08 Attachment 2 - North 40 In Lieu Traffic Fee Credit Agreement
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NORTH 40 IN LIEU TRAFFIC FEE CREDIT AGREEMENT
This North 40 In Lieu Traffic Fee Credit Agreement (“Agreement”) is entered into effective
this ___ day of August, 2020, by and between the Town of Los Gatos, a California General Law City
(“Town”) and SummerHill N40 LLC, a California limited liability company (“SummerHill”), each a
“Party” and collectively “Parties,” with respect to the following facts and circumstances:
WHEREAS, in 2017, the Town approved Phase 1 of the North 40 project (“Project”) to be
developed on part of the property known as the North 40 site, bounded generally by California State
Route 17 to the west, Lark Avenue to the south, California State Route 85 to the north and Los Gatos
Boulevard to the east. SummerHill is the developer of the Project; and
WHEREAS, the Town by Resolution 2014-59 adopted a Traffic Impact Policy (the “Policy”).
Under the Policy, developments such as the Project must pay Traffic Impact Mitigation Fees based
upon trip generation of the development. The Policy contains a Traffic Improvements Project List,
which identifies traffic improvement for which a developer that installs such improvements is granted
a credit against its Traffic Impact Mitigation Fees; and
WHEREAS, per the conditions of approval of Architecture and Site Application S-13-090 for
the Project, the Project's Traffic Impact Mitigation Fee shall be paid before issuance of a building
permit.
WHEREAS, SummerHill N40 LLC is ready to pull building permits for Lots 1-22, 24-27, and
30-39 of Tract 10441 recorded on October 11, 2018 that will result in the generation of 2,338 average
daily trips resulting in a Traffic Impact Mitigation Fee obligation (the "Phase 1 Traffic Fees") of Two
Million One Hundred Seventy–Four Thousand and Seventy-Five Dollars ($2,174,075);
WHEREAS, the Project is required by its conditions of approval to construct four
improvements that are on the Traffic Improvements Project List: (1) Westbound Lark to Hwy 17
northbound ramps, (2) Lark/Los Gatos Intersection Improvements, (3) Complete street Improvements
– Lark from Garden Hill to Los Gatos, and (4) Local Bikeway Improvements (collectively, the “Phase
1 Traffic Improvements”); and
WHEREAS, the Town and SummerHill have worked together to refine the exact scope of the
Phase 1 Traffic Improvements. Pursuant to such agreed-upon scope, SummerHill has caused its
contractor DeSilva Gates to prepare a detailed estimate of the cost of each of these Phase 1 Traffic
Improvements based on actual bids. These estimates (the “Current Estimates”) are memorialized in
SummerHill’s letter of February 20, 2020 to the Town. The two-page letter (including the eight-page
attachment from DeSilva Gates) is attached hereto as Exhibit “A” and incorporated herein by this
reference; and
WHEREAS, the Town and SummerHill agree that SummerHill shall have credits applied to
the Traffic Impact Mitigation Fee that it pays to the Town in order to obtain building permits for the
Project in amounts based upon the Current Estimates, with adjustments detailed below.
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NOW THEREFORE, in consideration of the foregoing recitals and the conditions and covenants
contained herein, the parties hereto agree as follows
1) Traffic Improvements. The amount of credits that shall be applied against the Phase 1
Traffic Fees to determine the amount of such fees that Summerhill must pay to obtain building permits
shall be based upon the Current Estimates. For each of the four Phase 1 Traffic Improvements listed
above, the applicable amount of the Current Estimates for each improvement shall be as listed below:
a) Westbound Lark to Hwy 17 northbound ramps: Construction total of $1,268,000 plus
12% for both soft costs and contingencies, for a total of $1,572,320.
b) Lark/Los Gatos Intersection Improvements: Construction total of $769,000 plus 12% for
both soft costs and contingencies, for a total of $953,560.
c) Complete street Improvements – Lark from Garden Hill to Los Gatos: Construction total
of $213,000 plus 12% for both soft costs and contingencies, for a total of $264,120.
d) Local Bikeway Improvements: No credit requested.
2) Initial Amount of Credits. The total credit based upon paragraph 1 above shall be in the
amount of $2,790,000 (the "Baseline Costs"), which includes the construction costs, soft costs and
contingencies. Subtracting the Phase 1 Traffic fees from the Baseline Costs leaves a potential credit
amount for future reimbursement to SummerHill (the “Baseline Credit”) of Six Hundred Fifteen
Thousand Nine Hundred and Twenty-Five Dollars ($615,925). Thus, the parties agree that
SummerHill’s obligation to pay Traffic Impact Mitigation Fees to obtain building permits for the
Project shall be satisfied by the completion of the Phase I Traffic Improvements.
3) Adjustment of Credits. Should significant changes to the scope of work occur due to
unforeseen circumstances, adjustments to the credits may be granted by the Town up to a total of ten
percent. This adjustment is not intended to address minor variation in quantities, labor, or other
construction costs. Following completion of the Phase 1 Traffic Improvements, SummerHill may elect
to provide to the Town a summary of expenses reasonably supported by invoices from their general
contractor, subcontractors, and soft cost vendors in the event that the actual costs of completing the
Phase 1 Traffic Improvements (the “Actual Costs”) have exceeded the Baseline Costs. The Town may
reasonably audit these numbers at its own expense, with any such audit to be completed within sixty
(60) days of submission of the supporting documentation. If the Actual Costs as finally agreed upon
by the Parties exceed the Baseline Costs, then the Baseline Credit shall be increased by the difference
between the Actual Costs and the Baseline Costs. The increased amount, together with the original
amount of the Baseline Credit, shall be deemed to be the "Adjusted Credit." If an Adjusted Credit has
not been computed pursuant to this paragraph, then the Adjusted Credit as used in paragraph 4 herein
shall be deemed to be the Baseline Credit.
4) Reimbursement From Other Development That is a Part of Tentative Map M-13-014. Each
time that one or more building permits are ready for release by the Town for any or all lots 23, 28, 29
of Tract 10441 or APN 424-07-036 and 037, the Traffic Impact Mitigation Fee for each such lot shall
be calculated per the impact fee policy in effect at the time and paid by the building permit applicant.
If the Adjusted Credit is a positive number, then such amount of such fees will be paid by the Town as
a reimbursement to SummerHill N40 LLC within thirty (30) days of receipt thereof. Each time a
payment is made to SummerHill pursuant to this paragraph 4, the Adjusted Credit shall be reduced by
such payment. This obligation shall cease once the Adjusted Credit reaches zero or the original
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building permits as identified in this section have been issued. This section shall be in effect for a
period of five years.
5) No Reimbursement. No reimbursement for the Phase 1 Traffic Improvement from future
projects that are not a part of Tentative Map M-13-014 shall be paid to SummerHill.
6) Dispute Resolution. Any dispute under this agreement, including with regard to the payment
amounts to be paid pursuant to paragraph 3 hereunder shall first be negotiated by the Parties. If
negotiation fails, either Party may demand binding arbitration, which shall be conducted under the
auspices of the Judicial Arbitration and Mediation Service (JAMS). Each party shall bear its own costs
and attorneys’ fees in the arbitration, regardless of the outcome thereof.
7) Good Faith Cooperation. The Parties shall cooperate and use their good faith efforts to
expedite the issuance of any necessary permits or permissions from the Town or from third parties for
the construction of the Phase 1 Traffic Improvements. The Parties to this Agreement agree to execute
any and all documents reasonably necessary to effectuate the terms, conditions, purposes, and aims of
this Agreement.
8) Integrated Agreement. This Agreement, together with the exhibit attached hereto, shall be
deemed the complete and total agreement of the parties concerning the subject matter hereof, which
supersedes memoranda or correspondence, if any, and any previous drafts or oral understandings, if
any, made by the parties concerning the subject matter hereof. Nothing herein shall preclude the
parties from executing such other documents as are necessary to perfect this Agreement.
9) No Third-Party Beneficiaries. This Agreement is intended exclusively for the benefit of the
Parties hereto, and no third parties are entitled to any rights hereunder or to claim to be beneficiaries
hereof.
10) Successors and assigns. This Agreement shall be binding upon, and inure to the benefit of,
the Parties and their respective successors, transferees and assigns.
11) Amendments to be in Writing. This Agreement may not be altered, amended, modified or
changed in any respect or particular whatsoever except by writing duly executed by all the parties to
this Agreement.
12) Miscellaneous. This Agreement may be signed in counterparts. Each executed duplicate
hereof shall be considered as an original. Facsimile or signatures on electronically transmitted
documents in PDF form and copies of signatures shall have the same force and effect as original
signatures. The captions and titles herein are for convenience only and shall not be used to interpret
this Agreement.
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IN WITNESS WHEREOF, The Parties acknowledge and accept the terms and conditions of
this Agreement as evidenced by the following signatures of their duly authorized representatives. It is
the intent of the Parties that this Agreement shall become operative on the Effective Date.
SummerHill N40 LLC, a California limited liability company
By: SummerHill Homes LLC, its Manager
By: ____________________________
Its: ____________________________
By: ____________________________
Its: ____________________________
TOWN OF LOS GATOS, a California municipal corporation
By: Laurel Prevetti
Its: Town Manager
APPROVED AS TO FORM:
Robert Schultz
Town Attorney
ATTEST:
__________________________________
Shelley Neis
Town Clerk