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CITY COUNCIL AGENDA ITEM NO. 25

Meeting Date:  May 23, 2000

Subject/Title:     Pre-Development Agreement with John Muir/Mt. Diablo Hospital

Submitted by:    Dennis Beougher, City Attorney

Approved by:     Jon Elam, City Manager

RECOMMENDATION        

Authorize the City Manager to execute the attached Pre-Development Agreement and Outline Development Process For the John Muir/Mt. Diablo Health System.

PREVIOUS ACTION

John Muir/ Mt. Diablo Health System (“John Muir”) signed an option agreement to purchase 58 acres at Balfour Road and Concord Avenue from Sciabica Family Trust.   John Muir optioned the property to develop  a medical campus and other land uses on the subject property.

BACKGROUND

In order for a health care provider to undertake the creation of a new medical campus where none exists now, John Muir  must make substantial capital commitment.   As a non-profit community based hospital,  John Muir has limited capital reserves and a new medical campus is  a major and risky venture.     

                  AGREEMENT AND OUTLINE DEVELOPMENT PROCESS FOR

                              THE JOHN MUIR/MT. DIABLO HEALTH SYSTEM

                                                      BRENTWOOD PROJECT

                                      DEVELOPMENT AGREEMENT NO. _____

THIS AGREEMENT AND OUTLINE OF DEVELOPMENT PROCESS FOR THE JOHN MUIR/MT. DIABLO HEALTH SYSTEM BRENTWOOD PROJECT (hereinafter "Agreement") is made and entered in the City of Brentwood on the ____ day of ______________, 2000, by and between the CITY OF BRENTWOOD, a municipal corporation (hereinafter referred to as "CITY"), and JOHN MUIR/MT. DIABLO HEALTH SYSTEM, a California not for profit corporation (hereinafter "JOHN MUIR"), pursuant to the California development agreement statutes.

                                                                     RECITALS

1.                  JOHN MUIR has entered into an option agreement with Sciabica Family Trust to acquire its real property located at Balfour Road and Concord Avenue in Brentwood, California, comprised of approximately fifty-eight (58) acres.  A legal description of the real property under option is attached hereto as Exhibit A, which exhibit is fully incorporated in this Agreement by this reference.  The real property under option is hereinafter referred to as the "Sciabica Property."  The location of the Sciabica Property is depicted on the Sciabica Property Location Map prepared by Carlson, Barbee & Gibson, dated _________________, 2000 attached hereto as Exhibit B, which exhibit is fully incorporated in this Agreement by this reference.

2.                  JOHN MUIR has optioned the Sciabica Property for the purpose of developing a medical campus with the intended purpose to improve the delivery of quality health care services to and make their delivery more convenient for the citizens of Brentwood and East Contra Costa County.  In order to undertake the planning and development processes for such a medical campus on the Sciabica Property, JOHN MUIR must commit substantial capital resources to the project.  As a not-for-profit entity dedicated to providing for the health care service needs of the public and not being a developer, JOHN MUIR desires some reasonable assurances and understandings from the CITY as it embarks on such planning and development processes and thereby reasonably reduce its economic risks in undertaking such processes.  Any reasonable reduction in such economic risks improves the opportunities for JOHN MUIR to efficiently and economically deliver quality health care services to the community.

3.                  In light of the potential benefits to its citizens and to residents generally in East Contra Costa County, the CITY is prepared to provide for such reasonable assurances and understandings through this Agreement.  In the public interest, the CITY desires to take reasonable steps to encourage JOHN MUIR to undertake and complete the planning and development process as necessary to allow JOHN MUIR, over time, to build and operate a medical campus on the Sciabica Property.  In that regard, the CITY recognizes that JOHN MUIR may be required to develop its medical campus incrementally, so as to avoid unreasonable economic risks and to reasonably respond to market health service needs.  JOHN MUIR and the CITY acknowledge that, in light of the need for such flexibility in the use and development of the Sciabica Property as a medical campus, the application of the Planned Development zoning regulations under Article VII of Title 17 of the Brentwood Municipal Code to the Sciabica Property would be advantageous here. 

4.                  California Government Code Sections 65864 through 65869.5 were enacted to authorize local agencies to enter into binding development agreements with persons or entities having legal equitable interests in real property for the development of such property.  Purposes of the statutes include to make maximum effective utilization of resources at the least economic cost to the public through the reasonable avoidance of uncertainty in the approval of development projects, which uncertainty may result in a waste of resources and an escalation of costs of development, a discouragement of investment and a lack of commitment to comprehensive planning.  It is the intent of the CITY and JOHN MUIR to establish certain development rights for JOHN MUIR on the Sciabica Property, so that the JOHN MUIR may develop the Sciabica Property consistent with the City of Brentwood General Plan and Brentwood Municipal Code, including its zoning ordinances, in effect on the effective date of this Agreement or as subsequently amended and, with the agreement of JOHN MUIR, made applicable to the Sciabica Property.

5.                  JOHN MUIR’s application for rezoning and for amendment to the General Plan will be consistent with the John Muir Site Plan dated ______________, 2000, attached hereto as Exhibit C, which exhibit is incorporated in this Agreement by this reference.  Specifically, JOHN MUIR intends to submit an application to amend the Brentwood General Plan to provide for a Special Planning Area land use designation and description for the Sciabica Property that is consistent with the John Muir Site Plan.  The CITY is currently processing an update of its General Plan.  The CITY intends to update its General Plan in a manner that is consistent with the General Plan amendment and rezoning applications of JOHN MUIR to be concurrently processed with that General Plan update. 

                                                                       TERMS

NOW, THEREFORE, in further consideration of the above Recitals, which are incorporated in the terms of this Agreement by this reference as though fully set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the CITY and JOHN MUIR agree as follows:

1.                  Term of Agreement.  For purposes of this Agreement, the effective date shall mean the effective date of the ordinance approving this Agreement (hereinafter "Effective Date").  The term of this Agreement shall commence on the Effective Date and shall continue, unless sooner terminated pursuant to the terms hereof, for thirty (30) years.  Provided however, if this Agreement is assigned by JOHN MUIR to a person or entity not affiliated with JOHN MUIR as to all or a portion of the property, as more specifically described hereinbelow in Section 5, then the term of this Agreement as to said assignee shall be limited to ten (10) years from the date of written notice of said assignment by JOHN MUIR to the CITY.  Affiliation with JOHN MUIR shall mean a person, corporation or other legal entity that is a subsidiary, partner, or other legal entity in which JOHN MUIR is a member or has a substantive legal interest (hereinafter "John Muir Affiliated Successor-In-Interest").  JOHN MUIR acknowledges that the term of this Agreement as applied to JOHN MUIR and to any John Muir Affiliated Successor-In-Interest is longer than usual in order to accommodate and secure the necessarily long-term development and operation of a medical campus on the Sciabica Property

2.                  Applicable Brentwood Rules, Regulations and Official Policies.  The Brentwood rules, regulations and official policies covering land uses on the Sciabica Property shall be those in effect on the Effective Date of this Agreement, except as otherwise approved by the CITY and agreed to by JOHN MUIR through written notice to the CITY.  Such Brentwood rules, regulations, ordinances and official policies include the current Brentwood General Plan and the current Brentwood Municipal Ordinance with its zoning ordinances.  However, any new Brentwood rules, regulations, ordinances and official policies shall apply to the Sciabica Property, provided they do not in any way conflict with or restrict JOHN MUIR’s ability to develop the Sciabica Property to the extent allowed in the current Brentwood General Plan and Brentwood Municipal Code.  Further provided, the Sciabica Property shall be subject to the Uniform Codes, e.g., California Building Code Fire Code, Mechanical Code and Plumbing Code, as revised or adopted during the term of this Agreement and to the extent otherwise applicable under State law to the approved uses on the Sciabica Property.

3.                  Permitted Uses and Intensity of Uses.     This Agreement does not require the CITY to approve the John  Muir Site Plan or the uses or intensity of uses provided therein.  However, by this Agreement the CITY acknowledges that CITY officials have had the opportunity to review the John Muir Site Plan and the CITY encourages JOHN MUIR to submit development applications, including an amendment to the General Plan to establish a Special Planning Area land use designation and description for the Sciabica Property and a rezoning thereof to Planned Development consistent with the John Muir Site Plan. Apart from the vesting provided hereinabove in Section 2, JOHN MUIR agrees that this Agreement shall not vest or protect any permitted use or the density of such permitted use, (i.e. the "intensity of use") as described in the John  Muir Site Plan, Exhibit C to this Agreement, unless and until application for such use or density is approved by the CITY.  Absent an amendment to this Agreement, the John  Muir Site Plan provides limits accepted by JOHN MUIR on the height of buildings on the Sciabica Property, a maximum floor area ratio and other limits on the intensity of uses.

4.                  Planning Process for John Muir Project.  

a.         Following approval of this Agreement by the Brentwood City Council, JOHN MUIR  shall promptly file its application to amend the Brentwood General Plan to provide a Special Planning Area land use designation and description for the Sciabica Property.  JOHN MUIR shall concurrently file and the CITY shall concurrently process JOHN MUIR’s application to rezone the Sciabica Property to Planned Development and any related initial subdivision thereof.  The applications shall provide for development of a medical campus on a majority of the Sciabica Property and for medium density residential use on the remainder of the Sciabica Property consistent with the John Muir Site Plan.  The applications shall provide for alternative uses to a medical campus on the Sciabica Property, in order to address the future circumstance that JOHN MUIR may not be in a position to fully develop the Sciabica Property with a medical campus as contemplated in the John Muir Site Plan. 

b.         The CITY shall use its best efforts to expedite the planning and environmental review processes for such applications.  To that end, the CITY shall retain outside environmental, planning and other consultants to process the applications and prepare the necessary reports for Planning Commission and City Council consideration of the applications, under the direction of the Brentwood Community Development Director.  By this Agreement, JOHN MUIR obligates itself to be responsible to promptly pay for the reasonable costs of such consultants, in addition to other typical CITY fees and costs.  .  The CITY agrees to reasonably consider JOHN MUIR’s input on the selection of those consultants, in particular with respect to their ability to timely complete their tasks and their expertise and experience with these types of applications.  Any draft reports or documents submitted by the consultants to the CITY shall be concurrently provided to JOHN MUIR for review and comment.  As soon as reasonably possible after submittal by JOHN MUIR of its applications, the CITY shall formally select its outside consultants and provide JOHN MUIR with a timetable to complete the environmental, planning and development processes.  It is anticipated by the parties that such processes for an amendment to the General Plan to approve a Special Planning Area land use designation and description for the Sciabica Property and a Planned Development rezoning thereof, as well as an initial subdivision of the Sciabica Property,  should be completed before the end of this year.

5.                  Binding Effect of Agreement.   The burdens of this Agreement shall bind and its benefits shall inure to the CITY and JOHN MUIR and the successors-in-interest to JOHN MUIR in ownership of all or a portion of the Sciabica Property.

6.                  Assignment.   The rights and obligations of JOHN MUIR hereunder may be assigned or transferred in whole or in part to any person or persons, partnership, corporation or other legal entity who purchases all or a portion of JOHN MUIR’s right, title and interest in the Sciabica Property, effective on the date that JOHN MUIR provide notice of such assignment to the CITY pursuant to Section 7 hereinbelow.  Such notice to the CITY shall include the identity of any such assignee and the portion of the Sciabica Property purchased or acquired from JOHN MUIR.  Such notice shall also confirm whether the assignee is a John Muir Affiliated Successor-In-Interest as defined hereinabove in Section 1.

7.                  Notices.   All notices required or provided under this Agreement shall be in writing and delivered in person, sent by certified mail, postage prepaid, return receipt requested, or by overnight mail signed by the party receiving the notice (e.g., Federal Express) or by facsimile.  Notice shall be deemed effective upon actual receipt or upon refusal of delivery.  Notices shall be delivered or mailed to the other parties indicated below:

Notice to CITY:

City of Brentwood

Attn: City Manager

150 City Park Way

Brentwood, CA 94513

Fax: (925) 516-5441

Notice to JOHN MUIR:

John Muir/Mt. Diablo Health System

Attn:    President

1800 Treat Boulevard

Walnut Creek, CA 94596

Fax:     (925) 947-3225

             With a copy to:

Mark L. Armstrong, Esq.

Gagen, McCoy, McMahon & Armstrong

P. O. Box 218

Danville, CA 94526

Fax:     (925) 838-5985

The address or facsimile number of either party or counsel herein designated to receive notices may be changed by delivering, mailing or faxing notice of such new address or facsimile number to the other party in the manner specified for the giving of notice.

1.         Time is of the Essence.        Time is of the essence for this Agreement.  Each time frame specified herein for performance of any obligation or the accrual of any right forms a material part of the consideration for the execution of this Agreement. 

8.                  Covenant of Good Faith and Fair Dealing.  The parties agree that each of them shall at all times act in good faith in order to carry out the terms of this Agreement and shall do nothing contrary to avoid the spirit and intent of this Agreement.

9.                  Entire Agreement.     This Agreement, together with its Exhibits, constitutes the entire agreement between the CITY and JOHN MUIR with respect to the subject matter of this Agreement.  This Agreement is specifically intended by the parties to supersede all prior negotiations and agreements between them.

10.             Amendments. This Agreement may only be amended by a written instrument signed by the parties hereto or by their heirs, successors or assigns.

11.             Cancellation of This Agreement.     Except as otherwise permitted herein, this Agreement may be canceled in whole or in part only by the mutual consent of the parties or their successors-in-interest, in the manner set forth in California Government Code Sections 65865.1, 65867, 65867.5, and 65868. 

12.             Rules of Interpretation.        This Agreement and each of its provisions shall be deemed to be jointly prepared by the parties hereto, and no party shall claim the benefit of any rule of interpretation of this State, whether by statute or otherwise, which would cause ambiguities in this Agreement or any of its provisions to be interpreted against the party who drafted it or whose attorney drafted it.

13.             Enforcement. Unless amended or canceled in accordance with its terms, this Agreement is specifically enforceable by either party, notwithstanding a change in the Brentwood General Plan, the Brentwood Municipal Code or other Brentwood rules, regulations and official policies adopted by the CITY, which alter or amend the permitted uses of the land, density and intensity of use and reservation of land for public purposes (except for such  changes specially permitted herein). 

14.             Waiver of Breach; Notice of Alleged Breach.       The waiver by one party hereto of a breach of any term or provision of this Agreement by another party shall not be deemed a wavier of any subsequent breach of the same or other term or provision of this Agreement, with any subsequent breach by any party being independent of any other breach which may have occurred prior thereto.  In the event of any default or breach of any term or provision of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) days notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured.  During such thirty (30) days, the party charged shall not considered in default for purposes of termination or institution of legal proceedings.  After notice and expiration of the thirty (30) day period, the other party to this Agreement, at its option, may institute legal proceedings pursuant to this Agreement, or give notice of the intent to terminate this Agreement pursuant to California Government Code Section 65868 and regulations of the CITY implementing said section of the Government Code.  Following notice of intent to terminate, the matter shall be scheduled for consideration and review in the manner set forth in Government Code Sections 65865, 65867 and 65868, as well as the CITY’s regulations implementing such statutes.  Following consideration of the evidence presented before the City Council, the party alleging the default by the other party may give written notice of termination of this Agreement to the other party.

15.             Annual Review of Agreement.         The Brentwood Community Development Director  shall, at least every twelve (12) months during the term of this Agreement, review the extent of good faith substantial compliance by JOHN MUIR and the CITY with the terms and provisions of the Agreement.  Such periodic review of compliance by JOHN MUIR shall be limited in scope to compliance with the terms and provisions of this Agreement pursuant to California Government Code section 65865.1.  A finding by the CITY of good faith compliance by JOHN MUIR with the terms of this Agreement shall conclusively determine said issue up to and including the date of said review.  Provided however, any decision made by the Brentwood Community Development Director may be appealed consistent with the ordinary appeal provisions in the Brentwood Municipal Code.  The CITY shall deposit in the mail a copy of all staff reports and attachments, to the extent practical, at least ten (10) calendar days prior to any such periodic review.  JOHN MUIR shall be permitted an opportunity to be heard orally or in writing as to its performance under this Agreement.  If the CITY fails to timely initiate and complete such a review, then JOHN MUIR shall be conclusively deemed in good faith compliance with this Agreement during the preceding year.

16.             Hold Harmless Agreement; Cooperation in Defense.       JOHN MUIR agrees to, and shall hold the CITY, its elective and appointive boards, commissions, officers, agent and employees, harmless from any suits or actions at law or in equity, filed against the CITY by a third party as a result of the CITY being a party to this Agreement, including reasonable attorney’s fees and costs.  JOHN MUIR shall not be responsible for the costs of the City Attorney.  In the event of any legal actions or by a third party or other governmental entity or official challenging the validity of any provisions of this Agreement or any subsequent development approvals and related determinations, the parties hereby agree to cooperate in defending said action.

17.             Severability.     The unenforceability, invalidity or illegality of any section, term or provision of this Agreement shall not render the other sections, terms or provisions unenforceable, valid or illegal. The remaining sections, terms and provisions shall nonetheless continue in full force and effect, without being impaired or invalidated in any way.

18.             Governing Laws, Jurisdiction and Venue.    This Agreement shall be governed by and construed in accordance with the laws of the State of California.  The parties hereby stipulate that any court of competent jurisdiction located within Contra Costa County, State of California, shall be the proper court for the determination of a dispute arising out of this Agreement, or in which to commence an action to enforce its terms.

19.             No Third Party Beneficiary.     This Agreement is intended solely for the benefit of the parties hereto and their successors and assigns and shall not be construed to create any rights for any other person or entity. 

20.             Attorney’s Fees and Costs.     If any action at law or in equity is commenced to  enforce or interpret the terms of this Agreement, then the prevailing party to such action shall be entitled to reasonable attorney’s fees, costs and disbursements, in addition to other relief to which it may be entitled. 

21.             Headings.    The headings and captions used in this Agreement are for convenience and ease of reference only and should not be used to construe, interpret, expand or limit the sections or provisions of this Agreement.

22.             Warranty of Capacity to Execute.      Each party warrants that the undersigned has the capacity and authority to sign this Agreement on behalf of that party.

23.             Original Counterparts.     This Agreement shall be executed in three (3) counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same Agreement.

24.             Recordation of Agreement.     Either party may record this Agreement in the Office of the Contra Costa County Recorder. 

IN WITNESS WHEREOF, the CITY and JOHN MUIR have executed and approved this Agreement.

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov