HomeMy WebLinkAboutHMP 05-04; Shelley Property; Habitat Management Permit (HMP) (2)FUND AGREEMENT
for the
Fair Oaks Valley Preserve Area Mitigation Endov.•ment
(a Designated Mitigation Endormnent fund)
THIS AGREEMENT is made and entered into on Date \\ (' /, ~ , by and between THE
SAN DIEGO FOUNDATION ("TSDF") and CWV LA ~LC ("Founder"). CWV
LA COSTA 49 LLC is the Project Proponent described in the Definitions section below.
RECITALS
A. Project Proponent, which is the Declarant in the Declaration of Restrictive Covenant,
executed a certain Declaration of Restrictive Covenants with City of Carlsbad,
Califorina dated (the "Agency Agreement") regarding the appropriate
management and maintenance of certain open space land and/ or open space
easements which total 55.06 acres (hereinafter referred to as the "Property").
Pursuant to the Agency Agreement, Project Proponent, and its heirs, successors in
interest, administrators, assigns, lessees, or other occupiers and users of the Property
or any portion of it, is responsible for the long-term stewardship costs of the Property
in accordance with the requirements of that certain Preserve Management Plan for
Fair Oaks Valley dated August 30, 2013 (the "PMP").
B. Pursuant to the Agency Agreement, the Project Proponent is obligated to create an
endowment fund in the amount of $428,74 7.65 representing a principal amount that,
when managed and invested, is reasonably anticipated to cover the funding needs of
the long-term stewardship of the Property. This endowment has been established to
be held, managed, invested and disbursed by TSDF solely for, and permanently
restricted to, the long-term stewardship of the Property.
C. Project Proponent has contracted with Urban Corps of San Diego County (the
"Habitat Manager") and Urban Corps of San Diego County is thusly obligated to
monitor and manage the Property for conservation purposes. The Habitat Manager
is a California nonprofit public benefit corporation, and it is an organization
described in Section 170( c)(l) or (2) of the Internal Revenue Code.
D. To facilitate the matters described in Recital B, Founder is entering into this
Agreement.
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DEFINITIONS
The following terms, as used in this Agreement, shall be defined as follows:
(1) Agency: The lead governmental entity issuing a permit for the mitigation
project and requiring the establishment of the mitigation endowment.
(2) Project Proponent: The entity proposing the mitigation project to Agency for
approval and issuance of permit.
(3) Habitat Manager: Nonprofit or governmental entity contracted to perform
habitat management tasks.
( 4) Property: Fee title land or any partial interest in real property, including a
conservation easement, conveyed pursuant to a mitigation requirement by the Agency or
other agency.
(5) Property Management Plan (PMP): The plan describing the management
activities to be performed on the Property.
(6) Declaration of Restrictive Covenant: The agreement between Agency and
Project Proponent by which these entities agree to terms which include the PMP.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. NAME OF FUND
Project Proponent transfers assets irrevocably to TSDF to establish in TSDF the Fair Oaks
Valley Preserve Area Mitigation Endowment (the "Fund") as an endowment for the purpose
described in paragraph 2 below. An endowment is a permanent fund. Endowment funds
are pooled for maximum benefit and invested to achieve long-term capital growth.
Contributions are irrevocable and become assets of The San Diego Foundation. As an
endowment fund for the purpose described in Paragraph 2 below, the Fund shall be
operated and administered in accordance with (i) Sections 65965, 65966, 65967 and 65968
of the California Government Code and (ii) the Uniform Prudent Management of
Institutional Funds Act, California Probate Code Section 18501 et seq. ("UPMIFA"), except
to the extent TSDF may adhere, from time to time, to more rigorous standards or
requirements than those proscribed by UPMIF A. Expenditures from the Fund shall be
made in the manner described for endowment funds under UPMIFA Section 18504. TSDF
may receive additional irrevocable gifts of property acceptable to TSDF from time to time
from Project Proponent and from any other source to be added to the Fund, all subject to
the provisions hereof.
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2. PURPOSE
Subject to the limitations of paragraph 4 below, the primary purpose of the .Fund shall be to
support the Habitat Manager in furtherance of the long-term stewardship of the Property in
accordance with the Agency Agreement. In the event that in the future the Habitat Manager
(i) no longer constitutes an organization described in Sections 170( c)( l) or (2) of the
Internal Revenue Code, (ii) becomes subject to bankruptcy proceedings under state or
federal law, (iii) liquidates and dissolves or otherwise ceases to exist, (iv) fails to submit to
Agency and TSDF in a timely manner (or within such reasonable period as determined by
Agency and TSDF) the annual income and expense report (the "Expense Report") along
with reimbursement to the Fund of any unused funds from any previous distribution( s) and
an annual certification, signed by the President or Chief Financial Officer of the Habitat
Manager, certifying as to the accuracy and completeness, in all material respects, of the
Expense Report and the Habitat Manager's compliance with the requirements imposed
upon it under the Agency Agreement (the "Annual Certification"), or (v) proves unable to
fulfill substantially all of the duties described in the Agency Agreement as determined by
either the Agency or a court of law, then the assets of the Fund shall be applied as described
in paragraph 5 below.
3. INVESTMENT OF FUNDS
TSDF shall have all powers necessary or desirable to carry out the purposes of the Fund,
including, but not limited to, the power to retain, invest and reinvest the Fund in any
manner within the "prudent person" standard and the power to commingle the assets of the
Fund with those of other funds for investment purposes, subject however, to the
requirements of Sections 5231 and 5240 of the California Corporations Code.
4. DISTRIBUTEE$
Subject to paragraph 5 below, earnings allocated by TSDF to the Fund shall be distributed
exclusively for charitable, scientific, literary or educational purposes or to organizations of
the type to which an individual taxpayer may make deductible charitable contributions, gifts,
and bequests under the income, gift and estate tax provisions of the Internal Revenue Code
of 1986, as amended, and of the Revenue and Taxation Code of California. It is intended by
the foregoing that at the time a distribution is made from the Fund, the distribution must be
made for a charitable, scientific, literary or educational purpose as described in, or to an
organization which is described in, Sections 170( c)(l) or (2), of the Internal Revenue Code
of 1986, as amended, and Section 17201 of the Revenue and Taxation Code of California, or
to a government entity acceptable to Agency. Distributions from the Fund shall be within
the purposes and procedures ofTSDF as contained in its Articles oflncorporation and its
Bylaws.
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5. DISTRIBUT ION
Distributions from the Fund may be made from earnings and so much of the net gains
(realized and unrealized) in the fair value of the assets of the Fund as is prudent under the
standard established by Section 18!'>04 ofUPMIFA. Distributions shall be made to the
Habitat Manager or such other permissible distributees and at such times and in such
amounts subject to the approval of the TSDF Board of Governors. Subject to the limitations
of Section 18504 of UPMIFA, distributions shall be made each year to the extent needed to
cover the management and maintenance expenses for such year in accordance with the
requirements of the PMP; provided, however, TSDF is not, and shall not in the future under
any circumstances be deemed to be, a party to either the PMP or the Agency Agreement.
TSDF shall have no liability or responsibility whatsoever for the funding needed to cover
such expenses to the extent such funding need is greater than the distributable amount of
the Fund. There shall he no requirement that all earnings and net gains be distributed each
year; earnings and net gains may be accumulated and added to principal. Earnings and net
gains which are accumulated and added to the principal may, however, be distributed in the
future as herein provided.
Distributions shall be made to such distributees of the type described in Section 4 above as
may be designated by the Board of Governors ofTSDF except as modified in accordance
with Section 6 below.
In the event TSDF becomes aware that the Habitat Manager has misused or diverted any
monies from the purposes required by the Agency Agreement or any of the events listed in
Section 2 above have occurred, TSDF shall (i) immediately cease making any further
distributions from the Fund to Habitat Manager, and (ii) provide Agency with writLen notice
of such misuse or diversion so that TSDF and Agency can take appropriate action, and (iii) if
Agency elects to undertake the management and maintenance responsibilities over the
Property pursuant to the Agency Agreement, make distributions from the Fund to Agency
or make distributions from the Fund to a distributee designated by Agency and approved
the TSDF Board of Governors as desclibed in Section 6 below.
Without limiting the foregoing, all parties hereto acknowledge and agree that distributions
from the Fund are to be made only for the stewardship purposes described in Section 2
above, and that the Fund is not intended to provide distributions to address the effects of
emergencies or natural disasters.
Unless the Agency Agreement provides that another person or entity shall prepare an
annual fiscal report that complies with the requirements set forth in Section 65966(e) of the
California Government Code, TSDF shall prepare such an annual fiscal report.
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6. CONTINUITY OF THE FUND
If any of the events referred to in Section 2(i), (ii), (iii), (iv), (v) or Section 5 (iii) above occur,
TSDF and Agency shall elect a new nonprofit habitat management organization approved by
Agency and the TSDF Board of Governors.
The Fund shall continue so long as assets are available in the Fund and the purposes in the
Fund can be served by its continuation. If the Fund is terminated for any of the above
reasons, TSDF shall devote any remaining assets in the Fund exclusively for charitable
purposes that:
a. are within the scope of the charitable purposes of TSDF's Articles of
Incorporation; and,
b. most nearly approximate, in the good faith opinion of the Board of Governors,
of the original purpose of the Fund.
7. NOT A SEPARATE TRUST
The Fund shall be subject to the Articles of Incorporation and Bylaws of TSDF. All money
and property in the Fund shall be assets ofTSDF, and not a separate trust, and shall be
subject only to the control of TSDF. Pursuant to Treasury Regulations, the Board of
Governors ofTSDF has the power "to modify any restriction or condition on the
distribution of funds for any specified charitable purpose or to any specified organization if,
in the sole discretion of the Board of Governors, such restriction or condition becomes
unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the
community or area served." Treas. Reg. §1.170A-9(e)(ll)(v)(B) and (E).
8. COSTS OF THE FUND
Founder understands and agrees tl1at the Fund shall share a fair portion of the total
administrative cost') ofTSDF. The administrative cost annually charged against the Fund
shall be determined in accordance with the then current Fee Policy identified by TSDF as
the fee structure applicable to Funds of this type. Any costs to TSDF in accepting,
transferring or managing property donated to TSDF for the Fund shall also be paid from the
Fund.
9. ACCOUNTING
This Fund shall be accounted for separately and apart from other gifts to TSDF.
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10. CHARITABLE DEDUCTIONS
TSDF has provided no advice or assurance to Project Proponent as to the tax treatment of
the amounts deposited in the Fund by Project Proponent. Project Proponent has been
advised and given the opportunity to seek independent advice as to such tax treatment.
11. DISCLAIMERS
TSDF shall have no duty of any kind whatsoever to monitor or determine the Habitat
Manager's compliance with the PMP (including, without limitation, the Agency Agreement)
other than to accept receipt, annually, of the Expense Report and the Annual Certification.
TSDF shall have no liability whatsoever with respect to the performance of any of the
obligations of the Habitat Manager under the RMP (including, without limitation, the
Agency Agreement). The responsibility for managing and maintaining the Property is
limited solely to the Habitat Manager. TSDF shall have no obligation whatsoever to enforce
the terms and provisions of the Agency Agreement.
12. AITACHMENTS
If checked below, the attachment(s) so designated shall be incorporated by reference herein
and hereby made a part of this Agreement as if fully set fo rth in this Agreement (provided
that the applicable attachments are executed by Founder).
Addendum To Fund Agreement for Fair Oaks Valley Preserve Area Mitigation
Endowment
Endowment Distribution Election for Fair Oaks Valley Preserve Area
Mitigation Endowment
13. CERTIFICATION
Pursuant to California Government Code section 65968(e), TSDF certifies to the Founder,
Agency and the Pr~ject Proponent that it meets all of the following requirements:
a. TSDF has the capacity to effectively manage the Fund;
b. TSDF has the capacity to achieve reasonable rates of return on the investment
of the Fund similar to those of other prudent investors for endowment funds
and shall manage and invest the Fund in good faith and with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances, consistent with UPMIFA;
c. TSDF uses generally accepted accounting practices (GAAP) as promulgated by
the Financial Accounting Standards Board or any successor entity;
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d. TSDF will be able to ensure that the Fund is accounted for, and tied to, the
Property; and
e. TSDF has an investment policy that is consistent with UPMIFA.
IN WITNESS WHEREOF, we execute this agreement on ---~\\+-• +I ...... \_,114--1 t3. __ _
Founder:
CWV LA COSTA LLC
A Delaware Limited Liability Company
By: CALIFORNIA WEST COMMUNITIES LLC,
A California Limited Liability Com any
Its Manager
By: ________ ~~~~~~~------~D=a=te~=----~~-~-~~~~~-----
Donald W. Fontana
Managing Member
San Diego Fo undation on _ __.\ ...... \-tl-~-1 ....... {_,_/_~ __ _
By:
Enc.: Program Policies
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ADDENDUM TO FUND AGREEMENT
for
Fair Oaks Valley Preserve Area
THIS ADDENDUM TO FUND AGREEMENT is dated as of the same date as the Fund
Agreement by and between THE SAN DIEGO FOUNDATION {"TSDF") and CWV LA
COSTA 49 LLC ("Founder") and amends and supplements the Fund Agreement as follows:
14. DISPUTE RESOLUTION
A. Mediation. Founder and TSDF agree to mediate any dispute or claims arising
between them out of this Agreement, or any resulting transaction, before resorting to
arbitration or court action. Mediation fees, if any, shall be divided equally among the parties
involved. If, for any dispute or claim to which this paragraph applies, any party commences
an action without first attempting to resolve the matter through mediation, or before
commencement of an action, refuses to mediate after a request has been made, then that
party shall not be entitled to recover attorneys fees, even if they are otherwise available to
that party in any such action. Exclusions from this mediation agreement are specified in
paragraph 15C below.
B. Arbitration of Disputes. Founder and TSDF agree that any dispute or claim in
law or equity arising between them out of this Agreement or any resulting transaction,
which is not settled through mediation, shall be submitted for neutral, non-binding
arbitration. The arbitrator shall be a retired judge or justice, or an attorney with at least 20
years of experience, unless the parties mutually agree to a different arbitrator. The parties
shall have the right to discovery in accordance with the Code of Civil Procedure Section
1283.85. In all other respects, the arbitration shall be conducted in accordance with Title 9
of Part 3 of the Code of Civil Procedure. Exclusions from this arbitration provision are
specified in paragraph 15C below.
C. Exclusions. Any matter that is within the jurisdiction of any bankruptcy court
shall be excluded from mediation and arbitration.
IN WITNESS WHEREOF, we execute this agreement on ---\-\ /l l-1':)...._ ___ _
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Founder:
CWV LA COSTA LLC
A Delaware Limited Liability Company
By: CALIFORNIA WEST COMMUNITIES LLC,
A California Limited Liability Company
Its Manager ~
By: --------'v..-+--'-~-F-~=-----D=-=a=te:..:.....: ---41 L-r--~( -__.._l '3 __ _
Donald W. Fontana
Managing Member
WcS'I\223059296.8 9
ENDOWMENT DISTRIBUTION ELECTION
for
Fair Oaks Valley Preserve Area
Allocation of earnings are made semi-annually to each Fund in March and September.
Earnings are available for distribution semi-annually, annually, or on request after an
allocation period. Distributable earnings will remain distributable unless it is requested
that the earnings be reinvested. Earnings reinvested become a part of principal and
cannot be accessed in the future for distribution.
Please check one of the following: (If no selection is made eamings will be held until
distribution is requested by founder(s) or advisor(s).
Please distribute the earnings semi-annually. (March and September)
Please distribute lhe earnings annually.
Circle one: March or September
Please hold the earnings until distribution is requested.
Please note distributable balance earnings are not credited to the fund.
~ Please reinvest the earnings.
(This selection can be changed at any time, but becomes effective on july land january l.)
CWV LA COSTA LLC
A Delaware Limited Liability Company
By: CALIFORNIA WEST COMMUNITIES LLC,
A California Limited Liability Company
Its Manager ~
By: ~
Donald W. Fontana
Managing Member
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Date: lt-l-13
PROGRAM POLICIES
l. The San Diego J:<'oundation. The San Diego Foundation ("TSDF") is a California nonprofit public benefit
corporation exempt from taxation under Section 50l(c)(3) of the Internal Revenue Code of 1986, as amended ("TRC").
TSDF is recognized as a public charity under lRC Sections 509(a)(l) and 170(b)(1 )(A)( vi) and operates as a "community
trust" under U.S. Treasury Regulations Section 1.170A-9T(f)(11). All conLributions to and assets ofTSDF are subject to its
Articles oflncorporation, Bylaws and Pmgram Policies. TSDF reserves the tight lO modify the terms and conditions of its
Articles of Incorporation, Bylaws and Program Policies at any time.
2. Donor Advised Funds. As a community foundation, TSDF may establish for its donors a "donor advised
fund," which is separately identified by reference to the donor or donors. The fund is owned and controlled by TSDF and
the donor or pet·$ons appointed by the donor have the privilege of providing advice with respect to the fund's investments
or disu·ibutions. TSDF has final authority over the distribution of all grants from its donor advised funds, and reserves the
right to decline or modify a grant recommendation that is not consistent with these policies or TSDF's charitable purposes.
Gifts to a donor advised fund are irrevocable.
3. Other Funds. In add ition to donor advised funds, TSDF also establishes scholarship funds (discussed
below), agency funds (for the benefit of a specified charity), field of interest funds (for a specified charitable purpose) and
habitat funds (to administet· funds set aside to maintain ecological preset·ves ). Gifts to these funds are in·evocable.
4. Fund Minimums. Generally, a minimum of $50,000 is required to establish an agency fund and $25,000
for all other funds.
5. J>roviding Grant Advice to Donor Advised Funds. Once a donor advised fund has been established and
funded, and as long as it maintains a fund balance of at least $10,000, the advisor(s) named in the agreement may
recommend distributions t.o qualified charitable organizations. (TSDF staff will perform due diligence to verify that the
organization is a current, qualified cha1i ty.) The following rules govern grant recommendations:
a. Minimums. Each recommended grant should be for at least $250.00.
b. Procedure. Unless othenvise restricted as an endowment, grants may be
recommended out of rhe original principal, as well as accumulated investment earnings, if any. Grant
recommendations can be made at any time during the yeat·, except for designated endowment funds,
which make distributions in March and/or September. Recommendations can be submitted by mail,
facsimile or electronic maiL Forms and instructions for making grant recommendations will be provided
upon creation of a fund, as part of an advisor orientation process.
c. Grant Restrictions. The following restrictions apply to grants:
i. No Indirect Benefit. Grants from donor advised funds may not be used to secure all)'
benefit from the gr.mtee for the donor, the advisor or any persons related to them.
ii. Enforceable Pled~. Grants from donor advised funds may not be used to discharge
or satisfy a charitable pledge or obligation that is legally enforceable against the donor or any other person.
111. Event Tickets. Grants from donor advised funds may not be used to pay for goods or
sen-ices of value received by the donor, advisor or their family members. For example, grants mar not be used to support
any charitable event, including fundraising dinners, concerts, auctions, or other benefit functions when the donor would
receive a return benefit, such as the benefit of being able to attend a fundraising dinner or event. Further, no grants may
be used to pay for any portion of a splil or bifm·cated disbm·sement to a charity. A split or bifm·cated payment t·efers to the
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splitting of a payment to a charity, such as for tickets to an !!Vent, into two parts: the deductible poruon and the non·
deductible portion.
iv. Giving to Individuals. Donors may not choose a specific individualLO receive a benefit
from a grant from ;1 donor advised fund.
v. Prohibited Loans & Comp~nsation. Don01·s, advisors or any relared parties may not
receive grants, loans, compensation or similar payments (including expense reimbursements) from donor advised funds.
d. Resu;cted Organizations and Purpose.~. TSDF will nor approve grant
recommendations that are for non-functionally integrated Type III supporting organizations; supporting
organi7.ations thar provide support to organizations controlled by the donor, advisor or related persons;
supporting organizations that are controlled by Lhe donor, advisor, or related persons; privaLe non-
operating foundations; lobbying, political campaigns or other political activities; or any purpose that is
not entirely charitable.
c. Remedial Action. TSDF will take remedial action if it discovers that grants
have been made for improper purposes. Remedial actions may include, but arc not limited to, a
requirement lhar the recipient charity return the grant and/ or termination of the donor·~ advisory
privileges.
t: Anti-Terrorism Provisions. J\s part of the grant review process, TSDF checks
all recommended grant t•ecipients against the Treasury Department's List ofSpeciaUy-Designated
Nationals, other U.S. and foreign government watch lists, and d1e IRS list of organizations whose tax
exemption has been suspended under IRC Section 50l(p). TSDF \villnot approve grant
recommendations ro organizations that appear on such lists.
6. Scholarship Funds. Scholarship funds may have a scholarship advisory committee. All scholarship
advismy committee members must be approved by the TSDF's Board of Governors prior to making the first scholarship
awards and thereafter annually. The founder may participate on the scholarship advisory committee, provided lhat neither
the founder nor the founder's designees (related parties) may chair the scholarship advisory committee or in any way
control the selection process or constitute a majm;ty of the scholarship advisory committee members. In the event the
scholarship advisor)' committee shall cease to be in existence, the Board of Governors ofTSDF shall serve as the advisor of
the scholarship fund. All scholarships shall be awarded on an objective and nondiscriminatory basis using procedures that
have been approved in advance by the Board of Governors ofTSDF and that have been designed to ensure that all such
grants meet the requirements of paragraphs (1), (2), or (3) of Section 49•l5(g) of the lmemal Revenue Code of 1986.
7. Income .md Estate Ta.." Deductions. TSDF does not vrovidc any advice or assurance to its donors as to
the income tax u-eatment of amount~ deposited in a f1.md. Donors are advised to seek independent advice as to such
income ta.."< treatment.
8. Investments. The fund advisors for endowment funds and for non-endowment f1.mds with assets in
excess of$25,000 may recommend that the assets of the fund be invested on one oflhree investment pools (subject to
liquidity requirements): information regarding the composition of each investment pool will be provided to the donot· at
the time the fund is established. Such recommendations are advbory, and TSDF has final authority over the investment of
assets in its funds.
9. Fees and Costs. F.ach fund established at TSDf' shall share a fait· portion of the tota.l administrative costs
ofTSDF. The administrative cost annually charged against each fund shall be determined in accordance with the lhen
cutTent fee policy ofTSDF as the fcc structure applicable to funds of its type. In addition, upon receipt of assets upon the
dealh of a donor, a onetime estate fee will be assessed in acco•·dance with the lhen current fee policy ofTSDF. Any costs to
TSDF' in accepting, transferring ot· managing property donated to TSDF for a fund sha!J also be paid fi·om such fund.
tO. Provision for Gover~. These Program Policies, all fund agreements, and any program-related
agreement executed by a Donor shall be governed by Califotnia law. J\11 gift agreements at·e deemed to be entered into in
the State of California, and all contributions to the TSDF are intended to be administered and managed in lhe State of
Califomia.
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