Letter - McLain - 1981-01-21 ROY E. JUNE, INC.
A LAW CORPORATION
51 JUNE CI ENS BANK OF COSTA MESA LDING NE
301 EAST 17T ST SU 201 17141 642-8210
POST ICE BOX 10395
COSTA MESA. CALIFORNIA 92627
January 21, 1981
Directors
Costa Mesa Sanitary District
In re Sewer Service contract
Gentlemen
This letter is intended as a report to the Board on negotia-
tions that have taken place with various developers and land-
owners being required to enter into the service agreement
with the District
1 McLain Developments The standard agreement developed `by
the District was modified to the extent that the Homeowners
Association for the 250-unit condominium would be responsible
for collection of fees from the individual units and was
further modified to require that individual purchasers of
condominium units would not be required to sign a separate
agreement with the District McLain Development has accepted
the $15 00 per 30-plumbing unit charge and a signed copy of
the agreement is in the District files
2 Irvine Company. Your Manager and Attorney met with Attor-
ney Andrew C Schutz and attorneys for the firm of Dempsey &
Nabholz , lessees of the Irvine Company on January 14 , 1981
Schutz ' s letter of November 24 , 1980 posing various objections
to the agreement was considered in detail and after appropriate
explanations were made, only a minor adjustment in the language
of the agreement was made which would provide that at the
enforcement of lien against unpaid service charges would be
on offending lots only and not only on other lots of the parcel
map which were paid current Other than this minor adjustment,
the Irvine Company agreed to all the balance of the terms of
the agreement and copies were forwarded to them for their signa-
ture and return to the Manager' s office for execution by the
Board
3 Two Town Center (Segerstrom) . Your Manager and Attorney
met with Attorney William Reavey of the firm of Latham &
Watkins who represent Two Town Center and the Segerstrom Family,
Directors , CMSD
1/21/81
Page 2
this meeting having taken place January 12 1981 Also present
was Kristin E Keaton, Associate Investment Manager for Pru-
dential Insurance Company of America Two Town Center is
Two Town Center Associates, a joint venture of Anton Street
Associates , a California general partnership, and Prudential
Insurance Company of America, a New Jersey corporation Anton
Street Associates is the Segerstrom entity The applicants
had two requests--first being that the District commit itself
in the agreement to an outside date for beginning of an assess-
ment district and secondly, inasmuch as the document was to
be recorded, that some provision be made in the contract for
a notice of termination of the agreement at the time the assess-
ment district was formed These items were discussed at the
meeting Subsequent to that time, in a letter of request, was
suggested language The applicant added a third request which
was a request that upon sale, the applicant be relieved of all
responsibility under the agreement The request with respect
to recording of the agreement is reasonable and some language
indicating that a release will be recorded when the assessment
district is formed should probably be added to the terms of
the agreement approved by the Board The release of the appli-
cant upon sale of the property should only be considered pro-
viding the financial stability of the new purchaser be approved
by the Board, that the original applicant be current in all pay-
ment and that the new purchaser execute an agreement binding
itself to make the necessary payments for liquid waste disposal
services The Staff cannot recommend that the Board commit
itself to an exact date for the starting of an assessment dis-
trict considering the taxpayer revolt that occurred immediately
after the enactment of Proposition 13 when Sanitation District
6 and 7 attempted to form an assessment district and was virtually
shouted down at its Fountain Valley meeting In addition, it
appears that there are some plans of either Sanitation 6 or 7
to undertake an assessment district and this could be an oppor-
tune time for the Sanitary District to follow along or to form
their district concurrently Any commitment in the contract
for the starting of an assessment district may act to the dis-
advantage of the District for this reason
4 Automobile Club of Southern California. Your District Manager
and Attorney met with Randy Olson, Director of Facilities-Planning
and Real Estate-for the Automobile Club of Southern California,
and Marlene F Gilbert , Associate Counsel for the Automobile
Club The contents of a letter of January 15 , 1981 submitted
by the Automobile Club of Southern California was discussed
and eliminated immediately was the objection to the cost price
index factor when it was pointed out that the increase, if any,
would be based upon budget calculations The second request
of the applicant was for a certain termination date and comments
Directors CMSC
1/21/81
Page 3
made in connection with this same application by Two Town Center
should be considered here Again, the applicant asked for a
release in the event of the sale of the property and the comments
made in connection with this same request for Two Town Center
should be considered at this point Their next request was for
a certain modification of the indemnity clause which was required
by their liability insurance carrier and the language is found
in paragraph. XIV on page 10, line 6 , and the request was to
eliminate reason of loss of use of and to eliminate in line 7
including consequential damages of any nature Inasmuch as
the improvements have been completed on site, it appears that
District liability has been reduced to almost nil and based upon
the Auto Club' s representation with respect to the extent of
their liability insurance coverage, it is reasonable that these
clauses be stricken in the agreement It is not recommended
that the agreement be totally revised at this point but that it
is sufficient with Board approval that these items be stricken
out of that paragraph by interlineation and initialing The
last request of the Automobile Club of Southern California was
that the language with respect to insurance , beginning on the
bottom of page 10 and concluding the paragraph XIV on the top
of page 11 be eliminated it is not recommended that this re-
quest be granted and the Auto Club Attorney was so advised The
Auto Club hopes to tie into this sewer facility sometime between
the February and March meeting and they expressed the hope that
the Board would make a decision with respect to their agreement
at the February meeting
Very truly yours ,
ROY E JUNE, INC
By
R E Jun Attorney at Law
REJ ljb
Cc Bruce Mattern