated April 24, 2002, Santa Clarita, LLC
provides a "comprehensive sequence of actions designed to continue environmental clean-up on the site
by attracting private capital." On page 2 of the letter, Santa Clarita, LLC lists 13 specific actions
related to soil remediation, groundwater remediation, establishment of a remediation escrow account,
and steps to comply with DTSC requirements, among others. The letter states that these actions are
contingent upon the City initiating the process to amend the Specific Plan, tentative map and
Development Agreement for the property, and conducting a number of other actions. Santa Clarita,
LLC concludes that the actions listed in the letter would improve Santa Clarita, LLC's relationship with
the DTSC and allow for the ultimate clean-up of the Porta Bella site.
At the May 7, 2002, Planning Commission meeting, the Commission directed staff to work with
SCLLC to prepare a more detailed timeline and task list so that the Commission and the public can
monitor progress toward actual site characterization and clean up. Staff, in working with SCLLC,
developed a proposed timeline which highlights the major activities to occur as part of the Porta Bella
clean-up and development project.
SCLLC Grounds for Appeal:: In their May 2, 2002, letter, SCLLC states that compliance with
DTSC's Enforceable Agreement is not required in the Development Agreement, until SCLLC applies
for a grading permit and, therefore, should not be considered as part of the Development Agreement
compliance review. In addition, SCLLC argues that the timing of development activities is within and
at the developer's discretion.
FINDING 4: ATTEMPTED TERMINATION OF THE CITY'S RIGHT TO OCCUPY AND
USE PROPERTY ADJACENT TO THE METROLINK STATION.
Bermite Recovery, LLC, and Santa Clarita, LLC, through their managing member Remediation
Financial, Inc., sought to terminate the City's right to occupy and use property underlying the parking
lot and access areas of the Metrolink Station by the purported termination of the lease of said property.
Under the terms of the Development Agreement, the City is to have the use and occupancy of the
property to support a commuter rail station during the term of the Development Agreement.
(Development Agreement, p. 25.) Thus, the Notice of Termination of Lease sent by Bermite Recovery,
LLC, Remediation Financial, Inc. and Santa Clarita, LLC on July 31, 2001 to be effective August 31,
2001, breached the developer's obligation under the terms of the Development Agreement.
Remedy: The Planning Commission, at their March 14, 2002, meeting, determined, consistent with
the terms of the Porta Bella Development Agreement, that as long as the Development Agreement is in
effect, the City of Santa Clarita has the right to use the property adjacent to the Metrolink Station for
commuter rail station parking and access. The Commission directed that Santa Clarita, LLC and
Bermite Recovery, LLC enter into an agreement with the City to be incorporated into and resolve the
currently pending injunction proceedings brought by the City against Bermite Recovery, LLC, Santa
Clarita, LLC and Remediation Financial, Inc. whereby these three parties will agree to forgo any
attempt to regain possession of the subject property as long as the Development Agreement is in effect.
In addition, Santa Clarita, LLC and Bermite Recovery, LLC shall present a written lease proposal to the
City within 30 days. This formal, written proposal shall outline the terms of the City's lease of the
subject property, specifying the number of years, payment schedule, and option to purchase details.
Actions to Date: At a special meeting on July 17, 2002, the City Council made a determination that
the public necessity required the acquisition of an easement ownership for public right-of-way and
additional parking at the Santa Clarita Commuter Rail Station by means of condemnation. Pursuant to
this action, on July 25, 2002, the City Attorney appeared in Los Angeles County Superior Court and
was successful in securing a three-day prejudgment order of possession for the Santa Clarita Commuter
Rail Station.
SCLLC Grounds for Appeal: In their May 2, 2002, letter, SCLLC states that the expiration and
non -renewal of the Metrolink lease agreement was consistent with the Development Agreement and
applicable law, and that this fact was acknowledged through a number of lease extensions pursued by
the City.
ALTERNATIVE ACTIONS
Other actions as determined by the City Council.
FISCAL IMPACT
No fiscal impacts to the City's budget are anticipated by the recommendation listed in this report.
ATTACHMENTS
Resolution
May 5, 2003 letter from Santa Clarita, LLC to City of Santa Clarita re appeal
Available in the City Clerk's Reading File:
Resolution No. P02-12
April 15, 2002 letter to City of Santa Clarita from Santa Clarita, LLC re development agreement
December 4, 2001 letter to City of Santa Clarita afrom Santa Clarita, LLC re compliance
March 19, 2002 letter to Arthur J. Gallagher & Co. from Santa Clarita, LLC re insurance
April 24, 2002 letter to City from Santa Clarita, LLC re clean-up and devleopment strategy
April 30, 2002 letter to City of Santa Clarita from Santa Clarita LLC re revision of 4/24/02 letter
Porta Bella Development Agreement
Additional material submitted by Santa Clarita, LLC
NOTICE OF CONTINUED PUBLIC HEARING
CITY OF SANTA CLARITA
CITY COUNCIL
NOTICE IS HEREBY GIVEN that the City Council of the City of Santa Clarita, at its
regular meeting held February 25, 2003, continued a public hearing on
11. APPEAL OF THE PLANNING COMMISSION'S ADOPTION OF RESOLUTION NO. P02-12,
FINDING THAT SANTA CLARITA, LLC AND BERMITE RECOVERY, LLC HAVE NOT
COMPLIED IN GOOD FAITH WITH THE TERMS OF THE PORTA BELLA DEVELOPMENT
AGREEMENT - This item is for Council to consider an appeal of the Planning Commission's
determination that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith
with the terms of the Porta Bella Development Agreement. In accordance with the Section 6 (b)(x) of
the Porta Bella Development Agreement, a compliance review was initiated in the Fall of 2001 and a
public hearing before the Planning Commission was held on March 14, 2002, to inform the Commission
of the Director of Planning and Building Service's findings of noncompliance and to consider other
evidence. Thereafter, at its meeting on April 2, 2002, the Commission adopted Resolution P02-12
finding that Santa Clarita, LLC and Bermite Recovery, LLC have not complied in good faith with four
provisions of the Porta Bella Development Agreement. Santa Clarita, LLC in a letter to the City dated
May 2, 2002, appeal the Planning Commission's determination of noncompliance to the City Council.
to May 13, 2003. The continued public hearing will be held at or after 6:00 p.m. in the
Council Chamber at 23920 Valencia Blvd., Santa Clarita, California.
Dated this 26th day of,February, 2003.
SHARON L. DAWSON, CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS. AFFIDAVIT OF POSTING
CITY OF SANTA CLARITA )
SHARON L. DAWSON, being first duly sworn, deposes and says that she is the
duly appointed and qualified City Clerk of the City of Santa Clarita and that on February
26, 2003, she caused the above notice to be posted at the door of the Council Chamber located
at 23920 Valencia Blvd., Santa Clarita, California.
SHARON L. DAWSON, CITY CLERK
Santa Clarita, California
Forms/contph.doc
May 5, 2003
Director of Planning and Building Services
City of Santa Clarita
23920 Valencia Blvd.
Santa Clarita, CA 91355
Re: Administrative Appeal of Planning Commission Resolution P02-12
The Planning Commission of the City of Santa Clarita, California — April 2, 2002
Porta Bella Development Agreement Findings of Non -Compliance Materials Submitted on
Behalf of Santa Clarita, L.L.C. for City Council Hearing of May 13, 2003
Dear Jeff:
This letter is written to once again respond to findings of non-compliance and in anticipation of the
City Council Public Hearing scheduled for May 13, 2003.
Permit us to again place on the record my letter of November 22, 2002 with its Exhibits 1-9, all of
which remains pertinent to the City Council Public Hearing of May 13th. We request that you and City
Council carefully study these documents.
In brief, our response to each finding is as follows:
Finding I: Provision of Evidence of Good Faith Compliance
On May 7, 2002, the Planning Commission concluded that we had satisfied this finding. Therefore,
this issue is a non -issue and should remain resolved.
Finding 2: Naming the City as an additional insured as addressed in Paragraph two (2) of
Exhibit `J' of the Development Agreement
Our insurance has been canceled (See Exhibit `A') and since Exhibit `J' of the Development
Agreement (DA) requires naming the City as an additional insured only i w e h ave i nsurance, t his
issue is moot.
We are challenging the cancellation in a trial involving our insurer starting August 5, 2003 in L.A.
Superior Court. If our insurance is reinstated, we will again pursue naming the City as an additional
insured.
REMEDIATION FINANCIAL,I NC.
Great American Tower
3100 North Central Avenue, Suite 100
Phoenix, Arizona 85012
602 238 9007 voice 602 238 90! 7 fax
Finding 3: Compliance with the Requirements ofDTSC
Mr. Lambert writes in his December 19, 2001 Notice of Non -Compliance, "Failure to Comply with the
Requirements of the Department of Toxic Substances Controls":
"The City entered into the Agreement in order to facilitate the achievement of a series
of public objectives that are identified in general in Recital `F' of the Agreement...
None of these objectives can be achieved without the timely and thorough investigation
and remediation of the Porta Bella Site."
First, the DA does not require us to comply with DTSC requirements until we apply for a grading
permit, and we have not applied for one. Secondly, the timing of development is at the Developer's
discretion. In fact, the Developer is not even required to develop the property.
Finally, in contrast to Mr. Lambert's Notice of Non -Compliance, the City concludes that remediation
is not part of the Development Agreement when it states in Recital `E' of the Draft "Reimbursement
Agreement for City Services Associated with Development of the Whittaker-Bermite Property" (the
"Reimbursement Agreement"):
"In the event of Acquisition, Developer will be expending considerable sums and
assuming considerable liabilities with respect to the Property and Cleanup prior to the
City's c onsideration o f any in odifications p roposed b y t he D eveloper t o t he E xisting
Approvals. Developer's willingness to proceed with the Acquisition, Cleanup, and
Development of the Property is dependent, in part, on... The City would view
positively this modification of public benefit in exchange for Developer's expedited
performance of soil and groundwater remediation, a goal which is not reflected in
Development Agreement 93-002..." (Emphasis Added)
The City's conclusion that soil and groundwater remediation are not reflected in the Development
Agreement negates the basis for this finding. Therefore, the finding is moot and nullified.
Finding 4: Termination of City's "Right" to Occupy and Use Metrolink Parking Lot
After renewing the Metrolink lease six times and months of negotiations with the City, upon the
expiration of the last renewal, we could not progress toward a satisfactory lease or sale of the property.
Therefore, no new lease was ever executed. Such an expiration of the lease is consistent with the
Development Agreement.
The City's repeated request for and receipt of lease extensions show that the City acknowledged its
need to have a lease, and thereby recognized that it does not have a right to use the parking throughout
the term of the DA. Why would the City repeatedly request a lease extension if it believed it had the
right to use the site for the term of the DA?
Let us review the specifics in the DA pertaining to the Metrolink Parking lot. Paragraph 4(c) (iv) "Use,
Option to Purchase and Grant of Commuter Rail Station Site" states:
REMEDIATION FINANCIAL,I NC.
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"Developer shall enter into an agreement, in the same form and substance as Exhibit `K'
attached hereto, pursuant to which Developer shall do the following (a) Developer shall
lease the Commuter Rail Station Site to the City for One Dollar ($1) per year, for a period
of three (3) years commencing on April 21, 1996; (b) shall grant to City an option to
purchase the Commuter Rail Station Site at any time during such three-year lease term at
the 1995 appraised v alue ($2,5000,000)p lus any percent b y which the Consumer Price
Index (as hereinafter defined in footnote ) has increased between April 21, 1995 (the date
of the valuation) and the date on which the purchase is consummated. If, at any time prior
to the consummation of any purchase pursuant to clause (b) above, Developer records the
final tract map for any subsection of the Project, Developer shall dedicate the Commuter
Rail Station Site to the City upon such recordation; and if, at any time after the City has
purchased the Commuter Rail Station Site Developer records the first final tract map for
any subsection of the Project, Developer shall reimburse the City for the full purchase
price by the City plus any percentage by which the Consumer Price Index has increased
during the period between the date the City consummated its purchase and the date of
reimbursement. During the term of this Agreement, the City shall use the Commuter Rail
Station Site as a public passenger station for commuter rail transportation, subject only to
ancillary uses supporting such primary use."
Please note that:
1. (iv) (a) states that the Developer would lease the property to the City for three (3) years.
2. The City could buy the property for $2.5M, plus a CPI increase during the three (3) year lease.
(It's amazing how the City recently appraised the property at $1,000.)
3. The developer would dedicate the property to the City if the developer recorded the final tract
map before the City bought the property, or the developer would reimburse the City the
purchase price if the final tract map was recorded after the City's purchase.
Also note that Paragraph 2 "Term" of Exhibit `K,' "Second Commuter Rail Station Site Lease with
Option to Purchase" states, "The Term of this Lease shall be three (3) years, commencing on April 21,
1996 and ending on April 21, 1999 ("Term"), unless this Lease is terminated pursuant to the provisions
of this Lease."
It is clear from the above that termination was contemplated, and therefore the City does not have the
right to use the property for the term of the DA.
The City has stated that the last sentence of Paragraph 4 (c) (iv) implies that the City has a right to the
property for the term of the DA. This is a misinterpretation of the sentence. The sentence needs to be
interpreted within the context of the entire Paragraph 4 (c) (iv) and Paragraph 4 (a) of Exhibit `K,' the
Lease, which states:
"The Premises shall be used only for the operation and maintenance of a Public Commuter
Rail Station and such other uses which are reasonably ancillary to, supporting of, and
relating to such primary use and which are expressly set forth in Exhibit C, attached
hereto."
If the last sentence in paragraph 4 (c) (iv) really meant that the City could use the property for the term
of the DA, all the previous contents of this paragraph and all of Exhibit `K,' the lease, wouldn't make
REMEDIATION FINANCIAL,I NC.
3
sense because the last sentence would contradict the ideas of termination clearly expressed throughout
the text of 4 (c) (iv) and Exhibit `K.' We therefore submit that this last sentence makes sense if and
only if it is interpreted to limit the City's uses of the property during the term of the DA. This becomes
crystal clear in the light of paragraph 4 (a) of Exhibit `K,' quoted above.
We therefore submit that letting the lease expire is consistent with the intent and specific language of
the DA.
In addition to being in compliance, we have fully complied with the Planning Commission's suggested
remedy.
Finally, this finding is moot, not just because of our compliance with the DA and Planning
Commission, but also because the City has received possession of the Metrolink Parking as part of its
condemnation.
Negative Environmental Implications of Non -Compliance Findings
Finding us in non-compliance reduces the chance that the site will be properly cleaned up because such
a finding starts the clock toward termination of the Development Agreement, which, in turn, rescinds
certain entitlements and conditions for development. All this adds to uncertainty, which reduces the
value of the property and without sufficient value, no private party can afford the environmental
remediation. Without sufficient value (knowing what can be built and associated costs) there is not
sufficient profit to make remediation affordable.
The City may believe it has compensated for such risks through clauses in the proposed
Reimbursement Agreement, but this is not the case for several reasons:
1. Cherokee has not bought the property. There is not yet a firm sales price, nor are conditions
established for the timing of the purchase.
2. There is no guarantee that Cherokee will buy the property within the 120 -day cure period and
thus default could occur and lead to termination of the DA.
3. Cherokee simply may not close. Ironically, certain stipulations in the Reimbursement
Agreement reduce the odds that Cherokee will be able to close because its stipulations make it
more difficult for Cherokee to offer a price that is acceptable to Porta Bella investors. In effect,
conditions in the Reimbursement Agreement interfere with the contract between Cherokee and
SCLLC.
Regardless of who a potential buyer may be, findings of non-compliance reduce the City's chances of
remediating the site. Therefore, we urge you to proceed cautiously and moderately without finding us
in non-compliance in order to achieve your goals related to soils, water, roads, and over 400 acres of
open spaces.
Why Make Findines ol'Non-Compliance?
Please carefully weigh the pro's and con's of your decision. What does the City gain by finding us in
non-compliance? It is not possible for us to name the City as an additional insured to a non -existing
insurance policy, and the DA doesn't require this. It is not possible for us to clean up the site because
REMEDIATION FINANCIAL,I NC.
4
of our financial condition, nor does the DA require us to do so. It's impossible for us to grant access to
Metrolink Parking because the City already possesses the parking through condemnation.
The C ity m ay s ee a n egotiating o r o ther p olitical a dvantage t o t olling a default a s i ndicated i n t he
Reimbursement Agreement, but such an advantage is illusory, unnecessary, and as already indicated,
deleteriously affects any purchase. It is unnecessary because potential buyers will want to re -negotiate
the DA, and at that time the City can negotiate in its best interests without the stigma of non-
compliance obfuscating a purchase by increasing uncertainties. The perceived advantage has a
deleterious impact upon any purchase and is illusory because it hinders achievement of the City's
goals. It also has liabilities to the City because it interferes with an existing contract between private
parties.
Not rndinz us in non-compliance has several positive aspects:
1. The City better preserves the opportunity of cleaning up the site with private funds.
2. It keeps the City's developer options open until a final agreement is achieved between the City
and developer as well as the present property owner and potential buyer. It doesn't put all the
City's clean up eggs in the basket of one developer.
3. It fosters a market transaction because it wipes away the cloud of uncertainty that a finding of
non-compliance begets.
4. It demonstrates political probity and entitlement stability, the lack of which has a chilling effect
on potential clean up and development.
5. It preserves the City's integrity by doing what is right, rather than using might to make it so.
We trust that City Council will not find us in non-compliance because of the overwhelming evidence
that we have complied with the Development Agreement.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing Member
Sincerely,
BERMITE RECOVERY, L.L.C.
By: Remediation Financial Inc.
Managing Member
By:
Gary own Gary 10own
Director of Development Director of Development
Remediation Financial, Inc. Remediation Financial, Inc.
Enclosures: Letter to Jeff Lambert from Gary Brown Dated November 22, 2002 with Exhibits 1-9
Exhibit A
cc: Ken Pulskamp, City Manager (Letter Only - No Attachments)
Carl Newton, Esquire (Exhibit A)
Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, Vice President & General Counsel, Remediation Financial, Inc.
REMEDIATION FINANCIAL,I NC.
5
Apr -18-02 03:01pm Frm4-READIATION FINANCIAL INC, +602-238-6017 T-674 P.03 F-276
April 15, 2002
Mr. Jeff Lambert
Director of Planting and Building Services
City of Santa Clarita
23920 Valencia Blvd.
Santa Clarita, CA 91355
Re. Porta Bella Deyelooment Agreement
Dear JeM
In partial fulfillment of the remedial measures adopted by the Planning Commission on
April 2, 2002, please allow this letter to provide assurances to the City that Santa Clarita, L.L.C.
(SCLLC) and Betmite Recovery, L.L.0 ("BRLLC") will comply and cooperate with all future
annual reviews initiated by you and will provide information to the City in accordance with the
schedule for compliance reviews specified in our Development Agreement. As additionally
requested by the Planning Commission, we are re -submitting comments contained in our letter of
February 18, 2002.
We have carefully reviewed your letter and the bases for your stated determination that
"SCLLC" and "BALLC' (collectively "S&B") have "not complied in good faith" with the
Development Agreement by and between the City of Santa Clarita ("CIV"} and Whittaker Porta
Bella Development, Inc, dated March 28, 1996 (the "Agreemew"). For the reasons set forth
below, we respectfully disagree with your determination; we have not, in any way, violated
either the terms or spirit of the Agreement.
Before reviewing the actual terms of the Agreement to underscore our compliance with
each of your areas of specific concern, we thought it would be helpful to non -exhaustively
review many of the actions we have undertaken, as well as the significant costs we bave
incurred, to remediate the environmental contamination existing at Porta Bella. We also want to
reiterate our commitment to continuing our efforts toward the clean-up of Porta Bella, and to
express our hope that we will be able to work cooperatively with the City in the future in order to
facilitate the remediation of this property which we did not pollute.
Our Environrnenral Clean -Uv of the Porta Bella Pronertv
As you know, since our ownership of the Porta Bella property, we entered into a
Memorandum of Understanding with the City in March of 1999 ("AdOU"), with respect to which
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we acknowledge (although do not agree with) the City's differing opinion as to its effect,
purpose, binding) nature and enforceability.
We have undertaken numerous efforts and engaged in several projects, at considerable
private expense, which resulted, among other things, in the Department of Toxic Substances
Control ("DTSC') conditionally certifying (subject only to a final UXO effort) to a residential
standard Operable Unit ("OU") —IA, OU -113 and OU -IC as "clean" and "safe" from an
environmental perspective, so that phased development (i.e. building and development) on that
portion orthe site could begin.1 This accomplishment was not only a success, for which we were
solely responsible, but it was also an enormous benefit to the City, because it established the
basis upon which the City and its contractors have constructed Golden Valley Road within the
OU -1 of the Porta Bella site. In addition, as a volunteer who did not pollute the property, we
have undertaken the following remediation and investigation measures during our brief
ownership history. These efforts have to -date cost more than $25,000.000, excluding our
financing costs.
OU -1
The following OU -1 Remediation Investigation Work plans defined the scope of the
investigations that were conducted:
OU -1A & OU -1C REMEDIAL INVESTIGATION (RI) WORKPLAN (58 pages), approved
by DISC May 1999
OU -1B RI WORKPLAN (58 pages), approved by DTSC May 1999.
OU -1 Dn & Ds RI WORKPLAN (81 pages), approved by DTSC June 1999.
OU -IE RI WORKPLAN (121 pages), approved by DTSC on April 10, 2000.
The following reports document the results of the investigations and include a baseline risk
assessment of the risk to public health and the environment from chemical compounds of
concern that were found during the investigations:
SITE INVESTIGATION AND PRELIMINARY ENDANGERMENT SSSS neral T
REPORT FOR OU-lA, OU -1B AND OU -1C (869 pages), granted
no
further action on February 11, 2000.
• OU-IDn & Ds RI REPORT & BASELINE RISK ASSESSMENT (l 183 pages), additional
sampling required in three limited areas prior to DTSC approval
OU -IE RI REPORT & BASELINE RISK ASSESSMENT (1,154 pages), SCLLC to
incorporate DTSC comments
OU -1E REMOVAL ACTION WORKPLAN (63 pages), SCLLC to incorporate DTSC
comments
i Sea, Febn,sry It, 2000 letter from DTSC to TImothy & Lewis, --Conditltmel No Further Action...", copy attsohed.
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The following reports dermes the scope of the work for the ORDNANCE AND
EXPLODED WASTE (OEW) INVESTIGATION AND REMOVAL (if found) required in
order to conduct the remedial investigations:
• OEW CLEARANCE AND CONSTRUCTION SUPPORT RI WORKPLAN FOR OU -IA,
13, C & E (66 pages), approved by DISC April 10, 2000,
REPORT ON THE OEW CLEARANCE, CONSTRUCTION SUPPORT FOR RI
ACTIVITIES IN OU -IA, B, C & E (153 pages).
• RL^'PORI' ON OEW ESCORT AND AVOIDANCE FOR OU-lE (2 pages).
• OEW CLEARANCE AND CONSTRUCTION SUPPORT REPORT FOR THE GOLDEN
VALLEY ROAD RIGHT-OF-WAY (44 pages).
As a result of the remedial investigations and resulting reports completed by us, DTSC
concluded that further active remediation ei•Torts were not necessary. Further more, based upon
demands made upon us by the City, the Hart High School District and our neighbor (Santa
Clarita Business Park), and the resulting agreements we believed we had reached with the City,
we gave this work top priority in order to cooperate with the City's need and desire to
immediately build Golden Valley Road.
Although during our ownership of the site, OU -1 is the only portion which the DTSC has
certified as environmentally safe for development, our clean-up etTorts and accomplishments are
evident throughout the entire Potts Bella Site, as reflected in the following docu rents:
SCTE WIDE
The SITE -WIDE SAMPLING AND ANALYSIS PLAN (SAP), 1066 pages, defines the
scope of the soil and groundwater sampling and laboratory analysis, and quality
assurance/quality control procedures to be followed in the field and the laboratory. It also
defines how the investigation derived waste from drilling operations will be managed and
disposed.
• Volume 1— Soil- Approved by DTSC September 15, 2000.
• Volume 2 — Groundwater and Surface Water -Approved by DTSC January 19, 2001.
• Volume 3 — Investigation Derived Waste Management Plan - Approved by DTSC January
12, 2001.
The PUBLIC PARTICIPATION PLAN (PPP) 134 pages, defines how the public will be
informed and participate through public meeting, hearings, and the response to public
comments.
• The PPP was submitted to DTSC on March 23, 2001.
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The HEALTH AND SAFETY PLAN (276 pages) and ILLNESS AND INJURY
PROTECTION PLAN (83 pages) establish the procedures to be followed on-site to protect
the health and safety of the on-site workers, visitors to the site, and the public who live and
work in areas adjacent to the site.
• Both plans were approved by DTSC on November 15, 2000.
The SITE -WIDE HUMAN HEALTH AND ECOLOGICAL RISK ASSESSMENT
(MMRA), 160 pages, establishes the parameters for evaluating the risk to human health
and the environment through defined pathways of exposure Involving chemical compounds
of concern that may be discovered on -situ.
This document has been submitted to the DTSC for approval. SCLLC has responded to the
DISC comments and a final document will be issued.
The OEW REMOVAL ACTION WORKPLAN (OEW RAW), 88 pages, defines the
technical and safety procedures to be implemented for removing and disposing of any
OEW material that may be found on-site.
• SCT.LC incorporating comments received from DTSC on July 31, 2001.
The STORM WATER POLLUTION PREVENTION PLAN (SWPPP), 332 pages, defines
the physical ocedures to be followed on-site to prevent
including the saePollution
mpling and a alysis of storm wa errun off nthe eve t o
of major s �ge
rm$ r
• The SWPPp was completed February 2001, updated January 2002,
The ENFORCEABLE AGREEMENT (EA) defines the responsibilities, compliance
procedures, and general rgWroments for eondnuing the remedial investigation, feasibility
studies, and implementing the remedial action plans in cleaning up the site.
• The EA W43 signed by the DTSC and SCLLC February 15, 2001.
_OU -2 / OU -6 and OU -3
The following RI Work plans for OU -2/0U-6 and OU -3 define the scope of the
investigations conducted in these areas.
• OU -2 and OU -6 R1 'WORKPLAN (270 pages), approved by DTSC November 15, 2000.
• OU -3 RI WORKPLAN (267 pages), draft report submitted to DISC March 2001.
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OU -4
Funding has been provided by the U.S. Congress for an OE Technology Demonstration
Project to excavate and remove any OE material from the existing landfill areas in OU4.
The project will be implemented and managed by the U.S. Army Corps of Engineers
(USACE.) The project Is to proceed during late Spring 2002.
ORDNANCE AND EXPLOSIVE (OE) TECHNOLOGY DEMONSTRATION PROJECT
WORICPLAN FOR THE OU -4 LANDFILLS
• USACE submitted a draft Work, plan to DTSC August 2001. A final work plan incorporating,
DTSC comments is expected to be resubmitted to DTSC during February 2002.
OU -7
A DRAFT OU -7 WORKPLAN FOR THE GROUNDWATER REMEDIAL
INVESTIGATION Feasibility Study was submitted to DTSC on July 2,1999. In response,
DTSC requested that the Work plan be broken down into a series of technical memoranda
to further define the major phases of the groundwater investigation.
OU -7 GROUNDWATER REMEDIAL INVESTIGATION/FEASMILITY STUDY
WORKPLAN AND CONCEPTUAL SCOPING DOCUMENT (256 pages) submitted to
DTSC July 2, 1999.
The following four Field Sampling Plan Technical Memoranda (FSPTM) were prepared to
define the first four phases of the OU -7 groundwater investigation to be conducted. Two of
the FSPTMs have been implemented, and all of the FSPTMs are to be implemented in the
spring of 2002 as part of the Santa Clara Basin Groundwater Study currently being
planned by the USACE. This Groundwater Study is another federally funded project
approved by the U.S. Congress that will be implemented and managed by the USACE in
couj unction with a local sponsor.
• FIELD SAMPLING PLAN TECHNICAL MEMORANDUM (FSPTM) - GROUNDWATER
MON rORING AND RECONNAISSANCE INVESTIGATION — AREAS 11, 67 & 75 (92
pages), approved by DTSC May 25, 2000.
• FSPTM RECONNAISSANCE GROUNDWATER INVESTIGATION OU -2 & OU -3 (196
pages), approved by DTSC May 25, 2000.
• FSPTM SURFACE WATER RUN-OFF (94 pages), approved by DTSC May 25, 2000.
• FSPI'M DEPTH SPECIFIC SAMPLING PRODUCTION WELL NLF-155 (102 pages),
approved by DTSC May 25, 2000.
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The following reports document the results of the groundwater monitoring activities
conducted in Areas 11, 67, and 75 from June 2000 to June 2001 including water sampling
and laboratory analysis as defined in the FSPTM.
• THIRD QUARTER 2000 GROUNDWATER MONITORING DATA SUBMITTAL. —
AREAS 11,67, & 75 (49 pages), submitted to DTSC November 9, 2000.
• GROUNDWATER MONITORING AND SAMPLING DATA SUBMITTAL AREAS 11,
67 & 75 (459 pages), Final report submitted to DTSC December 21, 2001.
Good Faith Cgmpl•!.e13 T! •.!t ! ' MANIA-
.. •.!! iLl' !
We, believe the accomplishments set forth above, detailing an enormous investment of
time, effort and money prerequisite to proceeding with and accomplishing environmental
clean-up efforts, demonstrate and are supportive of our good faith compliance with the terms,
--spirit" and ''intent" of the Agreement. We believe we have pursued obligations under the
Agreement in good faith, with reasonable diligence, and with an intent to accomplish the
objective of the Agreement in as timely a manner as is reasonably practicable, particularly in
light of the issues surrounding the MOV, the PERC case, the CLWA case, and the two litigation
matters in which the City has sued us (i.e. Golden Valley Road and Metrolink).
The purpose of the Porta Bella Specific Plan and the Agreement were clearly stated in
1995 and 1996, respectively: to "restore a highly disturbed site to compatible contemporary uses
in contrast to its current status as a vacated former industrial manufacturing site in the middle of
what has become a residential and suburban community." (See e.g., Porta Bella Specific Plan
and the Agreement 14(a)). importantly, the Agreement docs not provide a rime frame within
which any development must occur, nor that one is obligated to develop the site at all. however,
once development begins, the developer will provide the City hundreds of acres of parks and
open space, an elementary school site, housing, businesses, roads, etc. We remain committed to
developing the Pone Bella property as entitled and as expeditiously as possible. Indeed, we
continue to firmly support the "intent" of the Agreement, in both spirit and terms, and we
strongly believe that the clean-up and development of Porta Bella are in our best interests as well
as those of the City and the community it serves. The environmental efforts in which we have
been engaged, as is discernable from that which is outlined above, are prerequisites to the
additional and larger in -the -field efforts which are now intended to be launched with the
federally funded programs (groundwater and UXO-OEW), etc.
it is unquestioned that the "spirit" of the Agreement as well as its very terms and
provisions require all of as to work cooperatively to ensure the effectuation, of the purpose of the
Porta Bella Specific Plan and the Agreement.
We are reminded of the well -reasoned presentation you made to City Council in April
2001, emphasizing the critical need for the City and us to work together to make the clean-up of
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Porta Bella a reality. For your immediate ease of reference, we have attached a copy of will recall, heApril
3, 2001 Memorandum which the Planning Department prepared. As y
ou in
reviewing the information presented to City Council as part of that Memorandum, a number of
critical points were recognized, and strongly emphasized, by the Planning Department with
respect to the continued clean-up of the Porta Bella site. Specifically, you emphasized that it is
"good public policy" to clean up "Brownfields," and that .-local government needs to take a
leadership role in mobilizing these efforts." Moreover, you stated that "Santa Clarita, LLC, or
any other private entity, requires City support to be successful, just like all other Brownfield
projects." (Emphasis added). You went on to appropriately acknowledge that "no legitimate
developer could proceed with the remediation and development of Porta Bella without public
support." We agree with the Planning Department's determination that in order to move forward
with the clean-up of Porra Bella as expeditiously as possible, and to fulfill the true intent and
purpose of the Agreement and Specific Plan, there should be a cooperative working relationship.
Lastly, it is important To note in passing that a cooperative approach to Porta Bella project issues
was woven into the original, 1996 Agreement in, among other things, the areas of expedited
processing, public financing mechanisms, reimbursement mechanisms, obligations undertaken
by the City to pay for or require third patties to pay for infrastructure exceeding our "fair share",
etc.
In reviewing the April 3, 2001 Memorandum, it is evident that the City (through its
Planning Commission) and the DISC are fully confident that the phased development which we
have proposed for Porta Bella is environmentally safe. Indeed, the City has affirmatively
endorsed this position, since it started building Golden Valley Road on OU -1 following the
certification and clearance which we worked so hard and spent millions of dollars (as set forth
above) to obtain from the DISC. We can only conclude that the City would not have undertaken
such a massive building project on OU -1 unless it was confidant, based on the DTSC's
assurance, that development is now completely safe on this portion of the site.
As you are aware, we are also interested in beginning construction on the OU -1 portion
of the site. As we are sure you can appreciate, we spent the time, effort and money outlined
above, not just for the City's benefit (although we understood the importance to the City of being
able to build Golden Valley Road), but based upon the terms and assurances set forth in the
March 1999, MOU. As you will recall, the MOU specifically contemplated that we, like the
City, would be permitted to begin building in phases once the DISC certified an OU as
environmentally safe, in that regard, we are pleased that the City has determined to allow (at
least some) phased development to begin on OU -1 as evidenced by the construction of Golden
Valley Road. The City's apparent confidence that this area is safe for building is the kind of
progress we need to secure the continued financial assurances necessary to support further
private clean-up of Porta Bella.
Page 7 of 14
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Section 8(u) of the Develotmtg]lll A, eeg� tnent
Because of the numerous financial considerations which are closely tied to phased
clean-up and development, and given the DTSC's, as well as the Planning Department's
recognition that it is safe to build on OU -1, we hereby request a meeting with the City, pursuant
to Section S(u) of the Agreement. The purpose of this meeting will be to discuss financial issues
which have been impa�ning the development of the Porta Bella Project, and to seek the City's
"reasonable" assistance in working with us to allow our private clean-up efforts to move forward
in furtherance of the Specific Plan and The Agreement.
Please let us know, as soon as possible, when such a meeting will be convenient for the
City.
our C�, onti.nuing Eff= To Obtain Financial involvement by Those with an Interest in the
Cle *+ p of Porta. Bella
Albeit expensive and a continuing effort and commitment on our part, we continue,
through the Courts and otherwise, to address those entities having an historic (and hence fiscal
responsibility) involvement witb the Porta [cella site. Given the attorney client privilege of such
matters, we are not at liberty to provide details in this regard; however, please be assured this
aspect of the fiscal equation is well within our focus and a matter of our utmost attention.
Despite the unexpected financial constraints which have resulted, in large measure, from
the fact that the City has not complied with the terms of the MOU after having accepted our
performance thereunder, in further demonstration of our good faith efforts to continue with the
environmental remediation of Porta Bella, for several years now we have been actively working
with Congressman "Suck" McKeon to secure federal money toward the clean-up of Porta Bella
As you know, at this point, our cooperative efforts with Congressman McKeon have successfully
shepherded through the US Congress $ 10.5 million in federal funds for further study of
perchlorate in the groundwater (OU -7) and investigation and removal of ordinance and explosive
materials (in OU -4). While this is obviously a significant achievement, we are continuing to
work to obtain even greater federal assistance, and have every expectation that our efforts will be
successful.
We have Complied with the Insur'nnc_t ReguiTemems
We also must respectfully disagree with your conclusion that we have failed to comply
with Paragraph 2 of Exhibit ] to the Agreement in failing to have the City named as an additional
insured under our Steadfast insurance policy. As a fundamental matter, it is important to note
that we are unaware of anything within the Agreement which requires the developer to secure
such insurance, or to keep any such insurance in effect. Consequently, although we are not
suggesting that we plan to cancel our insurance, the fact remains that we could simply drop our
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environmental insurance policy, thereby obviating any need to have the City named as an
additional insured, and we would still be in lull compliance with the terms of the Agreement.2
Notwithstanding the foregoing, and despite our understanding that we have no obligation
under the terms of the Agreement to name the City as an additional insured on our policy, we
want to emphasize that we have no objection to taking such action; and, in fact, have already
done everything in our power to accomplish that goal. 'However, as you are (no doubt) already
aware, only the insurance carrier, not us, can determine who will be named as an additional
insured on the policy. All we can do is exactly what we have done -- which is to request such
action by Steadfast. To that end, we wrote to Steadfast on May 25, 2001, and requested that the
City be added as an additional insured on our policy. We would be happy to provide a copy of
our letter. To date, Steadfast has refused to honor our request, despite numerous telephone calls
from us and our counsel to follow up on this matter;.
At this point, we encourage the City to work with us to determine how we can best
effectuate our request to have the City named on our policy. Perhaps the City has encountered
this problem before, and was able to find a solution that met the insurance carriers' requirements.
Please let us know what the City can do to assist us in this process, and to make the best
case possible for establishing to Steadfast that the City is properly insurable. We look forward to
hearing from the City with constructive suggestions and the details of other instances in which
the City has been accepted as an additional insured in similar circumstances to assist us in our
efforts.
Compliance with the DTSC Enforceable Agreement is Not Relevant to the D"2011Olnent
ggreetnent
t In this regard, you should be aware that our environmental insurance carrier, Steadfast, has purported to limit the forum
atYbetiveness of our environmental insurance coverage. This is a manor presently subject to litigation between Steadfast and as.
Again. while we have not taken any action to simply drop our insurance coverage (and do not intend to at this time), it remains
possible that there may not be a policy in farce in the fltttae upon which the City can be named as an insured. Should this
no requiremen for enhave no ground vironmental nsufor rance tolaint be obtaiinedhat all, or os ofnce obtained. m be mamined ias set n force.
Additionally, above,
there plainly is
Additionally, assuming the policy does remain in farce, we have been advised by our attorney that because the
decessor in
interest (i.e., "Whittaker Porm Belia Pevolopment, Inc. a California cotporadon'j (See, Paragraph 1(f) Agreement) was
released by the City from any obligation to provide environmental nsurane4 Paragraph 2 was rendered a nullity by this release.
Further, a careful reading of Paragraph 2 confirms that, unlike other provisions of Exhibit I to the Agreement, Paragraph 2 does
not pertain to WbinalcW s successors and assign. Therefore, if the City had wanted all successors and assigns of Whittaker Patty
Belle Development, inc. and Whittaker Corporation to be subject to the insurance provision set forth in Paragraph 2, express
reference to successor and assigns needed to be included in Paragraph 2, as it was, fr example in Paragraph i. Contrast
Paragraph 2 with the indemnification provision of Paragraph i, which includes the language ["for each of them and each of their
successors and assigns"] (emphasia added). As it stands, however, the plain language of Paragraph 2 does not impose anY
insurance obligation on n. Indeed, we were quite surprised m loam that the City had any desire to be named as an additional
insured on any cnvironmcntal policy, since it had not raised this issue anti] Years after we acquired the site.
t This is exactly the circumstance contemplated in Paragraph 7 (e) of rhe Development Agreement (i.e., the "force majeure"
paragraph), wherein performance in excused due to causes beyond the reasonable control of the parry.
Page 9 of 14
March 19, 2002
Via Telefax
Mr. Ronald D'Ambrosi
Vice President
Arthur J. Gallagher & Co.
14 Wall Street
18th Floor
New York, New York 10005
Re: Porta Bella Project
Santa Clarita, California
Steadfast Insurance Company PLC 3598792-00
Dear Ron:
At the specific request of the City of Santa Clarita, California, we are requesting that you
once again ask our insurer, Steadfast / Zurich to add the City of Santa Clarita as an additional
insured on our above referenced policy. As usual, please request an immediate action by
Zurich to this request and a detailed response, in lieu of silence, if they chose to continue to
disregard our request.
Thank you for your on-going efforts in this matter.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing,Member
By: Tk
IIIVI,
Wayne G. Souza
General Counsel
Remediation Financial, Inc.
Cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
REhIEI)IATION FINANCIAL, INC.
Great American Tower
3100 North Central Avenue, Suite 100
Phoenix, Arizona 35012
Apr -16-02 03:01 Pm From-BELEDIATION FINANCIAL INC, 4802-238-9017 T-674 P.02 F-276
April 15, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Claim
23920 Valencia Blvd.
Santa Claim, CA 91355
Re: Porta Bella
Dear Jeff`.
This letter is written to fulfill a remedy mentioned in Section 3.b of the Planning Commission's resolution
adopted on April 2, 2002 concerning compliance with the Porta Bella Development Agreement.
Specifically, it appears that the Planing Commission has asked Santa Clarim, L.L.C. (-SCLLCI and
Bermim Recovery, LLC ("Bermite'l to confnm that we would request that the City of Santa Clarita be
named as an additional insured if SCLLC or Bemtite, or both were to obtain insurance covering the risk
of Liability arising from "toxic" or "hazardous" substances, or materials on the Project Site from a carrier
other than our present one, Steadfast Insurance Company ("Steadfast"). Please allow this to coufirm our
March 20 discussions, in which we stated that if SCLLC or Bermite, or both, were to obtain such other
insurance, such a request through our insurance broker to name the City as an additional insured will be
made. Additionally, during our March 20 meeting, we provided you with a copy of SCLtC's letter of
March 3, 2002 in which SCLLC again requested our agent to have Steadfast name the City as an
additional insured under PLC 3598792-00. To date, we have still received no response from Steadfast.
This letter is written with the understanding that it does not constitute a waiver of the positions taken in
our letter of February 18, 2002, regarding the Porta Bella. Development Agreement, Notice of Non -
Compliance matters. Additionally, this letter is a privileged communication for the purposes of
settlement under California Code of Civil Procedure 1152 and similarly applicable provisions.
By providing this response, we believe we will have satisfied all the.remedies in Section 3.b of the
resolution.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.,
Managing Member
By: Aoz��
Gary Bro
Director of Development
Remediation Financial, Inc.
Sincerely,
BERM= RECOVERY, L.L.C.
By: Remediation Financial, Inc.,
Managing Member
Gary Brow
Director Development
Remediation Financial, Inc.
Cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne Cr. Souza, General Counsel, Remediation Financial, inc.
REMEDIATION FINANCIAL, INC.
CREAT AMERICAN rowzA
3200 North Central Avn,ue. Suite 100 Phoenix, AliZOna 8S012
am?a.vannl vaira 9922389017fda
Apr -24-02 02:23pm From -REMEDIATION FINANCIAL INC, +802-238-801T T-812 P.02/03 F-384
April 24, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
23920 Valencia Blvd.
Santa Clarita, California 91355
Re: porta Bella
Dear Jeff:
The following is writtea in response to the Planning Commission's request that we address activities
Which would move us forward under the Enforceable Agreement with the DISC. We note that it's our
belief and position that matters specified in the Enforceable Agreement are not relevant to compliance
with the Development Agreement. The particulars of our position in this regard are set forth at length in
our letter to you of February 18, 2002. Additionally, this Vetter is a privileged communication for the
purposes of settlement under California Code of Civil Procedure 1152 and similarly applicable
provisions. Notwithstanding, we an forth these activities in our good faith efforts to be responsive to the
Planning Commission's request and with the hope that they will foster progress on environmental goals
we both wish to achieve.
As background, at your request we met on March 27, 2002 with DISC staff Sayareh Amir, Rita Kamat
and Ken Baez. In summary based upon Ms. Mix's statements, she appeared to be unwilling to rescind or
abate the pending referral to the Attorney General's office on behalf of DISC regardless of actions we
may take. Although we believe she has both the power and authority to retract or abate her refeaal, she
nevertheless maintained that position with us during our meeting while also stating she wished she could
help us.
Before stating specific actions that remediate site conditions at Porta Bella, we all need to realize several
factors:
1. Although we have spent over $25M in remediation efforts, additional capital is required to
meaningfully remediate further.
2. The most significant source of capital is the private sector.
3. Private sector capital is sophisticated and understandably hesitant to invest farther because of
several factors including, but not limited to:
a). A Specific Plan and Tentative Tract Map that do not match reality on the ground.
b). An inability for us or any buyers to vertically develop until the site's entire
surface is rernediated.
c). Uncertainty and a perceived void on the public sector side of any critical path
being developed or followed concerning financial mechanisms with public
participation such as Tax Increment Financing.
REMEDIATION FINANCIAL, INC.
GreatA/adricall Tower
3200 North Centra! Avdnuv some 100
- Phur^Lv, drtza`ne 3i u
-O 4A 1? rnv
Apr -24-02 02.23pm Froa-REIEDIATION FINANCIAL INC, +502-238-9017 T-012 P.03/05 F-384
d). A political environment that appears to want to negate present housing
entitlements.
e). Outstanding lawsuits such as pERC, disputes between the City and us, and
DTSC's legal actions on the Enforceable Agreement.
4. We need to resolve many of the above factors in order to move forward aggressively, positively
and reliably toward an environmental remediation under the Enforceable Agreement.
Therefore, we set forth below a comprebensive sequence of actions designed to continue environmental
clean up on the site by attracting private capital. These actions will permit us to move qulckly on Area 55
and subsequently proceed with other higher priorities of DTSC.
SCLLC and Beninite Recovery would take the following sequential actions, contingent upon the City and
Planning Commission taking timely actions stated later in this letter.
1. Place net funds from the City's condemnation for Golden Valley Road into an Environmental
Escrow Fund (EIM. Funds in the EEF will be spent on remediation and remediation related
costs.
2. Place into the EEF Metrolink rental income collected after amendments to the Specific Plan,
Vesting Tentative Tract Map and Development Agreement have been made and all appeal
periods have expired. We will also place into the EEF one third of the rental income collected
during the period prior to such amendments being approved and expiration of all appeal
periods.
3. Provide a schedule of activities to DTSC as soon as an mnendrnent process schedule is
established.
4. If the City purchases the Mctralink property, the net proceeds will go into the M.
S. Submit an OEW Remedial Action Workplan to the DTSC by May 15, 2002.
6. The Army Corps of Engineers (COE) has provided a start date of June 4, 2002 to commence
work on the OE technology demonstration project within the Huila Bowls. We would
continue our work with the COE on how best to apply the next S2.5M in federal finds.
7. First, spend EEF funds to remediate conditions in Area 55 consistent with work plans.
approved by DTSC and alas work on Area 55 within 60 days of the expiration of appeal
periods having for actions in item 2, above.
8. We will continue our eoope12tion with the COE on the groundwater perchloraw study. The
COE perchlorate project provides for the commencement of fieldwork by June 30, 2002.
9. Continue to address water concerns in OU7 by implementing the applicable technical
memoranda on groundwater work and taking other actions required by DTSC related to
groundwater. (Such steps will depend in large measure upon the results of the investigations
to be conducted by COE's perchlorate study.)
10. Place net revenues from the We and development of Parcel 1 and OUI ibrough OU 5 into the
EEF for remediation purposes.
11. Implement the Remedial investigation Work plan for OU2.
12. Take actions necessary to comply with DTSC's letter of September 10, 2001 such as:
A. Submit workplan to conduct soil sampling at the Metrolink site.
13. Improve Security Fencing.
C. Provide "Certificates of Insurance for Liability".
D. Act on oversight costs.
E. Revise "Site Wide human health and Ecological Risk Assessment Work Plan".
F. Submit revised Work Plan for OUIE Interim Remedial Measure (1RM) Work Plan.
�� Raxrt..nfAT10N FINANCIAL, INC. 2
Apr -24-02 02:24pm From -REMEDIATION FINANCIAL INC, +602-236-6017 T-812 P.04/05 F-384
13. After implementation of remediation in Area 55 and OU2/OU6, initiate work plans and
implementation of work plans for OU3 through OU5 as net income from development of
OU's generates finds for remediation and/or we generate additional investment capital.
The above actions will address DTSC priorities stated in the March 27 meeting which were:
1. Remediation of Area 55.
2 Implememstion of the approved remedial investigation work plan for OU2.
3. Provide DTSC with a schedule of activities to be undeataken.
4. Finalize the OEW Remedial Action Work Plan.
5. Other activities stated in DTSC's letter of September 10, 2001.
Ms. Arnir said her top priorities were remediation of Area 55 and implementation, of the Remedial
Investigation Work Plan for OU2.
The above work can be done if the following assumptions and cooperation are achieved:
1. The Planning Commission initiates an amendment process to the Specific Plan, Vesting
Tentative Tract Map, and Development Agreement largely consistent with the already
certified Golden Valley Road EIR that mitigates the impacts of building Golders Valley Road.
Vertical development will be allowed on OUl and Parcel l for non -housing uses when DISC
has signed off on such uses. For OUl through 6, the City will issue a grading permit within
an OU when DTSC has signed off on the safety for the uses within the OU and has given
preliminary clearance on the adjacent OU or OU's. This will exceed DTSC standards by
providing an OU between areas undergoing vertical development and areas yet to be
certified.
Since OU7, (groundwater), does not affect the safety of living on or using Parcel l and OUl
through OU6, the amendment process would also clarify D3-12 so that a grading permit for
OU5 may be granted when the treatment technology for remediation of OU7 is agreed upon
with DTSC and in place, yet the flail remediation may not be completed. This approach is
safe and good science and is an approach uniformly followed by the DTSC in virtually every
similar project we are aware of in California. Specifically, within OU1 through 014 and
OU6 a grading permit will be issued by the City if rhe specific OU for which it is requested
has received clearance from DTSC, and the 4acent OU(s) has received preliminary
clearance from DTSC. For OUS a grading permit will be granted when OU5 has received
DTSC clearance and after the remediation methodology is agreed upon between DTSC and
SCLLC and in place.
2. During the amendment process, we are willing to eareflrlly consider reducing the total
number of housing units permitted on the site if the City is willing to consider a reduction of
infrastructure requirements. For example, we could reduce the number of housing units if we
weren't required to pay for the construction of Santa Clarita and Magic Mountain parkways.
At the same time, we could formally and legally reserve and dedicate the necessary rights-of-
way for the roads.
3. The City would initiate analyses necessary to declare the Porta Bella project site an urban
renewaltredevelopment area and eventually the use of Tax Increment generated only from the
Porta Bella site to pay for infrastructure improvements and environmental remediation
including groundwater.
z4
Apr -24-02 02:24pm From-READIATION FINANCIAL INC, +002-230-li01r T-012 P.00/00 F-304
4. The City signs a mutually agreeable Metrolink Lease.
5. The City agrees to establish the REF.
6. The City will join us in working with DTSC to hold in abeyance legal actions on the
Enforceable Agreement.
7. The City gives top priority to seeking state and federal ilmds for Via Princessa.
We believe the above outlines actions which will generate and attract funds to address environmental
conditions and improve our relationship with DTSC to the point where we can proceed with the total
remediation of Porta Bella as has always been envisioned. This will vastly improve conditions in the
heart of Santa Clarim by providing over 400 acres of open spaces and parks, address water conditions,
alleviate traffic conditions and improve access for public safety and emergency, disaster relief vehicles.
We hope we can move vigorously ahead together toward amore; comprehensive approach addressing our
mutual challenges.
Sincerely,
SANTA CLARITA, L.LC.
By: Remediation Financial, Inc.
Managing Member
By:
OarY �'
Director &Development
Remediarion Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Z�
4
Nay -0.1-02 03:044 FrwREIEDIATION FINANCIAL INC,
+802-238-8017 T-847 P.01/02 F-488
REMEDIATION FINANCIAL, INC.
Great American Tower
3200 North Central Avenue, Suite 100
Phoenix, Arizona 85012
(602) 238-9007
DATE: May 1, 2002
TO: Jeff Lambert — (661) 259-8125
Lisa Hardy
FROM: Denise Bernal
RE: Porta Bella
2 Pages — Including Cover
Following is the corrected version of the letter that was seat yesterday, which had a typo in the first
line. Sorry for any inconvenience.
Thank you,
Denise
Return Facsimile (602) 238-9017
THE INFORMATION CONTAINED IN THIS FACSIMILE MGSSAOE is CONFIDENTIAL AND INTENDED
SOLELY FOR THE USE OF THE INDIVIDUAL OR ENTITY NAMED ABOVE. IF THE READER IS NOT
THE INTENDED RECIPIENT, YOU ARE ETEMY NOTIFIED THAT ANY DISSEMINATION,
DISTRIBUTION, COPYING OR UNAUTHORIZED USE OF THIS COMMUNICATION IS STRICTLY
PROHIBITED. IF YOU HAVE RECEIVED THIS FACISBAME IN ERROR, PLEASE NOTIFY THE SENDER
BY TELEPHONE IMMEDIATELY SO WE CAN ARRANGE FOR THE RETURN OF THE ORIGINAL
DOCUMENTS TO US. THANK YOU.
May -01-02 03:02pm From -REMEDIATION FINANCIAL INC, +802-238-9017 T-847 ?.02/02 F-488
April 30, 2002
Mr. Jeff Lambert
Director of Flaming and Building Services
City of Santa Clarity
23920 Valencia Boulevard
Suite 300
Santa Clarita, CA 91355.2196
Re: Revision to April 24, 2002 letter
Dear Jeff.
In light of our discussion last Friday, and comments sent to the DTSC, item #7 on page two of our April
24, 2002 letter should be revised to read as follows:
"Spend EEF funds first to remediam conditions in Area 55 consistent with work plans approved by
DISC; commence work on Area 55 as soon as possible after the EEF is established, and the Metrolink
rental income, described in item 2 above, and escrowed funds relating to Golden valley Road (GVR), are
placed into the F-EEF."
We believe this change will expedite the remediation of Area 55, compared to waiting for the expiration
of appeal periods on amendments to the Specific Plan, V TTM and Development Agreement as previously
stated in our letter.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing Member
By:
AVLAI)—
Gary Braqv
Director & Development
Remediarion Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
Oreas American Tower
3200 North Cantral Avenme, Suite 100
Pheenir, Arirona 85012
602 238 9007 yak# 602 238 9017 fAx
November 22, 2002
Via Hand Delivery
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
23920 Valencia Boulevard
Suite 300
Santa Clarita, CA 91355-2196
Re: Administrative Appeal of Planning Commission Resolution P02-12
The Planning Commission of the City of Santa Clarita, California
April 2, 2002
Porta Bella Development Agreement Findings of Non -Compliance
Materials Submitted on Behalf of Santa Clarita, L.L.C. for City Council Hearing
of November 26, 2002
Dear Jeff:
We are providing the attached materials in connection with the I° ever review for
compliance of any Development Agreement in the history of the City under its Unified
Development Code.
This letter serves as a Summary which is organized so as to address each of the Planning
Commission's initial findings. The detailed information and exhibits attached are additionally
supportive of each item in this Summary.
EXECUTIVE SUMMARY
This is the I" ever Development Agreement review in the City's history, despite
authority requiring to the contrary. Accordingly, Council's review is a serious matter. The
potential property rights affected by Council's decision and the significant chilling affect upon
Council's articulated desire to accomplish an environmental cleanup of this site are economically
and socially significant.
The standard established in the Development Agreement by which Council's evaluation
must be made is whether the developer has attempted to comply "in good faith."
Finding 1 is no longer an issue because the Planning Commission found us to have
satisfied it. Finding 2 is not an issue because our insurance coverage has been cancelled (over
REMEDIATION FINANCIAL, INC.
GmatAnwkm Tower
3300 North centraLOMO K Suite 100
Phoenb. Aliiona 85012
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
November 22, 2002
our objection) and the Development Agreement does not require a developer to obtain or carry
such coverage. Finding 4 is moot given the Superior Court's rulings. Therefore, only Finding 3
could possibly remain. Given the DTSC's sworn testimony (through Sara Amir) as recently as
last month on this very issue, it can only be concluded that we have acted in good faith, thereby
meeting the Development Agreement standard. In any event, the Development Agreement
DOES NOT REQUIRE compliance with DTSC requirements, and it does not even mention the
Enforceable Agreement. Nobody has been able to cite a single provision in the Development
Agreement requiring any developer to meet DTSC requirements other than when and if the
developer requests a grading permit from the City.
Lastly, our good faith has been further manifested by identifying, selecting and
contracting with a well known industry buyer who has demonstrable experience and verifiable,
deep fiscal resources who, upon purchase, will move forward expeditiously to conduct the
environmental cleanup.
DISCUSSION
Attached —Exhibit 1 provides a more detailed response to the findings as well as the
assurances of compliance and cooperation that the Planning Commission found to be remedies to
its initial findings. Attached Exhibit 2 is a copy of our power point presentation made to the
Planning Commission on March 14, 2002, which contains a synopsis of comments made in our
February 18, 2002 letter.
Planning Commission Finding # 1: Provision of Evidence of Good Faith Compliance:
The Planning Commission concluded on May 7, 2002 that we have satisfied this
issue. Accordingly, this item should stand as having been resolved.
Planning Commission Finding # 2: Naming the City as an additional insured on our insurance
policy covering risks of liability from hazardous substances as addressed in Paragraph 2 of
Exhibit J (Indemnification Agreement) of the Development Agreement:
• We have never denied our obligation to indemnify the City as provided in
Exhibit J (the Indemnification Agreement to the Development
Agreement); the only issue which has arisen has been relative to
insurance.
• As observed by former Planning Commission Pains, we too believe and
we assume it is conceded by all that there is no obligation on the part of
any developer under the Development Agreement to carry such insurance.
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
November 22, 2002
The only issue has been, if such insurance exists, then the City should be
named as an additional insured thereon.
As you are aware, we have historically and repeatedly requested Zurich to
so name the City. (See, Exhibits 3 & 4 attached). As we have stated, we
cannot force the insurance company to add anyone as an insured to the
policy; we have no legal or other power to do so. The only thing we can
do is to ask and request, which we have done.
In the summer of 2001, Zurich wrongfully cancelled our insurance. We
have sued them over this issue, and other issues of bad faith, breach of
insurance contract, etc. as part of a series of complex cases currently
pending in LA Superior Court. As you will see from the attached exhibits,
even after Zurich's wrongful cancellation we continued to request that the
City be so named.
• Accordingly, we respectfully submit that we have complied in good faith
with the Development Agreement in this regard. We do not have such
insurance, we are fighting to get it back, and we have previously stated in
writing to the City that if obtained, we will continue to insist that the City
be so named. (See, Exhibit 5 attached).
Planning Commission Finding # 3: Compliance with DTSC Requirements
• The operative standard required to be considered is whether there has been
"good faith" compliance under the Development Agreement. The guiding
principle therefore is: whether the developer has acted in good faith.
• In sworn testimony given on October 17, 2002 by Sara Amir of the DTSC
commenting upon any failure of SCLLC to comply with each and every
provision of the Enforceable Agreement, she stated:
"They want to do the best they can. They don't have the resources."
Therefore, the DTSC has acknowledged in sworn testimony on this very
issue that our position is and has been one of "good faith" with respect to
the Enforceable Agreement.
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
November 22, 2002
• There are several "goals" (including certain "public objectives") in the
Development Agreement; however, the question that must be asked is:
"What does the contract (i.e. Development Agreement) between the
parties obligate each party to dol" We submit, the Development
Agreement simply does not require us to do what the City contends.
• The Development Agreement is clear that:
there is no obligation upon the developer to ever remediate
or develop the Site (i.e. no obligation to ever avail itself of
the Development Agreement),
2. the timing of development, if development even ever
occurs at all, and the timing of restoration are solely at the
discretion of the property owner, and
3. unless the property owner requests a grading permit from
the City, compliance with DTSC requirements is not
required under the Development Agreement. (See, Exhibi
1 attached, pages 9-11).
• See also, Exhibit 6 and 7 attached for steps outlined in response to
Planning Commission requests, and a Project Schedule developed in
consultation with the City's Planning Staff.
The Development Agreement was adopted in February, 1996. For
all of 1996, 1997 and 1998 virtually nothing was done by the prior owner
with whom the City negotiated the Development Agreement to cleanup the
Site. It is undisputed that there was no desire to or effort engaged in by
the City to find the prior owner in non-compliance with the Development
Agreement in this regard.'
1 The prior owner had also executed an agreement (a Consent Decree) with the DTSC
resulting, however, from a DTSC initiated criminal investigation relative to the Site. In the face
of that DTSC agreement and the lack of cleanup activities, the City took no action as is being
undertaken here. Additionally, the prior owner had millions of dollars of insurance covering
risks of liability from hazardous substances upon which the City could (and should) have been
named as an additional insured; however, no request was ever made by the City and the prior
owner apparently never added the City as required under Exhibit J to the Development
Agreement. Likewise, in the face of those circumstances involving the very party with whom
the City negotiated the Development Agreement, the City again took no action, such as is being
undertaken here.
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
November 22, 2002
Plannine Commission Finding # 4: Termination of City's "Right" to Occupy and Use
Metrolink Parking Lot
• The LA Superior Court has entered 2 different Orders authorizing the
City's occupancy and use of the parking lot. Accordingly, this is a moot
issue.
• Notwithstanding the above, we fully complied with the Planning
Commission's suggested remedy (See, Exhibit 8 attached). Prior to
Exhibit 8, we repeatedly attempted to achieve an amicable solution with
the City as can be seen from the series of correspondence attached as
Exhibit 9.
NEGATIVE ENVIRONMENTAL IMPLICATIONS OF FINDINGS OF NON-
COMPLIANCE
In its recently established 14 points, the City states its desire to achieve the highest level
of environmental clean up on our project; it is assumed that the objective is to achieve this City
goal as quickly as possible outside of a litigious setting. We submit that the best way to achieve
your goal is to facilitate a sale of the property to a potential buyer with well known
environmental competencies, financial strength, and a proven track record. We understand that
the City's special counsel (Cox — Castle) is familiar with our current buyer's reputation and
strengths in these areas: We have acted in good faith in identifying, selecting, and contracting
with Cheorkee who has met with the City and is continuing in its due diligence on our project.
We agree with the skepticism expressed by Planning Commissioners Trautman and
Burkhart when they questioned the impact terminating the Development Agreement might have
on potential buyers. We suggest that you not take any action that would discourage buyers and
thereby retard environmental remediation. One such negative action would be to confirm
findings of non-compliance under the Development Agreement. We believe such an action by
Council raises 2 primary concerns, among others: (1) it raises the specter of an inexplicable
policy change which could prove problematic for any qualified buyer to underwrite the effects
of, and (2) it raises the specter of a potential nullification of the Development Agreement,
thereby depriving a new property owner of certainties about future development of the Site.
Although we are cognizant of the fact that confirming the findings is not equivalent to
terminating the Development Agreement, it starts the 120 -day clock toward termination and
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
November 22, 2002
vastly increases potential buyers' uncertainties and perceptions of risks. In summary, it will be
more difficult to gauge whether remediation makes financial sense to anyone.
Accordingly, a confirmation of non-compliance will have a chilling effect upon buyers
and interferes in any potential sale to the determent of the City and our property interests. The
City will be hurt by further delays in remediation. Simply put, the City will be without sufficient
fiscal resources from its own budget to address key issues for its citizens such as water, roads,
soils and over 400 acres of open spaces and parks. If finding us in non-compliance will have a
chilling affect, terminating the Development Agreement will be a deep freeze that plunges the
City into a time consuming labyrinth of legal entanglement and regulatory enforcement that will
ultimately end in minimal cleanup, not the highest level you desire.
In conclusion, we respectfully request cooperation and moderation from the City. Private
sector, voluntary remediation is the fastest approach to environmental solutions and the only way
to achieve the highest level of cleanup.
We look forward to meeting with Council and our discussion on the findings
Sincerely, Sincerely,
SANTA CLARITA, L.L.C. BERMITE RECOVERY, L.L.C.
By: Remediation Financial, Inc. By: Remediation Financial, Inc.
Managing Member Managing Member
By:
Gary wn
Direct& of Development
Remediation Financial, Inc.
cc: Ken Pulskamp, City Manager
Carl Newton, Esquire
By:
rown
Director of Development
Remediation Financial, Inc.
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EXHIBIT 1
X HI T
April 15, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Sanra Clarita
23920 Valencia Blvd.
Santa Clarita, CA 91355
Re: Porra Bella Development Agreement
N1. ate. .,..:,.,,.
r:t IF
.:1.1:!1 WFYF A �•n�rl�r:".......
Dcar Jeff:
In partial fulfillment of the remedial measures adopted by the Planning Commission on
April 2, 2002, please allow this lctrcr to provide assurances to the City that Santa Clarita, L.L.C.
(SCLLC) and Reunite Recovery, L.L.0 C SRLLC'I will comply and cooperate with all future
annual reviews initiated by you and will provide information to the City in accordance with the
schedule for compliance reviews specified in our Development Agreement. As additionally
requested by the Placating Commission, we are re -submitting comments contained in our letter of
February 13, 2002.
We have carefully reviewed your letter and the bases for your stated determination that
"SCLLC" and "BRLLC" (collectively "S&B") have "not complied in good faith" with the
Development Agreement by and between the City of Santa Clarity ("Ciry") and V✓hittakcr Porta
Bella Development, Inc, dated March 28. 1996 (the "Agreement'). For the reasons set forth
below, we respectfully disagree with yoiu daermnadoo; we have not, in any way, violated.
either the terms or spirit of the Agreement."` +e
Before nwicwing the antral terms of the Agreement to underscore' our compliance with
each of your areas of specific concern, we thought it would be helpful to non -exhaustively
review many of the actions we have ttnderraken, as well as the significant costs we have
iocurrcd, cc remediate the environmental cootanuinarion exihdng ar Porto-.Blrlla. We also want to
reiterate our commitment to continuing our effors toward the clean-up of Porta Bella, and to
express our hope chat we will be able to work coopemdvely with the City in the future in order to
facilitate the remediation of this property which we did not pollute.
Our Lnvimnmenral Clean Un of the Porta Bella Property
As you know, since ota ownership of the Porta Bella property, we entered. into a
Memorandum of Unclerstanding with The City i%o,March. of 1999 ("NIOU ), w th respect to which
Page 1 of 14
We acknowledge (although do not agree with) the City's differing opinion as to its eCizcr,
prnpose, biadirng nature anti enforceability.
We have undertaken numerous efforts and engaged in several projects, at considerable
private expense, which resultcd, among other things, in the Deptt tment of Toxic Substances
Control ('`STSG"') conditionally certifying .(subject only to a final UXO effoli) to a residential
sauidard Operable Unit ("OU') —IA, OU -JB and OU -IC as "clean" and `safe" fi•otn an
environmental perspective, so that phased developmcnt (i.e. building and development) on that
portion of the site could begin. t This accomplishment was not only a success, for which we were
solely responsible, but it was also an enormous betieht to the City, because it established the
basis upon which the City and its contractors have constructed Golden Valley Road within the
OU -1 of the Porta Bella site. In addition, as a,.volunteer who did not pollute the property, we
have undertaken rhe following remediation and investigation measures during our brief
ownership history. 'These efforts h ve to -late cost more than $25,000,000, excluding our
financing costs. .
OU -1
The following OU -1 Remediation Investigation Work plans defined the scopeof the
investigations that were conducted:
OU -1A & OU -1C REMEDIAL INVESTIGATION (RI) WORKPLAN (58 pages), approved
by DTSC May 1999
• OU -1B RI WORKPLAN (58 pages), approved by �Aq 1999.
• OU -1 Lin & Ds RI WORKPLAN (81 pages proved by D'I'SC June 1999.
OU -IE RI WORKPLAN (121 pages), approved by DTSC on April 10, 2000.
The following reports document the results of the investigations and include a baseline risk
assessment of the risk to public health and the environment from chemical compounds of
concern that were found during the investigations:
• SITE iNVESVGATION AND PRELIMINARY ENDANGL'RMENT ASSESSMENT
RFpOP�T FOR OU -rte, OU -113 AND OU -1C (869 pages), DTSC granted conditional no
further action on February 11, 2000.
OU- Mn & Ds RI REPORT & BASELINE RISK ASSESSMENT (1153 pages), additional
sampling reyttired in three limited areas prior to DTSC approval
• OU -1E RI REPORT & BASELINE RISK ASSESSMENT (1,154 pages), SCLLC to
incorporate DTSC comments
OU -IE RliivlOV.aL ACTION WORKPLAN (63 pages), SCLLC to incorporate DTSC
comments a, ,
'See, rcbroary t 1, 2000 lamr from DTSC m Timothy E Lewis. -Conditional No Father Action...", copy attached.
Page 2 of 14
The following reports defines the scope of the work for the ORDNANCE AND
LaPLODED WASTE: (00W) INVESTIGATION AND REMOVAL (if found) required in
order ro conduct the remedial investigations:
OEW CLEARANCE AND CONSTRUCTION SUPPO iT`1ZT WORKPLAN FOR OU -1A,
B, C & E (66 pages), approved by DTSC April 10, 2000.
REPORT ON THE OF CLEARANCE; CONSTRUCTION SUPPORT FOR Rl
ACTIVITIES IN OU -1A, B, C & E (153 pages).
. REPORT ON OEW L•SCOR'I' AND AVOIDANCE FOR OU -1E (2 pages).
. OEW CLEARANCE AND CONSTRUCTION SUPPORT REPORT FOR THE GOLDEN
VALLEY ROAD RIGHT-OF-WAY (44 pages).
As a result of the remedial invesdgations and resulting reports cotnpiczcd by us, DISC
concluded that further active remediation etTOrts were not necessary. Further more, based upon
demands made upon us by the City, the 14arc High School District and our neighbor (Santa
Clcuita Business Park), and the resulting agreements we believed we had reached widl the City,
we gave this work top priority in order to cooperate with the City's aced and desire to
immediately build Golden Valley Road.
Although during our ownership of the site, 011-1 is the only portion which the DTSC has
certified as environmentally safe for development, our clean-up efforts and accomplishments are
evident throughout the entire Porus Balla Site, k�reflccted in thaF;following documents:
'fcdu•r b; rte:,. . �..- .,i.
SITE WIDE
The SITE-WME SAMPLING AND ANALYSIS PLAN (SAP), 1066 pages, defines the
scope of the soi3 and groundwater sampling and laboratory analysis, and quality
assurance/quality control procedures to be followed in the field and the laboratory. It slso
defines how the investigation derived wast:: from drilling operations will be managed and
disposed.
Volume 1 — Soil- Approved by DTSC September 15, 2000,
Volumc 2 — Groundwater and Surface Water - Approved by DISC January 19, 2001.
Volume 3 — Investigation Derived Waste Management Plan - Approved by DTSC January
12, 2001.
The PUBLIC PARTICIPATION ]'LATi. (PPP) 134 pagg9{ defLnps„how the public will be
informed stnd participate through public., n ecting, hcarinas, and rhe response to public
comments.
. The PPP was subnuacd to DTSC on March 23, 2001. .
Page 3 of 14
G7
The FfEALTl3 AN SAFETY PLAN (276 pages) and ILLNESS AND INTURY
PROTECTION PLAN (83 pages) estitblish the procedures to be followed on-site to protect
the health and safety of the on-site workers, visitors to the site, and the public who live and
work in areas adjacent to the site.
• Both plans were approved by DTSC on November 15, 2000.
The SITE -WIDE ADMAN HEALTH AND ECOLOGICAL RISK ASSESSNIENT
(ELM, RA), 160 pages, establishes the parameters for evaluating the risk to human health
and the environment through defined pathways of exposure involving chemical compounds
of concern that may be discovered on-site.
"Chis document has been submitted to the DTSC for approval. SCLLC has responded to the
DTSC comments and a final document will be issued.
The OEW REMOVAL ACTION VORKPLAN (OEW RAW), 88 paocs, defines the
technical and safety procedures to be implemented for removing and disposing of any
OEW material that may be found on -sire.
• SCT.LC incorporating cotntnants received from DTSC on July 31, 2001.
The STORM WATER VOLLUTEON PREVENTION PLAN (SWITPP), 332 pages, defines
the physical procedures to be followed on-site to prevent pollution of storm water discharge
including the sumpling and analysis of storm water run-off in the event of major storms.
• 'lite SWPPP was completed February 200 1,updated January 2002.
The ENFORCEABLE AGREEMENT":'(EA)' defines ,the. responsibilities, compliance
procedures, and general requirements for continuing the remedial investigation, feasibility
studies, and implementing the remedial action plans in cleaning up the site.
• The EA was signed by the DTSC and SCLLC FebrLmry 15, 2001. - .
OU -2 / OU -6 and OU -3
]'Ile following R1 Work plans for OV-21OU-6 and OU -3 define the scope of the
investigations conducted in these areas.
• OU -2 and OU -6 Rl WORKPLAN (270 pages), approved by DTSC November 15, 2000.
• OU -3 Rl WOR.KPLAN' (267 pages), draft reports ubiriiucci to DTSC March 2001.
page 4 of 14
OU -4
Funding has been provided by the U.S. Congress for an OE Technology Demonstration
Project to excavate and remove any OE material from the existing landfill areas in OU -4.
The project will be implemented and managed by the U.S. Army Curps of Engineers
(USACE..) The project is to proceed during late Spring 2002.
• ORDNANCE AND EXPLOSIVE (OE) TECHNOLOGY DEMONSTRATION PROTECT
WOr,KPLAN FOR THE OU -4 LANDFILLS,
USACL- submitted a draft Work plan to DTSC August 200IT A final work plan incorporating
DTSC comments is expected to be n submitted to DTSC during February 2002.
OU -7
A DRAFT OU -7 WORKI"LAN FOR TIM, GROUNDWATER REMEDIAL
INVESTIGATION Feasibility Study Was submitted to DTSC on July 2, 1999. In response,
DTSC requested that the Work plan be broken down into a series or technical memoranda
to further define the major phases of the groundwater investigation.
OU -7 GROUNDWATER REMEDIAL. INVESTIGATION/FEASIBILITY STUDY
WORKPLAN AND CONCEPTUAL SCOPTNG DOCUMENT (256 pages) submitted to
DTSC Iuly 2, 1999.
The following four Field Sampling Plan Teebnical Memoranda (FSPTM) were prepared to
define the first four phases of the OU 7 gi•oundN"ter investigariou'to be conducted. Trvo of
the PSPTMi have been implemented, an&la of the FSPTMs are to be implemented in the
spring of 2002 as part of the Santa,,Clara.,.13asin Groundwater Study currently being.
planned by the USACE. This Groundwater Study is another federally funded project
approved by the U.S. Congress that will be implemented and managed by the USACE ih
conjunction with a local sponsor.
• FIE -LD SAMPLING PLAN TECHNICAL MEMORANDUM (FSPTM)— GROUNDWATER
MONITORING AND RECONNAISSANCE INVESTIGATION — ARFAS 11, 67 & 75 (92
pages), approved by DTSC May 25, 2000.
• FSPTM RECONNAISSANCE GROUNDWATER INVESTIGATION OU -2 do OU -3 (196
pages), approved by DTSC May 25, 2000.
FSPTM SURFACE WATER RUN-OFF (94 pages), approved by DTSC May 25, 2000.
. FSPI'M DEPTH SPECIFIC SA1vTLING PRODUCTION WELL NLF-155 (102 pages),
approved by DTSC May 25, 2000.
Pagc 5 of 14
The following reports document the results of the groundwater monitoring activities
conducted in Areas 11, 67, and 75 from June 2000 to ,lune 2001 including water sampling
and laboratory analysis as defined in the FSPTM.,.
THIRD QUARTER 2000 GROUNDWATER. MONITORING. DATA SUBMITTAL —
AREAS 11,67, & 75 (48 pages), subminted�f$bTSC November 9, 2000.
GROUNDWATER MONITORING AND SAMPLING DATA SUBMITTAL AREAS 11,
67 & 75 (459 pages), Final report'aiitiuiitted`ic DTSC December 21, 2001.
Good 1-aith Compliance with the Terms and Tntent of the Develooment A¢reemcnt
We believe the accomplishments set fortabove, detailing ran enomious investment of
time, effort and money prerequisite to proceeding with and accomplishing environmental
clean-up efforts, demonstrate and are supportive of our good faith compliance with the temrs,
"spirit" and "intent". of the Agreement We believe we have pursued obligations under the
Agreement in good faith, with reasonable diligence, and with an intent to accomplish the
objective of the Agreement in as timely a manner as is reasonably practicable, particularly in
light of the issues surrounding the MOU, the PERC case, the CLWA case, and the two litigation
matters in which the City has sued us (i.e. Golden Valley Road and Metrolink).
The purpose of the Porta Bella Specific Plan and the Agreement were clearly stated in
1995 and 1996, respec6vely: to "restore d highly+disturbcd site,to compatible contemporary uses
in contrast to its current suntans as a vacate d•foriner industrial manufacturing site in the middle of
what has become a resideneial and suburban community." (See e.g., Porta Bella Specific Plan
and the Agreement 14(a)). Importantly, the Agreement does not provide a time frame within
which any development must occur, nor that one is obligated to develop the site at all. However,
once development begins, the developer will provide the City hundreds of acres of parks and
open space, an elementary school site, housing, businesses, roads, etc. We remain committed to
developing the Porta Bella property as entitled and as expeditiously as possible. Indeed, we
continue to firmly support the -'intent" of rhe Agreement, in both spirit and terms, and we
strongly believe that the clean-up and development of Porta Bella are in our best interests. as well
as those of the City and the conumuniry it serves. The environmental efforts in which we have
been engaged, as is discernable CTom that which is ourIincd above, are prerequisites to the
addirional and larger in -the -(field efforts which are now intended to be launched with the
federally fttnded programs (groundwater and UXO-OBW), etc.
It is unquestioned thar rhe "5pirid' of -rhe Agreemernt as well as its very ternis Burd
provisions rogLdre all of to to work cooperatively to ensure the effectuation of the purpose of the
Porta Bella Specific Plan and the Agrcement.
We are reminded of the well -reasoned presentation you made to City Council in April
2001 , emphasizing rhe critical need for the City and us to work together to malce the clean-up of
Page 6of14
Porta Bella a reality. For your immediate easy of reference, we have attachcd a copy of the April
3, 2001 Memorandum w}dch the Planning `Department prepared. As you will recall, its
reviewing the information presented to. Clty,Council as part of that Memorandum, a number of
critical points were recognized, and strongly emphasized, by the Planning Department with
respect to flu: continued clean-up of the Porta Bella sire. Specifically, you emphasized that it is
"good public policy" To clean up "Brownfields," and that "local govern -neat needs to take a
leadership role in mobilizing these efforts." Moreover, you stated that "Santa Clarita, LLC, or
any other private entity, requires City support to be successful, just like all other Brownfield
projects." (Emphasis added). You went on to appropriately acknowledge that "no legitintl[e
developer could proceed with the remediarion and development of Porta Bella without public
support.', We agree with the Planning Department's determination that in order to move forward
with the clean-up of Porta Bella as expeditiously as possible, and to fulfill the tnte intent and
purpose of the Agreement and Specific Plan, there should be a cooperative working relationship.
Lastly, it is important to note in passing that a cooperative approach to Porta Bella project issues
was woven into The origumal, 1996 Agreement in, among other things, the areas of expedited
processing, public financing mechanisms, reimbursement mechanisms, obligations undertaken.
by the City to pay for or require third parties Ed,` pay for infrastfiidture'&xceeding our "fair share",
etc.
Development by the City and Us of the OU-1`Portion of the Site Based Upon the DTSC's
Clearance Furthers [he Tntent of dz Development Aereemen[
in reviewing the April 3, 2001 Memorandum, it is evident that the City (through .its
Planning Commission) and the DTSC are fully confident that the phased development which we
have proposed for Porta Bella is environmentally safe. Indeed, the City has affirmatively
endorsed this position, since it started building Golden Valley Road on OU -1 following the
certification and clearance which we worked so hard and spent millions of dollars (as set forth
above) to obtain from the DISC. 'We can only conclude that the City would not have undertaken
such a massive building project on OU -1 unless it was confidant, based on the DTSC'.s
assiatmcc, that development is now completely safe an this portion of the site.
As you are aware, we are also interested-iri beginning,ponstruction"on The DU -i portion
of the site. As we are sure you can appreciate; we spent die time; effort Burd money outlined
above, not just ror the City's benefit (although we understood the importance to the.Ciry of being
able to build Golden Valley Road), but based upon the terns and assurances set forth is the
March 1999, MOU. As you will recall, the MOU specifically coatcmplated That we, like the
City, would be permitted to begin building in phases once the DISC certified an OU as
environmentally safe, in rhat regard, we are pleased that the City has dcrerrabaed to allow (at
least some) phased development to begin on OU -1 as evidenced by the construction of Golden
Valley P�oad. TheCiry's apparent confidence that this area is sate for building is the kind of
progress we need to secure dee continued financial assurances necessary to support further
private clean-up of Porta Bella.
Page 7 of 14
Section 8(u) of the Development AgreenaLm
Because of the numerous ficaneial cousiderarions which are closely tied to phased
clean-up and development, and given the DTSC's, as well as the Planning Department's
recognition that it is safe to build on OU -1, we hereby request a meeting with The City, pttrsuant
to Section S(u) of the Agn .—near. The purpose of this meeting will be to discuss financial issues
which have been impacting the development of the Porta Bella Project, and to seek die City's
"reasonable" assistance in working with us to allow our private clean-up efforts to move forward
in furthe:mcc of the Specific Plan and the Agreement.
Please let us know, as soon as possible, when such a meeting will be convenient for the
Our Continuing Efforts to Obtain Financial Involvement by Those with an Interest in the
Clean -Up of porta Bella
Albeit expensive and a cominuing effort rid commitnienr on our part, we continue,
through the Courts and otherwise, to address Those entities having an historic (and hence fiscal
responsibiliry) involvement with the Porta Bella site. Given The attorney client privilege of such
anatters, we are not at liberty to provide details in this regard; however, please be assured this
aspect of the fiscal equation is well within cur focus and a matter of our utmost attention.
Despfre the unexpected financial constraints which have resulted, in large measure, from
the fact that the City has not complied withh the recuts of the MOU after having accepted our
performance thereunder, in fu;tluer demonstration of our good faith efforts to continue with the
environmental remediation of Porra Bella, for seveialyears now we have been actively working
with Congressman "Buck" McKeon to secure federal money toward The clean-up of Porta Bella.
As you know, at this paint, our cooperative' efforts with Consressman'McKeon have successfully
shepherded through The US Congress $ 10.5 million in federal funds for further sfudy' oI
Perchlorate in The groundwater (OU -7) and investigation and removal of ordinance and explosive
materials (in OU -4). While this is obviously a significant achievements we are continuing to
work to obtain even greater federal assistance, and have every expectation that our efforts will be
successful.
We have Complied withhe Insurance Requirements 1
We also must respectfully disagree with your conclusion that we have 'failed to comply
with Paragraph 2 of Exhibit J to the Agreemenr in failing To have the City named as au additional
insured under our Steadfast insurance policy. As a fundnruental rnaacr, it is important to note
char we are unaware of anything within The Agreement which requires the developer to secure
such insurance, or to keep any such insurance in effect. Consequeatly,'alrhough we are not
suggesting that we plan To cancel our insurrance,'the'facr remains that we could simply drop our
Page 8 of 14
environmental insurance policy, thereby obviating any need to have the City named as ah
additional insured, and we would still be in full coittpliaace with the terms of the Agreement
Notwirhstariding the foregoing, and despite our understanding that we have ao obligation
under the tarns of the Agreement to name the City as an additional insured on our policy, we
want to emphasize that we have no objection to taking such action; and, in fact, have already
done everything in our power to accomplish that' goal "However,, as you arc (no doubt) already
aware, only the insurance carder, not us, can, determine who will be named as an additional
insured on the policy. All we can do is exactly' ;what. we have done - which is to request such
action by Steadfast. To that end, we wrote' to Steadfast on May 25, 2041, and requested chat the
City be added as an additional iosurcd,on.our.policy... We would be happy to provide a copy of
our letter. "1•e date, Steadfast has refused to honor our request, despite numerous telephone calls
Cross us and our counsel to follow un on this matter'.
At this point, we encourage the City to work with its to deterrrErie how we can best
cfiectuate our request to have the City named on our policy. Perhaps the City has encountered
This problem before, and was able to find a solution that met the insurance carriers' requirements.
Please let us know what the City can do to assist us in this process, and to make the best
case possible for establishing to Steadfast that the City is properly insurable. We look forward to
heating from the City with constructive suggestions and the derails of other inslanccs in which
the City has been accepted as an additional insured in sintiilar circumstances to assist us in our
efforts.
x. ,
L kvgo 0......,.:
' in this regard, you should be aware than our environmental insurance carrier, steadfvsr, has purposed m limit the future
effectiveness of our environmental insurance coverage. This is a manor presently subject to titigarion berwocn sicadfast and us.
Again. while we have not tauten any action to simply drop our insurance coverage Curd do not intend to at this time), it remains
possible that there may not be apolicy in force in the future upon wbich the City can be named as an insured. should this
happen, the City will have no ground for complatnr under the terms of The Agreement, bccu c. as set forth above, there plainly is
no rctluiremertt for environmental Irtsurunee to be obtained at all, or, once obtained• to be maintained in rorce.
Additionally assuming the policy does remain in Corse, we have be= advised by our attorney that because our predecessor in
interest (i.c.. ••Whittaker Ponos Bella Development, lee, a California corporation") (See, Paragraph I(tl p1 the agreement) was
released by the City from any obligution to provide envirmtmenral insurance, Paragraph ? was rendered a nullity by this release.
Further, a cureful reading of paergmph 2 confirms that, unlike other provisions of Exhibit J to the Agmerrent, Paragrapl12 does
not pertain to Wbirtalcer's successors and asst. s. Therefor, if the City had wanted all sucecssors and assigns of Whiaaker Porn
Bolla Development, Inc. and Whittaker Corporation to be subject to the insurance provision ser forth in Paragraph 2, express
rrfemned m successors and assigns needed to be included in paragraph 2, as it was, for example in Paragnph I. Contrast
Paragraph 1 with rhe indcmnitication provision of paragraph 1. which includes the language [-Por each of chem and cath of their
successors and assigns") (emphasis added). As it stands, however, the plain language of Pars, sph 2 docs nor impaFeany
insurance ablicsrian on us. indeed• we ware galte surprised ro team that the City had any desire m m
be mned u an additional
insured on any environmental policy, since it had not raised this issue until years aper we acquired rho sic=.
s This is exactly the circumstance centcmplared in Paragraph 9 (e) of the Davelopment Agreemcnr (i.c., rhd •force maieure"
paragraph), wherein performance la excused due to causes beyond the reasonable control of the pasty.
Pave 9 of 14
At the outset, it important to establish the context of the existence of the Enforceable
Agreement. Prior to purchasing Porta Bella; wg':mer with, among. others, representatives from
the DISC, including those in its Glendale offtcei. An the 3 years1'we have owned the site, we have
had 3 different Branch Chiefs at DTSC for, this project and 3 different DTSC Project Managers
for 11 -Lis project. In summary, we approached-DTSC as a volunteer, one who had had no historic
conncction or association wirh the site, its contamination and/or its Ivstory of owners. DISC
agreed to a number of concepts, including but not limited to, expedited report and other
submittals review, assigning a specific team of DISC staff out of Glendale to focus on this
project, etc. Additionally, and a maacr with respect to which we had no involvement, interest or
concern, DTSC informed as that they were not going to release Whittaker Corporation from the
Consent Decree with the DTSC which apparently was a result of the prior California
enforcement action against Whittaker. Accordingly, it was within that context that we acquired
The site and began, without tiny writren agreement with B715C, to engage in environmentally
positive activities and spend private capital in support of those efforts. After quite some. time,
the Agency began to discuss with is for the first rime their need for a written agreement. In
meerings with the Agency, we discussed the fact that their statutory scheme relating to such
agreements was focused on non-valunteers (i.e. the polluters and those responsible parties who
are viewed as having a contributing involvement in creating the pollution, ctc.). They also
tr ,,;.
acknowledged that constructing an agreement with to (ast!?a volLmteer) would be markedly
a,
different than the circumstances surrounding,. for exatnple, the Whittaker Consent Decree. After
discussions, We entered into the Enforceable Agreement with DTSC. Crur agreement with thu
Agcncy has apparently been the subject of several meetings involving representatives of the City
as well as certain citizens from the community. We have not been invited to nor have we
participated in any of those rncetings; we have leamed about them "after rhe fact". Additionally,
the City's recent letter to the Agency "weighing in on" the matters currently pending before the
Agcncy relating to our agreement with them has not been helpful, productive, nor consistent with
good faith and fair dealing.
We have carefully reviewed your letter to determine where within the Agreement there is. .
a requirement that we owe the City an obligation of performance Linder or compliance with .rhe
DTSC Enforceable Agreement. We cannot find any such provision or obligation to the City. Pia
differently, although we acknowledge that we have issues to resolve with the DTSC, we can only
conclude that fact is irrelevant in determining compliance with our land use document - the
Development Agreement.
The only possible (and it's a suctcfr) connectiiiii between the 'Agreement and the
Enforceable Agreement with DTSC is the City's contention that we arc bound by and therefore
must comply with DS -12 foutnd in tfie Coaditioiis'fo'r Approvai to the Vesting Tentative Tcact
Map in order to obtain a grading permit from the City. Importantly, however, this provision only
comes into play if and when we actually apply for a grading permit. Moreover, nor only is there
no requirement in the Agreement that we meet DTSC certification requirements earlier dzan
when we apply for a grading permit, the Agreemcut clearly indicates that whether we develop
and the timing of development is clearly at our discretion. In shorr without development anti the
Page 10 of 14
.,y�it yi�r
need to grade; there is no requirement to [nett DS -124. This is not to say that:we do not have
every intention of continuing to work toward dic'clean up and development of the Porta Bella
site. We do. In fact, as se[ forth in the first section oCthis lettef, we have already made a
substantial investment of time, efibl•t and money, in reliance on several agreements with the City
(including but tot limited to our vested entitlement rights under the Agreement) so that the
devclopmcitt of porta Bells can become a reality. However, as properly recognized in the April
3, 2001 Mccnorandutn to the City, the intent of the Agreement also requires the City's firm
commitment and willingness to take a leadership role in worl-ing widh us toward the successful
clo: n up of this Brownfield.
Thus, while the spirit of the Agreement broadly contemplates that both the City and the
Developer will work together to make Porta Bella the community envisioned in the Porta Bella
Specific Platt (for instance, by making and honoring the kind of a cc mens set for n the
MOU), the laugt age of the Agreement and DS -12 are quite spcciIIc. In order to comply with the
Agreement, the developer need only remediate the site in accord with DTSC requirements when
and ij'thc developer determines it is ready, and it is otherwise desirable, to, proceed with grading
and development. Accordingly, the present.! status of compliance with the Enforceable
Agreement is ?imply not relevant [o the Ageement and cannot, under any circumstances,
support your detcmlination.
Terminating the ]-case on the Mettnlink Pronercv is not only consistent with,but snccifically
allowed within the Development Aeteement
Given the fact that these very issues are the subject of pending litigation. instituted by the
City against us in Los Angeles County Superior Court, we will need to consult will}:our counsel
{ Paragraph 3(g) of the Agreerocu; "Phasing Development," stores: "...it is the intent a f Che City and Devoloper to curt the
deficiency described in Pardea by providing for the right of [hc DeYeloper m develop Che Project in such order Wd at such rue
and times as developer deems appropriate within the exercise of its sole reasonable business judgment." Paragraph 4,
`Obligadans of Developtr," courains subparagraph (a)(i), "Restoration." which states: "As devciopmeat proceeds, dna Project
zh¢II b¢ gevemed by The Specific Plan which seeks to restore c highly disturbed sitnto cbmpbpblc'contemporary uses m contrast
to its current status as a vacated former industrial llunufacmiing site In the middle of what has become a residential and suburhao
community ... [.1'-ihe phr¢sc "as development proceeds'! clearly indicates that the restoration Vaal 'would be achieved when
development proceeds, which means that restoration will nor be achieved or required if dcveiopment does not proceed. Since
development is to be implemented at the sole discretion of the dweloper, there is no requirement for restoration, because the
developer is not required to develop.
The Agrccmcnt further aelmowlcdges ncc developer's central uvcr the order of development when it states in Paragraph 3(g):
"City furthcr actatowledges that market conditions may Maltz it expedient ar desirable for Developer to proceed with portions of
one orcho phases in an order other Chun That as Indicated by the numeral Identification of a Phase-.[.]" Paragraph 3(g) continues:
"City and Developer hereby agree char unless otharwiso required pursuant to Section 4 of this Agreement, whenever the
Condition: of Approval or Proicet Approvals require an improvement or improvements (a'C'equirement') to be constructed prior
to iesuanca of cerciEeaces ordecupaney for a Phase, Chat requirement shall be completed as follow, (l) with respect to street
improvecncnis and traffic conditions...; (2) with respccr to all other rcquimments for a phase, prior to rbc issuance of occupancy
ccrtirsc¢cas for a cuhsaction within a phase only to the extent such requirements reasonably satisfy the impacts from development
of aueh +ubsoctien:... [.)"
h
_..: page l i of 14
in that case before providing a more exhaustive response. Clearly, the Ciry has a legal position
in that litigation, as do we; the matter will soon come to trial..
In summary and as you are already aware from our responsive pleadings and transcripts
in open Court on August 31 and September 24, 2001, we disagree with your conclusion that our
efforts to `.terminate" the Metrolink lease constitute non-compliance with the Agreement.
Su fice it to state, if the Ciry truly believed that the Second Commuter Rai] Station Site Lease
with Option to Purchase could not so "expire" or be so "terminable", then why did the Ciry
request six separate extensions of The term of that Lease? .
It should be noted in this context that the Lease provided that .`[The City shall use the
Commuter Rail Station site as a public passenger station for commuter rail transportation, .subjecr'
only ro mtcillary uses supporting such prirpary uses. "(Eraphasis added).
Your letter of December 19, 2001 appears to rely on Paragraph 4 (c) (iv) to contend that
the City has the unlimited right, regardless of whether it owns or leases the Meu-olink property,
to "use and occupy" the property into the future with absolutely no time limitation, for as long as
the Agreement remains in force, This interpretation simply cannot be correct. Without limiting
Our right to assert certain positions in the pending litigation, it is obvious and fitndamentally
inconsistent that if the City really had an unlimited right to "use and occupy" the property,
without having to lease it or purchase it, why would the Agreement be pabistakiugly written to
specifically set forth the terms under which the lease and possible future sale of the property
would take place, including a lengthy lease document as an Exhibir to the Agreement, etc.?
Additionally, your citation to page 25 of the Agreement (again, we prestune you mean paragraph
4 (c) (iv)) to support your position that the City has the unlimited right to "occupy" the propetZy
is also misplaced for the simple reason that the 'woids "occupy' or `'occupancy" appear no where
within this section. Lastly, it is The Developer
,wbo wanted to preserve The right to require the
City, if purchased by or transferred to the City,'to continue to''r'eWh ble'site as a commuter rail
station, because of the potential value enliitticeinent for residents and businesses of the Porta
Bella site. Thus, the Development Agreement .was dra$ed to clarify that the City "shall" (this is
a burden / obligcnion upon the City) continue to ruse the Commuter Rail Station site as a public
passestger station for commuter rail transportation during the term of thtj Agreement -- and is,
therefore, not free to simply use the site in any manner it deems appropriate.
Further, although the Agreement was drafted with the possibility that the City would
become the owner of the Metrolink property before April 21, 1999„ ,the Agreement also
contemplated dte possibility that other outcomes could occur — i.e., that -the City would fail to
exercise its option, and/or the Developer would not record a final tract map on or before April
it should he noted thin we have become aware the City stub let rhe Metrolink parking lot to the owner aradjoinins propcary in
conjunction with char third parry's swap meet business on weekends. Tho city's aetians violate the Agreement in two way:: 1)
by nor obtaining prior permission to sublet the property, and 2) because they are violative of paragraph a (c) (iv) in that the City's
use must be "... subject only to nocinary uses supporting such primary use." It is difEculr to s'ce how a week=nd .nvap meet is an
ancillary use supparring the commuter rail station. Furthermore, the Lease, which is an exhibit Cc Tile Ab'tacment, states in
Pamgmph +(e) chat the proparty shall he used for only the'bperation and maintenance aE a commuter rail station and anter uses
supporting the rail am000 and 'expressly set forth in Exhihit'C.I' As one would expect, lIxhlbtt C does act list parking Sar a swap
moot as a potential use
Page 12 of 14
Further, although the Agreement was drafted with the possibility that the City would
become the owner of the Metrolink property before April 21, 1999, the Agreerneut also
contemplated the possibility that other outcomes could occur -- i.e., that the City would fail to
exercise its option, and/or the Developer would not record a final tract map on or before April
21, 1999. Of course, this is precisely what has happened. Therefore, at this point in time, the
City no longer has any rigbt under the terms of the Agreement or any., Exhibit thereto to purchase
or lease (no[ to mention 'Occupy") the property','. absent an agreemcnt with us. Indeed, up unril
gi
Ven all outward appearances of recognizing this fact based on its repeated
now tile City has
efforts to obtain our consent to cortinueihe leasc'agrcement.
In that regard, as you know, we were wilting to extend the lease agreement, and, in fact,
grartted such an extension through August 31, 2001. However, while we would like to have been
able to work something out with the City beyond August 31, 2001 -- and thought we had reached
agreement on this and other critical issues related to the Porta Bella site under the terms of the
MOU -- working with the City ro move forward on [hese atgreemears became impossible once it
became clear that Llc : City took performance from us under the MOU but would not honor, on its
part, even one of its agreements of the MOU. Based upon this decision by the City, we were
constrained to exercise our rights with respect to the Merrolink property by terminating the lease
agrcemcnt. Notwithstanding the exercise of our rights under the Agreement, we repeatedly and
unequivocally stated that we did not seek to discontinue the general public's use of the train
station or the parking arca. Accordingly, there is no action Which we have taken with respect to
rbe Metrolink properly Char is not fully consistent Wirh our rights under the Agreement and tinder
law.„d
Conclusion
For all of the reasons set forth herein, wo believe that we are in compliance with the
Agreement and respectfully request drat you rescind the Notice of Non -Compliance. '
On a more personal note, Jeff, please know tient we have tried to set forth our posiddtu ib as
stratghtfcrward a manner as possible. We both recognize that our respective lawyers can argue
various positions — we, however, arc both running a "business": yours is the business of
municipal government For the public's benefit and good, ours is dze development business in
connection with which we strive to act responsibly and maintain a fair profit margin for the risk
we undertake and our efforts expended. We recognize that die City has legitimate concerns and
needs that must be addressed and we do too. To that end, in addition to the ncctirrg requested
under Section 8(u) of the Development Agreement, we would like to meet with the City to try to
comprehensively review and resolve all of the outstanding issues between us so that we can work
together as p maers, not antagonists, and proceed With die developmear of Porta Bella.
By providing this response, we do not waive or reliquish any of oui rights, including but
no[ limited to those relating to the procedural aspects of your inquiry. Additionally, we reserve
the right to nater and/or supplement Ibis response at anytime including at, to conn.ecttoit with and
after any proceedings or hearing's with respect to these matters,
Page 13 of 14
I trust that rhe above meats all the xequirculebrs 'af Section 3.aµ, of the Planning Commission's
resolution, but please Ict me know if additional information is necessary.
Sincerely,
Sincerely, Sincerely,
SANTA CLARUTA, L.L.C. BERNIITE RECOVERY, L.L.C.
By: Remediation Financial, Inc. By: Remediation Financial, Inc,
Managing Member Managilag Member
By: ZX�2� By: Z4�;�
Gary Br 6*u Gary B164n
Director of Development Director of Development
Remediarion Financial, Inc. Remediation Financial, Inc.
1.1"It
cc: Myla D. Babrow, President L CEO, -Fe?�tidiation Financial, Inc,
Wayne G. Souza, Genual Counsel, RE diation Financial, Inc.
Ivor Samson, Esquire, Sonacnsclicin Narh'&RosenThal , ,
Page 14 of 14
EXHIBIT 2
SUPERIOR COURT OPCALIFORNIA, COUNTY OF AS ANGELES
ATE: 05/13/02
ONORABLE Wendell Mortimer, Jr. JUDGE
ONORABLE JUDGEPROTEM
R. SANCHEZ , C.A. Deputy sheriff
BC251374
STEADFAST INSURANCE COMPANY
VS
SANTA CLARITA, LLC, ET AL
R/T 5/13/02 PCO26739
170.6 McCOY C/W BC263976
NATURE OF PROCEEDINGS:
RULING ON SUBMITTED MATTER
G. CAMPBELL
NONE
Plaintiff
Counsel
Defendant
Counsel
DEPT. 307
DEPUTY CLERK
ELECTRONIC RECORDING MONITOR
Reporter
NO APPEARANCES
This matter having been taken under submission on
May 10, 2002, the Court issues its ruling on submitted
matter as follows:
1) and 2): 9emurrer and Motions to Strike filed by
'Stgt d Zurich attaching Whittaker's First
Amended Cross -Complaint: Motion to strike the third
cause of action for wrongful cancellation granted.
This cause of action presents the exact same issue
that was previously rejected by this Court. Insurance
Code Section 673 allows the lender involved in a
premium -financed policy to cancel and said cancella-
tion cannot, therefore, be wrongful. See HOLLAND VS.
STERLING CASUALTY (1994), 25 Cal. 4th 1059.
Demurrer moot in light of the above ruling. No
sanctions imposed.
3) Whittaker's Demurrer to Steadfast's Second Amended
Complaint (20th cause of action for Reformation):
Demurrer sustained with twenty days leave to amend.
The presently -pled 20th cause of action for reforma-
tion fails to allege facts sufficient to have the
Court reform or rewrite the policy in question. The
pleading must show how, when and why the mistake
occurred. GIRARD VS. MILLER (1963) 214 Cal. App. 2nd
266.
MINUTES ENTERED
Page 1 of 2 DEPT. 307 05/13/02
COUNTY CLERK
SUPERIOR COURT OICALIFORNIA, COUNTY OF FAS ANGELES
)ATE: 05/13/02
IONORABLE Wendell Mortimer, Jr. JUDGE
iONORABLE JUDGEPROTEM
R. SANCHEZ , C.A. Deputy Sheriff
G. CAMPBELL
NONE
DEPT. 307
DEPUTY CLERK
ELECTRONIC RECORDING MONITOR
Reporter
BC 2 513 7 4 Plaintiff
Counsel
STEADFAST INSURANCE COMPANY NO APPEARANCES
Defendant
VS Counsel
SANTA CLARITA, LLC, ET AL
R/T 5/13/02 PCO26739
170.6 McCOY C/W BC263976
NATURE OF PROCEEDINGS:
4) Santa Clarita, et al's Demurrer to Steadfast's
Second Amended Complaint: Demurrer sustained with
twenty days leave to amend (see (3] above). Steadfast
i1_ granted leave to file a Third Amended Complaint.
5) Dem rrer of Steadfast to Santa Clarit >rd
d Cross -Complaint: Demurrer to 20th and 21st
causes of action sustained without leave to amend.
See [1] and [2] above. Insurance Code Section 673
does not require an insurer to return unearned
premiums before cancellation is effective. Demurrer
to 35th and 36th causes of action sustained without
leave to amend. These causes of action fail to
address the elements for bad faith. The policies were
issued *in 1998 and contain no duty to provide finan-
cing. An agreement to provide financing must be done
in writing under Civil Code Section 1624.
6) Motion to Stay Action Against Other Insurers: This
contribution action against ten other insurance
companies under sixteen other policies has already
been severed by Court order of February 6, 2002. This
Court sees no present reason to stay this portion of
the case and will deny the motion at this time.
Copies of this ruling sent to counsel this date via
U.S. Mail as reflected in the most recent proof of
service contained in the court file.
&rflRA,\V\
MINUTES ENTERED
Page 2 of 2 DEPT. 307 05/13/02
COUNTY CLERIC
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EXHIBIT 3
March 19, 2002
Via Telefax
Mr. Ronald D'Ambrosi
Vice President
Arthur J. Gallagher & Co.
14 Wall Street
18th Floor
New York, New York 10005
Re: Porta Bella Project
Santa Clarita, California
Steadfast Insurance Company PLC 3598792-00
Dear Ron:
tXN16IT3
At the specific request of the City of Santa Clarita, California, we are requesting that you
once again ask our insurer, Steadfast / Zurich to add the City of Santa Clarita as an additional
insured on our above referenced policy. As usual, please request an immediate action by
Zurich to this request and a detailed response, in lieu of silence, if they choose to continue to
disregard our request.
Thank you for your on-going efforts in this matter.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing ember
By. V --A
Wayne G. Souza
General Counsel
Remediation Financial, Inc.
Cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
Great American Tower
32001Varth Central Avenue, Suite 100
Phoenix, Arizona 85012
602 238 9007 voice 602 238 9017 fax
ARTHUR I GALLAGHER & CO. OF NEWYORK, INC,
May 25, 2001
Mr. Ed Sheiffele
Environmental Product Line Manager
Zurich American Insurance Company
One Liberty Plaza 53rd floor
New York, New York 10006
Re: Santa Clarita, LLC
Steadfast Insurance Company
Policy 93598792-00
Dear Ed:
As we have advised Zurich/ Steadfast in previous discussions and communications. the
City of Santa Clarita has demanded to be added to the policy as an additional insured
pursuant to a provision of section'_ of the Indemnification Agreement, which was an
exhibit to the Development Agreement assigned to and assumed by SCLLC in 1999.
Although SCLLC doesn't share the City's interpretation of the provision in question, they
believe it would be advantageous to avoid further dispute over the issue. assuming that
the City honors its commitment (as set out in the Memorandum of Understanding) to
allow phased development.
Accordingly, please confirm your willingness to add to the policy as an additional
insured, to be effective upon our advising you of the date of the City's final approval of
phased development for the project:
The City of Santa Clarita
1_3920 Valencia Boulevard Suite 300
Santa Clarita, California 91355-2196
Attention: Mr. Jeffrey Lambert. Director of Planning
We believe that adding the City to the policy should not materially affect Steadfast's
exposure to loss, because under section 818.4 of the California Government Code the
City has immunity from liability for a broad range of discretionary acts. including
issuance of approvals and authorizations for development projects such as Porta Bella.
Your most expeditious response would be appreciated.
Sinc ely.a,��
Ronald A. D'Am osi
Area Vice President
Environmental Services Division
14 WALL STREET. NEW YORK. NY 10005 212-732.9855 / FAX 212-349-3821
Letter to Ed Sheiffele, Zurich U.S.
Re: SCLLC-City of Santa Clarita as Additional Insured
Page 2 of 2 Ma} 25, 2001
c. Lindene Patton. Zurich, U.S.
Dave Jung, Zurich, U.S.
Wayne Souza, SCLLC
John Hahn, Mayer, Brown & Platt
MAY-30-01 WED 03:26 PM ARTHUR J. GALLAGHER-NY FAX N0, 212 568 8645 P,02/02
nARTHUR J. GALLAGHER & CO, OFNEWYORK,INC.
May 30, 2001
Mr. Ed Sheiffele
Product Line Manager, Environmental
Zurich U.S.
One Liberty Plaza 53rd floor
New York, New York 10006
Re: Santa Clarita LLC
Steadfast Insurance Company
Policy #3598792-00
Dear Ed:
Pursuant to my initial letter concerning the above -captioned, the City of Santa Clarita (as
communicated to me through SCLLC) has expressed the following reasons for requiring
its status as an additional insured tinder the policy:
1. Derivative liability arising out of its decision to grant SCLLC "phased development".
2. CERCLA liability arising out of its future ownership of common remediated and
redeveloped site areas such as streets, highways, sidewalks., and parks.
Again, we believe the granting of additional insured status to the City will not increase
Steadfast's exposure to loss. Remediation of the site will proceed by "OU" and pursuant
to DISC approval in any event. In addition, the City has advised us that the City's
present uninsured status is the primary impediment to approval of phased development,
which is essential to the financial health of the project.
Please call if you have any questions.
rely,
Ronald
D'Ambrosi Ronald A.
Vice President
Environmental Services Division
C. Lindene Patton, Zurich U,S.
Dave Jung, Zurich U.S.
Wayne Souza, SCLLC
John Hahn, Mayer. Brown & Platt
11/20/2007. 17:27 FAX 12127857947
CORNWALL STEVENS a 002
4901- Arthur J. Gallagher & Co. of New York, Inc.
September 18, 2002
Mr. Edward L. Sheiffele, Jr.
Product Line Manager
Zurich North American Specialties
601 West 26a` Street
New York, New York 10001
Re: Santa Clarita, LLC
Steadfast Policy PLC 3598792-00
Dear Ed:
I am again requesting, on behalf of the Named Insured, Saa:a Clarita, LLC, that the City .
of Santa Clazita be added as an additional insured to the policy.
The initial request was made more than one and one half years ago and Steadfast has yet
to respond to this request. During the interim additional requests have been made without
response from Steadfast as evidenced in the attached copy of Lindene Patton's e-mail of
06/05/01.
The lack of action on this request has damaged the Insured's relationship with the City of
Santa Clarita, and continues to be a source of friction and an impediment to completing
the project.
A timely response to my request is most appreciated. Thank you.
Sinc ely� �/j
Ronald A. D' brosi —ate
Area Vice President
c. Wayne G. Souza, Esq. - SCLLC
444 Madison Ave ue, 20th Floor
New York, NY 10022-6903
212.994.7100
Fax 212 .994.7047
EXHIBIT 4
CORNWALL STE`IENS
_ �-11/20/2002 17:27 FAX 12127857947
To: ran d'ambrosi eday e �n9�Zurid Que bo Unresolved
"Lindens Pei an@Xudc
cc: "David Jung" gdditjonal Insured Question
<IindAns.p Subject: Santa Clarita
hna.cdm>
06105101 07:53 PM ay
to the
back to you today O we still have not
Ron, for t being able
to an City
attemPt to
a t
to
taken axpologle Positio ed under an ye spoon when In�m 1 0 l `',ill again can e-mail
s unablewe ons.
airP°Lt' as T. WaL to ecifie4l at a ace
whet
issue tomorrow aftern
additional ins
r work this
and call easily•
su
wr Regards,
PHO Lindene
FAX
vF;
or'i �-
l✓ X i- )61-r 6 -
April
April 15, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
23920 Valencia Blvd.
Santa Clarita, CA 91355
Re: Porta Bella
Dear Jeff:
This letter is written to fulfill a remedy mentioned in Section 3.b of the Planning Commission's resolution
adopted on April 2, 2002 concerning compliance with the Porta Bella Development Agreement.
Specifically, it appears that the Planning Commission has asked Santa Clarita, L.L.C. ("SCLLC") and
Bermite Recovery, LLC (`Bermite") to confirm that we would request that the City of Santa Clarita be
named as an additional insured if SCLLC or Bermite, or both were to obtain insurance covering the risk
of Liability arising from "toxic" or "hazardous" substances, or materials on the Project Site from a carrier
other than our present one, Steadfast Insurance Company ("Steadfast"). Please allow this to confirm our
March 20 discussions, in which we stated that if SCLLC or Bermite, or both, were to obtain such other
insurance, such a request through our insurance broker to name the City as an additional insured will be
made. Additionally, during our March 20 meeting, we provided you with a copy of SCLLC's letter of
March 3, 2002 in which SCLLC again requested our agent to have Steadfast name the City as an
additional insured under PLC 3598792-00. To date, we have still received no response from Steadfast.
This letter is written with the understanding that it does not constitute a waiver of the positions taken in
our letter of February 18, 2002, regarding the Porta Bella Development Agreement, Notice of Non -
Compliance matters. Additionally, this letter is a privileged communication for the purposes of
settlement under California Code of Civil Procedure 1152 and similarly applicable provisions.
By providing this response, we believe we will have satisfied all the remedies in Section 3.b of the
resolution.
Sincerely, Sincerely,
SANTA CLARITA, L.L.C. BERMITE RECOVERY, L.L.C.
By: Remediation Financial, Inc., By: Remediation Financial, Inc.,
Managing Member Managing Member
By: n/criUc By;
Gary Browz Garry
Director of Development Director of evelopment
Remediation Financial, Inc. Remediation Financial, Inc.
Cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
GREAT AMERICAN Too,ER
3200 North Central Avenue, Suite 100 Phoen&, Arizona 85071
EXHIBIT 6
EXNi)3ir
April 24, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clatita
23920 Valencia Blvd.
Santa Clarita, California 91355
Re: Porta Bella
Dear Jeff:
The following is written in response to the Planning Commission's request that we address activities
which would move us forward under the Enforceable Agreement with the DISC. We note that it's our
belief and position that matters specified in the Enforceable Agreement are not relevant to compliance
with the Development Agreement. The particulars of our position in this regard are set forth at length in
our letter to you of February 18, 2002. Additionally, this letter is a privileged communication for the
purposes of settlement under California Code of Civil Procedure 1152 and similarly applicable
provisions. Notwithstanding, we set forth these activities in our good faith efforts to be responsive to the
Planning Commission's request and with the hope that they will foster progress on environmental goals
we both wish to achieve.
As background, at your request we met on March 27, 2002 with DTSC staff Sayareh Amir, Rita Kamat
and Ken Baez. In summary based upon Ms. Amir's statements, she appeared to be unwilling to rescind or
abate the pending referral to the Attorney General's office on behalf of DTSC regardless of actions we
may take. Although we believe she has both the power and authority to retract or abate her referral, she
nevertheless maintained that position with us during our meeting while also stating she wished she could
help us.
Before stating specific actions that remediate site conditions at Porta Bella, we all need to realize several
factors:
Although we have spent over $25M in remediation efforts, additional capital is required to
meaningfully remediate further.
The most significant source of capital is the private sector.
Private sector capital is sophisticated and understandably hesitant to invest further because of
several factors including, but not limited to:
a). A Specific Plan and Tentative Tract Map that do not match reality on the ground.
b). An inability for us or any buyers to vertically develop until the site's entire
surface is remediated.
c). Uncertainty and a perceived void on the public sector side of any critical path
being developed or followed concerning financial mechanisms with public
participation such as Tax Increment Financing.
REMEDIATION FINANCIAL, INC.
Great Ainerican Tower
3200 North Central Avenue, Suite 100
Phoen Lr, Arizona 85012
602138 9007 voice 602 238 9017 fav
d). A political environment that appears to want to negate present housing
entitlements.
e). Outstanding lawsuits such as PERC, disputes between the City and us, and
DTSC's legalactions on the Enforceable Agreement.
4. We need to resolve many of the above factors in order to move forward aggressively, positively
and reliably toward an environmental remediation under the Enforceable Agreement.
Therefore, we set forth below a comprehensive sequence of actions designed to continue environmental
clean up on the site by attracting private capital. These actions will permit us to move quickly on Area 55
and subsequently proceed with other higher priorities of DTSC.
SCLLC and Bet -mite Recovery would take the following sequential actions, contingent upon the City and
Planning Commission taking timely actions stated later in this letter:
I. Place net funds from the City's condemnation for Golden Valley Road into an Environmental
Escrow Fund (EEF). Funds in the EEF will be spent on remediation and remediation related
costs.
2. Place into the EEF Metrolink rental income collected after amendments to the Specific Plan,
Vesting Tentative Tract Map and Development Agreement have been made and all appeal
periods have expired. We will also place into the EEF one third of the rental income collected
during the period prior to such amendments being approved and expiration of all appeal
periods.
3. Provide a schedule of activities to DTSC as soon as an amendment process schedule is
established.
4. If the City purchases the Metrolink property, the net proceeds will go into the EEF.
5. Submit an OEW Remedial Action Work plan to the DTSC by May 15, 2002.
6. The Army Corps of Engineers (COE) has provided a start date of June 4, 2002 to commence
work on the OE technology demonstration project within the Hula Bowls. We would
continue our work with the COE on how best to apply the next $2.5M in federal funds.
7. First, spend EEF funds to remediate conditions in Area 55 consistent with work plans
approved oved by DTSC and start work on Area 55 within 60 days of the expiration of appeal
we periods having cr actions in item 2, above.
8. We will continue our cooperation with the COE on the groundwater perchlorate study. The
COE perchlorate project provides for the commencement of fieldwork by June 30, 2002.
9. Continue to address water concerns in OU7 by implementing the applicable technical
memoranda on groundwater work and taking other actions required by DTSC related to
groundwater. (Such steps will depend in large measure upon the results of the investigations
to be conducted by COE's perchlorate study.)
10. Place net revenues from the sale and development of Parcel I and OU1 through OU 5 into the
EEF for remediation purposes.
11. Implement the Remedial Investigation Work plan for OU2.
12. Take actions necessary to comply with DTSC's letter of September 10, 2001 such as:
A. Submit work plan to conduct soil sampling at the Metrolink site.
B. Improve Security Fencing.
C. Provide "Certificates of Insurance for Liability".
D. Act on oversight costs.
E. Revise "Site Wide Human Health and Ecological Risk Assessment Work Plan".
F. Submit revised Work Plan for OUIE Interim Remedial Measure (IRM) Work Plan.
REMEDIATION FINANCIAL, INC.
13. After implementation of remediation in Area 55 and OU2/OU6, initiate work plans and
implementation of work plans for OU3 through OU5 as net income from development of
OU's generates funds for remediation and/or we generate additional investment capital.
The above actions will address DTSC priorities stated in the March 27 meeting which were:
1. Remediation of Area 55.
2. Implementation of the approved remedial investigation work plan for OU2.
3. Provide DTSC with a schedule of activities to be undertaken.
4. Finalize the OEW Remedial Action Work Plan.
5. Other activities stated in DTSC's letter of September 10, 2001.
Ms. Amir said her top priorities were remediation of Area 55 and implementation of the Remedial
Investigation Work Plan for OU2.
The above work can be done if the following assumptions and cooperation are achieved:
1. The Planning Commission initiates an amendment process to the Specific Plan, Vesting
Tentative Tract Map, and Development Agreement largely consistent with the already
certified Golden Valley Road EIR that mitigates the impacts of building Golden Valley Road.
Vertical development will be allowed on OU1 and Parcel 1 for non -housing uses when DTSC
has signed off on such uses. For OUl through 6, the City will issue a grading permit within
an OU when DTSC has signed off on the safety for the uses within the OU and has given
preliminary clearance on the adjacent OU or OU's. This will exceed DTSC standards by
providing an OU between areas undergoing vertical development and areas yet to be
certified.
Since OU7, (groundwater), does not affect the safety of living on or using Parcel 1 and OUi
through OU6, the amendment process would also clarify DS -12 so that a grading permit for
OU5 may be granted when the treatment technology for remediation of OU7 is agreed upon
with DTSC and in place, yet the full remediation may not be completed. This approach is
safe and good science and is an approach uniformly followed by the DTSC in virtually every
similar project we are aware of in California. Specifically, within OUI through OU4 and
OU6 a grading permit will be issued by the City if the specific OU for which it is requested
has received clearance from DTSC, and the adjacent OU(s) has received preliminary
clearance from DTSC. For OU5 a grading permit will be granted when OU5 has received
DTSC clearance and after the remediation methodology is agreed upon between DTSC and
SCLLC and in place.
2. During the amendment process, we are willing to carefully consider reducing the total
number of housing units permitted on the site if the City is willing to consider a reduction of
infrastructure requirements. For example, we could reduce the number of housing units if we
weren't required to pay for the construction of Santa Clarita and Magic Mountain Parkways.
At the same time, we could formally and legally reserve and dedicate the necessary rights-of-
way for the roads.
3. The City would initiate analyses necessary to declare the Porta Bella project site an urban
renewal/redevelopment area and eventually the use of Tax Increment generated only from the
Porta Bella site to pay for infrastructure improvements and environmental remediation
including groundwater.
REbIEDIATION FINANCIAL, INC.
4. The City signs a mutually agreeable Metrolink Lease.
5. The City agrees to establish the EEF.
6. The City will join us in working with DTSC to hold in abeyance legal actions on the
Enforceable Agreement.
7. The City gives top priority to seeking state and federal funds for Via Princessa.
We believe the above outlines actions which will generate and attract funds to address environmental
conditions and improve our relationship with DTSC to the point where we can proceed with the total
remediation of Porta Bella as has always been envisioned. This will vastly improve conditions in the
heart of Santa Clarita by providing over 400 acres of open spaces and parks, address water conditions,
alleviate traffic conditions and improve access for public safety and emergency, disaster relief vehicles.
We hope we can move vigorously ahead together toward a more comprehensive approach addressing our
mutual challenges.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing Member
By: -/
Gary Br
Director of Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
Confirmation Report— Memory Send
Job number
Date
To
Document pages
Start time
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Time Apr -29-02 03:13pm
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Name REMEDIATION FINANCIAL INC,
448
Apr -29 03:llpm
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Apr -29 03:llpm
Apr -29 03:13pm
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REM£DSATION PINANCIAI INC -
3200 1V- C.atra 1, Suit. 100
Plaooaix, Ariz n 85012
(602)238-9007
DATP: APrH 29, 2002
TO: Scoa Wille—(661)254-2380.i'
FROM. Gary Browtl
REa Porcn IIclla
S Pag.s — Including Cover
Rctuzxa F ... iltatln (602) 238-9017
THIS MPO R. TTON CONTwINSD IN TI S PACSIMILE N(T`S3wpS IS CON FIDENT1wL w INTENDED
SOLELY FOR THS use OF THS IATDT VLDUwi- OR ENTITY NA wB e- II' TH£ READER 25 NOT
TI -SS 1N TENDED AS CIPISNT' YOU w a Het mB NaTwts- DISSSMII ZON,
DISTIiie UTION. COPYIIYO OA VNAUTHO RIZ'HD USE OF THIS COMMSINICATION IS STRICTLY
PROHMl'reM. TF YOU H e RSCSIVHm THIS Fw CISTMILS IN ERROR. PL£wSS NOTIFY TKE SL -N DSR
BY TeLSPHONE SMM£D1wTELY SO WS CAN wR,R. a POR THE RETURN OP TI -re OASG MwZ.
D OCUMSNTS TO US. THANK YOU
Confirmation Report— Memory Send
r ,1
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"'dame''"i REWDIATION FINANCIAL INC,
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DATE•
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FROM:
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Apr -25 11:54am
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398 *** SEND SUCCESSFUL,. ***
REMEDIATION FINANCIAL, INC.
Greae Amaricaa Tower
3200 N. Central, Suite 100
Yltucaix. A g5U12
(602) 238-90as-90 07
APril 25, 2002
Geor6e Caravalho — (661) 259-8125
Je£f Lambert
Gary Brown
Porta Balla
g pace — IacfuGing Cover
Rexum Facximile (602) 238-901')
Ttr[E TNFORMATION CONT' wsN 1N THf3 FACSx.I z MHSSAGC IS CONFIDENTI.V- AND INTE=NDED I
SOLELY FOR Tlil� USE OF TYIB 1NDIVIDU� OR awTi NAMED ABOVE. 1, TH READL-R TS NOT
Ttic'. TNTENDED RCCIPTENT, YOU APS HSAESV
VSWE"E f TED TI -IAT ANY DfSSEMINAT2ON,
DSSTR1B UTlON. COPYING OR TJIYAUTHOR OF "Xs
COMMVNTCATION I9 STRaCTS_V
PROI-IJBIT£D. 1F YOU HAVE RECETV BD THIS IS FACfSIMILn1N CR.SLOR, PLEAS£ NOT[FY THC SENDER
BV T8L£PHONE SMMEDLATELY SO WP_ CAN AfiR.'.NO£ POR TH8 RETURN OF TTS OR1G tNAL
DOCUMENTS TO US. YH.aNK YOU.
April 30, 2002
Mr. Jeff Lambert
Director of Planning and Building Services
City of Santa Clarita
23920 Valencia Boulevard
Suite 300
Santa Clarita, CA 91355-2196
Re: Revision to April 24, 2002 letter
Dear Jeff:
In light of out discussion last Friday, and comments sent to the DTSC, item #7 on page two of our April
24, 2002 letter should be revised to read as follows:
"Spend EEF funds first to remediate conditions in Area 55 consistent with work plans approved by
DTSC; commence work on Area 55 as soon as possible after the EEF is established, and the Metrolink
rental income, described in item 2 above, and escrowed funds relating to Golden Valley Road (GVR), are
placed into the EEF."
We believe this change will expedite the remediation of Area 55, compared to waiting for the expiration
of appeal periods on amendments to the Specific Plan, VTTM and Development Agreement as previously
stated in our letter.
Sincerely,
SANTA CLARITA, L.L.C.
By: Remediation Financial, Inc.
Managing Member
By:
Gary Br n
Director of Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
REMEDIATIoN FINANCIAL, INC.
Great Ant erican To
3200 North Central Ave it e, Saile 100
Phoenix, Arizona 85012
602 238 9007 voice 602 233 9017 five
DAT£:
p
TO:
Jeff r-.h.r — 0661) 259-H 125
Confirmation
Report— Memory Send
RE:
Poas Bella
Time Apr -30-02 03:38pm
Tel line : +602-238-9017
Name REMEDIATION FINANCIAL INC,
Joh number
470
Date
Apr -30 03:38pm
To
16612598125
Document pages
02
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Apr -30 03:38pm
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Apr -30 03:38pm
Pages sent
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Status
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Job number : 470
*** SEND SUCCESSFUL ***
R£ML• DIATTON FINwN CTAl., INC.
Groa< Am¢rican Tower
3200 N. Cenrral, Surra 100
phoenix, wrizona 95012
(602)23H-9009
DAT£:
A'r l 30,-2002
TO:
Jeff r-.h.r — 0661) 259-H 125
FROM:
Gary Brown
RE:
Poas Bella
2 PaYc — inclvdinY Cover ti; '-
P-. u v Facsimile (602) 238-9017
THE MFORMATSON CONT ALN£D IN THIS FAGSIMTLS MESSAGE IS CONFIDENTIAL. AND INTENDED
SOLELY FOR THE VSE OF THE INDIV (OVAL OR ENTTTY NAMED ABOVE. LF THE REAf]SR L9 NOT
THE INTENDED RECIPIENT, YOUARE ORTZII Y NOTIFIED THAT ANY DTSSEMLNATTON,
DISTRIBUTION. COPYINTJN
G OR AVTHORTZED USS ml THIS COMT . PX-GATION 15 STRLGTLY
PROHIELTED. SF YOV }IAVE RE S LVED TH33 FAC[1IQa F- ZN ERROR. PLEASE _rmr- OY THE SENDER
HY TL-LEf•HONE IMMEDIATELY SO wE CAN ARRANGE FOR THE liETVRN OF 'CFIF- ORLO LNAL
DOCVMENTS'TO VS. TflwNK YO V.
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EXHIBIT 8
April 30, 2002
Via Telefax and Federal Express
Carl K. Newton, Esquire
Burke, Williams & Sorensen
611 W. 61h Street, Suite 2500
Los Angeles, California 90017
Re: Metrolink Lease
Dear Carl:
EX141617- 8'
This letter is written in response to Section 3d of the Planning Commission's Resolution No.
P02-12. This letter is a privileged communication for the purposes of settlement Linder
California Code of Civil Procedure 1152 and similarly applicable provisions.
Although we remain convinced that our past actions and legal positions related to the Metrolink
property are consistent with the Development Agreement, and we hold firm to the positions
taken in our letter of February 18, 2002 to Mr. Lambert, we hope the ideas in this letter will
prove helpful to resolving issues between us.
As a threshold issue, we believe it is only fair and equitable that the City fulfill its clear and
unambiguous obligations under the terms of former leases by paying Bermite Recovery, L.L.C.
("Bermite") the property taxes and lease payments required under previous leases. We wrote
letters on December 12, 2001 and March 26, 2002 to Mr. Caravalho requesting the payments and
providing detailed calculations and supporting documents. To date, we have not received any
payments or a written response.
Assuming the City will live up to its obligations mentioned above and pay Bermite, we offer the
following for your consideration:
Term. A new lease retroactive to September 1, 2001, under which the City would pay
the retroactive rent at the time of executing the new lease. The lease would end upon the
first to occur of the following: (i) the date specified in the Development Agreement
("DA") for the expiration of the DA, or (ii) the date the DA is terminated by City action,
or (iii) the exercise of the Owner's Option stated in Paragraph 5(b) below.
2. Subletting. The City would pay to Bermite all income received by the City on the
property since January 1, 1999 because: (i) the City never received permission to sub -let
the property as required by the former lease, and (ii) subletting to the swap meet next
REMEDIATION FINANCIAL, INC.
Great American Tower
3200 North Centra[ Avenue, Sitite 100
Phoen&, Arizona 85012
602 238 9007 voice 602 238 9017 jax
Carl K. Newton, Esquire
Burke, Williams & Sorensen
April 30, 2002
door was not pennitted within the "use" or "purposes" clauses of the former lease. All
prospective rights to sublet would remain with the Owner.
3. Use. The permitted uses under the new lease would be as stated in the former lease.
4. Parking. The City would allow parking to be reconfigured on the site so long as the
parking retains in proximity to the Metrolink station (as agreed between the City and the
Owner) and the number of parking spaces remains at the present number of: 425.
Reconfiguration of parking includes structured parking similarly proximate to the station.
5. Rent. (a) Rental payments will be as follows:
Period
09/01/01 through 08/31/02
09/01/02 through 08/31/03
09/01/03 through 08/31/05
09/01/05 & every 5 years thereafter
Amount
$20,000/month
Annual rent fixed at 10% of the property's
Fair Market Value ("FMV") as established
by appraisal based upon the property's
highest and best use acknowledged to be
a "mixed use" of housing and commercial
Same as above with an increase every 12
months during the Period equal to the
increase, if any, in the cost of living
("COLA"), but with a cap in the COLA
of 5% for any 12 months during the Period.
The I" such increase, if any, will be on
09/01/03
Annual rent fixed at 10% of FMV as
established by a new appraisal done every 5
years based upon same use as above.
Provided, however, after every 12 -month
period during those years in which no
appraisal is obtained (i.e. between
appraisals), the annual rent will increase by
the actual increase, if any, in COLA, but
with a cap in the COLA of 6.5% for any 12
month period.
REMEDIATION FINANCIAL, INC.
Carl K. Newton, Esquire
Burke, Williams & Sorensen
April 30, 2002
(b) Rental payments actually received will be applied as follows:
Once amendments, satisfactory to the property owner ("Owner") (which
amendments we have discussed with City staff), are made to the Specific Plan, VTTM, and DA
and all appeal periods have expired, 100% of rental payments (less what portions thereof, if any,
as may be needed by Bermite to pay federal and state income tax liability attributable solely to
the receipt of such rental income) actually received by Owner and attributable to such period will
be placed in an Environmental Escrow Fund ("EEF') to be used for environmental work at the
site by the Owner.
One-third of the rental income collected after September 1, 2001 and prior to the
expiration of the aforementioned appeal periods (subject to the same income tax liability
obligation of Bermite) will also be placed into the EEF to be used for the same purposes. The
amendments will, among other things, mitigate the impact of Golden Valley Road ("GVR") as
described and required in the GVR EIR, and will clarify DS -12 to the satisfaction of the Owner.
Notwithstanding the foregoing, if such amendments are not made by August 31, 2004, the lease
will expire, at Owner's option ("Owner's Option"), on August 31, 2004.
6. City's Option to Purchase. The City will have the option to purchase the property
under the following terms ("City's Option"):
a) Term. The City's Option will be exercisable, if at all, through August 31,
2004, subject to the City's timely payment to Owner of the Rolling Option
Payments below.
b) Exercise Price. The price will be equal to the FMV as described above in
Paragraph 5(a) and if purchase and closing occurs within the first 12 months
of the lease, then such purchase price will be capped at $4M and the City will
be credited against such purchase price with all rent paid by the City to the
Owner under the lease attributable to the lease period commencing on the
commencement date of the new lease through August 31, 2002.
C) Rolling Option Payments. If the City Option is not exercised by 08/31/02,
then the City may continue the City Option by payment to the Owner at that
time of $100,000 which will extend the City Option until 08/31/03; and if not
exercised by 08/31/03, then the City may timely make payment of a similar
amount thereby extending for another 12 months, and so on until 08/31/04. If
any Rolling Option Payment is not timely made, then the City Option will
expire by its own terms on the next business day. Rolling Option Payments
are received by the Owner in recognition that the unexercised City Option will
REMEDIATION FINANCIAL, INC. 3
Carl K. Newton, Esquire
Burke, Williams & Sorensen
April 30, 2002
delay implementation of other measures the Owner may wish to exercise on the
property. The Owner covenants that such other measures will not block the
public's access to or parking for the Metrolink station.
d) Miscellaneous. If the City Option is not exercised by August 31, 2004, the City
will cooperate with the Owner by issuing a grading permit for Parcel 1, if DTSC
is required to and has issued a No Further Action letter, or similar document,
which permits the uses proposed by the Owner.
Net proceeds from the sale to the City under the City Option will go into the EEF.
The Owner will refund to the City one-half of the net proceeds from the sale to
the City under the City Option once the City has issued building permits for
vertical development in OU1, OU2/6 through OU4.
7. Misc. The responsibilities, liabilities and indemnifications stated in previous leases
would be applicable to a new lease.
Carl, we hope the above will focus our discussions and lead to a long-term lease and the
exclusive right for the City to purchase the Metrolink property.
Sincerely,
BERMITE RECOVERY L.L.C.,
By: Remediation Financial, Inc.,
Managing Member
By:
Gary Bro
Director f Development
Remediation Financial, Inc.
Cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
Confirmation Report— Memory Send
Time Apr -30-02 03:45pm
Tel line : +602-238-9017
Name REMEDIATION FINANCIAL INC
Job number 468
Date Apr -30 03:35pm
To 12132352700
Document pages 05
Start time Apr -30 03:35pm
End time Apr -30 03:45pm
Pages sent 05
Status OK
Job number 468 *** SEND SUCCESSFUL ***
12E MSDIATI
7N FINANCIAL, C.
].601 Nors6 tL , Suite 42020
P�ooaix, Arizona .... 85006
(602)238-9007
DwTE: w,ril 30, 2002
TO: Cerl Newioa — (213) 236-2700
FAOMa Gary Browxn
ill.: Mexrol;^v Lease
5 Pages — In c3.Idiag Cover
Recurs Facsimile (602)238-9017
Ttil 1NFORMAT3ON CONTAINED 1N -r Ins FACSLMLLE M£SSAOE IS CON P(DENTTAL AND SNTENDED
SOLELY FOR THE USE OF TFIE LNDIVID VAL OA BNTtTV NAMED ADO, H. IF TF READER IS NOT
TYZE ZN1'ENDED RECtPIL-NT, YOU ARR I3ERF_DY NOTIFIED TRAY ANY DISSFvMINAYLON,
DIS"PRSl3UT3ON, COPYING OR LNAT.!"I'HORIZED USE OF THIS COMMIl1VICATION IS STRICTLY
P AOH181'1'ED. TF Y.0 Yl 1� RECEIVED TL IS FACISIMLLE 3N ER2OR. PLEASE NOTIFY THE SENDEli
BY'I'£LEPHONE IMNLL-D]ATELY SO W£ CAN ARIL+NOE FOR THS RL -TURN OF THE ORIGINAL
DOCUMENTS TO US. TNA NK YOU..
Confirmation Report— Memo,ry Send
Time May -02-02 01:54pm
Tel line : +602-238-9017
Name REMEDIATION FINANCIAL INC,
Job number
Date
To
Document pages
Start time
End time
Pages sent
Status
Job number
512
May -02 01:52pm
16612542380
05
May -02 01:52pm
May -02 01:54pm
05
OK
2 *** SEND SUCCESSFUL ***
REMEDIATION FINANCIAL, INC.
Gra aC Amo�i�an Tow¢r
3200 N. C¢ntral. Suite 100
Pbo¢nix, writ
85Ol2
(602)238-90-90 00
DATE:
May 2. 2002
TO:
Scott Wilk — (661), 254-2380
FROM:
Gary Brown
Rl':
Metrolixilc Laxtcr
Pages — Including Covar
Scott,
Thou&ht this xaighx
Gary
Rctum Facaixnila (602), 238-9017
THE INFORMATION CONTAINED IN THIS PACsl3 "L8 M6ssA TS CONFTDENTIAL AND INTENDED
SOLELY FOR TH8 US8 OF TH8 TNDIYIDU.aL OA ENTITY NAIv[8D AHOvg. 3F THS R3iAD8R IS NOT
TZiE INT£NDSD 2 CxrtsNT. YOU DISSMMLNATION.
DISTRIH 11T ION. COPYING OR TJNAVTHORI2ED USH OF THIS IS STRICTLY
PRO&TTHTTB . TF YOU HAVB RHC6lVED THTS FACISINll1.£ 1N BRROR. PL S8 NOTIFY THE S£NDER
SY T£L£PHONE IMNII6DIAT8LY
YOU. WS CAN ALY .+NGB FOR TI -IS RETURN OF THP ORIO t1YAi
DOCtJM8NT5 TO US. T'f/d NK CI.
e
Via Telefax
Carl K. Newton, Esquire
Burke, Williams & Sorensen
611 W. 61h Street, Suite 2500
Los Angeles, California 90017
Re: Metrolink Lease
Dear Carl:
April 30, 2002
Ae
&W16 try-
April
%
I have seen a copy of Bermite's letter to you signed by Gary of today proposing an
amicable arrangement for the City's lease and purchase of the Metrolink property. As you know,
you and I have been participants in many telephone conferences and lease proposals during the
last 8 +/- months. I have been pleased by our recent ability to find workable solutions such as
the Tolling Agreement and Dismissal in the Writ of Mandate, etc. case. As you are aware, issues
relating to the Metrolink situation are still pending in Court. It strikes me that an amicable
resolution along the lines outlined in Gary's letter would be dispositive of that case as well.
However, we have had recent interest from the Southern California Regional Transit
Authority in acquiring the site. We appreciate how proud the City is in having the "number 1"
station in the system located in the heart of the City.
Carl, in light of the history of proposals made and either rejected or not responded to, I
am writing to ask you to please consider letting us know of the City's interest in pursuing the
lease / purchase option. That is, if the City is not genuinely interested, then we will accelerate
the involvement with the Authority. If, on the other hand, the City is genuinely interested, then
let's move forward with dispatch to attain our common goal which will have the added benefit of
resulting in the dismissal of yet another case between us.
Thank you.
SIGNATURE APPEARS ONLY ON PAGE 2 OF 2 PAGES
REMEDIATION FINANCIAL, INC.
Great American Traver
3200 Nord) Central Avenue, Suite 100
PhoetiLx, Arizona 85011
602138 9007 voice 602 233 9017 fax
Carl K. Newton, Esquire
Burke, Williams & Sorensen
April 30, 2002
Sincerely,
Bermite Recovery, L.L.C.
By: Remediation Financial, Inc.
Marta Member
By.
Wayne G. Souza
General Counsel
Remediation Financial, Inc.
Cc: Myla D. B row, President &CEO, Remediation Financial, Inc.
Gary wn, Director of Development, Remediation Financial, Inc.
RENIEDIATION FINANCIAL, INC.
EXHIBIT 9
EX`N�B�r 9
August 24, 2001
Via Telefax and Fed Ex
Mr. George Caravalho
City Manager
City of Santa Clarita
23920 Valencia Blvd., Suite 300
Santa Clarita, CA 91355
Re: Metrolink
Dear George:
This letter is in response to your letter of August 20, 2001, in which you request that we delay
the termination of the Metrolink lease until environmental questions raised by you are resolved.
You also state, "Nevertheless, the Citymust understand the current condition of the Metrolink
site before considering any options beyond a continuing short term lease of the property."
I personally support, as our company does, mass transit and see it as a valuable community asset.
I think it would be a shame for the City to not have a Metrolink lease and thereby not facilitate
the public's access to the train. Therefore, building upon an idea inspired by your letter we
suggest that the City enter into a short-term lease in which the City would pay a reasonable
market rate rent, which we believe is appropriate given the fact that the City has been renting for
only $1.00 per year for years. Such a lease could be terminated when you wish to enter into a
longer-term arrangement or decide you no longer want to rent the property.
Obviously, this is the briefest of outlines and would need to be formalized into a short-term lease
that I do not believe could be done by August 31. Therefore, if you wish to pursue this idea,
please let me know as soon as possible so we can prepare a lease that would go into effect
sometime in September, and we will consider keeping the site open for business day commuters
until we can consummate a new lease. If I do not hear from you by August 30, we will take the
necessary steps to physically effectuate the termination of the lease.
On a related matter, if you decide not to pursue a short-term lease, we suggest you take
appropriate traffic safety measures as well as bus routing consistent with the public not having
access to the Metrolink station. Also, since you probably have better contacts at Metrolink than
we do, could you please work with Metrolink to take whatever actions are necessary in the event
passengers no longer have access.
REMEDIATION FINANCIAL, INC.
1601 Norte 7 Street Suite 420 Phoenix, Ariiona 85006-2210
6022389007 voice 602138 9017 jox
Sincerely,
SANTA CLARITA, L.L.C.,
By: Remediation Financial, Inc.,
Its: Managing Member
By:
Gary Brown
Director of Development
Remediation Financial, Inc.
jcc: Mayor and City Council Members
Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne Souza, General Counsel, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
August 28, 2001
Via Telefax 1-661-259-8125
Mr. George Caravalho
City Manager
City of Santa Clarita
23920 Valencia Boulevard, Suite 300
Santar Clarita, California 92355
r
Re: Metrolink
Dear George:
Please allow this letter to serve as our follow up to your and Carl Newton's call of
this morning regarding the above. Our response is without regard to the contents of your
letters to Myla dated August 20, 2001, with which we disagree.
This will again confirm our interest in working cooperatively with the City in
negotiating and executing a new lease agreement for the Metrolink station at the Porta
Bella site. The lease would be for a period of between 6 and 8 months, the City would
pay a rental fee of $30,000 per month, and the City would receive a $10,000 per month
rebate out of the $30,000 per month rental paid when and if the City concludes final
amendments to the VTTM, Specific Plan and Development Agreement necessary to
accommodate Golden Valley Road and land use changes caused by Golden Valley Road.
Notwithstanding the term, either party will be able to terminate the lease upon the giving
of 30 days prior written notice. Lastly, we also discussed the fact that the new lease
would not include an option to purchase nor provide the City with the right to sublet all
or any portion of the premises. The City would be required to fully cooperate in our
subletting of the premises not inconsistent with the City's use of the premises as has
historically been the case.
We will draft the new lease as soon as possible, but it will not be ready for this
evening's Council meeting. Therefore, as long as we are making progress on the relevant
issues, we will simply keep the Metrolink access open to the public, except for a brief
shutdown period not to exceed 48 hours. Our goal will be to have the lease ready for
signing by mid-September.
Lastly, a precondition to the foregoing will be the refund to us at this time by the
City of the $6,200 check we forwarded to the City under cover of December 6, 2000 for
the specific purpose of having Impact Sciences pursue the expeditious environmental
review relating to the revised DS -12 language. Attached for your immediate ease of
reference is a copy of our December 6, 2000 letter transmitting that check to the City.
REMEDIATION FINANCIAL, INC.
1601 North Y" Street Suite 420 Phoenix, Arizona 85006-2210
602 238 9007 voice 6022389017f=
Mr. George Caravalho
City Manager
City of Santa Clarita
August 28, 2001
As you may know, the City unilaterally determined not to move forward on that
environmental review sometime after having received our check.
Sincerely,
SANTA CLARITA, L.L.C.,
r
By: Remediation Financial, Inc.,
Managing Member
By: N&
Gary Bro
Director of Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
Carl Newton, City Attorney
REMEDIATION FINANCIAL, INC.
August 29, 2001
Mr. George Caravalho
City Manager
City of Santa Clarita
23920 Valencia Blvd., Suite 300
Santa Clarita, CA 91355
Re: Metrolink Lease
Dear George
In my letter of 8/28/01, I wrote, "...as long as we are making progress on the relevant issues, we will
simply keep the Metrolink access open to the public, except for a brief shutdown period not to exceed 48
hours". This letter confirms that we will terminate public access to our property from approximately 8:00
P.M. on Saturday, September 1, 2001 through 8:00 P.M. Monday, September 3, 2001.
We believe that closing public access over Labor Day weekend will cause the least possible
inconvenience to commuters. Please take appropriate measures to accommodate changes in bus routing,
traffic safety and coordination with the MTA. Obviously, access to the station will be open in time for
commuter traffic on Tuesday, September 4. As a courtesy to the station's users, we will allow public
access until Council. considers the Metrolink lease at its September I1 meeting.
Please give me a call if you have questions.
Sincerely,
SANTA CLARITA, L.L.C.,
By: Remediation Financial, Inc.,
Its: Managing Member
By:
Gary or
Director f Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
Alan G. Berg, Site Restoration Director, Remediation Financial, Inc.
Ric Sager, Porta Bella Resident Manager, Remediation Financial, Inc.
RENIEDIATION FINANCIAL, INC.
1601 North 7'" Street Saite 420 Phoenix, Arizona 85006-2210
602138 9007 voice 602 238 9017 fax
August 30, 2001
Via Telefax 1-661-259-8125
Mr. George Caravalho
City Manager
City of Santa Clarita
23920 Valencia Boulevard, Suite 300
Santa Clarita, California 92355
Re: Metrolink
Dear George:
Please allow this letter to serve as another follow up to your and Carl Newton's
discussions with us regarding the above. These latest discussions occurred this morning
and are in addition to the discussions we had which resulted in our two page letter
proposal to you of August 28, 2001. This letter also serves as a withdrawal of our August
29 letter and any proposals proffered therein: This letter continues to be without regard
to the contents of your letters to Myla dated August 20, 2001, with which we disagree.
We again confirm our interest in working cooperatively with the City in
connection with the status of the lease agreement relating to the Metrolink station at the
Porta Bella site.
We propose the following:
• The Lessor and City would enter into the Seventh Amendment to the
Second Commuter Rail Station Site Lease which would extend the term of
the Original Lease from August 31, 2001 through midnight, Santa Clarita,
California time on November 2, 2001. The Lessor will not be required to
provide a notice of non -renewal.
The City would pay a rental fee of $25,000 per month, without offset, in
advance not in arrears. Any portion of the month of November, 2001
during which the City occupies the premises under the Seventh
Amendment will be pro -rated for the actual number of days based on a 30 -
day month.
Notwithstanding the November 2, 2001 expiration date, if the City
Council does not approve the Seventh Amendment at its meeting on
September 11, 2001, then the aforementioned term specified in such
Seventh Amendment will automatically terminate, without the necessity of
REMEDIATION FINANCIAL, INC.
1601 North 7" Street Suite 420 Phoeuiz, Arizona 85006-2110
6022389007 voice 601 238 9017 fa
Mr. George Caravalho
City Manager
City of Santa Clarita
August 30, 2001
further notice or action on the part of the Lessor or Lessee, at midnight,
Santa Clarita, California time on September 14, 2001.
• All rights or options to purchase, if any, will be eliminated from the lease.
The foregoing will not affect or alter any rights under law with respect to
condemnation.
The City will affirmatively relinquish any and all rights and privileges
under the lease to sublet all or any portion of the premises. All sublet
rights will be reserved unto the Lessor. The City would be required to
fully cooperate in Lessor's subletting of the premises which is not
inconsistent with the City's use of the premises as has historically been the
case.
• No later than the close of business on Tuesday, September 4, 2001, the
City will have refunded Santa Clarita, L.L.C.'s $6,200 which was
transmitted in December of 2000 to the City for the purposes of having
Impact Sciences conduct certain CEQA work.
• The City Council will agendize and schedule for discussions at its meeting
on September 25, 2001 and its meetings in October, 2001 certain issues
relating to the Porta Bella project and development, which issues will be
timely outlined in a letter from us to the City.
The notice of non -renewal and termination dated July 31, 2001 intended to be
effective midnight, Santa Clarita, California time on August 31, 2001 is hereby
withdrawn contingent upon City Council's approval on September 11, 2001 of the
Seventh Amendment containing the foregoing business agreements. If the City
Council does not so approve the Seventh Amendment on September 11, 2001,
then the notice of non -renewal and termination will then and there go back into
effect with midnight, Santa Clarita, California time on September 14, 2001 being
deemed substituted for midnight, Santa Clarita, ,California time on August 31,
2001.
SIGNATURE OF BERMITE RECOVERY, L.L.C. APPEARS
ON PAGE 3 OF 3 PAGES
REMEDIATION FINANCIAL, INC.
Mr. George Caravalho
City Manager
City of Santa Clarita
August 30, 2001
Sincerely,
BERMITE RECOVERY, L.L.C.,
By: Remediation Financial, Inc.,
Managing Member
By: �/
Gary Br n
Director of Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
Carl Newton, City Attorney
END OF AUGUST 30, 2001 LETTER
REMEDIATION FINANCIAL, INC.
4 zo B 360 — 1130
August 30, 20(
Via Telefax 1 -
Mr. George Ca
City Manager
City of Santa C
23920 Valencia
Santa Clarita, (
Re:
Dear George:
This letter confirms our conversation this evening in which you notified us that
City Council rejected the proposal contained in our letter of August 30, 2001. We are
disappointed to hear that the City did not accept our proffered extension of the existing
lease.
Sincerely,
BERMITE RECOVERY, L.L.C.,
By: Remediation Financial, Inc.,
Managing Member
By: zti
Gary Br
Direct of Development
Remediation Financial, Inc.
cc: Myla D. Bobrow, President & CEO, Remediation Financial, Inc.
Wayne G. Souza, General Counsel, Remediation Financial, Inc.
REMEDIATION FINANCIAL, INC.
1601 North 7" Street Suite 420 Phoenix, Arizona 35006-2210
602 233 9007 voice 602 233 9017 j¢x
MBP 11/12/01 10:06 PAGE 2/3 RightFAX� . 3DB
MAYER, BROWN & PLATT
350 SOUTH GRAND AVENUE
25TH FLOOR
LOS ANGELES. CALIFORNIA 9007 1-1503
DAVID BOISTAD
"i
.. .. MAIN PHONE
DIAEC OIAL: (2 13) 229-95 1 4
.. (2 131 229-9500
DIRECT FAX: 12 131 576.6 103
MAI. FAX
OBOLSTAD@MA AEIAOW .COM
(2 1 3) 625-0248
November 12, 2001
VIA FACSIMILE AND U.S. MAIL
Carl K. Newton, Esq.
Burke, Williams & Sorensen, LLP
611 West Sixth Street, Suite 2500
Los Angeles, CA 90017-3102
Re: City of Santa Clarita v. Santa Clarita, LLC, et al., Los Angeles Superior Court
Case No. BC 257151
Dear Carl:
On September 24, 2001, at the hearing on the OSC Re: Preliminary Injunction in the
above -referenced action, you represented to the Colin that the City of Santa Clarita (the "City")
was obligated and willing to pay Bermite Recovery, L.L.C. the fair market rental value of the
Metrolink Property during the period of time was in possession of the Metrolink Property. It has
now been seven weeks since your representation to the Court and over two months since the
Second Commuter Rail Lease expired by its terms, and the City has not made any proposal for
payment of a fair market rental rate. Please let us know as soon as possible, but in no event later
than November 19, 2001, the City's intention in this regard.
This letter is intended to constitute a privileged offer to compromise pursuant to
California Evidence Code Sections 1152, 1154 and any, similar, statute, rule or doctrine.
��Siin�nc'erely,
Davt�d Bolst�������
DBL/slc
021%
11/12/01 10:06 PAGE 3/3 RightFAX
MAYER, BROWN & PLATT
Carl K. Newton, Esq.
November 12, 2001
Page 2
bcc: Wayne G. Souza, Esq.
Myla Bobrow, Esq.
MBP 12/5/01 3:48 PAGE 2/3 RightFAX
Received 11/14/2001 02:36PM in 01:12 on line [01 for DSL . Pg 2/3
11/14/bl WED 14:95 FAX 219 236 2700
WM0sY 06e¢ Wh
213-236.1708
w wtgnWW.i e=n
November 14, 2001
Vla Facsimile: (213) 576-8103 and Mail
David Bolstad, Esq.
Mayer, Brown & Platt
350 South Grand Avenue, 25th Fl.
Los Angeles, CA 90071-1503
Dear David:
11. .,u I .. ....
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Sul UU= OOUm afna
550 WW -C ]TA97r, SII 1A70
SAM 01WO, CAMM A 93101-61
VW; (619)ws6w2
rw (619) 615-6673
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2310E V MXOSA VA3Ve. Sunt 25
CwARLA Cx1r09A0A 0610•4147
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02012.0473
11 Court -
Thank you for your letter of November 12, 2001 regarding the Metrolink property. The
City is certainly interested in continued occuparioy of the Metrolink property and is willing to
pay a fair market rental value to Bermite Recovery; L.L.C. for such right of occupancy.
You may be aware that prior to the lease expiration, the City Manager and Gary Brown,
of RFI, discussed the matter of rental value for the Metrolink property. At that time a figure was
agreed upon between them that the fair rental would be $20,000 per month.
If our respective clients could reach an agreement to pay a fair market rental for the
property, is it possible that we could place the existing litigation in abeyance and work out an
agreement to occupy the Metrolink property for the specified compensation, terminable on not
less than 90 -days notice if one or both of the parties determined it appropriate to resume the
litigation postures?
In the alternative, is there any possibility that we could work out a new lease?
Please contact me at your early convenience so that we may discuss this matter or set up
a meeting for the purpose of conducting such a discussion. .
This confirms our understanding, that these discussions ate intended to constitute
privileged offers to compromise, pursuant to Califomia Evidence Code Sections 1152, 1154, and
any similar statute, rule or doctrine.
LA 9s0566 v[
LAW OFFICES
BURKE, WMLIAMS & SORENSEN, LLP
°A""2 C M Oma
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November 14, 2001
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David Bolstad, Esq.
Mayer, Brown & Platt
350 South Grand Avenue, 25th Fl.
Los Angeles, CA 90071-1503
Dear David:
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Thank you for your letter of November 12, 2001 regarding the Metrolink property. The
City is certainly interested in continued occuparioy of the Metrolink property and is willing to
pay a fair market rental value to Bermite Recovery; L.L.C. for such right of occupancy.
You may be aware that prior to the lease expiration, the City Manager and Gary Brown,
of RFI, discussed the matter of rental value for the Metrolink property. At that time a figure was
agreed upon between them that the fair rental would be $20,000 per month.
If our respective clients could reach an agreement to pay a fair market rental for the
property, is it possible that we could place the existing litigation in abeyance and work out an
agreement to occupy the Metrolink property for the specified compensation, terminable on not
less than 90 -days notice if one or both of the parties determined it appropriate to resume the
litigation postures?
In the alternative, is there any possibility that we could work out a new lease?
Please contact me at your early convenience so that we may discuss this matter or set up
a meeting for the purpose of conducting such a discussion. .
This confirms our understanding, that these discussions ate intended to constitute
privileged offers to compromise, pursuant to Califomia Evidence Code Sections 1152, 1154, and
any similar statute, rule or doctrine.
LA 9s0566 v[
MBP 12/5/01 3:48 PAGE 3/3 RightFAX
Received 11/14/2001 02:36PM in 01:12 on tine (01 for DBL • PB 3/3
11/14/01 WED 14:35 FAX 213 236 2700 Q003
David Bolstad, Esq.
November 14, 2001
Page 2
If you have any questions, please don't hesitate to contact me.
Sincere]
CARL K NE N
of BURKE, WILLIAMS & SORENSEN, LLP
cc: Creorgc A. Caravalho, City Manager
LA 080566 � )
MBP 12/12/01 4:32 PAGE 2/12 RightFAX
MAYFA BROWN;&PLATTl
350 SOUTH GRAND AVENUE
.25TH. -FLOOR-- _
LOS ANGELES. CALIFORNIA 9007 1-1 503
DAVID BOLSTAD COPY
DIRER DIAL (2 1 3) 229-95 14
DIREL F" (21 3) 575-51 03
dbolstad@mayerbrow .com
December 12, 2001
VIA FACSIMILE
Carl K. Newton, Esq.
Burke, Williams & Sorensen, LLP
611 W. 6th Street, Suite 2500
Los Angeles, California 90017
Re: City of Santa Clarita, California and Bermite Recovery, L.L.0
Metrolink Lease
Dear Carl:
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121 31 220-9500
WVN FA%
lZ 1 31 525-0248
This letter and the discussions attendant thereto are intended to constitute privileged
communications and offers to compromise pursuant to California Evidence Code Sections 1152,
1154, and any similar statute, rule or doctrine.
Weare writing in response to your letter of N9,yember 14, 2001 regarding the proffer in
court by the City of Santa Clarita ( the "City') to pay a fair market rental value for the continued
right of occupancy of the Metrolink property (thd +P emi'ses"). We1ave consulted with our
client, Bermite Recovery, L.L.C. ("Bermite'% andaare prepared to move forward with these
discussions.
At the outset, please allow us the opportunity -to correct the record referred to in the
second paragraph of your letter. Our client informs us that there were several conference calls
between the City Manager and Gary Brown, including those in which you and Wayne Souza
participated. Mr. Brown repeatedly emphasized that any rental agreement would only be made
within the context of a more comprehensive agreement addressing other important questions
such as phased development, redevelopment and tax increment. As you know, the City Council
rejected any comprehensive discussion, and, therefore, no agreement was ever reached on a fair
market rent. Both prior to those calls and as a result thereof, Bermite presented many written
proffers regarding the lease situation (extension proposals, alternatively "new" lease proposals,
and several different numbers for rent). Unfortunately and as you are well aware, the City
Council rejected, without counter, each and every orie bYMch written proffers. In fact, you
represented that to the Court at the TRO hearing* Acprc�yyordingly, your statement that "a figure was
CHARLOTTE CHICAGO COLOGNE FRANKFURT HOUSTON LONDON
LOS ANGELES NEW YORK '`PALO -ALTO PARIS WASHINGTON
INDEPENDENT HE o Cm' CORRESPONDENT: ''REGIA. NAVARRETE. NAGER Y RO,IAS
MBP 12/12/01 4:32 .PAGE 3/12 RightFAX
.
MAYER, BROWN & PLATT
Carl K. Newton, Esquire
December 12, 2001
Page 2
agreed upon between them [the City Manager and Gary Brown] that the fair rental would be
$20,000 per month" is inaccurate. With that background we present the following.
In an effort to amicably resolve these matters, Bermite is willing to lease the Premises to
the City under the following terms:
1. $46,500 per month, payable monthly'ii advance not0lairears, met.
2. The lease would commence as of September 1, 2001 and end at midnight, Santa
Clarita, California time on December 31, 2004. Therefore, the fust rental
payment made by the City to Bermite would need to'cover the retro -period back
to September 1, 2001.
With the first rent payment by the City, the City would also pay its back taxes and
rent as particularized in Mr. Brown's letter to Mr. Caravalho,-a copy of which is
attached for your immediate ease of reference. The City's obligation to pay taxes
on a current basis so as to effect a "net" lease arrangement would continue
throughout the term of the lease.
4. The right to sublet all or any portion of the Premises would be retained
exclusively by Bermite. Any sublet proceeds which have been paid to the City
for the period commencing September, 1, 2001 would b!Zsid by the City to
Bermite with the first rst rent a "jr u
p en{ u �ae"r the new ]eat�.st'e. "`' `
5. The lease will be terminableommnobless than 90 days written notice by either
party-
As
ly
As you will recall from evidence presented by counsel for Metrolink, this station and
these Premises in Santa Clarita are the most heavily used and trafficked on the entire line. The
above proffered monthly rent does not take into account such factors, and is simply an amount
acceptable at this time to Bermite to arrive at an agreement and resolution with the City.
Sincerely,
Z��
David Bolstd -••
DBL/slC
Encl.
cc: Bermite Recovery, L.L.C. (via fax)