Open the public hearing, receive public testimony, close the public hearing; and,

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1 9/15/ TO: FROM: Honorable Mayor and Members of the City Council Sergio Klotz, Acting Development Services Directo~ Prepared by: Charlie View, Project Manager Ayako Rauterkus, Senior Management Analyst ~ DATE: SUBJECT: Consideration of a Resolution Approving Amended and Restated Special 4(d) Interim Habitat Loss Implementation Agreement, Accepting a Surety Bond, Approving Modification to the Conditions of Approval of Vesting Tentative Tract Map (VTTM) 15609, and Approving an Open Space Easement and a Public Trail Easement on Lot H of Final Tract Map (Pacifica San Juan) RECOMMENDATION: Open the public hearing, receive public testimony, close the public hearing; and, By motion, adopt a Resolution approving Amended and Restated Special 4(d) Interim Habitat Loss Implementation Agreement ("Agreement"); accept a Surety Bond in the amount of $3 million required per the Agreement; approving the modification to Section 1.6-8, "Engineering & Building conditions of approval" of Resolution No , approving Vesting Tentative Tract Map (VTTM) 15609; and approving an open space easement and a public trail easement on Lot H of Final Tract Map which will be accepted and recorded upon completion of the restoration and trail work (Assessors Parcel No ). EXECUTIVE SUMMARY: Pacific Point Development Partners LLC (Developer), the current owner/developer of the Pacifica San Juan project, is requesting approval to move forward with implementation of both on-site and off-site habitat restoration and conservation, as required by the 1997 Special 4(d) Rule Interim Habitat Loss Mitigation Permit (1997 IHLMP) and subsequent Revised Special 4(d) Rule Interim Habitat Loss Permit dated February 11, 2015 (Revised IHLMP) issued by United States Fish and Wildlife Services and California Department of Fish and Wildlife (collectively the "Resource Agencies"). In 2006, the City and the previous owner entered into a Special 4(d) Interim Habitat Loss Implementation Agreement (2006 Agreement) as a method of ensuring completion of the mitigation measures required when the project was approved (Attachment 1 ).

2 Page 2 of 7 The economic downturn in the housing market in 2008 resulted in the previous owner's bankruptcy and abandonment of the project. Over the past year, the bankruptcy team and the current Developer worked with City staff to update the original mitigation plans to suit the current conditions of the Pacifica San Juan development (2015 Plan). The 2015 Plan also accounts for the sale of a portion of the on-site restoration area to an adjacent land owner. Although this area is protected open space, the Resource Agencies have required the new owner of Pacifica San Juan to augment their restoration plan to address their loss of control of this area. A summary of the updated 2015 Plans are as follows: A newly proposed off-site restoration area (33.2 acres, Attachment 2) - Laguna Heights Home Owners Association (HOA) within the City's Northwest Open Space area (Attachment 2). Developer ownership of on-site restoration area (Lot H and Lot I of Final Tract Map 16750, total 9.6 acres, Attachment 3) - Per Section of Conditions of Approval of Vesting Tentative Tract Map (VTTM) indicates that Lot H of Final Tract Map (FTM) (formerly Lot K under VTTM 15609) shall be dedicated to the City of San Juan Capistrano. The 2015 Plan proposes the Developer shall retain ownership of both Lot H and Lot I. Further, Developer shall record an Open Space Easement over Lot H, as well as a Public Trail Easement within Lot H. The result of the proposed changes is that the community will receive the benefit of preservation of additional habitat area and enhancement of these highly visible areas at no cost to the City for establishment or maintenance of the habitat. costs will be bourne by the developer and maintenance will be managed by a qualified firm and funded through an endowment. The above changes will require an amendment to the 2006 Agreement, accepting the surety bond naming the City as beneficiary in the amount of $3 million to serve as security for the performance of the activities identified in the revised 2015 On-site and Off-site Mitigation Plans. Additionally, Section of the Conditions of Approval (COA) of VTTM needs to be modified in order for the Developer to retain ownership of Lot H of FTM and record an Open Space Easement and a Public Trail Easement. Staff recommends that the City Council approve the Amended and Restated Special 4(d) Interim Habitat Loss Implementation Agreement (Exhibit A to the Resolution), accept the surety bond (Exhibit B), approve modified Conditions of Approval for the VTTM 15609, and approve an Open Space Easement over Lot H (Exhibit C) and a Public Trail Easement within Lot H (Exhibit D), which will be accepted by the City Manager and recorded upon completion of restoration and trail work per the City Council Resolution No (Attachment 5) DISCUSSION/ANALYSIS: The Pacifica San Juan project (aka Pacific Point project), generally located east of Interstate 5, north of Camino Las Ramblas, and south of La Novia Avenue, originally

3 Page 3 of 7 approved under Vesting Tentative Tract Map (VTTM) was subject to a Special 4(d) Rule Interim Habitat Loss Mitigation Plan as approved by the United States Fish and Wildlife Services and California Department of Fish and Wildlife (collectively the "Resource Agencies") on January 31, 1997 (1997 IHLMP). In summary, the 1997 IHLMP required the previous developer, SJD Partners, LTD., to implement a total of 2.6 acres of on-site Coastal Sage Scrub (CSS) preservation, 17.6 acres of on-site CSS restoration and 22.6 acres of off-site exotic vegetation control (42.8 total acres). The previous developer never completed the habitat restoration project prior to its bankruptcy. Under the subsequent ownership, LV Pacific Point LLC, the Resource Agencies issued a Revised Special 4(d) Rule Interim Habitat Loss Permit (Revised IHLMP) as confirmed by the concurrence letter to the City dated February 11, The current developer of the project, Pacific Point Development Partners LLC (Developer) has been in discussions with the City and Resource Agencies to further update the Revised IHLMP. The Revised IHLMP indicated that the 42.8 acre on-site and off-site Mitigation could be satisfied with implementation of 9.6 acres of on-site CSS habitat restoration and 33.2 acres of off-site CSS habitat restoration located within the City's Northwest Open Space. It was anticipated that the 33.2 acre off-site restoration area would consist of acres owned by the Laguna Heights Home Owners Association (HOA) and 6.93 acres owned by the City. As part of the planning related to the off-site restoration area, the Developer commissioned a preliminary title report (PTR) which revealed that the 6.93 acres thought to be owned by the City were actually owned by J.F. Shea Company, Inc. (Shea) encumbered with an open space easement in favor of the City. Because concurrence from the underlining fee title owner (Shea) cannot be guaranteed, the Developer has requested that, in lieu of restoring the Sheaowned property, the Developer be allowed to restore an additional 6.93 acres owned by the HOA adjacent to the original acres. The proposed restoration area is located on a portion of HOA-owned land, within the City's boundary, adjacent to the current 40- acre Orange County Transportation Authority (OCTA) Habitat Restoration site, part of the overall 54-acre 2C Ranch Habitat Restoration project. The reasons for proposing the HOA-owned land for the habitat restoration are: 1) its adjacency to the OCTA hillside restoration area (a part of the on-going 2C Ranch Trabuco Creek Habitat Restoration project) which will provide a contiguous area of restored open space for both public and environmental benefit, and 2) the popular Shea and Colinas Ridge public trails extend directly through the proposed restoration area, thus restoration of the site would improve public use and enjoyment of the trails and open space, and would also provide a considerably improved open space view shed which serves as a major backdrop to the North West Open Space and also the City of San Juan Capistrano as a whole. During the "Establishment Period" the plant materials in the restoration area will require temporary irrigation and this will be provided through a recycled water connection to the Moulton Niguel Water District, thus not impacting the City's water supply or conservation compliance.

4 Page 4 of 7 This off-site restoration project would benefit adjacent City-owned land as a part of continuous effort to improve the North West Open Space for public and environmental benefit. Additionally, the control of invasive species offered by developing larger restoration areas is a significant benefit of this plan. It reduces long-term maintenance requirements, encourages additional native plant development, and improves the viability of the other restored areas. The Revised IHLMP identified two (2) parcels within the Pacifica San Juan boundaries for on-site restoration, Lot H (approximately 4.3 acres) and 5.6 acres of Lot I of Final Tract Map (FTM) The project entitlement documents identify Lot H of FTM (also referred in the approvals as Vista Park and VTTM Lot K) as a passive park intended for "trail use and enjoyment of natural scenery." VTTM Condition of Approval (COA) states that "prior to approval of the first final map, Lot "K" (Vista Point) shall be dedicated to the City of San Juan Capistrano in accordance with the provisions of the Subdivision Map Act". In addition, notes included on FTM state that "Lot H is for public park purposes (to be granted to City of San Juan Capistrano under separate document)." This concept is reinforced by the project's existing Special 4(d) Interim Habitat Loss Implementation Agreement which states that the "City shall accept the dedication of a portion of this Habitat Restoration Area, identified as Lot H on FTM 16750, for public park purposes as required by the conditions of approval for VTTM 15609, at such time that the habitat restoration and revegetation work has been completed and accepted by the Resource Agencies". Successful implementation of the Revised IHLMP requires the recordation of conservation easements protecting the CSS habitat values, including the approximately 9.9 acres of restored on-site land. The form of conservation easement is established by the California Department of Fish and Wildlife and must be executed and recorded by the property owners with few, if any, modifications. As the ultimate owner of Lot H, the City will be bound by the terms of the recorded conservation easement. The terms of the Conservation Easement create a possible obligation for the City regarding Habitat Maintenance. As an alternative, the Developer could retain ownership of Lot H, with ultimate ownership conveyed to the project's homeowners association, and accomplish the required Resource Agency restoration and City public access goals by a) recording the required Resource Agency conservation easement and b) recording separate open space/public trail access easements with, and for the benefit of, the City. The open space/public trail easements would provide the public park benefits required by the project's entitlements and would also fulfill the intent of the tract map note regarding recordation of a separate document. The easements granted to the City would also be consistent with the public park land requirements of Section (Parkland) of the City's Municipal Code since the easements would specifically provide access, use and enjoyment by the general public rather than limit said use to only project residents. As an added benefit to the City, a third-party conservation entity would be responsible to maintain the trail network, habitat area fencing, viewing benches and informational signs. The Developer is currently working with the Center for Natural Lands Management as the preferred third-party conservation entity. Maintenance would be

5 Page 5 of 7 guaranteed by a non-wasting endowment established by the Developer and held by the third-party conservation entity. The City and general public would receive the public park amenity constructed by the Developer with ongoing maintenance provided by the third-party conservation entity. Staff recommends the Developer retain ownership of Lot H, which will require a modification to the existing COA of VTTM to allow the Developer to retain ownership of Lot H with appropriate easements for open space, public access and trail use. The Resource Agencies require the developer to provide a $3 million surety bond to be held by the City to insure the on- and off-site habitat restoration work is completed in a satisfactory manner consistent with the Revised IHLMP. The City Attorney has reviewed and approved the bond language as well the easements benefiting the City for the proposed park site, and the Developer has delivered the bond to the City. FISCAL IMPACT: The proposed mitigation work will be fully funded by the Developer. There is a developer deposit fund to offset the staff cost to process the project and staff will request additional funds as needed. Consistent with the practice for other habitat restoration projects, long term maintenance will be managed by a qualified firm and costs will be funded by the Developer through a non-wasting endowment established under a formula approved by the Resource Agencies. ENVIRONMENTAL IMPACT: This Project (Habitat Mitigation) is exempt from review under the California Environmental Quality Act ("CEQA") pursuant to a Class 8 exemption for actions by regulatory agencies for protection of the environment. (Tit. 14, Cal. Code Regs., Div. 6, Chapt. 3 ["State CEQA Guidelines"], ) While the Project modifies the 2006 Agreement and a condition of approval regarding dedication of a lot to the City, these modifications ensure that the Developer: (1) establishes an off-site restoration area of 33.2 acres, and (2) records a perpetual open space easement over and a perpetual public trail easement within Lot H of Final Tract Map Ensuring that the off-site restoration project will take place will benefit adjacent City-owned land as part of the continuous effort to improve the North West Open Space for public and environmental benefit. No construction activities or relaxation of standards that would allow environmental degradation are proposed or will come to pass, due to the modification of the 2006 Agreement or the recorded easements. No currently existing statutory protections are removed by the Project. Thus, the Project is an action that will maintain, enhance, and protect the environment and is therefore exempt under the Class 8 exemption. (State CEQA Guidelines, ) This ground is independently sufficient to exempt the entire Project from CEQA.

6 Page 6 of 7 Further, none of the exceptions to the Class 8 categorical exemption apply to the Project. (See State CEQA Guidelines, ) Specifically, the cumulative impact of successive projects of this same type in the same place over time would not produce a potentially significant impact. Successive projects would in contrast continue to preserve additional lands in perpetuity and restore, conserve, and enhance City property. Further, the Project will not result in damage to scenic resources within a scenic highway. The Project preserves open space and trail access in perpetuity, and no construction or alteration of any scenic resource will result from the Project. There are no known hazardous waste sites on the Project site, and the Project proposes no change in the significance of a historical resource. Therefore, none of the circumstances outlined in State CEQA Guidelines, section apply. Thus, the Class 8 categorical exemption outlined above remains applicable to the proposed Project. PRIOR CITY COUNCIL REVIEW: On July 3, 2006, the City Council approved the Special 4(d) Interim Habitat Loss Implementation Agreement with the SJD Partners, LTD. On October 7, 2014, the City Council approved the original preferred off-site habitat mitigation location. On May 5, 2015, the City Council approved the assignment of Special 4(d) Interim Habitat Loss Implementation Agreement to Pacific Point Development Partners LLC. COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: On August 26, 2014, the Mayoral Community Trail Sub-Committee reviewed the proposed Pacifica San Juan off-site Habitat Restoration location option and directed staff to present this option to the City Council. NOTIFICATION: Pursuant to Title 9, Land Use Code, Section (f), Notification Procedures, a public hearing notice has been mailed to all property owners within 1,000 feet as listed on the Orange County Real Property Tax Assessment rolls), a "Notice of Proposal" sign has been posted on-site, and the hearing notice has been published in the Capistrano Valley News at least ten (1 0) days prior to the hearing, and has been posted at three public locations. This agenda item has been provided to the applicant and their representative through posting of the agenda packet on the City's website. ATTACHMENT(S): Attachment 1 - Special 4(d) Interim Habitat Loss Implementation Agreement (2006 Agreement) Attachment 2- Off-site Restoration Area Map Attachment 3 - On-site Restoration Area Map

7 Page 7 of 7 Attachment 4 - Resolution and Exhibits Exhibit A- Amended Restated Special4(d) lmterim Habitat Loss Implementation Agreement Exhibit 8 - Surety Bond Exhibit C - Open Space Easement Exhibit D - Public Trail Easement Attachment 5- Resolution No Attachment 6 - Public Hearing Notice