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2006-05-02; Public Financing Authority; 15; Golf Course Management & Consulting Agreements
CARLSBAD PUBLIC FINANCING AUTHORITY - AGENDA BILL AB*15 MTG 5/2/06 DEPT. Recreation TITLE: CARLSBAD GOLF COURSE MANAGEMENT AND CONSULTING AGREEMENTS BETWEEN THE CARLSBAD PUBLIC FINANCING AUTHORITY AND KEMPER SPORTS MANAGEMENT INC CITY ATTY//7/ , ' CITYMGR. L^ RECOMMENDED ACTION ; ADOPT RESOLUTION # 19 approving the Carlsbad Golf Course Consulting and Grow-In Agreement and ADOPT RESOLUTION # 20 approving the Carlsbad Management Agreement with Kemper Sports Management Inc. ITEM EXPLANATION : In April 2000, The City of Carlsbad joined with the Board of the Carlsbad Municipal Water District and formed the "Carlsbad Public Financing Authority" as a Joint Powers Authority. The purpose of the Joint Powers Authority (JPA) was to assist the city with the financing, construction, and management of the day to day operations of the golf course project. On December 9, 2003, the City Council adopted Resolution No. 2003-324 which authorized staff to proceed forward with the development of the golf course. In keeping with member agency procedures for procurement of professional services, in October of 2004, a committee was formed of city staff and one member of the Golf Course Steering Committee to help select an operator for the golf course. Request for Qualifications (RFQ) were sent out to find an experienced, qualified firm to operate, manage, and maintain the entire golf course including the clubhouse and facilities therein. Approximately 60 requests were sent and four proposals were received in response. After reviewing each of these, the committee identified three (3) qualified operators to interview in more depth. Individual meetings were then set up in which the committee was able to obtain a better understanding of their golf course management and consulting experience, qualifications, philosophy in customer service, financial and budget objectives, client references, as well as to discuss what their management approach to this project would be. The committee continued to do their due diligence by visiting and touring the golf courses that each of the proposer's manage in an effort to experience first hand the quality of their course management, and to obtain a better understanding and perspective from a customer perspective. The committee also spent a substantial amount of time talking to other municipal and private operators in an effort to obtain as much information as possible to help select the number one candidate. After this extensive process, the committee selected Kemper Sports Management Inc. (KSM) as the best qualified firm and proceeded with the negotiation of a management agreement. Key factors in selecting KSM was their broad experience in managing municipal golf courses, the quality of the courses they currently manage, their excellent customer service philosophy and high standards of care for their courses. These qualities mirrored the expectations and standards of the City of Carlsbad. KSM also received high recommendations from each of the client references that were called. After lengthy negotiations, City staff and Kemper have drafted mutually acceptable agreements for the operations of the course, both prior to opening day and for a 5-year term after opening. Page 2 The Consulting and Grow-in Services Agreement covers the period from execution of the contract until the day the course is opened to the public. Under the terms of the agreement, KSM will consult with the Authority on all aspects of the development and pre-opening activities for the golf course (Exhibit 3) including: • Developing a preopening budget • Establishing green fees - This would include establishing a "Resident Green Fee Discount," whereby Carlsbad residents shall receive a discount on green fees. All necessary rules and procedures for implementing the discount shall be subject to the prior written approval of the Executive Director. • Hiring and training of all staff • Overseeing all pre-opening operations to prepare for grand opening • Developing an initial business plan which would include such items as marketing, sales, promotion, advertising, naming of the course, and public relation concepts • Consulting and making recommendations regarding the construction of the golf course • Consulting and making recommendations regarding the club house and other buildings including such items as interior design, construction issues, selection of furniture, fixtures, and equipment, etc. The second agreement is a Management Agreement in which KSM will be responsible to manage and operate the 18-hole golf course, driving range, club house, pro shop and maintenance facility (Exhibit 4). If approved, this Agreement will commence on the opening date of the course. The term of the Management Agreement is for 5 years; however, as required by the Revenue Taxation Code, the Authority has the ability to terminate the agreement at any time after three years without cause, with appropriate written notice. The agreement may be extended for one additional five (5) year period upon mutual agreement of both parties. KSM responsibilities would include but not be limited to: D All day-to day operations including building and course maintenance, course reservations, tee times, course marshals, cart rentals, .driving range, golf instruction, and tournaments, D Hiring, training, and supervision of all employees D Preparing Annual Plan and Reports D Managing all marketing and promotional activities D Making recommendations to the Authority regarding green fee changes D Acquiring all goods and services necessary D Acquiring all necessary permits and licenses including those related to food preparation and alcohol beverages. D Maintain Open Space and/or Habitat preserve Areas as requested by Authority Page 3 FISCAL IMPACT: The Consulting and Grow-in Services Agreement provides for a consulting fee of $10,000 per month to KSM for the term of the agreement. All employees will be hired by KSM; and all expenses of growing-in the course, initial maintenance of the buildings, and all other pre- opening costs including salaries and benefits, purchase of materials and supplies and the acquisition of equipment will be reimbursed by the Authority in addition to the fee. The consulting fee covers the human resources, marketing, agronomy, management and other services provided by KSM's corporate staff. Assuming the course opens in July 2007, the total cost of the pre-opening consulting services will be approximately $140,000. These amounts were included in the "Grow-in and Pre-opening" items of the construction budget for the Golf Course as shown below. CITY OF CARLSBAD GOLF COURSE CONSTRUCTION Activity Budget Grading $ 9,527,468 Construction 16,727,761 Buildings 10,661,052 Construction Contingency 2,861,209 Construction Management, Design and Misc 4,240,000 Subtotal Construction 44,017,490 Furniture Fixtures and Equipment 1,640,000 Grow-in and Pre-opening 1,100,000 Start Up Costs 1,500,000 Total Budget as of 3/31/2006 $ 48,257,490 The fees for the Management Agreement are comprised of two parts: a fixed fee and an incentive fee. Since the Authority will be using tax-exempt debt to partially finance the golf course, there are certain restrictions on how the management agreement can be structured. With an agreement term of five years, the incentive portion of the fee must be based on gross revenues, not net revenues, and the incentive portion of the fee cannot be greater than the fixed portion. Recent interpretations of the law also require that the cost of key management employees be included in the fixed management fee structure and not paid through direct reimbursements for Golf Course expenses. The fees contemplated in the agreement are proposed as a fixed fee of $150,000 per year plus the cost of the salaries and benefits of the key employees as defined in the agreement. This will be paid monthly in advance. The incentive portion of the fee is proposed at 5% of the gross revenues of the course, club house and all other facilities which are in excess of $4.5 million; however, they may not exceed $150,000. Page 4 For example, if the gross revenues for a year were $6 million, KSM would receive a fixed fee of $150,000 plus an incentive fee of $75,000 (5% of $1.5 million) for a total of $225,000. If the gross revenue was $8 million, the total fee would top out at $300,000 ($150,000 fixed fee plus $150,000 incentive (5% of $3.5 million but capped at the $150,000 fixed fee). In each of these cases, the salaries of the key employees would be added to the $150,000 for the total fixed fee. All costs, expenses and debt payments of the Golf Course and related facilities are expected to be paid for from the revenues generated by the Golf Course. However, if revenues are not sufficient to make the Bond payments, the City's General fund will be pledged to ensure that the Bond payments are made. EXHIBITS: 1. Resolution # 19 approving the Carlsbad Golf Course Consulting and Grow-In Agreement with Kemper Sports Management Inc. 2. Resolution # 20 approving the Carlsbad Golf Course Management Agreement with Kemper Sports Management Inc. 3. Golf Course Consulting and Grow-In Agreement between the Authority and Kemper Sports Management Inc. 4. Golf Course Management Agreement between the Authority and Kemper Sports Management Inc. DEPARTMENT CONTACT: Ken Price - 434-2826 kpric(5)ci.carlsbad.ca.us , and Lisa Hildabrand - 434-2821 lhild@ci.carlsbad.ca.us 1 RESOLUTION NO. 19 2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD PUBLIC FINANCING AUTHORITY APPROVING 3 THE CARLSBAD GOLF COURSE CONSULTING AND GROW-IN AGREEMENT WITH KEMPER SPORTS MANAGEMENT, INC. 5 WHEREAS, on December 9, 2003, the Board of Directors of the Carlsbad Public 6 Financing Authority (Authority) adopted Resolution No. 2003-324 authorizing proceeding with 7 the development of the Carlsbad City Golf Course project; and o g WHEREAS, a Consulting and Grow-In Services Agreement for the Golf Course project 10 has been prepared and hereby presented for the Authority's review and action; and 11 WHEREAS, a Consulting and Grow-In Services Agreement with Kemper Sports 12 Management, Inc. (KSM) will consult with the Authority on all aspects of the development and 13 pre-opening activities for the Golf Course project; and 14 WHEREAS, KSM would assist the Authority with development of the budget, 15 establishing green fees, develop a preliminary business plan, overseeing all pre-opening 16 operations to prepare for Grand Opening consult and make recommendations regarding the 17 preparation of the Golf Course, clubhouse, and site planning of the course. 18 NOW, THEREFORE, BE IT RESOLVED by the Public Financing Authority of the City 20 of Carlsbad, California, as follows: 21 1. That the above recitations are true and correct 22 // 23 „ 24 25 26 27 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 78 2. The form of the Consulting and Grow-In Agreement, herewith submitted, is approved substantially in the form submitted. The President of the Board is hereby authorized to execute the final form of each such agreement on behalf of the City. The City Manager, subject to the review of the City Attorney, is authorized to approve changes in such agreement deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of such agreement. PASSED, APPROVED AND ADOPTED at a Special Meeting of the Public Financing Authority of the City of Carlsbad on the 2—_ day of May. 2006, by the following vote: AYES: Council Members Lewis, Hall, Kulchin, Packard NOES: Council Member Sigafoose ABSENT: , President of the Board ATTEST: 1 RESOLUTION NO. 20 2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD PUBLIC FINANCING AUTHORITY APPROVING 3 THE CARLSBAD GOLF COURSE MANAGEMENT 4 AGREEMENT WITH KEMPER SPORTS MANAGEMENT, INC. 5 WHEREAS, on December 9, 2003, the Board of Directors of the Carlsbad Public 6 Financing Authority (Authority) adopted Resolution No. 2003-324 authorizing proceeding with 7 the development of the Carlsbad City Golf Course project; and o WHEREAS, a Management Agreement for the Golf Course project has been prepared 10 and hereby presented for the Authority's review and action; and 11 WHEREAS, a Management Agreement with Kemper Sports Management, Inc. (KSM) to 12 maintain and manage the 18-hole golf course, driving range, club house, pro shop and maintenance facility; and 14 WHEREAS, this Agreement will commence on the opening date of the course; and 15 WHEREAS, KSM's responsibilities would include, but not be limited to: all day-to-day 16 operations, including building and course maintenance, course reservations, tee times, cart 17 rentals, golf instructions, hiring, training and supervision of all employees, prepare annual plan 18 and reports, manage all marketing and promotional activities, making recommendations to the 20 Authority regarding green fee changes, acquiring all necessary permits and licenses, including 21 those related to food preparation and alcoholic beverages. 22 NOW, THEREFORE, BE IT RESOLVED by the Public Financing Authority of the City of Carlsbad, California, as follows: 24 1. That the above recitations are true and correct 25 26 27 9.R 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 78 2. The form of the Management Agreement, herewith submitted, is approved substantially in the form submitted. The President of the Board is hereby authorized to execute the final form of each such agreement on behalf of the City. The City Manager, subject to the review of the City Attorney, is authorized to approve changes in such agreement deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of such agreement. PASSED, APPROVED AND ADOPTED at a Special Meeting of the Public Financing Authority of the City of Carlsbad on the 2nd day of May, 2006, by the following vote: AYES: Board Member Lewis, Hall, Kulchin, Packard NOES: Board Member Sigafoose ABSENT: , president of the Board ~<l% ATTEST:. LORRAINE M. WOOD, Secretary (SEAL)\ GOLF COURSE CONSULTING AND GROW-IN SERVICES TABLE OF CONTENTS RECITALS 1 ARTICLE I DEFINITIONS 1-4 ARTICLE II CONSULTING AND GROW-IN SERVICES 4 2.0 Term. 4 2.1 Meetings and Consulting 4 2.2 Environmental Standards and Actions 4-5 2.3 Market Due Diligence 5 2.4 Golf Course Planning 5 2.5 Golf Course Pre-Opening Marketing 6 2.6 Pre-Opening Operations 6 2.7 Grow-In Services 6 2.8 Pre-Opening Budget 7 2.9 Initial Business Plan 7 ARTICLE III PROVISIONS AFFECTING SERVICES 7 3.1 Environmental Remediation 7 3.2 Emergency Expenditures 7 3.3 Other Duties and Prerogative 8 ARTICLE IV AUTHORITY'S RESPONSIBILITIES 8 4.1 Costs 8 4.2 Security 8 4.3 Golf Course Accounts 8 4.4 Pre-Opening Expense Account 9 4.5 Pre-Opening Payroll Account 9 4.6 Pre-Opening Expenses 9-10 ARTICLE V FEES AND REIMBURSABLE EXPENSES 11 5.1 Consulting Fees 11 EXHIBITS ARTICLE VI INSURANCE 11 6.1 Types of Coverage 11 6.2 Other Insurance Provisions 12 6.3 Insurance Maintained by KSM 13 ARTICLE VII INDEMNITIES 13 7.0 KSM's Indemnity 13 7.2 Survival 14 ARTICLE VIII TERMINATION RIGHTS 14 8.1 Termination by Authority 14 8.2 Termination by KSM 15 8.3 Payments Upon Termination 15 8.4 Curing Defaults 15 8.5 Effect of Termination 15 8.6 Remedies Cumulative 15 8.6 Remedies 15-16 ARTICLE IX TITLE MATTERS: ASSIGNMENT 16 9.1 Ownership of Improvements and Personal Property 16 9.2 No KSM Assignment or Subcontracting 17 9.3 Successors and Assigns 17 9.4 Golf Course Name 17 ARTICLE X MISCELLANEOUS 17 10.1 Force Majeure Events 17 10.2 Damage or Destruction 18 10.3 Contract Administration 18 10.4 Compliance 19 10.5 Notices 19 10.6 Independent Contractor 20 10.7 Modification and Changes 20 10.8 Entire Understanding and Agreement 20 10.9 Headings 20 10.10 Consents 20 10.11 Survival Covenants 20 10 10.12 Third Parties 20 10.13 Waivers 20 10.14 Applicable Law. Venue: Service of Process 21 10.15 No Presumption Regarding Drafter 21 10.16 Enforceability of Any Provision 21 10.17 Counterparts: Facsimile Signatures 21 10.18 Covenants Against Discrimination 21 10.19 Non-liability of Authority or Authority Officers and Employees 21 10.20 Time of the Essence 21 10.21 Exhibits and Attachments Incorporated 22 10.22 Authority 22 10.23 Authorization to Executive Director 22 10.24 Possessory Interest 22 10.25 Proprietary Information ....22 10.26 Outside Business 22 EXHIBITS Exhibit B - Habitat Preserve Area 2 pages Exhibit D - Legal Description of Real Property 2 pages Exhibit E - Regulatory Permits 39 pages GOLF COURSE CONSULTING AND GROW-IN SERVICES AGREEMENT THIS GOLF COURSE CONSULTING AND GROW-IN SERVICES AGREEMENT (Agreement") is made and entered into this /ffi\lay of ^Ogujv^— . 2006 ("Effective Date") by and between the Carlsbad Public Financing Authority, California, a public entity and joint powers authority (the "Authority"), and KEMPER SPORTS MANAGEMENT, INC., an Illinois corporation ("KSM"). RECITALS A. WHEREAS, the City of Carlsbad, a municipal corporation (the "City"), is the Owner of certain property located in the city of Carlsbad, California, to be developed as a municipal golf course; and B. WHEREAS, the City has leased the golf course property to the Authority which will be responsible for the development and operation of the public golf course, to be known as the "Carlsbad Golf Course" located in the City of Carlsbad, California, consisting of an 18-hole golf course, a driving range, Golf Course Clubhouse, pro shop, and maintenance facility (collectively, the "Golf Course"); and C. WHEREAS, the Authority desires to utilize the consulting and grow-in services of KSM in connection with the construction and development of the Golf Course upon the terms and conditions set forth in this Agreement; and D. WHEREAS, the Authority and KSM acknowledge that this Agreement is being executed prior to the Authority commencing the construction and development of the Golf Course in anticipation of such construction and development. NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the Authority and KSM hereby agrees as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings indicated below: 1.0 Affiliate - Any and all corporations, partnerships, trusts, and other entities directly or indirectly controlled by, controlling, or subject to direct or indirect common control of an entity or person. 1.1 Board of Directors of the Authority - The Board of Directors of the Carlsbad Public Financing Authority, initially the City Council members and, thereafter as designated by the Board. 1.2 City - The City of Carlsbad, a municipal corporation. 04/24/20061:59PM 1.3 Carlsbad Public Financing Authority (the "Authority") - is a public entity and joint powers authority whose members are the City of Carlsbad, a municipal corporation and general law city in the State of California, and the Carlsbad Municipal Water District, a public agency organized and existing under the Municipal Water Act of 1911, and a Subsidiary District of the City of Carlsbad. 1.4 City Council - The City Council of the City of Carlsbad. 1.5 Conditional Use Permit - The conditional use permit for the Golf Course approved by and issued by the City in accordance with the Carlsbad Zoning Code. 1.6 Employee Compensation - The direct salaries and wages paid to or accruing for the benefit of the management staff and all other persons employed by KSM at the Golf Course except Key Management Employees as defined in Section 1.15 of this Agreement, together with all fringe benefits payable to or accruing for the benefit of such employees, including employer's contribution under the Federal Insurance Contributions Act ("PICA"), unemployment compensation, or other employment taxes, pension fund contributions, worker's compensation, group life and accident and health insurance premiums, profit sharing, retirement, disability and other similar benefits, as determined by KSM and as set forth in the approved Pre-Opening Budget. 1.7 Environmental Laws - All current and future federal, state, and local statutes, regulations, ordinances, and rules relating to (i) the emission, discharge, release, or threatened release of a Hazardous Material into the air, surface water, groundwater, or land; (ii) the manufacturing, processing, use, generation, treatment, storage, disposal, transportation, handling, removal, remediation, or investigation of a Hazardous Material; or (iii) the protection of human health, safety, or the indoor or outdoor environment, including, without limitation, the Clean Air Act, the Federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Occupational Safety and Health Act, all amendments thereto, all regulations promulgated thereunder, and their state or local statutory and regulatory counterparts. 1.8 Executive Director of Carlsbad Public Financing Authority - The person holding the position of City Manager of the City of Carlsbad, or his or her authorized designee, including but not limited to the Project Manager. 1.9 Furnishings and Equipment - All furniture, furnishings, trade fixtures, apparatus and equipment, including without limitation course maintenance vehicles and equipment, golf carts, driving range pickers and pullers,. mats, range ball baskets, cash registers, rental golf clubs and bags, ball washers, benches, uniforms, kitchen equipment, appliances, china, glassware, silverware, office equipment computers, copy machines, facsimile machines, telephone systems (not including pay telephones), and other personal property used in or held in storage for use in the operation of the Golf Course, other than Operating Inventory. 04/24/20061:59PM 12, 1.10 Habitat Preserve Area - As depicted on Exhibit "B" locator map along with legal descriptions on file with the City Clerk as amended from time to time. 1.11 Hazardous Material - Any solid, liquid, or gaseous substance, chemical, compound, product, byproduct, waste, or material that is or becomes regulated, defined, or designated by any applicable federal, state, or local governmental authority or by any Environmental Law as hazardous, extremely hazardous, imminently hazardous, dangerous, or toxic, or as a pollutant or contaminant, and shall include, without limitation, asbestos, polychlorinated biphenyls, and oil, petroleum, petroleum products and petroleum byproducts. 1.12 Impositions - All taxes and assessments (including without limitation real property taxes and assessments, possessory interest taxes, and personal property taxes), water, sewer or other similar rents, rates and charges, levies, license fees, permit fees, inspection fees and other authorization fees and charges, which at any time may be assessed, levied, confirmed or imposed on the Golf Course or the operation of the Golf Course. 1.13 Insurance Requirements - All requirements of each insurance policy, and all orders, rules, regulations and other requirements of the Authority applicable to the Golf Course or the operation of the Golf Course. 1.14 KSM - Kemper Sports Management, Inc. or any successor in interest under this Agreement. 1.15 Key Management Employees. The General Manager of the Golf Course shall be responsible for the day-to-day management and operation of the Golf Course. The name and telephone number (both home and business) of the General Manager shall be provided, in writing, to the Executive Director and shall be current at all times. The General Manager shall be reasonably available during normal working hours to meet with the Executive Director. After normal working hours, the General Manager shall be reasonably available to appear at the Golf Course if deemed necessary by the Executive Director. The Course Superintendent for the Golf Course shall be certified by the Golf Course Superintendents Association. The Director of Golf for the Golf Course shall be a current Class "A" member in good standing of the Professional Golf Association or the Ladies Professional Golf Association. The Executive Director shall have the right to approve the individuals who KSM intends to hire to fill the positions of General Manager, Golf Course Superintendent, and Director of Golf and Controller (regardless of the titles given for such positions by KSM) (collectively, the "Key Management Employees"), which approval shall not be unreasonably withheld. 1.16 Legal Requirements - All laws, statutes, ordinances, orders, rules, regulations, permits, licenses, authorizations, directives and requirements of governments and governmental authorities, which now or hereafter may be applicable to the Golf Course or the operation of the Golf Course. 1.17 Opening Date - The date the Golf Course is first opened to the public. 04/26/20061:50PM 4 1.18 Operating Year - An Operating Year shall be a twelve (12) month calendar year during the Term of this Agreement commencing on January 1 and continuing through and including the following December 31. 1.19 Pre-Opening Expenses - The total of (a) all expenses specifically identified as "Pre-Opening Expenses" in this Agreement; and (b) all other expenses incurred by KSM in connection with the Golf Course or this Agreement, which expenses were not reasonably anticipated by the parties or otherwise provided in this Agreement provided that, except for emergency expenditures as described in Section 3.2 below, any such unplanned expense which exceeds Five Thousand Dollars ($5,000.00) must have prior written approval from the Executive Director. Except as specifically provided herein, Pre-Opening Expenses shall not include any expenses of KSM's corporate office, or any services rendered by KSM's corporate offices for or to the Golf Course, or the compensation of any corporate or regional employee of KSM. 1.20 Project Manager - The individual designated by the Executive Director to serve as the "Project Manager", or his or her authorized designee. 1.21 Real Property - As designated in the Legal Description as Exhibit "D". 1.22 Technical Advisory Committee ("TAG") - The advisory group required by the California Coastal Commission Permit with respect to the Golf Course. 1.23 Termination Date - The day prior to the Opening Date. 1.24 Weekends - The period commencing at 12:01 a.m. Friday and ending at 11:59 p.m. on Sunday. ARTICLE II CONSULTING AND GROW-IN SERVICES 2.0 Term. The term of this Agreement shall begin on the Effective Date and terminate as of the end of the day prior to the Opening Date (the "Term"). 2.1 Meetings and Consulting. KSM shall attend meetings and consult with Authority and designated development team members regarding matters affecting the development of the Golf Course. KSM shall consult with Authority on all aspects of the development of the Golf Course, including, but not limited to, the development budget, coordination with the TAG, Golf Course buildings, interiors, furniture, fixtures and equipment, human resources, environmental and regulatory permits and approvals held by the Authority and development of logo and golf course naming related issues 2.2 Environmental Standards and Actions. Authority and KSM agree to set forth those minimum actions, standards and procedures to be implemented by KSM in its 04/26/20061:50PM 4 15 operation and maintenance of the Real Property in order to meet the environmental requirements imposed upon the Authority by permits issued for the Golf Course ("the Permits") by all regulatory agencies including the City, the United States Fish and Wildlife Service, the California Department of Fish and Game, the California Coastal Commission, United States Army Corps of Engineers, San Diego Regional Quality Control Board, and Sempra Energy ("Regulatory Agencies"). KSM hereby covenants to comply with and implement the minimum actions, standards and procedures consistent with those imposed by those Permits as contained in Exhibit "C", attached hereto, at all times in performance of its duties and obligations under this Agreement. Authority reserves the right, upon prior written notice to KSM, to revise the minimum actions, standards and procedures to be implemented by KSM in its operation and maintenance of the Real Property from time to time, to adopt additional requirements for operation and maintenance of the Real Property, and to enter upon and modify the Real Property, in order to discharge the Authority's obligations under the Permits. KSM acknowledges that the Coastal Development Permit for the Golf Course requires the Golf Course operator to consult with the TAG, a committee comprised of an advisory group conditioned by the California Coastal Commission, for the purpose of making recommendations on environmental issues so as to protect the environmentally sensitive habitat adjacent to the Golf Course. The Authority reserves the right to remove the Habitat Preserve Area from the scope of this Agreement, or to require KSM to employ persons with expertise in habitat management subject to the Authority's approval. These services shall continue to be provided for the term of the Agreement. 2.3 Market Due Diligence. KSM shall review any market analysis prepared for Authority and shall conduct its own market due diligence to help determine green fee rates, mix of play, other user charges, and other factors to prepare the Initial Business Plan. 2.4 Golf Course Planning. KSM shall assist the Authority in golf course, clubhouse and site planning for the Golf Course, including the following: • Golf Course Vision. KSM shall work with the Authority to establish the vision of the Golf Course and consult with the Authority in keeping the remaining development plans and Initial Business Plan consistent with the vision established by the Authority. This will also involve development of the Golf Course brand statement. • Golf Course. KSM shall work with the golf course architect and the Authority to help assure that the final design decisions meet the vision that the course will be "player-friendly" and can be maintained cost-effectively. KSM shall consult with the Authority on design items such as drainage, irrigation, and grassing. • Construction Phase. KSM will continue to consult with the City during the construction phase. KSM will attend meetings and offer advice and opinions to Authority on a regular basis regarding construction issues, the budget and the schedule. KSM will work with general contractor in good faith to assure a seamless turnover of holes to KSM during grow-in phase. 04/24/20061:59PM • Clubhouse. KSM shall consult with the Authority and the clubhouse architect on the planning and programming of the clubhouse. This work includes selection and procurement of furniture, fixtures, and equipment, etc. KSM shall assist the Authority in working with other clubhouse consultants such as kitchen, pro shop fixtures, and clubhouse interiors. • Maintenance Building. KSM shall work with the Authority and the building architect regarding the maintenance building. KSM shall consult on construction and move-in. Additionally, KSM will work with the Authority in procuring tools, equipment and supplies so it is ready for grow-in and full-time operations. • Site Planning/Front Entry. KSM shall consult with the Authority's site planning and landscape consultants on the overall site plan, including the area around the clubhouse and the front entrance. 2.5 Golf Course Pre-Opening Marketing. KSM shall develop a naming, branding and marketing/sales plan for the Golf Course for the Authority's approval. KSM will coordinate pre-opening public relations, advertising and marketing activities and shall manage grand opening events for the Golf Course with the Authority's approval. The pre-opening marketing campaign would commence once the Authority approves the plan. KSM shall manage the golf writers and golf course rankings during construction, including coordination of on-site visits and interviews. KSM's corporate and regional executives along with on-site operating staff will manage the pre-opening marketing plan when they are hired. 2.6 Pre-Opening Operations. KSM shall oversee all pre-opening operations to prepare the Golf Course for the Opening Date, all in accordance with the approved pre-opening operations plans and budgets, including (i) hiring the general manager and other clubhouse staff and managing all human resource and employee orientation activities; assist in establishing bank accounts, etc (ii) managing the clubhouse move-in phase, golf course set-up, cart procurement and other related pre-opening set-up activities; (iii) booking future tournaments, outings and events (once a final opening schedule has been established); and (iv) planning and managing the grand opening event, including media and approved guests. 2.7 Grow-In Services. KSM shall consult with Authority and make recommendations regarding the preparations of the golf course for play, including the labor and materials required in connection therewith (the "Grow-In"). KSM shall manage the Grow-In. In accordance with Authority's budget requirements, KSM shall procure materials and supplies necessary for the Grow-In. In accordance with Authority's budget requirements, KSM shall hire and supervise all employees necessary to oversee and implement the Grow-In of the Golf Course. The Authority shall have the right to approve the selection of the Golf Course Superintendent and Assistant Superintendent. All such employees shall be employees of KSM. All expenses associated with the Grow-In shall be Pre- Opening Expenses. KSM will deliver within 60 days of the Commencement Date a pre- 04/24/20061 :59PM opening Budget and Management Plan including growth-in, marketing and pre-opening operations. 2.8 Pro-Opening Budget. Within sixty (60) days after the Effective Date, KSM will create the Pre-Opening Budget that will include all planned non-construction Pre- Opening Expenses leading up to the Opening Date. The Pre-Opening Budget shall include, without limitation, Grow-In, pre-opening marketing, pre-opening payroll, pre- opening clubhouse move-in and operations, inventory procurement, carts, etc. The Pre- Opening Budget will be approved by the Authority prior to its implementation by KSM. 2.9 Initial Business Plan. Based upon consultation with Authority, KSM shall develop and submit to Authority, for its review and approval, no later than 180 days prior to the proposed Opening Date, a preliminary business plan for the Golf Course (the "Business Plan"), which shall include, without limitation , (i) proposed marketing, sales, promotion, advertising, and public relations concepts for the Golf Course, (ii) a schedule of proposed fees and general operating budgets for the Golf Course, and (iii) a description of the assumptions upon which the Business Plan is based. The Authority shall give its comments and/or approval of the Business Plan within ninety (90) days after receiving the Business Plan from KSM. KSM shall not be deemed to have made any guarantee or warranty in connection with the results of operations or performance set forth in the Business Plan (or any updated Business Plan delivered during the Term) since the parties acknowledge that the Business Plan is intended to set forth objectives and goals based upon KSM's judgment and the facts and circumstances known by KSM at the time of preparation. ARTICLE III PROVISIONS AFFECTING SERVICES 3.1 Environmental Remediation. Throughout the Term, if KSM becomes aware of the presence of any Hazardous Material in a quantity sufficient to require remediation or reporting under any Environmental Law in, on or under the Golf Course or if KSM, Authority, the Golf Course, City or the Golf Course becomes subject to any order of any federal, state or local agency to investigate, remove, remediate, repair, close, detoxify, decontaminate or otherwise clean up the Golf Course, KSM shall, at Authority's sole expense, use all commercially reasonable efforts to carry out and complete any required investigation, removal, remediation, repair, closure, detoxification, decontamination or other cleanup of the Golf Course; provided, that such remediation activities shall be at KSM's expense if such activities are required as a direct consequence of Hazardous Material being present in, on or under the Golf Course solely as a result of grossly negligent actions undertaken by KSM. 3.2 Emergency Expenditures. Notwithstanding anything else in this Agreement to the contrary, in the event, at any time during the Term, a condition should exist in, on, or about the Golf Course of an emergency nature which, in KSM's sole and absolute discretion, requires immediate action to preserve and protect the Golf Course, to better assure the Golf Course's continued operation, or to protect the Golf Course's customers, 04/24/20061:59PM guests, or employees, KSM is authorized to take all steps and to make all reasonable expenditures necessary to repair and correct any such condition, whether or not provisions have been made in the applicable Annual Plan for any such expenditures. The Authority shall be notified of the need for, and estimated amount of, any such emergency expenditures as soon as reasonably practical. 3.3 Other Duties and Prerogatives. In fulfilling its operational responsibilities hereunder, KSM shall have all rights ordinarily accorded to a KSM in the ordinary course of business, including, without limitation, the collection of proceeds from the operation of the Golf Course, the approval and payment of obligations, and the negotiating and signing of leases and contracts. KSM shall not be obligated to advance any of its own funds to or for the account of the Authority nor to incur any financial liability, unless the Authority shall have furnished KSM with funds necessary for the full discharge thereof. Further, KSM shall not be obligated to sign any leases or other agreements in KSM's name. However, if for any reason KSM shall have advanced funds in payment of any reasonable expense in connection with the maintenance and operation of the Golf Course, the Authority shall reimburse KSM within a reasonable time upon demand for the full amount of such payments. ARTICLE IV AUTHORITY'S RESPONSIBILITIES 4.1 Costs. The Authority shall have full responsibility for all costs and expenses associated with the development and construction of the Golf Course. 4.2 Security. The Authority shall provide, or arrange for the provision of, security for the Golf Course during design, development and construction and Authority will ensure that the Golf Course are insured to their full replacement value during design, development and construction. 4.3 Golf Course Accounts. KSM shall assist the Authority in establishing bank accounts for the Golf Course at a banking institution or institutions reasonably approved by the Executive Director (which banking institution or institutions shall have branches located in close proximity to the Golf Course), such accounts to be in the Authority's name (the "Golf Course Accounts"). Individuals designated and approved in writing by the Authority as well as City employees designated in writing by the Authority shall be signatories on the accounts, and the Authority and KSM will not change the signatories of such accounts or close such accounts without the prior written consent of Authority. KSM shall assist the Authority in establishing a pre-opening expense account (the "Pre-Opening Expense Account") and a pre-opening payroll account (the "Payroll Account"). The Authority shall fund expenses for operations as described in Sections 4.4 and 4.5 below based on the amounts identified in the approved Pre-Opening Budget in accordance with Section 2.8. 04/24/20061:59PM 4.4 Pre-Opening Expense Account. No later than fifteen days after the Effective Date (and in any event, prior to KSM's incurrence of any Pre-Opening Expenses), Authority shall remit to KSM for deposit into the Pre-Opening Expense Account the sum of $50,000 (the "Pre-Opening Expense Minimum"). Authority shall maintain the Pre- Opening Expense Minimum in the Pre-Opening Expense Account. On a monthly basis, KSM shall provide Authority with a statement describing the expenses paid for the prior month. Within five (5) business days after Authority's receipt of such statement from KSM, Authority shall remit to the Pre-Opening Expense Account the amount set forth in such statement. Authority may not offset amounts due pursuant to any statement against the Pre-Opening Expense Minimum. KSM shall pay all such expenses, including without limitation, the Consulting Fee and any other expenses related to the Golf Course directly from the Pre-Opening Expense Account. 4.5 Pre-Opening Payroll Account. Commencing prior to the date KSM hires the first on-site employees for the Golf Course (and in any event, prior to KSM's incurrence of any payroll expenses), Authority shall remit to KSM for deposit into the Payroll Account, a sum equal to one month's estimated payroll obligations (as specified in the approved Pre-Opening Budget) (the "Payroll Expense Minimum"). Authority shall maintain the Payroll Expense Minimum in the Payroll Account at all times. Thereafter, on a bi-weekly basis, KSM shall provide Authority with a statement containing the projected payroll obligations of the Golf Course for the next two-week period. Within five (5) days after Authority's receipt of such statement from KSM, Authority shall remit to the Payroll Account the amount set forth in such statement. Authority may not offset amounts due pursuant to any statement against the Payroll Expense Minimum, as the Payroll Expense Minimum shall be available solely for payment by KSM of unanticipated payroll obligations. KSM shall pay payroll obligations directly from the Payroll Account. 4.6 Pre-Opening Expenses. "Pre-Opening Expenses" shall include all pre-opening and Grow-In expenses of the Golf Course incurred or paid on behalf of the Authority during the Term as approved by the Authority in the Pre-Opening Budget or otherwise, computed on an accrual basis, including, but not limited to, the following items: (a) Salaries, wages, employee benefits, and payroll expenses, including ADP fees, payroll taxes, Golf Course profit sharing programs, and insurance for all employees employed on-site at the Golf Course.during the Term (except for the Key Management Employees as defined in Section 1.15) (collectively, the "Gross Payroll"); (b) Marketing-, advertising, and promotional expenses; (c) Purchase and replacement, as necessary, of inventories of maintenance parts and supplies; (d) Purchase and replacement, as necessary, of equipment; 05/01/200611:01 AM (e) Purchase and replacement, as necessary, of office supplies, computers, printers, facsimile machines, photocopiers, postage, printing, routine office expenses, and accounting services incurred for the on-site pre-opening operations of the Golf Course; (f) The costs of IT third party consultants and other third party consultants utilized for the Golf Course; (g) Reasonable travel expenses of on-site employees only incurred exclusively in connection with the business of the Golf Course; (h) Accrual of a reserve for insurance (including workers' compensation) each month in an amount or at a rate that is sufficient to pay such insurance premiums when they become due and payable; (i) Insurance premiums to the extent not provided for in the reserve established therefor; (j) Auditing, accounting costs, Golf Course computer fees, and legal fees as approved by the General Counsel for the Authority, incurred in respect of the operation of the Golf Course, including any reasonable financial management and reasonable accounting fees paid to third party accounting firms, if included in the Pre-Opening Budget; (k) Costs incurred for utilities, including, but not limited to, all electric, gas, and water costs, and any other private utility charges incurred in connection with the pre- opening operation of the Golf Course; (1) Ordinary maintenance and repairs, exclusive of any capital improvements or capital replacements, which are hereby excluded; (m) All incidental expenses, as set forth in the approved Pre-Opening Budget, including those incurred by KSM in providing services under the terms of this Agreement and reasonable travel for employees employed on-site at the Golf Course while engaged in performing the obligations of KSM hereunder, air express, costs of recruitment (including applicable agent's fee), and other incidental expenses included in the Pre- Opening Budget; (n) Expenses, including legal fees, damages, awards or other costs involved in defending employment related lawsuits, charges or claims involving personnel of the Golf Course; and (o) All other customary and reasonable expenses incurred in the operation of the Golf Course in accordance with the Pre-Opening Budget. 04/24/20061:59PM 10 ARTICLE V FEES AND REIMBURSABLE EXPENSES 5.1 Consulting Fees. During the Term, KSM shall receive as compensation a fixed fee often thousand dollars ($10,000) per calendar month (to be prorated for any partial calendar month occurring during the Term) (plus amounts for the salaries of any Key Management Employees, as defined in Section 1.15) (the "Consulting Fee"). The Consulting Fee shall be payable by the Authority monthly in advance, no later than the first day of each calendar month. KSM's out-of-pocket expenses will be reimbursed within thirty (30) days after monthly submittal for review and processing. ARTICLE VI INSURANCE 6.0 Insurance. For the duration of this Agreement, KSM shall procure and maintain, at a minimum, the following types and amounts of insurance and coverage as described in this Article VI, all as a Golf Course Expense: 6.1 Types of Coverage: (a) Workers' Compensation. Coverage in compliance with the Workers' Compensation Laws of the State of California providing all statutory benefits and covering all Golf Course employees who are KSM employees. (b) Commercial General Liability. (i) Coverage shall include all premises and operations, including but not limited to, bodily injury, property damage, personal injury, liquor liability, independent contractors, products and completed operations and contractual liability. The applicable limits of liability shall be the minimum combined single limit of $10,000,000 per occurrence. (ii) The Authority, and its officers, officials, employees, agents, and volunteers, and the City of Carlsbad, its officers, officials, employees, agents and volunteers, and any other parties to which the Authority or City is required to have named as additional insured on insurance related to the Golf Course (provided that such parties are identified in writing to KSM), shall be named as an additional insured as respects liability arising out of work or operations performed by or on behalf of KSM. (c) Automobile Liability. Automobile Liability coverage shall apply to all automobiles, trucks and other motor vehicles utilized or controlled by KSM in connection with the Agreement, and shall include all owned, hired and non-owned vehicles in the amount of $1,000,000 combined single limit per occurrence. 04/24/20061:59PM 11 (d) Property Insurance. Property Insurance covering loss or damages to the buildings, structures or other improvements, contents, equipment and supplies on a replacement cost per occurrence basis (except for golf carts that are over five (5) years old shall be insured on an actual cost value basis) for "all risk", including specifically irrigation and/or sprinkler system leakage damage, vandalism and malicious mischief. The Authority shall provide KSM with the appropriate written specifications for all such property to be insured under such policy. The Authority must notify KSM in writing if the Authority wants coverage for flood, earthquake or wind damage or else this damage shall be excluded from coverage. (e) Direct and Indirect Loss of Earnings. Business Interruption, Loss of Income and Extra Expense Insurance in such amounts as will reimburse Authority for direct and indirect loss of earnings attributable to the annual value of lost business in connection with insured physical damage. Such coverage shall be on an "all risk" basis with Authority named as the loss payee. (f) Fidelity Bond. Coverage shall apply to all KSM employees who may handle funds or property in connection with the Golf Course and shall be in an amount not less than $300,000. (g) The coverage required above may be satisfied through a combination of primary and umbrella or excess liability coverage. 6.2 Other Insurance Provisions: (a) All insurance as is afforded under this Agreement shall be primary and without right of contribution from any other policies that are carried or are self-insured by the Authority or by any Additional Insured with respect to their interest in the Golf Course. Further, such insurance shall expressly provide that all the provisions thereof, except limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. (b) Authority and/or City shall be named as additional insureds on all policies on which each is not named as a primary insured to the extent allowed by law. (c) Within ten (10) business days after execution of this Agreement, KSM will furnish certificates of insurance and endorsements to Authority evidencing compliance with the insurance requirements in this Agreement. Authority has the right to review certified policies as reasonably necessary. Each certificate and endorsement shall be subject to reasonable approval by Authority and shall provide that such policy shall not be subject to material alteration to the detriment of Authority or KSM or cancellation without thirty (30) days' notice in writing to be delivered by registered mail to Authority. Should any policy expire or be canceled before the expiration of this Agreement and KSM fail to immediately procure other insurance as specified, Authority reserves the 04/24/20061:59PM 12 right, but shall have no obligation, to procure such insurance. Certificates and endorsements will be furnished per the Notice requirements in Section 9.2. (d) Insurance required under this Agreement shall be maintained with California admitted insurers that carry a minimum Best's Rating of A-VII. If a carrier is non- admitted, a minimum Best's Rating of A-X shall be required. Coverage shall be from a surety or insurance company reasonably acceptable to Authority. 6.3 Insurance Maintained by KSM. The parties acknowledge and understand that as of the Effective Date the following applies to insurance maintained by KSM: (a) Five Thousand Dollars ($5000.00) deductible per occurrence for property damage insurance, (b) ZERO Dollars ($0.00) self-insured retention per occurrence for commercial general liability insurance and automobile liability insurance, and (c) ZERO Dollars ($0.00) participation in loss limits (which is comparable to self-insurance) per accident for workers compensation insurance. Authority understands and agrees that with respect to all policies of insurance required under Sections 3.1, 3.2 and 3.3 the portion of any claim, loss, or damage subject to a deductible amount or a self-insurance or self-assumption amount shall be a Golf Course Expense. KSM shall notify Authority in writing at least thirty (30) days prior to any increase in the deductible amount or self-insured or self- assumed amounts for the insurance coverage maintained by KSM under this Section 3.3. The Executive Director shall have the right to approve an increase in the amount of any deductible. ARTICLE VII INDEMNITIES 7.1 KSM's Indemnity. Except as set forth in Section 6.4, KSM agrees to defend (with legal counsel reasonably satisfactory to the Authority's General Counsel/City Attorney), indemnify and hold harmless Authority and City and Authority's and City's officers, officials, members, employees, agents, representatives, and volunteers from and against any and all claims, demands, actions, lawsuits, proceedings, damages, liabilities, judgments, penalties, fines, expert witness fees, attorneys' fees, costs, and expenses, which results from or is connected with one or more of the following: (i) Any act or omission by KSM or any shareholder, director, officer, or employee of KSM in connection with KSM's performance under this Agreement that constitutes negligence or willful misconduct; or (ii) Any action taken by KSM relating to the Golf Course (i) that is expressly prohibited by this Agreement, or (ii) that is not within the scope of KSM's duties under this Agreement, or (iii) that is not within KSM's delegated authority under this Agreement. KSM's defense and indemnification obligations under this Section shall not apply to (i) any acts or omissions taken either at the specific written direction or written approval of 04/24/20061:59PM 13 the Authority, or (ii) the use by KSM of Golf Course trade names, trademarks, logos or other intellectual property used in connection with the Golf Course, or (ii) claims arising out of the sole negligence or willful misconduct of Authority, City, or their officers, officials, members, employees, agents, representatives or volunteers. 7.2 Survival. The defense and indemnification obligations contained in this Article 7 shall survive the expiration or termination of this Agreement for any reason. ARTICLE VIII TERMINATION RIGHTS 8.1 Termination by Authority. In addition to any other rights of the Authority to terminate this Agreement that are set forth in this Agreement, the Authority shall also have the right to terminate this Agreement upon the occurrence of any of the following events: (a) KSM fails to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by KSM, and such default continues for a period of thirty (30) days after written notice of such default by Authority to KSM; or (b) (i) KSM applies for or consents to the appointment of a receiver, trustee or liquidator of KSM or of all or a substantial part of its assets; (ii) KSM files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) KSM files an answer admitting the material allegations of a bankruptcy petition reorganization proceeding, or insolvency proceeding filed against KSM; (iv) KSM admits in writing its inability to pay its debts as they come due; (v) KSM makes a general assignment for the benefit of creditors; or (vi) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating KSM a bankrupt or insolvent or approving a petition seeking reorganization of KSM or appointing a receiver, trustee or liquidator of KSM or of all or a substantial part of its assets, and such order, judgment or decree continues unstated and in effect for any period of sixty (60) consecutive days; or (c) If, following commencement of construction, the Authority determines in its sole and absolute discretion not to develop the Golf Course, and the Golf Course in not developed by the Authority, the City or any of their Affiliates or any third party; or (d) The Planning Commission of the City of Carlsbad, or the City Council, as applicable, fails to renew approval or conditional approval of the Conditional Use Permit as required and, therefore, the Golf Course cannot continue to operate; or The Authority's right to terminate this Agreement pursuant to this Section shall be exercised upon written notice to KSM given and Authority's termination notice shall specify the effective date of such termination, which date shall not be less than thirty (30) 04/24/20061:59 PM 14 days after the date of KSM's receipt of Authority's termination notice; provided, however, that no grace period or thirty (30) day delay shall apply with respect to terminations pursuant to subparagraphs (c) and (d) of this Section. 8.2 Termination by KSM. KSM shall have the right to terminate this Agreement upon the following events: (a) If the Authority fails to keep, observe, or perform any other material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Authority, and such default continues for a period of sixty (60) days after notice of such default by KSM to Authority, KSM's right to terminate this Agreement pursuant to this Section 8.2 (a) shall be exercised upon written notice to Authority given at any time after the applicable grace period has expired. The grace period shall be extended as may be required for the Board of Directors of the Authority to comply with applicable law pertaining to the posting of agendas and hearings notices. KSM's termination notice shall specify the effective date of such termination, which date shall not be less than thirty (30) days after the date of KSM's termination notice. (b) The Authority's failure to pay any sums payable under this Agreement when and as the same shall become due and payable and such failure shall continue for a period often (10) days after written notice thereof from KSM to the Authority. KSM's right to terminate this Agreement pursuant to this Section 8.2 (b) shall be exercised upon written notice to Authority given at any time after the applicable grace period has expired and shall be effective immediately. 8.3 Payments Upon Termination. Upon expiration or termination of this Agreement, all sums owed by either party to the other shall be paid within forty-five (45) days of the effective date of such termination. 8.4 Curing Defaults. Any default by KSM or Authority under the provisions of Sections 8.1 or 8.2 (a), as the case may be, which is susceptible of being cured shall not constitute a basis for termination of this Agreement if the nature of such default will not permit it to be cured within the grace period allotted; provided that within such grace period the alleged party in default shall have given notice of its intent to cure, has commenced to cure such default, and is proceeding to complete the cure in good faith and with reasonable diligence. 8.5 Effect of Termination. The termination of this Agreement under the provisions of this Article 8 shall not affect the rights of the terminating party with respect to any damages it has suffered as a result of any breach of this Agreement, nor shall it affect the rights of either party with respect to any liability or claims accrued, or arising out of events occurring, prior to the date of termination. 8.6 Remedies Cumulative. Neither the right of termination, nor the right to sue for damages, nor any other remedy available to a party under this Agreement shall be exclusive of any other remedy given under this Agreement or now or hereafter existing at law or in equity. 04/24/20061:59PM 15 8.6 Remedies. A. The Authority's Remedies. Upon the occurrence of an event of default by KSM, the Authority may: 1. Seek specific performance of KSM's obligations or injunctive relief, as applicable; 2. Demand payment of all amounts due the Authority under the terms of this Agreement and demand the payment of all costs, damages, expenses, and reasonable attorney's fees of the Authority arising due to KSM's event of default; 3. Proceed to remedy the event of default, and in connection with such remedy, the Authority may pay all expenses and employ counsel. All sums so expended or obligations incurred by the Authority in connection therewith shall be paid by KSM to the Authority upon demand by the Authority, and on failure of such reimbursement, the Authority may, at the Authority's option, deduct all costs and expenses incurred in connection with remedying the event of default from the next sums becoming due to KSM from the Authority under the terms of this Agreement; and 4. Terminate this Agreement by written notice of termination to KSM. Upon proper termination of this Agreement, KSM shall surrender occupancy of the Golf Course to the Authority. B. KSM Remedies. Upon the occurrence of an event of default by the Authority, KSM may: 1. Demand payment of all amounts due KSM under the terms of this Agreement and demand the payment of all costs, damages, expenses, fees of KSM due to the Authority's event of default; 2. Terminate this Agreement by KSM's written notice of termination to the Authority. In such event, the Authority shall pay to KSM within sixty (60) days of termination an amount equal to the total unpaid Consulting Fees that KSM would have earned had the Agreement remained in effect until the Termination Date. ARTICLE IX TITLE MATTERS: ASSIGNMENT 9.1 Ownership of Improvements and Personal Property. All improvements to the Golf Course made during the term of this Agreement and all Furnishings and Equipment 04/24/20061.59 PM 16 2.1 and Operating Inventory purchased for the Golf Course during the term of this Agreement shall be considered property owned by Authority at such time as the improvements are made or the Furnishings and Equipment or Operating Inventory are purchased.. 9.2 No KSM Assignment or Subcontracting. KSM shall not assign this Agreement, except to an Affiliate of KSM, or subcontract any work, without the prior written consent of the Executive Director. Any assignment by KSM, whether or not requiring the prior consent of Executive Director, shall not be effective unless and until KSM and such assignee execute an assignment and assumption in a form acceptable to the City Attorney. It is understood and agreed that any consent granted by the Executive Director to any such assignment by KSM shall not be deemed a waiver of any consent required under this Section as to any future assignment. Any assignment by KSM of this Agreement in violation of the provisions of this Agreement shall be null and void and shall result in the termination of this Agreement. In addition to any other remedies available to the parties, the provisions of this Section shall be enforceable by injunctive proceeding or by suit for specific performance. 9.3 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. 9.4 Golf Course Name. The Golf Course shall be known by such trade name and/or trademark or logo as may from time to time be determined by the Authority. The parties acknowledge and understand that the names, logos, and designs developed or provided for the Authority and used in the operation of the Golf Course together with appurtenant goodwill, are the exclusive property of the Authority. KSM may identify the Golf Course as a golf course managed and operated by KSM; provided, however, that any display of any KSM logo or other corporate identification shall first be approved by the Executive Director in his sole discretion. ARTICLE X MISCELLANEAOUS 10.1 Force Mai cure Events. As used in this Agreement, the term "Force Majeure Event" means a disruption in the pre-opening operations of the Golf Course due to, or the cause of the failure to perform by a party hereto due to, declared or undeclared war, sabotage, riot or acts of civil disobedience, acts or omissions of governmental agencies (except acts of governmental agencies including, but not limited to, the Authority taken in accordance with this Agreement), accidents, fires, explosions, floods, earthquakes, or other acts of God, strikes, labor disputes, shortages of materials, or any other event not within the control of KSM and not caused by the gross negligence or intentional wrongful conduct of KSM. Notwithstanding anything contained herein to the contrary, the provisions of this Section shall not be applicable to either party's obligation to pay any 04/24/20061:59 PM 17 sums, monies, costs, charges, or expenses required to be paid pursuant to the terms of this Agreement. 10.2 Damage or Destruction. Should the Golf Course be destroyed or substantially damaged by fire, flood, acts of God, or other casualty, Authority, by written notice to KSM given within sixty (60) days following the occurrence of such event, shall have the right to terminate this Agreement on the basis that Authority does not choose to rebuild or restore the Golf Course, and in such event neither party shall have any further obligation to the other party under this Agreement, except with respect to liabilities accruing, or based upon events occurring, prior to the effective date of such termination (or, with respect to amounts due KSM, after such date if it is reasonably necessary to incur additional expenses in the wind-down of operations of the Golf Course). For the purpose of this Section, the Golf Course shall be deemed to have been substantially damaged if the estimated length of time required to restore the Golf Course substantially to its condition and character just prior to the occurrence of such casualty shall be in excess of six (6) months, as indicated by an architect's certificate or other evidence reasonably satisfactory to Authority. If this Agreement is not terminated in the event of damage to the Golf Course either because (i) the damage does not amount to substantial damage as described above, or (ii) notwithstanding destruction of or substantial damage to the Golf Course, Authority elects to restore the Golf Course, then Authority shall proceed, at Authority's own expense, with all due diligence to commence and complete restoration of the Golf Course to its condition and character just prior to the occurrence of such casualty. 10.3 Contract Administration. Authority has designated the Executive Director as the individual who is responsible for administering this Agreement on behalf of Authority. The Executive Director may designate a member of his or her staff to serve as the Project Manager, which individual shall carry out the Executive Director's responsibilities in administering this Agreement. The Executive Director shall inform KSM in writing of the person who will serve as the Project Manger and any change of the Project Manager. KSM has designated J. TOBIN DAVIS as the individual who is responsible for administering this Agreement on behalf of KSM. KSM shall notify the Executive Director in writing if another individual has replaced the foregoing designated person as the person responsible for administering this Agreement on behalf of KSM. The parties acknowledge that except as otherwise expressly provided herein (a) the Executive Director has the authority to approve or consent to those matters identified in this Agreement as requiring Authority's approval or consent and to make all other decisions on behalf of the Authority regarding the administration of this Agreement (except where the Authority's Board of Directors approval is expressly required herein), and (b) KSM's foregoing designated person or such other individual designated by KSM in writing to the Authority has the authority to approve or consent to those matters identified in this Agreement as requiring KSM's approval or consent and to make all other decisions on behalf of KSM regarding the administration of this Agreement. The Authority's management direction to KSM shall be given by the Executive Director. 04/24/20061:59PM IS 10.4 Compliance. KSM shall comply with all applicable laws of governmental bodies having jurisdiction with respect to the Golf Course site and KSM performance of this Agreement. KSM shall as a Pre-Opening Expense procure and maintain any necessary licenses, permits, and approvals required for the performance of its services under this Agreement. Without the prior written consent of the Executive Director, the actual amount expended for any Pre-Opening Expense shall not be greater than two percent (2%) higher than the amount budgeted in the Pre-Opening Budget. Notwithstanding the foregoing sentence, KSM shall be entitled to make additional expenditures not authorized under the then applicable Pre-Opening Budget in the event of an emergency pursuant to the provisions of Section 3.2 or in order to comply with Insurance Requirements or Legal Requirements. 10.5 Notices. All notices, demands, requests, consents, approvals, replies and other communications ("Notices") required or permitted by this Agreement shall be in writing and may be delivered by any one of the following methods: (a) by personal delivery; (b) by deposit with the United States Postal Service as certified or registered mail return receipt requested, postage prepaid to the addresses stated below; or (c) by deposit with a same-day or overnight express delivery service that provides a receipt showing date and time of delivery. Notice deposited with the United States Postal Service in the manner described above shall be deemed effective three (3) business days after deposit with the Postal Service. Notice by same-day or overnight express delivery service shall be deemed effective upon receipt. Notice by personal delivery shall be deemed effective at the time of personal delivery. For purposes of Notices hereunder, the address of Authority shall be: Carlsbad Public Financing Authority c/o City Manager of the City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008 Attention: Executive Director For purposes of Notices hereunder, the address of KSM shall be: Kemper Sports Management, Inc. 500 Skokie Blvd., Suite 444 Northbrook, IL 60062 Attention: Steven K. Skinner, President With a copy to: Kemper Sports Management, Inc. 500 Skokie Blvd., Suite 444 Northbrook, IL 60062 Attention: Corporate Counsel 04/24/20061:59PM 19 Each party shall have the right to designate a different address by the giving of notice in conformity with this Section. 10.6 Independent Contractor. KSM shall at all times be considered an independent contractor under this Agreement. Nothing contained in this Agreement shall be construed to be or create a partnership or joint venture between Authority and its successors and assigns, on the one part, and KSM and its successors and assigns, on the other part. 10.7 Modification and Changes. This Agreement may be amended or modified only by a writing signed by both parties. 10.8 Entire Understanding and Agreement. This Agreement constitutes the entire understanding and agreement between the parties with respect to the management of the Golf Course and this Agreement supersedes all prior understandings and agreements, whether written or oral, between Authority and KSM pertaining to the subject matter hereof. 10.9 Headings. The Article, Section, and Subsection headings contained in this Agreement are for convenience and reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. 10.10 Consents. Each party agrees that it will not unreasonably withhold any consent or approval requested by the other party pursuant to the terms of the Agreement, and that any such consent or approval shall not be unreasonably delayed or qualified, except where such consent is expressly stated as within the party's sole and absolute discretion. Similarly, each party agrees that any provision of this Agreement, which permits such party to make requests of the other party, shall not be construed to permit the making of unreasonable requests. 10.11 Survival of Covenants. Any covenant, term, or provision of this Agreement which in order to be effective must survive the termination of this Agreement shall survive any such termination. 10.12 Third Parties. None of the obligations under this Agreement of either party shall run to or be enforceable by any party other than the party to this Agreement or by a party deriving rights under this Agreement as a result of an assignment permitted pursuant to the terms of this Agreement. 10.13 Waivers. No failure by KSM or Authority to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy consequent upon the breach of this Agreement shall constitute a waiver of any such breach or any subsequent breach of the same covenant, agreement, term or condition. No covenant, agreement, term or condition of this Agreement and no breach of this Agreement shall be waived, altered or modified except by a written instrument. A waiver of any breach of this Agreement shall only affect this Agreement to the extent of 04/24/20061:59PM 20 31 the specific waiver, and all covenants, agreements, terms and conditions of this Agreement shall continue in full force and effect. 10.14 Applicable Law. Venue; Service of Process. This Agreement shall be construed and interpreted in accordance with, and shall be governed by, the laws of the State of California. The parties agree that the Superior Court of the State of California, County of San Diego shall have jurisdiction of any litigation between the parties relating to this Agreement. Service of process on Authority shall be affected in such manner as required by California law for service on public entities. Service of process on KSM shall be made in any manner permitted by California law. 10.15 No Presumption Regarding Drafter. Authority and KSM acknowledge and agree that the terms and provisions of this Agreement have been negotiated and discussed between Authority and KSM, and that this Agreement reflects their mutual agreement regarding the subject matter of this Agreement. Because of the nature of such negotiations and discussions, it would be inappropriate to deem either Authority or KSM to be the drafter of this Agreement, and therefore no presumption for or against the drafter shall be applicable in interpreting or enforcing this Agreement. 10.16 Enforceability of Any Provision. If any term, condition, covenant or obligation of this Agreement shall be determined to be unenforceable, invalid, or void, such determination shall not affect, impair, invalidate, or render unenforceable any other term, condition, covenant, or obligation of this Agreement . All amounts payable pursuant to this Agreement shall be in lawful money of the United States of America. 10.17 Counterparts; Facsimile Signatures. This Agreement and any amendment may be executed in counterparts, and upon all counterparts being so executed each such counterpart shall be considered as an original of this Agreement or any amendment and all counterparts shall be considered together as one agreement. Facsimile signatures shall be as effective as an original signature. 10.18 Covenants Against Discrimination. KSM agrees that in connection with its performance under this Agreement, there shall be no discrimination by KSM against any person on account of race, color, creed, religion, sex, marital status, national origin or ancestry. KSM agrees to include a provision similar to this Section in all subcontracts entered into by KSM in connection with work being performed under this Agreement. 10.19 Non-liability of Authority or Authority Officers and Employees. No officer, official, employee, agent, representative, or volunteer of the Authority, or City shall be personally liable to KSM, or any successor in interest, in the event of any default or breach by the Authority, or for any amount which may become due to KSM or any successor, or for breach of any obligation of the terms of this Agreement. 10.20 Time of the Essence. Time is of the essence of this Agreement. The parties understand that the time for performance of each obligation has been the subject of negotiation by the parties. 04/24/20061:59PM 21 10.21 Exhibits and Attachments Incorporated. All exhibits and attachments to this Agreement are incorporated herein and made a part hereof. 10.22 Authority. The parties represent for themselves that (a) such party is duly organized and validly existing, (b) the person or persons executing this Agreement on behalf of such party is/are duly authorized to execute and deliver this Agreement on behalf of such party, (c) by so executing this Agreement, such party is formally bound to the terms and provisions of this Agreement, and (d) the execution of this Agreement does not violate any provision of any other agreement to which such party is bound. Additionally, the Authority represents and warrants to KSM that (i) the Authority has and will retain the property interests in the Golf Course necessary to enable KSM to perform its duties pursuant to this Agreement peaceably and quietly; and (ii) that KSM's performance of the services required by this Agreement shall not violate the property rights or interests of any third party. 10.23 Authorization to Executive Director. In addition to such other authorizations granted to the Executive Director of Authority in this Agreement to act on behalf of Authority, the Executive Director shall have the authority, in the event of a dispute involving the interpretation of the terms and provisions of this Agreement, to reasonably interpret the terms and provisions of this Agreement on behalf of Authority. 10.24 Possessory Interest. Pursuant to California Revenue and Taxation Code Section 107.6, Authority hereby informs KSM that this Agreement may create a possessory interest subject to property taxation, and in such event KSM may be subject to the payment of property taxes levied on such interest. 10.25 Proprietary Information. All specifically identifiable information developed by KSM for the Authority at the expense of the Authority shall be the property of the Authority. All information, materials, concepts, software programs and technology developed by KSM at KSM's expense, shall be the exclusive property of KSM and neither the Authority nor any of its affiliates or successors may use, copy or disclose such proprietary information without the advance written consent of KSM. The obligations and restrictions contained in this Section shall survive the expiration or termination of this Agreement for any reason. 10.26 Outside Business. Nothing contained in this Agreement shall be construed to restrict or prevent, in any manner, any party or any party's affiliates, parent corporations, or representatives or principals from engaging in any other businesses or investments, nor shall the Authority or KSM have any right to share or participate in any such other businesses or investments of the other party. 04/24/20061:59PM 22 IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the day and year first written above. CONTRACTOR: KEMPER SPORTS MANAGEMENT, INC., an Illinois Corporation CARLSBAD PUBLIC FINANCING AUTHORITY, a Public Entity and Joint Powers Authority (print name/title) President of the Board ATTEST: E. (print name/title) FJORRAINE M. WOOF/ Secretary ^Q--'^i«r £x$uaM 5™J If required by Authority, proper notarial acknowledgment of execution by contractor must be attached. If a Corporation, Agreement must be signed by one corporate officer from each of the following two groups. *Group A. Chairman, President, or Vice-President **Group B. Secretary, Assistant Secretary, CFO or Assistant Treasurer Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation. EXHIBITS: Exhibit B - Habitat Preserve Area Exhibit D - Legal Description of Real Property Exhibit E - Regulatory Permits 05/03/200612:04 PM EXHIBIT B EXHIBIT "D" LEGAL DESCRIPTION OF CITY OF CARLSBAD GOLF COURSE PROPERTY LOTS 50 THROUGH 76 INCLUSIVE OF CARLSBAD TRACT NO. 81-46 UNIT NO. 3, ACCORDING TO MAP THEREOF NO. 11289, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON JULY 16, 1985, TOGETHER WITH THAT PORTION OF CARRIER AVENUE, SWIFT PLACE, PALOMAR OAKS WAY, COLLEGE BOULEVARD AND OTIS COURT AS DEDICATED ON SAID MAP NO. 11289, WHICH UPON CLOSING WOULD REVERT TO BY OPERATION OF LAW TO SAID LOTS; ALSO THAT CERTAIN LOT DESIGNATED AS "REMAINDER PARCEL" ON SAID MAP 11289; ALSO, LOTS I THROUGH 26 OF CARLSBAD TRACT NO. 85-17, ACCORDING TO MAP THEREOF NO. 12903, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON DECEMBER 13, 1991, TOGETHER WITH THAT PORTION OF COLLEGE BOULEVARD, ROCKEFELLER ROAD, CARNEGIE COURT, GETTY PLACE, HAMMER COURT, PALOMAR AIRPORT ROAD AND HIDDEN VALLEY ROAD AS DEDICATED ON SAID MAP NO. 12903, WHICH UPON CLOSING WOULD REVERT BY OPERATION OF LAW TO SAID LOTS; ALSO, A PARCEL OF LAND BEING A PORTION OF LOT F AND A PORTION OF LOT G OF RANCHO AGUA HEDIONDA, ACCORDING TO PARTITION MAP THEREOF NO. 823 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896; BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT POINT 9 OF SAID LOT F; THENCE N.0029'11"W. ALONG THE WESTERLY BOUNDARY OF SAID LOT F, 167.78 FEET TO A POINT ON THE ARC OF A NONTANGENT 58.00 FOOT RADIUS CURVE, CONCAVE WESTERLY, A RADIAL LINE TO SAID POINT BEARS S.55°03'22"E.; THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 7051'37", A DISTANCE OF 71.73 FEET TO SAID WESTERLY BOUNDARY; THENCE N.0029'11"W., 2092.42 FEET TO POINT 8 OF SAID LOT F; THENCE N.06°47'51"E., 1219.60 FEET TO A POINT ON THE NORTHERLY LINE OF SAID LOT E, DISTANT S.87°23'24"E., 2025.08 FEET FROM POINT 6 OF SAID LOT F; THENCE S.87°23'24"E. 2417.19 FEET TO THE NORTHWEST CORNER OF THE LAND DESCRIBED IN DEED TO HOWARD G. KIRGIS, ET UX., RECORDED SEPTEMBER 24,1957 IN BOOK 6761, PAGE 197 OF OFFICIAL RECORDS; THENCE S.02°36'36"W., 740.00 FEET TO THE SOUTHWEST CORNER OF SAID KIRGIS PROPERTY; THENCE S.87°23'24"E., 1378.84 FEET TO THE SOUTHEAST CORNER OF SAID KIRGIS PROPERTY; THENCE S.1058'35"E., 1394.10 FEET TO POINT 14 OF SAID LOT F; BEING THE MOST NORTHERLY CORNER OF LAND DESCRIBED IN DEED TO S.L. KELLY, RECORDED FEBRUARY 3,1961, AS FILE NO. 202293 OF OFFICIAL RECORDS; THENCE ALONG THE NORTHEASTERLY LINE OF SAID KELLY'S LAND S.51°01'58"E., 1042.27 FEET; THENCE S.38°58'02"W., 288.57 FEET; THENCE N.51°01'58"W. 152.00 FEET, THENCE S.38°58'02"W. 152.00 FEET; THENCE N.51°01'58"W. 1089.27 FEET TO A POINT ON THE LOT LINE BETWEEN POINT 13 AND POINT 14 OF SAID LOT F; THENCE S.63°14'04"W. ALONG SAID LOT LINE 564.30 FEET TO SAID POINT 13; THENCE S.40 42'08"W., 1584.44 FEET TO POINT 12 OF SAID LOT F; THENCE N.89°46'41""W., 646.96 FEET TO POINT 11 OF SAID LOT F; THENCE N.59°47'49"W., 1175.97 FEET TO POINT 10 OF SAID LOT F; THENCE S.70 54'2T'W., 546.55 FEET TO THE POINT OF BEGINNING; EXCEPTING THEREFROM ALL THOSE PORTIONS DESCRIBED IN DOCUMENTS RECORDED SEPTEMBER 10, 2001 AS INSTRUMENT NO. 01-0646854, 010646855, 01-0646856 AND 01-0646857 OF OFFICIAL RECORDS; ALSO EXCEPTING THEREFROM THOSE PORTIONS DESCRIBED IN PARCELS A AND C IN GRANT DEED RECORDED FEBRUARY 15, 2002 AS INSTRUMENT NO. 0135145 OF OFFICIAL RECORDS; ALSO THE SOUTHEASTERLY 152.00 FEET OF THE SOUTHWESTERLY 152.00 FEET OF THAT CERTAIN PORTION OF LOT G OF RANCHO AGUA HEDIONDA, ACCORDING TO SAID PARTITION MAP THEREOF NO. 823, BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT POINT 7 OF SAID LOT G WHICH POINT IS ALSO SHOWN AS POINT 14 OF LOT F ON SAID PARTITION MAP NO. 823; THENCE FROM SAID POINT OF BEGINNING, S.51°15'45"E., ALONG THE NORTHEASTERLY LINE OF SAID LOT G, 1042.27 FEET; THENCE AT RIGHT ANGLES S.37°44'15"W. 440.57 FEET; THENCE AT RIGHT ANGLES N,52°15'45"W., 1240.75 FEET TO A POINT ON THE NORTHWESTERLY LINE OF SAID LOT G; THENCE N.62°00'00"E. ALONG A PORTION OF THE NORTHWESTERLY LINE OF SAID LOT G, 483.29 FEET TO THE POINT OF BEGINNING OF THE PROPERTY HEREIN DESCRIBED, ALL OF THE AFOREDESCRIBED LAND BEING IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. CONTAINING A TOTAL OF 396 ACRES MORE OR LESS. ACTIONS, STANDARDS AND PROCEDURES FOR PERMITS Reference the attached permits as follows: 1. State Water Resources Control Board, WDID No. 937C337203 dated October 17, 2005; 2. California Department of Fish and Game, Streambed Alteration Agreement No. 5-122-00 dated June 30, 2004; 3. United States Army Corps of Engineers Permit No. 972020600-SMJ dated January 5, 2005 modifying Permit No. 972020600-MAT dated September 30, 2000; 4. California Coastal Commission Coastal Development Permit No. A- 6CII-00-087, Notice of Acceptance dated April 25, 2005; 5. City of Carlsbad, Endangered Species Act Incidental Take Permit No. HMP 04 -01 dated December 6, 2004; 6. San Diego Gas and Electric Company, Letter of Permission for Grading and Construction of Improvements dated June 23, 2005. EXHIBIT E 10/17/05 09:38 FAI 9162660053 COPY EDGE PRINTING @l ooi Alan C Lloyd Pfi D Secretary for Environmental Protection October 17,2005 i Wafer Resources Control Board Division of Water Quality 1001J Street • Sacramento, California 95814 • (916) 341-5536 Mailing Address: P.O. Box 1977-Sacramento, California-95S12-1977 ' FAX (916) 341-5543 • Internet Address: http://www.waterboards.ca.eov Email Address: stomwatei@waterhoards.ca^ov Arnold Sctimrzeneggei Governor John Cahill Carlsbad City 1200 Carlsbad Village Dr Carlsbad, CA 92008 OCT 1 1 2005 r-WXli' ii ASSOC:•• ??:.»/j Office RECEIPT OF YOUR NOTICE OF INTENT The State Water Resources Control Board (State Water Board) has received and processed your NOTICE OF INTENT TO COMPLY WITH THE TERMS OF THE GENERAL PERMIT TO DISCHARGE STORM WATER ASSOCIATED WITH CONSTRUCTION ACTIVITY. Accordingly, .you are required to comply with the permit requirements. The WDID identification number 9 37C337203. Please use this number in any future communications regarding this permit' SITE DESCRIPTION OWNER: Carlsbad City DEVELOPER: Sema Construction Inc COUNTY: San Diego SITE ADDRESS: 5800 Hidden Valley Rd Carlsbad, CA 92009- COMMENCEMENT DATE: 9/8/05 EST. COMPLETION DATE: 07/01/07 When construction is complete or ownership has been transferred, dischargers are required to notify the Regional Water Board by submitting a Notice of Termination (NOT). All State and local requirements must be met in accordance with Special Provision No. 7 of the General Permit If you do not notify the State Water Board that construction activity has been completed you will continue .to be invoiced for the annual fee each October. Please visit the storm water web page at www.waterboards.ca.gov/stormwtr/index.html to obtain an NOT and other storm water related information and forms. If you have any questions regarding permit requirements, please contact your Regional Water Board at (858)467-2952. Sincerely, Storm Water Section Division of Water Quality California Environmental Protection Agency Recycled Paper EXHIBIT E-1 40 IFOPMIA .THF PF < DEPARTMENT OF FISH AND GAME Region 5 4949 Viewridge Avenue an Diego, California 92123 58)467-4201 June 30,2004 Mr. John Cahill City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008-7314 RE: City of Carlsbad Municipal Golf Course Streambed Alteration Agreement #5-122-00 Dear Mr. Cahill: Enclosed is your copy of Streambed Alteration Agreement 5-122-00. If you agree with the conditions/measures set forth in the agreement, please make a copy, then sign and return both copies to our office for signature, at the above address. Written notice of your intent to commence project activities needs to be provided to the Department at least five days in advance of commencing project activities. The California Fish and Game Code requires that you notify the Department in writing within 14 days of receipt of this Proposal as to its acceptability. If you do not respond within this time period you will lose your right to request binding arbitration. For minor changes we suggest you contact the person responsible for writing your agreement prior to sending the written response. Please be advised the Department cannot execute (sign) your Streambed Alteration Agreement without your certified CEQA (California Environmental Quality Act) document, Notice of Determination (NOD), Findings, and proof of having paid the CEQA document filing fee. Also, this Agreement is subject to change upon receipt and review of your certified CEQA documents. If the project was determined to be exempt under CEQA by the lead agency, please provide a copy of the Notice of Exemption or other appropriate documentation. If you have any questions regarding the proposed conditions please contact me at (858) 467-4223. Thank you for your cooperation in this matter. Tamara A. Spear Environmental Scientist Habitat Conservation Planning, Region 5 EXHIBIT E-2 CALIFORNIA DEPARTMENT OF FISH AND GAME 4949 Viewridge Avenue San Diego, California 92123 Notification No.5-1 22-00 AGREEMENT REGARDING PROPOSED STREAM OR LAKE ALTERATION THR AGREEMENT entered into between the State of California, Department of Fish and Game hSeinafter called the Department, and John Cahill. representing the Cityof clrTsb'ad State of California . hereinafter called the Operator, is as follows: WHEREAS pursuant to Section 16Q1_ of California Fish and Game Code, the Operator, on thel5' da7of_Maw2QQQ, notified the Department that they intend to divert or obstruct the natural flow of or change the bed, channel, or bank of or use material from the Streambed(s) of, the following water(s): 1 Innamed drainage fributaryto the Aqua Hed.onda Lagoon! San Diego County, California, Section _ Township 12S_ Range 4W_. WHEREAS the Department (represented byTamara Spear) has determined that such oberatio^nTiray substantially adversely affect those existing fish and wildhfe resources of an unnamed tributary to the San Luis Rey River, specifically California anatcatcher. least Bell'* vir^o oranQethroat vfriptai . i white-talJeTOe. Cooper's hawk. Southwestern willow flycatcher. California shrike. yellow warbler, yellow-breasted chat. Southern California sparrow, great blue heron. San Dieao black-tailed rackrabbit. Northvesterm o- njpqri pnr.kftt mouse. San Dieoo desert woodrat. Yuma rnyotis bats. Northern harrier. mule deer, California Adolphia. Del Mar manzanita. Lewjs' evening primrose. Prostrate spineflower. Western dichondraT^e^urrbent aoldenbush. Southwestern soinv rusrL Nuttall's scrub oak and^ Ashvspike-moss. These plants and wildlife are associated~with Dieaan Coastal Saoe Scrub. Southern Maritirre Chaparral. Native and non-native grasslands. Southern Willow/Mulefat Scrub. Southern Coastal Freshwater Marsh. Riparian herb. Eucalyptus woodland and disturbed lands. THEREFORE, the Department hereby proposes measures to protect fish and wildlife resources during the Operator's work. The Operator herebyagrees to accept the following measures/conditions as part of the proposed work. If the Operator's work changes from that stated in the notification specified above, this Agreement is no longer valid and a new notification shall be submitted to the Department of Fish and Game. Failure to comply with the provisions of this Agreement and with other pertinent code sections, including but not United to Fish and Game Code Sections 5650, 5652, 5937, and 5948, may result in prosecution. Nothing in this Agreement authorizes the Operator to trespass on anyland or property, nor does it relieve the Operator of responsibility for compliance with applicable federal, state, or local laws or ordinances. A consummated Agreement does not constitute Department of Fish and Game endorsement of the proposed operation, or assure the Department's concurrence with permits required from other agencies. This Agreement becomes effective the date of Department's signature and terminates December 31. 2008 for project construction only. This Agreement shall remain in effect for that time necessary to satisfy the terms/conditions of this Agreement. Page 1 of 5 U 1 STREAMBED ALTERATION AGREEMENT #5-122-00 1. The following provisions constitute the limit of activities agreed to and resolved by this Agreement. The signing of this Agreement does not imply that the Operator is precluded from doing other activities at the site. However, activities not specifically agreed to and resolved by this Agreement shall be subject to separate notification pursuant to Fish and Game Code Sections 1600 et seq. Project Location and Description: 2. The Operator proposes to alter the streambed of an unnamed tributary to Agua Hedionda Lagoon to accommodate the construction of a Municipal Golf Course which will include an 18-hole championship golf course, clubhouse, maintenance facility, driving range, conference center, and pads for industrial/golf related uses. The project is located approximately one mile to the east of Interstate 5. Palomar Airport Road forms the southern boundary, Hidden Valley Road forms the western boundary, and the southern edge of grading for the future extension of Faraday Avenue forms the northern boundary. The 396-acres project site is located in the northwestern quadrant of the City of Carlsbad, San Diego County, impacting 0.91 acres of streambed. 3. The agreed work includes activities associated with No. 2 above. The project area is located in an unnamed ephemeral drainage, tributary to Agua Hedionda Lagoon, San Diego County. Specific work areas and mitigation measures are described on/in the plans and documents submitted by the Operator, including an Environmental Impact Report, and shall be implemented as proposed unless directed differently by this agreement. 4. The Operator shall not impact more than 0.91 acres of streambed comprised of 0.46 acres mule fat scrub, and 0.45 acres of unvegetated channel. Impacts are considered permanent and will be mitigated at a 3:1 ratio for mule fat scrub and 1:1 ratio for unvegetated channel, for a mitigation acreage requirement of 1.83 acres. Mitigation: 5. As mitigation for the project, the Operator shall restore through creation and enhancement, 1.83 acres of comparable wetland habitat on-site. The Operator shall submit a final Mitigation and Monitoring Plan within 60 days of signing this Streambed Alteration Agreement. Department approval of that plan is required prior to project initiation/impacts. All revegetation shall be installed no later than March 31.2009. 6. The Operator shall mitigate at a minimum 5:1 ratio for impacts beyond those authorized in this Agreement. In the event that additional mitigation is required, the type of mitigation shall be determined by the Department and may include creation, restoration, enhancement and/or preservation. Vegetation. Reveaetation and Restoration: 7. All mitigation planting shall have a minimum 100% survival the first year and 80% survival thereafter and/or shall attain 75 % cover of native wetland species after 3 years and 90% cover of native wetland species after 5 years. If the survival and cover requirements have not been met, the Operator is responsible for replacement planting to achieve these requirements. Replacement plants shall be monitored with the same survival and growth requirements for 5 years after planting. At the completion of the monitoring period, the mitigation site shall have received NO supplemental irrigation for a period of two consecutive years, nonnative plants shall not make up more than 5% of the Page 2 of 5 . STREAMBED ALTERATION AGREEMENT #5-122-00 entire cover of the site, no more than 5% of the site shall consist of bare ground and site shall be free of invasive exotic plants species. 8. All planting should be done between October 1 and April 30 to take advantage of the winter rainy season. 9. An annual report shall be submitted to the Department by January 1 of each year for 5 years afer the on-site restoration/planting. This report shall include the survival and percent cover. The number by species of plants replaced, an overview of the revegetation effort, and the method used to assess these parameters shall also be included along with photos from designated photo stations. Work Period and Time Limits: 10. The Operator shall not remove vegetation within the stream from February 15 toSeptember 1 to avoid impacts to nesting birds. Habitat Protection: 11. The Operator shall have a qualified biologist onsite daily during any impacts to vegetation for the purpose of monitoring and enforcing conditions of this agreement. 12. Preparation shall be made so that runoff from steep, erodible surfaces will be diverted into stable areas with little erosion potential. Frequent water checks shall be placed on dirt roads, cat tracks, or other work trails to control erosion. 13. The perimeter of the work site shall be adequately flagged to prevent damage toadjacent riparian habitat. Structures: 14. This Agreement does not authorize the construction of any temporary or permanent dam, structure, flow restriction or fill except as described in the Operator's notification. Equipment and Access: 15. No equipment shall be operated in ponded or flowing areas. 16. Staging/storage areas for equipment and materials shall be located outside of the stream. 17. Access to the work site shall be via existing roads and access ramps. 18. Any equipment or vehicles driven and/or operated within or adjacent to the stream shall be checked and maintained daily, to prevent leaks of materials that if introduced to water could be deleterious to aquatic life. 19. The clean-up of all spills shall begin immediately. The Department shall be notified immediately by the Operator of any spills and shall be consulted regarding clean-upprocedures. Turbiditv/Siltation: Page 3 of 5 STREAMBED ALTERATION AGREEMENT #5-122-00 20. Water containing mud, silt or other pollutants from aggregate washing or other activities shall not be allowed to enter a lake or flowing stream or placed in locations that may be subjected to high storm flows. Pollution. Litter and Cleanup: 21. The Operator shall comply with all litter and pollution laws. All contractors, subcontractors and employees shall also obey these laws and it shall be the responsibility of the operator to ensure compliance. 22. Spoil sites shall not be located within a stream, where spoil could be washed back into a stream, or where it could cover aquatic or riparian vegetation. 23. Raw cement/concrete or washings thereof, asphalt, paint or other coating material, oil or other petroleum products, or any other substances which could be hazardous to aquatic life, resulting from project related activities, shall be prevented from contaminating the soil and/or entering the waters of the state. These materials, placed within or where they may enter a stream/lake, by Operator or any party working under contract, or with the permission of the Operator, shall be removed immediately. 24. No debris, soil, silt, sand, bark, slash, sawdust, rubbish, cement or concrete or washings thereof, oil or petroleum products or other organic or earthen material from any construction, or associated activity of whatever nature shall be allowed to enter into or placed where it may be washed by rainfall or runoff into, waters of the State. When operations are completed, any excess materiajs or debris shall be removed from the work area. No rubbish shall be deposited within 150 feet of the high water mark of any stream or lake. 25. No equipment maintenance shall be done within or near any stream channel where petroleum products or other pollutants from the equipment may enter these areas under any flow. Other: 26. The Operator shall provide a copy of this Agreement to all contractors, subcontractors, and the Operator's project supervisors. Copies of the Agreement shall be readily available at work sites at all times during periods of active work and must be presented to any Department personnel, or personnel from another agency upon demand. 27. The Department reserves the right to enter the project site at any time to ensure compliance with terms/conditions of this Agreement. 28. The Operator shalj notify the Department, in writing, at least five (5) days prior to initiation of construction (project) activities and at least five (5) days prior to completion of construction (project) activities. Notification shall be sent to the Department at 4949 Viewridge Avenue, San Diego, CA 92123 Attn: Tamara A. Spear 29. It is understood the Department has entered into this Streambed Alteration Agreement for purposes of establishing protective features for fish and wildlife. The decision to proceed with the project is the sole responsibility of the Operator, and is not required by this agreement. It is further agreed all liability and/or incurred cost related to or arising out of the Operator's project and the fish and wildlife protective conditions of this agreement, remain the sole responsibility of the Page 4 of 5 M £ STREAMBED ALTERATION AGREEMENT #5-122-00 Operator. The Operator agrees to hold harmless the State of California and the Department of Fish and Game against any related claim made by any party or parties for personal injury or any other damages. 30. The Operator may request one extension of this agreement, subject to Department approval, prior to its termination. The extension request and fees shall be submitted to the Department's Region 5 office at the above address. If the Operator fails to request the extension prior to the agreement's termination, then the Operator shall submit a new notification with fees and required information to the Department. Any activities conducted under an expired agreement are a violation of Fish and Game Code Section 1600et. seq. 31. The Department reserves the right to suspend or cancel this Agreement for other reasons, including but not limited to the following: a. The Department determines that the information provided by the Operator in support of the Notification/Agreement is incomplete or inaccurate; b. The Department obtains new information that was not known to it in preparing the terms and conditions of the Agreement; c. The project or project activities as described in the Notification/Agreement have changed; d. The conditions affecting fish and wildlife resources change or the Department determines that project activities will result in a substantial adverse effect on the environment. 32. Before any suspension or cancellation of the Agreement, the Department will notify the Operator in writing of the circumstances which the Department believes warrant suspension or cancellation. The Operator will have seven (7) working days from the date of receipt of this notification to respond in writing to the circumstances described in the Department's notification. During the seven (7) day response period, the Operator shall immediately cease any project activities which the Department specified in its notification. The Operator shall not continue the specified activities until that time when the Department notifies the Operator in writing that adequate methods and/or measures have been identified and agreed upon to mitigate or eliminate the significant adverse effect. CONCURRENCE City of Carlsbad California Dept. of Fish and Game (date) (signature) (date) John Cahill C.F. Ravsbrook. Regional Manager (t'tle) /fl/1/i/./AL Ptofcfo(title) Page 5 of 5 I V t\ v I i ri u REPVVTO ATTENTION Oft DEPARTMENT OF THE ARMY . LOS ANGELES DISTRICT, CORPS OF ENGINEERS P.O BOX 532711 LOS ANGELES, CALIFORNIA 90053-2325 January 5,2005 Office of the Chief Regulatory Branch City of Carlsbad Engineering Department Attention: John Cahill 2075 Las Palmas Drive Carlsbad, California 92009-1519 DearMr.Cahill: Reference is made to your request of March 16,1999 to amend Permit No. 97202060G-5MJ which authorised you to impact 2.95 acres of wetlands and waters of the U.S. to construct the Carlsbad Municipal Golf Course which would impact an unnamed tributary to the Agua Hedionda Creek in Carlsbad, San Diego County, California. Under Che provisions of 33 Code of Federal Regulations 325.6(d), the start date is to remain (he same and the completion date is extended from August 8,2005 to August 8,2007. Under the provisions of 33 Code of Federal Regulations 325.7(b), your permit is modified as follows: You are hereby authorized to construct the Carlsbad Municipal Golf Course on a 418-acre site located in the northwest quadrant of me City of Carlsbad. Palomar Airport Road forms the southern boundary of the site, Hidden Valley Road forms the eastern boundary, and the southern edge of grading for the extension of Faraday Avenue forms the northern boundary. Hie northern portion of the site is in the Agua Hedionda watershed and drains into Agua Hedionda Lagoon. The remainder of the site is in the Encinas Creek watershed, which drains through Encinas Canyon to the Pacific Ocean. In addition to the 18-hole championship golf course, the proposed project includes a clubhouse, maintenance facility, driving range, conference center, and pads for industrial/golf course uses. The Carlsbad Golf project received the Incidental Take Permit from the U.S. Fish and Wildlife Service .on December 06,2004. Also, the US. Fish and Wildlife Service concurred on December 15, 2004 that the project is consistent with the Carlsbad Habitat Management Plan- Therefore, Special Condition 1 of the original permit, dated August^, 2000, is no longer applicable. • - • '' '': The permittee shall now impact no more than 0.91 acre of waters of the United States. Specifically, the permittee shall impact no more than 0-46 acre of wetland Waters of the U.S. EXHIBIT E-3 rco. y, i\i\jj o.tzniYi ni/i\ -2- and 0.45 acre of non-wetland Waters of the U.S. This replaces Special Condition 2 of the original permit, dated August 2,2000. , The permittee shall mitigate impacts to 0.91 acre of waters of the U.S. (including wetland and non-wetland waters) by the on-site creation of 1,83 acres of riparian habitat, in accordance with the Gty of Carlsbad Revised Golf Course Riparian Mitigation Flan, dated December 2003. This replaces Special Condition 3 of the original permit, dated August 2,2000. The tenns and conditions of Permit No, 972020600-SMJ, except as changed herein/ remain in full force and effect Please note that a copy of (his letter is being forwarded to Field Supervisor, Ecological Services Field Office, U.S. Fish and Wildlife Service, 6010 Hidden Valley Road, Carlsbad, California 92009; U.S. Environmental Protection Agency, Attn: Mr. Tim VendJinski, Supervisor, Wetlands Regulatory Office (WTR-8), 75 Hawthorne Street San Francisco, California 94105; California Department of Fish and Game, Attn: Charles Raysbrook, 4949 View Ridge Ave., San Diego, California 92123. California Regional Water Quality Control Board, Region 9, San Diego, Attn: Mr. Michael McCann, Manager, Watershed Branch, 9174 Sly Park Court, Suite 100, San Diego, California 92123 Sincerely, David J. Castanon Acting Chief, Regulatory Branch, flGOE REGULfiTORY Fax:8586745388 Rpr 20 2004 16:43 P.02 LOS ANGELES DISTRICT U.S. ARMY CORPS OF ENG/NEERS Permittee: Permit Number Issuing Office: DEPARTMENT OF THE ARMY PERMIT i'r *. City of Carlsbad 972020600-MAT Los Angeles District Note: The term "you" and its derivatives, as used in this permit, means the permittee or any future transferee. The term "this office" refers to the appropriate district or division office of the Corps of Engineers having jurisdiction over the permitted activity or the appropriate official acting under the authority of the commanding officer. You are authorized to perform work in accordance with the terms and conditions specified below. Project Description: To construct the Carlsbad Municipal Golf Course project in the City of Carlsbad, San Diego County, California, as shown on the attached drawings. Project Location: In unnamed tributaries to Agua Hedionda Creek and Encinas Creek in the City of Carlsbad, San Diego County, California. The 418-acre site is located in the northwestern quadrant of the City of Carlsbad- Palomar Airport Road forms the southern boundary of the site, Hidden Valley Road forms the eastern boundary, and the southern edge of grading for the future extension of Faraday Avenue forms the northern boundary. The northern portion of the site is in the Agua Hedionda watershed and drains into Agua Hedionda Lagoon. The remainder of the site is in the Encinas Creek watershed, which drains through Encinas Canyon (located on the south side of Palomar Road) to'the Pacific Ocean. Permit Conditions: 1 Your use of the permitted activity must not interfere with the public's right to free navigation on all navigable waters of the United States. 2 You must have a copy of this permit available on the vessel used for the authorized transportation and disposal of dredged material. 3 You must advise this office in writing, at least two weeks before you start maintenance flCOE REGULflTORY Fax : 8586745388 fipr 20 2004 16 = 43 P. 03 dredging activities under the authority of this pennit. .( 4 You must install and maintain/ at your expense, any safety lights and signals prescribed by the United States Coast Guard (USCG), through regulations or otherwise, on your authorized facilities. The USCG may be reached at the following address and telephone number. 5 The condition below will be used when a Corps permit authorizes an artificial reef, an aerial transmission line, a submerged cable or pipeline, or a structure on the outer continental shelf. National Ocean Service (NOS) has been notified of this authorization. You must notify NOS and this office in writing, at least two weeks before you begin work and upon completion of the activity authorized by this permit Your notification of completion must include a drawing which certifies the location and configuration of the completed activity (a certified permit drawing may be used). Notifications to NOS will be sent to the following address: The Director, National Ocean Service (N/CG 222), Rockvffle, Maryland 20852. 6 The following condition should be used for every pennit where legal recordation of the pennit would be reasonably practicable and recordation could put a subsequent purchaser or owner of property on notice of pennit conditions. You must take the actions required to record this pennit with the Registrar of Deeds or other appropriate official charged with the responsibility for maintaining records of title to or interest in real property. General Conditions: 1. The time limit for completing the authorized activity ends on August 2, 2005 . If you find that you need more time to complete the authorized activity, submit your request for a time extension to this office for consideration at least one month before the above date is reached. 2. You must maintain the activity authorized by this pennit in good condition and in conformance with the terms and conditions of this permit. You are not relieved of this requirement if you abandon the permitted activity, although you may make a good faith transfer to a third party in compliance witK General Condition 4 below. Should you wish to cease to maintain the authorized activity or should you desire to abandon it without a good faith transfer, you must obtain a modification from this permit from this office, which may require restoration of the area. 3- If you discover any previously unknown historic or archeologkal remains while accomplishing the activity authorized by this permit, you must immediately notify this office of what you have found. We will initiate the Federal and state coordination required to determine if the remains warrant a recovery effort or if the site is eligible for listing in the National Register of Historic Places. ». 4. If you sell the property associated, with this permit, you must obtain the signature of the new owner in the space provided and forward a copy of the permit to this office to validate the 50 .flCOE REGULflTORY Fax=8586745388 flpr 20 2004 16=44 P. 04 transfer of this authorization. 5. If a conditioned water quality certification has been issued for your project, you must comply with the conditions specified in the certification as special conditions to this permit. For your convenience, a copy of the certification is attached if it contains such conditions. 6. You must allow representatives front this office to inspect the authorized activity at any time deemed necessary to ensure that it is, being or has been accomplished with the terms and conditions of your permit , Special Conditions: 1. The permittee shall obtain "take" authorization under the Endangered Species Act for any and all impacts to threatened or endangered species prior to initiating waters/ wetlands impacts authorized by this IP, The permittee shall submit verification of compliance with this permit condition prior to initiating waters / wetlands impacts authorized by this DP. This authorization may be obtained by the following means: a) Adoption and approval of the Gty's Habitat Management Plan by the USFVVS and CDFG. (the City would then issue their own take authorization), orb) Individual Section 10 permit issued by the USFWS. 2. The permittee shall impact no, more man 2.95 acres of waters of the United Stales (including wetlands and non-wetland waters). The permittee shall fence (with silt barriers) the limits of the construction corridor to prevent additional waters/wetlands impacts and the spread of silt from the construction zone into adjacent waters/wetlands. If waters/wetlands impacts occur outside these limits, all work shall cease, and the Corps shall be notified immediately. Any waters/wetlands impacts that occur outside the fenced and marked limits shall be mitigated at a minimum 5:1 ratio, and shall be subject to the requirements of all the special conditions listed below. 3. The permittee shall mitigate impacts to 2.95 acres of waters of the United States (including wetlands and non-wetland waters) by a) creating 4.5 acres of riparian habitat on-site adjacent to the Cannon road riparian site and existing Macario Creek riparian corridor; and b) restpring/enhancing 4.0 acres of wetland habitat offsite at the Carltas site. Mitigation grading, planting, and irrigation shall begin prior to and/or concurrent with the planned date of initiating waters/wetlands impacts authorized by this IP. 4. A final conceptual wetiand mitigation plan based on the Carlsbad Golf Course Composite Wetlands Mitigation: Plan (P&D Environmental Services, May 2000) shall be suhtnjjtedjro the Corps for review and approval 30 days prior to initiating waters/wetland impacts (cc: USFWS and EPA). These final conceptual plans shall be prepared in strict accordance with the Corps' Habitat Mitigation andMonitoring Proposal Guidelines (June 1> 1993). In addition to the information presented in P&D's draft May 2000 mitigation plan, it is the Corp's understanding that the Carlsbad Golf on-site mitigation will conform, to the extent practicable, to the specifications outlined in the Cannon Road Mitigation Plan (specifically the "Addendum to the Conceptual Mitigation Plan for Cannon Road Extension Project Reaches 1 3 flCOE REGULflTORY Fax=8586745388 flpr 20 2004 16:44 P. 05 and 2" dated February 20,1998). The final conceptual mitigation plan shall include and incorporate all sections of the Canon Road mitigation plans that pertain to the Carlsbad Golf project. In addition, all addendums submitted to the Corps shall be included in the final conceptual plan. The final conceptual plan shall include details of the offsite restoration/enhancement including location, methods of removal, replanting strategies and techniques, success criteria (performance standards), monitoring/maintenance methods and schedules. Additional content and requirements for the final conceptual plan are listed below in special condition number five. The final conceptual plan shall be submitted as one complete and comprehensive document for Corps review 30 days prior to the planned date of initiating waters/wetlands impacts authorized by this IP. No impacts to waters/wetlands shall occur until after the Corps approves the conceptual plan. 5. Final wetland construction plans, specifications and drawings based on the Corps- approved final conceptual wetland mitigation plan shall be submitted to the Corps for review and approval 10 days prior to initiating wetland impacts. The final plans and specifications shall also include: a) All final specifications and topography-based layout grading, planting, and irrigation. b) A provision that all wetland creation areas shall be graded to the same elevation as the adjacent existing wetlands and/or within one foot of the groundwater table, and shall be left in a rough grade state with topographic relief (including channels) that mimics natural wetland topography. c) Planting pallets (plant species,, size, and number per acre) and seed mix (plant species and pounds per acre). All planting shall be installed in a manner that mimics natural plant distribution (e.g., random and/or aggregate distributions rather man uniform rows). Plantings shall generally be placed within the mitigation areas along hydrologic gradients that make ecological sense in relation to each plant's facultative category (e.g. obligate, facultative, etc.). d) A provision that on the first anniversary of the initial planting, all dead plants shall be replaced unless their function has been replaced by natural recruitment as verified by the Corps. e) A final implementation schedule that indicates when all wetland/waters impacts, as well as mitigation site grading, planting, and irrigation will begin and end. f) Five years of explicit and measurable success criteria for wetland creation, restoration, and enhancement areas. The permitec shall conduct a minimum of five years of maintenance and monitoring of wetland mitigation areas. If success criteria are met earlier and all artificial water supply to the site has ceased for a minimum of two yearsv the site may be considered, at the Corps discretion, for early approval. In addition to the success criteria outlined in the final mitigation — jihthmdnitoring plan, evidence of wetland hydrology and natural recruitment of native wetland vegetation must be present on-site in order to obtain final Corp approval of the mitigation areas. Annual mitigation maintenance and monitoring reports shall be submitted to the Corps (cc: USFWS and EPA). 6. Planting and irrigation shall not be installed until the Corps has approved the xrutigation. sit® grading. TKo permittee sKall contact tKe dorps, for verification of flCDE REGULflTORY Fax=8586^.588 Hpr AI :AJU4 ic.:^ r.uo proper grading of the mitigation site a minimum of 15 days prior to the planned date of initiating planting. 7. If changes are made to the mitigation design during its implementation, the permittee shall immediately notify the Corps. If changes are determined to be greater than minimal by the Corps, as-built drawings of the mitigation grading, planting, and irrigation shall be submitted to the Corps (cc: USFWS and EPA) within 30 days of implementing the redesignedmitigation. 8. The permittee shall staff a qualified biologist on site during all phases of construction and mitigation implementation to ensure compliance with the requirements of mis permit, and shall produce a report that documents the timing and events of the final implementation schedule. The permittee shall submit the biologist's name, address/ telephone number, email address (if available), and work schedule on the project to the Corps prior to the planned date of initiating waters /wetlands impacts authorized by this IP. The permittee shall report any violation to the Corps within one day of its occurrence. 9. The permittee shall submit a report to the Corps within 30 days of completion of waters/wetlands impacts authorized by this IP that documents compliance with all permit conditions. The report shall include photographs showing fenced and marked limits of impacts to all Corps, jurisdictional areas, as-built construction drawings and a summary of all project activities. 10. The permittee shall not remove/impact vegetation from development areas from March 15 to September 15 to avoid impacts to nesting birds. Any habitat restoration and creation activities also shall be timed to avoid disturbance of Federally-listed and other migratory nesting birds (ie., avoid disturbance from March 15 through September 15). However, the permittee may be authorized to remove/impact vegetation within development and restoration areas during this time if a qualified biologist surveys the proposed work area immediately prior to the vegetation removal and concludes that no impacts to nesting birds will occur. The results of the survey shall be provided to the Corps for review and approval prior to initiation of vegetation removal. A qualified biologist shall monitor the vegetation removal to ensure the no impacts to nesting birds will occur. 11. The permittee shall ensure that water quality is maintained within the channel at and downstream of the project site by incorporating appropriate design elements into the project (e.g., maintaining a soft bottom channel, installing detention basins, etc.) 12. The permittee shall preserve in perpetuity all mitigation areas by placing a biological conservation easement in favor of an agent approved by the Corps on these areas. The permitt"ee°shall submit a draft easement to the Corps prior to initiating wetland impacts. The form and content of the easement shall follow the enclosed example, and must be approved by the Corps prior to its execution. The easement shall state clearly that no other easements or activities that would result in soil disturbance and/or vegetation removal, except as approved by the Corps, shall be allowed within the biological conservation easement area. The permittee shall submit the final easement within. 10 days of receiving Corps approval of the draft easement. 5 flCOE REGULflTORY Fax:8586745388 flpr 20 2004 16:45 P.07 Further Information: 1. Congressional Authorities. You have been authorized to undertake the activity described above pursuant to: () Section 10 of the River and Harbor Act of 1899 (33 U.S.C 403). (X) Section 404 of the Clean Water Act (33 U.S.C 1344). () Section 103 of the Marine Protection, Research and Sanctuaries Act of 1972 (33 US.C 1413). 2. Limits of this authorization. a. This permit does not obviate the need to obtain other Federal, state, or local authorizations required by law. b. This permit does not grant any property rights or exclusive privileges. c. This permit does not authorize any injury to the property or rights of others. jji d. This permit does not authorize interference with any existing or proposed Federal project 3. Limits of Federal Liability. In issuing this permit, the Federal Government does not assume any liability for the following: a. Damages to the permitted project or uses thereof as a result of other permitted or unpermitted activities or from natural causes. b. Damages to the permitted project or uses thereof as a result of current or future activities undertaken by or on behalf of the United States in the public interest c. Damages to persons, property, or to other permitted or unpennitted activities or structures caused by the activity authorized by this permit. d. Design or construction deficiencies associated with the permitted work. e. Damage claims associated with any future modification, suspension, or revocation of this permit, « . . 4. Reliance on Applicant's Data. The determination of this office that issuance of this permit is not contrary to the public interest was made in reliance on the information you provided. t 5. Reevaluation of Permit Decision. This office may reevaluate its decision on this permit at any W time the circumstances warrant. Circumstances that could require a revaluation include, but are 6 flCOE REGULflTORY Fax: 8586745388 flpr 20 2UU4 not limited to, the following: a. You fail to comply with the terms and conditions of this permit b. The information provided by you in support of your permit application proves to have been false, incomplete, or inaccurate (See 4 above). c. Significant new information surfaces which this office did not consider in reaching the original public interest decision. Such a reevaiuation may result in a determination mat it is appropriate to use the suspension, modification, and revocation procedures contained in 33 CFR 325.7 or enforcement procedures such as those contained in 33 CFR 326.4 and 326J5. The referenced enforcement procedures provide for the issuance of an administrative order requiring you to comply with the terms and conditions of your permit and for the initiation of legal action where appropriate. You will be required to pay for any corrective measure ordered by this office, and if you fail to comply with such directive, this office may in certain situations (such as those specified in 33 CFR 209.170) accomplish the corrective measures by contract or otherwise and bill you for the cost 6. Extensions. General condition 1 establishes a time Hmit for the completion of the activity authorized by this permit Unless there are circumstances requiring either a prompt completion of the authorized activity or a reevaluation of the public interest decision, the Corps will normally give you favorable consideration to a request for an extension of mis time Hmit, 55 flCOE REGULflTORY Fax:8586745388 flpr 20 2004 16:46 P. 09 "' J Your signature below, as permittee, indicates that you accept and agree to comply with the terms and conditions of this permit This permit becomes effective when the -Federal official, designated to act for the Secretary of the Army, has signed below. George L Beams Chief, Construction - Operations Division DATE When the structures or work authorized by this permit are still in existence at me time the property is transferred, the terms and conditions of this permit will continue to be binding on the new owner(s) of the property. To validate the transfer of mis permit and the associated liabilities associated with, compliance with its terms and conditions, have the transferee sign and date below. TRANSFEREE DATE ,Apr-25-05 OZ:Z5pin from-618 o.ia ror ARNOLD SCHWAR2BNEQQBK. Q, COASTAL COMMISSION iN D1EOO AI*£A 75 MfiTROPOWTAM DRIVE, SUITE 103 .NDIEQO. CA 92IOW42I City of Carlsbad Ann: JohnCahill 1635 Faraday Avenue Carlsbad, CA 92008 NOTICE OF ACCEPTANCE Pate: April 25. 2005 Applicant: Citv of Carlsbad Document or Plans: 1. Water Quality Monitoring Plan dated November 18.2004. 2. —rf and Pest Management Plan dated August 17. 2004. 3. Technical Advisory- - - ' —«-• ^ TO—i j—i—^^fr wi.vr.a that include ivinf . g Comments dated August 6. 2004. 4. Final --***•*"••- 7 ^ vdiologv Report a«d Storm WaterKfthtirtff, water fea Revised RiparianPino dated July 2004 (revised N itiqatirtn Plan for an Q. Recordation of nedicate Open Space and Consprvatinn Easement. Submitted in comph'ance with Special Conditions) No(s).: of Coastal Development Permit No. A-6-Cn-OO rto'T Remaining Special Condition(s): None 6 7 8, 10, J4 Material submitted in compliance with said Special Conditions) of your development nermtt has been reviewed by the District Director and found to fulfiU the requirements of Sondition(s). Your submitted material and a copy of this letter have been made a part of the permanent file. Sincerely, (b:\San DlcEO\LBE\Curlsbaa OolfCouree NOA.doc) Deborah Lee Deputy Director By: EXHIBIT E-4 57 STATE OF CALIFORNIA - THE RESOURCES AOENCY GRAY DAVIS. Governor CALIFORNIA COASTAL COMMISSION San Diego Coast Area Office ~<575 Metropolitan Drive, Suite 103 Jan Diego, CA 92108-4421 ;-t619) 767-2370 Page:l Date: August 28, 2003 Permit Application No.: A-6-CII-00-087 COASTAL DEVELOPMENT PERMIT On August 8, 2003, the California Coastal Commission granted to City of Carlsbad, Attn: Michael Holzmiller this permit subject to the attached Standard and Special conditions, for development consisting of Development of an18 hole championship golf course, clubhouse, parking lot,, maintenance facilities, driving range, conference center and pads for future industrial/golf related uses on 397 acre site. more specifically described Jii the application filed in the Commission offices. The development is within the coastal zone at North of Palomar Airport Road and east and west of College Boulevard, Mello II, Carlsbad, (San Diego County) Issued on behalf of the California Coastal Commission by PETER M.DOUG Executive Directo By: Keri Ake Coastal Pro Analyst ACKNOWLEDGMENT: The undersigned permittee acknowledges receipt of this permit and agrees to abide by all terms and conditions thereof. The undersigned permittee acknowledges that Government Code Section 818.4 which states in pertinent part that: "A Public entity is not liable for injury caused by the issuance... of any permit. . ." applies to the issuance of this permit. IMPORTANT: THIS PERMIT IS NOT VALID UNLESS AND WITH THE SIGNED ACKNOWLEDGMENT HAS BEEN RETU OFFICE. 14 Cal. Admin. Code Section 13 UNTIl I Dfete COPY OF THE PERMIT TO THE COMMISSION mittee 1 Page: 2 Date: August 28, 2003 Permit Application No.: A-6-CII-00-087 STANDARD CONDITIONS: 1. Notice of Receipt and Acknowledgment. The permit is not valid and development shall not commence until a copy of the permit, signed by the permittee or authorized agent, acknowledging receipt of the permit and acceptance of the terms and conditions, is returned to the Commission office. 2. Expiration. If development has not commenced, the permit will expire two years from the date on which the Commission voted on the application. Development shall be pursued in a diligent manner and completed in a reasonable period of time. Application for extension of the permit must be made prior to the expiration date. 3. interpretation. Any questions of intent or interpretation of any condition will be resoived by the Executive Director or the Commission. 4. Assignment. The permit may be assigned to any qualified person, provided assignee files with the Commission an affidavit accepting all terms and conditions of the permit. 5. Terms and Conditions Run with the Land. These terms and conditions shall be perpetual, and it is the intention of the Commission and the permittee to bind all future owners and possessors of the subject property to the terms and conditions. SPECIAL CONDITIONS: The permit is subject to the following conditions: 1. Final Development Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, detailed final plans for the proposed development that include site, building, grading and drainage plans. Said plans shall be in substantial conformance with the plan entitled "City of Carlsbad Golf Course Revisions" submitted with LCPA 1-03B (Habitat Management Plan) on February 7, 2003 and shall comply with the following: a. There shall be no impacts to southern maritime chaparral habitat within the Coastal Zone portion of the project. Impacts to coastal sage scrub shall be consistent with the approved development plan and shall be mitigated as addressed in Condition #2 below. Any temporary impacts to wetland and/or riparian areas for the purpose of constructing golf cart path crossings shall be restored as addressed in Condition #3 below. b. The conservation and development areas for the golf course property shall be consistent with the golf course hardline map (Figure 8 Revised) in the City of Carlsbad Habitat Management Plan (HMP). Areas shown for conservation shall not be impacted or disturbed except for revegetation, restoration and other similar activities related to mitigation. Areas shown for impact may be fully developed with appropriate mitigation. The permittee shall undertake the development in accordance with the approved plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes : Page: 3 Date: August 28, 2003 Permit Application No.: A-6-CII-00-087 to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 2. Mitigation for Upland Habitat Impacts: PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, a final detailed coastal sage scrub mitigation plan. Said plan shall be developed in consultation with the U.S. Fish and Wildlife Service and the California Department of Fish and Game, and shall include the following: a. Preparation of a detailed site plan" delineating all areas and types of impact to upland habitat species (both permanent a'rid temporary) and the exact acreage of each impact. In addition, a detailed site plan of the mitigation sites shall also be included. b. Impacts to coastal sage scrub shall be mitigated at not less than a ratio of 2:1. c. Mitigation methods shall be consistent with those approved in Section 7-9 of the second addendum to the Carlsbad HMP and Policy 7-1.10 of the Mello II Land Use Plan of the Carlsbad LCP, as provided in Exhibit 10. d. A minimum buffer of 20 feet shall be provided between development as defined in Section 30106 of the Coastal Act, and native upland habitat, except as otherwise provided in Section 7-11 of the second addendum the Carlsbad HMP and Policy 3-1.12 of the Mello II Land Use Plan of the Carlsbad LCP, as provided in Exhibit 10. e. Location where the seeds will be collected and identification of plant species to be used for the restoration area; f. Application rate (e.g. pounds per acre of seeding effort); g. Methods of weed eradication. No Weed whips shall be permitted after installation of the seed mixes; • ':!' h. Designation of a qualified botanist to supervise the restoration effort; i. Goals, objectives and success criteria. The plan shall include quantitative success criteria that clearly relate to the goals and objectives of the habitat restoration program. These quantitative success criteria shall be based on sampling reference sites or on pertinent published reports. The success critieria shall include minimum requirements for species diversity and cover of shrubs, subshrubs, and herbaceous species. At minimum, five years after the initial planting the restored areas shall support at least 10 native species appropriate to characterize the vegetation type and have evidence of recruitment of at least one-half of these species. Weeds shall be controlled as specified in (g) above and never constitute more than 10 percent of the total cover. j. At completion of the mitigation/restoration effort, the restoration specialist shall prepare a letter report indicating that the installation is finished and that the five-year monitoring period has begun. Monitoring reports shall be submitted to the City and the Executive Director annually for five years. If at the end of five years, any of the restored areas fail to meet the success criteria as contained in the final mitigation plan, the monitoring and maintenance perioc. M be extended one full year for that aK ~.' Final monitoring for success shall occur after at least a three-year period during which there has been no remediation or maintenance,.other than weeding. If the success critieria are not met after 6 years, an amendment to the permit shall be required. The permittee shall undertake development in accordance with the approved mitigation/restoration plan. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 3. Restoration for Construction Impacts. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, if any temporary wetland and/or riparian impacts are proposed, the applicant shall submit a detailed revegetation plan indicating the type, size, extent and location of all plant materials, any proposed irrigation system and any other landscape features necessary to revegetate any proposed temporary wetland and/or riparian impacts. The restoration program shall be developed in consultation with the U.S. Department of Fish and Wildlife and the California Department of Fish and Game, and at a minimum shall include: Before/After Survey. The condition of the wetland and/or riparian revegetation and substrate under the two approved golf cart crossing locations shall be documented prior to construction, and the extent of proposed temporary impacts shall be identified. The extent of impacts to the vegetation and substrate shall be assessed and documented after completion of the repairs. Temporary wetland and/or riparian impacts shall be revegetated at a ratio of 1:1. There shall be no wetland impacts except for those temporary impacts associated with construction of the two approved golf cart crossings. No permanent wetland or riparian impacts shall be allowed. a. The following goals, objectives and performance standards for the restoration sites: 1. Full restoration of all wetland and/or riparian impacts that are identified as temporary. Restoration of temporarily impacted areas shall include, at a minimum, restoration of before-impact elevations, restoration of before-impact hydrology, removal of all non-native plant species, and replanting with locally collected native wetland and/or riparian plant species. 2. After construction and restoration, a permanent minimum buffer of 100 feet shall be provided between development and wetlands, and a minimum buffer of 50 feet shall be provided between development and riparian area, except as shown on the "City of Carlsbad Golf Course Revisions" plan dated February 7, 2003. For the two approved golf cart path crossings and the golf course playing areas adjacent to the riparian area as shown on the plan, an average minimum post-construction buffer of 50 feet shall be provided between new development and wetlands, and an average minimum post-construction buffer of 25 feet shall be provided between new development and riparian areas, consistent with Policy 3-1.12 of the Mello II Land Use Plan and Section 7-11 of the Carlsbad HMP, as provided in Exhibit 10, unless otherwise approved by the Executive Director in a manner consistent with the final, approved development plans and mitigation/restoration plans. The buffer between development and riparian/wetland habitat for these referenced areas shall not be less than 10 feet in width at any one point. 3. As shown on the plan entitled "City of Carlsbad Golf Course Revisions" submitted with LCPA 1-03B (Carlsbad HMP) on February 7, 2003, and consiste., /i/ith the golf course hardline map (Figu 8 Revised) in the Carlsbad HMP, golf cart path crossing #1 shall utilize the existing farm road, and crossing #2 shall utilize a bridge span structure. No permanent riparian impacts shall occur for either crossing. 4. Success criteria and final performance monitoring shall provide at least a 90% coverage of areas disturbed by construction activities within 1 year of completion of construction activities. 5. The final design and construction methods that will be used to ensure the restoration sites achieve the defined goals, objectives and performance standards. 6. Submittal, within 30 days of completion of initial restoration work, of post- restoration plans demonstrating that the restoration sites have been established in accordance with the approved design and construction methods. Construction impacts to sensitive habitat areas (e.g., coastal sage and other native upland habitat, wetlands, and riparian areas) shall be avoided by identifying and staking all sensitive habitats outside the project footprint, and educating the construction crews about the importance of these habitats and need for protection. The permittee shall undertake development in accordance with the approved restoration plan. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 4. Final Landscape Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, a detailed final landscape plan for the proposed development. Said plan shall show the type, size, extent and location of all proposed vegetation and any necessary irrigation, and shall provide the following information and/or commit to the following requirements: a. The installation of plant materials on the site, except for golf course turf within the playing and practice areas, shall consist only of drought-tolerant native or non-invasive plant materials. Within buffers adjacent to native habitat, only native plant materials shall be installed. To the extent feasible, native grasses shall be utlilized in "rough" areas. b. Required habitat buffers, as provided in Special Condition #2, shall be identified. The applicant shall provide a list of proposed plants to be used in the buffer areas, and shall indicate the type and location of any proposed barriers, signage or other methods that will be utilized to separate golf course activities from protected native habitat, wetlands and/or riparian area. c. A planting schedule that indicates the planting plan will be implemented within 60 days of completion of construction. d. A written commitment by the applicant that all required plantings will be maintained in good growing condition, and whenever necessary, will be replaced with new plant materials to ensure continued compliance. e. A written commitment by the applicant that five years from the date of opening of the golf course, the applicant will submit for the review and written approval of the Executive 1*2- Director, a landscap, Monitoring report, prepared by a licens Landscape Architect or qualified Resource Specialist, that certifies the on-site landscaping is in conformance with the landscape plan approved pursuant to this Special Condition. The monitoring report shall include photographic documentation of plant species and plant coverage. f. If the landscape monitoring report indicates the landscaping is not in conformance with or has failed to meet the performance standards specified in the landscaping plan approved pursuant to this permit, the applicant, or successors in interest, shall submit a revised or supplemental landscape plan for the review and approval of the Executive Director. The revised landscaping plan must be prepared by a licensed Landscape Architect or a qualified Resource Specialist and shall specify measures to remediate those portions of the original plan that have failed or are not in conformance with the original approved plan. The permittee shall undertake development in accordance with the approved landscaping plans. Any proposed changes to the approved landscaping plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 5. Erosion Control Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, an erosion and sediment control plan for the proposed development, prepared by a qualified resource specialist. The plan shall be in substantial conformance with the following requirements: a. The plan shall delineate the areas to be disturbed by grading or construction activities and shall include any temporary access roads, staging areas and stockpile areas. The natural areas on the site shall be clearly delineated on the project site with fencing or survey flags. No grading or staging of equipment or supplies shall occur in the protected areas. b. The plan shall specify that if grading occurs during the rainy season (October 1 - March 31), the applicant undertake the following protective measures to assure offsite sedimentation is minimized to the maximum extent feasible: install or construct temporary sediment basins (including debris basins, desilting basins or silt traps), temporary drains and swales, sand bag barriers and/or silt fencing; stabilize any stockpiled fill with geofabric covers or other appropriate cover; install geotextiles or mats on all cut or fill slopes; and close and stabilize open trenches as soon as possible. These erosion and sediment control measures shall be required on the project site prior to or concurrent with the initial grading operations and maintained throughout the development process. All sediment should be retained on-site unless removed to an approved dumping location either outside the coastal zone or to a site within the coastal zone permitted to receive fill. c. The plan shall also include temporary erosion control measures should grading or site preparation cease for a period of more than 30 days, including but not limited to: stabilization of all stockpiled fill, access roads, disturbed soils and cut and fill slopes with geotextiles and/or mats, sand bag barriers, and/or silt fencing; and installation of temporary drains and swales and sediment basins. These temporary erosion control measures shall be monitored and maintained until grading or construction operations resume. The permittee shall undertake development in accordance with the approved erosion control plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this 4,3 coastal development permit _,iless the Executive Director determine.. Jiat no amendment is legally required. 6. Drainage and Polluted Runoff Control Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit for the review and approval of the Executive Director, final drainage and runoff control plans including supporting calculations. The plan shall be prepared by a licensed engineer and shall incorporate structural and non-structural Best Management Practices (BMPs) designed to reduce the pollutant load of runoff to the maximum extent feasible, and reduce or eliminate any potential increases in the volume or velocity of runoff leaving the site. In addition to the specifications above, the plan shall be in substantial conformance with the following requirements: a. Selected BMPs (or suites of BMPs) shall be designed to treat, infiltrate or filter stormwater from each runoff event, up to and including the 85th percentile, 24-hour runoff event for volume-based BMPs, and/or the 85th percentile, 1-hour runoff event, with an appropriate safety factor, for flow-based BMPs. b. BMPs shall be selected to address the pollutants of concern for this development, including sediments, nutrients, pesticides, fertilizers, metals, petroleum hydrocarbons, trash and debris, and organic matter. c. Runoff shall be conveyed off site in a non-erosive manner. Energy dissipating measures shall be installed at the terminus of all outflow drains. d. Drainage from all roofs, parking areas, driveway area, and other impervious surfaces on the building pad shall be directed through vegetative or other media filter devices effective at removing and/or treating contaminants such as petroleum hydrocarbons, heavy metals, and other particulates. e. Opportunities for directing runoff into pervious areas located on-site for infiltration and/or percolation of rainfall through grassy swales or vegetative filter strips, shall be maximized. f. The plan shall include provisions for maintaining the drainage system, including structural BMPs, in a functional condition throughout the life of the approved development. The plan shall include an identification of the party or entitvu'es) responsible for maintaining the various drainage systems over its lifetime and shall include written acceptance bv the responsible entitv(ies). Such maintenance shall include the following: (1) BMPs shall be inspected, cleaned and repaired when necessary prior to and during each rainy season, including conducting an annual inspection no later than September 30th each year and (2) should any of the project's surface or subsurface drainage/filtration structures or other BMPs fail or result in increased erosion, the applicant/landowner or successor-in-interest shall be responsible for any necessary repairs to the drainage/filtration system or BMPs and restoration of the eroded area. Should repairs or restoration become necessary, prior to the commencement of such repair or restoration work, the applicant shall submit a repair and restoration plan to the Executive Director to determine if an amendment to this coastal development permit or a new coastal development permit is legally required to authorize such work. g. Parking lots susceptible to stormwater should be swept with a vacuum regenerative sweeper on a regular basis. h. The golf course shall be equipped with flow reducers or shutoff valves triggered by a pressure drop so that broken pipes do not increase flow to the storm drains; i. The applicant shall H.ovide, for the review and approval of tf._ executive Director, plans for a self-contained cart washing facility that is equipped with a pre-treatment facility, and, if significant discharge is proposed, is connected to the sanitary sewer; j. All storm drain inlet structures must be equipped with trash racks, which shall be maintained by the applicant and/or authorized agent. k. Storm drains shall be stenciled with<water quality warnings indicating that the drain flows to the lagoon. The permittee shall undertake development in accordance with the approved drainage and runoff control plans. Any proposed changes to the approved drainage and runoff control plans shall be reported to the Executive Director. No changes to the approved plans shall occur without an amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 7. Water Quality Monitoring Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit for the review and approval of the Executive Director, a water quality monitoring plan to address the quality of runoff prior to leaving the site or entering the onsite riparian area. The plan shall describe the methodology for monitoring, including specific threshold levels and sampling protocols, location of monitoring sites, schedule for monitoring, and reporting of results. The monitoring plan shall also include a contingency plan describing the actions to be taken if water quality impacts are discovered. In addition to specifications above, the plan shall be in substantial conformance with the following requirements: a. The plan shall require monitoring of the following pollutants: nitrates, nitrites, phosphates, dissolved oxygen, pH, total suspended solids (TSS), acute and chronic toxicity, and shall indicate the proposed sampling frequencies. Total suspended solids (TSS) shall be sampled for at the same frequency as the nutrients. b. The plan shall specify maximum threshold levels for each water quality parameter. c. The plan shall specify sampling protocols to be used for each water quality parameter. Measurements must be precise enough to evaluate compliance with applicable water quality threshold levels. d. Sampling for baseline data shall be conducted a minimum of three (3) times and during different level storms to acquire a representative sample of water quality conditions at the site. e. Results of monitoring shall be submitted to the Executive Director annually. f. If any water quality threshold levels referred to above in b) are exceeded, the applicant (or successor interest) shall notify the Executive Director of the exceedances and potential impacts and within 48 hours of receipt of the monitoring data. At the same time the applicant shall consult with the Executive Director regarding the need for additional sampling to evaluate the exceedance or corrective action to minimize water quality impacts. The applicant shall report to the Executive Director on the possible causes of the exceedance and proposed corrective actions within 30 days of the initial receipt of the data. g. If any water quality impacts persist after three years of detection, not withstanding any corrective actions taken by the applicant, all use of the chemicals that exceed water quality threshold levels shall cease. 8. Turf and Pest Management Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and approval, a detailed turf and pest management plan for the golf course portion of the development. The plan shall comply with the following requirements: a. Turf management practices shall utilize state-of-the-art environmental methods to minimize fertilizer use, water use and chemical pest control to the maximum extent feasible, to avoid impacts to native upland habitat, wetlands, riparian areas, and water quality. b. The plan shall favor non-chemical strategies over chemical strategies for managing onsite pests. Chemical strategies shall only be employed after all other strategies have been used and proven ineffective. This shall be demonstrated by providing written notice to the Executive Director of the non-chemical strategies that will be used, the reasons for their ineffectiveness, and the chemical strategies that are being considered. The permittee shall undertake development in accordance with the approved turf and pest management plan plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the approved plans shall occur without an amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 9. Public Golf Course Facility. The golf course, clubhouse, parking areas, driving range, conference center and pads for future industrial/golf related uses shall be operated as facilities open to the general public. Any proposed change in the level of public access and/or public use shall require an amendment to this permit. Signage shall be provided indicating that the onsite facilities as provided above are open to the public. 10. Open Space and Conservation Easement. A. No development, as defined in Section 30106 of the Coastal Act, shall occur in those areas indicated as Preservation Areas in Exhibit 7 (City Golf Course, Revised Figure 8 of the Carlsbad HMP, CAR LCPA 1-03B), except for temporary impacts associated with construction of the two approved golf cart path crossings, consistent with Special Condition #3, and onsite habitat restoration/revegetation activities as part of an approved coastal sage scrub mitigation plan, consistent with Special Condition #2. B. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall execute and record a document in a form and content acceptable to the Executive Director, irrevocably offering to dedicate to a the California Department of Fish and Game and the U.S. Fish and Wildlife Services, or their successor agencies, an open space and conservation easement over all onsite habitat preservation areas, and all mitigation areas (onsite and/or offsite) that will be utilized to address onsite impacts to habitat. The recorded document shall include legal descriptions of both the applicant's entire parcel and the easement area(s). The recorded document shall also reflect that development in the easement area(s) is restricted as set forth in this permit condition. C. The offer to dedicate shall be recorded free of prior liens and encumbrances which the Executive Director determines may affect the interest being conveyed. The offer shall run with the land in favor of the People of the State of California, binding all successors and assignees, and shall be irrevocable for a period of 21 years, such period running from the date of recording. 11. Protection of the Coastal California Gnatcatcher. To prevent breeding/nesting season impacts to the coastal California gnatcatcher (Polioptila californica californica), the permittee shall not undertake any clearing or grading activities on the golf course site between March 1 and August 15, unless approved in writing by the U.S. Fish and Wildlife Service and the California Department of Fish and Game. Herbicide, pesticide and/or fertilizer applications shall occur outside of a 100-foot exclusion zone to avoid drift towards nesting areas. A worker education program shall be implemented to ensure that all golf course construction and maintenance workers know the location of all gnatcatcher nests and are aware of the above-described protection measures. During the non-breeding season (August 16 through February 28), if construction activities will produce noise levels greater than 60 db, gnatcatcher-occupied habitats within the habitat preserve areas shall be shielded from the sight and sound of such activities taking place within 50 feet of the occupied habitat, using the following technique. During construction, the gnatcatcher habitat will be shielded from sight and sound by 8-foot high, solid 1-inch thick barriers. A biological monitor must be onsite daily to ensure that the construction activities are having no negative impact on gnatcatchers. The permittee shall staff a qualified monitoring biologist on-site during all CSS clearing and any other project-related work adjacent to CSS to be avoided. The biologist must be acknowledgeable of gnatcatcher biology and ecology. The permittee shall ensure that prior to and during the clearing of coastal sage scrub and/or any other suitable gnatcatcher habitats outside the gnatcatcher breeding season, the biologist shall locate any individual gnatcatchers on-site and direct clearing to begin in an area away from birds. In addition, the biologist shall walk ahead of clearing equipment to flush birds towards areas of habitat that will be avoided and/or which are located within the permanent preserve areas. 12. Open Space Restriction. A. No development, as defined in Section 30106 of the Coastal Act, shall occur in habitat buffer areas as required in Special Conditions #2 and 4, and as identified in the final landscape plans, and as described and depicted in an Exhibit attached to the Notice of Intent to Issue Permit (NO!) that the Executive Director issues for this permit, except for 1. approved landscaping activities and plantings and/or restoration and revegetation of native habitat according to the final coastal sage scrub mitigation plan; and B. PRIOR TO ISSUANCE BY THE EXECUTIVE DIRECTOR OF THE NOI FOR THIS PERMIT, the applicant shall submit for the review and approval of the Executive Director, and upon such approval, for attachment as an Exhibit to the NOI, a formal legal description and graphic depiction of the portion of the subject property affected by this condition, as generally described above and shown on Exhibit 7 attached to this staff report. C. PRIOR TO ANY CONVEYANCE OF THE PROPERTY THAT IS THE SUBJECT OF THIS COASTAL DEVELOPMENT PERMIT, the applicant shall execute and record a deed restriction, in a form and content acceptable to the Executive Director: (1) indicating that, pursuant to this permit, the California Coastal Commission has authorized development on the subject property, subject to terms and conditions that restrict the use and enjoyment of that property (hereinafter referred to as the "Standard and Special Conditions); and (2) imposing all Standard and Special Conditions of this permit as covenants, conditions and restrictions on the use and enjoyment of the Property. The restriction shall include a legal description of the applicant's entire parcel or parcels. It shall also indicate that, in the event of an extinguishment or termination of the dt. j restriction for any reason, the Stand. J and Special Conditions of this permit shall continue to restrict the use and enjoyment of the subject property so long as either this permit or the development it authorizes - or any part, modification or amendment thereof - remains in existence on or with respect to the subject property. 13. Any future revisions to the golf course layout and/or design which may be necessary to address golf course operations or any other reason shall require an amendment to this permit. Any such revisions to the golf course shall occur within the approved developable area in the least environmentally damaging manner that is most protective of the sensitive resources within the habitat preserve. No impacts to resources within the preserve shall be permitted. 14. Technical Advisory Panel. An independent technical advisory panel of environmental and agency representatives shall be provided the opportunity to review and comment on the management plans and ongoing monitoring reports. This will allow for meaningful input by all parties interested in the water quality in the Agua Hedionda Lagoon, and will assist the Coastal Commission staff and the City in effectively assuring the environmental quality of the golf course. All review and comments will be requested to be submitted within 45 days of receipt of draft plans. The Executive Director of the California Coastal Commission shall have final authority over the determination of condition compliance, unless it is determined that the item should be referred to the Commission. A-6-CII-00-087p CITY OF CARLSBAD PLANNING DEPARTMENT 1635 Faraday Avenue Carlsbad CA 92008 ENDANGERED SPECIES ACT INCIDENTAL TAKE PERMIT 1. Permit Number HMP 04-01 3. Name of Project Carlsbad Municipal Golf Course 2. Name of Permittee City of Carlsbad, Recreation Department 4. Contact Name and Phone Number JohnCahill 602-2726 5. Location Where Authorized Activity May Be Conducted City owned site located generally north or Palomar Airport Road, south of Faraday Avenue, east of Hidden Valley Road, and west of McClellan-Palomar Airport. 6. Other Related Entitlements CUP 97-07 7. Conditions of Permit • The applicant shall comply with all conditions of approval and mitigation measures contained in CUP 97-07, EIR 97-01, and Coastal Development Permit A-6-CII-00-87 issued by the Coastal Commission. • The applicant shall comply with all applicable provisions of the approved Habitat Management Plan. See attached Findings. *T)J 1"^Renommended for approval V c-"l *"* 8. S Dat( Signature of Planning Director *: \7^b/O/r> EXHIBIT E-5 PLANNING DIRECTC i=INDINGS FOR ISSUANCE OF INCL ,NTAL TAKE PERMIT These Findings accompany Carlsbad HMP Permit No. 04-01. In issuing the permit, the Planning Director finds as follows: 1. That the Carlsbad Municipal Golf Course has received all necessary permits, entitlements and approvals from the City of Carlsbad, the California Coastal Commission, and all other agencies having jurisdiction. 2. That the Carlsbad Municipal Golf Course is shown as a Proposed Hardline Project in the final approved Habitat Management Plan as Figure 8 Revised. A Grading Permit for the project will be issued which conforms to the areas of impact and preservation as shown in Figure 8. 3. That authorization to take species of concern is subject to continuous compliance with all provisions of the Habitat Management Plan for Natural Communities in the City of Carlsbad (HMP), the Citywide Incidental Take Permit issued for the HMP, the Implementing Agreement, the Terms and Conditions of the Incidental Take Permit, and the Biological Opinion. 4. That authorization to take species of concern is subject to continuous compliance with all mitigation measures as stated in EIR 97-01 and all conditions of approval of Coastal Development Permit A-6-CII-00-87, including but not limited to onsite revegetation of coastal sage scrub and Southern Maritime Chaparral, offsite acquisition in the County Gnatcatcher Core Area, recordation of conservation easements over all conserved areas, seasonal grading restrictions, and management and monitoring in perpetuity by a qualified conservation entity. 5. That authorization to take species of concern is subject to continuous compliance with the provisions of Volumes I, II and III of the Multiple Habitat Conservation Program and the Final Environmental Impact Statement/Environmental Impact Report for Threatened and Endangered Species Due to Urban Growth within the Multiple Habitat Conservation Program Planning Area (SCH No. 93121073). 6. That all impacts to habitat and all take of species will be incidental to otherwise lawful activities related to construction and operation of a public golf course. 7. That the project design as approved by the City of Carlsbad and the California Coastal Commission has avoided and minimized impacts to wildlife habitat and species of concern to the maximum extent practicable. 8. That adequate funding has been provided to address changed circumstances and adaptive management needs that may be reasonably anticipated in the future, consistent with the HMP Implementing Agreement. 9. That the incidental take of species of concern as a result of the project will not appreciably reduce the likelihood of survival and recovery of the species in the wild due to compliance with all of the above stated requirements, as well as ongoing monitoring and reporting to the wildlife agencies and the public. APPROVED Planning Director " Date ~70 UM/UB/ZUU4 U»:48 KAA 7B04315S02 US FISH AND WILDLIFE &002 EXHIBIT 4 United States Department of the Interior HSH AND WILDLIFE SERVICE Ecological Services Carlsbad Fish and Wildlife Office 6010 Hidden Valley Road Carlsbad, California 92009 In Reply Refer To: FWS-SDG-1188.1 SEP 0 8 2004 Mr. Michael Holzmiller Carlsbad Planning Department 1635 Faraday Avenue Carlsbad, California 92008 Re: Mitigation for the City of Carlsbad's Proposed Municipal Golf Course Dear Mr. Holzmiller: The U.S. Fish and Wildlife Service (Service) has reviewed the information provided by the City of Carlsbad (City) regarding the purchase of 51.6 acres of coastal California gnatcatcher (Polioptila californica califomica; gnatcatcher) habitat to mitigate for impacts from the City's proposed municipal golf course. This information included an exhibit which identified the exact location of the 51.6 acres and the conservation easement deed. Within the Multiple Habitat Conservation Plan (MHCP) and the City's Subarea Plan (HMP), the City has an obligation to effectuate the conservation and conveyance of 307.6 acres of land within the MHCP core gnatcatcher area. One means by which the City proposes to help meet this obligation is to acquire 51.6 acres of habitat occupied by five pairs of gnatcatchers to partially mitigate for impacts that would occur from the development of the municipal golf course. It is our understanding that this condition is met by the purchase of 51.6 acres of mitigation land as identified on the enclosed exhibit for the following reasons: 1) the land is located within the area the Service considers as contributing to the gnatcatcher core area within the MHCP; 2) a conservation easement will be placed over all 51.6 acres with the California Department of Fish and Game as third party beneficiary; 3) records provided by the City indicate that at least five pairs of gnatcatchers occupy the 51.6 acres that will be preserved; and 4) the lands will be managed by the Center for Natural Lands Management with a sufficient endowment to ensure the management of land to provide gnatcatcher habitat in perpetuity. In addition, the Service accepts the City's proposal to acquire the designated lands and upon acquisition and implementation of the conditions outlined above, the City may apply the 51.6 acres towards the land acquisition obligation under the MHCP and HMP. If for any reason the City does not proceed with development of the municipal golf course, the City shall have the right to apply the 51.6 acres to mitigate for another public project that would require mitigation for impacts to coastal sage scrub. If the City desires to apply the 51.6 acres towards mitigation credit for private projects, the Service will work with the City to establish an appropriate mitigation bank to facilitate such a transfer. TAKE PRIDE u»/ up/U5 ANi) W1LUL1MS 10003 Mr. Holzmiller (FWS-SDG-1181.1) The Service is pleased to know the City of Carlsbad is moving forward on such obligations pre- permit issuance. If you have any questions, please contact Lee Ann Carranza of the Service at (760) 431-9440 extension 292. Sincerely, Therese O'Rourke Assistant Field Supervisor U.S. Fish and Wildlife Service Enclosure San Diego Gas & Electric 8335 Century Park Court San Diego, CA 92123 A (^Sempra Energy utility" June 23, 2005 City of Carlsbad Recreational Department 1200 Carlsbad Village Drive. Carlsbad, CA 92123 Attn: John Cahill, Municipal Projects Manager LETTER OF PERMISSION FOR GRADING AND CONSTRUCTION OF IMPROVEMENTS Dear Mr. Cahill: San Diego Gas & Electric Company (SDG&E) is the owner of a 100', 150'; & 200' Electric Transmission Easement and a 20' Gas Transmission Easement located in and around the following legal description: THOSE PORTIONS OF SECTION 35, TOWNSHIP 12 SOUTH, RANGE 4 WEST AND SECTION 2, TOWNSHIP 13 SOUTH, RANGE 4 WEST, SAN BERNARDINO MERIDIAN, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED IN EXHIBIT "A" OF QUIT CLAIM DEED RECORDED MARCH 28, 1989 AS FILE NO. 89-157040 OF O.R. (A.P.N. 212-010-05, 07, 11, 12, 13, & 15; A.P.N. 212-041-12 TO 36; A.P.N. 212-082-01 TO 10; A.P.N. 212-081-01 TO 21) (SDG&E Right of Way No. 31580, Recorded April 15, 1954 in Book 5205, Page 419 of O.R.; SDG&E R/W No. 31581, Recorded May 6, 1954 in Book 5230, Page 131 of O.R.; SDG&E R/W No. 45062, Recorded August 14, 1957 in Book 6706, Page 514 of O.R.; SDG&E R/W No. 45064, Recorded September 27, 1957 in Book 6767, Page 25 of O.R.; SDG&E R/W No. 31564, Recorded April 15, 1954 in Book 5205, Page 416 of O.R.; SDG&E R/W No. 31565, Recorded May 3, 1954 in Book 5525, Page 397 of O.R.; SDG&E R/W No. 45474, Recorded May 11, 1961 as Doc. No. 81362 of O.R.; SDG&E R/W No. 45476, Recorded May 15, 1961 as Doc. No. 82981 of O.R.). We have reviewed and approved the Grading & Improvement Plans for Carlsbad Municipal Golf Course - Phase II, accepted April 4, 2005, which shows the proposed grading and improvements on the property subject to our easement, attached hereto as Exhibit 'A' (27 sheets). Carlsbad Golf Course.doc EXHIBIT E-6 Permission is hereby granted to City of Carlsbad (Permittee), to grade and construct improvements as shown on said plan, subject to the following conditions: 1. Expiration: This "Permission to Grade" shall expire if grading does not commence within 6 months from the date of this letter, or work is not diligently pursued to completion. 2. Submittals: 2.1. Permittee agrees to supply SDG&E with 'as built' grading, improvement, and profile plans to SDG&E specifications, if requested. 2.2. Permittee agrees to submit for review and approval, a blasting plan prior to blasting, if blasting is required. 3. Pre-Construction Meeting: SDG&E's Land Management Representative (LMR) must be invited with at least three (3) working days prior notice. 4. Grading: 4.1. At least twenty-four (24) hours notice must be given to SDG&E's LMR before start of work. Field changes to plans within said easement shall be approved in writing by SDG&E LMR. 4.2. Permittee is responsible to call DIG ALERT at 1-800-227-2600 for all underground mark-out locations 48 hours before digging. 4.3. SDG&E standby personnel are required when grading or ground penetration occurs within the gas transmission easement or within ten (10) feet of the gas line when in a franchise position. 4.4. No power-operated equipment shall be used within two (2) feet of any portion of the gas line, only hand digging is allowed and an SDG&E standby is required. 4.5. If any contact is made with the gas line or its coating, SDG&E must be notified immediately at 1-800-411-7343 and the area left exposed. 4.6. The gas easement shall be staked with ribboned lath at fifty-foot (50') increments and the staking shall be maintained at all times during grading and construction of the project. Carlsbad Golf Course.doc 4.7. SDG&E reserves the right to inspect and perform quality control work during construction. SDG&E standby personnel are authorized to stop work around the gas line if all required precautions are not strictly adhered to. 4.8. Equipment crossings of the gas line must be designed to eliminate any possible damage to the gas line and approved by SDG&E gas transmission engineering. 4.9. Clearance of (35) feet minimum between the SDG&E electric transmission wires and the natural ground shall be maintained on any given day, noting line sags vary depending on ambient temperature and line current. All requirements, including but not limited to OSHA, CAL-OSHA, ANSI, NIOSH, and NEC for clearances when working around energized electrical facilities must be maintained. 4.10. No grading shall be allowed within ten (10) feet of a single wood pole structure or anchor, or fifteen (15) feet from any multi-wood pole structure (H-frame, 3-pole, etc), or twenty (20) feet from any electric steel lattice towers or thirty (30) feet of steel poles. All measurements are taken from the face of pole or face of foundation. 5. Special Conditions: 5.1. All new SDG&E access roads shall be surfaced with an all-weather material. All access driveways shall have a 30' wide commercial grade apron. Roads shall be compacted to 90% relative maximum compaction. SDG&E requires that Permittee submit a complete compaction report upon completion of all areas of grading within the SDG&E gas transmission easement. Appropriate plans must be made to protect the affected areas from storm water. 5.2. All trees planted within SDG&E's easement, shall be no more than 15.00 feet in height at maturity and shall not restrict SDG&E's access to any of its facilities. 5.3. Irrigation systems shall not spray directly onto any electric facilry, access road or maintenance pad. 6. Erosion Control: 6.1. All disturbed and created slopes, within the SDG&E electric transmission easement, shall be hydro-seeded or planted by Permittee with an SDG&E approved mix. 6.2. All drainage shall be designed to prevent erosion of SDG&E easement and access roads. 7. Storage: 7.1. This permission to grade letter does not permit storage of equipment, materials, dirt or debris on the easement or SDG&E fee owned property. CarlsbadGolfCourse.doc ^7 8. Access: 8.1. Access to all SDG&E facilities shall be maintained at all times. All costs associated with restoration of access and all associated damages shall be borne by Permittee. 8.2. All gates shall provide for SDG&E access by padlock, lock-box or kieyed bypass both during and upon completion of construction. Location and construction of gates to be approved by SDG&E LMR. 9. Outstanding Agreements: Permittee agrees to pay for, sign and/or have signed all Consent Agreements, Consent to Use of Land Agreements and/or Joint Use Agreements between SDG&E and owner or public agencies who encroach upon the SDG&E easements. Said agreements shall be subject to the revocability clause as stated in the California Public Utility's Commission's General Order 69-C as shown on website http .V/www.cpuc.ca. gov/PUBLISHED/Graphics/645 .PDF. 10. Indemnification: 10.1. Permittee agrees to assume all risk of loss, damage to property and/or injury and/or death to persons, and to indemnify and hold SDG&E harmless from any and all liability in any way arising from the proposed grading or construction of improvements. 10.2. SDG&E shall not be responsible in any manner for any maintenance or repair of the proposed grading or improvements. This includes, but is not limited to, drainage and/or erosion problems or damage caused to improvements that were not constructed to take the weight or activities of vehicles and equipment owned by or working on behalf of SDG&E. 11. Terms and Conditions: The terms and conditions of this approval shall benefit and bind Permittee its successors, assigns, agents or contractors. 12. Posting: This permission letter shall be posted on the job site at all times. Carlsbad GolfCourse.doc Should you have any questions or require additional assistance, please call me at (858) 654-1201. APPROVED BY: San Diego Gas & Electric Company Michael J. Wilh Land Management Representative I ACCEPT THE AFOREMENTIONED CONDITIONS: I hereby have the authority to sign, City of Carlsba Print Name: Title: Date:U'Z1 Carlsbad GolfCourse.doc GOLF COURSE MANAGEMENT AGREEMENT TABLE OF CONTENTS RECITALS 1 ARTICLE I DEFINITIONS 1-4 ARTICLE II GOLF COURSE OPERATIONS AND MANAGEMENT 4 2.0 Term 4 2.1 Management Of The Golf Course By KSM 4 2.2 Authority Financing 5 ANNUAL PLAN 5 2.3 Preparation And Approval 5 2.4 Quarterly Review Of Annual Plan 6 CAPITAL EXPENDITURES 6 2.5 Capital Improvement Funds 6 2.6 Capital Improvement Plans 7 2.7 Implementation of Capital Improvement Projects 7 2.8 Responsibilities of KSM 7-9 PERSONNEL 9 2.9 General 9 2.10 Pension and Benefit Plans 10 2.11 Temporary Assignment of Other KSM Personnel 10 2.12 Management Staff. 10 2.13 KSM Acknowledgment of Regulatory and Permit Documents: Easements 10 2.14 Publicity 11 2.15 Specific Operating Procedures 11 2.16 Golf Course Hours of Operation 11 FEES AND CHARGES 11 2.17 Setting of Fees 11 2.18 City Use Day 11 2.19 Resident Green Fee Discount 11 2.20 Food and Beverage Operations 11 2.21 Office Operations 12 EXHIBIT 4 2.22 Safety and Security 12 2.23 Contracts and Agreements 12 2.24 Alterations to Buildings 12 2.25 Operations and Maintenance Standards 12 2.26 Authority Inspection and Evaluation 13 2.27 Results of KSM's Failure to Take Corrective Action 13 2.28 Exclusions from Imposition of Deductions 14 2.29 Acknowledgement of Parties Concerning Deductions 14 2.30 KSM Performance Evaluation Deposit 14 2.31KSM Purchases 15 ARTICLE III INSURANCE REQUIREMENTS AND INDEMNITY 15 3.0 Amounts of Insurance and Coverage 15 3.1 Types of Coverage 15 (a) Workers' Compensation 15 (b) Commercial General Liability 15 (c) Automobile Liability and Garage Keeper's Liability 15 (d) Property Insurance 16 (e) Direct and Indirect Loss of Earnings 16 (f) Fidelity Bond 16 (g) Umbrella or Excess Liability Coverage 16 3.2 Other Insurance Provisions 16 3.3 Insurance Maintained by KSM 17 3.4 Handling of Claims 17 INDEMNITIES 17 3.5 KSM's Indemnity 17 3.6 Compliance with Environmental Law 18 3.7 Environmental Remediation 18 ARTICLE IV KSM FEES DURING MANAGEMENT TERM: AVAILABLE FUNDS 18 4.0 Forms of KSM Compensation 18 4.1 Fixed Management Fee 18 4.2 Percentage Management Fee 18 4.3 Gross Revenues Defined 19 ARTICLE V ACCOUNTS: WORKING FUNDS; DISBURSEMENT OF FUNDS; RECORDS AND REPORTS; GOLF COURSE EXPENSES 20 5.0 Golf Course Accounts 20 5.1 Disbursements from Golf Course Accounts 21 5.2 Available Funds 21 5.3 Remaining Funds 22 5.4 Books and Records 22 5.5 Inspection 22 5.6 Reports to Authority 22 5.7 Golf Course Expenses 23 5.8 Payroll 24 5.9 KSM Accounting Software 24 ARTICLE VI TERMINATION RIGHTS 24 6.0 Termination by Authority 24 6.1 Termination by KSM 25 6.2 Payments Upon Termination 25 6.3 Curing Defaults 25 6.4 Effect of Termination 25 6.5 Remedies 26 A. Authority's Remedies 26 B. KSM's Remedies 26 6.6 Remedies Cumulative 26 ARTICLE VII TITLE MATTERS: ASSIGNMENT 27 7.0 Ownership of Improvements and Personal Property 27 7.1 No KSM Assignment or Subcontracting 27 7.2 Successors and Assigns 27 7.3 Golf Course Name 27 ARTICLE VIII DAMAGE OR DESTRUCTION; EMINENT DOMAIN: FORCE MAJEURE EVENTS 8.0 Damage or Destruction 27 8.1 Eminent Domain 28 8.2 Force Majcure Events 28 ARTICLE IX GENERAL PROVISIONS 28 9.0 Contract Administration 28 9.1 Compliance 29 9.2 Notices 29 9.3 Independent Contractor 30 9.4 Modification and Changes 31 9.5 Entire Understanding and Agreement 30 9.6 Headings 30 9.7 Consents 30 9.8 Survival of Covenants 30 9.9 Third Parties 30 9.10 Waivers 30 9.11 Applicable Law. Venue: Service of Process 30 9.12 No Presumption Regarding Drafter 31 9.13 Enforceablility of Any Provision 31 9.14 Counterparts; Facsimile Signatures 31 9.15 Covenants Against Discrimination 31 9.16 Non-liability of Authority or Authority Officers and Employees 31 9.17 Time of the Essence 31 9.18 Exhibits and Attachments Incorporated 31 9.19 Authority 31 9.20 Authorization to Executive Director 31 9.21 Possessory Interest 32 9.22 Proprietary Information 32 9.23 Restrictions as to Employees 32 9.24 Outside Business 32 EXHIBITS Exhibit A - Golf Course Operations and Maintenance Evaluation Form 18 pages Exhibit B - Habitat Preserve Area 2 pages Exhibit C - Notice of Golf Course Deficiency 2 pages Exhibit D - Legal Description of Real Property 2 pages Exhibit E - Regulatory Permits 39 pages IV GOLF COURSE MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into this ftf*\ day of t/^liV , 2006 ("Effective Date") by and between the Carlsbad Public Financing Authority, California, a public entity and joint powers authority (the "Authority"), and KEMPER SPORTS MANAGEMENT, INC., an Illinois corporation ("KSM"). RECITALS A. WHEREAS, the City of Carlsbad, a municipal corporation (the "City"), is the Owner of certain property located in the city of Carlsbad, California, to be developed as a municipal golf course; and B. WHEREAS, the City has leased the golf course property to the Authority which will be responsible for the development and operation of the public golf course, to be known as the "Carlsbad Golf Course", located in the City of Carlsbad, California, consisting of an 18-hole golf course, a driving range, Golf Course Clubhouse, pro shop, and maintenance facility (collectively, the "Golf Course"); and C. WHEREAS, the Authority desires to utilize the services of KSM to manage the Golf Course upon the terms and conditions set forth in this Agreement; and D. WHEREAS, the Authority and KSM acknowledge that this Agreement is being executed prior to the Authority commencing the construction and development of the Golf Course in anticipation of such construction and development. NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the Authority and KSM hereby agrees as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings indicated below: 1.0 Affiliate - Any and all corporations, partnerships, trusts, and other entities directly or indirectly controlled by, controlling, or subject to direct or indirect common control of an entity or person. 1.1 Board of Directors of the Authority - The Board of Directors of the Carlsbad Public Financing Authority, initially the City Council members and, thereafter as designated by the Board. 1.2 Capital Improvement Funds - The funds disbursed to the Authority pursuant to Section 2.5. 1.3 Capital Improvements - Any alteration, addition, improvement, repair, replacement, rebuilding, or renovation to the Golf Course, the cost of which exceeds Five Thousand Dollars ($5,000.00). 1.4 City - The City of Carlsbad, a municipal corporation. Revsed 4/18/06 1.5 Carlsbad Public Financing Authority (the "Authority") - is a public entity and joint powers authority whose members are the City of Carlsbad, a municipal corporation and general law city in the State of California, and the Carlsbad Municipal Water District, a public agency organized and existing under the Municipal Water Act of 1911, and a Subsidiary District of the City of Carlsbad. 1.6 City Council - The City Council of the City of Carlsbad. 1.7 [Intentionally left blank.] 1.8 Conditional Use Permit - The conditional use permit for the Golf Course approved by and issued by the City in accordance with the Carlsbad Zoning Code. 1.9 Cost of Sales - All monies expended by KSM for the purchase of consumable items at the Golf Course, including but not limited to, food and beverages (including liquor) and Pro Shop merchandise. 1.10 Employee Compensation - The direct salaries and wages paid to or accruing for the benefit of the management staff and all other persons employed by KSM at the Golf Course, except Key Management Employees as defined in Section 2.12 of this Agreement, together with all fringe benefits payable to or accruing for the benefit of such employees, including employer's contribution under the Federal Insurance Contributions Act ("PICA"), unemployment compensation, or other employment taxes, pension fund contributions, worker's compensation, group life and accident and health insurance premiums, profit sharing, retirement, disability and other similar benefits, as determined by KSM and as set forth in the approved Annual Plan. 1.11 Environmental Laws - All current and future federal, state, and local statutes, regulations, ordinances, and rules relating to (i) the emission, discharge, release, or threatened release of a Hazardous Material into the air, surface water, groundwater, or land; (ii) the manufacturing, processing, use, generation, treatment, storage, disposal, transportation, handling, removal, remediation, or investigation of a Hazardous Material; or (iii) the protection of human health, safety, or the indoor or outdoor environment, including, without limitation, the Clean Air Act, the Federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Occupational Safety and Health Act, all amendments thereto, all regulations promulgated thereunder, and their state or local statutory and regulatory counterparts. 1.12 Executive Director of Carlsbad Public Financing Authority - The person holding the position of City Manager of the City of Carlsbad, or his or her authorized designee, including but not limited to the Project Manager. 1.13 Furnishings and Equipment - All furniture, furnishings, trade fixtures, apparatus and equipment, including without limitation course maintenance vehicles and equipment, golf carts, driving range pickers and pullers, mats, range ball baskets, cash registers, rental golf clubs and bags, ball washers, benches, uniforms, kitchen equipment, appliances, china, glassware, silverware, office equipment computers, copy machines, facsimile machines, telephone systems (not including pay telephones), and other personal property used in or held in storage for use in the operation of the Golf Course, other than Operating Inventory. 1.14 Golf Course Expenses - The total of (a) all expenses specifically identified as "Golf Course Expenses" in this Agreement (see Section 5.7); and (b) all other expenses incurred by KSM in connection 9 Revsed 4/18/06 with the Golf Course or this Agreement, which expenses were not reasonably anticipated by the parties or otherwise provided in this Agreement provided that, except for emergency expenditures as described in Section 2.8(p) below, any such unplanned expense which exceeds Five Thousand Dollars ($5,000.00) must have prior written approval from the Executive Director, which approval shall not be unreasonably withheld. Golf Course Expenses shall not include any expenses of KSM's corporate office or the compensation of any Key Management Employees as defined in Section 2.12 of this Agreement, except as otherwise provided in Section 2.11 of this Agreement. 1.15 Golf Course Operations and Maintenance Evaluation Form - The form, attached to this Agreement as Exhibit "A", to be used to evaluate KSM's adherence to the Golf Course Operations and Maintenance Standards. The Golf Course Operations and Maintenance Evaluation Form includes a "Golf Course Clubhouse Audit form". This form may be modified from time to time by mutual written agreement of the Executive Director and KSM's representative identified in section 1.12 and 9.0 1.16 Golf Course Operations and Maintenance Standards - Those written maintenance standards described in Section 2.25 to be agreed upon by the parties, which may be modified from time to time by mutual written agreement of the Executive Director and KSM's representative identified in Sections 1.12 and 9.0. 1.17 Habitat Preserve Area - As depicted on Exhibit "B" locator map along with legal descriptions on file with the City Clerk as amended from time to time. 1.18 Hazardous Material - Any solid, liquid, or gaseous substance, chemical, compound, product, byproduct, waste, or material that is or becomes regulated, defined, or designated by any applicable federal, state, or local governmental authority or by any Environmental Law as hazardous, extremely hazardous, imminently hazardous, dangerous, or toxic, or as a pollutant or contaminant, and shall include, without limitation, asbestos, polychlorinated biphenyls, and oil, petroleum, petroleum products and petroleum byproducts. 1.19 Impositions - All taxes and assessments (including without limitation real property taxes and assessments, possessory interest taxes, and personal property taxes), water, sewer or other similar rents, rates and charges, levies, license fees, permit fees, inspection fees and other authorization fees and charges, which at any time may be assessed, levied, confirmed or imposed on the Golf Course or the operation of the Golf Course. 1.20 Index - The Consumer Price Index for All Urban Consumers for West Region (1982-84 equals 100) as published by the United States Department of Labor, Bureau of Labor Statistics. 1.21 Insurance Requirements - All requirements of each insurance policy, and all orders, rules, regulations and other requirements of the Authority applicable to the Golf Course or the operation of the Golf Course. 1.22 KSM- Kemper Sports Management, Inc. or any successor in interest under this Agreement. 1.23 Legal Requirements - All laws, statutes, ordinances, orders, rules, regulations, permits, licenses, authorizations, directives and requirements of governments and governmental authorities, which now or hereafter may be applicable to the Golf Course or the operation of the Golf Course. •J Revsed 4/18/06 1.24 Management Term - The Management Term shall commence on the Opening Date and end on the Termination Date. 1.25 Notice of Golf Course Deficiency - The form attached to this Agreement as Exhibit "C" to be used to notify KSM of Deficiency Items (as that term is defined in Section 2.25). 1.26 Opening Date - The date the Golf Course is first opened to the public. 1.27 Operating Inventory - Consumable items used in or held in storage for use in the operation of the Golf Course, including scorecards and cart tickets, driving range balls, golf pro shop merchandise, food and beverage inventory, kitchen supplies, paper and plastic ware, locker room and bathroom supplies, towels, fuel, cleaning materials, fertilizers, pesticides, seed, maintenance parts and supplies, office supplies, and other similar items. 1.28 Operating Year - An Operating Year shall be a twelve (12) month calendar year during the Term of this Agreement commencing on January 1 and continuing through and including the following December 31. 1.29 Project Manager - The individual designated by the Executive Director to serve as the "Project Manager" pursuant to Section 1.12, or his or her authorized designee. 1.30 Real Property - As designated in the Legal Description as Exhibit "D". 1.31 Technical Advisory Committee ("TAG") - The advisory group required by the California Coastal Commission Permit with respect to the Golf Course. 1.32 Termination Date - The fifth anniversary of the Opening Date. 1.33 Weekends - The period commencing at 12:01 a.m. Friday and ending at 11:59 p.m. on Sunday. ARTICLE II GOLF COURSE OPERATIONS AND MANAGEMENT 2.0 Term. This Management Agreement shall commence on the Opening Date and terminate on the Termination Date (the "Management Term"). This Agreement may be terminated by the Authority, without penalty or cause, at anytime after the 3rd anniversary of the Opening Date if the Authority delivers written notice to KSM of its intention to terminate. Such notice shall be given at least ninety (90) days prior to such 3rd anniversary, or one hundred twenty (120) days prior to termination if after the 3rd anniversary. If such prior written notice is not given by the Authority in the time period specified above, then this Agreement shall continue until the Termination Date. At the Termination Date, the Management Term may be extended for one additional five (5) year period upon mutual agreement of the parties. 2.1 Management of the Golf Course by KSM. The Authority hereby contracts with KSM, during the Management Term, to manage and operate the Golf Course following completion of construction, pursuant to the terms of this Agreement, and KSM agrees it shall manage and operate the Golf Course in such manner. Subject to the terms of this Agreement, and further subject to the approved Annual Plan, KSM shall have authority and responsibility to: (a) implement the policies and standards for the Golf Course as determined by the Authority; (b) manage and supervise all day-to-day operations of the Golf Course 4 Revsed 4/18/06 including starting, course marshals, pro shop, building and course maintenance, security, cart rental, driving range, food and beverage service, golf instruction, and administration management; (c) subject to Section 2.17, set, from time to time, greens fees and fees and charges for other uses and items charged to Golf Course customers, (d) hire, train, and supervise all employees required to carry out KSM's responsibilities, including with Authority approval, the General Manager, Course Superintendent, Director of Golf, and Controller; (e) acquire all goods and services necessary to carry out KSM's responsibilities; (f) acquire all necessary licenses and permits for the operation of the Golf Course including those related to food preparation and alcoholic beverages; (g) manage all course reservations, tee times, and tournaments, including special events or other activities requested by Authority; (h) manage all marketing and promotional activities and customer service relations; (i) manage accounting and payroll procedures and functions; and (j) prepare such annual and other plans and reports as set forth in this Agreement. The Authority agrees that it shall cooperate with KSM to permit and assist KSM to carry out its duties under this Agreement. 2.2 Authority Financing. KSM acknowledges that Authority intends to obtain tax-exempt bond financing or other tax-exempt financing ("Authority Financing") for construction of the Golf Course. The form and issuance of such Authority Financing, the selection of Authority Financing legal counsel, and all other matters pertaining to the Authority Financing, shall be in the sole and absolute discretion of the Authority. Authority has the right, at any time and from time to time, to affect a refinancing and refunding of the Authority Financing in its sole and absolute discretion. Notwithstanding any authority given in this Agreement to KSM to set fees, charges, and prices, the Authority Board of Directors shall have the superior authority to set fees, charges, and prices at the Golf Course, but only if necessary to meet the operating covenants required by the Authority's financing and the financing documents pertaining thereto. KSM agrees to amend this Agreement at any time and from time to time, if, in the opinion of the Authority's legal counsel, this Agreement must be amended to comply with laws, regulations, rules, or procedures applicable to the Authority Financing, and any refinancing or refunding thereto, including but not limited to those laws, regulations, rules, and procedures applicable to or promulgated by the Internal Revenue Service. Authority and KSM shall meet and confer in good faith to effect such written amendment to this Agreement as necessary to ensure the Agreement is in compliance as required by the preceding sentence, which amendment(s) shall be affixed as an attachment to this Agreement; provided, however, that in the event Authority and KSM cannot come to final agreement on the required amendment(s) necessary to ensure the Agreement is in compliance as required above, either party shall have the right to terminate this Agreement without penalty upon written notice to the other party. ANNUAL PLAN. 2.3 Preparation and Approval. The initial Business Plan shall be submitted according to the Golf Course Consulting Agreement between KSM and Authority. Thereafter, annually on or before October 1 of each year, KSM shall submit to the Authority the Annual Plan for the Golf Course for the next Operating Year ("Annual Plan"). The Annual Plan shall include (1) an operating budget containing bona fide good faith estimates of all Golf Course Expenses for the next Operating Year, including expenditures for (a) property operation and maintenance, (b) repairs, replacements, and alterations which do not constitute Capital Improvements, (c) Furnishings and Equipment and Operating Inventory, and (d) advertising, sales, and business promotion, and (2) a Capital Improvement Plan as described in Section 2.6 and (3) recommendation for all fees and charges as further described in Sections 2.17-2.18. The Annual Plan shall also include the course maintenance plan, the marketing and business plan for the Golf Course and hours of operation for the next Operating Year. The parties agree that they shall use commercially reasonable efforts to limit the increase in total Golf Course Expenses during the term of this Agreement to ^ Revsed 4/18/06 the increase in the Index or increases due to increases in Gross Revenues. Any increase in excess of the increase in the Index shall be thoroughly documented in the Annual Plan. The Annual Plan shall be subject to the prior written approval of the Executive Director of the Carlsbad Public Financing Authority ("Executive Director"). It is contemplated by the parties that the Annual Plan will be agreed upon by KSM and the Executive Director not later than sixty (60) days following delivery of the Annual Plan by KSM to the Authority. If the Executive Director fails to either approve the Annual Plan within said 60-day period or to advise KSM in writing of his/her objections to the Annual Plan within such period, then the Executive Director shall be deemed to have disapproved the Annual Plan as submitted. In the event of a dispute with regard to the Annual Plan, pending the resolution of such dispute, KSM shall continue to manage and operate the Golf Course in accordance with the standards set forth in this Agreement at a level of expenditures comparable to those of the preceding Operating Year, subject to increases in Golf Course Expenses due to increases in Gross Revenues, plus up to an additional two percent (2%) of such amount. This two percent (2%) shall apply to actual course costs, and shall not include any expenditure not authorized as a Golf Course Expense pursuant to this Agreement, nor the Fixed Management Fee as defined in Section 4.1, nor the Percentage Management Fee defined in Section 4.2. The Fixed Management Fee shall be subject to the Index adjustment only in the manner described in Sections 4.1. An executive summary of the Annual Plan shall be reviewed and approved by the Board of Directors prior to the commencement of each calendar year. KSM shall comply, to the extent reasonably and commercially practicable, with the applicable Annual Plan. However, the Authority agrees that the approved budgets and Annual Plan are intended to be reasonable estimates, and accordingly, KSM shall be entitled from time to time to revise the budgets and Annual Plan to cover any expenditures that were unanticipated at the time of preparation of the budgets and Annual Plan but are reasonable and necessary to carry out the provisions of this Agreement; provided, however, that except as otherwise set forth in this Agreement, KSM shall be required to obtain prior written consent of the Authority, if the actual amount expended per calendar month for Golf Course Expenses shall be greater than two (2%) higher than the amount budgeted for that calendar month in the Annual Plan. KSM is authorized to take all action reasonably deemed necessary by KSM to implement, perform, or cause the performance of the items set forth in the approved budgets and Annual Plans. The Authority acknowledges that the Annual Plan is intended to set forth objectives and goals based upon KSM's judgment and the facts and circumstances known by KSM at the time of preparation and that KSM has not made any guarantee or warranty concerning or relating to (i) the Annual Plan, including the budgets, or (ii) the amounts of Gross Revenues or Golf Course Expenses to be generated or incurred from the operation of the Golf Course. 2.4 Quarterly Review of Annual Plan. Every three (3) months, the Executive Director and the General Manager of the Golf Course shall meet and discuss the operating results of the Golf Course, and the parties shall agree in writing upon any amendments or revisions to the Annual Plan to take into consideration variables or events that did not exist, or could not be anticipated by KSM or Authority, at the time the Annual Plan was prepared. The Annual Plan and any material amendments or revisions to the Annual Plan shall require the approval of the Executive Director, and/or the Board of Directors, which approval shall not be unreasonably withheld. CAPITAL EXPENDITURES; 2.5 Capital Improvement Funds. Subject to the availability of funds in the "Golf Course Account" (as defined in Section 5.0 below), KSM, as provided in Section 5.2 below, shall disburse to Authority monthly {. Revsed 4/18/06 from the Golf Course Account an amount equal to two percent (2%) ("Capital Improvement Fund Percentage") of that portion of the Gross Revenues for the previous month attributed to green fees ("Capital Improvement Funds"). If available, accrued Capital Improvement Funds shall be disbursed to Authority within ten (10) days after the delivery to the Executive Director of the monthly profit and loss statements required by Section 5.6(a) below. In the event there are insufficient funds in the Golf Course Accounts to pay all or any portion of the Capital Improvement Funds for any particular month, then the unpaid Capital Improvement Funds shall be accrued and paid in the next succeeding month or months when sufficient funds exist in the Golf Course Account to pay such accrued Capital Improvement Funds. Authority shall establish and maintain a separate reserve account for the Capital Improvement Funds received pursuant to this section, and these Capital Improvement Funds shall be used for the purposes described in this Agreement. The parties hereby acknowledge and agree that the Capital Improvement Funds shall belong to Authority, and Authority shall have complete control over the Capital Improvement Funds. The parties hereby agree that prior to each Operating Year, in connection with the preparation and approval of the "Capital Improvement Plan" as described in Section 2.6 below, the parties shall discuss whether the Capital Improvement Fund Percentage should be changed. Any decision to change the Capital Improvement Fund Percentage shall be in the sole discretion of the Executive Director, and in making such decision the Executive Director shall consider such factors as the amount of Capital Improvement Funds currently available and the projected capital improvement requirements of the Golf Course. In no event, however, shall the Capital Improvement Fund Percentage be increased in excess of two percent (2%) except with the written approval of the Executive Director. 2.6 Capital Improvement Plans. During the Management Term, KSM shall submit on or before October 1 of each year, a "Capital Improvement Plan" for the Golf Course for the next Operating Year, which shall include KSM's recommendation of Capital Improvement projects for the next Operating Year and the estimated costs of such Capital Improvement projects. 2.7 Implementation of Capital Improvement Projects. The parties acknowledge and agree that all Capital Improvement projects are in Authority's sole control and discretion, and all costs and expenses of Capital Improvement projects shall be paid from the Capital Improvement Funds or from other Authority funds (and not from the Golf Course Accounts). The costs and expenses of Capital Improvement projects shall not be considered Golf Course Expenses. Once approved by the Board, KSM shall be responsible for the construction or purchase of the Capital Improvements, unless otherwise instructed by the Authority. 2.8 Responsibilities of KSM. Without in any way limiting KSM's right to manage and operate the Golf Course in accordance with the terms of this Agreement, KSM shall, in addition to other obligations and responsibilities set forth in this Agreement, perform the following services, or cause the same to be performed for the Golf Course, subject to the approved Annual Plan and the other terms and conditions set forth in this Agreement, and all expenditures of KSM and costs and expenses incurred by KSM in performing these services, including the "Management Fees" (as defined in Section 4.0), shall be Golf Course expenses: (a) Manage and market the Golf Course; (b) Hire, train and terminate all Golf Course personnel; (c) Consummate arrangements with concessionaires, licensees, tenants, or other intended users of the Golf Course; Revsed 4/18/06 (d) Negotiate and execute on behalf of the Authority contracts for the furnishing of utilities and maintenance and other services to the Golf Course, subject to Section 2.22; (e) Make all repairs, decorations, replacements, additions, revisions, alterations and improvements to the Golf Course as shall be reasonably necessary for maintenance of the Golf Course in good order, condition and repair, subject to the terms of this Agreement; (f) Manage payment of Golf Course operating expenses as identified in the Annual Plan; (g) Maintain a level of Operating Inventory deemed appropriate by KSM for supplying the needs of the Golf Course and its customers; (h) Apply for, and use its best efforts to obtain and maintain, all licenses and permits required of KSM in connection with the operation and management of the Golf Course; and Authority agrees to execute any and all applications and such other documents as shall be reasonably required and to otherwise cooperate, in all reasonable respects, with KSM in the application for, and obtaining and maintenance of, such licenses and permits. Upon termination or expiration of this Agreement, KSM shall cooperate in transferring all licenses, permits and accreditations in the name of KSM to Authority as permitted by law; (i) Use its best efforts to do, or cause to be done, all such acts and things in and about the Golf Course as shall be reasonably necessary to comply with all Insurance Requirements and Legal Requirements, whether or not compliance therewith shall interfere with the use and enjoyment of the Golf Course except for those which are the obligation of the Authority or the Authority's separate contractors. Notwithstanding the foregoing, the Authority acknowledges and agrees that the Authority or its construction contractors shall be responsible for procuring, maintaining and complying with all licenses and other authorizations relating to design, construction, zoning, erection, installation and similar matters relating to any construction at the Golf Course. In the event, at any time during the Management Term, repairs, additions, changes, or corrections in the Golf Course of any nature shall be required by reason of any Legal Requirements, KSM shall notify the Authority and request the Authority's consent to take all reasonable steps and to make all reasonable expenditures necessary to repair and correct any such repairs, additions, changes, or corrections whether or not provisions have been made in the Annual Plan for any such expenditures, the costs of which shall be Golf Course Expenses. If the Authority withholds such consent, KSM shall not be liable for any failure of the Golf Course to be in compliance with such Legal Requirements due to the Authority's refusal to consent; (j) Pay all Impositions and insurance premiums when due; (k) Implement a marketing, advertising, and promotional plan for the Golf Course; (1) Purchase Furnishings and Equipment necessary to operate and maintain the Golf Course in the manner provided in this Agreement; (m) Maintain the landscaping within the boundaries of the Golf Course pursuant to the Golf Course Operations and Maintenance Standards; and (n) Defend and settle claims, lawsuits, and demands relating to the Golf Course and Golf Course personnel (as further provided in Section 3.4 below), and retain legal counsel (and pay legal fees and costs) who under the direction of KSM will represent KSM, and the Golf Course on all questions relating to Legal g Revsed4/18/06 Requirements, will defend any claims or actions brought against KSM relating to the Golf Course or Golf Course personnel, and will institute and defend any and all legal actions or proceedings as shall be reasonably necessary to collect charges, rent or other income for the Golf Course to dispossess tenants or other persons in possession from all or any portion of the Golf Course to cancel or terminate any lease, license or concession agreement on the grounds of default by the tenant, licensee, or concessionaire, or to contest property taxes. KSM shall notify Authority and its General Counsel of any claims or lawsuits relating to the Golf Course within two (2) business days after KSM receives notice of such claims or lawsuits. Any legal fees for outside counsel shall be paid by KSM and charged as a Golf Course Expense and shall not include any KSM corporate overhead or administrative fee or charge. The Authority's General Counsel shall have the right to reasonably pre-approve any legal counsel retained by KSM to defend KSM and the Golf Course in connection with such matters. For all claims naming the Authority and/or City, KSM shall cooperate with the Authority's General Counsel/City Attorney who at his discretion may represent the Authority/City or retain any outside counsel to assist in the representation of the Authority/City as a Golf Course expense. (o) During the Management Term, KSM's on-site controller shall: (i) maintain all books, records, and other data associated with the financial activities of the Golf Course, (ii) prepare all operating budgets, cash flow budgets, and other financial projections and forecasts, and (iii) be responsible for the day-to-day financial affairs of the Golf Course; (p) Notwithstanding anything else in this Agreement to the contrary, in the event, at any time during the Management Term, a condition should exist in, on, or about the Golf Course of an emergency nature which, in KSM's sole and absolute discretion, requires immediate action to preserve and protect the Golf Course, to better assure the Golf Course's continued operation, or to protect the Golf Course's customers, guests, or employees, KSM is authorized to take all steps and to make all reasonable expenditures necessary to repair and correct any such condition, whether or not provisions have been made in the applicable Annual Plan for any such expenditures. The Authority shall be notified of the need for, and estimated amount of, any such emergency expenditures as soon as reasonably practical; and (q) In fulfilling its operational responsibilities hereunder, KSM shall have all rights ordinarily accorded to a KSM in the ordinary course of business, including, without limitation, the collection of proceeds from the operation of the Golf Course, the approval and payment of obligations, and the negotiating and signing of leases and contracts. KSM shall not be obligated to advance any of its own funds to or for the account of the Authority nor to incur any financial liability, unless the Authority shall have furnished KSM with funds necessary for the full discharge thereof. However, if for any reason KSM shall have advanced funds in payment of any reasonable expense in connection with the maintenance and operation of the Golf Course, the Authority shall reimburse KSM within a reasonable time upon demand for the full amount of such payments. (r) To maintain Open Space and/or Habitat Preserve Areas as requested by the Authority. PERSONNEL. 2.9 General. Subject to Section 2.1(d), KSM shall employ all of the employees of the Golf Course. KSM shall recruit, hire, train, discharge, promote and supervise the management staff of the Golf Course (i.e., the General Manager, the Course Superintendent, and other key personnel), and KSM shall supervise through Q Revsed 4/18/06 the management staff the recruiting, hiring, training, discharge, promotion and work of all other employees of the Golf Course. All employees of the Golf Course shall be properly qualified for their positions. 2.10 Pension and Benefit Plans. KSM shall have the right to provide eligible employees of the Golf Course with pensions and other employee retirement benefits and disability, health and welfare benefits, and other benefit plans now or hereafter available to employees of other golf courses and country clubs operated by KSM, and the allocable share of such employee benefits shall be a Golf Course Expense. 2.11 Temporary Assignment of Other KSM Personnel. If the position of General Manager, Course Superintendent, or other Key Management Employee positions of the Golf Course are not filled for whatever reason, KSM may temporarily assign to these positions the staff of other golf courses and country club Golf Courses operated by KSM or other qualified KSM staff; provided, however, that said temporary assignment shall not exceed ninety (90) days without the written approval of the Executive Director. During such time as these employees are temporarily assigned to the Golf Course, all such employees will be paid a pro-rata share of their regular Employee Compensation equal to the actual time such employees worked at the Golf Course which shall be a Golf Course Expense and the Fixed Management Fee shall be increased or decreased accordingly. 2.12 Key Management Employees. The General Manager of the Golf Course shall be responsible for the day-to-day management and operation of the Golf Course. The name and telephone number (both home and business) of the General Manager shall be provided, in writing, to the Executive Director and shall be current at all times. The General Manager shall be reasonably available during normal working hours to meet with the Executive Director. After normal working hours, the General Manager shall be reasonably available to appear at the Golf Course if deemed necessary by the Executive Director. The Course Superintendent for the Golf Course shall be certified by the Golf Course Superintendents Association. The Director of Golf for the Golf Course shall be a current Class "A" member in good standing of the Professional Golf Association or the Ladies Professional Golf Association. The Executive Director shall have the right to approve the individuals who KSM intends to hire to fill the positions of General Manager, Golf Course Superintendent, Director of Golf and Controller (regardless of the titles given for such positions by KSM) (collectively, the "Key Management Employees"), which approval shall not be unreasonably withheld. 2.13 KSM Acknowledgment of Regulatory and Permit Documents: Easements. KSM acknowledges that it has been provided copies of the Regulatory Permits pertaining to the Golf Course property attached here to as Exhibit E, consisting of: 1. State Water Resources Control Board, WDID No. 937C337203, dated 10/17/05; 2. California Department offish and Game, Streambed Alteration Agreement No. 5-122-00, dated June 30, 2004; 3. United States Army Corps of Engineers Permit No. 972020600-SMJ, dated 1/5/05, modifying permit No. 972020600-MAT, dated September 30, 2000; 4. California Coastal Commission Coastal Development Permit No. A-6CI 1-00-087, Notice of Acceptance, dated April 25, 2005; 5. City of Carlsbad, Endangered Species Act Incidental Take Permit No. HMP 04-01, dated December 5, 2004; and 6. San Diego Gas and Electric Company, Letter of Permission for Grading and Construction of Improvements, dated June 23, 2005. Revsed 4/1 8/06 2.14 Publicity. Any commercial advertisements, press releases, articles, or other media information using Authority's or City's name shall be subject to the prior approval of the Executive Director which approval may be or withheld in the Executive Director's sole and absolute discretion. 2.15 Specific Operating Procedures. In addition to the more general responsibilities of KSM as manager of the Golf Course as provided in this Article II, KSM shall operate and manage the Golf Course in accordance with the following operating procedures consistent with the approved budget and Annual Plan: 2.16 Golf Course Hours of Operation. Except upon the occurrence of the events described in Article VIII of this Agreement, the Golf Course shall be operated on a daily basis all year and shall not be closed on holidays. The Golf Course shall be kept open during all hours necessary to adequately serve the public utilizing the Golf Course, subject to the specific conditions of the Conditional Use Permit and except for instances in which normal maintenance requires temporary closure. The driving range may be open when the Golf Course is closed, subject to the conditions of the Conditional Use Permit. The inside food and beverage services of the Golf Course Clubhouse shall be open as determined in the Annual Plan. The permitted hours for food and beverage services in the Golf Course Clubhouse restaurant shall be as provided in the Conditional Use Permit. FEES AND CHARGES. 2.17 Setting of Fees. KSM shall, from time to time, set the amount for fees and charges for services at the Golf Course, including greens fees (which shall include use of a golf cart), Golf Club rental, and driving range. All fees, charges, and prices at the Golf Course set by KSM shall be comparative and competitive with other first class public golf courses in San Diego County and approved by the Executive Director. All fees and charges shall be set first to ensure coverage of Golf Course Expenses, Management Fees, and debt service and secondarily, to provide a benefit to residents of Carlsbad. The green fees shall be recommended in the Annual Plan. KSM acknowledges that Authority intends to obtain public and/or private financing for construction of the Golf Course, and that such financing may require Authority to control the setting of other charges, and prices at the Golf Course in addition to green fees. 2.18 City Use Day. The Authority/City shall have the right to designate a day for its exclusive use of the Golf Course and all improvements free of charge once a year on a Monday through Thursday only. 2.19 Resident Green Fee Discount. KSM shall establish a "Resident Green Fee Discount," whereby Carlsbad residents shall receive a discount on green fees. KSM shall recommend the amount of the resident green fee discount and include the recommended discount in the Annual Plan. KSM shall develop all necessary rules and procedures for implementing the Resident Green Fee Discount, which rules, and procedures shall be subject to the prior written approval of the Executive Director. KSM may also recommend discounted rates for other specified groups. 2.20 Food and Beverage Operations. The Golf Course shall include a restaurant located in the Golf Course Clubhouse and a snack bar, which shall be operated in accordance with the Conditional Use Permit. Temporary fixed food stands shall not be installed on the Golf Course except for special events. KSM shall provide a staffed food service and beverage cart for the service of players on the Golf Course during peak hours of operation. KSM shall comply with all requirements of state and local law governing the sale and distribution of alcoholic beverages. KSM shall obtain and maintain all permits from all governmental agencies having jurisdiction for all food and beverage operations at the Golf Course, including holding a liquor license in the name of KSM or a KSM Affiliate. KSM shall comply with all health law and 11 Revsed 4/18/06 regulations as existing or as may be established by the federal, state, county, and city governmental agencies. All food service employees shall possess valid food handler cards, and a copy of these cards shall be maintained in the administrative office at the Golf Course. KSM, for all food and beverage employees, shall comply with all applicable codes and regulations as relates to tuberculosis and other health and disease testing - as now or hereafter required by applicable law. Prices of food and beverages sold at the Golf Course shall be market rate and competitive with prices charged at comparable first class public golf courses in San Diego County. 2.21 Office Operations. KSM shall employ sufficient administrative staff at the Golf Course to permit KSM to competently perform KSM's obligations under this Agreement. Upon Authority's written request, KSM shall provide the Executive Director with a written job description for each management position at the Golf Course. The Executive Director shall keep these job descriptions in strict confidence, subject to applicable public records disclosure laws. KSM shall maintain at the Golf Course copies of all KSM corporate policies and procedures, as such may be changed from time to time. 2.22 Safety and Security. The Golf Course shall comply with all safety regulations of federal, state, and local governmental agencies, including without limitation any requirements imposed by California Labor Code Section 6300 et seq. and regulations promulgated with respect thereto, and applicable federal occupational, health, and safety laws and regulations. KSM shall take all reasonable actions to protect the safety of all Golf Course employees and customers. The Golf Course shall contain appropriate security systems, including video monitoring of cash operations, security alarm systems, motion detection sensors for after hours control, and locks for the maintenance yard and perimeter gates. The alarm system at the Golf Course shall be tied into an airtight monitoring station. KSM shall keep for seven (7) days computer back-up tapes for all accounts payable and accounts receivable information. All records at the Golf Course shall be kept in fireproof files and made available to the Authority upon request. 2.23 Contracts and Agreements. KSM shall negotiate, consummate, enter into, and perform, on behalf of Authority, such agreements as KSM may deem necessary or advisable for the furnishing of all food, beverages, utilities, concessions, entertainment, operating supplies, equipment, repairs and other materials and services as KSM determines are needed from time to time for the management and operation of the Golf Course. KSM shall not be obligated to sign any leases or other agreements in KSM's name except for any employment related agreements, if any, which shall be in KSM's name. Notwithstanding the above, any contract which exceeds Twenty Five Thousand Dollars ($25,000) in total payments over the term of such contract or which has a term of over one (1) year shall be negotiated by KSM but provided to Authority for its approval and signature. 2.24 Alterations to Buildings. KSM shall not make any substantial alterations, additions, or changes to the exterior appearance or the structural nature of the Golf Course Clubhouse, golf pro shop, maintenance building, or other buildings located at the Golf Course without the prior consent of the Executive Director. 2.25 Operations and Maintenance Standards. The parties acknowledge and agree that the Golf Course shall be operated and maintained as a first class golf course. As used herein, "first class golf course" shall mean a golf course comparable to the following golf courses in San Diego County: Torrey Pines - City of San Diego; The Vineyard - City of Escondido; and Encinitas Ranch - City of Encinitas California, as they existed on the Effective Date of this Agreement. In addition to all other responsibilities of KSM under this Agreement, KSM agrees that at all times during the term of this Agreement, the Golf Course shall be operated and maintained in accordance with the written standards to be agreed upon by Authority and KSM Revsed 4/18/06 (the "Golf Course Operations and Maintenance Standards"), which will be consistent with the approved budget and Annual Plan. 2.26 Authority Inspection and Evaluation. At any time during the term of this Agreement, the Authority Executive Director, or his designee shall inspect some or all of the Golf Course for purposes of compliance with the Golf Course Operations and Maintenance Standards and this Section. In conducting such inspection and evaluation, the Authority Executive Director, or his designee shall complete the Golf Course Operations and Maintenance Evaluation Form, or applicable portions thereof, and shall promptly thereafter provide KSM a copy of the completed form or applicable portion thereof. Authority agrees that the Executive Director shall act reasonably and in good faith in making the determination of whether the Golf Course Operations and Maintenance Standards, or applicable portion thereof, have been met. As set forth in Exhibit "A", the Golf Course Operations and Maintenance components shall be rated as "Acceptable," "Needs Improvement," and "Unacceptable." Notwithstanding KSM's obligation to correct Deficiency Items as set forth below, KSM shall be in compliance with the Golf Course Operations and Maintenance Standards unless an overall rating is determined to be "Unacceptable." The Executive Director's rating of an item as "Unacceptable" or "Needs Improvement" shall, upon KSM's receipt of the Golf Course Operations and Maintenance Evaluation Form, constitute a Notice of Golf Course Deficiency with respect to the deficient item(s). Within one (1) week after receipt of the Golf Course Operations and Maintenance Evaluation Form, the Executive Director and General Manager of the Golf Course, and the Golf Course Superintendent, if necessary, shall meet to review the Deficiency Item(s), including the corrective actions KSM intends to take to correct the Deficiency Item(s). KSM shall complete the "Statement of Corrective Action", detailing the steps it intends to take to correct each Deficiency Item and the time schedule for completion of corrective action. The proposed corrective action and the time schedule shall be reasonably approved by the Executive Director. When a Deficient Item has been satisfactorily corrected in the judgment of the Executive Director, the Executive Director and the General Manager of the Golf Course shall each sign the Notice acknowledging completion of the corrective action. The cost for correcting any Deficiency Item shall be a Golf Course Expense. 2.27 Results of KSM's Failure to Take Corrective Action. Except as provided in Section 2.27 below, if KSM obtains an overall rating of "Unacceptable", or fails to take action to timely correct any Deficiency Item(s), the following shall occur: (a) If there are two (2) consecutive months in which the Golf Course Operations and Maintenance Evaluation Form indicates that KSM's management of the Golf Course has obtained an overall rating of "Unacceptable," the Authority shall be entitled to deduct from the Performance Evaluation Deposit described in Section 2.29, the amount of Five Thousand Dollars ($5,000) per month, and such deduction amount shall be retroactive to the first (1st) of the two (2) consecutive months and shall continue until KSM's management of the Golf Course achieves an overall rating of "Acceptable" as indicated on the Golf Course Maintenance Evaluation Form. In addition, any failure to achieve an overall rating of "Acceptable" for (i) any four (4) months within any single operating year, or (ii) any three (3) consecutive months, shall be considered a material breach of this Agreement entitling the Authority to terminate this Agreement regardless of the deductions that have been made from the Performance Evaluation Deposit. (b) The Authority shall further be entitled to deduct from the Performance Evaluation Deposit the amount of Two Thousand Dollars ($2,000) per month for each Deficiency Item that is not timely corrected. 13 Revsed4/18/06 Such deduction shall be imposed as of the date the Deficiency Item was to have been corrected and shall continue each month thereafter until such Deficiency Item has been corrected as indicated by the signature of the Executive Director and General Manager of the Golf Course on the Notice of Golf Course Deficiency as described in Section 2.25. The deductions provided for in this Section shall not be a Golf Course Expense. 2.28 Exclusions from Imposition of Deductions. The following items shall be considered exclusions for the purpose of determining whether there have been two (2) consecutive months with overall ratings of "Unacceptable" and for the purpose of determining whether an outstanding Deficiency Item has been timely corrected: (a) any outstanding Deficiency Item that KSM is diligently and timely correcting in accordance with the time schedule jointly agreed to by the Executive Director and the General Manager of the Golf Course as provided in Section 2.25; (b) any Deficiency Item in which the correction is considered a Capital Improvement, but only if and to the extent KSM, in light of its expertise and experience as a manager of first class golf courses, could not have taken reasonable measures to prevent or mitigate the Deficiency Item from occurring; (c) any Deficiency Item that KSM is unable to correct because of, or any rating of "Unacceptable" caused by, the occurrence of a "Force Majeure Event" (as defined in Section 8.2 of this Agreement) but only to the extent KSM, in light of its expertise and experience as a manager of first class golf courses, could not have taken reasonable measures to prevent or mitigate the Force Majeure Event; and (d) any Deficiency Item that KSM is unable to correct due to, or any rating of "Unacceptable" caused by, the Authority's failure to provide sufficient funds to effect such correction. 2.29 Acknowledgement of Parties Concerning Deductions. THE PARTIES HERETO AGREE THAT THE $5,000.00 PER MONTH DEDUCTIONS FROM THE PERFORMANCE EVALUATION DEPOSIT REFERENCED ABOVE CONSTITUTE A REASONABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT THE AUTHORITY WOULD SUFFER DUE TO A FAILURE BY KSM TO ADHERE TO THE REQUIRED PERFORMANCE LEVEL, CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE CHARGES TO THE RANGE OF HARM TO THE AUTHORITY THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE AUTHORITY OF THE AUTHORITY TO EFFECT SUCH DEDUCTIONS SHALL NOT LIMIT THE AUTHORITY'S TERMINATION RIGHTS AS SET FORTH IN THIS AGREEMENT. IN PLACING IT'S INITIALS AT THE PLACES PROVIDED HEREIN BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED THE CONSEQUENCES OF THE DEDUCTION PROVISIONS AT OR PRIOR TO THE TIME EACH EXECUTED THIS. 2.30 KSM Performance Evaluation Deposit. Not later than commencement of the Management Term, and as a condition to commencement of the Management Term, KSM shall deposit with the Authority in cash the sum of Twenty-Five Thousand Dollars ($25,000) as security for the performance of KSM's obligations pursuant to Section 2.26 ("Performance Evaluation Deposit"). The Authority shall place the Performance Evaluation Deposit in a separate interest-bearing account and such funds shall not be intermingled with any other funds nor subject to withdrawal or allocation except as specifically set forth in Section 2.26. The Performance Evaluation Deposit shall not be a Golf Course Expense. In the event of failure of KSM to timely correct Deficiency Items as provided in Section 2.26, the Executive Director shall have the authority to deduct from the Performance Evaluation Deposit the amounts set forth in Section 14 Revsed 4/18/06 2.26. In the event the Authority is required to make deductions from the Performance Evaluation Deposit, KSM shall promptly, upon written request therefore by the Authority, submit such additional cash amounts to the Authority as is required in order to maintain the Performance Evaluation Deposit at the Twenty-Five Thousand Dollar ($25,000) level. Upon expiration or termination of this Agreement for any reason, all of the Performance Evaluation Deposit, along with all accrued interest, shall be returned to KSM within sixty (60) days after such expiration or termination. 2.31 KSM Purchases. In connection with any purchases made by KSM or an Affiliate of KSM for the account of the Authority, it is understood that KSM or such Affiliate may perform services as a representative of the manufacturer to secure the benefits of lower costs, and that any resulting savings shall be passed on to the Authority, including representatives' fees. In addition, all trade discounts, rebates and refunds pertaining directly to purchases for the Golf Course shall accrue to the benefit of the Authority. If any purchases of goods or services for the Golf Course are made from or through an Affiliate of KSM, that shall be disclosed to the Authority in the Monthly Report, and the charges to the Golf Course for such goods or services shall not exceed the lesser of the cost actually paid or the market prices for such goods and services. ARTICLE III INSURANCE REQUIREMENTS AND INDEMNITY 3.0 For the duration of this Agreement, KSM shall procure and maintain, at a minimum, the following types and amounts of insurance and coverage as described in this Article III, all as a Golf Course Expense: 3.1 Types of Coverage: (a) Workers' Compensation. Coverage in compliance with the Workers' Compensation Laws of the State of California providing all statutory benefits and covering all Golf Course employees who are KSM employees. (b) Commercial General Liability. (i) Coverage shall include all premises and operations, including but not limited to, bodily injury, property damage, personal injury, liquor liability, independent contractors, products and completed operations and contractual liability. The applicable limits of liability shall be the minimum combined single limit of $10,000,000 per occurrence. (ii) The Authority, and its officers, officials, employees, agents, and volunteers, and the City of Carlsbad, its officers, officials, employees, agents and volunteers, and any other parties to which the Authority or City is required to have named as additional insured on insurance related to the Golf Course (provided that such parties are identified in writing to KSM), shall be named as an additional insured as respects liability arising out of work or operations performed by or on behalf of KSM. (c) Automobile Liability and Garage Keeper's Liability. Automobile Liability coverage shall apply to all automobiles, trucks and other motor vehicles utilized or controlled by KSM in connection with the Agreement, and shall include all owned, hired and non-owned vehicles in the amount of $1,000,000 combined single limit per occurrence. 15 Revsed 4/18/06 KSM will maintain Garagekeepers Liability protection in the amount of $900,000 for customers' automobiles, subject to policy deductibles acceptable to the Authority. (d) Property Insurance. Property Insurance covering loss or damages to the buildings, structures or other improvements, contents, equipment and supplies on a replacement cost per occurrence basis (except for golf carts that are over five (5) years old shall be insured on an actual cost value basis) for "all risk", including specifically irrigation and/or sprinkler system leakage damage, vandalism and malicious mischief. The Authority shall provide KSM with the appropriate written specifications for all such property to be insured under such policy. The Authority must notify KSM in writing if the Authority wants coverage for flood, earthquake or wind damage or else this damage shall be excluded from coverage. (e) Direct and Indirect Loss of Earnings. Business Interruption, Loss of Income and Extra Expense Insurance in such amounts as will reimburse Authority for direct and indirect loss of earnings attributable to the annual value of lost business in connection with insured physical damage. Such coverage shall be on an "all risk" basis with Authority named as the loss payee. (f) Fidelity Bond. Coverage shall apply to all KSM employees who may handle funds or property in connection with the Golf Course and shall be in an amount not less than $300,000. (g) Umbrella or Excess Liability Coverage. The coverage required above may be satisfied through a combination of primary and umbrella or excess liability coverage. 3.2 Other Insurance Provisions: (a) All insurance as is afforded under this Agreement shall be primary and without right of contribution from any other policies that are carried or are self-insured by the Authority or by any Additional Insured with respect to their interest in the Golf Course. Further, such insurance shall expressly provide that all the provisions thereof, except limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. (b) Authority and/or City shall be named as additional insureds on all policies on which each is not named as a primary insured to the extent allowed by law. (c) Within ten (10) business days after execution of this Agreement, KSM will furnish certificates of insurance and endorsements to Authority evidencing compliance with the insurance requirements in this Agreement. Authority has the right to review certified policies as reasonably necessary. Each certificate and endorsement shall be subject to reasonable approval by Authority and shall provide that such policy shall not be subject to material alteration to the detriment of Authority or KSM or cancellation without thirty (30) days' notice in writing to be delivered by registered mail to Authority. Should any policy expire or be canceled before the expiration of this Agreement and KSM fail to immediately procure other insurance as specified, Authority reserves the right, but shall have no obligation, to procure such insurance. Certificates and endorsements will be furnished per the Notice requirements in Section 9.2. (d) Insurance required under this Agreement shall be maintained with California admitted insurers that carry a minimum Best's Rating of A-VII. If a carrier is non-admitted, a minimum Best's Rating of A- X shall be required. Coverage shall be from a surety or insurance company reasonably acceptable to Authority. 16 Revsed 4/18/06 3.3 Insurance Maintained by KSM. The parties acknowledge and understand that as of the Effective Date the following applies to insurance maintained by KSM: (a) Five Thousand Dollars ($5000.00) deductible per occurrence for property damage insurance, (b) ZERO Dollars ($0.00) self-insured retention per occurrence for commercial general liability insurance and automobile liability insurance and [garage keeper's liability], and (c) ZERO Dollars ($0.00) participation in loss limits (which is comparable to self- insurance) per accident for workers compensation insurance. Authority understands and agrees that with respect to all policies of insurance required under Sections 3.1, 3.2 and 3.3 the portion of any claim, loss, or damage subject to a deductible amount or a self-insurance or self-assumption amount shall be a Golf Course Expense. KSM shall notify Authority in writing at least thirty (30) days prior to any increase in the deductible amount or self-insured or self-assumed amounts for the insurance coverage maintained by KSM under this Section 3.3. The Executive Director shall have the right to approve an increase in the amount of any deductible. 3.4 Handling of Claims. With the exception of claims naming the Authority and/or the City,which in the sole discretion of the General Counsel for the Authority may be handled by the General Counsel/City Attorney, KSM (or its insurers) shall be responsible for handling all claims, demands, and lawsuits for any losses, damages, liability, and expenses (including without limitation personal injury and property damage claims) arising out of the operation and management of the Golf Course ("Claims"), whether or not such Claims are covered by the insurance required under Section 3.1. Handling such Claims shall include without limitation responding to such Claims, investigating such Claims, retaining outside legal counsel to defend such Claims, settling such Claims, and paying any losses, damages and expenses relating to such Claims. All costs and expenses, including attorneys' fees relating to the handling of such Claims as set forth in the preceding sentence, (including employment related lawsuits), shall be a Golf Course Expense, subject to KSM's obligations to indemnify Authority/City pursuant to Section 3.5(a). INDEMNITIES. 3.5 (a) KSM's Indemnity. KSM agrees to defend (with legal counsel reasonably satisfactory to the Authority's General Counsel/City Attorney), indemnify and hold harmless Authority and City and Authority's and City's officers, officials, members, employees, agents, representatives, and volunteers from and against any and all claims, demands, actions, lawsuits, proceedings, damages, liabilities, judgments, penalties, fines, expert witness fees, attorneys' fees, costs, and expenses, which results from or is connected with one or more of the following: (i) Any act or omission by KSM or any shareholder, director, officer, or employee of KSM in connection with KSM's performance under this Agreement that constitutes negligence or willful misconduct; or (ii) Any action taken by KSM relating to the Golf Course (i) that is expressly prohibited by this Agreement, or (ii) that is not within the scope of KSM's duties under this Agreement, or (iii) that is not within KSM's delegated authority under this Agreement. KSM's defense and indemnification obligations under this Section shall not apply to (i) any acts or omissions taken either at the specific written direction or written approval of the Authority, or (ii) the use by KSM of Golf Course trade names, trademarks, logos or other intellectual property used in connection with the Golf Course, or (ii) claims arising out of the sole negligence or willful misconduct of Authority, City, or their officers, officials, members, employees, agents, representatives or volunteers. 17 Revsed4/18/06 Survival. The defense and indemnification obligations of KSM contained in this Section 3.5 shall survive the expiration or termination of this Agreement for any reason. 3.6 Compliance with Environmental Law. In performing its responsibilities under this Agreement, KSM shall comply with all federal state, and local laws and regulations pertaining to the storage, use, and disposal of "hazardous or toxic wastes, substances, or materials" as defined by applicable law. 3.7 Environmental Remediation. Throughout the Management Term, if KSM becomes aware of the presence of any Hazardous Material in a quantity sufficient to require remediation or reporting under any Environmental Law in, on or under the Golf Course or if KSM, Authority, the Golf Course, City or the Golf Course becomes subject to any order of any federal, state or local agency to investigate, remove, remediate, repair, close, detoxify, decontaminate or otherwise clean up the Golf Course, KSM shall, at Authority's sole expense, use all commercially reasonable efforts to carry out and complete any required investigation, removal, remediation, repair, closure, detoxification, decontamination or other cleanup of the Golf Course; provided, that such remediation activities shall be at KSM's expense if such activities are required as a direct consequence of Hazardous Material being present in, on or under the Golf Course as a result of negligent actions or willful misconduct of KSM, its agents, contractors or employees. ARTICLE IV KSM FEES DURING MANAGEMENT TERM; AVAILABLE FUNDS. 4.0 Forms of KSM Compensation. KSM shall receive as compensation for its services during the Management Term, the following: (i) a fixed management fee (the "Fixed Management Fee"); and (ii) a percentage management fee (the "Percentage Management Fee") (the Fixed Management Fee and the Percentage Management Fee are collectively referred to hereinafter as the "Management Fees"). The Management Fees are further defined below. 4.1 Fixed Management Fee. During the Management Term, KSM shall receive from Authority a Fixed Management Fee in the annual amount of One Hundred Fifty Thousand Dollars ($150,000) (plus any annual adjustments as provided herein and amounts for the salaries of Key Management Employees as defined in Section 2.12 of this Agreement). The annual Fixed Management Fee shall be payable in twelve monthly installments, payable in advance on the first day of the month for which such installment pertains. (Such Fixed Management Fee shall be prorated for any partial calendar months occurring during the Management Term.) The Fixed Management Fee shall be increased annually on January 1 of each Operating Year (the "Adjustment Date") in accordance with the percentage increase, if any, in the Index for the month of October immediately preceding the Adjustment Date as compared to the Index for the like month of the previous year. The Fixed Management Fee may also be increased or decreased by mutual agreement of the parties during the term of this Agreement to reflect adjustments in Key Management Employee salaries. In no event, however, shall the Fixed Management Fee, as such amount may be increased by any increase in the Index, be adjusted downward to reflect a percentage decrease in the Index. 4.2 Percentage Management Fee. During the Management Term, KSM shall also receive from Authority, as Percentage Management Fee, five percent (5%) of that portion of the "Gross Revenues" (as defined in Section 4.3 below) derived from the operation of the Golf Course that is in excess of Four Million Five Hundred Thousand Dollars ($4,500,000) (the "Percentage Management Fee Threshold"); 18 Revsed 4/18/06 provided, however, that such Percentage Management Fee Threshold shall be prorated for the first and last fiscal year of the Management Term in the event they are partial fiscal years; and, provided, further that in no event shall the Percentage Management Fee, for any annual period during the Management Term, be greater than One Hundred Fifty Thousand ($150,000). [Example: Fixed Management Fee (less the portion of the Fixed Management Fees paid for the salaries of the Key Management Employees) is $150,000. The maximum Percentage Management Fee is $150,000. Gross Revenues are $8,000,000. The Percentage Management Fee is 5% x $3,500,000 = $175,000, which is greater than the permitted maximum Percentage Management Fee. The Percentage Management Fee, therefore, is $150,000. If applicable, the Percentage Management Fee shall be paid to KSM, annually in arrears within ten (10) days following the delivery to the Executive Director of the Operating Year profit and loss statement required by Section 5.6 below. Any Percentage Management Fee owing as of the expiration or earlier termination of this Agreement shall be payable concurrently with the delivery to the Executive Director of the final profit and loss statement. 4.3 Gross Revenues Defined. For the purposes of this Agreement, the term "Gross Revenues" means, except as provided below, all money received as a result of the operation of the Golf Course and the sale of goods and services at the Golf Course, determined on an accrual basis in accordance with generally accepted accounting principles consistently applied. By way of example, and without limitation, Gross Revenues shall include all green fees; rental fees for golf carts, golf clubs and bags, and other rental items; bag storage fees; range balls; reservation fees; fees for golf handicap service; rental and concession payments; revenue generated from space rentals and from meetings, banquets, parties, receptions, tournaments, and other group gatherings; golf instruction fees; revenues from golf schools; and proceeds from business interruption insurance. Gross Revenues shall be reduced by any cash refunds or credits allowed on returns by customers. Gross Revenues shall not include the following: (a) Sales taxes, excise taxes, gross receipts taxes and other similar taxes now or later imposed upon the sale of food, beverages, merchandise or services and paid to the appropriate taxing authority, whether added to or included in the selling price; (b) Those fees charged by a golf professional functioning as an independent contractor for the teaching of golf lessons and instruction which are not paid by the golf professional to the Golf Course operation; (c) Receipts in the form of refunds from, or the value of merchandise, supplies or equipment returned to, shippers, suppliers or manufacturers; (d) The amount of any gratuities paid or given by customers to Golf Course employees, or service charges added to customer billings, which represent gratuities to Golf Course employees; 19 Revsed 4/18/06 /CO (e) Gross receipts received by licensees or concessionaires, except to the extent any portion of such receipts is received by the Golf Course; (f) Proceeds of insurance other than business interruption insurance or similar types of insurance; (g) Receipts from public telephones and vending machines, except to the extent of commissions paid to KSM or Authority; (h) Proceeds of any borrowings by KSM or Authority; (i) Any amount received by KSM in connection with any claim, demand, or lawsuit, except when such amount is for interruption or loss of Golf Course business or; (j) Any additional funds provided by the Authority for, or paid by the Authority for, any Golf Course purpose. (k) Interest earnings on any Golf Course funds. ARTICLE V ACCOUNTS: WORKING FUNDS; DISBURSEMENT OF FUNDS; RECORDS AND REPORTS; GOLF COURSE EXPENSES 5.0 Golf Course Accounts. KSM shall assist the Authority in establishing bank accounts for the Golf Course at a banking institution or institutions reasonably approved by the Executive Director (which banking institution or institutions shall have branches located in close proximity to the Golf Course), such accounts to be in the Authority's name (the "Golf Course Accounts"). Individuals designated and approved in writing by the Authority as well as City employees designated in writing by the Authority shall be signatories on the accounts, and KSM will not change the signatories of such accounts or close such accounts without the prior written consent of the Authority. The Authority shall not close the accounts without ten (10) days written notice to KSM. KSM shall deposit in the Golf Course Accounts all monies received from the operation of the Golf Course. Any interest earned on monies in the Golf Course Accounts shall be the property of the Golf Course. The funds in the Golf Course Accounts shall be disbursed by KSM for the purposes set forth in Section 5.1 below. Notwithstanding the provisions of the foregoing sentence, KSM shall be entitled to maintain funds in reasonable amounts in "cash register banks" or in petty cash funds at the Golf Course. Additionally, KSM shall assist the Authority in establishing an operating expense account (the "Operating Expense Account") and a payroll account (the "Payroll Account"). No later than fifteen (15) days after the Effective Date (and in any event, prior to KSM's incurrence of any Golf Course Expenses), the Authority shall fund for deposit into the Golf Course Accounts, Advances equal to one (1) month's estimated Golf Course Expenses (including payroll) equal to the highest monthly operating budget identified in the current approved Annual Plan (the "Operating Expense Minimum"). The Authority shall maintain the Operating Expense Minimum in the Golf Course Accounts at all times. KSM shall be responsible for the payment of Golf Course Expenses as incurred in accordance with the monthly operating budgets set forth in the approved Annual Plan directly from the Golf Course Accounts, but only to the extent funds have been made available by the Authority. KSM shall provide Authority with statements informing Authority of the amounts needed in the Golf Course Accounts in order to pay 20 Revsed 4/18/06 101 operating expenses and payroll and Authority shall make sure that the Golf Course Accounts contain such needed amounts before they become due and payable. Authority may not offset amounts needed for payment of operating expenses and payroll against the Operating Expense Minimum, as the Operating Expense Minimum shall be available solely for payment by KSM of unanticipated Golf Course Expenses. KSM shall have no liability for, and shall not be obliged to process or otherwise address, any and all expenses of the Golf Course incurred prior to the Effective Date. All Golf Course funds held by KSM, whether the Advances or monies held by KSM in "cash register banks" or petty cash funds at the Golf Course, shall be owned and controlled by The Authority. 5.1 Disbursements from Golf Course Accounts. From the Golf Course Accounts (or, if appropriate, from "cash register banks" or petty cash funds available at the Golf Course), KSM is authorized to pay the following: (a) Golf Course Expenses as and when incurred; provided, however, that (1) the amount disbursed shall constitute a Golf Course Expense, and (2) KSM shall provide the Executive Director, within ten (10) days following the end of each calendar month, an accounting delineating the Golf Course Expenses disbursed from the Golf Course Accounts for such preceding calendar month (e.g., accounting due not later than April 10 covering the immediately preceding month of March); (b) The Fixed Management Fee; provided, however, that such disbursement/payment to KSM shall be paid in accordance with the terms of Section 4.1; (c) The Percentage Management Fee, if applicable; provided, however, that (1) Such disbursement/payment to KSM shall be paid in arrears on not more than an annual basis pursuant to Section 4.2, and (2) KSM shall provide the Executive Director, within ten (10) days following the end of the Operating Year, an accounting delineating the calculation of the Percentage Management Fee for the annual period for which the Percentage Management Fee is disbursed/paid to KSM. The Percentage Management Fee shall be adjusted if necessary to agree with the audit. (d) All accrued (but undisbursed) Capital Improvement Funds as provided in Section 2.5; (e) Amounts needed to maintain the Operating Expense Minimum; and (f) The Available Funds payable to the Authority pursuant to Section 5.2. KSM shall maintain at all times, in accordance with the Annual Plan, sufficient funds in the Golf Course Account to satisfy the daily working capital needs of the Golf Course, KSM shall only disburse funds from the Golf Course Accounts to pay accrued Capital Improvement Funds when there are sufficient funds available in the Golf Course Account to satisfy the daily working capital needs of the Golf Course. In the event Golf Course gross revenues are insufficient to pay the amounts set forth in the foregoing subparagraphs (a), (b), and (c), Authority, after reviewing Golf Course accounts and confirming the insufficiency of Golf Course gross revenues to meet the obligations to pay (a), (b), and (c) above, shall remit to KSM such funds as necessary for (a), (b), and (c) to be paid. 21 Revsed 4/18/06 5.2 Available Funds. If after payment of the Golf Course Expenses, the Fixed Management Fee, and the Percentage Management Fee (if applicable), maintenance of the Operating Expense Minimum, and all accrued Capital Improvement Funds, then any excess funds in the Golf Course Accounts "Available Funds" shall be disbursed by KSM to Authority. The Available Funds shall be disbursed to Authority monthly at the same time as the monthly profit and loss statements required by Section 5.6 or within 20 days of month end, whichever occurs first. 5.3 Remaining Funds. Upon the expiration or earlier termination of this Agreement, all funds remaining in the Golf Course Accounts, after payment of the Golf Course Expenses, Fixed Management Fee, and the Percentage Management Fee (if applicable), shall be disbursed by KSM to Authority within ten (10) days after KSM delivers to the Authority the final profit and loss statement or within thirty (30) days of the Termination date, whichever occurs earlier. 5.4 Books and Records. KSM shall keep full and accurate books of account and such other records as are necessary to reflect the results of the operation of the Golf Course. For this purpose, Authority agrees it will make available to KSM, or KSM's representatives, all books and records in Authority's possession relating to the Golf Course, including Golf Course construction plans and specifications and as-built drawings and construction records. All books and records for the Golf Course shall be located at the Golf Course. All accounting records shall be maintained in accordance with generally accepted accounting principles and shall be maintained on an accrual basis. All such books, records, and reports shall be maintained separately from other facilities operated by KSM. KSM agrees to maintain reasonable and necessary accounting, operating, and administrative controls relating to the financial aspects of the Golf Course and such controls shall provide checks and balances designed to protect the Golf Course, KSM, and Authority. The cash registers used by KSM shall be approved by the Executive Director. KSM shall surrender all on-site books and records to the Authority upon the expiration or earlier termination of this Agreement. The Authority shall have the right to inspect and audit the Golf Course books and records as provided in Section 5.5 below. 5.5 Inspection. The Authority or its authorized agents, auditors, or representatives shall have the right during normal business hours to review, inspect, audit, and copy the books, records, invoices, deposit receipts, canceled checks, and other accounting and financial information maintained by KSM in connection with the operation of the Golf Course. All such books and records shall be made available to Authority at the Golf Course unless Authority and KSM agree upon another location. The Authority shall have the right to retain an independent accounting firm to audit the books and records of the Golf Course the cost of which shall be a Golf Course Expense and included in the Annual Plans. Such inspection right shall not extend to any inspection of non-Golf Course records at KSM's corporate office. 5.6 Reports to Authority. KSM shall deliver to Authority the following financial statements, in a form reasonably acceptable to Authority: (a) Within twenty (20) calendar days after the end of each calendar month, a profit and loss statement showing the results of operation of the Golf Course for such month and for the Operating Year to date, which statement shall include sufficient detail to reflect all Gross Revenues, Cost of Sales, Fixed Management Fee, Percentage Management Fee (if applicable), and Capital Improvement Funds; and (b) Within sixty (60) calendar days after the end of each Operating Year, a profit and loss statement, set of financial statements in a form reasonably acceptable to the Executive Director, including a balance sheet and income statements, showing the results of operation of the Golf Course for such Operating Year 22 Revsed 4/18/06 /o3 which statement shall include sufficient detail to reflect all Gross Revenues, Fixed Management Fee, Percentage Management Fee (if applicable), and Capital Improvement Funds. If requested by Authority, these financial statements shall be certified by an independent certified public accountant acceptable to Authority, the cost of which shall be a Golf Course Expense and included in the Annual Plans. 5.7 Golf Course Expenses. "Golf Course Expenses" shall include all operating expenses of the Golf Course incurred or paid on behalf of the Authority during the Management Term as approved by the Authority in the Annual Plan or otherwise, computed on an accrual basis, including, but not limited to, the following items: (a) Salaries, wages, employee benefits, and payroll expenses, including ADP fees, payroll taxes, Golf Course profit sharing programs, and insurance for all employees employed on-site in the direct operation of the Golf Course (except for the Key Management Employees as defined in Section 2.12 of this Agreement), excluding, however, service charges, which are defined as percentage gratuities added to billings and paid to employees (collectively, the "Gross Payroll"); (b) Marketing-, advertising, and promotional expenses; (c) Purchase and replacement, as necessary, of inventories of maintenance parts and supplies, food stores and bar supplies; (d) Purchase and replacement, as necessary, of silver, chinaware, glassware, cooking utensils, and other similar items of equipment; (e) Purchase and replacement, as necessary, of office supplies, computers, printers, facsimile machines, photocopiers, postage, printing, routine office expenses, and accounting services incurred for the on-site operation of the Golf Course; (f) The costs of IT third party consultants and other third party consultants utilized for the Golf Course; (g) Reasonable travel expenses of on-site employees only incurred exclusively in connection with the business of the Golf Course; (h) Accrual of a reserve for insurance (including workers' compensation) each month in an amount or at a rate that is sufficient to pay such insurance premiums when they become due and payable; (i) Insurance premiums to the extent not provided for in the reserve established therefor; (j) Auditing, accounting costs, Golf Course computer fees, and legal fees as approved by the General Counsel for the Authority, incurred in respect of the operation of the Golf Course, including any reasonable financial management and reasonable accounting fees paid to third party accounting firms, if included in the Operating Budgets; (k) Costs incurred for utilities, including, but not limited to, all electric, gas, and water costs, and any other private utility charges incurred in connection with the operation of the Golf Course; (1) Ordinary maintenance and repairs, exclusive of any capital improvements or capital replacements, which are hereby excluded; 23 Revsed 4/18/06 (m) All incidental expenses, as set forth in the approved Annual Plan, including those incurred by KSM in providing services under the terms of this Agreement and reasonable travel for employees employed on-site at the Golf Course while engaged in performing the obligations of KSM hereunder, air express, costs of recruitment (including applicable agent's fee), and other incidental expenses included in the Annual Plan; and (n) All other customary and reasonable expenses incurred in the operation of the Golf Course in accordance with the Annual Plan. 5.8 Payroll. The parties acknowledge that as of the date of this Agreement, the method used by KSM to administer the payroll for its employees employed at golf courses it manages is to have the bank processing payroll to automatically withdraw the amount of the payroll payment from the Payroll Expense Account. The processing bank shall notify KSM of the amount of the payroll payment prior to the date of such payroll payment. 5.9 KSM Accounting Software. The parties acknowledge and understand if the accounting software to be used at the Golf Course is owned or licensed by KSM, and the Authority shall have no rights or interests in such software. Upon the expiration or earlier termination of this Agreement, all such accounting software shall be removed from the Golf Course by KSM. ARTICLE VI TERMINATION RIGHTS. 6.0 Termination by Authority. In addition to any other rights of the Authority to terminate this Agreement that are set forth in this Agreement, the Authority shall also have the right to terminate this Agreement upon the occurrence of any of the following events: (a) KSM fails to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by KSM, and such default continues for a period of thirty (30) days after written notice of such default by Authority to KSM; or (b) (i) KSM applies for or consents to the appointment of a receiver, trustee or liquidator of KSM or of all or a substantial part of its assets; (ii) KSM files a voluntary petition in bankruptcy or commences a proceeding seeking reorganization, liquidation, or an arrangement with creditors; (iii) KSM files an answer admitting the material allegations of a bankruptcy petition reorganization proceeding, or insolvency proceeding filed against KSM; (iv) KSM admits in writing its inability to pay its debts as they come due; (v) KSM makes a general assignment for the benefit of creditors; or (vi) an order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating KSM a bankrupt or insolvent or approving a petition seeking reorganization of KSM or appointing a receiver, trustee or liquidator of KSM or of all or a substantial part of its assets, and such order, judgment or decree continues unstated and in effect for any period of sixty (60) consecutive days; or (c) If, following commencement of construction, the Authority determines in its sole and absolute discretion not to develop the Golf Course, and the Golf Course in not developed by the Authority, the City or any of their Affiliates or any third party; or following completion of construction of the Golf Course, not to open or operate the Golf Course and the Golf Course is not operated by the Authority, the City or any of their Affiliates or any third party; or 24 Revsed 4/18/06 /OS (d) The Planning Commission of the City of Carlsbad, or the City Council, as applicable, fails to renew approval or conditional approval of the Conditional Use Permit as required and, therefore, the Golf Course cannot continue to operate. (e) If the Authority sells or transfers all or any portion of the Golf Course to a third party during the Management Term, Authority shall deliver to KSM written notice of such proposed sale or transfer at least ninety (90) days prior to the anticipated date of such sale or transfer. If this Agreement is terminated as a result of such sale or transfer within the first three years of the Management Agreement and KSM is not retained by the Authority's successor to manage the Golf Course, KSM shall receive from the Authority, not as a penalty but as compensation for the damages caused to KSM by such early termination, an early termination fee of One Hundred Thousand Dollars ($100,000) or a pro-rata share of the annual Fixed Management Fee as yet unpaid at the time of such termination, whichever is less. Such early termination fee shall be paid to KSM within thirty (30) days after the closing of such sale or transfer. The Authority's right to terminate this Agreement pursuant to this section shall be exercised upon written notice to KSM given and Authority's termination notice shall specify the effective date of such termination, which date shall not be less than thirty (30) days after the date of KSM's receipt of Authority's termination notice pursuant to Section 6.0; provided, however, that no grace period or thirty (30) day delay shall apply with respect to terminations pursuant to subparagraphs (c) and (d) of this section. 6.1 Termination by KSM. KSM shall have the right to terminate this Agreement upon the following events: (a) If the Authority fails to keep, observe, or perform any other material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Authority, and such default continues for a period of sixty (60) days after notice of such default by KSM to Authority, KSM's right to terminate this Agreement pursuant to this Section 6.1 (a) shall be exercised upon written notice to Authority given at any time after the applicable grace period has expired. The grace period shall be extended as may be required for the Board of Directors of the Authority to comply with applicable law pertaining to the posting of agendas and hearings notices. KSM's termination notice shall specify the effective date of such termination, which date shall not be less than sixty (60) days after the date of KSM's termination notice. (b) The Authority's failure to pay any sums payable under this Agreement when and as the same shall become due and payable and such failure shall continue for a period of ten (10) days after written notice thereof from KSM to the Authority. KSM's right to terminate this Agreement pursuant to this Section 6.1(b) shall be exercised upon written notice to Authority given at any time after the applicable grace period has expired and the notice shall be effective pursuant to the provisions in Section 9.2. 6.2 Payments Upon Termination. Upon expiration or termination of this Agreement, all sums owed by either party to the other shall be paid within sixty (60) days of the effective date of such termination. 6.3 Curing Defaults. Any default by KSM or Authority under the provisions of Sections 6.0 or 6.1 (a), as the case may be, which is susceptible of being cured shall not constitute a basis for termination of this Agreement if the nature of such default will not permit it to be cured within the grace period allotted; provided that within such grace period the alleged party in default shall have given notice of its intent to cure, has commenced to cure such default, and is proceeding to complete the cure in good faith and with reasonable diligence. 25 Revsed 4/18/06 6.4 Effect of Termination. The termination of this Agreement under the provisions of this Article 6 shall not affect the rights of the terminating party with respect to any damages it has suffered as a result of any breach of this Agreement, nor shall it affect the rights of either party with respect to any liability or claims accrued, or arising out of events occurring, prior to the date of termination. 6.5 Remedies. A. The Authority's Remedies. Upon the occurrence of an event of default by KSM, the Authority may: 1. Seek specific performance of KSM's obligations or injunctive relief, as applicable; 2. Demand payment of all amounts due the Authority under the terms of this Agreement and demand the payment of all costs, damages, expenses, and fees of the Authority arising due to KSM's event of default; and 3. Proceed to remedy the event of default,. All sums so expended or obligations incurred by the Authority in connection therewith, with the exception of attorneys' fees, shall be paid by KSM to the Authority within thirty (30) days after written demand by the Authority, and in the event of a failure of KSM to provide such reimbursement, the Authority may, at the Authority's option, deduct all costs and expenses incurred in connection with remedying the event of default from the next sums becoming due to KSM from the Authority under the terms of this Agreement; and 4. Terminate this Agreement by written notice of termination to KSM. Upon proper termination of this Agreement, KSM shall surrender occupancy of the Golf Course to the Authority. B. KSM Remedies. Upon the occurrence of an event of default by the Authority, KSM may: 1. Demand payment of all amounts due KSM under the terms of this Agreement and demand the payment of all costs, damages, expenses, fees of KSM due to the Authority's event of default; 2. Terminate this Agreement by KSM's written notice of termination to the Authority. In such event, the Authority shall pay to KSM within sixty (60) days of termination an amount equal to the total unpaid Management Fees that KSM would have earned had the Agreement remained in effect until the Termination Date. If the Authority is in material breach of this Agreement, the parties agree that the Authority shall pay One Hundred Thousand Dollars ($100,000) to KSM as liquidated damages for its breach which is a fair and reasonable estimate of the damage caused thereby to KSM. 6.6 Remedies Cumulative. Neither the right of termination, nor the right to sue for damages, nor any other remedy available to a party under this Agreement shall be exclusive of any other remedy given under this Agreement or now or hereafter existing at law or in equity. 26 Revsed 4/18/06 JO*) ARTICLE VII TITLE MATTERS; ASSIGNMENT 7.0 Ownership of Improvements and Personal Property. All improvements to the Golf Course made during the term of this Agreement and all Furnishings and Equipment and Operating Inventory purchased for the Golf Course during the term of this Agreement shall be considered property owned by Authority at such time as the improvements are made or the Furnishings and Equipment or Operating Inventory are purchased. 7.1 No KSM Assignment or Subcontracting. KSM shall not assign this Agreement, except to an Affiliate of KSM, or subcontract any work, without the prior written consent of the Executive Director. Any assignment by KSM, whether or not requiring the prior consent of Executive Director, shall not be effective unless and until KSM and such assignee execute an assignment and assumption in a form acceptable to the City Attorney. It is understood and agreed that any consent granted by the Executive Director to any such assignment by KSM shall not be deemed a waiver of any consent required under this Section as to any future assignment. Any assignment by KSM of this Agreement in violation of the provisions of this Agreement shall be null and void and shall result in the termination of this Agreement. In addition to any other remedies available to the parties, the provisions of this Section shall be enforceable by injunctive proceeding or by suit for specific performance. 7.2 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. 7.3 Golf Course Name. The Golf Course shall be known by such trade name and/or trademark or logo as may from time to time be determined by the Authority. The parties acknowledge and understand that the names, logos, and designs developed or provided for the Authority and used in the operation of the Golf Course together with appurtenant goodwill, are the exclusive property of the Authority. KSM may identify the Golf Course as a golf course managed and operated by KSM; provided, however, that any display of any KSM logo or other corporate identification shall first be approved by the Executive Director in his sole discretion. ARTICLE VIII DAMAGE OR DESTRUCTION; EMINENT DOMAIN: FORCE MAJEURE EVENTS 8.0 Damage or Destruction. Should the Golf Course be destroyed or substantially damaged by fire, flood, acts of God, or other casualty, Authority, by written notice to KSM given within sixty (60) days following the occurrence of such event, shall have the right to terminate this Agreement on the basis that Authority does not choose to rebuild or restore the Golf Course, and in such event neither party shall have any further obligation to the other party under this Agreement, except with respect to liabilities accruing, or based upon events occurring, prior to the effective date of such termination (or, with respect to amounts due KSM, after such date if it is reasonably necessary to incur additional expenses in the wind-down of operations of the Golf Course). For the purpose of this Section, the Golf Course shall be deemed to have 77 Revsed 4/18/06 been substantially damaged if the estimated length of time required to restore the Golf Course substantially to its condition and character just prior to the occurrence of such casualty shall be in excess of six (6) months, as indicated by an architect's certificate or other evidence reasonably satisfactory to Authority. If this Agreement is not terminated in the event of damage to the Golf Course either because (i) the damage does not amount to substantial damage as described above, or (ii) notwithstanding destruction of or substantial damage to the Golf Course, Authority elects to restore the Golf Course, then Authority shall proceed, at Authority's own expense, with all due diligence to commence and complete restoration of the Golf Course to its condition and character just prior to the occurrence of such casualty. 8.1 Eminent Domain. If all of the Golf Course (or such a substantial portion of the Golf Course so to make it unfeasible, in the reasonable opinion of Authority, to restore and continue to operate the remaining portion of the Golf Course for the purposes contemplated in this Agreement) shall be taken through the exercise (or by agreement in lieu of the exercise) of the power of eminent domain, then upon the earlier of (i) the date that Authority shall be required to surrender possession of the Golf Course or of that substantial portion of the Golf Course, or (ii) the date when the Golf Course is no longer open, this Agreement shall terminate and neither party shall have any further obligation to the other party under this Agreement except with respect to liabilities accruing, or based upon events occurring, prior to the effective date of such termination (or, with respect to amounts due KSM, after such date if it is reasonably necessary to incur additional expenses in the wind-down of operations of the Golf Course). If such taking of a portion of the Golf Course shall not make it unfeasible, in the reasonable opinion of Authority, to restore and continue to operate the remaining portion of the Golf Course for the purposes contemplated in this Agreement, then this Agreement shall not terminate, and Authority shall proceed, at Authority's own expense, with all due diligence to alter or modify the Golf Course so as to render it a complete architectural unit, which can be operated as a golf course of substantially the same type and character as before. If as a result of any alteration or modification of the Golf Course as provided in this Section, the responsibilities of KSM under this Agreement are substantially changed, then the parties shall meet and discuss in good faith appropriate modifications to this Agreement including the Management Fees. 8.2 Force Mai cure Events. As used in this Agreement, the term "Force Majeure Event" means a disruption in the operation of the Golf Course due to, or the cause of the failure to perform by a party hereto due to, declared or undeclared war, sabotage, riot or acts of civil disobedience, acts or omissions of governmental agencies (except acts of governmental agencies including, but not limited to, the Authority taken in accordance with this Agreement), accidents, fires, explosions, floods, earthquakes, or other acts of God, strikes, labor disputes, shortages of materials, or any other event not within the control of KSM and not caused by the gross negligence or intentional wrongful conduct of KSM. Notwithstanding anything contained herein to the contrary, the provisions of this Section shall not be applicable to either party's obligation to pay any sums, monies, costs, charges, or expenses required to be paid pursuant to the terms of this Agreement. ARTICLE IX GENERAL PROVISIONS 9.0 Contract Administration. Authority has designated the Executive Director as the individual who is responsible for administering this Agreement on behalf of Authority. The Executive Director may designate a member of his or her staff to serve as the Project Manager, which individual shall carry out the Executive Director's responsibilities in administering this Agreement. The Executive Director shall inform KSM in writing of the person who will serve as the Project Manger and any change of the Project Manager. 28 Revsed 4/18/06 IO? KSM has designated J. TOBIN DAVIS as the individual who is responsible for administering this Agreement on behalf of KSM. KSM shall notify the Executive Director in writing if another individual has replaced the foregoing designated person as the person responsible for administering this Agreement on behalf of KSM. The parties acknowledge that except as otherwise expressly provided herein (a) the Executive Director has the authority to approve or consent to those matters identified in this Agreement as requiring Authority's approval or consent and to make all other decisions on behalf of the Authority regarding the administration of this Agreement (except where the Authority's Board of Directors approval is expressly required herein), and (b) KSM's foregoing designated person or such other individual designated by KSM in writing to the Authority has the authority to approve or consent to those matters identified in this Agreement as requiring KSM's approval or consent and to make all other decisions on behalf of KSM regarding the administration of this Agreement. The Authority's management direction to KSM shall be given by the Executive Director. 9.1 Compliance. KSM shall comply with all applicable laws of governmental bodies having jurisdiction with respect to the Golf Course site and KSM performance of this Agreement. KSM shall as a Golf Course Expense procure and maintain all licenses, permits, and approvals required for the Golf Course. Upon termination or expiration of this Agreement, KSM shall cooperate in transferring all licenses, permits and accreditations in the name of KSM to Authority as permitted by law. Without the prior written consent of the Executive Director, the actual amount expended for any Golf Course Expense shall not be greater than two percent (2%) higher than the amount budgeted in the Annual Plan. Notwithstanding the foregoing sentence, KSM shall be entitled to make additional expenditures not authorized under the then applicable Annual Plan in the event of an emergency pursuant to the provisions of Section 2.8(p) or in order to comply with Insurance Requirements or Legal Requirements. 9.2 Notices. All notices, demands, requests, consents, approvals, replies and other communications ("Notices") required or permitted by this Agreement shall be in writing and may be delivered by any one of the following methods: (a) by personal delivery; (b) by deposit with the United States Postal Service as certified or registered mail return receipt requested, postage prepaid to the addresses stated below ; or (c) by deposit with a same-day or overnight express delivery service that provides a receipt showing date and time of delivery. Notice deposited with the United States Postal Service in the manner described above shall be deemed effective three (3) business days after deposit with the Postal Service. Notice by same-day or overnight express delivery service shall be deemed effective upon receipt. Notice by personal delivery shall be deemed effective at the time of personal delivery. For purposes of Notices hereunder, the address of Authority shall be: Carlsbad Public Financing Authority c/o City Manager of the City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California 92008 Attention: Executive Director For purposes of Notices hereunder, the address of KSM shall be: Kemper Sports Management, Inc. 500 Skokie Blvd., Suite 444 Northbrook, IL 60062 Attention: Steven K. Skinner, President 29 Revsed 4/18/06 MO With a copy to: Kemper Sports Management, Inc. 500 Skokie Blvd., Suite 444 Northbrook, IL 60062 Attention: Corporate Counsel Each party shall have the right to designate a different address by the giving of notice in conformity with this Section. 9.3 Independent Contractor. KSM shall at all times be considered an independent contractor under this Agreement. Nothing contained in this Agreement shall be construed to be or create a partnership or joint venture between Authority and its successors and assigns, on the one part, and KSM and its successors and assigns, on the other part. 9.4 Modification and Changes. This Agreement may be amended or modified only by a writing signed by both parties. 9.5 Entire Understanding and Agreement. This Agreement constitutes the entire understanding and agreement between the parties with respect to the management of the Golf Course and this Agreement supersedes all prior understandings and agreements, whether written or oral, between Authority and KSM pertaining to the subject matter hereof. 9.6 Headings. The Article, Section, and Subsection headings contained in this Agreement are for convenience and reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. 9.7 Consents. Each party agrees that it will not unreasonably withhold any consent or approval requested by the other party pursuant to the terms of the Agreement, and that any such consent or approval shall not be unreasonably delayed or qualified, except where such consent is expressly stated as within the party's sole and absolute discretion. Similarly, each party agrees that any provision of this Agreement, which permits such party to make requests of the other party, shall not be construed to permit the making of unreasonable requests. 9.8 Survival of Covenants. Any covenant, term, or provision of this Agreement which in order to be effective must survive the termination of this Agreement shall survive any such termination. 9.9 Third Parties. None of the obligations under this Agreement of either party shall run to or be enforceable by any party other than the party to this Agreement or by a party deriving rights under this Agreement as a result of an assignment permitted pursuant to the terms of this Agreement. 9.10 Waivers. No failure by KSM or Authority to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy consequent upon the breach of this Agreement shall constitute a waiver of any such breach or any subsequent breach of the same covenant, agreement, term or condition. No covenant, agreement, term or condition of this Agreement and no breach of this Agreement shall be waived, altered or modified except by a written instrument. A waiver of any breach of this Agreement shall only affect this Agreement to the extent of the specific waiver, and all covenants, agreements, terms and conditions of this Agreement shall continue in full force and effect. 30 Revsed 4/18/06 9.11 Applicable Law. Venue; Service of Process. This Agreement shall be construed and interpreted in accordance with, and shall be governed by, the laws of the State of California. The parties agree that the Superior Court of the State of California, County of San Diego shall have jurisdiction of any litigation between the parties relating to this Agreement. Service of process on Authority shall be affected in such manner as required by California law for service on public entities. Service of process on KSM shall be made in any manner permitted by California law. 9.12 No Presumption Regarding Drafter. Authority and KSM acknowledge and agree that the terms and provisions of this Agreement have been negotiated and discussed between Authority and KSM, and that this Agreement reflects their mutual agreement regarding the subject matter of this Agreement. Because of the nature of such negotiations and discussions, it would be inappropriate to deem either Authority or KSM to be the drafter of this Agreement, and therefore no presumption for or against the drafter shall be applicable in interpreting or enforcing this Agreement. 9.13 Enforceability of Any Provision. If any term, condition, covenant or obligation of this Agreement shall be determined to be unenforceable, invalid, or void, such determination shall not affect, impair, invalidate, or render unenforceable any other term, condition, covenant, or obligation of this Agreement. All amounts payable pursuant to this Agreement shall be in lawful money of the United States of America. 9.14 Counterparts; Facsimile Signatures. This Agreement and any amendment may be executed in counterparts, and upon all counterparts being so executed each such counterpart shall be considered as an original of this Agreement or any amendment and all counterparts shall be considered together as one agreement. Facsimile signatures shall be as effective as an original signature. 9.15 Covenants Against Discrimination. KSM agrees that in connection with its performance under this Agreement, there shall be no discrimination by KSM against any person on account of race, color, creed, religion, sex, marital status, national origin or ancestry. KSM agrees to include a provision similar to this Section in all subcontracts entered into by KSM in connection with work being performed under this Agreement. 9.16 Non-liability of Authority or Authority Officers and Employees. No officer, official, employee, agent, representative, or volunteer of the Authority, or City shall be personally liable to KSM, or any successor in interest, in the event of any default or breach by the Authority, or for any amount which may become due to KSM or any successor, or for breach of any obligation of the terms of this Agreement. 9.17 Time of the Essence. Time is of the essence of this Agreement. The parties understand that the time for performance of each obligation has been the subject of negotiation by the parties. 9.18 Exhibits and Attachments Incorporated. All exhibits and attachments to this Agreement are incorporated herein and made a part hereof. 9.19 Authority. The parties represent for themselves that (a) such party is duly organized and validly existing, (b) the person or persons executing this Agreement on behalf of such party is/are duly authorized to execute and deliver this Agreement on behalf of such party, (c) by so executing this Agreement, such party is formally bound to the terms and provisions of this Agreement, and (d) the execution of this Agreement does not violate any provision of any other agreement to which such party is bound. Additionally, the Authority represents and warrants to KSM that (i) the Authority has and will retain the property interests in the Golf Course necessary to enable KSM to perform its duties pursuant to this 31 Revsed 4/18/06 Agreement peaceably and quietly; and (ii) that KSM's performance of the services required by this Agreement shall not violate the property rights or interests of any third party. 9.20 Authorization to Executive Director. In addition to such other authorizations granted to the Executive Director of Authority in this Agreement to act on behalf of Authority, the Executive Director shall have the authority, in the event of a dispute involving the interpretation of the terms and provisions of this Agreement, to reasonably interpret the terms and provisions of this Agreement on behalf of Authority. 9.21 Possessory Interest. Pursuant to California Revenue and Taxation Code Section 107.6, Authority hereby informs KSM that this Agreement may create a possessory interest subject to property taxation, and in such event KSM may be subject to the payment of property taxes levied on such interest. 9.22 Proprietary Information. All specifically identifiable information developed by KSM for the Authority at the expense of the Authority shall be the property of the Authority. All materials, software programs and technology developed by KSM at KSM's expense, shall be the exclusive property of KSM and neither the Authority nor any of its affiliates or successors may use, copy or disclose such proprietary information without the advance written consent of KSM. The obligations and restrictions contained in this Section shall survive the expiration or termination of this Agreement for any reason. 9.23 Restrictions as to Employees. During the Management Term and for a period of one (1) year after the end of the Management Term, it is agreed that neither the Authority nor the City shall employ any Key Employee of KSM nor shall the Authority or the City request or require their agents or contractors to employ or seek to employ any such Key Employee, without first obtaining the written consent of KSM. For purposes hereof, a "Key Employee" of KSM shall mean the General Manager of the Golf Course, the Golf Course superintendent, or any employee of KSM's corporate office. 9.24 Outside Business. Nothing contained in this Agreement shall be construed to restrict or prevent, in any manner, any party or any party's affiliates, parent corporations, or representatives or principals from engaging in any other businesses or investments, nor shall the Authority or KSM have any right to share or participate in any such other businesses or investments of the other party. [end - signature page follows] 32 Revsed4/18/06 IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the day and year first written above. CONTRACTOR: KEMPER SPORTS MANAGEMENT, INC., an Illinois Corporatism" CARLSB a Public/a/tit DANCING AUTHORITY, . Joi/t|PoV^rs Authority ATTEST: c^p*** v—. i' \ \. ^print name/title) \ )RRAINE M. Secretary If required by Authority, proper notarial acknowledgment of execution by contractor must be attached. If a Corporation. Agreement must be signed by one corporate officer from each of the following two groups. * Group A. Chairman, President, or Vice-President **Group B. Secretary, Assistant Secretary, CFO or Assistant Treasurer Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation. EXHIBITS: EXHIBIT A - Golf Course Operations and Maintenance Evaluation Form EXHIBIT B - Habitat Preserve Area EXHIBIT C - Notice of Golf Course Deficiency EXHIBIT D - Legal Description of Real Property EXHIBIT E - Regulatory Permits CARLSBAD PUBLIC FINANCING AUTHORITY CARLSBAD MUNICIPAL GOLF COURSE GOLF COURSE OPERATIONS AND MAINTENANCE EVALUATION FORM DATE: SUPERINTENDENT: AUDITORS: NEEDS AREA UNACCEPTABLE IMPROVEMENT ACCEPTABLE Greens Fairways & roughs Tees Driving range Maintenance records & schedules Lakes & other water bodies Maintenance employees Maintenance shop & equipment Traffic control Rest rooms OVERALL COURSE/ OPERATIONS EXHIBIT "A1 GREENS QUALITY STANDARD: Smooth, uniform, turf, firm but not hard, well-defined, consistent, of suitable speed for the location. Cups placed in accordance with USGA recommendations. Flags stands up straight. Cups, poles and flags are uniform, clean and in good repair. Pin placement indicators uniform and properly used only where necessary. 1. QUALITY. How do they Putt and Play? 100% Turf cover, smooth and uniform. Do the greens hold approach shots? Are the cups cut cleanly and in proper locations? No diseases, weeds, insects, rodents, or bare spots. Unacceptable Needs Improvement Acceptable 2. APPEARANCE. How do they look? Color and texture of the greens turf, uniformity of the mowing, condition of cup, flag and pole, condition of the areas around the greens. No diseases, weeds, insects, rodents, or off-color areas. Unacceptable Needs Improvement Acceptable 3. SAND TRAPS GREENS. How do they play and look? Sand surface is uniform and smooth, sand is adequate depth for play. No weeds or debris hi traps. Rakes adequate in number and condition, properly placed. Quality of mowing/trimming around traps. As necessary, edge traps to always maintain a neat lip. Unacceptable Needs Improvement Acceptable FAIRWAYS AND ROUGHS QUALITY STANDARD: Fairways: Smooth, uniform turf cover, smooth mowing and trimming, clean, firm but not hard, well defined, that properly supports the ball for play. Roughs: Properly mowed and trimmed, clean and adequately uniform for play, distinct in height from fairways. Perimeter fencing properly trimmed at all tunes. 1. QUALITY. How do they play? Mowing height of fairways and roughs is within USGA specifications, mowing frequency is appropriate for the turf type and season. Fairway turf properly supports the ball for play. Able to find the ball in the roughs. Absence of wet or dry spots hi play areas. Unacceptable Needs Improvement Acceptable 2. APPEARANCE. How do they look? Uniformity of color and irrigation, texture, quality mowing. Appearance of being "Manicured" turf coverage hi traffic areas. No weeds, disease, insects, rodents, or off-color areas. Unacceptable Needs Improvement Acceptable 3. SAND TRAPS ROUGHS. How do they play and look? Sand surface is uniform and smooth, sand is adequate depth for play. No weeds or debris in traps. Rakes adequate hi number and condition, properly placed. Quality of mowing/trimming around trees. As necessary, edge traps to always maintain a neat lip. Unacceptable Needs Improvement Acceptable 4. TREES AND SHRUBS. Pruned to maintain specimen health and safety to golfers and maintenance employees. Unacceptable Needs Improvement Acceptable 11-7 TEES QUALITY STANDARD: TEES: Tees smooth, completely turfed, leveled, firm but not hard, clean, properly directed, with amenities trash cans, signs, tee markers, monuments, ball washers, towels, sand & seed containers, as appropriate) in good condition and repair, consistent and uniform. 1. APPEARANCE. MANICURED AND CLEAN. 100% turf cover, smooth and uniform. No weeds, diseases, insects or rodents. Consistent, adequate top dressing and seeding program. Minimal litter or broken tees. Unacceptable Needs Improvement Acceptable 2. PERIMETER AREAS AROUND TEES. Area between cart path (if any) and tee-uniformly and smoothly turfed, no mud or dirt, ball washers are clean, in good repair and properly located for the tee positions, cart paths are clean and properly placed as necessary; no identifiable traffic wear into tee. Unacceptable Needs Improvement Acceptable DRIVING RANGE 1. APPEARANCE - MANICURED AND CLEAN. Uniformity of mowing, color, texture of turf, smoothness of surface, cleanness of mowing on perimeters- absence of scalping. Consistent,, adequate top dressing and seeding program. Unacceptable Needs Improvement Acceptable 2. PERIMETER AREAS AROUND TEES. Area between cart path (if any) and tees - uniformly and smoothly turfed, no mud or dirt, benches, club washers, bag stands are clean, hi good repair and properly located for the tee positions, cart path is clean and properly edged, curbing or ropes/stakes are clean and properly placed as necessary; no identifiable traffic pattern into tee. Unacceptable Needs Improvement Acceptable 3. RANGE LANDING AREA. Turfed, clean and mowed per fairway maintenance section of audit. Unacceptable Needs Improvement Acceptable l\<8f MAINTENANCE RECORDS AND SCHEDULES All of the following maintenance records properly kept, on site, and up to-date 1. Maintenance plan visible and in use. Unacceptable Needs Improvement Acceptable 2. Superintendents manual. Unacceptable Needs Improvement Acceptable 3. Expense ledger-weekly. Unacceptable Needs Improvement Acceptable 4. Records form. Unacceptable Needs Improvement 5. Equipment maintenance records. Unacceptable Needs Improvement 6. Labor scheduling. Unacceptable Needs Improvement 7. Inclement weather, core staffing program in place. Unacceptable Needs Improvement 8. Gasoline log. Unacceptable Needs Improvement Acceptable _Acceptable Acceptable Acceptable Acceptable LAKES AND OTHER WATER BODIES QUALITY STANDARD: Water Bodies: Clean, well-defined, free of weeds and noxious growth; well-marked and attractive. 1. Appearance of water-clean, no weeds or noxious growth, no noxious odors, no floating trash/debris. Unacceptable Needs Improvement Acceptable 2. Ground around lakes - mowing, trimming, etc. Unacceptable Needs Improvement Acceptable MAINTENANCE EMPLOYEES/CORE STAFF 1. Required state and federal forms posted. Unacceptable Needs Improvement Acceptable 2. Report number of Department employees. Actual: Unacceptable Needs Improvement Budget: Acceptable 3. Uniforms, hard hats, steel toe shoes on all Department employees except superintendent. Unacceptable Needs Improvement Acceptable MAINTENANCE SHOP AND EQUIPMENT 1. Shop area is orderly, clean, with no obvious safety hazards. Fertilizer and chemical storage is per training manual. No disorganized junk or trash in yard or shop. Condition of superintendents office. Unacceptable Needs Improvement Acceptable 2. Equipment is in good repair, is clean and properly maintained. Check oil, air cleaners, hydraulic oil, and status of machines under repair. Unacceptable Needs Improvement _Acceptable \2-0 TRAFFIC CONTROL 1. Ropes, stakes, and other traffic control devices are clean as necessary, in good condition, straight and repaired. Traffic control devices are used effectively to minimize turf wear in high traffic areas. Worn areas are under repair. Routes used by golf carts are well-maintained, free of potholes, and present a generally smooth and clean appearance. Unacceptable Needs Improvement Acceptable 2. Cart paths - Concrete paths are uniform in width and surfaces are safe for spikes, smooth for operation of golf carts. Unacceptable Needs Improvement Acceptable REST ROOMS RESTROOM - WOMEN'S FRONT NINE Entry mat or carpet clean/entry door fingermark-free/tile and painted walls clean/toilets clean/bowls, rims, tank tops and bodies/toilet seats clean, tops and under sides/mirrors clean and streak fee/soap dispenser clean and full/paper towel dispenser clean and full/toilet paper dispenser clean and full/seat cover and dispenser clean and full/counter top clean/sink and faucet fixtures clean and functional. Light fixtures clean, functional and bug-free/room air freshener clean and functional/trash receptacle, clean with liner, reasonable empty/napkin receptacles clean with liners. Unacceptable Needs Improvement Acceptable RESTROOM - MEN'S FRONT NINE Entry mat or carpet clean/entry door fingermark-free/tile and painted walls clean/toilet clean/bowls, rims, tank tops and bodies/toilet seats clean: tops and under sides/mirrors clean and streak-free/soap dispenser cleaned and full paper towel dispenser clean and full/toilet paper dispenser clean and full/seat cover dispenser clean and full/counter top clean and full/seat cover dispenser clean and full counter top clean/sink and faucet fixtures clean and functional/light fixtures: clean, functional and bug-free/room air freshener clean and functional/trash receptacle: clean with liner, reasonably empty/urinals: clean, splash mats and deodorant blocks. Unacceptable Needs Improvement Acceptable RESTROOM - WOMEN'S BACK NINE Entry mat or carpet clean/entry door fingermark-free/tile and painted walls clean/toilets clean/bowls, rims, tank tops and bodies/toilet seats clean, tops and under sides/mirrors clean and streak-free/soap dispenser clean and full/paper towel dispenser clean and full/toilet paper dispenser clean and full/seat cover and dispenser clean and full/counter top clean/sink and faucet fixtures clean and functional/light fixtures clean, functional and bug-free/room air freshener clean and functional/trash receptacle; clean with liner, reasonably empty/napkin receptacles clean with liners. Unacceptable Needs Improvement Acceptable 7 \2\ RESTROOM - MEN'S BACK NINE Entry mat or carpet clean/entry door fingermark-free/tile and painted walls clean/toilet clean/bowls, rims, tank tops and bodies/toilet seats clean: tops and under sides/mirrors clean and streak-free/soap dispenser clean and Ml/seat cover dispenser clean and full/counter top clean/sink and faucet fixtures clean and functional/light fixtures: clean; functional and bug-free/room air freshener clean and functional/trash receptacle: clean with liner, reasonably empty/urinals: clean, splash mats and deodorant blocks. Unacceptable Needs Improvement Acceptable CLUBHOUSE AUDIT CLUBHOUSE AUDIT: DATE:_ MANAGER: AUDITORS: NEEDS AREA UNACCEPTABLE IMPROVEMENT ACCEPTABLE Clubhouse Golf Shop Pro Shop Food & Beverage Security/Accounting Carts Personnel Lockers CLUBHOUSE MAINTENANCE CLUBHOUSE EXTERIOR 1. Parking lot trash-free/lot well striped and in good repair/trash bin area clean. Flags flying, flags and poles in good condition. Unacceptable Needs Improvement Acceptable 2. Exterior wail surfaces clean and cobweb-free/windows clean. Paint in good condition. All signage in good condition and uniformed. Unacceptable Needs Improvement Acceptable 3. Ground well clean and edged, proper planting, flowers fresh and colorful, planter beds weed and trash-free. Unacceptable Needs Improvement Acceptable 4. Bag racks, shoe cleaners painted, clean and in good repair/pay phones clean/directories available. Unacceptable Needs Improvement Acceptable 5. Scorecards on carts with pencil/also available at golf shop counter. Unacceptable Needs Improvement Acceptable 6. Preventative maintenance, programs in place for building and equipments. Unacceptable Needs Improvement Acceptable DRIVING RANGE Trash-free/mats in good condition/quality and quantity of balls/ball washer in good condition/balls clean/no trash/employee in uniform with name badge/baskets picked up on a regular basisAreceptacle for cigarettes/no cigarette butts on walkways or m grass area/bag stands. Unacceptable Needs Improvement Acceptable ENTRY/LOBBY Interior paint in good condition/walls and vents clean/wall-mounted/pictures hung properly and clean/carpet vacuumed and spot-free or floor clean. Unacceptable Needs Improvement Acceptable RESTROOM - WOMEN'S Entry mat or carpet clean/entry door fingermark-free/tile and painted wails clean/toilets clean bowls, rims, tank tops and bodies/toilet seats clean, tops and under sides/mirrors clean and streak- free/soap dispenser clean and full/seat cover and dispenser clean and full/counter top clean/sink and faucet fixtures clean and functional/light fixtures clean, functional and bug-free/room air freshener clean and functional/trash receptacle; clean with liner, reasonably empty/napkin receptacles clean with liners. Unacceptable Needs Improvement Acceptable 123 RESTROOM - MEN'S Entry mat or carpet clean/entry door fingermark-free/tile and painted walls clean/toilet clean: bowls, rims, tank tops and bodies/toilet seats clean: tops and under sides/mirrors clean and streak-free/Soap dispenser clean and full/paper towel dispenser clean and full/toilet paper dispenser clean and full seat cover dispenser clean and full/counter top clean/faucet fixtures clean and functional/trash receptacle: clean with liner, reasonably empty/urinals: clean, splash mats and deodorant blocks. Unacceptable Needs Improvement Acceptable MANAGERS OFFICE 1. Clean/files organized/manuals available/schedules, current and posted/manager in uniform with name badge/office door closed, if possible. Copy of current course maintenance plan available/monthly course inspection report available. Unacceptable Needs Improvement Acceptable 2. Staff scheduling uniform with name badge. # of employees: Unacceptable Needs Improvement Acceptable 3. Tickler file on contracts and agreements. Unacceptable Needs Improvement Acceptable 4. Labor scheduling. Department Heads & Staff. Unacceptable Needs Improvement Acceptable 5. Manager schedule Unacceptable Needs Improvement Acceptable 6. Valet room - neat and proper, no trash. Customer viewpoint must be considered at all tunes. Unacceptable Needs Improvement Acceptable 12-4 GOLF (PRO) SHOP Customer Service: all staff have been trained in and provide first class service to customers (including staff empowered to handle customer problems). Unacceptable Needs Improvement Acceptable Ready Golf: Signs up in pro shop and golf course - starters and marshals trained. Unacceptable Needs Improvement Acceptable Rounds and carts counted by shift - per Utilization Report, waiting lists, utilizing back nine. Unacceptable Needs Improvement Acceptable Cash handling: excess cash removed from cash register on a regular basis/checks endorsed/I.D.: major credit card, driver's license/employee's initials/register drawer closed between transactions/register display visible to golfer/V,R,X,Z keys stored, only management has access/credit card approval on all purchases over $ 100.00/vendor code ring properly. Unacceptable Needs Improvement Acceptable Prices marked clearly with COST CODE and RECEIVED Date/Product knowledge suggestive selling/approved signage/merchandise hung and folded properly by color/departmentalized, clean and neat/no old stock. Unacceptable Needs Improvement Acceptable Carpet vacuumed and spot-free or floor clean/windows and mirrors clean and streak-free/shelves, counter tops, base boards, window ledges dusted/starter counter clean/dressing room clean, not used for storage. Unacceptable Needs Improvement Acceptable Staff in uniform/clean/neat and clean hair, beard shaved with name badge. Unacceptable Needs Improvement Acceptable Customer message board UP/current, legible/customer comment forms on counter. Unacceptable Needs Improvement Acceptable Starter's responsibilities: Starter sheet in ink legible; all last names only with ring number/complimentary play sheet by starter sheet/cart tickets dated, signed and with dollar amount/car key deposit control used/key deposit: stored, properly/paid out slips and overring slips used and filled out completely. Unacceptable Needs Improvement Acceptable PRO SHOP Customer Service: all staff have been trained in and provides first class service to customers (including staff empowered to handle customer problems. Unacceptable Needs Improvement Acceptable Cash handling: excess cash removed from cash register on a regular basis/checks endorsed/I.D.: major credit card, driver's license/employee's initials/register drawer closed between transactions/register display visible to golfer/VjR^XjZ keys stored, only management has access/credit card approval on all purchases over $ 100.00/vendor code ring properly. Unacceptable Needs Improvement Acceptable Prices marked clearly with COST CODE and RECEIVED Date/Product knowledge suggestive selling/approved signage/merchandise hung and folded properly by color/departmentalized, clean and neat/no old stock. Unacceptable Needs Improvement Acceptable Carpet vacuumed and spot-free or floor clean/windows and mirrors clean and streak-free/shelves, counter tops, base boards, window ledges dusted/starter counter clean/dressing room clean, not used for storage. Unacceptable Needs Improvement Acceptable 12 FOOD AND BEVERAGE CUSTOMER SERVICE/FIRST CLASS SERVICE Non-transactional response, everyone has been empowered to handle customer's problem. Unacceptable Needs Improvement Acceptable SNACK BAR Staff in uniform: logo shirt/name badge/staff is friendly, smiling, and helpful. Unacceptable Needs Improvement Acceptable Cash Handling: Excess cash removed on a regular basis/drawer closed between transactions/register display visible to golf/V.R.X.Z keys stored/checks endorsed. Unacceptable Needs Improvement Acceptable Display case clean/well stocked with sandwiches and beer/appetizing appearance. Unacceptable Needs Improvement Acceptable Front counter clean/condiments fresh and in clean containers coffee and soft drink stations clean adequately stocked and ready for use/napkin dispensers clean and full. Unacceptable Needs Improvement Acceptable Snack display well stocked and clean. Unacceptable Needs Improvement Acceptable Hot dog cooker clean/well stocked/adequate fresh buns. Unacceptable Needs Improvement Acceptable Menu board clean/no hand lettering. Unacceptable Needs Improvement Acceptable Storage areas: clean, shelves organized. Food and chemicals stored per applicable governmental regulations. Unacceptable Needs Improvement Acceptable DINING ROOM Chairs, seats and frames clean and in good repair/tables clean, tops and bases/carpets clean and in good repair. Unacceptable Needs Improvement Acceptable Dining area: carpet vacuumed and spot-free/windows clean and streak-free tables and chairs neatly arranged/table tops clean and bases dusted/chairs clean/linens neat and clean/lights clean and functional/Staff in uniform, menu clean. Unacceptable Needs Improvement Acceptable \2fl Bar Seating Area: Carpet vacuumed and spot-free/windows clean and streak-free/bar stools, tables and chairs clean/bar top clean with supplied neatly arranged/bar mats and floor clean/glass shelves clean and streak-free/staff in uniform with name tags/light fixtures clean and functional/back bar organizes liquor brands displayed and dusted/refrigerators clean and organized/beer dispenser and drains clean/license framed, posted, and current/liquor brands displayed and dusted/refrigerators clean and organized/beer dispensers and drains clean/license framed, posted, and current/liquor storage shelves organized and clean/liquor storage floors, walls, and vents clean. Approved-pouring brands in place for well and back bars. Unacceptable Needs Improvement Acceptable Kitchen: Dish washing machine clean and sanitation procedures followed/garbage disposal operable/pots, pans and all shelving grease-free/garbage cans clean with liners/chopper, sheer and mixer clean and operable, kitchen floors clean/drains operable and clean/hoods, filters clean/refrigerators clean and organized - food stored off of the floor/food film covered hi refrigerators and freezers/walls and floors clean/fife extinguishers current/last Health Department inspection. Unacceptable Needs Improvement Acceptable Inventory organized, in locked storage when applicable/two staff members take the inventories. Unacceptable Needs Improvement Acceptable Equipment clean and function/freezers and refrigerators at correct temperature. Sink areas clean. Grill areas clean, good and filters clean. Trash containers clean including lidliner buff or brown/reasonably empty. Unacceptable Needs Improvement Acceptable OFFICE Banquet information available/contracts completed and signed for each booking with deposit/contract being used. Banquet histories, call reports and files in place and current. Unacceptable Needs Improvement Acceptable Beverage requisition form being used/breakage being disposed of properly in bars and snack bars, if liquor is served. Unacceptable Needs Improvement Acceptable 14 SECURITY AND ACCOUNTING Script, rain checks in small supply at register/all are accounted for/manager has reserve stored for management access only/staff trained to issue properly/proper paidrout, incorrect ring slip used and staff trained/stored in safe: extra keys-script-rain checks. Unacceptable Needs Improvement Acceptable Payables, weekly sales, daily packages filed in date order, utilized per accounting manual Profit and loss statements, payroll registers and general ledgers for management access only. Bi-weekly productivity report completed. Unacceptable Needs Improvement Acceptable Alarm system operational, staff trained to use/only management has pass through/fire extinguishers services. Unacceptable Needs Improvement Acceptable Proper accounting software on P.C., no excess programs. Unacceptable Needs Improvement Acceptable Parking and clubhouse lighting adequate, functional and on tune, set properly for the season: off a.m. - on p.m. Unacceptable Needs Improvement Acceptable Bank deposits made during daylight hours oaly/one day or less, of receipts in locked safe/deposits in bank daily/transfers made daily. Unacceptable Needs Improvement Acceptable Safe locked, not on day lock. Combination last changed Unacceptable Needs Improvement Acceptable Cash verification. Unacceptable Needs Improvement Acceptable Tournament contracts files with receipt attached. Deposit rung and recorded day received. Unacceptable Needs Improvement Acceptable 15 CARTS Electric Carts onsite. Quantity of carts down # % Unacceptable Needs Improvement Acceptable General Manager and cart mechanic understand and comply with agreement parts, batteries, warranties (copy of agreement in maintenance book). Unacceptable Needs Improvement Acceptable Maintenance records currently maintenance cardform in use/battery discharge records kept/all repairs dated/tools available. Unacceptable Needs Improvement Acceptable Necessary tools, electric discharge equipment available/being used carts being rotated/records kept/surfaces of batteries clean and free of acid, rest of cart chassis and mechanical recently cleaned. Unacceptable Needs Improvement Acceptable Carts being used fur rental only/seats clean and in good repair/floor mats clean and in good repair/cart bodies and roofs in good repair, carts not over 3 years old. Unacceptable Needs Improvement Acceptable Cart storage area clean, no junk. Unacceptable Needs Improvement Acceptable Employees demonstrate caring customer service/neat and clean/bair clean/shaved/employees in uniform with name badge/proper shoes. Unacceptable Needs Improvement Acceptable 16 PERSONNEL Time clocks, operational, cards available, racks for cards. Hotline poster, for employees eyes only. (Spanish available where necessary.) Unacceptable Needs Improvement Acceptable Required state and federal forms posted by time clock. OSHA 200 form posted in clubhouse. Unacceptable Needs Improvement Acceptable Personnel card files up to date to include key and uniform issue. Attestation forms on file for all employees. Unacceptable Needs Improvement Acceptable First aid kit available and adequately stocked. Phone number for emergencies, police, and fire posted. Unacceptable Needs Improvement Acceptable Monthly staff arid safety meetings being held. Forms complete and up-to-date. Unacceptable Needs Improvement Acceptable Inclement weather staff-reduction procedure in place. Unacceptable Needs Improvement Acceptable New employee forms available, checklist/applications/loss prevention/employee handbook/Reid reports/payroll deduction forms/insurance enrolment cards/liability claim form. Unacceptable Needs Improvement Acceptable Additional personnel forms available, verbal warning/written warnings/termination checklist/liability claim form. Unacceptable Needs Improvement Acceptable 17 DEFICIENT ITEMS ITEM: REQUIRED COMPLETION DATE: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 18 EXHIBIT B EXHIBIT "C" CARLSBAD PUBLIC FINANCING AUTHORITY CARLSBAD MUNICIPAL GOLF COURSE NOTICE OF GOLF COURSE DEFICIENCY [SEE FOLLOWING PAGE] Carlsbad Public Financing Authority Carlsbad Municipal Golf Course NOTICE OF GOLF COURSE DEFICIENCY Golf Operations Clubhouse Operations Greens Clubhouse Fairways & Roughs Golf Shop Tees Hard Goods Pro Shop Driving Range Food & Beverage Maintenance Records & Schedules Security & Accounting Lakes & Water Hazards Carts Maintenance Employees Personnel Maintenance Shop & Equipment Lockers Traffic Control Rest Room Statement of Deficiency Describe nature of deficiency to be corrected: Reported By: Date:_ Date Statement of Correction Due: Statement of Correction Describe what has or will be done to correct this deficiency: Reported By: Date:. Acknowledgement of Deficiency Correction It is hereby acknowledged that the above-listed golf course deficiency has been satisfactorily corrected. For Carlsbad Public Financing Authority By: Date: For Kemper Sports Management By: Date: EXHIBIT "D» LEGAL DESCRIPTION OF CITY OF CARLSBAD GOLF COURSE PROPERTY LOTS 50 THROUGH 76 INCLUSIVE OF CARLSBAD TRACT NO. 81-46 UNIT NO. 3, ACCORDING TO MAP THEREOF NO. 11289, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON JULY 16, 1985, TOGETHER WITH THAT PORTION OF CARRIER AVENUE, SWIFT PLACE, PALOMAR OAKS WAY, COLLEGE BOULEVARD AND OTIS COURT AS DEDICATED ON SAID MAP NO. 11289, WHICH UPON CLOSING WOULD REVERT TO BY OPERATION OF LAW TO SAID LOTS; ALSO THAT CERTAIN LOT DESIGNATED AS "REMAINDER PARCEL" ON SAID MAP 11289; ALSO, LOTS I THROUGH 26 OF CARLSBAD TRACT NO. 85-17, ACCORDING TO MAP THEREOF NO. 12903, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON DECEMBER 13, 1991, TOGETHER WITH THAT PORTION OF COLLEGE BOULEVARD, ROCKEFELLER ROAD, CARNEGIE COURT, GETTY PLACE, HAMMER COURT, PALOMAR AIRPORT ROAD AND HIDDEN VALLEY ROAD AS DEDICATED ON SAID MAP NO. 12903, WHICH UPON CLOSING WOULD REVERT BY OPERATION OF LAW TO SAID LOTS; ALSO, A PARCEL OF LAND BEING A PORTION OF LOT F AND A PORTION OF LOT G OF RANCHO AGUA HEDIONDA, ACCORDING TO PARTITION MAP THEREOF NO. 823 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 16, 1896; BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT POINT 9 OF SATO LOT F; THENCE N.0029'11"W. ALONG THE WESTERLY BOUNDARY OF SATO LOT F, 167.78 FEET TO A POINT ON THE ARC OF A NONTANGENT 58.00 FOOT RADIUS CURVE, CONCAVE WESTERLY, A RADIAL LINE TO SAID POINT BEARS S.55°03'22"E.; THENCE NORTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 7051'37", A DISTANCE OF 71.73 FEET TO SAID WESTERLY BOUNDARY; THENCE N.002911"W., 2092.42 FEET TO POINT 8 OF SAID LOT F; THENCE N.06°47'51"E., 1219.60 FEET TO A POINT ON THE NORTHERLY LINE OF SAID LOT E, DISTANT S.87°23'24"E., 2025.08 FEET FROM POINT 6 OF SAID LOT F; THENCE S.87°23'24"E. 2417.19 FEET TO THE NORTHWEST CORNER OF THE LAND DESCRIBED IN DEED TO HOWARD G. KIRGIS, ET UX., RECORDED SEPTEMBER 24,1957 IN BOOK 6761, PAGE 197 OF OFFICIAL RECORDS; THENCE S.02°36'36"W., 740.00 FEET TO THE SOUTHWEST CORNER OF SAID KIRGIS PROPERTY; THENCE S.87°23'24"E., 1378.84 FEET TO THE SOUTHEAST CORNER OF SAID KIRGIS PROPERTY; THENCE S.10 58'35"E., 1394.10 FEET TO POINT 14 OF SAID LOT F; BEING THE MOST NORTHERLY CORNER OF LAND DESCRIBED IN DEED TO S.L. KELLY, RECORDED FEBRUARY 3,1961, AS FILE NO. 202293 OF OFFICIAL RECORDS; THENCE ALONG THE NORTHEASTERLY LINE OF SAID KELLY'S LAND S.51°01'58"E., 1042.27 FEET; THENCE S.38°58'02"W., 288.57 FEET; THENCE N.51°01'58"W. 152.00 FEET, THENCE S.38°58'02"W. 152.00 FEET; THENCE N.51°01'58"W. 1089.27 FEET TO A POINT ON THE LOT LINE BETWEEN POINT 13 AND POINT 14 OF SAID LOT F; THENCE S.63°14'04"W. ALONG SAID LOT LINE 564.30 FEET TO SAID POINT 13; THENCE S.40 42'08"W., 1584.44 FEET TO POINT 12 OF SAID LOT F; THENCE N.89°46'4r"W., 646.96 FEET TO POINT 11 OF SAID LOT F; THENCE N.59°47'49"W., 1175.97 FEET TO POINT 10 OF SAID LOT F; THENCE S.7054'2rW., 546.55 FEET TO THE POINT OF BEGINNING; EXCEPTING THEREFROM ALL THOSE PORTIONS DESCRIBED IN DOCUMENTS RECORDED SEPTEMBER 10, 2001 AS INSTRUMENT NO. 01-0646854, 010646855, 01-0646856 AND 01-0646857 OF OFFICIAL RECORDS; ALSO EXCEPTING THEREFROM THOSE PORTIONS DESCRIBED IN PARCELS A AND C IN GRANT DEED RECORDED FEBRUARY 15, 2002 AS INSTRUMENT NO. 0135145 OF OFFICIAL RECORDS; ALSO THE SOUTHEASTERLY 152.00 FEET OF THE SOUTHWESTERLY 152.00 FEET OF THAT CERTAIN PORTION OF LOT G OF RANCHO AGUA HEDIONDA, ACCORDING TO SAID PARTITION MAP THEREOF NO. 823, BOUNDED AND DESCRIBED AS FOLLOWS: BEGINNING AT POINT 7 OF SAID LOT G WHICH POINT IS ALSO SHOWN AS POINT 14 OF LOT F ON SAID PARTITION MAP NO. 823; THENCE FROM SAID POINT OF BEGINNING, S.51°15'45"E., ALONG THE NORTHEASTERLY LINE OF SAID LOT G, 1042.27 FEET; THENCE AT RIGHT ANGLES S.37°44'15"W. 440.57 FEET; THENCE AT RIGHT ANGLES N,52°15'45"W., 1240.75 FEET TO A POINT ON THE NORTHWESTERLY LINE OF SAID LOT G; THENCE N.62°00'00"E. ALONG A PORTION OF THE NORTHWESTERLY LINE OF SAID LOT G, 483.29 FEET TO THE POINT OF BEGINNING OF THE PROPERTY HEREIN DESCRIBED, ALL OF THE AFOREDESCRIBED LAND BEING IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. CONTAINING A TOTAL OF 396 ACRES MORE OR LESS. ACTIONS, STANDARDS AND PROCEDURES FOR PERMITS Reference the attached permits as follows: 1. State Water Resources Control Board, WDID No. 937C337203 dated October 17, 2005; 2. California Department of Fish and Game, Streambed Alteration Agreement No. 5-122-00 dated June 30, 2004; 3. United States Army Corps of Engineers Permit No. 972020600-SMJ dated January 5, 2005 modifying Permit No. 972020600-MAT dated September 30, 2000; 4. California Coastal Commission Coastal Development Permit No. A- 6CII-00-087, Notice of Acceptance dated April 25, 2005; 5. City of Carlsbad, Endangered Species Act Incidental Take Permit No. HMP 04 -01 dated December 6, 2004; 6. San Diego Gas and Electric Company, Letter of Permission for Grading and Construction of Improvements dated June 23, 2005. EXHIBIT E 10/17/05 09:38 FAI 9162660053 COPY EDGE PRINTING Alan C Lloyd Ph D SecKlaryfor Environmental Protection ' )State Water Resources Control Board Division of Water Qualify 1001J Street • Sacramento, California 95814 • (916) 341-5535 Mailing Address: P.O. Box 1977 • Sacramento, California • 95812-1977 FAX (916) 341-5543 • Internet Address: http://www.waterboards.ca.gov Email Address: stDrmwater@watettoards.ca.gov ©001 Arnold Schwjrzeneggei Governor October 17,2005 OCT 1 ? 2005JohnCahill Carlsbad City 1200 Carlsbad Village Dr Carlsbad, CA 92008 RECED7T OF YOUR NOTICE OF INTENT you are required to comply with the permit requirement ACTIVITY. Accordingly, The WDID identification number 937C337203 Please use this number in any iuture communications regarding this permit' SITEDESCRD7TION OWNER: Carlsbad City DEVELOPER: Sema Construction Inc COUNTY: San Diego SITE ADDRESS: 5800 Hidden Valley Rd Carlsbad, CA 92009- COMMENCEMENT DATE: 9/8/05 EST. COMPLETION DATE: 07/01/07 When construction is complete or ownership has been transferred, dischargers are required to notify the Regional Water Board by submitting a Notice of Termination (NOT). AH State and local requirements must be met in accordance with Special Provision No. 7 of the General permit If you do not notiiy the State Water Board that construction activity has been completed you will continue .to be invoiced for the annual fee each October. Please visit the storm water web page at www.waterboards.ca.gov/stormwtr/index.html to obtain an NOT and other storm water relatedinformation and forms. If you have any questions regarding permit requirements, please contact your Regional Water Board at(858) 467-2952. Sincerely, Storm Water Section Division of Water Quality California Environmental Protection Agency G Recycled Paper EXHIBIT E-1 IHO - TUF PCgni IPl-.F DEPARTMENT OF FISH AND GAME Region 5 4949 Viewridge Avenue an Diego, California 92123 8)467-4201 June 30,2004 Mr. John Cahill City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008-7314 RE: City of Carlsbad Municipal Golf Course Streambed Alteration Agreement #5-122-00 Dear Mr. Cahill: Enclosed is your copy of Streambed Alteration Agreement 5-122-00. If you agree with the conditions/measures set forth in the agreement, please make a copy, then sign and return both copies to our office for signature, at the above address. Written notice of your intent to commence project activities needs to be provided to the Department at least five days in advance of commencing project activities. The California Fish and Game Code requires that you notify the Department in writing within 14 days of receipt of this Proposal as to its acceptability. If you do not respond within this time period you will lose your right to request binding arbitration. For minor changes we suggest you contact the person responsible for writing your agreement prior to sending the written response. Please be advised the Department cannot execute (sign) your Streambed Alteration Agreement without your certified CEQA (California Environmental Quality Act) document, Notice of Determination (NOD), Findings, and proof of having paid the CEQA document filing fee. Also, this Agreement is subject to change upon receipt and review of your certified CEQA documents. If the project was determined to be exempt under CEQA by the lead agency, please provide a copy of the Notice of Exemption or other appropriate documentation. If you have any questions regarding the proposed conditions please contact me at (858) 467-4223. Thank you for your cooperation in this matter. Environmental Scientist Habitat Conservation Planning, Region 5 EXHIBIT E-2 CALIFORNIA DEPARTMENT OF FISH AND GAME 4949 Viewridge Avenue San Diego, California 92123 Notification No.5-122-00 AGREEMENT REGARDING PROPOSED STREAM OR LAKE ALTERATION THIS AGREEMENT, entered into between the State of California, Department of Fish and Game, hereinafter called the Department, and John Cahill. representing the Citvof Carlsbad. State of California . hereinafter called the Operator, is as follows: WHEREAS, pursuant to Section 1601 of California Fish and Game Code, the Operator, on the 1st day of Mav. 2000. notified the Department that they intend to divert or obstruct the natural flow of, or change the bed, channel, or bank of or use material from the streambed(s) of, the following water(s): Unnamed drainage, tributary to the Agua Hedionda Laaoon. San Diego County, California, Section _ Township 12S Range 4W . WHEREAS, the Department (represented byTamara Spear) has determined that such operations may substantially adversely affect those existing fish and wildlife resources within the streambed of an unnamed tributary to the San Luis Rey River, specifically identified as follows: California anatcatcher. least Bell's vireo. oranaethroat wiiptail. burrowing owl, white-tailed kite. Cooper's hawk. Southwestern willow flycatcher.JDalifornia horned lark, loggerhead shrike, vellow warbler, yellow-breastedI chat. Southern Californiarufous-crowned sparrow, great blue heron. San Dieoo black-tailed rackrabbit. Northvesterm Dieao pocket mouse. San Dieao desert woodrat. Yuma mvotis bats. Northern harrier mule deer. California Adolohia. Del Mar manzanita. Lewjs' evening primrose. Prostrate spineflower. Western dichupndra. Decumbent aoldenbush. Southwestern soinv rush.SDI Nuuttall's scrub oak and Ashy spike-moss. Thesejalants and wildlife are associated with Hnastal Saae Scrub. Southern Maritime Chaparral. Native and non-native" grasslands, Southern Willow/Mulefat Scrub. Southern Coastal Freshwater Marsh. Riparian herb. Eucalyptus woodland and disturbed lands! THEREFORE, the Department hereby proposes measures to protect fish and wildlife resources during the Operator's work. The Operator herebyagrees to accept the following measures/conditions as part of the proposed work. If the Operator's work changes from that stated in the notification specified above, this Agreement is no longer valid and a new notification shall be submitted to the Department of Fish and Game. Failure to comply with the provisions of this Agreement and with other pertinent code sections, including but not lirrited to Fish and Game Code Sections 5650, 5652, 5937, and 5948, may result in prosecution. Nothing in this Agreement authorizes the Operator to trespass on anyland or property nor does it relieve the Operator of responsibility for compliance with applicable federal state or local laws or ordinances. A consummated Agreement does not constitute Department o'f Fish and Game endorsement of the proposed operation, or assure the Department's concurrence with permits required from other agencies. This Agreement becomes effective the date of Department's signature and terminates December 31. 2008 for project construction only. This Agreement shall remain in effect for that time necessary to satisfy the terms/conditions of this Agreement. PagelofS STREAMBED ALTERATION AGREEMENT #5-122-00 1 . The following provisions constitute the limit of activities agreed to and resolved by this ^ Agreement. The signing of this Agreement does not imply that the Operator is precluded J from doing other activities at the site. However, activities not specifically agreed to andJ resolved by this Agreement shall be subject to separate notification pursuant to Fish and Game Code Sections 1600 et seq. Project Location and Description: 2. The Operator proposes to alter the streambed of an unnamed tributary to Agua Hedionda Lagoon to accommodate the construction of a Municipal Golf Course which will include an 18-hole championship golf course, clubhouse, maintenance facility, driving range, conference center, and pads for industrial/golf related uses. The project is located approximately one mile to the east of Interstate 5. Palomar Airport Road forms the southern boundary, Hidden Valley Road forms the western boundary, and the southern edge of grading for the future extension of Faraday Avenue forms the northern boundary. The 396-acres project site is located in the northwestern quadrant of the City of Carlsbad, San Diego County, impacting 0.91 acres of streambed. 3. The agreed work includes activities associated with No. 2 above. The project area is located in an unnamed ephemeral drainage, tributary to Agua Hedionda Lagoon, San Diego County. Specific work areas and mitigation measures are described on/in the plans and documents submitted by the Operator, including an Environmental Impact Report, and shall be implemented as proposed unless directed differently by this agreement. 4. The Operator shall not impact more than 0.91 acres of streambed comprised of 0.46 _ acres mule fat scrub, and 0.45 acres of unvegetated channel. Impacts are considered 11 permanent and will be mitigated at a 3:1 ratio for mule fat scrub and 1 :1 ratio for unvegetated channel, for a mitigation acreage requirement of 1.83 acres. Mitigation: 5. As mitigation for the project, the Operator shall restore through creation and enhancement, 1 .83 acres of comparable wetland habitat on-site. The Operator shall submit a final Mitigation and Monitoring Plan within 60 days of signing this Streambed Alteration Agreement. Department approval of that plan is required prior to project initiation/impacts. All revegetation shall be installed no later than March 31. 2009. 6. The Operator shall mitigate at a minimum 5:1 ratio for impacts beyond those authorized in this Agreement. In the event that additional mitigation is required, the type of mitigation shall be determined by the Department and may include creation, restoration, enhancement and/or preservation. Vegetation. Reveaetation and Restoration: 7. All mitigation planting shall have a minimum 100% survival the first year and 80% survival thereafter and/or shall attain 75 % cover of native wetland species after 3 years and 90% cover of native wetland species after 5 years. If the survival and cover requirements have not been met, the Operator is responsible for replacement planting to achieve these requirements. Replacement plants shall be monitored with the same • survival and growth requirements for 5 years after planting. At the completion of the monitoring period, the mitigation site shall have received NO supplemental irrigation for a period of two consecutive years, nonnative plants shall not make up more than 5% of the Page 2 of 5 STREAMBED ALTERATION AGREEMENT #5-122-00 entire cover of the site, no more than 5% of the site shall consist of bare ground and site .^ shall be free of invasive exotic plants species. 8. All planting should be done between October 1 and April 30 to take advantage of the winter rainy season. 9. An annual report shall be submitted to the Department by January 1 of each year for 5 years afer the on-site restoration/planting. This report shall include the survival and percent cover. The number by species of plants replaced, an overview of the revegetation effort, and the method used to assess these parameters shall also be included along with photos from designated photo stations. Work Period and Time Limits: 10. The Operator shall not remove vegetation within the stream from February 15 to September 1 to avoid impacts to nesting birds. Habitat Protection: 11. The Operator shall have a qualified biologist onsite daily during any impacts to vegetation for the purpose of monitoring and enforcing conditions of this agreement. 12. Preparation shall be made so that runoff from steep, erodible surfaces will be diverted into stable areas with little erosion potential. Frequent water checks shall be placed on dirt roads, cat tracks, or other work trails to control erosion. 13. The perimeter of the work site shall be adequately flagged to prevent damage to Hi adjacent riparian habitat. Structures: 14. This Agreement does not authorize the construction of any temporary or permanent dam, structure, flow restriction or fill except as described in the Operator's notification. Equipment and Access: 15. No equipment shall be operated in ponded or flowing areas. 16. Staging/storage areas for equipment and materials shall be located outside of the stream. 17. Access to the work site shall be via existing roads and access ramps. 18. Any equipment or vehicles driven and/or operated within or adjacent to the stream shall be checked and maintained daily, to prevent leaks of materials that if introduced to water could be deleterious to aquatic life. 19. The clean-up of all spills shall begin immediately. The Department shall be notified immediately by the Operator of any spills and shall be consulted regarding clean-up procedures. " Turbiditv/Siltation: Page 3 of 5 ) UQ STREAMBED ALTERATION AGREEMENT #5-122-00 20. Water containing mud, silt or other pollutants from aggregate washing or other activities shall not be allowed to enter a lake or flowing stream or placed in locations that may be subjected to high storm flows. Pollution. Litter and Cleanup: 21. The Operator shall comply with all litter and pollution laws. All contractors, subcontractors and employees shall also obey these laws and it shall be the responsibility of the operator to ensure compliance. 22. Spoil sites shall not be located within a stream, where spoil could be washed back into a stream, or where it could cover aquatic or riparian vegetation. 23. Raw cement/concrete or washings thereof, asphalt, paint or other coating material, oil or other petroleum products, or any other substances which could be hazardous to aquatic life, resulting from project related activities, shall be prevented from contaminating the soil and/or entering the waters of the state. These materials, placed within or where they may enter a stream/lake, by Operator or any party working under contract, or with the permission of the Operator, shall be removed immediately. 24. No debris, soil, silt, sand, bark, slash, sawdust, rubbish, cement or concrete or washings thereof, oil or petroleum products or other organic or earthen material from any construction, or associated activity of whatever nature shall be allowed to enter into or placed where it may be washed by rainfall or runoff into, waters of the State. When operations are completed, any excess materials or debris shall be removed from the work area. No rubbish shall be deposited within 150 feet of the high water mark of any stream or lake. 25. No equipment maintenance shall be done within or near any stream channel where petroleum products or other pollutants from the equipment may enter these areas under any flow. Other: 26. The Operator shall provide a copy of this Agreement to all contractors, subcontractors, and the Operator's project supervisors. Copies of the Agreement shall be readily available at work sites at all times during periods of active work and must be presented to any Department personnel, or personnel from another agency upon demand. 27. The Department reserves the right to enter the project site at any time to ensure compliance with terms/conditions of this Agreement. 28. The Operator shall notify the Department, in writing, at least five (5) days prior to initiation of construction (project) activities and at least five (5) days prior to completion of construction (project) activities. Notification shall be sent to the Department at 4949 Viewridge Avenue, San Diego, CA 92123 Attn: Tamara A. Spear 29. It is understood the Department has entered into this Streambed Alteration Agreement for purposes of establishing protective features for fish and wildlife. The decision to proceed with the project is the sole responsibility of the Operator, and is not required by this agreement. It is further agreed all liability and/or incurred cost related to or arising out of the Operator's project and the fish and wildlife protective conditions of this agreement, remain the sole responsibility of the Page 4 of 5 STREAMBED ALTERATION AGREEMENT #5-122-00 Operator. The Operator agrees to hold harmless the State of California and the Department of Fish and Game against any related claim made by any party or parties for personal injury or any other damages. 30. The Operator may request one extension of this agreement, subject to Department approval, prior to its termination. The extension request and fees shall be submitted to the Department's Region 5 office at the above address. If the Operator fails to request the extension prior to the agreement's termination, then the Operator shall submit a new notification with fees and required information to the Department. Any activities conducted under an expired agreement are a violation of Fish and Game Code Section 1600et. seq. 31. The Department reserves the right to suspend or cancel this Agreement for other reasons, including but not limited to the following: a. The Department determines that the information provided by the Operator in support of the Notification/Agreement is incomplete or inaccurate; b. The Department obtains new information that was not known to it in preparing the terms and conditions of the Agreement; c. The project or project activities as described in the Notification/Agreement have changed;d. The conditions affecting fish and wildlife resources change or the Department determines that project activities will result in a substantial adverse effect on the environment. 32. Before any suspension or cancellation of the Agreement, the Department will notify the Operator in writing of the circumstances which the Department believes warrant suspension or cancellation. The Operator will have seven (7) working days from the date of receipt of this notification to respond in writing to the circumstances described in the Department's notification. During the seven (7) day response period, the Operator shall immediately cease any project activities which the Department specified in its notification. The Operator shall not continue the specified activities until that time when the Department notifies the Operator in writing that adequate methods and/or measures have been identified and agreed upon to mitigate or eliminate the significant adverse effect. CONCURRENCE City of Carlsbad John Cahill (title> California Dept. of Fish and Game (signature)(date) C.F. Ravsbrook. Regional Manager (title) Page 5 of 5 vnn_i/, RBtYTO DEPARTMENT OF THE ARMY . LOS ANGELES DISTRICT, CORPS OF ENGINEERS P.OBOX532711 LOS ANGELES, CALIFORNIA 90053-2325 January 5,2005 Office of Ihe Chief Regulatory Branch City of Carlsbad Engineering Department Attention: John Cahill 2075 Las Palmas Drive Carlsbad, California 92009-1519 DearMr.Cahfll: Reference is made to your request of March 16,1999 to amend Permit No. 972020600-SMJ which authorized you to impact 2.95 acres of wetlands and waters of the U.S. to construct die Carlsbad Municipal Golf Course which would impact an unnamed tributary to the Agua Hedionda Creek in Carlsbad, San Diego County, California. Under the provisions of 33 Code of Federal Regulations 325.6(d), the start date is to remain Ihe same and the completion date is extended from August 8,2005 to August 8,2007. Under the provisions of 33 Code of Federal Regulations 325.7(b), your permit is modified as follows: You are hereby authorized to construct the Carlsbad Municipal Golf Course on a 418-acre site located in the northwest quadrant of the City of Carlsbad. Palomar Airport Road forms the southern boundary of the site, Hidden Valley Road forms me eastern boundary, and me southern edge of grading for the extension of Faraday Avenue forms the northern boundary. The northern portion of the site is in the Agua Hedionda watershed and drains into Agua Hedionda Lagoon. The remainder of the site is in the Encinas Creek watershed, which drains through Encinas Canyon to the Pacific Ocean. In addition to the IB-hole championship gott course, the proposed project includes a clubhouse, maintenance facility, driving range, conference center, and pads for industrial/golf course uses. The Carlsbad Golf project received the Incidental Take Permit from the U5. Fish and Wildlife Service .on December 06,2004-. Also, the U.S- Fish and Wildlife Service concurred on December 15,2004 that the project is consistent with the Carlsbad Habitat Management Plan, Therefore, Special Condition 1 of me original permit, dated August2,2000, is no longer applicable. ' The permittee shall now impact no more than 0-91 acre of waters of the United States. Specifically, the permittee shall impact no more than 0.46 acre of wetland Waters of the U.S. EXHIBIT E-3 rco. 7. i\j\j'j o.t/nw nui\ onm_t/i cuu iiu. vjyj i. j -2- and 0.45 acre of non-wetland Waters of the VS. This replaces Special Condition 2 of the originalpermit, dated August 2,2000. The permittee shall mitigate impacts to 0.91 acre of waters of the U.S. (including wetland and non-wetland waters) by the on-site creation of 1,83 acres of riparian habitat, in accordance with the City of Carlsbad Revised Golf Course Riparian Mitigation Flan, dated December 2003. This replaces Special Condition 3 of the original permit dated August 2,2000. The terms and conditions of Permit No. 972020600-SMJ, except as changed herein/ remain in full force and effect Please note that a copy of this letter is being forwarded to Held Supervisor, Ecological Services Field Office, U.S. Fish and Wildlife Service, 6010 Hidden Valley Road, Carlsbad, California 92009; U.S. Environmental Protection Agency, Atrn: Mr. Tfen Vendlinski- Supervisor, Wetlands Regulatory Office (WTR-8), 75 Hawthome Street San Francisco, California 94105; California Department of Fish and Game, Atrn: Charles Raysbrook, 4949 View Ridge Ave., San Diego, California 92123. California Regional Water Quality Control Board, Region 9, San Diego, Attn: Mr. Michael McCann, Manager, Watershed Branch, 9174 Sky- Park Court, Suite 100, San Diego, California 92123 Sincerely, David J. Castanon Acting Chief, Regulatory Branch i .Jr flGOE REGULATORY Fax:8586745388 flpr 20 2004 16:43 P. 02 LOS ANGELES DISTRICT U.S. ARMY CORPS OF ENGINEERS Permittee: Permit Number Issuing Office: DEPARTMENT OF THE ARMY PERMIT City of Carlsbad 972020600-MAT Los Angeles District Note: The term "you" and its derivatives, as used in this permit, means the permittee or any future transferee. The term "this office'' refers to the appropriate district or division office of the Corps of Engineers having jurisdiction over the permitted activity or the appropriate official acting under the authority of the commanding officer. You are authorized to perform work in accordance with the terms and conditions specified below. Project Description: To construct the Carlsbad Municipal Golf Course project in the City of Carlsbad, San Diego County/ California, as shown on die attached drawings. Project Location: In unnamed tributaries to Agua Hedionda Creek and Encinas Creek in 1he City of Carlsbad, San Diego County, California. The 418-acre site is located in the northwestern quadrant of the City of Carlsbad- Palomar Airport Road forms the southern boundary of the site, Hidden Valley Road forms the eastern boundary, and the southern edge of grading for the future extension of Faraday Avenue forms the northern boundary. The northern portion of the site is in the Agua Hedionda watershed and drains into Agua Hedionda Lagoon. The remainder of the site is in the Encinas Greek watershed, which drains through Encinas Canyon (located on the south side of Palomar Road) to'the Pacific Ocean. Permit Conditions: 1 Your use of the permitted activity must not interfere with the public's right to free navigation on all navigable waters of the United States. 2 You must have a copy of this permit available on the vessel used for the authorized transportation and disposal of dredged material. 3 You must advise mis office in writing, at least two weeks before you start maintenance flCOE REGULflTORY Fax: 8586745388 flpr 20 2004 16=43 P. 03 ^ dredging activities under the authority of this permit. s 4 You must install and maintain, at your expense, any safety lights and signals prescribed by the United States Coast Guard (USCG), ^through regulations or otherwise, on your authorized facilities. The USCG may be reached at the following address and telephone number. 5 The condition below will be used when a Corps permit authorizes an artificial reef, an aerial transmission line, a submerged cable or pipeline, or a structure on the outer continental shelf. National Ocean Service (NOS) has been notified of this authorization. You must notify NOS and this office in writing, at least two weeks before you begin work and upon completion of the activity authorized by this permit Your notification of completion must include a drawing which certifies the location and configuration of the completed activity (a certified permit drawing may be used). Notifications to NOS will be sent to the following address: The Director, National Ocean Service (N/CG 222), Rockvffle, Maryland 20852, 6 The following condition should be used for every permit where legal recordation of the permit would be reasonably practicable and recordation could put a subsequent purchaser or owner of property on notice of permit conditions. You must take the actions required to record this permit with the Registrar of Deeds or other appropriate official charged with the responsibility for maintaining records of title to or •k. interest in real property. General Conditions: 1. The time limit for completing the authorized activity ends on August 2,2005 . If you find that you need more time to complete the authorized activity, submit your request for a time extension to this office for consideration at least one month before the above date is reached. 2. You must maintain the activity authorized by this permit in good condition and in conformance with the terms and conditions of this permit You are not relieved of this requirement if you abandon the permitted activity, although you may make a good faith transfer to a third party i*x compliance with General Condition. 4 below. Should you wish to cease to maintain the authorized activity or should you desire to abandon it without a good faith transfer, you must obtain a modification from this permit from this office, which may require restoration of the area. 3- If you discover any previously unknown historic or archeological remains while accomplishing the activity authorized by this permit, you must immediately notify this office of what you have found. We will initiate the Federal and state coordination required to determine if the remains warrant a recovery effort or if the site is eligible for listing in the National Register of Historic Places. *.. 4, If you sell the property associated, with this permit, you must obtain the signature of the new owner in the space provided and forward a copy of the permit to this office to validate the flCOE REGULRTORY Fax=8586745388 flpr 20 2004 16:44 P.04 transfer of this authorization. 5. If a conditioned water quality certification has been issued for your project, you must comply with the conditions specified in the certification as special conditions to this permit. For your convenience, a copy of the certification i| attached if it contains such conditions. 6. You must allow representatives from this office to inspect the authorized activity at any time deemed necessary to ensure that it is being or has been accomplished with the terms and conditions of your permit , Special Conditions: 1. The permittee shall obtain "talce" authorization under the Endangered Species Act for any and all impacts to threatened or endangered species prior to initiating waters/wetlands impacts aut&orized by this IP. The permittee shall submit verification of compliance with this permit condition prior to initiating waters / wetlands impacts authorized by mis IP. This authorization may be obtained by the following means: a) Adoption and approval of (he/City's Habitat Management Plan by the USFWS and CDFG. (the City would then issue their own take authorization)/ orb) Individual Section 10 permit issued by the USFWS. 2. The permittee shall impact no, more than 2.95 acres of waters of the United States (including wetlands and non-wetland waters). The permittee shall fence (with silt . barriers) the limits of the construction corridor to prevent additional waters/wetlands impacts and the spread of silt from the construction zone into adjacent waters/wetlands. If waters/wetlands impacts occur outside these limits/ all work shall cease, and the Corps shall be notified immediately. Any waters/wetlands impacts that occur outside the fenced and marked limits shall be mitigated at a minimum 5:1 ratio, and shall be subject to the requirements of all the special conditions listed below. 3. The permittee shall mitigate impacts to 2.95 acres of waters of the United States (including wetlands and non-wetland waters) by a) creating 4.5 acres of riparian habitat on-site adjacent to the Cannon road riparian site and existing Macario Creek riparian corridor; and b) restpring/enhancing 4.0 acres of wetland habitat offsite at the Carltas site. Mitigation grading, planting, and irrigation shall begin prior to and/or concurrent with the planned date of initiating waters/wetlands impacts authorized by this DP. 4. A final conceptual wetland mitigation plan based on the Carlsbad Golf Course Composite Wetlands Mitigation Plan (P&D Environmental Services, May 2000) shall be subrnijtte.djo the Corps for review and approval 30 days prior to initiating waters/wetland impacts (cc: USFWS and EPA). These final conceptual plans shall be prepared in strict accordance with the Corps' Habitat Mitigation and Monitoring Proposal Guidelines (June 1/1993). In addition to the information presented in P&D's draft May 2000 mitigation plan, it is the Corp's understanding that the Carlsbad Golf on-site mitigation will conform, to the extent practicable, to the specifications outlined in the Cannon Road Mitigation Plan (specifically the "Addendum to the Conceptual Mitigation Plan for Cannon Road Extension Project Reaches 1 3 flCOE REGULflTORY Fax:8586745388 flpr 20 2004 16=44 P.05 and 2" dated February 20,1998). The final conceptual mitigation plan shall include and incorporate all sections of the Canon Road mitigation plans that pertain to the Carlsbad Golf project. In addition, all addendums submitted to the Corps shall be included in. the final conceptual plan. The final conceptual plan shall include details of the offeite restoration/enhancement including location, methods of removal, replanting strategies and techniques, success criteria (performance standards), monitoring/maintenance methods and schedules. Additional content and requirements for the final conceptual plan are listed below in special condition number five. The final conceptual plan shall be submitted as one complete and comprehensive document for Corps review 30 days prior to the planned date of initiating waters/ wetlands impacts authorized by this IF. No impacts to waters/wetlands shall occur until after the Corps approves the conceptual plan. 5. Final wetland construction plans, specifications and drawings based on the Corps- approved final conceptual wetland mitigation plan shall be submitted to the Corps for review and approval 10 days prior to initiating wetland impacts. The final plans and specifications shall also include: a) All final specifications and topography-based layout grading, planting, and irrigation, b) A provision that all wetland creation areas shall be graded to the same elevation as the adjacent existing wetlands and/or within one foot of the groundwater table/ and shall be left in a rough grade state with topographic relief (including channels) that mimics natural wetland topography. c) Planting pallets (plant species, size, and number per acre) and seed mix (plant species and pounds per acre). All planting shall be installed in a manner that mimics natural plant distribution (e.g., random and/or aggregate distributions rather than uniform rows). Plantings shall generally be placed within the mitigation areas along hydrologic gradients mat make ecological sense in relation to each plant's facultative category (e.g. obligate, facultative, etc.). d) A provision that on the first anniversary of the initial planting, all dead plants shall be replaced unless their function has been replaced by natural recruitment as verified by the Corps. e) A final implementation schedule that indicates when all wetland/waters impacts, as well as mitigation site grading, planting, and irrigation will begin and end. f) Five years of explicit and measurable success criteria for wetland creation, restoration, and enhancement areas. The permitee shall conduct a minimum of five years of maintenance and monitoring of wetland mitigation areas. If success criteria are met earlier and all artificial water supply to the site has ceased for a minimum of two years, the site may be considered, at the Corps discretion, for early approval. In addition to the success criteria outlined in the final mitigation — jaidTnbnitoring plan, evidence of wetland hydrology and natural recruitment of native wetland vegetation must be present on-site in order to obtain final Corp approval of the mitigation areas. Annual mitigation maintenance and monitoring reports shall be submitted to the Corps (cc: USFWS and EPA). 6. Planting and irrigation shall not be installed until the Corps has approved the xrutigatiorv site grading. TKo permittee sKall corxtact tKe Corps, for verification o£ RCDE REGULRTDRY Fax: 8586 ^41x588 Hpr A)U4 it>:«>r.uo /)proper grading of the mitigation site a minimum of 15 days prior to the planned date of initiating planting. 7. If changes are made to the mitigation design during its implementation, the permittee shall immediately notify the Corps. If changes are determined to be greater than minimal by the Corps, as-built drawings of the mitigation grading, planting, and irrigation shall be submitted to the Corps (cc: USFWS and EPA) within 30 days of implementing the redesigned mitigation. 8. The permittee shall staff a qualified biologist on site during all phases of construction and mitigation implementation to ensure compliance with the requirements of mis permit, and shall produce a report that documents the timing and events of the final implementation schedule. The permittee shall submit the biologist's name, address, telephone number, email address (if available), and work schedule on the project to the Corps, prior to the planned date of initiating waters/ wetlands impacts authorized by this IP. The permittee shall report any violation to the Corps within one day of its occurrence. 9. The permittee shall submit a report to the Corps within 30 days of completion of waters /wetlands impacts authorized by this IP mat documents compliance with all permit conditions. The report shall include photographs showing fenced and marked limits of impacts to all Corps jurisdictional areas, as-built construction drawings and a summary of all project activities. 10. The permittee shall not remove/impact vegetation from development areas from March 15 to September 15 to avoid impacts to nesting birds. Any habitat restoration and creation activities also shall be timed to avoid disturbance of Federally-listed and other migratory nesting birds (ie., avoid disturbance from March 15 through September 15). However, the permittee may be authorized to remove /impact vegetation within development and restoration areas during this time if a qualified biologist surveys the proposed work area immediately prior to the vegetation removal and concludes that no impacts to nesting birds will occur. The results of the survey shall be provided to the Corps for review and approval prior to initiation of vegetation removal. A qualified biologist shall monitor the vegetation removal to ensure the no impacts to nesting birds will occur. 11. The permittee shall ensure mat water quality is maintained within the channel at and downstream of the project site by incorporating appropriate design elements into the project (e.g., maintaining a soft bottom channel installing detention basins, etc.) 12. The permittee shall preserve in perpetuity all mitigation areas by placing a biological conservation easement in favor of an agent approved by the Corps on these areas. The permitleeljhall submit a draft easement to the Corps prior to initiating wetland impacts. The form and content of the easement shall follow the enclosed example, and must be approved by the Corps prior to its execution. The easement shall state clearly that no other easements or activities that would result in soil disturbance and /or vegetation removal, except as approved by the Corps, shall be allowed within the biological conservation easement area. The permittee shall submit the final easement within 10 days of receiving Corps approval of the draft easement. 5 fiCOE REGULflTORY Fax:8586745388 flpr 20 2004 16:45 P.07 Further Information: 1. Congressional Authorities. You have been authorized to undertake the activity described above pursuant to: () Section 10 of the Fiver and Harbor Act of 1899 (33 U.S.C 403). (X) Section 404 of the Clean Water Act (33 U5.C 1344). () Section 103 of the Marine Protection, Research and Sanctuaries Act of 1972 (33 U.S.C 1413). 2. Limits of this authorization. a. This permit does not obviate the need to obtain other Federal, state, or local authorizations required by law. b. This permit does not grant any property rights or exclusive privileges. c. This permit does not authorize any injury to the property or rights of others. |i d. This permit does not authorize interference with any existing or proposed Federal project 3. Limits of Federal Liability. In issuing this permit, the Federal Government does not assume any liability for the following: a. Damages to the permitted project or uses thereof as a result of other permitted or unpennitted activities or from natural causes. b. Damages to the permitted project or uses thereof as a result of current or future activities undertaken by or on behalf of the United States in the public interest c. Damages to persons, property, or to other permitted ox unpennitted activities or structures caused by the activity authorized by this permit. d. Design or construction deficiencies associated with the permitted work. e. Damage claims associated with any future modification, suspension, or revocation of this permit * 4. Reliance on Applicant's Data. The determination of this office that issuance of this permit is not contrary to the public interest was made in reliance on the information you provided. t 5. Revaluation of Permit Decision. This office may reevaluate its decision on this permit at any W time trie circumstances warrant. Circumstances that could require a reevaluation include, but are flCOE REGULflTORY Fax: 8586745388 flpr 20 2004 lb:4b K.U» not limited to, the following: a. You fail to comply with the terms and conditions of this permit b. The information provided by you in support of your permit application proves to have been false, incomplete, or inaccurate (See 4 above). c. Significant new information surfaces which this office did not consider in reaching the original public interest decision. Such a reevaluation may result in a determination that it is appropriate to use the suspension, modification, and revocation procedures contained m 33 CFR 325.7 or enforcement procedures such as those contained in 33 CFR 326.4 and 326J5. The referenced enforcement procedures provide for the issuance of an administrative order requiring you to comply with the terms and conditions of your permit and for the initiation of legal action where appropriate. You will be required to pay for any corrective measure ordered by mis office, and if you fail to comply with such directive, this office may in certain situations (such as those specified in 33 CFR 209.170) accomplish the corrective measures by contract or otherwise and bill you for the cost 6. Extensions. General condition 1 establishes a time limit for the completion of the activity authorized by mis permit Unless there are circumstances requiring either a prompt completion of the authorized activity or a reevaluation of the public interest decision, the Corps will normally give you favorable consideration to a request for an extension of mis time limit flCOE REGULflTORY Fax=8586745388 flpr 20 2004 16:46 P. 09 -'^ Your signature below, as permittee, indicates that you accept and agree to comply with the terms and conditions of this permit DA This permit becomes effective when the Federal official, designated to act for the Secretary of the Army, has signed below. George L. Beams Chief, Construction - Operations Division DATE When the structures or work authorized by this permit are still in existence at the time the property is transferred, the terms and conditions of this permit will continue to be binding on the new ownerfs) of the property. To validate the transfer of mis permit and the associated liabilities associated with compliance with its terms and conditions, have the transferee sign and date below. TRANSFEREE DATE -Apr-25-05 OZ:Z5pm from-618 W z«4 o.is rof tat* i AGENCY : IALIFORNIA COASTAL COMMISSION kN oreao AJ*£A - 75 MfiTROrOWTAN DRIVE, SUITE 103 axomoo. CA MIOS-WI ^ 767-2370 City of Carlsbad Attn: JohnCahill 1635 Faraday Avenue Carlsbad, CA 92008 NOTICE OF ACCEPTANCE - April 25. 2005 Applicant: City of Carlsbad Document or Plans: 1. Water Quality Monitoring Plan dated November 18.2004. 2. Turf and Pest Management Plan dated August 17, 2004. 3. Technical Advisory rnmmittee Comments dated August 6. 2004. 4. Final development t>1aBS that include eradirig and erosion control plans, bridge plans, comfort station plans, driving ranee lighting, water features and club house plans. 5. Hydrology Report and Storm Water Management Plan dated Julv 2004 rrevised November 2Q04Y 6. Revised Riparian Mitigation Plan for any faot anticipated^ temporary impacts. 7. Final Landscape plans. « renal Upland Mitigation/Monitoring Proi^tn Hated January 2005. A Recordation of Offer to Dedicate Open Space and Conservation Easement. __ Submitted in compliance with Special Coudition(s) No(s).: 1. 2. 3.4. $,. 6. 7. 8. 10. 14 of Coastal Development Permit No. A-6-CIL-00-087 Remaining Special Condition(s): None Material submitted in compliance with said Special Condition(s) of yo«r development permit has been reviewed by the District Director and found to fulfill the requirements of said condition(s). Your submitted material and a copy of this letter have been made a part of the permanent file. Sincerely, Deborah Lee Deputy Director (O:\San OlcE<rtLBE\Carlsbad Oolf Coune NOA.doc) EXHIBIT E-4 /S.-7 STATE OF CALIFORNIA - THE RESOURCES AGENCY GRAY DAVIS. Governor CALIFORNIA COASTAL COMMISSION San Diego Coast Area Office r*<575 Metropolitan Drive, Suite 103 >>Jan Diego. CA 92108-4421 ^19)767-2370 I Page:! Date: August 28, 2003 Permit Application No.: A-6-CII-00-087 COASTAL DEVELOPMENT PERMIT On August 8, 2003, the California Coastal Commission granted to City of Carlsbad, Attn: Michael Holzmiller •:'•'••'this permit subject to the attaphed Standard and Special conditions, for development consisting of Development of an 18 hole championship golf course, clubhouse, parking lot,, maintenance facilities, driving range, conference center and pads for future industrial/golf related uses on 397 acre site. more specifically described Jfi the application filed in the Commission offices. The development is within trie coastal zone at North of Palomar Airport Road and east and west of College Boulevard, Mello II, Carlsbad, (San Diego County) Issued on behalf of the California Coastal Commission by PETER M. DOUG Executive Directo By: Keri Aker Coastal Pro ACKNOWLEDGMENT: The undersigned permittee acknowledges receipt of this permit and agrees to abide by all terms and conditions thereof. The undersigned permittee acknowledges that Government Code Section 818.4 which states in pertinent part that: "A Public entity is not liable for injury caused by the issuance... of any permit. . ." applies to the issuance of this permit. IMPORTANT: THIS PERMIT IS NOT VALID UNLESS AND UNTIl WITH THE SIGNED ACKNOWLEDGMENT HAS BEEN RETUF OFFICE. 14 Cal. Admin. Code Section 13 COPY OF THE PERMIT TO THE COMMISSION l Date ! Page: 2 Date: August 28, 2003 Permit Application No.: A-6-CII-00-087 STANDARD CONDITIONS: 2. 3. 1. Notice of Receipt and Acknowledgment. The permit is not valid and development shall not commence until a copy of the permit, signed by the permittee or authorized agent, acknowledging receipt of the permit and acceptance of the terms and conditions, is returned to the Commission office. Expiration. If development has not commenced, the permit will expire two years from the date on which the Commission voted on the application. Development shall be pursued in a diligent manner and completed in a reasonable period of time. Application for extension of the permit must be made prior to the expiration date. Interpretation. Any questions of intent or interpretation of any condition will be resolved by the Executive Director or the Commission. 4. Assignment. The permit may be assigned to any qualified person, provided assignee files with the Commission an affidavit accepting all terms and conditions of the permit. 5. Terms and Conditions Run with the Land. These terms and conditions shall be perpetual, and it is the intention of the Commission and the permittee to bind all future owners and possessors of the subject property to the terms and conditions. SPECIAL CONDITIONS: The permit is subject to the following conditions: 1. Final Development Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, detailed final plans for the proposed development that include site, building, grading and drainage plans. Said plans shall be in substantial conformance with the plan entitled "City of Carlsbad Golf Course Revisions" submitted with LCPA 1-03B (Habitat Management Plan) on February 7, 2003 and shall comply with the following: a. There shall be no impacts to southern maritime chaparral habitat within the Coastal Zone portion of the project. Impacts to coastal sage scrub shall be consistent with the approved development plan and shall be mitigated as addressed in Condition #2 below. Any temporary impacts to wetland and/or riparian areas for the purpose of constructing golf cart path crossings shall be restored as addressed in Condition #3 below. b. The conservation and development areas for the golf course property shall be consistent with the golf course hardline map (Figure 8 Revised) in the City of Carlsbad Habitat Management Plan (HMP). Areas shown for conservation shall not be impacted or disturbed except for revegetation, restoration and other similar activities related to mitigation. Areas shown for impact may be fully developed with appropriate mitigation. I The permittee shall undertake the development in accordance with the approved plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes Page: 3 Date: August 28,2003 .-...•, Permit Application No.: A-6-CH-00-087 .«^y :j to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 2. Mitigation for Upland Habitat Impacts: PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, a final detailed coastal sage scrub mitigation plan. Said plan shall be developed in consultation with the U.S. Fish and Wildlife Service and the California Department of Fish and Game, and shall include the following: a. Preparation of a detailed site plan" delineating all areas and types of impact to upland habitat species (both permanent arid temporary) and the exact acreage of each impact. In addition, a detailed site plan of the mitigation sites shall also be included. b. Impacts to coastal sage scrub shall be mitigated at not less than a ratio of 2:1. c. Mitigation methods shall be consistent with those approved in Section 7-9 of the second addendum to the Carlsbad HMP and Policy 7-1.10 of the Mello II Land Use Plan of the Carlsbad LCP, as provided in Exhibit 10. d. A minimum buffer of 20 feet shall be provided between development as defined in Section 30106 of the Coastal Act, and native upland habitat, except as otherwise provided in Section 7-11 of the second addendum the Carlsbad HMP and Policy 3-1.12 of the Mello II Land Use Plan of the Carlsbad LCP, as provided in Exhibit 10. e. Location where the seeds will be collected and identification of plant species to be used for the restoration area; f. Application rate (e.g. pounds per acre of seeding effort); g. Methods of weed eradication. No weed whips shall be permitted after installation of the seed mixes; •••' '.t' h. Designation of a qualified botanist to-supervise the restoration effort; i. Goals, objectives and success criteria. The plan shall include quantitative success criteria that clearly relate to the goals and objectives of the habitat restoration program. These quantitative success criteria shall be based on sampling reference sites or on pertinent published reports. The success critieria shall include minimum requirements for species diversity and cover of shrubs, subshrubs, and herbaceous species. At minimum, five years after the initial planting the restored areas shall support at least 10 native species appropriate to characterize the vegetation type and have evidence of recruitment of at least one-half of these species. Weeds shall be controlled as specified in (g) above and never constitute more than 10 percent of the total cover. j. At completion of the mitigation/restoration effort, the restoration specialist shall prepare a letter report indicating that the installation is finished and that the five-year monitoring period has begun. Monitoring reports shall be submitted to the City and the Executive Director annually for five years. If at the end of five years, any of the restored areas fail to meet the success criteria as contained in the final mitigation plan, the monitoring and IfeO maintenance perioc vlll be extended one full year for that ak J Final monitoring for success shall occur after at least a three-year period during which there has been no remediation or maintenance,.other than weeding. If the success critieria are not met after 6 years, an amendment to the permit shall be required. The permittee shall undertake development in accordance with the approved mitigation/restoration plan. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 3. Restoration for Construction Impacts. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, if any temporary wetland and/or riparian impacts are proposed, the applicant shall submit a detailed revegetation plan indicating the type, size, extent and location of all plant materials, any proposed irrigation system and any other landscape features necessary to revegetate any proposed temporary wetland and/or riparian impacts. The restoration program shall be developed in consultation with the U.S. Department of Fish and Wildlife and the California Department of Fish and Game, and at a minimum shall include: Before/After Survey. The condition of the wetland and/or riparian revegetation and substrate under the two approved golf cart crossing locations shall be documented prior to construction, and the extent of proposed temporary impacts shall be identified. The extent of impacts to the vegetation and substrate shall be assessed and documented after completion of the repairs. Temporary wetland and/or riparian impacts shall be revegetated at a ratio of 1:1. There shall be no wetland impacts except for those temporary impacts associated with construction of the two approved golf cart crossings. No permanent wetland or riparian impacts shall be allowed. a. The following goals, objectives and performance standards for the restoration sites: 1. Full restoration of all wetland and/or riparian impacts that are identified as temporary. Restoration of temporarily impacted areas shall include, at a minimum, restoration of before-impact elevations, restoration of before-impact hydrology, removal of all non-native plant species, and replanting with locally collected native wetland and/or riparian plant species. 2. After construction and restoration, a permanent minimum buffer of 100 feet shall be provided between development and wetlands, and a minimum buffer of 50 feet shall be provided between development and riparian area, except as shown on the "City of Carlsbad Golf Course Revisions" plan dated February 7, 2003. For the two approved golf cart path crossings and the golf course playing areas adjacent to the riparian area as shown on the plan, an average minimum post-construction buffer of 50 feet shall be provided between new development and wetlands, and an average minimum post-construction buffer of 25 feet shall be provided between new development and riparian areas, consistent with Policy 3-1.12 of the Mello II Land Use Plan and Section 7-11 of the Carlsbad HMP, as provided in Exhibit 10, unless otherwise approved by the Executive Director in a manner consistent with the final, approved development plans and mitigation/restoration plans. The buffer between development and riparian/wetland habitat for these referenced areas shall not be less than 10 feet in width at any one point. 3. As shown on the plan entitled "City of Carlsbad Golf Course Revisions" submitted with LCPA 1-03B (Carlsbad HMP) on February 7, 2003, and consiste^. /Vith the golf course hardline map (Figi.. is Revised) in the Carlsbad HMP, golf cart path crossing #1 shall utilize the existing farm road, and crossing #2 shall utilize a bridge span structure. No permanent riparian impacts shall occur for either crossing. 4. Success criteria and final performance monitoring shall provide at least a 90% coverage of areas disturbed by construction activities within 1 year of completion of construction activities. 5. The final design and construction methods that will be used to ensure the restoration sites achieve the defined goals, objectives and performance standards. 6. Submittal, within 30 days of completion of initial restoration work, of post- restoration plans demonstrating that the restoration sites have been established in accordance with the approved design and construction methods. Construction impacts to sensitive habitat areas (e.g., coastal sage and other native upland habitat, wetlands, and riparian areas) shall be avoided by identifying and staking all sensitive habitats outside the project footprint, and educating the construction crews about the importance of these habitats and need for protection. The permittee shall undertake development in accordance with the approved restoration plan. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 4. Final Landscape Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, a detailed final landscape plan for the proposed development. Said plan shall show the type, size, extent and location of all proposed vegetation and any necessary irrigation, and shall provide the following information and/or commit to the following requirements: a. The installation of plant materials on the site, except for golf course turf within the playing and practice areas, shall consist only of drought-tolerant native or non-invasive plant materials. Within buffers adjacent to native habitat, only native plant materials shall be installed. To the extent feasible, native grasses shall be utlilized in "rough" areas. b. Required habitat buffers, as provided in Special Condition #2, shall be identified. The applicant shall provide a list of proposed plants to be used in the buffer areas, and shall indicate the type and location of any proposed barriers, signage or other methods that will be utilized to separate golf course activities from protected native habitat, wetlands and/or riparian area. c. A planting schedule that indicates the planting plan will be implemented within 60 days of completion of construction. d. A written commitment by the applicant that all required plantings will be maintained in good growing condition, and whenever necessary, will be replaced with new plant materials to ensure continued compliance. e. A written commitment by the applicant that five years from the date of opening of the golf course, the applicant will submit for the review and written approval of the Executive Director, a landscap. Monitoring report, prepared by a licens Landscape Architect or qualified Resource Specialist, that certifies the on-site landscaping is in conformance with the landscape plan approved pursuant to this Special Condition. The monitoring report shall include photographic documentation of plant species and plant coverage. f. If the landscape monitpring report indicates the landscaping is not in conformance with or has failed to meet the performance standards specified in the landscaping plan approved pursuant to this permit, the applicant, or successors in interest, shall submit a revised or supplemental landscape plan for the review and approval of the Executive Director. The revised landscaping plan must be prepared by a licensed Landscape Architect or a qualified Resource Specialist and shall specify measures to remediate those portions of the original plan that have failed or are not in conformance with the original approved plan. The permittee shall undertake development in accordance with the approved landscaping plans. Any proposed changes to the approved landscaping plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 5. Erosion Control Plans. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and written approval, an erosion and sediment control plan for the proposed development, prepared by a qualified resource specialist. The plan shall be in substantial conformance with the following requirements: a. The plan shall delineate the areas to be disturbed by grading or construction activities and shall include any temporary access roads, staging areas and stockpile areas. The natural areas on the site shall be clearly delineated on the project site with fencing or survey flags. No grading or staging of equipment or supplies shall occur in the protected areas. b. The plan shall specify that if grading occurs during the rainy season (October 1 - March 31), the applicant undertake the following protective measures to assure offsite sedimentation is minimized to the maximum extent feasible: install or construct temporary sediment basins (including debris basins, desilting basins or silt traps), temporary drains and swales, sand bag barriers and/or silt fencing; stabilize any stockpiled fill with geofabric covers or other appropriate cover; install geotextiles or mats on all cut or fill slopes; and close and stabilize open trenches as soon as possible. These erosion and sediment control measures shall be required on the project site prior to or concurrent with the initial grading operations and maintained throughout the development process. All sediment should be retained on-site unless removed to an approved dumping location either outside the coastal zone or to a site within the coastal zone permitted to receive fill. c. The plan shall also include temporary erosion control measures should grading or site preparation cease for a period of more than 30 days, including but not limited to: stabilization of all stockpiled fill, access roads, disturbed soils and cut and fill slopes with geotextiles and/or mats, sand bag barriers, and/or silt fencing; and installation of temporary drains and swales and sediment basins. These temporary erosion control measures shall be monitored and maintained until grading or construction operations resume. The permittee shall undertake development in accordance with the approved erosion control plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the plans shall occur without a Coastal Commission approved amendment to this coastal development permit _,iless the Executive Director determine., .nat no amendment is legally required. 6. Drainage and Polluted Runoff Control Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit for the review and approval of the Executive Director, final drainage and runoff control plans including supporting calculations. The plan shall be prepared by a licensed engineer and shall incorporate structural and non-structural Best Management Practices (BMPs) designed to reduce the pollutant load of runoff to the maximum extent feasible, and reduce or eliminate any potential increases in the volume or velocity of runoff leaving the site. In addition to the specifications above, the plan shall be in substantial conformance with the following requirements: a. Selected BMPs (or suites of BMPs) shall be designed to treat, infiltrate or filter stormwater from each runoff event, up to and including the 85th percentile, 24-hour runoff event for volume-based BMPs, and/or the 85th percentile, 1-hour runoff event, with an appropriate safety factor, for flow-based BMPs. b. BMPs shall be selected to address the pollutants of concern for this development, including sediments, nutrients, pesticides, fertilizers, metals, petroleum hydrocarbons, trash and debris, and organic matter. c. Runoff shall be conveyed off site in a non-erosive manner. Energy dissipating measures shall be installed at the terminus of all outflow drains. d. Drainage from all roofs, parking areas, driveway area, and other impervious surfaces on the building pad shall be directed through vegetative or other media filter devices effective at removing and/or treating contaminants such as petroleum hydrocarbons, heavy metals, and other particulates. e. Opportunities for directing runoff into pervious areas located on-site for infiltration and/or percolation of rainfall through grassy swales or vegetative filter strips, shall be maximized. f. The plan shall include provisions for maintaining the drainage system, including structural BMPs, in a functional condition throughout the life of the approved development. The plan shall include an identification of the party or entitv(ies) responsible for maintaining the various drainage systems over its lifetime and shall include written acceptance by the responsible entitv(ies). Such maintenance shall include the following: (1) BMPs shall be inspected, cleaned and repaired when necessary prior to and during each rainy season, including conducting an annual inspection no later than September 30th each year and (2) should any of the project's surface or subsurface drainage/filtration structures or other BMPs fail or result in increased erosion, the applicant/landowner or successor-in-interest shall be responsible for any necessary repairs to the drainage/filtration system or BMPs and restoration of the eroded area. Should repairs or restoration become necessary, prior to the commencement of such repair or restoration work, the applicant shall submit a repair and restoration plan to the Executive Director to determine if an amendment to this coastal development permit or a new coastal development permit is legally required to authorize such work. g. Parking lots susceptible to stormwater should be swept with a vacuum regenerative sweeper on a regular basis. h. The golf course shall be equipped with flow reducers or shutoff valves triggered by a pressure drop so that broken pipes do not increase flow to the storm drains; i. The applicant shall K.ovide, for the review and approval of tt.- executive Director, plans for a self-contained cart washing facility that is equipped with a pre-treatment facility, and, if significant discharge is proposed, is connected to the sanitary sewer; j. All storm drain inlet structures must be equipped with trash racks, which shall be maintained by the applicant and/or authorized agent. k. Storm drains shall be stenciled with water quality warnings indicating that the drain flows to the lagoon. The permittee shall undertake development in accordance with the approved drainage and runoff control plans. Any proposed changes to the approved drainage and runoff control plans shall be reported to the Executive Director. No changes to the approved plans shall occur without an amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 7. Water Quality Monitoring Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit for the review and approval of the Executive Director, a water quality monitoring plan to address the quality of runoff prior to leaving the site or entering the onsite riparian area. The plan shall describe the methodology for monitoring, including specific threshold levels and sampling protocols, location of monitoring sites, schedule for monitoring, and reporting of results. The monitoring plan shall also include a contingency plan describing the actions to be taken if water quality impacts are discovered. In addition to specifications above, the plan shall be in substantial conformance with the following requirements: a. The plan shall require monitoring of the following pollutants: nitrates, nitrites, phosphates, dissolved oxygen, pH, total suspended solids (TSS), acute and chronic toxicity, and shall indicate the proposed sampling frequencies. Total suspended solids (TSS) shall be sampled for at the same frequency as the nutrients. b. The plan shall specify maximum threshold levels for each water quality parameter. c. The plan shall specify sampling protocols to be used for each water quality parameter. Measurements must be precise enough to evaluate compliance with applicable water quality threshold levels. d. Sampling for baseline data shall be conducted a minimum of three (3) times and during different level storms to acquire a representative sample of water quality conditions at the site. e. Results of monitoring shall be submitted to the Executive Director annually. f. If any water quality threshold levels referred to above in b) are exceeded, the applicant (or successor interest) shall notify the Executive Director of the exceedances and potential impacts and within 48 hours of receipt of the monitoring data. At the same time the applicant shall consult with the Executive Director regarding the need for additional sampling to evaluate the exceedance or corrective action to minimize water quality impacts. The applicant shall report to the Executive Director on the possible causes of the exceedance and proposed corrective actions within 30 days of the initial receipt of the data. g. If any water quality impacts persist after three years of detection, not withstanding any corrective actions taken by the applicant, all use of the chemicals that exceed water quality threshold levels shall cease. )(,£ 8. Turf and Pest Management Plan. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall submit to the Executive Director for review and approval, a detailed turf and pest management plan for the golf course portion of the development. The plan shall comply with the following requirements: a. Turf management practices shall utilize state-of-the-art environmental methods to minimize fertilizer use, water use and chemical pest control to the maximum extent feasible, to avoid impacts to native upland habitat, wetlands, riparian areas, and water quality. b. The plan shall favor non-chemical strategies over chemical strategies for managing onsite pests. Chemical strategies shall only be employed after all other strategies have been used and proven ineffective. This shall be demonstrated by providing written notice to the Executive Director of the non-chemical strategies that will be used, the reasons for their ineffectiveness, and the chemical strategies that are being considered. The permittee shall undertake development in accordance with the approved turf and pest management plan plans. Any proposed changes to the approved plans shall be reported to the Executive Director. No changes to the approved plans shall occur without an amendment to this coastal development permit unless the Executive Director determines that no amendment is legally required. 9. Public Golf Course Facility. The golf course, clubhouse, parking areas, driving range, conference center and pads for future industrial/golf related uses shall be operated as facilities open to the general public. Any proposed change in the level of public access and/or public use shall require an amendment to this permit. Signage shall be provided indicating that the onsite facilities as provided above are open to the public. 10. Open Space and Conservation Easement. A. No development, as defined in Section 30106 of the Coastal Act, shall occur in those areas indicated as Preservation Areas in Exhibit 7 (City Golf Course, Revised Figure 8 of the Carlsbad HMP, CAR LCPA 1-03B), except for temporary impacts associated with construction of the two approved golf cart path crossings, consistent with Special Condition #3, and onsite habitat restoration/revegetation activities as part of an approved coastal sage scrub mitigation plan, consistent with Special Condition #2. B. PRIOR TO ISSUANCE OF THE COASTAL DEVELOPMENT PERMIT, the applicant shall execute and record a document in a form and content acceptable to the Executive Director, irrevocably offering to dedicate to a the California Department of Fish and Game and the U.S. Fish and Wildlife Services, or their successor agencies, an open space and conservation easement over all onsite habitat preservation areas, and all mitigation areas (onsite and/or offsite) that will be utilized to address onsite impacts to habitat. The recorded document shall include legal descriptions of both the applicant's entire parcel and the easement area(s). The recorded document shall also reflect that development in the easement area(s) is restricted as set forth in this permit condition. C. The offer to dedicate shall be recorded free of prior liens and encumbrances which the Executive Director determines may affect the interest being conveyed. The offer shall run with the land in favor of the People of the State of California, binding all successors and assignees, and shall be irrevocable for a period of 21 years, such period running from the date of recording. 11. Protection of the Coastal California Gnatcatcher. To prevent breeding/nesting season impacts to the coastal California gnatcatcher (Polioptila californica californica), the permittee shall not undertake any clearing or grading activities on the golf course site between March 1 and August 15, unless approved in writing by the U.S. Fish and Wildlife Service and the California Department of Fish and Game. Herbicide, pesticide and/or fertilizer applications shall occur outside of a 100-foot exclusion zone to avoid drift towards nesting areas. A worker education program shall be implemented to ensure that all golf course construction and maintenance workers know the location of all gnatcatcher nests and are aware of the above-described protection measures. During the non-breeding season (August 16 through February 28), if construction activities will produce noise levels greater than 60 db, gnatcatcher-occupied habitats within the habitat preserve areas shall be shielded from the sight and sound of such activities taking place within 50 feet of the occupied habitat, using the following technique. During construction, the gnatcatcher habitat will be shielded from sight and sound by 8-foot high, solid 1-inch thick barriers. A biological monitor must be onsite daily to ensure that the construction activities are having no negative impact on gnatcatchers. The permittee shall staff a qualified monitoring biologist on-site during all CSS clearing and any other project-related work adjacent to CSS to be avoided. The biologist must be acknowledgeable of gnatcatcher biology and ecology. The permittee shall ensure that prior to and during the clearing of coastal sage scrub and/or any other suitable gnatcatcher habitats outside the gnatcatcher breeding season, the biologist shall locate any individual gnatcatchers on-site and direct clearing to begin in an area away from birds. In addition, the biologist shall walk ahead of clearing equipment to flush birds towards areas of habitat that will be avoided and/or which are located within the permanent preserve areas. 12. Open Space Restriction. A. No development, as defined in Section 30106 of the Coastal Act, shall occur in habitat buffer areas as required in Special Conditions #2 and 4, and as identified in the final landscape plans, and as described and depicted in an Exhibit attached to the Notice of Intent to Issue Permit (NOI) that the Executive Director issues for this permit, except for 1. approved landscaping activities and plantings and/or restoration and revegetation of native habitat according to the final coastal sage scrub mitigation plan; and B. PRIOR TO ISSUANCE BY THE EXECUTIVE DIRECTOR OF THE NOI FOR THIS PERMIT, the applicant shall submit for the review and approval of the Executive Director, and upon such approval, for attachment as an Exhibit to the NOI, a formal legal description and graphic depiction of the portion of the subject property affected by this condition, as generally described above and shown on Exhibit 7 attached to this staff report. C. PRIOR TO ANY CONVEYANCE OF THE PROPERTY THAT IS THE SUBJECT OF THIS COASTAL DEVELOPMENT PERMIT, the applicant shall execute and record a deed restriction, in a form and content acceptable to the Executive Director: (1) indicating that, pursuant to this permit, the California Coastal Commission has authorized development on the subject property, subject to terms and conditions that restrict the use and enjoyment of that property (hereinafter referred to as the "Standard and Special Conditions); and (2) imposing all Standard and Special Conditions of this permit as covenants, conditions and restrictions on the use and enjoyment of the Property. The restriction shall include a legal description of the applicant's entire parcel or parcels. It shall also indicate that, in the event of an extinguishment or termination of the dt. /restriction for any reason, the Stano. j and Special Conditions of this permit shall continue to restrict the use and enjoyment of the subject property so long as either this permit or the development it authorizes - or any part, modification or amendment thereof - remains in existence on or with respect to the subject property. 13. Any future revisions to the golf course layout and/or design which may be necessary to address golf course operations or any other reason shall require an amendment to this permit. Any such revisions to the golf course shall occur within the approved developable area in the least environmentally damaging manner that is most protective of the sensitive resources within the habitat preserve. No impacts to resources within the preserve shall be permitted. 14. Technical Advisory Panel. An independent technical advisory panel of environmental and agency representatives shall be provided the opportunity to review and comment on the management plans and ongoing monitoring reports. This will allow for meaningful input by all parties interested in the water quality in the Agua Hedionda Lagoon, and will assist the Coastal Commission staff and the City in effectively assuring the environmental quality of the golf course. All review and comments will be requested to be submitted within 45 days of receipt of draft plans. The Executive Director of the California Coastal Commission shall have final authority over the determination of condition compliance, unless it is determined that the item should be referred to the Commission. A-6-CII-00-087p CITY OF CARLSBAD PLANNING DEPARTMENT 1635 Faraday Avenue Carlsbad CA 92008 ENDANGERED SPECIES ACT INCIDENTAL TAKE PERMIT 1. Permit Number HMP 04-01 2. Name of Permittee City of Carlsbad, Recreation Department 3. Name of Project Carlsbad Municipal Golf Course 4. Contact Name and Phone Number John Cahill 602-2726 5. Location Where Authorized Activity May Be Conducted City owned site located generally north or Palomar Airport Road, south of Faraday Avenue, east of Hidden Valley Road, and west of McClellan-Palomar Airport. 6. Other Related Entitlements CUP 97-07 7. Conditions of Permit • The applicant shall comply with all conditions of approval and mitigation measures contained in CUP 97-07, EIR 97-01, and Coastal Development Permit A-6-CII-00-87 issued by the Coastal Commission. • The applicant shall comply with all applicable provisions of the approved Habitat Management Plan. See attached Findings. Recommended for approval 8. Signature of Planning Director Date: EXHIBIT E-5 PLANNING DIRECTC BINDINGS FOR ISSUANCE OF INCL .NTAL TAKE PERMIT These Findings accompany Carlsbad HMP Permit No. 04-01. In issuing the permit, the Planning Director finds as follows: 1. That the Carlsbad Municipal Golf Course has received all necessary permits, entitlements and approvals from the City of Carlsbad, the California Coastal Commission, and all other agencies having jurisdiction. 2. That the Carlsbad Municipal Golf Course is shown as a Proposed Hardline Project in the final approved Habitat Management Plan as Figure 8 Revised. A Grading Permit for the project will be issued which conforms to the areas of impact and preservation as shown in Figure 8. 3. That authorization to take species of concern is subject to continuous compliance with all provisions of the Habitat Management Plan for Natural Communities in the City of Carlsbad (HMP), the Citywide Incidental Take Permit issued for the HMP, the Implementing Agreement, the Terms and Conditions of the Incidental Take Permit, and the Biological Opinion. 4. That authorization to take species of concern is subject to continuous compliance with all mitigation measures as stated in EIR 97-01 and all conditions of approval of Coastal Development Permit A-6-CII-00-87, including but not limited to onsite revegetation of coastal sage scrub and Southern Maritime Chaparral, offsite acquisition in the County Gnatcatcher Core Area, recordation of conservation easements over all conserved areas, seasonal grading restrictions, and management and monitoring in perpetuity by a qualified conservation entity. 5. That authorization to take species of concern is subject to continuous compliance with the provisions of Volumes I, II and III of the Multiple Habitat Conservation Program and the Final Environmental Impact Statement/Environmental Impact Report for Threatened and Endangered Species Due to Urban Growth within the Multiple Habitat Conservation Program Planning Area (SCH No. 93121073). 6. That all impacts to habitat and all take of species will be incidental to otherwise lawful activities related to construction and operation of a public golf course. 7. That the project design as approved by the City of Carlsbad and the California Coastal Commission has avoided and minimized impacts to wildlife habitat and species of concern to the maximum extent practicable. 8. That adequate funding has been provided to address changed circumstances and adaptive management needs that may be reasonably anticipated in the future, consistent with the HMP Implementing Agreement. 9. That the incidental take of species of concern as a result of the project will not appreciably reduce the likelihood of survival and recovery of the species in the wild due to compliance with all of the above stated requirements, as well as ongoing monitoring and reporting to the wildlife agencies and the public. APPROVED Planning Director ^ Date ua/UB/ZUU4 UB:48 KAA 7BU4315902 US FISH AND WILDLIFE 1^002 «"" J, •# ' ' ' EXHIBIT 4 United States Department of the Interior FISH AND WILDLIFE SERVICE Ecological Services Carlsbad Fish and Wildlife Office 6010 Hidden Valley Road Carlsbad, California 92009 In Reply Refer To: FWS-SDG-1188.1 <j£p 0 g 2004 Mr. Michael Holzmiller Carlsbad Planning Department 1635 Faraday Avenue Carlsbad, California 92008 Re: Mitigation for the City of Carlsbad's Proposed Municipal Golf Course Dear Mr. Holzmiller: The U.S. Fish and Wildlife Service (Service) has reviewed the information provided by the City of Carlsbad (City) regarding the purchase of 51.6 acres of coastal California gnatcatcher (Polioptila californica californica; gnatcatcher) habitat to mitigate for impacts from the City's proposed municipal golf course. This information included an exhibit which identified the exact location of the 51.6 acres and the conservation easement deed. Within the Multiple Habitat Conservation Plan (MHCP) and the City's Subarea Plan (HMP), the City has an obligation to effectuate the conservation and conveyance of 307.6 acres of land within the MHCP core gnatcatcher area. One means by which the City proposes to help meet this obligation is to acquire 51.6 acres of habitat occupied by five pairs of gnatcatchers to partially mitigate for impacts that would occur from the development of the municipal golf course. It is our understanding that this condition is met by the purchase of 51.6 acres of mitigation land as identified on the enclosed exhibit for the following reasons: 1) the land is located within the area the Service considers as contributing to the gnatcatcher core area within the MHCP; 2) a conservation easement will be placed over all 51.6 acres with the California Department of Fish and Game as third party beneficiary, 3) records provided by the City indicate that at least five pairs of gnatcatchers occupy the 51.6 acres that will be preserved; and 4) the lands will be managed by the Center for Natural Lands Management with a sufficient endowment to ensure the management of land to provide gnatcatcher habitat in perpetuity. In addition, the Service accepts the City's proposal to acquire the designated lands and upon acquisition and implementation of the conditions outlined above, the City may apply the 51.6 acres towards the land acquisition obligation under the MHCP and HMP. If for any reason the City does not proceed with development of the municipal golf course, the City shall have the right to apply the 51.6 acres to mitigate for another public project that would require mitigation for impacts to coastal sage scrub. If the City desires to apply the 51.6 acres towards mitigation credit for private projects, the Service will work with the City to establish an appropriate mitigation bank to facilitate such a transfer. TAKE PRIDE US M.5H AWl* WILDLIFE lg]003 Mr. Holzmiller (FWS-SDG-1181.1) The Service is pleased to know the City of Carlsbad is moving forward on such obligations pre- permit issuance. If you have any questions, please contact Lee Ann Carranza of the Service at (760) 431-9440 extension 292. Sincerely, Therese O'Rourke Assistant Field Supervisor U.S. Fish and Wildlife Service Enclosure f 4. SDGJ San Diego Gas & Electric 8335 Century Park'Court San Diego, CA 92123 A (^ Sempra Energy utility" June 23, 2005 City of Carlsbad Recreational Department 1200 Carlsbad Village Drive. Carlsbad, CA 92123 Attn: John Cahill, Municipal Projects Manager LETTER OF PERMISSION FOR GRADING AND CONSTRUCTION OF IMPROVEMENTS Dear Mr. Cahill: San Diego Gas & Electric Company (SDG&E) is the owner of a 100', 150', & 200' Electric Transmission Easement and a 20' Gas Transmission Easement located in and around the following legal description: THOSE PORTIONS OF SECTION 35, TOWNSHIP 12 SOUTH, RANGE 4 WEST AND SECTION 2, TOWNSHIP 13 SOUTH, RANGE 4 WEST, SAN BERNARDINO MERIDIAN, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED IN EXHIBIT "A" OF QUIT CLAIM DEED RECORDED MARCH 28, 1989 AS FILE NO. 89-157040 OF O.R. (A.P.N. 212-010-05, 07, 11, 12, 13, & 15; A.P.N. 212-041-12 TO 36; A.P.N. 212-082-01 TO 10; A.P.N. 212-081-01 TO 21) (SDG&E Right of Way No. 31580, Recorded April 15, 1954 in Book 5205, Page 419 of O.R.; SDG&E R/W No. 31581, Recorded May 6, 1954 in Book 5230, Page 131 of O.R.; SDG&E R/W No 45062, Recorded August 14, 1957 in Book 6706, Page 514 of O.R.; SDG&E R/W No. 45064 Recorded September 27, 1957 in Book 6767, Page 25 of O.R.; SDG&E R/W No. 31564, Recorded April 15, 1954 in Book 5205, Page 416 of O.R.; SDG&E R/W No. 31565, Recorded May 3, 1954 in Book 5525, Page 397 of O.R.; SDG&E R/W No. 45474, Recorded May 11, 1961 as Doc. No. 81362 of O.R.; SDG&E R/W No. 45476, Recorded May 15, 1961 as Doc. No. 82981 of O.R.). We have reviewed and approved the Grading & Improvement Plans for Carlsbad Municipal Golf Course - Phase II, accepted April 4, 2005, which shows the proposed grading and improvements on the property subject to our easement, attached hereto as Exhibit 'A' (27 sheets). Carlsbad GolfCourse.doc EXHIBIT E-6 Permission is hereby granted to City of Carlsbad (Permittee), to grade and construct improvements as shown on said plan, subject to the following conditions: 1. Expiration: This "Permission to Grade" shall expire if grading does not commence within 6 months from the date of this letter, or work is not diligently pursued to completion. 2. Submittals: 2.1. Permittee agrees to supply SDG&E with 'as built' grading, improvement, and profile plans to SDG&E specifications, if requested. 2.2. Permittee agrees to submit for review and approval, a blasting plan prior to blasting, if blasting is required. 3. Pre-Construction Meeting: SDG&E's Land Management Representative (LMR) must be invited with at least three (3) working days prior notice. 4. Grading: 4.1. At least twenty-four (24) hours notice must be given to SDG&E's LMR before start of work. Field changes to plans within said easement shall be approved in writing by SDG&E LMR. 4.2. Permittee is responsible to call DIG ALERT at 1-800-227-2600 for all underground mark-out locations 48 hours before digging. 4.3. SDG&E standby personnel are required when grading or ground penetration occurs within the gas transmission easement or within ten (10) feet of the gas line when in a franchise position. 4.4. No power-operated equipment shall be used within two (2) feet of any portion of the gas line, only hand digging is allowed and an SDG&E standby is required. 4.5. If any contact is made with the gas line or its coating, SDG&E must be notified immediately at 1-800-411-7343 and the area left exposed. 4.6. The gas easement shall be staked with ribboned lath at fifty-foot (50') increments and the staking shall be maintained at all times during grading and construction of the project. Carlsbad GolfCourse.doc 4.7. SDG&E reserves the right to inspect and perform quality control work during construction. SDG&E standby personnel are authorized to stop work around the gas line if all required precautions are not strictly adhered to. 4.8. Equipment crossings of the gas line must be designed to eliminate any possible damage to the gas line and approved by SDG&E gas transmission engineering. 4.9. Clearance of (35) feet minimum between the SDG&E electric transmission wires and the natural ground shall be maintained on any given day, noting line sags vary depending on ambient temperature and line current. All requirements, including but not limited to OSHA, CAL-OSHA, ANSI, NIOSH, and NEC for clearances when working around energized electrical facilities must be maintained. 4.10. No grading shall be allowed within ten (10) feet of a single wood pole structure or anchor, or fifteen (15) feet from any multi-wood pole structure (H-frame, 3-pole, etc), or twenty (20) feet from any electric steel lattice towers or thirty (30) feet of steel poles. All measurements are taken from the face of pole or face of foundation. 5. Special Conditions: 5.1. All new SDG&E access roads shall be surfaced with an all-weather material. All access driveways shall have a 30' wide commercial grade apron. Roads shall be compacted to 90% relative maximum compaction. SDG&E requires that Permittee submit a complete compaction report upon completion of all areas of grading within the SDG&E gas transmission easement. Appropriate plans must be made to protect the affected areas from storm water. 5.2. All trees planted within SDG&E's easement, shall be no more than 15.00 feet in height at maturity and shall not restrict SDG&E's access to any of its facilities. 5.3. Irrigation systems shall not spray directly onto any electric facilty, access road or maintenance pad. 6. Erosion Control: 6.1. All disturbed and created slopes, within the SDG&E electric transmission easement, shall be hydro-seeded or planted by Permittee with an SDG&E approved mix. 6.2. All drainage shall be designed to prevent erosion of SDG&E easement and access roads. 7. Storage: 7.1. This permission to grade letter does not permit storage of equipment, materials, dirt or debris on the easement or SDG&E fee owned property. Carlsbad GolfCourse.doc 8. Access: 8.1. Access to all SDG&E facilities shall be maintained at all times. All costs associated with restoration of access and all associated damages shall be borne by Permittee. 8.2. All gates shall provide for SDG&E access by padlock, lock-box or kieyed bypass both during and upon completion of construction. Location and construction of gates to be approved by SDG&E LMR. 9. Outstanding Agreements: Permittee agrees to pay for, sign and/or have signed all Consent Agreements, Consent to Use of Land Agreements and/or Joint Use Agreements between SDG&E and owner or public agencies who encroach upon the SDG&E easements. Said agreements shall be subject to the revocability clause as stated in the California Public Utility's Commission's General Order 69-C as shown on website http://www.cpuc.ca.gov/PUBLISHED/Graphics/645.PDF. 10. Indemnification: 10.1. Permittee agrees to assume all risk of loss, damage to property and/or injury and/or death to persons, and to indemnify and hold SDG&E harmless from any and all liability in any way arising from the proposed grading or construction of improvements. 10.2. SDG&E shall not be responsible in any manner for any maintenance or repair of the proposed grading or improvements. This includes, but is not limited to, drainage and/or erosion problems or damage caused to improvements that were not constructed to take the weight or activities of vehicles and equipment owned by or working on behalf of SDG&E. 11. Terms and Conditions: The terms and conditions of this approval shall benefit and bind Permittee its successors, assigns, agents or contractors. 12. Posting: This permission letter shall be posted on the job site at all times. Carlsbad GoIfCourse.doc Should you have any questions or require additional assistance, please call me at (858) 654-1201. APPROVED BY: San Diego Gas & Electric Company Michael J. Willi Land Management Representative I ACCEPT THE AFOREMENTIONED CONDITIONS: I hereby have the authority to sign, City of Carlsbai Print Name: Title: Date: Carlsbad GolfCourse.doc Carlsbad Golf Course Management & Carlsbad Golf Course Management & Consulting AgreementConsulting AgreementBetweenBetweenCarlsbad Public Financing AuthorityCarlsbad Public Financing Authority&&Kemper Sports Management, Inc.Kemper Sports Management, Inc. OverviewOverview••Golf Course Construction UpdateGolf Course Construction Update••Consulting & GrowConsulting & Grow--In AgreementIn Agreement••Management AgreementManagement Agreement 1818--Hole Golf CourseHole Golf Course Clubhouse under ConstructionClubhouse under Construction Maintenance Building under Maintenance Building under ConstructionConstruction Hole #7 WaterfallHole #7 Waterfall Irrigation Installation Irrigation Installation ––Hole #13Hole #13 HistoryHistory••April 2000April 2000City of Carlsbad joined with City of Carlsbad joined with Carlsbad Municipal Water District BoardCarlsbad Municipal Water District BoardFormedFormed““Carlsbad Public Financing AuthorityCarlsbad Public Financing Authority””((““AuthorityAuthority””)) HistoryHistory••December 2003December 2003¾¾City Council authorized development City Council authorized development of Golf Courseof Golf Course••October 2004October 2004¾¾Committee was formed to select an Committee was formed to select an experienced firm to operate, manage experienced firm to operate, manage & maintain course & clubhouse& maintain course & clubhouse2003 NextNext……••60 Request for Qualifications were 60 Request for Qualifications were sent outsent out••Three (3) qualified operators were Three (3) qualified operators were selectedselected¾¾InterviewsInterviews¾¾Site tours of golf coursesSite tours of golf courses¾¾Client references were contactedClient references were contacted¾¾Municipal & Private operators were Municipal & Private operators were contactedcontacted Kemper Sports Management, Inc.Kemper Sports Management, Inc.(KSM)(KSM)Management AgreementConsulting & Grow-in Services Agreement Consulting & GrowConsulting & Grow--In AgreementIn Agreement••KSM will consult with Authority on KSM will consult with Authority on all aspects of the development and all aspects of the development and prepre--opening activitiesopening activities¾¾Make recommendations regarding Make recommendations regarding the construction of: the construction of: ••Golf CourseGolf Course••ClubhouseClubhouse Consulting & GrowConsulting & Grow--In AgreementIn Agreement••Development of preDevelopment of pre--opening opening budgetbudget••Establishing Green FeesEstablishing Green Fees••Hiring & Training Staff Hiring & Training Staff ••PrePre--Opening Operations to prepare Opening Operations to prepare to Grand Openingto Grand Opening Consulting & GrowConsulting & Grow--In AgreementIn Agreement(cont.)(cont.)••Develop Business PlanDevelop Business Plan¾¾MarketingMarketing¾¾Naming of CourseNaming of Course¾¾Promotions & SalesPromotions & Sales¾¾Public Relations ConceptsPublic Relations Concepts Green FeesGreen Fees••To be determined based on marketTo be determined based on market••11ststpriority:priority:¾¾To pay operating costs / debt serviceTo pay operating costs / debt service••Resident Green Fee DiscountResident Green Fee Discount Consulting & GrowConsulting & Grow--In Agreement In Agreement Term & FeeTerm & Fee••Date of Execution of Contract until Date of Execution of Contract until day Course is openday Course is open¾¾Projected opening:Projected opening:July 2007July 2007¾¾Consulting Fee:Consulting Fee:••$10K per month + direct expenses$10K per month + direct expenses Management AgreementManagement Agreement••KSM will manage and operate dayKSM will manage and operate day--toto--day operations:day operations:¾¾1818--Hole Golf CourseHole Golf Course¾¾Driving RangeDriving Range¾¾ClubhouseClubhouse¾¾Pro ShopPro Shop¾¾Maintenance FacilityMaintenance Facility Management AgreementManagement Agreement••KSMKSM’’ssresponsibilities:responsibilities:¾¾Course maintenance & reservationsCourse maintenance & reservations¾¾Golf instruction & tournamentsGolf instruction & tournaments¾¾Hire, train, and supervise all Hire, train, and supervise all employeesemployees¾¾Manage all marketing & promotional Manage all marketing & promotional activitiesactivities Management AgreementManagement Agreement••KSMKSM’’ssresponsibilitiesresponsibilities(cont.):(cont.):¾¾Make recommendations regarding Make recommendations regarding green fee changesgreen fee changes¾¾Acquire all goods & servicesAcquire all goods & services¾¾Acquire all necessary permits / Acquire all necessary permits / licenses for food preparation & licenses for food preparation & alcoholic beveragesalcoholic beverages¾¾Maintain Open Space & / or Habitat Maintain Open Space & / or Habitat Preserve areasPreserve areas Management Agreement TermManagement Agreement Term••5 Years w/one additional five (5) year 5 Years w/one additional five (5) year extension period upon mutual extension period upon mutual agreement of both partiesagreement of both parties••““AuthorityAuthority””may terminate may terminate Agreement at any time after three (3) Agreement at any time after three (3) years without cause as required by years without cause as required by Revenue Taxation CodeRevenue Taxation Code Management Agreement FeesManagement Agreement Fees••Fixed ComponentFixed Component••Incentive ComponentIncentive Component¾¾Must be based on gross revenueMust be based on gross revenue Fixed Management FeeFixed Management Fee••$150,000 / Yr$150,000 / Yr••Plus the Costs of Salaries & Plus the Costs of Salaries & Benefits:Benefits:¾¾General ManagerGeneral Manager¾¾Golf Course SuperintendentGolf Course Superintendent¾¾Director of GolfDirector of Golf¾¾ControllerController Incentive Management FeeIncentive Management Fee••5% of Gross Revenues in5% of Gross Revenues inexcess of $4.5 millionexcess of $4.5 million??$150,000 Cap$150,000 Cap Management FeeManagement Fee••Example:Example:Gross RevenueGross Revenue$6,000,000$6,000,000Fixed FeeFixed Fee$150,000$150,000Incentive Fee Incentive Fee (5% of $1.5 mil) (5% of $1.5 mil) $75,000$75,000$225,000$225,000*Plus salaries & benefits of key employees*Plus salaries & benefits of key employees Recommended ActionRecommended Action••““AuthorityAuthority””approve Carlsbad Golf approve Carlsbad Golf Course Consulting & GrowCourse Consulting & Grow--In In Agreement with Kemper Sports Agreement with Kemper Sports Management, Inc.Management, Inc.••““AuthorityAuthority””approve Carlsbad Golf approve Carlsbad Golf Course Management Agreement with Course Management Agreement with Kemper Sports Management, Inc.Kemper Sports Management, Inc. Kemper Sports Management, Inc.Kemper Sports Management, Inc.••Toby Davis, Toby Davis, Senior Vice President, Business Senior Vice President, Business DevelopmentDevelopment••Mark Mark HoesingHoesing,,Regional Director of Operations West Regional Director of Operations West Coast, Texas, KansasCoast, Texas, Kansas Special Thanks toSpecial Thanks toIrvIrvRostonRostonGolf Course Steering Golf Course Steering Committee ChairCommittee Chair Questions ?Questions ?