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025-23 - Ordinance - Diaz Meadows Development Agreement EXHBIT AName and Mailing Address City of Port Orchard -Clerk's Office 216 Prospect Street Port Orchard, WA 98366 CITY OF PORT ORCHARD 202310200068 Agreement Reo Fee: $ 227,50 10/20/2023 11:10 AM Page: 1 of 25 Paul Andrews; Kitsap Co Auditor The Recorder is required to use only the information you provide on this cover sheet to index the document. Type or print legibly. Document Title(s). Development Agreement by and between the City of Port Orchard and Diaz Meadows LLC for water the developemnt water improvements, CFC credits, and relief from design standards. Auditor's File Number of Document (s) Referenced: Grantor(s) person(s) that conveys, sells or grants interest in property: City of Port Orchard Grantee(s) person that buys, receives or to whom conveyance of property is made: Diaz Meadows, LLC Abbreviated Legal Description: • Quarter, Quarter, Section, Township, Range (and Government lot # if applicable); OR • Plat/Condo Name, lot or unit number, building or block number; OR • Short Plat, Large Lot number, lot number and auditor file number Northwest quarter of the Northwest quarter, Section 3, Township 23 North, Range I East, W.M., in Kitsap County, Washington Assessor's 14 digit Tax Parcel Number: 032301-2-104-2006. 032301-2-105-2005, 032301-2-106-2004, 032301-2-042-2001, 032301-2-043-2000, 032301-2-044-2009, and 032301-2-102-2008 04/25/14 DEVELOPMENT AGREEMENT BY AND BETWEEN THE CITY OF PORT ORCHARD AND DIAZ MEADOWS, LLC FOR THE DEVELOPMENT WATER IMPROVEMENTS, CFC CREDITS, AND RELIEF FROM DESIGN STANDARDS THIS DEVELOPMENT AGREEMENT is made and entered into this 311 day of October 2023, by and between the City of Port Orchard, a non -charter, optional code Washington municipal corporation, hereinafter the "City," and Diaz Meadows, LLC, a Washington limited liability company, hereinafter the "Developer" (individually, a "Party" and collectively, the "Parties"). The Parties hereby agree as follows: RECITALS WHEREAS, the Washington State Legislature has authorized the execution of a development agreement between a local government and a person having ownership or control of real property within its jurisdiction (RCW 36.7013.170(l)); and WHEREAS, a development agreement must set forth the development standards and other provisions that shall apply to, govern, and vest the development, use and mitigation of the development of the real property for the duration specified in the agreement (RCW 36.7013.170(1)); and WHEREAS, a development agreement must be consistent with the applicable development regulations adopted by a local government planning under chapter 36.70A RCW (RCW 36.70B.170(1)); and WHEREAS, Port Orchard adopted Chapter 20.26 of the Port Orchard Municipal Code ("POMC" or "Code") which establishes the standards and procedures for Development Agreements in Port Orchard; and WHEREAS, Chapter 20.26 POMC is consistent with State law; and WHEREAS, the Developer has applied for a Development Agreement under Chapter 20.26 POMC on August 17, 2023 and such Agreement has been processed consistently with the POMC and State law; and WHEREAS, this Development Agreement by and between the City of Port Orchard and the Developer (hereinafter the "Development Agreement" or "Agreement'), relates primarily to the development of property owned by Developer at 1375, 1385, 1391, 1395, 1405, and 1415 Old Clifton Road, Washington (Kitsap County Tax Parcels 032301-2-044-2009, 032301-2-043-2000, 032301-2-042-2001, 032301-2-025-2002) (hereinafter, the "Property"); and WHEREAS, the Developer proposes to develop the Property with a multi -family development consisting of 96 multifamily units within five (5) buildings, required off-street vehicle parking, landscaping, outdoor amenity areas, and associated site improvements Development Agreement for Diaz Meadows Page 1 of 16 10685543.6 - 366922 - 0051 (collectively, the "Development Project' or City Permit Nos. No. 22-894, 22-895, 22-896, 22-897, and 22-898); and WHEREAS, the City is undertaking review of the Development Project pursuant to the POMC and has undertaken State Environmental Policy Act ("SEPA") review for the Development Proposal with the issuance of a Mitigated Determination of Non -significance issued on August 24, 2023 ("MDNS"). The MDNS for the Development Project was not timely appealed; and WHEREAS, the Developer proposes to construct at its expense, a portion of Capital Improvement Project #8 as shown in table 7-2 of the Port Orchard Comprehensive Plan; and WHEREAS, Project #8 as shown in Table 7-2 of the Comprehensive Plan is estimated to cost $1,325,000 and is shown as being 75% developer funded; and WHEREAS, the Developer proposes to build 27% of the total project watermain length but not build the planned project Pressure Reducing Valve (PRV) station; and WHEREAS, POMC 13.04.030 provides a framework for a Water Capital Facility Charge Credit when a developer constructs an eligible project at their expense; and WHEREAS, POMC 20.32.100 requires a minimum ground floor elevation of two feet for all "Apartment' building types within the first 20 feet of a lot when measured from the right of way line and this standard will be difficult to meet due to the site topography; and WHEREAS, the Parties agree that, as proposed, the Development Project provides an equal or better ground floor privacy for residents and aesthetic screening than could be provided with strict adherence to the Code, therefore, the City has agreed that Developer may depart from the requirements of POMC 20.32.100 in the following manner: no minimum ground floor elevation shall be applied; and WHEREAS, the Port Orchard Design standards at POMC 20.127.210(2) require at least one building entrance needs to be visible and directly accessible from the street for each building and where the buildings are setback from the street, pedestrian connections are required from the sidewalk; and WHEREAS, the Parties agree that, as proposed, the Development Project provides an equal or better design and access which will include two access walkways being added to the design near the leasing office and between Buildings 3 and 4 to give access to Old Clifton Road which is a more convenient connection for the residents; and WHEREAS, POMC 20.128.050(5) requires certain plant diversity be installed, POMC 20.128.070 requires a three-foot minimum height for planters or walls within landscape areas with a maximum height of five -feet, requires landscaping strips to be a minimum of five -feet wide, and allows landscaped screening of large walls to be integrated into the plan to screen walls that are more than five -feet tall; and Development Agreement for Diaz Meadows Page 2 of 16 10685543.6 - 366922 - 0051 WHEREAS, due to the site topography larger retaining walls are required and the Parties agree that, as proposed, the Development Project provides an equal or better configuration for landscaping and therefore a departure from strict compliance with this section is appropriate; and WHEREAS, except with regard to the water capital facility charge credit and the departures from POMC 20.32.100, 20.127.210(2), 20.128.050(5), and 20.128.070 as described herein, this Agreement does not establish or modify the standards or conditions for the underlying Development Project which is being undertaken in accordance with applicable code and regulations; and WHEREAS, in consideration of the benefits conferred by this new Agreement, which reflect the current plans of both the City and the Developer and include a water capital facility charge credit calculation, the Parties deem it in their best interests to enter into this Agreement; and WHEREAS, the City Council held a public hearing on October 10, 2023 regarding this Agreement; and WHEREAS, after a public hearing, by Ordinance No. 025-23, the City Council authorized the Mayor to sign this Agreement with the Developer. AGREEMENT Section 1. The Property. The Property comprises 1375, 1385, 1391, 1395, 1405, and 1415 Old Clifton Road, Washington (Kitsap County Tax Parcels 032301-2-044-2009, 032301-2-043- 2000, 032301-2-042-2001, 032301-2-025-2002). The Property is described on Exhibit A which is attached hereto and incorporated herein by this reference as if set forth in full. A map of the Property is shown Exhibit B on which is attached hereto and incorporated herein by this reference as if set forth in full. Section 2. Water Improvement Project. Developer shall construct a portion of the 580 to 390 Zone Transmission Main Project, which is designated as Project #8 within table 7-2 of the Port Orchard Comprehensive Plan as amended most recently by Ordinance 012-23 and is also sometimes referred to as the "Old Clifton Road 580-390 Intertie." For purposes of this Agreement, the 580 to 390 Transmission Main Project is defined herein as the "Water Improvement Project" and as further defined in Exhibit C. The Water Improvement Project shall be constructed in conformance with Exhibit D. The Water Improvement Project shall serve the Diaz Meadows Property, amongst other properties the 580 and 390 water pressure zones, and shall provide connectivity and capacity for the City. The City's Public Works Director has verified that the Water Improvement Project is eligible for Water CFC credits in accordance with POMC 13.04.030 as provided in Section 10 of this Agreement. The credits authorized by this Agreement are only applicable to pending Building Permit Applications No. 22-894, 22-895, 22-896, 22-897, and 22- 898 for the properties identified on Exhibit B. Section 3. Defluitions. As used in this Agreement, the following terms, phrases, and words Development Agreement for Diaz Meadows Page 3 of 16 10685543.6 - 366922 - 0051 shall have the meanings and be interpreted as set forth in this Section. a) "Adopting Ordinance" means the Ordinance which approves this Agreement, as required by RCW 36.70B.200 and Chapter 20.26 POMC. b) "Council" or "City Council" means the duly elected legislative body governing the City of Port Orchard. c) "Development Project" means the development of the Property with approximately 96 units of housing within 5 buildings, all required off-street vehicle parking, landscaping, outdoor amenity areas, and associated site improvements, as shown in Exhibit B and approved by the City under Permit PW22-054 and associated with Building Permit No. 22-894, 22-895, 22-896, 22-897, and 22-898. d) "Director" means the City's Public Works Director. e) "Effective Date" means the effective date of the Adopting Ordinance. f) "Maximum credit" means the maximum amount of water CFC credits to be provided by the City to the Developer for the Water Improvement Project. g) "Water Improvement Project" means the Water Improvement Project described above which serves both the Property and the greater community which partially completed by the developer. Section 4. Exhibits. Exhibits to this Agreement are as follows: a) Exhibit A — Legal Description of the Property. b) Exhibit B — Map of the Property and the Development Project and with permits listed in Section 2 identified. c) Exhibit C — Map of Water Improvement Project, including project components. d) Exhibit D — Standards for development of Water Improvement Project. e) Exhibit E — CFC Credit calculation estimation for this Development Project and Water Improvement Project. f) Exhibit F — Site Plan showing code departures as set forth in Section 12. Section 5. Parties to Development Agreement. The Parties to this Agreement are: a) The "City" is the City of Port Orchard, whose office is located at 216 Prospect Street, Port Orchard, WA 98366. Development Agreement for Diaz Meadows Page 4 of 16 10685543.6 - 366922 - 0051 b) The "Developer" is a private enterprise which owns the Property in fee, and whose principal office is located at 144 Brick Kiln Road, Fox Island WA 98333-9708. Section 6. Water Improvement Project Is a Private Undertaking. It is agreed among the Parties that the Water Improvement Project is a private improvement for which Water CFC credits are allowed pursuant to POMC 13.04.030 and that the City has no interest in the improvements until such time as the Water Project is completed, dedicated, and accepted by the City as provided in Section 9 of this Agreement. Section 7. Term of Agreement. This Agreement shall commence upon the Effective Date and shall continue in force for a period of five (5) years unless extended or terminated as provided herein. Following the expiration of the term or extension thereof, or if sooner terminated, this Agreement shall have no force and effect except for such sections which are specifically intended to survive expiration or termination. Section 8. Project Schedule. Subject to the City's issuance of all necessary permits and approvals, Developer will commence construction of the Water Improvement Project on the following schedule: a) Developer has already submitted applications for the required approvals to develop the Water Improvement Project. b) The City shall undertake good faith efforts to promptly review and make final determinations on all necessary permits and approvals for constriction of the Water Improvement Project ("Water Improvement Permits"), including but not limited to using the City's third -party reviewer to provide for prompt review. In the event that the City requires additional time beyond the 120-day window to review the Water Improvement Permits, or requests corrections of Developer, the timeline for Developer's obligation to constrict the Water Improvement Project is tolled until the date that the City makes its final determination on the Water Improvement Permits. c) Upon issuance of the Water Improvement Permits, the Developer shall commence constriction of the Water Improvement Project within 120 days and proceed in a timely and workmanlike fashion, provided however, the Developer shall be solely responsible for the means and methods for construction sequencing and phasing. d) Developer understands that in accordance with POMC 13.04.030(8)(f)(iv) that the City will not issue any certificates of occupancy for the Development Project prior to substantial completion of the Water Improvement Project. Furthermore, the Developer shall fully complete the Water Improvement Project in accordance with POMC 13.04.030(8)(f)(v) and Section 9 below prior to the issuance of any Certificates of Occupancy, or sixty (60) calendar days prior to the Termination of this Agreement, whichever date occurs first. Section 9. Water Improvement Project Standards. Development Agreement for Diaz Meadows Page 5 of 16 10685543.6 - 366922 - 0051 a) General. Developer will finance, design, and construct the Water Improvement Project to comply with City standards, including obtaining all necessary permits, not to be unreasonably withheld or conditioned by the City. The City will approve the plans before construction begins; and the City may accept responsibility for the operation of the Water Improvement Project in accordance with POMC 13.04.030 provided construction is completed, the Water Improvement Project has been accepted, any transfer property documents are completed, accepted, and recorded, and a two-year warranty and maintenance bond is in place, such acceptance not to be unreasonably conditioned, withheld or denied. The Project will be deemed completed when the requirements set forth in POMC 13.03.030(8)(f), have been completed. b) Water Improvement Project. The Water Improvement Project will include design, permitting, and construction, at Developer's sole expense of a new Water Main (Project #8, 580 to 390 Zone Transmission Project) that complies with the standards as set forth on Exhibits C and D which are attached hereto and incorporated herein by this reference as if set forth in full. Any and all work within the right of way shall fully satisfy the requirements in POMC Chapter 12.04 and the City's right of way use permit process. In accordance with RCW 35.91.020, the Water Improvement Project shall be constructed according to plans and specification approved by the City. In addition, POMC 13.04.030.12 requires the materials used to comply with the requirements of the City. c) Bond Required. The Water Improvement Project construction work shall be secured by a Performance Bond at 150% of the estimated construction costs. Construction of the Water Improvement Project shall be inspected by the City, approval not to be unreasonably withheld. In addition to the requirements in Section 9(a) above, the City's final approval of Water Improvement Project shall be conditioned upon receipt from Developer of three (3) copies of as- builts, a copy of the DWG files for the Water Improvement Project, and a two (2) year Maintenance Bond at 20% of the construction costs, which shall be effective upon the City's release of the Performance Bond. Upon acceptance of the Bill of Sale, the City shall release the Performance Bond and shall accept full responsibility for the Water Improvement Project, except for those maintenance obligations of Developer secured by the two-year Maintenance Bond. Upon City's acceptance of the Water Improvement Project, Developer shall not be responsible for any further costs, maintenance, or liability for the Water Improvement Project except as provided in the maintenance bond. This provision survives the Termination of this Agreement. Section 10. CFC Credits for Water Improvement Project. a) Maximum Credit. In accordance with POMC 13.04.030(8), there is a maximum amount of the Water CFC credit for the Water Improvement Project to be built by Developer. There are three methods for calculating the credit as defined in POMC 13.04.030(8). The lowest of these three calculations shall serve as the Maximum Credit Amount for improvements. The three calculation methods are set forth on Exhibit E, which is attached hereto and incorporated herein by this reference as if set forth in full. The three credit calculations are described as follows: 1. Water Capital Facility Charge Method. The Water Improvement Project was identified in the CFC rate study adopted by the City as a $1,325,000.00 project that is 75% funded by CFCs. The Developer is building twenty-seven percent (27%) of Development Agreement for Diaz Meadows Page 6 of 16 10685543.6 - 366922 - 0051 the total project watermain length and not constructing the PRV Station. The PRV Station is estimated at $1-25,000 which is removed from the total project costs prior to the calculation below. The Water Improvement Project is designed to be oversized to meet the needs of future growth. The percentage of the facilities to be used by the proposed Development Project is 25%, meaning that 75% of the added capacity will be for other customers. Therefore, under the Water Facility Fee method of (a) project cost of the project as defined in the Water CFC and reduced by 25% because the project is 75% CFC funded multiplied by (b) the percentage of the project being constructed by the developer (27%) by (c) the percentage of the project that is excess capacity of the Water Improvement Project (75%), the Developer would be credited $182,250 (($1,325,000 - $125,000) x .75 *.27 *.75). The Parties agree with the accuracy and methodology of the Water Capital Facility Charge method formula in Section 10(a)(1). 2. Certified Project Cost Method. The Certified Project Cost method is determined by (a) identifying the certified construction costs of the Water Improvement Project multiplied by (b) percentage of ERUs for excess capacity of the Water Improvement Project, which as defined above, was 75% of the added capacity. The Certified Project Cost method cannot be determined until the Parties certify the Water Improvement Project costs as provided in Section 10(d) of this Agreement. The Parties agree with the accuracy and methodology of the Certified Project Cost method formula in Section 10(a)(2). Total Water Capital Facility Charge owed by Developer Method. The Total Water Capital Facility Fee Method is determined by (a) identifying the current CFC at the time of the Agreement (currently $11,591) and multiplying by (b) number of ERUs for Developer needs of current Water Improvement Project. Based on the scope of the Development Project that is currently in development review, there are expected to be 5 new water connections serving 96 multifamily units and common areas. These connections are expected to use 25% of the Water Improvement Project capacity. Therefore, under the Total Water Capital Facility Charge Method, Developer would be required to pay a total of $1,112,736 in CFC charges. Because this total is higher than the Water Capital Facility Charge Method in Section 10(a)(1), this option is unlikely to be used unless the Water CFC rate is reduced significantly at the time that the building permits for the project are issued. The Parties agree with the accuracy and methodology of the Certified Project Cost method formula in Section 10(a)(3). The Code requires that the total CFC credit be the lowest of the three calculated methods as set forth above. Upon competition of the Certified Project Cost method as set forth in Section 10(d), the City shall confirm the potential CFC Credits for the Developer. The lowest of the three methodologies shall be the "Maximum Water CFC Credit' for the Developer, as authorized by Code. At this point, the Parties anticipate that the Water Capital Facility Charge Method will likely be the Maximum Water CFC Credit available to Developer, however, that is subject to confirmation and change based on the above stated methodology. Once the Maximum Water CFC Credit has been achieved through credits to Developer, Developer will be required to pay any Development Agreement for Diaz Meadows Page 7 of 16 10695543.6 - 366922 - 0051 CFCs that exceed the Maximum Water CFC Credit and will be required to comply with Chapter 13.04 POMC for any further development of the Property. b) Deferral of CFC for Development Project. It is expected that Developer would owe a total Water CFC payment of $1,112,736 to the City for the Development but would receive Maximum Water CFC Credit of $182,250 (or alternative lesser amount as calculated by Section 10(a)(2) and 10(d)). Thus, the remaining CFC balance which is anticipated to be due at the time of building permit issuance from the Developer to the City is $930,486. The Parties acknowledge that this amount could change if the CFC fees are increased prior to permit issuance. Exhibit E contains the estimated credit calculations for the CFC credit under the Code as applied to this Development Project. The City and Developer agree that these credits are consistent with RCW 82.02.060(4) and that they are consistent with POMC 13.04.030, c) Payment of CFC; deferral. Unless the CFC rate changes or the Development Project scope changes between approval of this Agreement and issuance of building permits, the Developer will not be required to pay the full CFCs prior to building permit issuance. The Developer shall pay the CFC charges as required as of the Effective Date of this Agreement, except as deferred herein. The amount of full CFC charge required may change if Developer changes the scope of the Development Project or if the timing of the building permits is such that the CFC is adjusted. The Parties anticipate that the Maximum Water CFC Credit for the Water Improvement Project as described in this Section and on Exhibit E will not cover more than $182,250 of the Water CFC charge amount. The City agrees to defer $182,250 of the Water CFC charge amount owing but will not issue certificates of occupancy until the certified projects costs are established and the maximum credit amount is confirmed as described in Section 10(d). If the maximum credit amount after establishing certified project costs is less than the deferred amount of $182,250, then the Developer shall pay the difference prior to being granted certificates of occupancy on the Project. d) Certification of Project Costs. Upon completion of the Water Improvement Project, Developer shall submit certified project costs to the City for review and acceptance by the City Engineer; provided however, City shall use its best efforts to review and reach a final determination within 30 calendar days of receipt, provided all information needed by the City to determine the correct certified costs is included in the submittal. Once these costs and the executed Bill of Sale are reviewed and accepted by the City Engineer, not to be unreasonably withheld, conditioned, or delayed, the Maximum Water CFC Credit due to Developer will be established and will equal the Maximum Water Project Credit as so certified in accordance with this Section 10. Certificates of occupancy for the final residential structure in the Development Project will be withheld by the City until the construction costs are certified and accepted by the City and any remaining Water CFC fee balance has been paid; provided, however, the City shall use best available efforts to review and certify the credits applicable to the CFC balance within 30 days of receipt. Section 11. Permitted Design Modiflcations. Development Agreement for Diaz Meadows Page 8 of 16 10685543.6 - 366922 - 0051 a) The Development Project is not subject to the minimum two -foot (2') ground floor elevation requirement that is set forth in POMC 20.32.100 as applicable to all "Apartment" building types, regardless of site topography or other design considerations. The Development Project provides equal or better ground floor privacy for residents and aesthetic screening than could be provided with strict adherence to the Code, therefore, the City has agreed that Developer may depart from the requirements of POMC 20.32.100 in the following manner: no minimum ground floor elevation shall be applied. b) The Development Project may depart from strict compliance with to Port Orchard Design standards at POMC 20.127.210(2) which require at least one building entrance be visible and directly accessible from the street for each building and which require that where buildings are setback from the street, pedestrian connections are required from the sidewalk. The Development Project provides an equal or better design and access which will include two access walkways being added to the design near the leasing office and between Buildings 3 and 4 to give access to Old Clifton Road which is a more convenient connection for the residents. A Site Plan showing the departures as described in this subsection is attached hereto as Exhibit F and incorporated herein by this reference as if set forth in full. c) The Development Project may depart from strict compliance with POMC 20.128.050(5) which requires certain plant diversity be installed, and POMC 20.128.070 which requires a three-foot minimum height for planters or walls within landscape areas with a maximum height of five -feet, requires landscaping strips to be a minimum of five -feet wide, and allows landscaped screening of large walls to be integrated into the plan to screen walls that are more than five -feet tall. Such departure is necessary due to the site topography which requires larger retaining walls. To make space available to meet parking requirements, large retaining walls up to 15-feet in height may be located along the northern property line along with a six-foot wall installed in a cut section along the southern property line. Adjacent properties on the north and south sides of the property are undeveloped with no access agreements from the property owners. In order to creatively screen the north wall for the neighbors without having to access their site, the Development Project by install a variety of native vines that will be planted at the top of the wall at the northernmost edge to make a primarily green wall which will be filled in within a three -to - five -year period. The wall will be screened per code but will be done from the top rather than the bottom of the retaining wall. This will ensure that there is no encroachment of either plants or maintenance access on the neighbor's property to the north. Additionally, diverse screening plantings per POMC 20.128.070 and POMC 20.128.050(5) along with a four -foot -high wrought iron fence shall be included in the planting area on top of the wall. This will provide a dense and varied, mostly native, screening of the site and from the site toward neighbors to the north. The southern property line is ten feet from the back of Building No.I and the Leasing Office, up to six feet below the adjacent property elevation. This area for all practical purposes is blocked from the adjacent undeveloped property and proposed parking lot area. The Development Project shall meet, as close as feasible, the Type B landscape requirements near the dog park area and along the patio/playground area near the Leasing Office. These are visual areas that will benefit the project and provide screening from the adjacent property. As proposed, the landscaping departures for the Development Project provides an equal or better configuration for landscaping and therefore a departure from strict compliance with these sections is appropriate. A Site Plan showing the departures as described in this subsection is attached hereto as Exhibit F and incorporated herein Development Agreement for Diaz Meadows Page 9 of 16 10685543.6 - 366922 - 0051 by this reference as if set forth in full. Section 12. Default. a) Subject to extensions of time by mutual consent in writing, failure, or delay by either Party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the Party alleging such default or breach shall give the other Party not less than thirty (30) days' notice in writing, specifying the nature of the alleged default and the manner in which said default may be cured. During this thirty (30) day period, the Party charged shall not be considered in default for purposes of termination or institution of legal proceedings. b) After notice and expiration of the thirty (30) day period, if such default has not been cured or is not being diligently cured in the manner set forth in the notice, the other Party to this Agreement may, at its option, institute legal proceedings pursuant to this Agreement. In addition, the City may decide to file an action to enforce the City's Codes, and to obtain penalties and costs as provided in the POMC for violations of this Agreement and the Code. Section 13. Termination. This Agreement shall terminate five (5) years after Effective Date. Upon termination and upon the request of the Developer, the City shall record a notice of such termination in a form satisfactory to the Parties that the Agreement has been terminated. Section 14. Extension and Modification. Any request for extension or modification, if allowed under the City's code, shall be subject to the provisions contained in POMC Chapter 20.26 POMC. Section 15. Effect upon Termination on Developer. Termination of this Agreement as to the Developer shall not affect any of the Developer's respective obligations to comply with the City Comprehensive Plan and the terms and conditions or any applicable zoning code(s) or other land use entitlements approved with respect to the Property, or obligations to pay assessments, liens, fees, or taxes. Furthermore, if the Agreement expires without the Water Improvement Project costs being fully recovered by impact fee credit or mitigation funds, the Developer will no longer be eligible to receive such credits. Section 16. Effects upon Termination on City. Upon any termination of this Agreement as to the Property, or any portion thereof, the City will be under no obligation to provide any additional credits or reimbursement to Developer even if the Water Improvement Project costs have not been fully recovered at the time of expiration or termination. Section 17. Assignment and Assumption. The Developer shall have the right to sell, assign or transfer this Agreement with all rights, title, and interests therein to any person, firm, or corporation at any time during the term of this Agreement with a sale of the underlying property. Developer shall provide the City with written notice of any intent to sell, assign, or transfer all or a portion of the Property, at least 30 calendar days in advance of such action; provided; however, failure to strictly comply with the 30-calendar day notice provision shall not be considered a breach Development Agreement for Diaz Meadows Page 10 of 16 10685543.6 - 366922 - 0051 k of this Agreement. Section 18. Binding on Successors; Covenants Running with the Land. The conditions and covenants set forth in this Agreement and incorporated herein by the Exhibits shall run with the land and the benefits and burdens shall bind and inure to the benefit of the Parties. The Developer and every purchaser, assignee or transferee of an interest in the Property, or any portion thereof, shall be obligated and bound by the terms and conditions of this Agreement, and shall be the beneficiary thereof and a Party thereto, but only with respect to the Property, or such portion thereof, sold, assigned or transferred to it. Any such purchaser, assignee or transferee shall observe and fully perform all of the duties and obligations of the Developer contained in this Agreement, as such duties and obligations pertain to the portion of the Property sold, assigned, or transferred to it. Section 19. Amendment to Agreement; Effect of Agreement on Future Actions. No waiver, alteration, or modification to any of the provisions of this Agreement shall be binding unless in writing, signed by the duly authorized representatives of the Parties, be consistent with Chapter 20.26 POMC, and, where considered substantive as determined by the Director, follow the same procedures set forth in Chapter 20.26 POMC. Nothing in this Agreement shall prevent the City Council from making any amendment to its Comprehensive Plan, Zoning Code, Official Zoning Map or development regulations after the Effective Date of this Agreement. Section 20. General release. Developer may free itself from further obligations relating to the sold, assigned, or transferred property, provided that the buyer, assignee, or transferee expressly assumes the obligations under this Agreement as provided herein. Section 21. Notices. Notices, demands, correspondence to the City and/or Developer (as applicable) shall be sufficiently given if dispatched by pre -paid first-class mail to the addresses of the Parties as designated in "Written Notice" Section 33 below. Notice to the City shall be to the attention of both the City Clerk and the City Attorney. Notices to successors -in -interest of the Developer shall be required to be given by the City only for those successors -in -interest who have given the City written notice of their address for such notice. The parties hereto may, from time to time, advise the other of new addresses for such notices, demands or correspondence. Section 22. Reimbursement for Agreement Expenses of the City. Developer agrees to reimburse the City for actual expenses incurred over and above fees paid by Developer as an applicant incurred by City directly relating to this Agreement, including recording fees, publishing fees, attorneys' fees, and reasonable staff and consultant costs not otherwise included within application fees; provided however, the City shall provide written notice to Developer if the expenses to the City are anticipated to exceed Twenty -Five Thousand Dollars and No Cents ($25,000.00) and the Parties shall meet and confer regarding the City's anticipated costs. Upon payment of all expenses, the Developer may request written acknowledgement of all fees. Such payment of all fees shall be remitted to the City, at the latest, within thirty (30) days from the City's presentation of a written statement of charges to the Developer. Development Agreement for Diaz Meadows Page l 1 of 16 10685543.6 - 366922 - 0051 Section 23. Applicable Law, Resolution of Disputes, and Attorneys' Fees. It is the Parties' intent to work cooperatively and to resolve disputes in an efficient and cost-effective manner. All disputes arising out of or relating to this Agreement shall be resolved as follows: a) Settlement Meetinl'. If any dispute arises between the Parties relating to this Agreement, then the Parties shall meet and seek to resolve the dispute, in good faith, within ten (10) working days after a Parry's request for such a meeting. The City shall send the Mayor, Community Development Director, Public Works Director, and/or the Mayor's designee and any persons with information relating to the dispute, and Developer shall send an owner's representative and any consultant or other person with technical information or expertise related to the dispute. b) Court. If the Parties cannot resolve the matter in a settlement meeting, then jurisdiction of any resulting litigation shall be filed in Kitsap County Superior Court, Kitsap County, Washington, or the U.S. District Court for Western Washington, as applicable. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. The non -prevailing Party in any action brought to enforce this Agreement shall pay the other Parties' expenses and reasonable attorney's fees. Section 24. No Third -Party Beneficiaries. Except as otherwise provided herein, this Agreement shall not create any rights enforceable by any party who is not a Party to this Agreement. Section try. City's right to breach. The Parties agree that the City may, without incurring any liability, engage in action that would otherwise be a breach if the City makes a determination on the record that the action is necessary to avoid a serious threat to public health and safety, or if the action is required by federal or state law. Section 26. Developer's Compliance. The City's duties under the Agreement are expressly conditioned upon the Developer's substantial compliance with each and every term, condition, provision, and/or covenant in this Agreement, including all applicable federal, state, and local laws and regulations and the Developer's obligations as identified in any approval or project permit for the property identified in this Agreement. Section 27. Limitation on City's Liability for Breach. Any breach of this Agreement by the City shall give right only to damages under state contract law and shall not give rise to any liability under Chapter 64.40 RCW, the Fifth and Fourteenth Amendments to the U.S. Constitution, including but not limited to 42 U.S.C. § 1983, or similar state constitutional provisions. Section 28. Third Party Legal Challenge. In the event any legal action or special proceeding is commenced by any person or entity other than a Party to challenge this Agreement or any provision herein, the City may elect to tender the defense of such lawsuit or individual claims in the lawsuit to Developer. In such event, Developer shall hold the City harmless from and defend the City from all costs and expenses incurred in the defense of such lawsuit or individual claims in the lawsuit, including but not limited to, attorneys' fees and expenses of litigation. The Developer shall not settle any lawsuit without the consent of the City. The City shall act in good Development Agreement for Diaz Meadows Page 12 of 16 10685543.6 - 366922 - 0051 faith and shall not unreasonably withhold consent to settle. Section 29. Specific Performance. The Parties specifically agree that damages are not an adequate remedy for breach of this Agreement, and that the Parties are entitled to compel specific performance of all material terms of this Agreement by any Party in default hereof. Section 30. Recording. This Agreement shall be recorded against the Property with the real property records of the Kitsap County Auditor. During the term of the Agreement, it is binding upon the owners of the property and any successors in interest to such property. Section 31. Severability. This Agreement does not violate any federal or state statute, rule, regulation or common law known; but any provision which is found to be invalid or in violation of any statute, rule, regulation or common law shall be considered null and void, with the remaining provisions in the Agreement remaining viable and in effect. Section 32. Non -Waiver of Breach. The failure of a Party to insist upon strict performance of any of the covenants and agreements contained herein, or to exercise any option herein conferred in one or more instances shall not be construed to be a waiver or relinquishment of said covenants, agreements, or options, and the same shall be and remain in full force and effect. Section 33. Written Notice. All written communications regarding enforcement or alleged breach of this Agreement shall be sent to the parties at the addresses listed below, unless notified to the contrary. Unless otherwise specified, any written notice hereunder shall become effective upon the date of both emailing and mailing by registered or certified mail, and shall be deemed sufficiently given if sent to the addressee at the address stated below: NAME OF DEVELOPER: Diaz Meadows, LLC Attn. Michael A. Diaz 144 Brick Kiln Road Fox Island WA 98333-9708 Email: mdiaz@windermere.com CITY: Mayor City of Port Orchard 216 Prospect Street Port Orchard WA 98366 rputaansuu@portorchardwa.gov Copies shall also be transmitted to the City Clerk and City Attorney at the above address. Section 34. Time is of the essence. All time limits set forth herein are of the essence. The Parties agree to perform all obligations under this Agreement with due diligence. Section 35. Covenant of Good Faith and Cooperation. The Parties agree to take further actions and execute further documents, either jointly or within their respective power and authority, to implement the intent of this Agreement. Each Party covenants to use its best efforts and work cooperatively in order to secure the benefits and rights under this Agreement. The Parties shall not unreasonably withhold approvals or consents provided for in this Agreement. Each Party shall execute and deliver to the other all fiuher documents as are reasonably necessary to carry Development Agreement for Diaz Meadows Page 13 of 16 10685543.6 - 366922 - 0051 out this Agreement, including the Water Improvement Project, the property dedications (if any), and Development Project, as may be necessary to provide a Party with a full and complete enjoyment of its rights and privileges under this Agreement. Section 36. Interpretation. This Agreement has been reviewed and revised by legal counsel for both Parties, and no presumption or rule construing ambiguity against the drafter of the document shall apply to the interpretation or enforcement of this Agreement. Section 37. Counterparts. The Agreement may be signed in two or more counterpart copies with the same effect as if the signature of each counterpart copy were on a single instrument. Each counterparty shall be deemed as an original as to the Party whose signature it bears, and all such counterparts shall constitute one document. Section 38. Entire Agreement. The written provisions and terms of this Agreement, together with the Exhibits attached hereto, shall supersede all prior verbal statements of any officer or other representative of the Parties, and such statements shall not be effective or be construed as entering into or forming a part of or altering in any manner whatsoever, this Agreement. The entire agreement between the Parties with respect to the subject matter hereunder is contained in this Agreement and exhibits thereto. IN WITNESS WHEREOF, the Parties have executed this Agreement on thisi day of 0 C 6W .2023. DIAZ MEADOWS, LLC By: Mic 1 A. Diaz Its: APPROVED AS TO FORM: Jacob Potak Attorney for Developer EXHIBITS TO AGREEMENT: Development Agreement for Diaz Meadows Page 14 of 16 10685543.6 - 366922 - 0051 CIT OF PORT ORCHARD Ru• Rob Putaansuu Its: Mayor APPROVED AS TO FORM: Jennifer S. Robertson Attorney for Port Orchard ATTEST: Brandy Wallace CMC Port Orchard City Clerk out this Agreement, including the Water Improvement Project, the property dedications (if any), and Development Project, as may be necessary to provide a Party with a frill and complete enjoyment of its rights and privileges under this Agreement. Section 36. Interpretation. This Agreement has been reviewed and revised by legal counsel for both Parties, and no presumption or rule construing ambiguity against the drafter of the document shall apply to the interpretation or enforcement of this Agreement. Section 37, Counterparts. The Agreement may be signed in two or more counterpart copies with the same effect as if the signature of each counterpart copy were on a single instrument. Each counterparty shall be deemed as an original as to the Party whose signature it bears, and all such counterparts shall constitute one document. Section 38. Entire Agreement. The written provisions and terms of this Agreement, together with the Exhibits attached hereto, shall supersede all prior verbal statements of any officer or other representative of the Parties, and such statements shall not be effective or be construed as entering into or forming a part of or altering in any manner whatsoever, this Agreement. The entire agreement between the Parties with respect to the subject matter hereunder is contained in this Agreement and exhibits thereto. IN WITNESS WHEREOF. the Parties have executed this Agreement on thisl3 day of 0C4.v- .2023. DIAZ MEADOWS, LLC By: M is 1 A. Diaz Its: APPROVED AS TO FORM: Jacob Potak Attorney for Developer EXHIBITS TO AGREEMENT: Development Agreement for Diaz Meadows Page 14 of 16 10685543.6 - 366922 - 0051 CI1' OF PORT ORCHARD By: Rob Putaansuu Its: Mayor APPROVED AS TO FORM: DocuSigned by: a. kkRAk"4k, Jennifer S. Robertson Attorney for Port Orchard ATTEST: Brand"Wa/ MC Port Orchard City Clerk Exhibit A — Legal Description of the Property being developed by Developer Exhibit B — Map of the Property and the Development Project and with permits listed in Section 2 identified Exhibit C — Map of Water Improvement Project, including project components. Exhibit D — Standards for development of Water Improvement Project. Exhibit E — CFC Credit calculation estimation for this Development Project and Water Improvement Project. Exhibit F -- Site Plan showing Section 12 departures. Development Agreement for Diaz Meadows Page 15 of 16 10685543.6 - 366922 - 0051 NOTARY BLOCK FOR PORT ORCHARD STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that Robert Putaansuu is the person who appeared before me, and said person acknowledged that he signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Mayor of Port Orchard to be the free and voluntary act of such Party for the uses and purposes mentioned in the instrument. Dated: f 3 _. 2021 L /t C t (print or type name) NOTARY PUBLIC in and for the Statue fo-Washi igtou residing at: My Commission expires: C,22 Z1 - Development Agreement for Diaz Meadows Page 16 of 16 10685543.6 - 366922 - 0051 NOTARY BLOCK FOR DIAZ MEADOWS, LLC STATE OF WASE NGTON ) ) ss. COUNTY OF ?k* -Q Cie-, ) I certify that I know or have satisfactory evidence that Michael A. Diaz is the person who appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Managing Member of Diaz Meadows, LLC, a Washington limited liability company to be the free and voluntary act of such Party for the uses and purposes mentioned in the instrument. Dated: Woktr + J .2023. .•ro S�,SDY RV +�''••• a '� S ♦' NOTARY N PUBLIC c� .......... *' '••., WASH 0 ••r+Ni uni", Development Agreement for Diaz Meadows Page 17 of 16 10685543.6 - 366922 - 0051 Savdu Ru 1 z (print or type name) NOTARY PUBLIC in and for the State of Washington, residing at:_ (I IC' 4a✓ boy - My Commission expires: I CYl EXHIBIT "A" Legal Description For APN/Parcel ID(s): 032301-2-104-2006, 032301-2-105-2005, 032301-2-106-2004, 032301-2-042-2001, 032301-2-043-2000, 032301-2-044-2009 and 032301-2-102-2008 Resultant Lots 2, 3 and 4 of Declaration of Partition recorded under Auditor's File No. 202301300063, in Volume 97 of Surveys, Pages 146 and 147, records of Kitsap County, Washington, being a portion of the Northwest quarter of the Northwest quarter, Section 3, Township 23 North, Range 1 East, W.M., in Kitsap County, Washington. Exhibit B — Map of the Property and the Development Project and with permits listed in Section 2 identified. The Map of the Property and the Development Project and with permits listed in Section 2 identified, are on file with the City of Port Orchard Department of Community Development in File# PW22-054. Exhibit C — Map of Water Improvement Project, including project components. The Map of Water Improvement Project, including project components, is on file with the City of Port Orchard Department of Community Development in Capital Facilities Plan - Water System Update. Exhibit I] — Public Works Engineering Standards and Specifications The City of Port Orchard Engineering Standards and Specifications are on file with the City of Port Orchard City Clerk. Development Agreement for Diaz Meadows Exhibit D Exhibit E — CFC Credit calculation estimation for this Development Project and Water Improvement Proiect. Water Capital Facility Charge Method. The Water Improvement Project was identified in the CFC rate study adopted by the City as a $1,325,000.00 project that is 75% funded by CFCs. The Developer is building twenty-seven percent (27%) of the total project watermain length and not constructing the PRV Station. The PRV Station is estimated at $125,000 which is removed from the total project costs prior to the calculation below. The Water Improvement Project is designed to be oversized to meet the needs of future growth. The percentage of the facilities to be used by the proposed Development Project is 25%, meaning that 75% of the added capacity will be for other customers. Therefore, under the Water Facility Fee method of (a) project cost of the project as defined in the Water CFC and reduced by 25% because the project is 75% CFC funded multiplied by (b) the percentage of the project being constructed by the developer (27%) by (c) the percentage of the project that is excess capacity of the Water Improvement Project (75%), the Developer would be credited $182,250 (($1,325,000 - $125,000) x .75 *.27 *.75). The Parties agree with the accuracy and methodology of the Water Capital Facility Charge method formula in Section 10(a)(1). 2. Certified Project Cost Method. The Certified Project Cost method is determined by (a) identifying the certified construction costs of the Water Improvement Project multiplied by (b) percentage of ERUs for excess capacity of the Water Improvement Project, which as defined above, was 75% of the added capacity. The Certified Project Cost method cannot be determined until the Parties certify the Water Improvement Project costs as provided in Section 10(d) of this Agreement. The Parties agree with the accuracy and methodology of the Certified Project Cost method formula in Section 10(a)(2). 3. Total Water Capital Facility Charge owed by Developer Method. The Total Water Capital Facility Fee Method is determined by (a) identifying the current CFC at the time of the Agreement (currently $11,591) and multiplying by (b) number of ERUs for Developer needs of current Water Improvement Project. Based on the scope of the Development Project that is currently in development review, there are expected to be 5 new water connections serving 96 multifamily units and common areas. These connections are expected to use 25% of the Water Improvement Project capacity. Therefore, under the Total Water Capital Facility Charge Method, Developer would be required to pay a total of $1,112,736 in CFC charges. Because this total is higher than the Water Capital Facility Charge Method in Section 10(a)(1), this option is unlikely to be used unless the Water CFC rate is reduced significantly at the time that the building permits for the project are issued. The Parties agree with the accuracy and methodology of the Certified Project Cost method formula in Section 10(a)(3). Development Agreement for Diaz Meadows Exhibit E Exhibit F — Site Plan showing code departures as set forth in Section 12. The Site Plan showing code departures as set forth in Section 12, is on file with the City of Port Orchard Department of Community Development in File# PW22-054.