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HomeMy Public PortalAboutA 2017-12-12 PLANNING COMMISSIONF LYN -t!;JJ.J;lR'tC!lFFICEr AGENDA ,-~~ In Compliance with the Americans with Disabilities Act (ADA), if you are a disabled person and need a disability related modification or accommodation to participate in this meeting, please contact the City Clerk's Department at (310) 603-0220 ext 214. Requests must be made as early as possible, and at least one full business day before the start of the meeting. Staff reports or other materials related to an item on this Agenda which are distributed to the Planning Commission less than 72 hours before this scheduled meeting shall be available for public inspection in the Development, Compliance and Enforcement Department/Planning Division office located at 11330 Bullis Road, Lynwood, CA 90262, during normal business hours. 1. CALL TO ORDER 2. CERTIFICATION OF AGENDA 3. ROLLCALL 1. Elizabeth Battle, Commissioner 2. Juan Enciso, Commissioner 3. Sylvia Ortiz, Commissioner 4. Kenneth West, Vice-Chair 5. Jorge Casanova, Chairperson 4. PLEDGE OF ALLEGIANCE Planning Commission & Parking & Business Improvement District Board Agenda December 12,2017 Page 2 of3 5. PRESENTATIONS AND RECOGNITIONS None. 6. APPROVAL OF MINUTES A 11 ':-•• ~e-of~~..e "1-.. -~~o.--... A 20"'7 '"'on£:-.. e.J) /"'\. IVIIIIUL ;:, Lll I"VVI::IIIUI::I 1 ... , I I \'-' I LIIIU U • 7. SWEARING IN OF SPEAKERS (City Clerk or Designee) 8. NON-AGENDA PUBLIC ORAL COMMUNICATION (This time is reserved for members of the public to address the Planning Commission relative to matters that are not on the agenda. No action may be taken on non-agenda items unless authorized by law) 9. PUBLIC HEARING(S) (With respect to speakers addressing items listed under the heading of public hearing, you are asked to wait until the Chair formally opens the public hearing and the item is called) A. A request to approve Conditional Use Permit No. 2017-03 and Site Plan Review No. 2017-18 and certification of Mitigated Negative Declaration to enable development of an 11 ,468 square foot medical office buiidingitreatments center on a 38,248 square foot site. I. Staff Report Presentation II. Open Public Hearing ( M. ____ S ____ _, Ill. Public Testimony IV. Close Public Hearing V. Commission Discussion VI. Call for the question/vote ( M. ____ S ____ _, B. The proposed project, referenced herein as the Cannabis Development Agreement 2017-13 through 2017-20 and DA 2017-03 Modification No. 1, represent the 8 applicant selected by the Lynwood City Council to negotiate Development Agreements for cannabis activities in the City. 2 Planning Commission & Parking & Business Improvement District Board Agenda December 12,2017 Page 3 of3 VII. Staff Report Presentation VIII. Open Public Hearing ( M, ____ S ____ ) IX. Public Testimony X. Close Public Hearing XI. Commission Discussion XII. Call for the question/vote ( M, ____ S ____ _, 10.0LD BUSINESS None 11. PLANNING COMMISSION/PBIDB ORAL COMMUNICATIONS 1. Elizabeth Battle, Commissioner 2. Sylvia Ortiz, Commissioner 3. Kenneth West, Vice Chair 4. Jorge Casanova, Chairperson 5. Juan Enciso, Commissioner 12. DIRECTOR COMMUNICATIONS 13. ADJOURNMENT Next Regular Meeting is scheduled for January 9, 2017. APPROVED BY: 3 DATE: TO: FROM: SUBJECT: APPLICANT: City qf IXNWOOD u4 CH~ uUeett11g C~oQQe,ges 11330 BULLIS ROAD LYNWOOD, CALIFORNIA 90262 (310) 603-0220 December 12, 2017 ''"''' AH,AM«~I(A CJl't' Honorable Chair and Members of the Planning Commission John Yonai, Interim Director of Development, Compliance and Enforcement Services Albert Armijo, Interim Planning Manager Certification of Mitigated Negative Declaration Conditional Use Permit No. 2017-03 Site Plan Review No. 2017-18 Deborah Kerr on behalf of the Market Street Development LLC has submitted an application for a 38,248 square foot property located at 10211 Long Beach Boulevard for consideration to: 1) Issue a Conditional Use Permit to allow a medical office building/treatment center in the Downtown Village I portion of the Long Beach Specific Plan study area; and, 2) Approve a Site Plan Review for the proposed medical office building/treatment center pertaining to building and parking placement, building design, building architecture, and landscaping design. RECOMMENDATION That the Planning Commission: A. Adopt Resolution No. 3381 to approve Conditional Use Permit No. 2017-03 and adopt the Mitigated Negative Declaration and Mitigation Monitoring Plan B. Adopt Resolution No. 3386 to approve Site Plan Review No. 2017-18 BACKGROUND The Project site currently contains a 12,430 square foot building used for commercial retail purposes and a vacant 3,277 square foot building previously used for public residential (shelter) housing. In addition, trailers are stored on the Project site. - CALIFORNIA ENVIRONMENTAL QUALITY ACT The Department of Development, Compliance and Enforcement Services conducted an Initial Study for the Project which determined a Mitigated Negative Declaration was the appropriate form of environmental documentation to address Project environmental impacts. The Mitigated Negative Declaration (reference Attachment 4) was prepared and provided for public review according to California Environmental Quality Act requirements. EXISTING CONDITIONS The following Table indicates existing and proposed City of Lynwood General Plan and zoning information about the proposed project site, indicated in bold, and adjacent parcels. Table 1 -General Plan and Zoning Information Direction Current Proposed Cl:irrent Proposed Current Prop9sed Use Use General General Zoning Z9rH.,g ,, Plan ,plan_ , < ,> North and Commercial No Change Commercial No Change Specific Plan No Change South (Long Beach Boulevard Specific Plan); C-3 (Heavy Commercial underlying) East Commercial No Change Commercial No Change Specific Plan No Change (Long Beach Boulevard Specific Plan); C-3 (Heavy Commercial underlying) West Single-Family Residences -(Gity-elf-South-Gate} -~··----~-----·~~------------~-------------------- Project Commercial; Medical Commercial No Change Specific Plan No Change Site Single-Office; (Long Beach Family Treatment Boulevard Residential Center Specific Plan); C-3 (Heavy Commercial underlying) As indicated in Tab!e 1, the Project site is bordered to the north and south by commercial uses; to the east by Long Beach Boulevard and commercial uses beyond; and to the west by a residential neighborhood in the City of South Gate. The project site is separated from its adjacent non-roadway neighboring properties to the west by a six-foot fence. Landscaping on the project site is comprised of minor planting. CUP 2017-03/SPR 2017-18 2 PC Agenda Report Analysis Project Description Market Street Development LLC has submitted an application that would enable development of an 11,468 square foot medical office building on a 38,248 square foot site that would contain a kidney dialysis treatment center with 25 dialysis stations. The proposed single-story structure also will contain medical offices, a water treatment plant, supply storage area, customer service area, staff meeting rooms and, and other ancillary spaces as necessary and required by the California Health Code to support dialysis treatment functions. At full capacity, the Project hours of operation will be from 6:00 am. to 10:00 p.m., Monday through Saturday. Some staff will arrive one hour prior to opening to set up for the initial treatment or stay one hour after closing. All treatment is by appointment only. Most patients will be scheduled for dialysis between 8:00 a.m. and 5:00 p.m. When initially open, the treatment center typically will run at a reduced capacity. Some patients who still work will require dialysis earlier or later in the day. The patients all are repeat clients who receive treatment three times weekly; each treatment lasts three to four hours. Most patients do not drive themselves to treatment; rather, they arrive and leave by medical transport or are dropped off and picked up by a family member or caregiver. At full operation, the clinic may serve as many as 100-120 patients over the course of a week. When all 25 stations are in operation, there will be an average of 15 employees per shift. A total of 30-40 employees will be employed by the Project. Landscaping would occupy approximately 23 percent of the Project site, as depicted on the Project Plans (reference Attachment 3) Vehicular access to the Project site parking garage would be via two access driveways from Long Beach Boulevard. A parking lot will be located on the north end of the Project site. The parking lot will contain 31 full size spaces (29 spaces are required). Required discretionary actions include a Conditional Use Permit that would allow development of the proposed use on Project site and Site Plan Review that would address overall building design, on-site parking, circulation and access, compatibility with surrounding uses, landscaping and lighting. City of Lynwood General Plan Consistency The Project site has a General Plan land use designation of "Commercial." The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, safe, well-designed and well-integrated with adjacent neighborhoods. The Community Design Element also identifies proper corridors, gateways and nodes. Long Beach Boulevard is an important corridor that extends adjacent to the Project site in a general north-south path. However, Long Beach Boulevard is not designated a State or local scenic highway. Gateways near the Project CUP 2017-03/SPR 2017-18 3 PC Agenda Report site include the northernmost entry to the City of Lynwood at Long Beach Boulevard and Tweedy Boulevard. The General Plan Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. General Plan Goals, Policies and Implementation Measures relevant to the Project include the following. Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi-public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that arc of a size and location to efficientiy serve the current and future population of Lynwood. Land Use Element Implementation Measure 3.0-[The City shall] work with parties interested in the redevelopment of properties in redevelopment areas. Circulation Element Goal CIR-4-Provide an adequate supply of private off-street and public parking to meet the needs of residents and visitors to the City. Infrastructure/Public Services Element Policy DW-1.3-The City shall require that water conservation measures be implemented into all construction projects. Infrastructure/Public Services Element Goal HC-1 -Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medica! service facilities, including public and private hospitals, medical clinics, emergency care facilities, convalescent hospitals, and specialized private practitioners. Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities) -The City shall distribute throughout the [General Plan] Planning Area land use designations that allow medical service facilities. Community Design Element (Overall Objective)-To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. Economic Development Element Policy ED-1.2-The City shall strive to diversify its !oca! business makeup so that it avoids dependence on one segment of the economy to provide employment, revenues, and retail outlets for the citizenry. CUP 2017-03/SPR 2017-18 4 PC Agenda Report Noise Element Goal NOI-1-Protect those living, working, and visiting the community from exposure to excessive noise. Noise Element Policy NOI-1.5 -Provide guidelines to contractors for reducing potential noie impacts on surrounding land uses. Noise Element Implementation Measure 2.0 -The City shall require sound attenuation features such as walls, berming, and heavy landscaping between commercial and industrial uses and residential uses to reduce noise and vibration. Open Space and Conservation Element (Water Resources) Policy SR-2. 1 -The City shall ensure that water conservation measures are implemented in all development projects. Open Space and Conservation Element (Water Resources) Implementation Measure 1.0-The City shall require that all new developments adhere to the NPDES permit program for stormwater discharge. Open Space and Conservation Element (Water Resources) Implementation Measure 5.0-The City shall require that all new construction be equipped with water- conserving plumbing fixtures that conform to State statutes and codes. Open Space and Conservation Element (Energy Conservation) Goal EC-1 - Promote the conservation of energy resources in new and existing developments. Open Space and Conservation Element (Energy Conservation) Policy WR-2. 1 - The City shall ensure that energy conservation measures are implemented in all development projects. Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures) -The City shall ensure to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. Long Beach Boulevard Specific Plan Consistency The Project site occupies 0.88 acre (38,248 square feet) within the Downtown Village I portion of the Long Beach Boulevard Specific Plan study area. That Specific Plan study area encompasses 137.967 acres and 556 parcels on either side of Long Beach Boulevard, extending the 2.3-mile north-south length of the City between Tweedy Boulevard on the north and Orchard Avenue (the City of Compton boundary) on the south. The Long Beach Boulevard Specific Plan establishes a land use plan and framework of standards and guidelines for the purpose of revitalizing the Long Beach Boulevard Corridor. The Specific Plan considers Long Beach Boulevard as an entity that is part of a larger corridor and as a functioning downtown for the City of Lynwood. The Specific CUP 2017-03/SPR 2017-18 5 PC Agenda Report Plan indicates five major policies that would guide revitalization of the Long Beach Boulevard Corridor, as follows. • Establishment of four villages with distinct functions and focus • Transit-oriented development around the Metro Green Line • Combination of land uses, particularly mixed uses • Strong architectural and landscape character • Pedestrian connectivity to transit The Dovvntown Village I portion of the Specific Plan encompasses 27 acres and is focused at supporting numerous existing small businesses between Tweedy Boulevard and Martin Luther King Jr. Boulevard. The Specific Plan states "the focus in this village is on revitalization, encouraging businesses to renovate their existing buildings and construct new buildings in keeping with the architectural and landscape design guidelines specified for this village." The Specific Plan does not propose any changes to land uses within Village I but does provide that "the architectural and landscape design guidelines will guide the developments in this village." The four primary types of land use in the Specific Plan study area are commercial, residential, public facility, and mixed use. The Long Beach Boulevard Specific Plan permits Medical Office use in the Downtown Village I planning area but does not permit Medical Clinics. The Project land use has elements of each classification and is subject to a similar use determination by the Planning Manager, who has determined the proposed use may be conditionally permitted. The Project complies with Specific Plan Development Standards pertaining to setbacks, building height, fence height, floor-area ratio, driveway placement, user loading area, trash bin location, and landscape coverage. Architectural Design Guidelines The architectural style "recommended" for Downtown Village I is Spanish Colonial, ···· -whieM-is-eMar-aeterizeei--by--the foiiowing identifying features: iow-p1tched -ro·ofs~- asymmetrical facades; thick stucco walls with recessed openings; arched window openings; and, elaborate grille and tile work. The more contemporary architectural style of the proposed medical office/treatment center incorporates many architectural components that are characteristic of the Spanish Colonial style, such as the following. • The base of the building establishes a human scale for pedestrians and joins the building to the ground. • The main body of the building is architecturally subdivided into segments. • Window header height is maintained to unify the building masses and convey a harmonious street scene. CUP 2017-03/SPR 2017-18 6 PC Agenda Report • The building fagade is relieved by vertical changes in the elevation; long, blank walls are avoided. • A significant percentage of the building fagade is treated with window and arched treatments. • The north elevation (entry) building fagade is treated with paned windows and decorative arches above the windows. In addition, the following have been incorporated into Project design. • Loading/unloading areas are located away from Long Beach Boulevard. • Mechanical units are concealed from public view by walls and/or landscaping. • The stucco walls are painted a contemporary color mix of Iron Ore, Tin Lizzie, Argos, and Nebulous White The Project is consistent with City of Lynwood General Plan goals and policies that are relevant to the Project and with City of Long Beach Boulevard Specific Plan general goals and policies. Conditional Use Permit A Conditional Use Permit is required to allow the proposed medical office/treatment center use on the Project site. Required Findings A. That the proposed conditional use is consistent with the General Plan The General Plan designation for the Project site is Commercial. Office uses are allowed within the Commercial land use designated properties. The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, safe, well-designed and well-integrated with adjacent neighborhoods. The General Plan Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. General Plan Goals, Policies and Implementation Measures most relevant to the Project include the following. • Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi-public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that are of a size and location to efficiently serve the current and future population of Lynwood. • Land Use Element Implementation Measure 3.0 -[The City shall] work with parties interested in the redevelopment of properties in redevelopment areas. CUP 2017-03/SPR 2017-18 7 PC Agenda Report • Circulation Element Goal CIR-4 -Provide an adequate supply of private off- street and public parking to meet the needs of residents and visitors to the City. • Infrastructure/Public Services Element Policy DW-1.3 -The City shall require that water conservation measures be implemented into all construction projects. • Infrastructure/Public Services Element Goal HC-1 -Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. • Infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medical service facilities, ;11,..1. •dinn n••hli,.. anrl nri"a+o hnsnital"' I"Y\odi,....,l clini"S ""mer,..'"'"C" ,..a ....... .fa,..ilit";os II \JIU Ill~ tJUUIIV II \.A tJI I Y L\:# IIV tJ"· 1~, II IV 1\.10.1 I IV J ~I I !:::fCII Y \.1 I~ I VIII oc;;: J convalescent hospitals, and specialized private practitioners. • Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities)-The City shall distribute throughout the [General Plan] Planning Area land use designations that allow rnedical service facilities. • Community Design Element (Overall Objective)-To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. • Economic Development Element Policy ED-1.2-The City shall strive to diversify its local business makeup so that it avoids dependence on one segment of the local economy to provide employment, revenues, and retail outlets for the citizenry. ,. Noise Element Goal NOI-1 -Protect those living, working, and visiting the community from exposure to excessive noise. • Noise Element Policy NOI-1.5 -Provide guidelines to contractors for reducing potential noise impacts on surrounding land uses. • Noise Element Implementation Measure 2.0 -The City shall require sound attenuation features such as walls, berming, and heavy landscaping between commercial and industrial uses and residential uses to reduce noise and vibration. • Open Space and Conservation Element (\/Vater Resources) Policy SR-2.1 -The City shall ensure that water conservation measures are implemented in all development projects. • Open Space and Conservation Element (Water Resources) Implementation Measure 1.0 -The City shall require that all new developments adhere to the ··NPDESpermltpr6~fram for stormwater discharge. • Open Space and Conservation Element (Water Resources) Implementation Measure 5.0-The City shall require that all new construction be equipped with water-conserving plumbing fixtures that conform to State statutes and codes. • Open Space and Conservation Element (Energy Conservation) Goal EC-1 - Promote the conservation of energy resources in new and existing developments. • Open Space and Conservation Element (Energy Conservation) Policy WR-2.1 - The Citv shall ensure that enerav conservation measures are imolemented in all ., ....... , - - --- - -.--- --- development projects. • Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures) -The City shall ensure that to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. CUP 2017-03/SPR 2017-18 8 PC Agenda Report The Project is consistent with all the above Goals, Policies and Implementation Measures. Conditions of Approval placed on the Site Plan Review and Mitigation Measures specified in the Mitigated Negative Declaration mandate the Applicant to implement all air quality and water quality measures required by the City and the State. B. That the nature, condition, and the development of adjacent uses, buildings, and structures have been consistent, and that the use will not adversely affect or be materially detrimental to these adjacent uses, buildings, or structures The single-family residence on the Project site previously was used as a shelter for victims of abuse but has been vacant for some time and in need of extensive rehabilitation. The commercial business building on the Project site is operated by the property owner. Demolition of these two buildings together with new development on the Project will improve not only the Project site with a new and attractive structure but also will contribute to property value increases of nearby commercial buildings along Long Beach Boulevard. The Project building is not of a size or height (single-story) inconsistent with the scale of surrounding development. The two buildings to be demolished occupy 15,707 square feet; the proposed new building will occupy 11 ,468 square feet (a decrease in building area on the Project site of 27 percent). Project development will be a catalyst for new developments on, or improvements to, neighboring and nearby properties that generally are aging in appearance. C. That the site for the proposed conditional use is of adequate size and shape to accommodate the use and buildings proposed The Project site occupies 38,248 square feet in the central portion of a commercial block on Long Beach Boulevard. At present, there is a commercial building that occupies 12,430 square feet and a vacant single-family residence that occupies 3,277 square feet on the Project site, which together total 15,707 square feet in area. The proposed medical office building and treatment center would occupy 11,468 square feet; that is, the proposed structure on the Project site would occupy 27 percent less building area than the existing structures on the site. The Project site is generally triangular in shape and of sufficient size to accommodate parking as proposed in excess of the City requirement. Furthermore, the Project site is of sufficient size and shape to accommodate not only the proposed structure and parking area, but also to accommodate more than 8,000 square feet of new landscaping - - a figure substantially in excess of the City requirement. D. That the proposed conditional use complies with all applicable development standards of the zoning district The proposed medical office building/treatment center on the triangular-shaped Project site complies with all City of Lynwood development standards delineated in the Long Beach Boulevard Specific Plan for the Downtown Village I area and with all development standards specified in the City of Lynwood Zoning Code for the underlying CUP 2017-03/SPR 2017-18 9 PC Agenda Report C-3 (Heavy Commercial) zoning district. Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11 ,468 square foot single-story medical office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 10 feet, 4 inches in front (facing Long Beach Boulevard) where a minimum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 1 00 feet on the northerly side where 10 feet is required. !n addition, the Project \IIJould include ~No spaces more than are required and would provide landscaping over 23 percent of the Project site where the zoning requirement is 7 percent. E. That the proposed conditional use observes the spirit and intent of this zoning code The Long Beach Boulevard Specific Plan (Section 3.2 -Determination of Unlisted Uses) states that "the Planning Director, upon written request, or the Planning Commission, upon referral by the Planning Director, shall be allowed to determine whether a use not specifically listed as a use that is principally permitted or conditionally permitted in the Specific Plan area should be given such designation based upon a similarity to uses already allowed." Medical offices are a permitted use within the Downtown Village I portion of the Long Beach Boulevard Specific Plan. However, hospitals and "medical clinics" are not permitted within the Specific Plan study area. The underlying zoning for the Project site is C-3 (Heavy Commercial), which permits outright medical offices, dental offices, medical laboratories, pharmacies, and skilled nursing facilities. The proposed medical office/treatment center use is similar to several outright permitted uses. Also, the Project will establish a use on the property that will not conflict with adjacent commercial uses to the north, south and east and with adjacent residential use to the west in the City of South Gate. In addition, the design of the proposed building and the fact that no variances are proposed or required indicates the proposed use observes the intent of the City Zoning Code. Thereby, Planning staff supports the proposed medical office/treatment center in that the proposed use observes the spirit and intent of the City of Lynwood Zoning Code. -----~--~- Site Plan Review Market Street Development LLC has submitted an application that would enable development of an 11,468 square foot medical office building on a 38,248 square foot site that would contain a kidney dialysis treatment center with 25 dialysis stations. The proposed single-story structure also will contain medical offices, a water treatment plant, supply storage area, customer service area, staff meeting rooms, and other ancillary spaces as necessary and required by the California Health Code to support dialysis +ro ... +mon+ f,,,..,.+innc-II.+ f, .II .-... n ... .-i+" +ho o,..,...;oc+ h"''r"' nf ,.....,.,...,..,... ... ;,....,. ,.,;11 h,.. fr" ...... a-on ,...,...... I.IV0\.11 VIII, IUIIVLIVII~. 1'\L lUll VO.tJOVILJ 1 LIIV I IVJV L IIVU ..-;;)VI VtJt:;'IQI.IVII VVIII Ut:; VIII V. V 0111. To 10:00 p.m., Monday through Saturday. Some staff will arrive one hour prior to opening to set up for the initial treatment or stay one hour after closing. All treatment is by appointment only. Most patients will be scheduled for dialysis between 8:00 a.m. CUP 2017-03/SPR 2017-18 10 PC Agenda Report and 5:00 p.m. When initially open, the clinic typically will run at a reduced capacity. Some patients who still work will require dialysis earlier or later in the day. The patients all are repeat clients who receive treatment three times weekly; each treatment lasts three to four hours. Most patients do not drive themselves to treatment; rather, they arrive and leave by medical transport or are dropped off and picked up by a family member or caregiver. At full operation, the clinic may serve as many as 100-120 patients over the course of a week. When all 25 stations are in operation, there will be an average of 15 employees per shift. A total of 30-40 employees will be employed by the Project. Landscaping would occupy approximately 23 percent of the Project site. Vehicular access to the Project site parking garage would be via two access driveways from Long Beach Boulevard. A parking lot will be located on the north end of the Project site. The parking lot will contain 31 full size spaces (29 spaces are required). A Site Plan Review is required to evaluate overall building design, on-site parking, circulation and access, compatibility with surrounding uses, landscaping and lighting. The Project is subject to Site Plan Review for its architectural and landscape design, streetscape enhancement, and lighting. This also would ensure Project development is visually compatible with existing land uses throughout the 27 -acre Downtown Village I planning area and entire Specific Plan study area. In addition, a Condition of Approval pertaining to required Applicant compliance with the City of Lynwood Art in Public Places Fee Program will be placed on the Conditional Use PermiUSite Plan Review Resolution. The Downtown Village I portion of the Specific Plan encompasses 27 acres and is focused at supporting numerous existing small businesses between Tweedy Boulevard and Martin Luther King Jr. Boulevard. The Specific Plan states "the focus in this village is on revitalization, encouraging businesses to renovate their existing buildings and construct new buildings in keeping with the architectural and landscape design guidelines specified for this village." The Specific Plan does not propose any changes to land uses within Village I but does provide that "the architectural and landscape design guidelines will guide the developments in this village." The four primary types of land use in the Specific Plan study area are commercial, residential, public facility, and mixed use. The architectural style "recommended" for Downtown Village I is Spanish Colonial, which is characterized by the following identifying features: low-pitched roofs; asymmetrical facades; thick stucco walls with recessed openings; arched window openings; and, elaborate grille and tile work. Site Plan Review Findings A. That the proposed uses are consistent with the General Plan The Project site has a General Plan land use designation of "Commercial." The City of Lynwood General Plan Community Design Element envisions new development in the CUP 2017-03/SPR 2017-18 11 PC Agenda Report study area to be attractive, safe, well-designed and well-integrated with adjacent neighborhoods. The Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. The Project is consistent with City of Lynwood General Plan goals and policies noted below that are relevant to the Project and with City of Long Beach Boulevard Specific P!an genera! goa!s and policies. Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi- public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that are of a size and location to efficiently serve the current and future population of Lynwood. Land Use Element Implementation Measure 3.0 -[The City shall] work with parties interested in the redevelopment of properties in redevelopment areas. Circulation Element Goal CIR-4 -Provide an adequate supply of private off-street and public parking to meet the needs of residents and visitors to the City. Infrastructure/Public Services Element Policy DW-1.3-The City shall require that water conservation measures be implemented into all construction projects. infrastructure/Public Services Element Goal HC-1 -Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. Infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medical service facilities, including public and private hospitals, medical clinics, emergency care facilities, convalescent hospitals, and specialized private practitioners. Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities) -The City shall distribute throughout the [General Plan] Planning Area land use designations that allow medical service facilities. Community Design Element (Overall Objective) -To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. Economic Development Element Policy ED-1.2 -The City shall strive to diversify its •---1 b• ·-:----..--1-~-· ·----~o&....--4-:-4-_._#_:,.,_ ,., ____ ,., ____ --------..----" -~ ,~...,_ •'u'"'r'a'"'•' IU\..CII U;:)IIIC;:);:) IIICI"-CUjJ ;:)U U ICIL H Cl VUIU;:) UCjJCIIUCII\..C VII UIIC ;:)C~IIICI H Ul U IC ~ economy to provide employment, revenues, and retail outlets for the citizenry. CUP 2017-03/SPR 2017-18 12 PC Agenda Report Noise Element Goal NOI-1 -Protect those living, working, and visiting the community from exposure to excessive noise. Noise Element Policy NOI-1.5-Provide guidelines to contractors for reducing potential noie impacts on surrounding land uses. Noise Element Implementation Measure 2.0 -The City shall require sound attenuation features such as walls, berming, and heavy landscaping between commercial and industrial uses and residential uses to reduce noise and vibration. Open Space and Conservation Element (Water Resources) Policy SR-2.1 -The City shall ensure that water conservation measures are implemented in all development projects. Open Space and Conservation Element (Water Resources) Implementation Measure 1.0 -The City shall require that all new developments adhere to the NPDES permit program for stormwater discharge. Open Space and Conservation Element (Water Resources) Implementation Measure 5.0-The City shall require that all new construction be equipped with water-conserving plumbing fixtures that conform to State statutes and codes. Open Space and Conservation Element (Energy Conservation) Goal EC-1 -Promote the conservation of energy resources in new and existing developments. Open Space and Conservation Element (Energy Conservation) Policy WR-2.1 -The City shall ensure that energy conservation measures are implemented in all development projects. Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures) -The City shall ensure to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. In addition, the Long Beach Boulevard Specific Plan permits Medical Office use in the Downtown Village I planning area but does not permit Medical Clinics. The Project land use has elements of each classification and is subject to a similar use determination by the Planning Manager, who has determined the proposed use may be conditionally permitted. The Project complies with Specific Plan Development Standards pertaining to setbacks, building height, fence height, floor-area ratio, driveway placement, user loading area, trash bin location, and landscape coverage. The more contemporary architectural style of the proposed medical office/treatment center incorporates many architectural components that are characteristic of the Spanish Colonial style, such as the following. CUP 2017-03/SPR 2017-18 13 PC Agenda Report • The base of the building establishes a human scale for pedestrians and joins the building to the ground. • The main body of the building is architecturally subdivided into segments. • Window header height is maintained to unify the building masses and convey a harmonious street scene. • The building fac;ade is relieved by vertical changes in the elevation; long, biank walls are avoided. • A significant percentage of the building fac;ade is treated with window and arched treatments. • The north elevation (entry) building fac;ade is treated with paned windows and decorative arches above the windows. In addition, the following have been incorporated into Project design. • Loading/unloading areas are located away from Long Beach Boulevard. • Mechanical units are concealed from public view by walls and/or landscaping. • The stucco walls are painted a contemporary color mix of Iron Ore, Tin Lizzie, Argos, and Nebulous White B. That the nature, condition, and development of adjacent uses, buildings, and structures have been considered, and that the use will not adversely affect or be materially detrimental to these adjacent uses, buildings, or structures Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11,468 square foot single-story medical office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 10 feet, 4 inches in front (facing Long Beach Boulevard) where a minimum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 100 feet on the northerly side where 10 feet is required. Adjacent commercial buildings in the City of Lynwood and residential buildings in the City of South Gate are single-story and will be -s-ep-arate-d-by-a-n-ew--6=foot-tall CMtnence as part of Project deVelopment. -As a result, the Project will have no materially detrimental effect on adjacent uses, buildings or structures. C. That the site for the proposed use is of adequate size and shape to accommodate the use and buildings proposed The Project site occupies 38,248 square feet in the central portion of a commercial block on Long Beach Boulevard. At present, there is a commercial building that occupies 12,430 square feet and a vacant single-family residence that occupies 3,277 square feet on the Project site, which together total 15,707 square feet in area. The proposed medical office building and treatment center would occupy 11 ,468 square feet; that is, the proposed structure on the Project site would occupy 27 percent less CUP 2017-03/SPR 2017-18 14 PC Agenda Report building area than the existing structures on the site. The Project site is generally triangular in shape and of sufficient size to accommodate parking as proposed in excess of the City requirement. Furthermore, the Project site is of sufficient size and shape to accommodate not only the proposed structure and parking area, but also to accommodate more than 8,000 square feet of new landscaping--a figure substantially in excess of the City requirement. D. That the proposed use complies with all applicable development standards of the zoning district The proposed medical office building/treatment center on the triangular-shaped Project site complies with all City of Lynwood development standards delineated in the Long Beach Boulevard Specific Plan for the Downtown Village I area and with all development standards specified in the City of Lynwood Zoning Code for the underlying C-3 (Heavy Commercial) zoning district. Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11 ,468 square foot single-story medical office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 10 feet, 4 inches in front (facing Long Beach Boulevard) where a minimum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 100 feet on the northerly side where 10 feet is required. In addition, the Project would include two additional spaces more than are required and would provide landscaping over 23 percent of the Project site where the zoning requirement is 7 percent. E. That the proposed use observes the spirit and intent of this zoning code The Long Beach Boulevard Specific Plan (Section 3 .. 2 - Determination of Unlisted Uses) states that "the Planning Director, upon written request, or the Planning Commission, upon referral by the Planning Director, shall be allowed to determine whether a use not specifically listed as a use that is principally permitted or conditionally permitted in the Specific Plan area should be given such designation based upon a similarity to uses already allowed." Medical offices are a permitted use within the Downtown Village I portion of the Long Beach Boulevard Specific Plan. However, hospitals and "medical clinics" are not permitted within the Specific Plan study area. The underlying zoning for the Project site is C-3 (Heavy Commercial), which permits outright medical offices, dental offices, medical laboratories, pharmacies, and skilled nursing facilities. The proposed medical office/treatment center use is similar to several outright permitted uses. Also, the Project will establish a use on the property that does not conflict with adjacent commercial uses to the north, south and east and with adjacent residential use to the west in the City of South Gate. In addition, the design of the proposed building and the fact that no variances are proposed or required indicates the proposed use observes the intent of the City Zoning Code. The proposed use observes the spirit and intent of the City of Lynwood Zoning Code. CUP 2017-03/SPR 2017-18 15 PC Agenda Report CONCLUSION The proposed Conditional Use Permit allowance of a medical office/dialysis treatment center use on the 38,248 square foot property is supported by staff. The existing single- family residence on the Project site has remained vacant for a number of months and the existing commercial business is experiencing difficult economic times. The new building design represents a dramatic improvement in the appearance of the Project site. Establishing a medical office/treatment facility on the Project site would and provide a catalyst for other improvements within the Downtown Village I area. Required parking for the Project is accommodated on site as are substantia! improvements to landscaping and fencing. Furthermore, due to City of Lynwood development requirements (particularly pertaining to parking) it is very unlikely any new commercial use could be established on the Project site without consideration of variances. The proposed medical office/treatment center use is substantially similar to permitted uses within the Long Beach Boulevard Specific Plan Downtown Village I area and complies with all Specific Plan and C-3 development standards. ATTACHMENTS 1) Resolution No. 3381 approving Conditional Use Permit 2017-03 and adopting the Mitigated Negative Declaration and Mitigation Monitoring Program 2) Resolution No. 3386 approving Site Plan Review 2017-15 3) Project Plans 4) Initial Study/Mitigated Negative Declaration/Mitigation Monitoring and Reporting Plan CUP 2017-03/SPR 2017-18 16 PC Agenda Report RESOLUTION NO. 3381 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LYNWOOD APPROVING CONDITIONAL USE PERMIT NO. 2017-03, A REQUEST TO ESTABLISH A MEDICAL OFFICE BUILDING/TREATMENT CENTER ON PROPERTY LOCATED AT 10211 LONG BEACH BOULEVARD (ASSESSOR'S PARCEL NUMBERS 6207- 010-007, 6207-010-008, 6207-010-009, 6207-010-010, AND 6207-010-011) IN THE SP (LONG BEACH SPECIFIC PLAN) ZONE AND HAS A GENERAL PLAN DESIGNATION OF COMMERCIAL, CITY OF LYNWOOD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AND ADOPTION OF MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING PLAN BE IT RESOLVED by the Planning Commission of the City of Lynwood as follows: A. Recitals (i) Market Street Development, LLC has filed an application for issuance of Conditional Use Permit No. 2017-03 to allow establishment of a medical office building/dialysis treatment center at 10211 Long Beach Boulevard, Lynwood, California 90262 (APN: 6207-010-007,6207-010-008, 6207-010- 009, 6207-010-010) in the County of Los Angeles. Hereinafter in this Resolution, the subject Conditional Use Permit request is referred to as the "application." This Resolution supplements any previous approvals for this location. (ii) On December 12, 2017, this Planning Commission conducted a duly noticed public hearing on the application and concluded said hearing prior to the adoption of this Resolution. (iii) All legal prerequisites to the adoption of this Resolution have occurred. B. Resolution NOW, THEREFORE, it is found, determined and resolved by the Planning Commission of the City of Lynwood as follows: A. The Planning Commission hereby specifically finds that all the facts set forth in the Recitals, Part A, of this Resolution are true and correct. B. In accordance with the California Environmental Quality Act Guidelines, an Initial Study was prepared to determine whether the Project may have a significant effect on the environment. On the basis of the Initial Study, the staff report, and oral and written evidence, it has been determined that the Project may have a potential significant effect on the environment which may be mitigated to a level that is less than significant and therefore a Mitigated Negative Declaration was prepared and adopted herein. A Mitigation Monitoring Plan has been prepared and said mitigation measures have been incorporated as a condition of this Resolution. The Mitigated Negative Declaration was circulated in accordance with CEQA Guideline Section 15105(b). The Planning Commission hereby finds the Mitigated Negative Declaration as adequate to assess the environmental impacts of the Project, based on the findings contained herein and finds, on the basis of the whole record, that there is no substantial evidence that the Project will have a significant effect on the environment and that the approval of the Mitigated Negative Declaration reflects the Planning Commission's independent judgment and analysis. As such, the City of Lynwood Planning Commission hereby adopts the Mitigated Negative Declaration and the Mitigation Monitoring Plan. The full record is available for review in the Community and Economic Development Department. C. Based upon substantial evidence presented to this Planning Commission during the above-referenced hearing, including written staff reports, verbal testimony, and development plans dated August 30, 2017, this Planning Commission hereby specifically finds as follows: 1. That the proposed conditional use is consistent with the general plan The General Plan designation for the Project site is Commercial. Office uses are allowed within the Commercial land use designated properties. The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, safe, well-designed and well-integrated with adjacent neighborhoods. The General Plan Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. General Plan Goals, Policies and Implementation Measures most relevant to the Project include the following. • Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi-public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that are of a size and location to efficiently serve the current and future population of Lynwood. • Land Use Element Implementation Measure 3.0-[The City shall] work with parties interested in the redevelopment of piOperties in redevelopment areas. • Circulation Element Goal CIR-4-Provide an adequate supply of private off-street and public parking to meet the needs of residents and visitors to the City. • Infrastructure/Public Services Element Policy DW-1.3-The City shall require that water conservation measures be implemented into all construction projects. • Infrastructure/Public Services Element Goal HC-1 -Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. • Infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medical service facilities, including public and private hospitals, medical clinics, emergency care facilities, convalescent hospitals, and specialized private practitioners. • Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities)-The City shall distribute throughout the [General Plan] Planning Area land use designations that allow medical service facilities. • Community Design Element (Overall Objective)-To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. • Economic Development Element Policy ED-1.2-The City shall strive to diversify its local business makeup so that it avoids dependence on one segment of the local economy to provide employment, revenues, and retail outlets for the citizenry. • Noise Element Goal NOI-1 -Protect those living, working, and visiting the community from exposure to excessive noise. • Noise Element Policy NOI-1.5 -Provide guidelines to contractors for reducing potential noise impacts on surrounding land uses. • Noise Element Implementation Measure 2.0 -The City shall require sound attenuation features such as walls, berming, and heavy landscaping between commercial and industrial uses and residential uses to reduce noise and vibration. • Open Space and Conservation Element (Water Resources) Policy SR-2.1 -The City shall ensure that water conservation measures are implemented in all development projects. • Open Space and Conservation Element (Water Resources) Implementation Measure 1.0 -The City shall require that all new developments adhere to the NPDES permit program for stormwater discharge. • Open Space and Conservation Element (Water Resources) Implementation Measure 5.0-The City shall require that all new construction be equipped with water-conserving plumbing fixtures that conform to State statutes and codes. • Open Space and Conservation Element (Energy Conservation) Goal EC-1 - Promote the conservation of energy resources in new and existing developments. • Open Space and Conservation Element (Energy Conservation) Policy WR-2.1 - The City shall ensure that energy conservation measures are implemented in all development projects. • Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures) -The City shall ensure that to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. Conditions of Approval placed on the Site Plan Review and Mitigation Measures specified in the Mitigated Negative Declaration mandate the Applicant to implement all air quality and water quality measures required by the City and the State. The Project is consistent with all the above Goals, Policies and Implementation Measures. 2. That the nature, condition, and the development of adjacent uses, buildings, and structures have been consistent, and that the use will not adversely affect or be materially detrimental to these adjacent uses, buildings, or structures The single-family residence on the Project site previously was used as a shelter for victims of abuse but has been vacant for some time and in need of extensive rehabilitation. The commercial business building on the Project site is operated by the property owner. Demolition of these two buildings together with new development on the Project will improve not only the Project site with a new and attractive structure but also will contribute to property value increases of nearby commercial buildings along Long Beach Boulevard. The Project building is not of a size or height (single-story) inconsistent with the scale of surrounding development. The two buildings to be demolished occupy 15,707 square feet; the proposed new building will occupy 11,468 square feet (a decrease in building area on the Project site of 27 percent). Project development will be a catalyst for new developments on, or improvements to, neighboring and nearby properties that generally are aging in appearance. 3. That the site for the proposed conditional use is of adequate size and shape to accommodate the use and buildings proposed The Project site occupies 38,248 square feet in the central portion of a commercial block on Long Beach Boulevard. At present, there is a commercial building that occupies 12,430 square feet and a vacant single-family residence that occupies 3,277 square feet on the Project site, which together total15,707 square feet in area. The proposed medical office building and treatment center would occupy 11 ,468 square feet; that is, the proposed structure on the Project site would occupy 27 percent less building area than the existing structures on the site. The Project site is generally triangular in shape and of sufficient size to accommodate parking as proposed in excess of the City requirement. Furthermore, the Project site is of sufficient size and shape to accommodate not oniy the proposed structure and parking area, but also to accommodate more than 8,000 square feet of new landscaping - - a figure substantially in excess of the City requirement. _ _4L ___ rhat the proposed conditional use complies llvith all applicable development - standards of the zoning district The proposed medical office building/treatment center on the triangular-shaped Project site complies with all City of Lynwood development standards delineated in the Long Beach Boulevard Specific Plan for the Downtown Village I area and with all development standards specified in the City of Lynwood Zoning Code for the underlying C-3 (Heavy Commercial) zoning district. Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11 ,468 square foot single-story medica! office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 1 0 feet, 4 inches in front (facing Long Beach Boulevard) where a m1n1mum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 100 feet on the northerly side where 10 feet is required. In addition, the Project would include two spaces more than are required and would provide landscaping over 23 percent of the Project site where the zoning requirement is 7 percent. s. That the proposed conditional use observes the spirit and intent of this zoning code The Long Beach Boulevard Specific Plan (Section 3.2-Determination of Unlisted Uses) states that "the Planning Director, upon written request, or the Planning Commission, upon referral by the Planning Director, shall be allowed to determine whether a use not specifically listed as a use that is principally permitted or conditionally permitted in the Specific Plan area should be given such designation based upon a similarity to uses already allowed." Medical offices are a permitted use within the Downtown Village I portion of the Long Beach Boulevard Specific Plan. However, hospitals and "medical clinics" are not permitted within the Specific Plan study area. The underlying zoning for the Project site is C-3 (Heavy Commercial), which permits outright medical offices, dental offices, medical laboratories, pharmacies, and skilled nursing facilities. The proposed medical office/treatment center use is similar to several outright permitted uses. Also, the Project will establish a use on the property that will not conflict with adjacent commercial uses to the north, south and east and with adjacent residential use to the west in the City of South Gate. In addition, the design of the proposed building and the fact that no variances are proposed or required indicates the proposed use observes the intent of the City Zoning Code. Thereby, Planning staff supports the proposed medical office/treatment center in that the proposed use observes the spirit and intent of the City of Lynwood Zoning Code. C. In view of all the evidence and based on the foregoing findings and conclusions, the Planning Commission approves Conditional Use Permit No. 2017-03 subject to the following conditions: 1. The City has determined that City, its employees, agents and officials should, to the fullest extent permitted by law, be fully protected from any loss, injury, damage, claim, lawsuit, expense, attorney fees, litigation expenses, court cost or any other cost arising out of or in any way related to the issuance of this Conditional Use Permit, or the activities conducted pursuant to this Conditional Use Permit, or the activities conducted pursuant to this Conditional Use Permit. Accordingly, to the fullest extent permitted by law, Market Street Development LLC and its representative(s), or its successors shall defend, indemnify and hold harmless the City, its employees, agents and officials, from and against any liability, claims, suits, actions, arbitrations proceedings, regulatory proceedings, losses, expenses or cost of any kind, whether actual, alleged or threatened, including, but not limited to, actual attorney fees, litigation expenses and court costs of any kind without restriction or limitation, incurred in relation to, as a consequence of, arising out of, or in any way attributable to, actually, allegedly or impliedly, in whole or in part, the issuance of the Conditional Use Permit , or the activities conducted pursuant to this Conditional Use Permit. Market Street Development LLC, and its representative(s), or its successors shall pay such obligations as they incurred by City, its employees, agents and officials, and in the event of any claim or lawsuit, shall submit a deposit in such amount as the City reasonably determines necessary to protect the City from exposure to fees, costs or liability with respect to such claim or lawsuit. 2. The subject property shall be maintained and operated in full compliance with the conditions of this grant and any !aw, statute, ordinance or other regulations applicable to any development or activity on the subject property. Failure of the Applicant or its successors to cease any development or activity not in full compliance shall be a violation of these conditions. Any violation of the conditions of approval may result in the revocation of this approval. 3. All current and future tenants/owners shall accept the conditions of this Conditional Use Permit by executing the Affidavit of Acceptance provided by the Department of Development, Compliance and Enforcement Services. 4. The City reserves the right to further review of the Conditional Use Permit and conditions of approval should complaints be received from adjacent residents/tenants or should the number of incidents reported to the Sheriff's Department exceed the number expected in this type of development. 5. The Project shall comply with all regulations of the Lynwood Municipal Code, the California Building Code, the Los Angeles County Fire Code, other City Departments and applicable State and Federal regulations. 6. Any subsequent modification of the subject site or structures thereon shall be first reported to the Department of Development, Compliance and Enforcement Services, Planning Division, for review. 7. Conditions of Approval shall be printed on the plans prior to submission to the Building and Safely_ llivisioo for _pJarLcheck. 8. Prior to plan check submittal, the Applicant shall sign a Statement of Acceptance stating it has read, understands, and agrees to all conditions of this approval prior to issuance of any building permits. 9. Prior to permit issuance, the Applicant shall pay all City of Lynwood fees including Development impact fees and Art in Public Places fees. -1 n Th.n f"'.nn,..ti+i.nn,.,J I l("'l.n 01"\rt'V'Ii.f. 8""""....., ... "',,....,1 ("'lh""ll Ia ...... ,..-""nd b-,.,-......,..,_ .. ,-.;,J on-1-1\ ,., __ ... IV. I 11-.;:; VVIIUILIVIIOI U~-.;:; I -.;;Ill IlL tJtJI VVOI ~11011 I 1-'~-.;:; 01 -.;;\,.VIII-.;; VVIU I -.;:; \I) y-.;:;al from the date (December 12, 2017) of this document unless all conditions of said permit are met and a Building Permit is issued or substantial progress has been made toward establishing this use. 11. All appeals must be brought within ten (1 0) working days of the date of the final action by the Planning Commission. Department of Development Compliance and Enforcement Services/Planning Division 12. The Project shall be substantially compliant with plans approved by the City of Lynwood Planning Commission (approved December 12, 2017) and on file in the Department of Development, Compliance and Enforcement Services, Planning Division. 13. Prior to issuance of a Certificate of Occupancy, the Applicant shall designate all required parking area, shall install bumper guards for all parking spaces within the parking areas, and shall provide that all parking areas are well lighted and secured to prevent loitering and public nuisances. The Applicant shall provide evidence of such to the Planning Manager for his/her approval. 14.Any proposed subsequent modification of the Project site, structures thereon or hours of operation shall be first reported to the Department of Development, Compliance and Enforcement Services for review and approval prior to said proposed modification. 15. The Applicant shall comply with all Mitigation Measures delineated in the Mitigated Negative Declaration/Mitigation Monitoring and Reporting Program prepared and adopted for this Project. 16. Failure to abide by and faithfully comply with any and all conditions attached to this approval action shall constitute grounds for the revocation of said action by the Lynwood Planning Commission. Fire Prevention 17. The required fire flow for public hydrants at this location is 1500 gallons per minute at 20 psi for a duration of 2 hours, over and above maximum daily domestic demand. 1 hydrant(s) flowing simultaneously may be used to achieve the required fire flow. 18. Water: Install one new public fire hydrant as shown on the attached site plan marked up. All required fire hydrants shall be installed, tested and accepted prior to construction. 19.Access: Access is accepted as shown on the revised site plan dated December 5, 2017 as submitted to the County of Los Angeles Fire Prevention Land Development. MISCELLANEOUS 20. The Applicant shall defend, indemnify, and hold harmless the City, its elected and appointed officials, agents, officers, and employees from any claim, action, or proceeding brought against the City, its elected and appointed officials, agents, officers, or employees arising out of, or which are related to the Applicant's project or application (collectively referred to as "proceedings"). The indemnification shall include, but not be limited to, damages, fees and/or costs, liabilities, and expenses incurred to awarded in connection with the proceedings whether incurred by the Applicant, the City and/or the parties initiating or bringing such proceedings. This indemnity provision shall include the Applicant's obligation to indemnify the City for all the City's costs, fees, and damages that the City incurs in enforcing the indemnification provisions set forth herein. The City shall have the right to choose its own iegai counsel to represent the City's interest in the proceedings. 21. The Applicant shall sign, notarize, and return to the Community and Economic Development Department an affidavit accepting all Conditions of Approval within 15 days from the date of the approval, unless appealed. The Applicant acknowledges and understands that all conditions set forth in this Resolution are conditions precedent to the grant of approval and failure to comply with any condition contained herein shall render this Conditional Use Permit non-binding as against the City and shall confer Applicant no legal rights under the law. APPROVED this 121h day of December 2017 by members of the Planning Commission, voting as follows: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO CONTENT: John Yonai, Interim Director Department of Development, Compliance and Enforcement Services Jorge Casanova, Chairperson Planning Commission APPROVED AS TO FORM: John Lam, Deputy City Attorney Planning Commission Counsel RESOLUTION NO .. 3386 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LYNWOOD APPROVING SITE PLAN REVIEW NO. 2017-18 AT 10211 LONG BEACH BOULEVARD, ASSESSOR'S PARCEL NUMBERS 6207- 010-007, 6207-010-008, 6207-010-009, 6207-010-010, AND 6207-010-011 IN THE SP (LONG BEACH SPECIFIC PLAN) ZONE, CITY OF LYNWOOD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA WHEREAS, Market Street Development LLC, on behalf of Linenwood Properties LLC property owner of 10211 Long Beach Boulevard, Lynwood, California 90262 has filed an application for Site Plan Review No. 2017-18 to allow establishment of a medical office building/kidney dialysis center at 10211 Long Beach Boulevard, Lynwood, California 90262 (APN: 6207-010-007, 6207-010-008, 6207-010-009, 6207-010-010, and 6207-010-011) in the County of Los Angeles. Hereinafter in this Resolution, the subject Site Plan Review request is referred to as the "application." This Resolution supplements any previous approvals for this location. WHEREAS, on December 12, 2017, this Planning Commission conducted a duly noticed public hearing on the application and concluded said hearing prior to adoption of this Resolution. WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, it is found, determined and resolved by the Planning Commission of the City of Lynwood as follows. SECTION 1. The Planning Commission hereby specifically finds that all the facts set forth in the Recitals, Part A, of this Resolution are true and correct. SECTION 2. Based upon substantial evidence presented to this Planning Commission during the above-referenced hearing, including written staff reports, verbal testimony, and development plans, dated December 12, 2017, this Planning Commission hereby specifically finds as follows: 1. That the proposed uses are consistent with the General Plan The Project site has a General Plan land use designation of "Commercial." The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, safe, well-designed and well-integrated with adjacent neighborhoods. The Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states 1 "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. The Project is consistent with City of Lynwood General Plan goals and policies noted below that are relevant to the Project and with City of Long Beach Boulevard Specific Plan general goals and policies. Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi- public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that are of a size and location to efficiently serve the current and future population of Lynwood. Land Use Element Implementation Measure 3.0 -[The City shall] work with parties interested in the redevelopment of properties in redevelopment areas. Circulation Element Goal CIR-4-Provide an adequate supply of private off-street and public parking to meet the needs of residents and visitors to the City. Infrastructure/Public Services Element Policy DW-1.3-The City shall require that water conservation measures be implemented into all construction projects. Infrastructure/Public Services Element Goal HC-1-Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. Infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medical service facilities, including public and private hospitals, medical clinics, emergency care facilities, convalescent hospitals, and specialized private practitioners. Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities) -The City shall distribute throughout the [General Plan] Planning Area land use designations that allow medical service facilities. Community Design Element (Overall Objective)-To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. Economic Development Element Policy ED-1.2-The City shall strive to diversify its local business makeup so that it avoids dependence on one segment of the local economy to provide employment, revenues, and retail outlets for the citizenry. Noise Element Goal NOI-1 -Protect those living, working, and visiting the community from ovnnc11ro tn ovl"'ossiHo nnico II Ill '-'"'tJVVUII'-' \.V '-'"'"'-' IY'-' IIVIV''-'• Noise Element Policy NOI-1.5-Provide guidelines to contractors for reducing potential noie impacts on surrounding land uses. 2 Noise Element Implementation Measure 2.0 -The City shall require sound attenuation features such as walls, berming, and heavy landscaping between commercial and industrial uses and residential uses to reduce noise and vibration. Open Space and Conservation Element (Water Resources) Policy SR-2.1 -The City shall ensure that water conservation measures are implemented in all development projects. Open Space and Conservation Element (Water Resources) Implementation Measure 1.0 -The City shall require that all new developments adhere to the NPDES permit program for stormwater discharge. Open Space and Conservation Element (Water Resources) Implementation Measure 5.0 -The City shall require that all new construction be equipped with water-conserving plumbing fixtures that conform to State statutes and codes. Open Space and Conservation Element (Energy Conservation) Goal EC-1-Promote the conservation of energy resources in new and existing developments. Open Space and Conservation Element (Energy Conservation) Policy WR-2.1-The City shall ensure that energy conservation measures are implemented in all development projects. Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures) -The City shall ensure to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. In addition, the Long Beach Boulevard Specific Plan permits Medical Office use in the Downtown Village I planning area but does not permit Medical Clinics. The Project land use has elements of each classification and is subject to a similar use determination by the Planning Manager, who has determined the proposed use may be conditionally permitted. The Project complies with Specific Plan Development Standards pertaining to setbacks, building height, fence height, floor-area ratio, driveway placement, user loading area, trash bin location, and landscape coverage. The more contemporary architectural style of the proposed medical office/treatment center incorporates many architectural components that are characteristic of the Spanish Colonial style, such as the following. • The base of the building establishes a human scale for pedestrians and joins the building to the ground. • The main body of the building is architecturally subdivided into segments. • Window header height is maintained to unify the building masses and convey a harmonious street scene. • The building fagade is relieved by vertical changes in the elevation; long, blank walls are avoided. 3 • A significant percentage of the building fagade is treated with window and arched treatments. • The north elevation (entry) building fagade is treated with paned windows and decorative arches above the windows. In addition, the following have been incorporated into Project design. • Loading/unloading areas are located away from Long Beach Boulevard. • Mechanical units are concealed from public view by walls and/or landscaping. • The stucco walls are painted a contemporary colm mix of Iron Ore, Tin Lizzie, Argos, and Nebulous White 2. That the nature, condition, and development of adjacent uses, buildings, and slrudures !Jave been considered, and l11al Lfle use will not adversely affecl ur be materially detrimental to these adjacent uses, buildings, or structures Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11,468 square foot single- story medical office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 10 feet, 4 inches in front (facing Long Beach Boulevard) where a minimum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 100 feet on the northerly side where 10 feet is required. Adjacent commercial buildings in the City of Lynwood and residential buildings in the City of South Gate are single-story and will be separated by a new 6-foot tall CMU fence as part of Project development. As a result, the Project will have no materially detrimental effect on adjacent uses, buildings or structures. 3. That the site for the proposed use is of adequate size and shape to accommodate the use and buildings proposed The Project site occupies 38,248 square feet in the central portion of a commercial block en-Ler1sJ-Beaeh Beulevard. At-present, there is a commercial building that occupies 12,430 square feet and a vacant single-family residence that occupies 3,277 square feet on the Project site, which together total15,707 square feet in area. The proposed medical office building and treatment center would occupy 11 ,468 square feet; that is, the proposed structure on the Project site would occupy 27 percent less building area than the existing structures on the site. The Project site is generally triangular in shape and of sufficient size to accommodate parking as proposed in excess of the City requirement. Furthermore, the Project site is of sufficient size and shape to accommodate not only the proposed structure and parking area, but also to accommodate more than 8,000 square feet of new iandscaping - - a figure substantiaiiy in excess of the City requirement. 4. That the proposed use complies with all applicable development standards of the zoning district 4 The proposed medical office building/treatment center on the triangular-shaped Project site complies with all City of Lynwood development standards delineated in the Long Beach Boulevard Specific Plan for the Downtown Village I area and with all development standards specified in the City of Lynwood Zoning Code for the underlying C-3 (Heavy Commercial) zoning district. Project development involves demolition of two existing buildings (occupying 15,707 square feet) on the Project site, grading, and construction of an 11 ,468 square foot single-story medical office building/dialysis treatment center. The new parking area will contain 31 stalls, 4 of which will be handicap accessible, and 4 bicycle parking spaces. The new building will be 23 feet tall at its highest point. Structural setbacks will be 1 0 feet, 4 inches in front (facing Long Beach Boulevard) where a minimum 10 feet is required, 8 feet, 8 inches in the rear where a minimum 5 feet is required, from 10 feet, 3 inches on the southerly side where 5 feet is required, and in excess of 100 feet on the northerly side where 1 0 feet is required. In addition, the Project would include two additional spaces more than are required and would provide landscaping over 23 percent of the Project site where the zoning requirement is 7 percent. 5. That the proposed use observes the spirit and intent of this zoning code The Long Beach Boulevard Specific Plan (Section 3 .. 2 - Determination of Unlisted Uses) states that "the Planning Director, upon written request, or the Planning Commission, upon referral by the Planning Director, shall be allowed to determine whether a use not specifically listed as a use that is principally permitted or conditionally permitted in the Specific Plan area should be given such designation based upon a similarity to uses already allowed." Medical offices are a permitted use within the Downtown Village I portion of the Long Beach Boulevard Specific Plan. However, hospitals and "medical clinics" are not permitted within the Specific Plan study area. The underlying zoning for the Project site is C-3 (Heavy Commercial), which permits outright medical offices, dental offices, medical laboratories, pharmacies, and skilled nursing facilities. The proposed medical office/treatment center use is similar to several outright permitted uses. Also, the Project will establish a use on the property that does not conflict with adjacent commercial uses to the north, south and east and with adjacent residential use to the west in the City of South Gate. In addition, the design of the proposed building and the fact that no variances are proposed or required indicates the proposed use observes the intent of the City Zoning Code. The proposed use observes the spirit and intent of the City of Lynwood Zoning Code. SECTION 3. Conditions: In view of all the evidence and based on the foregoing findings and conclusions, the Planning Commission approves Site Plan Review No. 2017-18, subject to the following conditions: 1. The City has determined that City, its employees, agents and officials should, to the fullest extent permitted by law, be fully protected from any loss, injury, damage, claim, lawsuit, expense, attorney fees, litigation expenses, court cost or any other 5 cost arising out of or in any way related to the issuance of this Conditional Use Permit, or the activities conducted pursuant to this Conditional Use Permit, or the activities conducted pursuant to this Conditional Use Permit. Accordingly, to the fullest extent permitted by law, Market Street Development LLC and its representative(s), or its successors shall defend, indemnify and hold harmless the City, its employees, agents and officials, from and against any liability, claims, suits, actions, arbitrations proceedings, regulatory proceedings, losses, expenses or cost of any kind, whether actual, alleged or threatened, including, but not limited to, actual attorney fees, litigation expenses and court costs of any kind without restriction or limitation, incurred in relation to, as a consequence of , arising out of, or in any way attributable to, actually, allegedly or impliedly, in whole or in part, the issuance of the Conditional Use Permit , or the activities conducted pursuant to this Conditional Use Permit. Market Street Development LLC, and its representative(s), or its successors shall pay such obligations as they incurred by City, its employees, agents and officials, and in the event of any ciaim or lawsuit, shall submit a deposit in such amount as the City reasonably determines necessary to protect the City from exposure to fees, costs or liability with respect to such claim or lawsuit. 2. The subject property shall be maintained and operated in full compliance with the conditions of this grant and any law, statute, ordinance or other regulations applicable to any development or activity on the subject property. Failure of the Applicant or its successors to cease any development or activity not in full compliance shall be a violation of these conditions. Any violation of the conditions of approval may result in the revocation of this approval. 3. All current and future tenants/owners shall accept the conditions of this Conditional Use Permit by executing the Affidavit of Acceptance provided by the Department of Development, Compliance and Enforcement Services. 4. The City reserves the right to further review the Site Plan Review and conditions of approval should complaints be received from adjacent residents/tenants or should the number of incidents reported to the Sheriff's Department exceed the number expected in tl'iis type of <;ievelopment. 5. The Project shall comply with all regulations of the Lynwood Municipal Code, the California Building Code, the Los Angeles County Fire Code, other City Departments and applicable State and Federal regulations. 6. Any subsequent modification of the subject site or structures thereon shall be first reported to the Department of Development, Compliance and Enforcement Services, Planning Division, for review. 7. Conditions of approval shall be printed on the plans prior to submission to the Building and Safety Division for plan check. 6 8. Prior to plan check submittal, the Applicant shall sign a Statement of Acceptance stating that he/she has read, understands, and agrees to all conditions of this approval prior to issuance of any building permits. 9. Prior to appropriate permit issuance, the Applicant shall pay all applicable City of Lynwood fees including Development Impact fees and Art in Public Places fees. 10. The Site Plan Review approval shall lapse and become void one (1) year from the date (December 19, 2017) of this document unless all conditions of said permit are met and a building permit is issued or substantial progress has been made toward establishing this use. 11.AII appeals must be brought within ten (1 0) working days of the date of the final action by the Planning Commission. Department of Development, Compliance and Enforcement Services/Planning Division 12. The Project shall be substantially compliant with plans approved by the City of Lynwood Planning Commission (approved December 19, 2017) and on file in the Department of Development, Compliance and Enforcement Services, Planning Division. 13. Prior to issuance of a Certificate of Occupancy, the Applicant shall designate all required parking area, shall install bumper guards for all parking spaces within the parking areas, and shall provide that all parking areas are well lighted and secured to prevent loitering and public nuisances. The Applicant shall provide evidence of such to the Planning Manager for his/her approval. 14. Prior to issuance of a Certificate of Occupancy, the Applicant shall delineate path of travel regarding Americans with Disabilities Act requirements and access guidelines and shall provide evidence of such to the Planning Manager for his/her approval. 15. The Applicant shall maintain all exterior lighting within the subject property; any artificial lighting shall be installed to reflect away from adjoining properties. 16. Prior to issuance of a Certificate of Occupancy, the Applicant shall post signs within and around the subject property stating that "Loitering is strictly prohibited" and shall provide evidence of such to the Planning Manager for his/her approval. 17. The Applicant shall be responsible for maintaining the premises free of graffiti. Any graffiti must be removed within 24 hours of its appearance. 18. Any proposed subsequent modification of the Project site, structures thereon or hours of operation shall be first reported to the Department of Development, 7 Compliance and Enforcement Services for review and approval prior to said proposed modification. 19. Prior to effecting any proposed subsequent modification to the Project site or hours of operation shall be first reported to the Department of Development, Compliance and Enforcement Services for review and approval. 20. Failure to abide by and faithfully comply with any and all conditions attached to this approval action shall constitute grounds for revocation of said action by the Lynwood Planning Commission. 21. The Applicant shall comply with all Mitigation Measures delineated in the Mitigated Negative Declaration/Mitigation Monitoring and Reporting Program prepared and certified fur Lhis Projecl. 22. Failure to abide by and faithfully comply with any and all conditions attached to this approval action shall constitute grounds for the revocation of said action by the Lynwood Planning Commission. Building and Safety Division 23.AII construction shall meet or exceed the minimum building standards that are referenced in the following codes: • The California Building Code-2016 edition • The California Plumbing Code-2016 edition • The California Mechanical Code-2015 edition • The Los Angeles County Fire Code-2016 edition • The California Electrical Code-2016 edition !n cases where the provisions of the California Building Code, the City of Lynwood Municipal Code, or the plans or specifications in these plans may conflict, the more restrictive provisions shall govern. Pulilic Works Department 24.AII drainage design criteria shall be implemented the Los Angeles Flood Control District and the City of Lynwood standards. In case of a conflict between the standards, the City standards will prevail. 25.AII grading plans shall be designed to requirements of the City of Lynwood Department of Public Works. 26. The Applicant shall prepare Street Improvement Plans depicting all existing and proposed public works improvements. All streets shall be designed per City of Lynwood standards. 8 27. All public works improvements shall be constructed in accordance with the latest edition of the SPPWS Standard Specifications for Public Works Construction ("Green Book") and Lynwood City Standards, and to the satisfaction of the Director of Public Works/City Engineer prior to issuance of a Certificate of Occupancy. 28. The Applicant shall provide an engineer's estimate for all public works improvements and shall pay all plan check fees in accordance with the latest fee schedule prior to plan review. 29. The Applicant shall pay permit and inspection fees associated with the Project in accordance with the latest fee schedule at the time of permit issuance and inspection. 30. The Applicant shall coordinate all public works improvements with the Public Works Department at least 48 hours in advance of work beginning. Contact Mr. Antonio Perez at (31 0) 603.0220, ext. 273 to arrange for a public works inspection. 31. To ensure completion of all public works improvements, the Applicant shall enter into a Development Agreement with the City prior to commencement of any demolition/construction activities, and shall post the necessary security in the amount estimated by the City engineer in a form approved by the City Attorney. 32. The Applicant shall comply with the City of Lynwood Ordinance pertaining to construction debris recycling. Contact the Public Works/Engineering Division to obtain a Construction & Demolition Debris Waste Reduction Recycling Plan form(s). The Applicant shall contact the City Waste Hauling Company (Waste Resources Inc.) at (31 0) 366.7600 and obtain a trash container(s), including facilities for recycling. 33. The Applicant shall comply with all applicable South Coast Air Quality Management District regulations. 34.1f any hazardous material is encountered on the Project site that has the potential to reach the ground water supply, the Applicant shall secure a permit from the State Regional Water Quality Control Board and an ID number from the Environmental Protection Agency. The following Conditions (as applicable to the Project) must be complied with prior to Approval of a Grading or Drainage Plan 35. Grading or drainage plans shall be prepared by a Registered Civil Engineer to the satisfaction of the Public Works Department/Engineering Division. The Project shall drain to the street through a parkway drain(s) or storm drain system whenever possible. Show street dedications and all existing and proposed driveways, curbs and gutters, sidewalks, handicap ramps, street trees, tree wells, street lights, street 9 signs, power poles, fire hydrants, bus stop furnishings, utility boxes, meters, traffic signal poles and cabinets, parkway drains, etc. on the plans. 36.A grading and drainage plan must provide for each lot having an independent drainage system to the public street, to a public drainage facility, or by means of an approved drainage easement. 37. Compliance with all Federal, State and local agency requirements pertaining to the Clean Water Act, which establishes regulations set forth in the Countywide National Pollutant Discharge Elimination System (NPDES) Permit. 38. Compliance with the City of Lynwood Storm Water Management ordinance and SUSMP requirements. Implementation of all NPDES requirements and Best Management Practices during and after construction. Provision and obtaining of approval of a site-specific Erosion Control Pian andior Storm Vvater Poiiution Prevention Plan (SWPPP) from the City plan check consultants. 39. Submittal of design calculations and obtaining permit and inspection for all development perimeter and retaining walls from the Building Division. 40.1mplementation of dust control operations (watering, use of approved dust preventatives, modifications of operations or other means acceptable to the City Engineer, Regional Water Quality Control Board, Air Quality Management District and any Health or Environmental Control Agency having jurisdiction over the area) at the time, location, required amount, and as often as necessary to comply with Fugitive Dust Regulations issued by the Air Quality Management District. The City Engineer shall have the authority to suspend all construction activities if, in his/her opinion, the Applicant fails to adequately provide for dust control. 41.A Commercial LID Project must incorporate one or more LID system(s) in the Project design. The system(s) must be depicted on Grading Plans submitted to the City. 42. Whefe FedeveiCJprnent result ir1 an alteration to rnore than fifty (50) percent or impervious surfaces of a previously existing development and the existing development was not subject to post-construction stormwater quality control requirements, the entire Project must be mitigated. 43. Where redevelopment results in an alteration of less than fifty (5) percent of impervious surfaces of a previously existing development and the existing development was not subject to post-construction stormwater quality control requirements, only the alteration must be mitigated. The following Conditions (if applicable to the Project) must be complied with prior to Issuance of a Building Permit 10 44. The Applicant shall submit an approved Grading Plan to the Department of Public Works/City Engineer for approval. No Building Permits will be issued prior to approval of the Grading Plan. ' 45. The Project is subject to the City of Lynwood Construction and Demolition Ordinance. Building Permits and/or Demolition Permits shall not be issued until the Applicant contacts the Department of Public Works, Engineering Division. 46. The final grading certificate signed by a registered Civil Engineer shall be submitted after grading operations are completed. The following Conditions (if applicable to the Project) must be complied with prior to Issuance of a Certificate of Occupancy 47. The Applicant shall remove any damaged sidewalk and construct new sidewalk within the Project limits, as necessary, in locations specified by the Public Works Director/City Engineer and per SPPWC STD DWG 113-2. 48. The Applicant shall remove rounded curb and gutter and construct new curb and gutter and asphalt pavement with the property limits, as necessary, in locations specified by the Public Works Director/City Engineer and per SPPWC STAD DWG 120-2, A2-6. 49. The Applicant shall construct new driveway approaches per SPPWC STD DWG 120-2 TYPE C and as directed by the City Engineer (to be used for ingress and egress as depicted on the Site Plan). 50. Where utility cuts on concrete pavement are proposed, the entire concrete panel shall be removed and reconstructed. 51. The Applicant shall submit all on-site landscape, irrigation and landscape maintenance plans to the Public Works Director/City Engineer for review and approval. Drip-line irrigation shall be used for all landscaped areas installed for new construction. The drip irrigation system must include an automatic rain shut- off device, soil moisture sensors, and an operating manual to instruct the building occupant on how to use and maintain water conservation hardware. 52. All on-site parking and circulation areas shall be paved as required by a pavement engineering or geotechnical report prepared by a Registered Civil Engineer, subject to review and approval of the Public Works/Engineering Division. 53. Centerline ties and benchmark monuments shall be preserved. In the event ties and benchmark monuments are disturbed, the Applicant shall secure a licensed Land Surveyor for their re-establishment. The Applicant shall re-establish all disturbed or removed survey monuments in the public right-of-way and shall file a 11 record of survey with the County of Los Angeles Surveyor in accordance with applicable provisions of California state law. 54. The Applicant shall prepare a Covenant, subject to approval of the City Engineer, for ingress and egress, utility and drainage easement, fire land, and maintenance of the private driveway. 55. The Applicant shall contact all appropriate utility companies (for non-City owned utilities) to establish any necessary easements to provide services to the Project site. All parcels shall be served by utilities, allowing each parcel/lot to function separately from one another. The Applicant shall be responsible for research about private utility lines to ensure there will be no conflicts with the developed Project site. If any existing on-site utility lines or any existing utility lines serving the proposed parking lot conflict with the developed parking lot, said utility lines shall be relocated, removed, or sealed at the Applicant's expense to the satisfaction of the City Engineer. 56. The Applicant shall remove any encroachments or interfering facilities from the public right-or-way as directed by the City Engineer. 57. The Project site shall be served by underground utilities, as necessary. All overhead utility services within the perimeter of the Project site shall be placed underground to the satisfaction of the City Engineer. 58. Relocation of any public waer or sewer lines shall be subject to approval of the City Engineer. 59. All proposed on-site sewer, water and drainage facilities shall be private system(s) maintained by the Applicant unless otherwise approved by the City Engineer. A private sewer main shall be installed in the private property connecting to the public sewei. Building sewer laterals shall connect to this main from the medical office building. A clean out or manhole structure as required shall be installed separately. Laterals shall be constructed as necessary and shall be a minimum six (6) inch size. When connecting to an existing lateral, a City approved contractor shall verify the size of such lateral and shall provide proof of its integrity by providing a video tape of the lateral to the Department of Public Works/Engineering Division. Videotaping and verification of sewer size and conditions must be done in the presence of the City Engineer/Inspector. Any and all existing sewer laterals shall be abandoned at the property line per City instructions. A Contractor License "A" and Public Works permit is required. 60. The Applicant shall install all required water meters, meter service changes and/or fire protection iines, as determined necessary by the Director of Pubiic \Narks. Any new water meter shall be Automatic Meter reading type (Smart Meter) that offers pulse output or a radio interface, and shall be approved by the Department of Public Works prior to installation. The existing water service line shall be 12 abandoned at the main. The existing water meter shall be delivered to the City Water Yard. The work shall be performed by a licensed contractor hired by the Applicant. The contractor must obtain a permit from the Department of Public Works/Engineering Division prior to performing any work. Any and all existing water service lines less than one inch in diameter shall be abandoned at the water main line per City instructions. 61. The Applicant shall be responsible to meet all water requirements and guidelines of the City of Lynwood Water Division, the Los Angeles County Health Department and Los Angeles County Fire Department. Provision of fire protection water systems, hydrants and appropriate easements shall be in conformance with City of Lynwood and Los Angeles County Fire Department requirements. Los Angeles County Fire Department 62. The required fire flow for public hydrants at this location is 1500 gallons per minute at 20 psi for a duration of 2 hours, over and above maximum daily domestic demand. 1 hydrant(s) flowing simultaneously may be used to achieve the required fire flow. 63. Water: Install one new public fire hydrant as shown on the attached site plan marked up. All required fire hydrants shall be installed, tested and accepted prior to construction. 64. Access: Access is accepted as shown on the revised site plan dated December 5, 2017 as submitted to the County of Los Angeles Fire Prevention Land Development. SECTION 4. CEQA. In accordance with the California Environmental Quality Act Guidelines, an Initial Study was prepared to determine whether the Project may have a significant effect on the environment. On the basis of the Initial Study, the staff report, and oral and written evidence, it has been determined that the Project may have a potential significant effect on the environment which may be mitigated to a level that is less than significant, and therefore a Mitigated negative Declaration was prepared and adopted herein. A Mitigation Monitoring Plan has been prepared and said mitigation measures have been incorporated as a condition of Site Plan Review No. 2017-18 and Conditional Use Permit No. 2017-03. The Mitigated Negative Declaration was circulated in accordance with CEQA Guidelines Section 151 05(b). The Planning Commission hereby finds the Mitigated Negative Declaration as adequate to assess the environmental impacts of the Project, based on the findings contained herein and finds, on the basis of the whole record, that there is not substantial evidence that the Project will have a significant effect on the environment and that the approval of the Mitigated Negative Declaration reflects the Planning Commission's independent judgment and analysis. As such, the City of Lynwood Planning Commission hereby adopts the Mitigated Negative Declaration and the Mitigation Monitoring Plan. The full record is available for review in the Community and Economic Development Department. 13 APPROVED and ADOPTED this 12th day of December by members of the Planning Commission, voting as follows: AYES: NOES: ABSENT: ABSTAIN: APPROVED AS TO CONTENT: John Yonai, Interim Director Department of Development, Compliance and Enforcement Services Jorge Casanova, Chairperson Planning Commission APPROVED AS TO FORM: John Lam, City Attorney Planning Commission Counsel APPROVED AND ADOPTED by the Planning Commission of the City of Lynwood at a regular meeting held on the 12th day of December 2017. RESOLUTION NO: 3386 14 LONG BEACH BOULEVARD MEDICAL OFFICE BUILDING Initial Study Prepared by: City of Lynwood Department of Development, Compliance and Enforcement Services 11330 Bullis Road Lynwood, CA 90262 Contact: Albert Armijo, Interim Planning Manager November 15, 2017 ljPage INiTIAL STUDY AND ENVIRONMENTAL CHECKLIST FOR MITIGATED NEGATIVE DECLARATION OF ENVIRONMENTAL IMPACT Project Title: Project Location: Project Description: Project Applicant: Property Owner: lead Agency Contact Person: Long Beach Boulevard Medical Office Building 10211 Long Beach Boulevard, Lynwood, Los Angeles County Construction of an 11,468 square foot kidney dialysis treatment center with 25 dialysis stations within a one-story building. Market Street Development LLC, 3005 Douglas Boulevard, Suite 200, Roseville, CA 95661 Linenwood Properties LLC/Khaled Shalabi, 14041 Cornuta Avenue, Bellflower, CA 90706 Albert Armijo, Interim Planning Manager City of Lynwood, Planning and Building Division 11330 Bullis Road Lynwood, CA 90262 (31 0) 603-0220 Email: aarmijo@lynwood.ca.us This Initial Study has been prepared to identify and assess anticipated environmental impacts of the Project described above. The document relies on the City of Lynwood General Plan, the City of Lynwood Municipal Code, the Long Beach Boulevard Specific Plan, Applicant-submitted Project plans and technical studies noted in the Bibliography to this do.cument _to address in detail the effects or impacts associated with Project construction and operation. The Initial Study is a public document used by the decision-making lead agency to determine whether a project may have a significant effect on the environment. If the lead agency finds substantial evidence that any aspect of the project, either individually or cumulatively, may have a significant effect on the environment, regardless of whether the overall effect of the project is adverse or beneficial, the lead agency is required to prepare an Environmental Impact Report. If the lead agency finds no substantial evidence the project or any of its aspects may cause a significant effect on the environment, a Negative Declaration shall be prepared. If the lead agency recognizes the Project may have a significant impact on the environment, but that by incorporating specific mitigation measures to vv'hich the Project proponent has agreed in advance the impact will be reduced to a less than significant effect, a Mitigated Negative Declaration shall be prepared. In reviewing site specific information provided for the Project, the City of Lynwood has analyzed potential environmental impacts created by this project and a 21Page Mitigated Negative Declaration has been prepared pursuant to the provisions of CEQA. Project Location The Project site address is 10211 Long Beach Boulevard, Lynwood, CA. The property occupies 38,248 square feet within 4 parcels configured in a triangular shape. The Project site is bordered by commercial retail businesses to the north and to the south, by Long Beach Boulevard and commercial retail businesses to the east, and by a residential neighborhood in the City of South Gate to the west. The General Plan Land Use designation of the site is Commercial; the site is zoned SP (Long Beach Boulevard Specific Plan -Downtown Village 1). ~\ I W Florerlce-~ Graham ,, SOuth Gate \.Vr~strnont :, ~ Regional Map Project Description HaC I Hei· Existing Conditions The Project site currently contains a 12,430 square foot commercial retail business and a vacant 3,277 square foot residential building, both of which will be demolished to allow Project development. Market Street Development LLC has submitted an application that would enable development of an 11 ,468 square foot medical office building on a 38,248 square foot site that would contain a kidney dialysis treatment center with 25 dialysis stations. The proposed single-story structure also will contain a water treatment plant, supply storage area, customer service area, staff meeting rooms and medical offices, and other ancillary spaces as necessary and required by the California Health Code to support dialysis treatment functions. At full capacity, the Project hours of operation will be from 6:00 am. To 10:00 p.m., Monday through Saturday. Some staff will arrive one hour prior to opening to set up for the initial treatment or stay one hour after closing. All treatment is by appointment only. Most patients will be scheduled for dialysis between 8:00 a.m. and 5:00 p.m. When initially open, the clinic typically will run at a reduced capacity. Some patients who still work will require dialysis earlier 3IPage or later in the day. The patients all are repeat clients who receive treatment three times weekly; each treatment lasts three to four hours. Most patients do not drive themselves to treatment; rather, they arrive and leave by medical transport or are dropped off and picked up by a family member or caregiver. At full operation, the clinic may serve as many as 100-120 patients over the course of a week. When all 25 stations are in operation, there will be an average of 15 employees per shift. A total of 30-40 employees will be employed by the Project. Landscaping would occupy approximately 23 percent of the Project site. Vehicular access to the Project site parking garage would be via two access driveways from Long Beach Boulevard. A parking lot will be located on the north end of the Project site. The parking lot will contain 31 full size spaces (29 spaces are required). Required discretionary actions include a Conditional Use Permit that would allow development of the Project site with the proposed land use and Site Plan Review that would address overall building design, on-site parking, circulation and access, compatibiiity with surrounding uses, landscaping and lighting. Project Objective The primary Objective of the Project is to provide badly needed medical services to the local and near-regional communities. A second Project Objective is to serve as a catalyst for redevelopment and improvement of properties along Long Beach Boulevard in the Project vicinity. A third Project Objective is to provide a viable and attractive use with no variances required for development on the oddly-shaped (triangular) Project site. Project Approvals The Project applicant is requesting the following approvals from the City of Lynwood: • Adoption of the Negative Declaration e il,pprova! of a Conditional Use Permit • Approval of a Site P!an Review • Issuance of grading permits • Issuance of building permits Regulatory Setting The State of California has created a set of legislation, executive orders, policies and programs intended to reduce greenhouse gas emissions. California can draw on substantial scientific research conducted by experts at various state universities and research institutions. More than a decade of concerted research has demonstrated to scientists that early signs of climate change already are evident in California -demonstrated in increased average temperatures, changes in temperature extremes, reduced Sierra Nevada snowpack, sea level rise, and ecological shifts. Many of such changes are accelerating. Generally, research indicates California should expect overall hotter and drier conditions, increased average temperatures, rising sea levels, and increasing intensity of extreme weather events such as heat waves, wildfires, droughts and floods. 41Page The California Climate Action Team and the Air Resources Board have developed several reports to achieve the Governor's greenhouse gas targets. Reliance on achieving the targets is based on voluntary actions of California businesses, local governments and community groups, and on State incentive and regulatory programs. These include the Climate Action Team's 2010 "Report to Governor Schwarzenegger and the Legislature," the Air Resource Board's 2007 "Expanded list of Early Action Measures to Reduce Greenhouse Gas Emissions in California," and the Air Resources Board's "First Update to the Climate Change Scoping Plan: Building on the Framework Pursuant to AB 32, the California Global Warming Solutions Act of 2006." The reports identify strategies to reduce California's emissions to levels proposed in Executive Order S-3-05 and Assembly Bill 32 that are applicable to the proposed project. The Scoping Plan adopted in 2008 and updated in 2014 is the most recent document. California Global Warming Solutions Act of 2006 (Assembly Bill 32) Assembly Bill 32 (AB 32, also known as the Global Warming Solutions Act of 2006) commits the State to reduce greenhouse gas emissions in California to 1990 levels by 2020 and to 80 percent below 1990 levels by 2050. It requires the California Air Resources Board (CARB) to develop regulations and market mechanisms in pursuit of that mandate. Mandatory emissions caps for significant sources (e.g., electricity producers, cement plants) began January 1, 2012. Neither AB 32 nor the CARB Scoping Plan implementing AB 32 specifically mandates that each individual city adopt its own greenhouse gas reduction plan to meet AB 32 targets on a city- specific basis. California Sustainable Communities and Climate Protection Act of 2008 (Senate Bill 375) SB 375 (signed by the Governor in September, 2008) requires the South Coast Air Quality Management District (SCAQMD) to develop a "Sustainable Communities Strategy" to meet AB 32 Statewide targets on a regional basis. SB 375 supports California's climate action goals to reduce Greenhouse Gas Emissions as set forth in Assembly Bill 32 by coordinated transportation and land use planning, with the goal of more sustainable communities. Under SB 375, the South Coast Air Quality Management District (SCAQMD) must adopt its initial Sustainable Communities Strategy within three years (subject to certain exceptions), and then update the Sustainable Communities Strategy regularly thereafter. SCAQMD completed the final Sustainable Communities Strategy and received approval of such in early, 2012. Under SB 375, the Sustainable Communities Strategy is not allowed to address all sources of greenhouse gas em1ss1ons. Rather, the Sustainable Communities Strategy must focus on reducing greenhouse gas emissions exclusively from autos and light trucks. Emissions from other sources, such as energy use in buildings or construction, are not addressed by a Sustainable Communities Strategy. Perhaps for this reason, SB 375 specifically prohibits reliance on the regional Sustainable Communities Strategy to satisfy California Environmental Quality Act (CEQA) requirements. In 2010, the Air Resources Board established Greenhouse Gas Emissions targets for 2020 and 2035 for each region covered by one of the State's metropolitan planning organizations. Each metropolitan planning organization is required to prepare a "Sustainable Communities Strategy" as an integral component of its Regional Transportation Plan. The Sustainable Communities Strategy is to contain land use, housing and transportation strategies that, if implemented, would allow the region to meet its Greenhouse Gas Emissions reduction targets. Furthermore, developers can obtain relief from certain environmental review requirements under the Senate Bill 375 Transit Priority CEQA Exemption if their projects are consistent with the Sustainable SIPage Communities Strategy and if the projects are classified as a Transit Priority Project or a Residential Mixed Use Project. 2012-2035 Regional Transportation Plan The Southern California Association of Governments Regional Council adopted the 2012-2035 Regional Transportation Plan/Sustainable Communities Strategy (RTPISCS): Towards a Sustainable Future" on April 4, 2012. Stakeholders from across the Southern California Association of Governments region participated in this effort. Senate Bill No. 743 (SB 743) Senate Bill 7 43 made several changes to the California Environmental Quality Act (CEQA) for projects in areas served by transit (i.e. transit-oriented developments; or, TOO). The changes directed the Governor's Office of Planning and Research to develop ne\AJ approaches for analyzing transportation impacts under CEQA. Senate Bill 7 43 also created a new exemption for certain projects that are consistent with a Specific Plan and, under some circumstances, eliminates the need to evaluate aesthetic and parking impacts of a project. Senate Bill No. 32 (SB 32) Senate Bill 32 requires the State Air Resources Board to approve a Statewide Greenhouse Gas Emissions limit equivalent to 80 percent below the 1990 level, which must be achieved by 2050. Senate Bill 32 works in conjunction with, and supports, Assembly Bill 32 and Senate Bill 375. Senate Bill 97 When cities amend their general plans in a manner that triggers CEQA requirements for climate change analysis, the cities generally will not be able to simply reference the Sustainable Communities Strategy. Rather, they generally still will need to do -or promise to complete within short order -their own city-specific "Climate Action Plan" (Greenhouse Gas Emissions Reduction Plan) to comply with CEQA. Similarly, cities cannot rely on the Sustainable Communities Strategy for CEQA review of individual private development projects (with certain narrow exceptions), but will be able simply to confirm consistency with a city-specific climate action plan. The California State Natural Resources Agency has adopted amendments (through Senate Bill 97) to CEQA Guidelines (that became effective March 18, 2011) that specifically require analysis of climate change impacts in environmental review of projects. Protocols outlined in the New CEQA Guidelines can be extremely difficult, time consuming and costly to implement on a project-by-project basis, both for developers and the City itself. In addition, the New CEQA Guidelines may require City-wide analysis and mitigation plans for General Plan updates and large-scale analysis and mitigation plans for Housing Element update amendments to the General Plan, Specific Plan amendments, and other planning proposals. For this reason, the New CEQA Guidelines offer lead agencies a streamlined approach to processing environmental documentation. Once a city adopts a city~vJide "Greenhouse Gas Reduction Plan," future projects can simply be evaluated for consistency, and project applicants can participate in pre- set mitigation protocols that are predictable and can be made potentially more affordable and efficient when instituted city-wide. Now that New CEQA Guidelines confirm the need for climate change analysis and feasible mitigation for projects in all localities in California, those localities 6!Page that offer a Greenhouse Gas Emissions Reduction Plan may prove to be more attractive for development (all other factors being equal). State of California Code of Regulations, Title 24 -Energy Building Regulations The Building Energy Efficiency Standards were first adopted in 1976 and have been updated periodically since then as directed by statute. The Standards contain energy and water efficiency requirements (and indoor air quality requirements) for newly constructed buildings, additions to existing buildings, and alterations to existing buildings. The Public Resources Code requires the California Energy Commission to establish performance standards in the form of an "energy budget" in terms of the energy consumption per square foot of floor space. Thereby, the Standards include a prescriptive option that allows builders to comply by using methods known to be efficient and a performance option that allows builders complete freedom in their designs provided the building achieves the same overall efficiency as an equivalent building using the prescriptive option. The 2016 update to the Building Energy Efficiency Standards focuses on several key areas to improve the energy efficiency of newly constructed buildings and additions and alterations to existing buildings. The most significant efficiency improvements to non-residential Standards include alignment with national standards. New efficiency requirements for elevators and direct digital controls are included in the non-residential standards. The Standards are divided into three basic sets: mandatory requirements that apply to all buildings; performance standards (energy budgets) that vary by climate zone (of which there are 16 in California); and, building type. Therefore, the Standards are tailored to local conditions. CaiGreen (Part 11 of the 2010 Title 24 Building Standards Code is the California Green Building Standards Code) The California State Legislature passed Cal Green in 2010 with an effective date of January 1, 2011. CaiGreen is the first mandatory statewide green building code in the United States. CaiGreen applies to all residential, commercial, hospital and school buildings. It requires waste and water reductions, energy inspections, and use of low pollutant emitting interior materials, and establishes a 75 percent waste material diversion goal for the State of California. Green buildings emit less pollution, use more environmentally friendly materials and are healthier for occupants. Buildings generate 30 percent of greenhouse gas emissions. Green buildings have smaller carbon footprints than conventional buildings. Green buildings also result in better indoor air quality and are less expensive to maintain due to reduced demand for heating, cooling and water. In California, commercial buildings account for 36 percent of the State's electricity use. Building materials account for nearly 22 percent of the waste stream going to landfills. The average green building uses 30 percent less energy and 30-50 percent less water than a comparable "non-green" building. In addition, failure to have a Greenhouse Gas Emissions Reduction . Plan to support major General Plan updates, large Specific Plans or Specific Plan Amendments may lead to litigation over adequacy of California Environmental Quality Act review of a proposed project. Because a Greenhouse Gas Emissions Reduction Plan can take more than a year to prepare, over the short term some agencies have been incorporating into their CEQA studies (or General Plan amendments themselves) a commitment to formulate and adopt a future Greenhouse Gas Emissions Reduction Plan within set time limits, often under 18 months. Commitments to adopt a Greenhouse Gas Emissions Reduction Plan have become focal points of settlement 71Page agreements between the State Attorney General's Office and jurisdictions whose general plan updates and major amendments otherwise failed to address sufficiently impacts of greenhouse gas emissions. Senate Bill 7 This Bi!!, passed in 2009, requires the State to achieve a 20% reduction in per capita water use by 2020. Noncompliance by local water providers will make them ineligible for State grant or loan funding. Senate Bill 407 This Bill, passed in 2010, requires inefficient plumbing fixtures be replaced with more efficient models at time of property sale or improvement. Assembly Bill 939 This Bill, passed in 1989, established the goal of achieving a statewide diversion rate of 50% and requires cities and counties to divert a minimum 50% of their waste stream for reuse or recycling. Assembly Bill 341 The Governor signed Assembly Bill 341 into law on October 5, 2011. Among its provisions, the Bill establishes a statewide policy goal of source reducing, recycling or composting at least 75% of solid waste generated by 2020 and requires a business (defined as a commercial or public entity) that generates more than 4 cubic yards of commercial solid waste per week or a multifamily residential dwelling of 5 or more units to arrange for recycling services on and after July 1, 2012. in addition, each jurisdiction is required to implement a commercial solid waste recycling program that consists of education, outreach and monitoring of businesses that is appropriate for that jurisdiction and is designed to divert commercial solid waste from businesses. Appliance Energy Efficiency Regulation California Appliance Efficiency Regulations address 21 categories of Federally-regulated and non-Federally regulated appliances that range from air condensing units to exit signs. Title 20 reduces emissions intensity of new and existing buildings by establishing performance standards for devices often used in buildings and, in some cases, public infrastructure. California Public Utilities Commission Energy Efficiency Strategic Plan This Strategic Plan describes a series of measures to improve energy efficiency and to address a variety of energy and emissions-related issues. Two important goals of the Strategic Plan are zero net energy residential buildings by 2020 and zero net energy commercial buildings by 2030, which would reduce emissions associated with new buildings. Executive Order B-30-15 Governor Jerry Brown issued B-30-15 on April 29, 2015, which established a California Greenhouse Gas Emissions reduction target of 40 percent below 1990 levels by 2030. 81Page According to the California Planning and Development Report, the Executive Order requires all State agencies with jurisdiction over sources of Greenhouse Gas Emissions to participate and agencies to prepare implementation plans. Executive Order S-3-05 Prior to signing AS 32, Governor Schwarzenegger issued Executive Order S-3-05, which provides an additional, long-term greenhouse gas emissions reduction target of 80 percent below 1990 levels by 2050. Governor Arnold Schwarzenegger issued an Executive Order seeking a more aggressive non-binding target of 33 percent renewable energy by 2020. City of Lynwood City of Lynwood General Plan The City of Lynwood General Plan has the following Mission Statement-- "The Lynwood General Plan represents an effort by those who live, work, invest and recreate in Lynwood and the surrounding environs to plan for their future. This effort was undertaken in order to plan for a diversified City which offers residential opportunities to all ages and income levels; encourages the development of the City's employment base to provide a range of employment opportunities; supports a broad commercial base that is diversified in type and location; protects the health, safety and welfare of all persons in the community; offers the residents of Lynwood a choice of recreational opportunities that are close to home; plans for the infrastructure needed to support the community today and tomorrow; and gives the City a set of flexible land use designations that provide both structured guidance as well as opportunities for innovation." In addition to the Mission Statement above, the City General Plan contains seven Vision Statements that pertain to maintaining the safety and affordability of the community, promoting commercial activities and related employment opportunities, providing a mix of housing choices, creating attractive gateway facilities, and providing public amenities for City residents and visitors. The following Vision Statement is particularly relevant to the Project. "The City will promote employment opportunities at all levels of ability and expertise. Industrial development, medical facilities, real estate, and other institutions will view Lynwood as an ideal location to bring their employees." Long Beach Boulevard Specific Plan The Long Beach Boulevard Specific Plan stipulates land uses and development standards for a 2.37-mile stretch of Long Beach Boulevard encompassing approximately 140 acres south from Tweedy Boulevard to Orchard Avenue. The Specific Plan study area generally is one block deep on either side of Long Beach Boulevard. The intent of the Specific Plan is "to achieve a high-quality, aesthetically attractive urban area with land uses that are conducive to the presence of transit along 1-105 and the numerous small, local markets that are also vital to the community." The Specific Plan objectives for new development in the Project study area Downtown Village I are the following. • To revitalize Long Beach Boulevard • To increase transit use, particularly of the Green Line light rail on lnterstate-1 05 91Page • To instill downtown presence on Long Beach Boulevard • To provide a base for economic vitality for the future The Specific Plan identifies key issues within the study area, creates a land use development program, and establishes design guidelines for architecture and landscaping along Long Beach Boulevard. In addition, the Specific Plan provides direction to investors, developers, and the City by establishing a frame\ivork for the visual quality desired by the City establishing dovvntovv'n presence along Long Beach Boulevard. Importantly, land use standards "are set with a level of flexibility to address the changing demands of the real estate market." City of Lynwood Bicycle and Pedestrian Transportation Plan The Lynwood City Council adopted the Lynwood Bicycle and Pedestrian Transportation Plan in 2013. The Transportation Plan outlines goals and conceptual improvements proposed to establish complete streets that provide safe travel options for all users. The Transportation Plan recommends iinear circulation improvements that wouid contribute to increasing connectivity along the entire length of Long Beach Boulevard and pedestrian-oriented intersection improvements throughout Lynwood. In addition, the Transportation Plan "recommends circulation improvements that can contribute to increased connectivity along Imperial Highway through the existing residential neighborhoods, and the integration of enhancements adjacent to the key development areas that would create vibrant zones of activity." City of lynwood Mitigating Ordinances, Guidelines and Standards CEQA Guidelines allow use of previously adopted development policies or standards as mitigation for environmental effects of future projects when the standards have been adopted by the City with findings, based on substantia! evidence, that the policies or standards will substantially mitigate environmental effects unless substantial new information shows the policies or standards will not substantially mitigate the effects (§15183[f]). In March 2005, the City of Lynwood adopted the CEQA implementing procedures for preparation, processing, and review of environmental documents. The following regulations and ordinances include standards and policies uniformly applied throughout the City that will substantially mitigate specified environmental effects of future projects. • City of Lynwood General Plan • Long Beach Boulevard Specific Plan • City of Lynwood Municipal Code, Chapter XXV-Zoning • Urban Stormwater Quality Management and Discharge Control • Stormwater Quality Design Manual • Noise Regulations • Traffic Mitigation Fee The City's mitigating ordinances, guidelines and standards are referenced, where applicable, in this Initial Study Checklist. Because the City has adopted Findings of Fact that these Mitigating Policies and Standards substantially mitigate environmental impacts, no additional project- specific mitigation is required for the specified impact areas. Under CEQA Guidelines Section 15183, the impacts that can be substantially mitigated by these policies or standards are exempt from CEQA. 10 I Page Initial Study Checklist The City has determined an Initial Study shall be prepared to determine whether any impacts resulting from Project and/or operation would be considered potentially significant. Where the Initial Study concludes there is no substantial evidence the project could have a significant effect on the environment, a Negative Declaration (or a Mitigated Negative Declaration) is required. If revisions in the Project plans or Project Description are made or agreed to by the Applicant before the CEQA analysis is released for public review that would avoid or mitigate significant adverse environmental impacts, then a Negative Declaration is still required (§15070). If the Initial Study concludes there is substantial evidence the Project could have a significant effect on the environment, and Mitigation Measures either are unavailable or have not been agreed to by the Applicant, then an EIR is required. The Initial Study Checklist recommended in the CEQA Guidelines is used to determine potential impacts of the Project on the physical environment. The Checklist provides a list of questions concerning a comprehensive array of environmental issue areas potentially affected by the Project. Explanations to answers are provided in a discussion for each section of questions, as follows: • A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show the impact simply does not apply to projects like the one involved (e.g., the Project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on Project-specific factors as well as general standards (e.g., the Project will not expose sensitive receptors to pollutants, based on a Project-specific screening analysis). • All answers must take account of the whole action involved, including off-site as well as on-site, cumulative as well as Project level, indirect as well as direct, and construction as well as operational impacts. • "Potentially Significant Impact" is appropriate if there is substantial evidence an effect is significant. If there are one or more "Potentially Significant Impact" entries when the determination is made, an EIR is required. • "Less Than Significant Impact with Mitigation Incorporated" applies where incorporation of Mitigation Measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the Mitigation Measures and briefly explain how they reduce the effect to a less than significant level • "Less Than Significant Impact" applies where the impact does not require mitigation or result in a substantial or potentially substantial change of any physical conditions within the area affected by the Project. • "No Impact" applies where Project development (demolition; grading; construction) and Project operation would not result in any impacts to the environment in the context of CEQA Thresholds of Analysis. 11 I Page • Earlier analyses may be used where, pursuant to the tiering, Program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063(c)(3)(D). This is particularly relevant to environmental analyses of the Project in that the City of Lynwood City Council certified the Lynwood Transit Area Specific Plan Program Environmental Impact Report (State Clearinghouse Number 2015121020). The following analyses were conducted within the context of the proposed specific development Project. 12 l Page I. AESTHETICS The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Municipal Code, City of Lynwood Long Beach Boulevard Specific Plan, and the Applicant-submitted Project plans. Setting The Project site occupies 38,248 square feet within 4 parcels bordered by commercial businesses to the north and to the south, by Long Beach Boulevard to the east, and by residential properties in the City of South Gate to the west. Commercial uses lie beyond Long Beach Boulevard east. The Project site is within the Downtown Village I portion of the Long Beach Boulevard Specific Plan. Long Beach Boulevard is the primary commercial artery in Lynwood and thus functions as an auto-dominated corridor that connects Lynwood to cities to the north and south. The entire Project vicinity within the Downtown Village I area of the Specific Plan is urbanized generally with neighborhood commercial and commercial-related or service businesses, largely in aged or deteriorating conditions. The Project site contains a commercial (linen store) business and vacant single-family residence (previously used for social welfare/shelter purposes). Thresholds for Analysis Would the project -- Potentially Less Than Less Than Significant No Environmental Issue Significant With Significant Impact Impact Mitigation Impact a) Have a substantial adverse effect on a X scenic vista? b) Substantially damage scenic resources, including, but not limited to, trees, rock X outcroppings, and historic buildings within a state scenic highway? c) Substantially degrade the existing visual character or quality of the site and its X surroundings? d) Create a new source of substantial light or glare, which would adversely affect day or X nighttime views in the area? Discussion of CEQA Checklist Answers a-b) No Impact The City of Lynwood has no significant scenic vistas and no designated or proposed scenic routes. Lynwood is relatively flat and is built out with a mix of residential, medical, commercial and industrial uses. The urban character of Lynwood is further reinforced by the major roadway corridors that includes Long Beach Boulevard, Imperial Highway, 13IPage Martin Luther King Jr. Boulevard, lnterstate-1 05, and Alameda Street. All these auto- oriented roadways are lined with commercial, industrial, residential or medical development. The Project site does not include any heritage trees, historic buildings or rock outcroppings that would be considered scenic resources. There are no scenic vistas or scenic resources on or near the Project site that Project development could adversely affect. Therefore, Project development and operation would not result in a substantial adverse effect on a scenic vista and would not substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway. The Project would provide for construction and operation of an 11 ,468 square foot medical office structure to be used for kidney dialysis treatment. The 38,248 square foot Project site is bordered by Long Beach Boulevard to the east which is not designated a State scenic highway by the Caltrans State Scenic Highway Mapping System. The Project site currently contains a 12,430 square foot building used for commercial retail purposes and a vacant 3,277 square foot building previously used for public residential (shelter) housing. Therefore, Project development would not deteriorate a scenic vista and no impact would result. c) No Impact The Project site does not include any heritage trees, historic buildings or rock outcroppings that would be considered scenic resources. There are no scenic vistas or scenic resources on or near the Project site that Project development could adversely affect. The Project site currently contains a 12,430 square foot building used for commercial retail purposes and a vacant 3,277 square foot building previously used for public residential (shelter) housing. In addition, trailers are stored on the Project site. Project development of the proposed medical office building and treatment center will represent an aesthetic improvement to the Project site by replacing two deteriorating buildings with a newly constructed one-story structure. The proposed structure would extend to a height of 22 feet at its main parapet and 23 feet at the maximum high parapet. Proposed structural setbacks at the front (1 0 feet), rear (5 feet), side to the street (1 0 feet), and side to the interior (5 feet) comply with City Zoning Code and with Long Beach Boulevard Specific Plan standards. Project development would represent redevelopment of a portion of the overall Downtown Village I of the Long Beach Boulevard Specific Plan. Downtown Village I covers 27 acres and is intended to redevelop in support of numerous existing small businesses between Tweedy Boulevard and Martin Luther King Jr. Boulevard. Although the Specific Plan does not proposed changes to land use in the Downtown Village I area, architectural and landscape design guidelines in the Specific Plan guide development in the Village I area. Although Project development would alter the visual character of the Project site and Project vicinity, the Long Beach Boulevard Specific Plan includes many features to improve the visual quality of the urban environment. Spanish Colonial is "recommended" as the architectural style for buildings in Downtown Village I. The more 14 I Page contemporary architectural style of the proposed medical office/treatment center incorporates many architectural components that are characteristic of the Spanish Colonial style, such as the following. • The base of the building establishes a human scale for pedestrians and joins the building to the ground. • The main body of the building is architecturally subdivided into segments. • Window header height is maintained to unify the building masses and convey a harmonious street scene. • The building fagade is relieved by vertical changes in the elevation; long, blank walls are avoided. • A significant percentage of the building fagade is treated with window and arched treatments. • The north elevation (entry) building fagade is treated with paned windows and decorative arches above the windows. • Loading/unloading areas are located away from Long Beach Boulevard. • Mechanical units are concealed from public view by walls and/or landscaping. • The stucco walls are painted a contemporary color mix of Iron Ore, Tin Lizzie, Argos, and Nebulous White The Project is subject to Site Plan Review for its architectural and landscape design, streetscape enhancement, lighting, and signage design. This also would ensure Project development is harmonious and visually compatible with existing land uses throughout the 27-acre Downtown Village I planning area and entire Specific Plan study area. In addition, a Condition of Approval pertaining to required Applicant compliance with the City of Lynwood Art in Public Places Fee Program will be placed in the Conditional Use Permit/Site Plan Review Resolution. Project development would improve the deteriorated conditions on the Project site and no impact would result. d) Less Than Significant Impact with Mitigation Incorporated The Project vicinity has an urban character and high nighttime light levels from street lights, parking lot lighting and light fixtures attached to exterior building facades. Vehicle headlights from autos traversing adjacent to the Project site also contribute to nighttime lighting. Although glare is primarily a daytime phenomenon caused by sunlight reflecting from structures, roadways and vehicles, glare also can be created at night by vehicle headlights. Residential uses adjacent to the Project site in the City of South Gate would be the most sensitive to night lighting and glare. However, Project development and operation construction and operation will not increase the level of light and glare now being produced on the Project site. The proposed medical office/treatment center is one story in height and will be separated from South Gate residences to the west by a new six-foot tall block wall. In addition, the west elevation of the proposed building has the fewest windows and thereby would emit the least light and glare. The new sources of light and glare would not substantially increase nighttime lighting or glare in the urbanized Project vicinity. In addition, the Conditional Use Permit/Site Plan Review will contain a Condition of Approval that requires all newly introduced lighting to 15 I Page be confined to the Project site. Furthermore, compliance with Mitigation Measure MM- AES-1 will ensure impacts from light and glare would remain less than significant. The Project is subject to Site Plan Review for its architectural and landscape design, streetscape enhancement, lighting, and signage design. This also would ensure Project development is harmonious and visually compatible with existing land uses throughout the Tovvn Center District and entire Specific Plan study area. Mitigation Measure MM-AES-1 -All Project exterior, parking structure, and security lighting shall be confined to the Project site to avoid casting light or glare onto adjacent residential properties. Prior to issuance of an Electric Permit, the Applicant shall submit a Lighting and Photometric Plan that provides evidence of this Mitigation and shall obtain the approval of the Planning Division Manager of such Plan. II. AGRICULTURAL AND FORESTRY RESOURCES The discussion in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Municipal Code, Applicant-submitted Project plans, and City of Lynwood Long Beach Boulevard Specific Plan. Setting In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Department of Conservation as an optional model to use in assessing impacts on agriculture and farmland. In determining whether impacts to forest resources, including timberland, are significant environmental effects, lead agencies may refer to information compiled by the California Department of Forestry and Fire Protection regarding the state's inventory of forest land, including the Forest and Range Assessment Project and the Forest Legacy Assessment project; and forest carbon measurement methodology provided in Forest Protocols adopted by the California Air Resources Board. The Project site is located within an urban area and is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. No agricultural uses or forestry uses are located on the Project site or in the Project vicinity. The Project site is not zoned for agricultural uses. Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared X pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? b) Conflict with existing zoning for agricultural X use, or a Williamson Act contract? c) Conflict with existing zoning for, or cause rezoning of, forest land (as defined in Public Resources Code section 12220(g)), timberland (as defined by Public Resources X Code Section 4526), or timberland zoned Timberland Production (as defined by Government Code section 511 04(q))? d) Result in the loss of forest land or conversion X of forest land to non-forest use? e) Involve other changes in the existing environment which, due to their location or X nature, could result in conversion of 17 I Page Farmland, to non-agricultural use or conversion of forest land to non-forest use? Discussion of Checklist Answers a-e) No impact No portions of the City of Lynwood Long Beach Boulevard Specific Plan contain agricultural resources or prime farmland. Construction and operation of the medical office/treatment center Project would not result in the loss of forest land or result in the conversion of farmland or conflict with any land zoned for forest land. Therefore, no impact would occur. 18 I Page Ill. AIR QUALITY The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Municipal Code, City of Lynwood Long Beach Boulevard Specific Plan, Applicant submitted Project plans, City of Lynwood Transit Area Specific Plan Environmental Impact Report, and the "Air Quality Assessment -Lynwood Medical Office," prepared by Ldn Consulting, Inc. (August 29, 2017) Setting The Project site is located in the South Coast Air Basin (SCAB). The SCAB climate and topography contribute to formation and transport of pollutants that contain ozone or other chemicals that react with sunlight throughout the region. The region experiences temperature inversions that limit atmospheric mixing and trap pollutants, resulting in high pollutant concentrations near the ground surface. The United States Environmental Protection Agency (EPA) has established national ambient air quality standards (NAAQS) for which the California Air Resources Board (ARB) and the South Coast Air Quality Management District (SCAQMD) have primary implementation responsibility. The ARB and the SCAQMD also are responsible for ensuring California ambient air quality standards (CAAQS) are met (California Air Resources Board 2008a). SCAQMD manages air quality in the Los Angeles County portion of the South Coast Air Basin; it has jurisdiction over air quality issues in the County and administers air quality regulations developed at the federal, State, and local levels. It also is responsible for implementing strategies for air quality improvement and recommending Mitigation Measures for new growth and development. Area Pollutants Federal Standards Federal Air Quality Standards were developed per requirements of the United States Clean Air Act (1970), as amended in 2990. The Clean Air Act provides the basis for the national air pollution control program and includes national ambient air quality standards for major air pollutants. The Clean Air Act established two types of air quality standards (primary and secondary standards). Primary Standards established limits intended to protect public health, including for sensitive populations. Secondary Standards established limits to protect public welfare to include protection against decreased visibility, damage to animals, crops, vegetation and buildings. The Federal Environmental Protection Agency Office of Air Quality Planning and Standards has established National Ambient Air Quality Standards for principal pollutants (i.e. "criteria" pollutants) that include Carbon Monoxide (CO), Lead (Pb), Nitrogen Dioxide (N02), Particulate Matter (PM10 or PM2.5), Ozone (03), and Sulfur Dioxide (S02). Carbon dioxide (C02) and toxic air contaminates (TAC) also affect climate change and human health, respectively, but no State or federal ambient air quality standards exist for these pollutants. Carbon Monoxide: Carbon Monoxide is a colorless, odorless and tasteless gas produced from partial combustion of carbon-containing compounds, particularly in internal combustion engines. Carbon monoxide is a public health concern because it combines readily with hemoglobin and reduces the amount of oxygen transported in the bloodstream. Exposure to Carbon Monoxide 19 I Page near ambient a1r quality standards levels can lead to fatigue, headaches, confusion and dizziness. Ozone: Ozone is a highly oxidative unstable gas capable of damaging linings of the respiratory tract. Ozone is primarily a summer air pollution problem, and high ozone levels often occur downwind of the emission source. Ozone forms in the atmosphere through reactions between chemicals directly emitted from vehicles, industrial plants, and other sources. Exposure to ozone above ambient air quality standards can lead to human health effects such as lung inflammation, tissue damage, and impaired lung functioning. Ozone also can damage materials such as rubber, fabrics and plastics. Lead: Lead is a potent neurotoxin that accumulates in soft tissues and bone over time. The major sources of lead emissions historically have been motor vehicles and industrial activities. Lead is slowly excreted. Thereby, exposures to small amounts of lead from a variety of sources can accumulate to harmful levels Fffects from inhalation of lead near the level of the ambient air quality standard include impaired blood formation and nerve conduction. In addition, lead can adversely affect the nervous, reproductive, digestive, immune, and blood-forming systems. Nitrogen Dioxide: Nitrogen Dioxide is a reactive, oxidizing gas capable of damaging cells lining the respiratory tract. It is one of the nitrogen oxides emitted from high-temperature combustion, such as those occurring in cars, trucks, power plants, home heaters, and gas stoves. Nitrogen Oxide, like other traffic-related pollutants, is associated with respiratory symptoms, respiratory illness, and respiratory impairment. Clinical studies of human subjects suggest Nitrogen Oxide exposure to levels near the current ambient air quality standard may worsen the effect of allergens in allergic asthmatics, especially in children. lnhalable Particulate Matter: Particulate Matter is a complex mixture of tiny particles that consists of dry solid fragments, solid cores with liquid coatings, and small droplets of liquid. The particles vary in size, shape and chemical composition, and can be comprised of multiple materials such as metal, soot, soil and dust. Exposure to Particulate Matter levels exceeding current air quality standards increases the risk of allergies such as asthma and respiratory illness. In addition, these particles can contribute significantly to regional haze and reduced visibility in California. Sulfur Dioxide: Sulfur Dioxide is a gaseous compound of sulfur and oxygen and is formed when sulfur-containing fuel is burned by mobile sources such as locomotives, ships and off-road diesel equipment. It also is emitted from several industrial processes such as petroleum refining and metal processing. Effects from Sulfur Dioxide exposure at levels near the one-hour standard include bronchoconstriction accompanied by symptoms that may include wheezing, shortness of breath, and chest tightness particularly during exercise or physical activity. Children, the elderly, and people with asthma, cardiovascular disease, or chronic lung disease are most susceptible to these symptoms. Continued exposure at elevated levels of Sulfur Dioxide results in increased incidence of pulmonary symptoms and disease, decreased pulmonary function, and increased risk of mortality. State of California Standards The California Air Resources Board establishes State laws and regulations for air quality. California Ambient Air Quality Standards either are identical to or more restrictive than National Ambient Air Quality Standards and also restrict four additional contaminants, as follows. 20 I Page Visibility Reducing Particles: Per their name, Visibility Reducing Particles in the air obstruct visibility. Sulfates: Sulfates are salts of Sulfuric Acid that occur as microscopic particles (aerosols) resulting from fossil fuel and biomass combustion. Sulfates increase acidity of the atmosphere and form acid rain. Hydrogen Sulfide: Hydrogen Sulfide is a colorless, toxic and flammable gas with a recognizable odor. Hydrogen Sulfide occurs naturally in crude petroleum, natural gas, volcanic gases, and hot springs and is formed from bacterial breakdown of organic matter. Exposure to low levels of Hydrogen Sulfide may cause irritation to the eyes, nose, or throat and also may cause difficulty in breathing for some asthmatics. Brief exposure to high concentrations of Hydrogen Sulfide can cause loss of consciousness and potentially death. Vinyl Chloride: Vinyl Chloride is also known as Chloroethene and is a toxic, carcinogenic, colorless gas with a sweet odor. Vinyl Chloride is an industrial chemical primarily used to product its polymer (polyvinyl chloride --PVC). Regional Standards The State of California has 35 specific air districts, each of which is responsible for ensuring criteria! pollutant levels are below National Ambient Air Quality Standards and California Ambient Air Quality Standards. Air basins that exceed either of these Standards for any criteria! pollutants are designated as "non-attainment areas" for that pollutant. Currently, there are 15 non-attainment areas for the federal Ozone Standard and two non-attainment areas for the PM2.s Standard. Therefore, the State created the California State Implementation Plan (SIP), which is designed to provide control measures necessary for California Air basins to attain ambient air quality standards. The Project site is located within the Southern California Air Basin. The South Coast Air Quality Management District is the government agency that regulates sources of air pollution within Los Angeles County. The following pollutants currently are non-attainment pollutants according to Federal Standards: Ozone (8-Hour); and PM2.5 (24-Hour and Annual Arithmetic Mean). The following pollutants currently are non-attainment pollutants according to California Standards: Ozone (1-Hour and 8-Hour); PM 10 (24-Hour and Annual Arithmetic Mean); PM2.5 (Annual Arithmetic Mean); and, Nitrogen Dioxide (1-Hour and Annual Arithmetic Mean). Local Air Quality Criteria pollutants are measured continuously throughout the South Coast Air Basis to track ambient air quality patterns throughout Los Angeles County. The South Coast Air Quality Management District is responsible for monitoring and reporting monitoring data. The Air Quality Management District operates 17 monitoring sites that collect data about criteria! pollutants within the southern South Coast region. The monitoring station closest to the Project site is the Lake Elsinore station. The South Coast Air Quality Management District uses a Localized Significance Threshold methodology for calculating Nitrogen Dioxide, Carbon Monoxide, and Particulate Matter (2.5 and 1 0) levels. The Localized Significance Thresholds for these pollutants are indicated in the following table. 21 I Page 1-Acre Localized Significance Thresholds Pollutant LST @ 25 Meters (lb/day) Carbon Monoxide 680 PM10 (Construction) 5 PM1o 2 Nitrogen Dioxide (Construction and 74 Operation) Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No With impact Impact Mitigation Impact a) Conflict with or obstruct implementation of X the applicable air quality plan? b) Violate any air quality standard or contribute substantially to an existing or X projected air quality violation? c) Result in a cumulatively considerable net increase of any criteria for which the project region is non-attainment under an applicable federal or state ambient air X quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? d) Expose sensitive receptors to substantial X pollutant concentrations? e) Create objectionable odors affecting a X substantial number of people? Discussion of Checklist Answers a) No Impact Project development (demolition; grading; construction) and operation are not anticipated to conflict with or obstruct implementation of the applicable Air Quality Plan. The Project site is located in the South Coast Air Basin (SCAB), which is under the jurisdiction of the South Coast Air Quality Management District (SCAQMD). The SCAQMD is the regional agency responsible for air quality regulations within the SCAB including enforcing the California Ambient Air Quality Standards (CAAQS) and implementing strategies to improve air quality and to mitigate effects from new growth. The SCAQMD, in association with the California Air Resources Board (CARS) and the Southern California Association of Governments (SCAG), is responsible for preparing the Air Quality Management Plan (AQMP) that details how the region intends to attain or maintain the state and federal ambient air quality standards. In 2007, CARS adopted a regulation to reduce diesel particulate matter and nitrogen oxides (NOx) emissions from in-use (existing) off-road heavy-duty 22 I Page diesel vehicles. Consistency with the 2007 AQMP is determined when a project: (1) does not increase the frequency or severity of an air quality standards violation or cause a new violation; (2) is consistent with the growth assumptions in the AQMP; and (3) does not conflict with the implementation of any of the control measures or strategies adopted in the AQMP. The purpose of the AQMP is to bring an area into compliance with the requirements of Federal and State air quality standards. The "Air Quality Assessment" prepared for the Project used the CaiEEMod to calculate emissions associated with Project development (demolition; grading; construction). Project development source types that contribute to pollutant emissions include the following: off-road equipment; on-road vehicle travel; fugitive dust; architectural coating; and, paving off-gassing. Project construction dates were estimated based on a hypothetical construction beginning early 2018. Project development was assumed to be completed approximately six months after construction begins. Project development would include demolition of approximately 15,000 square feet of existing buildings and include hauling demolished materials off the Project site. After Project development is completed, Project operation would generate emissions from daily operation that would include sources such as Area, Energy, Mobile, Waste and Water uses, which also were calculated within CaiEEMod. Area Sources include consumer products, landscaping and architectural coatings as part of regular maintenance. Energy sources would be from uses such as electricity and natural gas. In addition, mobile or transportation-related emissions were calculated. Consumer product emissions are generated by a wide range of product categories that include air fresheners, automotive products, household cleaners and personal care products. Potential on-site odor generators would include short-term construction odors from activities such as paving and painting. These are not considered an impact under CEQA. Project grading operations would require trenching for footings and utility installation, paving and building construction. The following table indicated expected Project development emissions and indicates whether those emissions exceed South Coast Air Quality Management District Thresholds. Expected Construction Emissions Summary Year ROG NOx co 2018 2.721 6.653 8.596 (lb/day) Un- Mitigated SCAQMD 75 100 550 Exceeds SCAQMD No No No Screening Threshold ROG = React1ve Organ1c Gases NOx = Nitrogen Oxide CO = Carbon Monoxide S02 = Sulfur Dioxide PM = Particulate Matter SOz PMlo PMlo PM1o (Dust) {Exhaust) (Total) 0.014 2.845 0.067 2.887 150 --150 No --No PMz.s PMz.s PMz.s (Dust} (Exhaust) (Total) 1.513 0.066 1.555 --55 --No 23 I Page Based on this consistency analysis, Project development and operation would not exceed South Coast Air Quality Management District air quality standards. Thereby, no impact will result from Project development and operation. b & c) Less Than Significant Impact Short-term air quality impacts can be anticipated from construction. ,i\1! construction equipment is required to comply with CARB regulations, and construction activity is subject to the SCAQMD regulations. The California Clean Air Act, signed into law in 1988, established the CAAQS; all areas of the State are required to achieve and maintain the CAAQS by the earliest practicable date. Regions of the State that have not met one or more of the CAAQS are known as nonattainment areas, while regions that meet the CAAQS are known as attainment areas. The proposed project would be located in the Los Angeles County sub-area of the SCAB. Los Angeles County is designated as a state nonattainment area for 0 3, PM2.5, inhalable particulate matter less than or equa! to 10 microns in diameter (PMd, nitrogen dioxide (N02), and !ead; and an attainment or unclassified area for carbon monoxide (CO), sulfur dioxide (S02), sulfates, hydrogen sulfide, and visibility reducing particles. The SCAQMD publishes thresholds of significance for these pollutants. In addition to construction equipment operating at the Project site, Project construction includes limited grading activity. In order to avoid significant impacts by stock-piling or transporting this soil, fugitive dust measures shall be addressed. This activity is subject to regulations under SCAQMD Rule 403 for fugitive dust control, which includes Best Management Practices (BMP) to mitigate fugitive dust from construction sites. The following tables noted in the "Air Quality Assessment" for the Project indicates Summer and Winter Daily pollutant generation from Project operation activities. Summer Daily Pollutant Generation I Area Source · ROG co PMz.s Emission 0.256 0.000 0.001 0.000 0.000 0.000 Estimates (lb/day) Energy Emission 0.004 0.032 0.027 0.000 0.002 0.002 Estimates (lb/day) Mobile Emission 0.610 2.734 7.479 0.024 1.821 0.503 Estimates (lb/day) Total (lb/day) 0.87 2.766 7.507 0.024 1.823 0.505 SCAQMD Thresholds 55 55 550 150 150 55 Significant? No No No No No No Daily pollutant generation assumes trip distances within CaiEEMod 24 I Page Winter Daily Pollutant Generation ROG NOx co SOx PM1o PM2.s Area Source Emission 0.256 0.000 0.001 0.000 0.000 0.000 Estimates (lb/day) Energy Emission 0.004 0.032 0.027 0.000 0.002 0.002 Estimates {lb/day) Mobile Emission 0.593 2.797 7.189 0.024 1.821 0.503 Estimates (lb/day) Total (lb/day) 0.853 2.829 7.217 0.023 1.823 0.505 SCAQMD Thresholds 55 55 550 150 150 55 Significant? No No No No No No Daily pollutant generation assumes trip distances within CaiEEMod In addition, the South Coast Air Quality Management District recommends using Localized Significance Thresholds methodology that incorporates background ambient air quality data. Mobile off-site emissions should not be included. The following table indicates modeled estimates for both Project development and Project operation, excluding off- site mobile emissions. The worst case Localized Significance Threshold is at 25 meters from the center of the Project and was used to analyze Project impact. The "Air Quality Assessment" indicates "based on the modeling results, no LST [Localized Significance Threshold] impacts are expected. Wetting down the Project site during Project development is a Project Design Feature and, as such, will require construction contractors to wet the Project site at least twice daily to minimize dust generation. Localized Significance Threshold (LST) Analysis Construction/Operations Pollutant Project without tSTSRA-1 Significance? Off-Site Mobile 1-Acre Emissions (lb/day) (lb/day} CO (Construction) 8.596 680 No CO (Operation) 0.028 680 No PM10 (Construction) 2.887 5 No PM2.5 (Operation) 0.002 2 No NOx (Construction) 6.653 74 No NOx (Operation) 0.032 74 No The data indicated in the three tables above indicates significant air quality impacts are not anticipated from associated Project development or operation. The "Air Quality Assessment" prepared for the Project concludes in part that although Project development will generate fugitive dust emissions during grading, heavy equipment usage and from construction workers commuting to/from the Project site "would not exceed any city thresholds." In addition, the "Air Quality Assessment" indicates no impacts were found when Project emission was compared to both operational and construction Localized Significance Thresholds. Furthermore, emissions generated from area and operational sources resulting from Project-generated traffic, landscaping 25 I Page maintenance equipment, consumer products, and annual maintenance and painting "would not generate emissions in excess of SCAQMD screening thresholds" and no additional Mitigation Measures [other than wetting the Project site down at least twice daily] are not required." d) Less Than Significant Impact with Mitigation Incorporated Sensitive receptors include day care centers (adult & child), schools, hospitals, churches, rehabilitation centers, and long-term care facilities (i.e. assisted living facilities). A review of the Project area indicates there are no sensitive receptors within one-fourth mile of the Project site. As such, no impact is anticipated. However, a residential neighborhood in the City of South Gate borders the Project site to the west. Residents of these dwellings could be exposed to short-term dust generated from grading and construction activities. implementation of Mitigation Measure MM-AQ-1 will require the Applicant to comply with all Best Management Practices contained in the South Coast Air Quality rv1anagement District Rule 403 and thereby reduce this potential impact to a less than significant level. e) No Impact The "Air Quality Assessment" prepared for the Project indicates the Project "would not be expected to generate offensive odors and would therefore not impact any sensitive receptors. The proposed project would not generate or be exposed to offensive odors. Therefore, no odor impacts would occur on or off-site." No resultant impact would occur. Mitigation Measures MM-AQ-1: During construction, the Applicant shall comply with all Best Management Practices contained in South Coast Air Quality Management District's Rule 403 pertaining to control of fugitive dust. 26 I Page IV. BIOLOGICAL RESOURCES The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting The Project site is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. There are no significant biological resources on the Project site. No sensitive or threatened animal species inhabit the Project site. Thresholds for Analysis Would the project -- Environmental Issue a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies or regulations or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? c) Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? d) Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? e) Conflict with any local ordinances protecting resources, such as a tree policy or ordinance? policies or biological preservation Potentially Significant Impact Less Than Significant With Mitigation Less Than Significant Impact No Impact X X X X X 271Page f) Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other X approved local, regional, or state habitat conservation plan? Discussion of Checklist Answers a-f) No Impact The 38,248 square foot triangular-shaped Project site is fully developed with a commercial retail business and a vacant residential building used for protective/rehabilitation purposes. The Project site currently has minimum landscaping. No sensitive or threatened floral or faunal species inhabit the Project site. The Project area is completely urbanized and there are no trees within the vicinity of the Project site tr1at couid provide suitable nesting habitat for protected raptors or other bird species. In addition, the Project site is not within a migratory bird flyway or near any active areas for water fowl. No wetlands or conditions that indicate the presence of wetlands or waters of the United States are on the Project site. Due to its location in a highly urbanized area near a busy roadway the Project site does not provide suitable habitat for a wildlife corridor or a native wildlife nursery. The Project site is not located within an adopted habitat conservation plan or natural community conservation plan. Therefore, Project development and operation would not result in any impacts related to Biological Resources. 28 I Page V. CULTURAL RESOURCES The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, Applicant submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting The Project site is located in the traditional territory of the Gabrielino tribal group. Most contemporary Gabrielino today identify themselves as Tongva. There are no historic resources in the Project site that are listed on the National Register of Historic Places or the California Register of Historical Resources. The Lynwood Pacific Electric Railway Depot, listed on the National Register, previously was located at 11453 Long Beach Boulevard but was relocated to Lynwood Park near Martin Luther King Jr. Boulevard and Carson Drive, outside the Project site and outside the Lynwood Transit Area Specific Plan study area. Another historic resource at 11331 Plaza Street was listed on the California Register and found eligible for listing on the National Register. However, the building is no longer extant and a shopping center is on its former site. As part of the planning effort for the Long Beach Boulevard Specific Plan, the City of Lynwood identified four structures as having "significant importance to the local heritage of the community" but noted the structures were not listed on the California Register at the time. Although four structures were mentioned, only three were described in detail: the Helen Grace Chocolate Factory (3303 Martin Luther King Jr. Boulevard); the Lynwood Hotel (3304 Mulford Avenue); and, a residential dwelling unit built in the 1960s (address not provided). The Helen Grace Chocolate Factory is outside the Project area (and has been converted to a different use). The Project site is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. Thresholds for Analysis Would the project -- Potentially Less Than Less Than Significant No Environmental Issue Significant With Significant Impact Impact Mitigation Impact a) Cause a substantial adverse change in the significance of a historic resource as X defined in Section 15064.5? b) Cause a substantial adverse change in the significance of an archaeological X resource pursuant to Section 15064.5? c) Directly or indirectly destroy a unique paleontological resource or site or unique X geologic feature? d) Disturb any human remains, including those interred outside of formal X cemeteries? 29 I Page Discussion of Checklist Answers a) No Impact The Project site has been previously disturbed through development of the existing buildings. The Project site is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. There are no known historical resources on the Project site. Limited excavation into soils on the Project site will occur, which would further limit the potential for resources to be encountered during Project development (grading and construction activities). There is no known event in history that occurred at the Project site that would qualify it for historical preservation. Therefore, Project development (grading; construction) will have no impact on historical resources as defined in CEQA Guidelines Section 15064.5. b) No Impact There are known archaeological resources in the Long Beach Boulevard Specific Plan study area. The Project site is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. Archaeological resources that may have existed at or near the surface have likely been disturbed by any past activities. As a result, uppermost soil sediments are not likely to contain archaeological resources. However, given the well-documented occupation of the Project area by indigenous tribes and others both prehistorically and historically, there is a reasonable potential Project development could occur on sites with previously unknown archaeological resources. Effects on archaeological resources are knowable only once Project specific proposed ground-disturbing activity occurs. Project development will occur pursuant to adopted County of Los Angeles and City of Lynwood policies, ordinances, procedures and Standard Conditions. c) No Impact There are known Paleontological resources in the Long Beach Specific Plan study area. The Project site is developed with a commercial retail business and a residential building used for protective/rehabilitation purposes. No paleontological resources were identified during prior development activities in the Specific Plan study area. Project development would not directly or indirectly destroy a unique paleontological resource or site or unique geologic feature. Notwithstanding this, should any be discovered on the site, the Applicant is required to comply with the provisions set forth in CEQA Guidelines Section 15064.5 regarding paleontological sites and is required to comply with City of Lynwood Standard Conditions pertaining to discovery of archaeological resources. d) Less Than Significant Impact Project development (demolition, grading, and construction activities) is not expected to disturb any human remains. Notwithstanding this, should any human remains be discovered on the site during grading or construction activities, the Applicant is required to comply with the provisions set forth in CEQA Guidelines Section 15064.5 regarding human remains sites and is required to comply with City of Lynwood Standard Conditions pertaining to discovery of human remains. Also, California State Health and Safety Code Section 7050.5 indicates no further disturbance may occur until the Los Angeles County Coroner has made necessary findings regarding origin and disposition 30 I Page pursuant to Public Resources Code Section 5097.98. If the remains are determined to be of Native American descent, the coroner has 24 hours to notify the California Native American Heritage Commission (refer to the Tribal Cultural Resources Section of this document for additional discussion). 31 I Page VI. GEOLOGY AND SOILS The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, City of Lynwood Long Beach Boulevard Specific Plan, Applicant submitted Project plans, and the "Geotechnical Report -Lynwood Medical Building" (September 8, 2017), prepared by Gulaite & Associates, Inc. Setting The City of Lynwood is located on the east edge of the Pacific Plate, within the wide transform boundary zone with the North American Plate and near the big bend in the San Andreas fault. The Project vicinity and the area around the City of Lynwood have experienced various effects of earthquakes on the San Andreas and other local faults. Local geology is described in terms of four primary structural blocks (the southwestern block; the northwestern block; the central block; and, the northeaster biock) that in part have contrasting basement rocks and superjacent sections and whose contacts are zones of faulting and flexure on which vertical and lateral movement has occurred intermittently since middle Miocene time. The Project site is located within the "Central Block." This Block is bounded by the Newport Inglewood-Rose Canyon fault zone to the southwest and the Whittier Elsinore fault zone to the northeast. The California Geological Survey classifies recognized faults in the State based on their potential seismicity. Faults are classified as active, potentially active, or inactive. The Project site and area are located in general proximity of several active and potentially active faults. Active faults are defined as those that have experienced surface displacement within the Holocene period (approximately the last 11,000 years). A fault segment is considered "potentially active" if there is evidence of displacement during Quaternary time (i.e. the last 2 million years). Southern California is known to be seismically active. Earthquakes that occur within approximately 60 miles of the Project site are capable of generating ground shaking of engineering significance to the proposed construction. The follo\lving table indicates principal knovv active faults that may affect the Project site. Principal Active Faults Fault Name Approximate Fault Maximum Moment Distance to Project Ma.gnitude2 Site1 (Mmax} {miles) Newport-Inglewood 3.2 7.1 Whittier 10.5 6.8 Palos Verdes 11.4 7.3 Hollywood 12.8 6.4 Puente Hills Blind Thrust 12.0 7.1 Raymond 13.2 6.5 Santa Monica 14.0 6.6 Anacapa-Dume 14.9 7.5 Verdugo 16.2 6.9 Sierra Madre 18.6 7.2 ~"' ~~~1...~11 c~ .. ,~·• '1'7 '.) £.I . .J a r:: U . .J 32 I Page Sierra Madre (San Fernando) 24.2 6.7 Malibu Coast 26.0 6.7 San Gabriel 26.5 7.2 San Andreas 41.0 7.8 Notes: 1 per Jennings, 2010 2 per Cao, et al., 2003 The Project site is approximately 45 miles west of the San Andreas Fault. Movement on the San Andreas Fault has created a complex geologic terrain over the 20-30 million years since it has been active. The San Andreas Fault also is the boundary between the oceanic plate on the west and the continental plate on the east. The section of the San Andreas fault nearest the Project site trends at an angle to that of the fault to the north and south and has been termed "The Big Bend" that causes a component of north-south convergence in the Southern California area. There are no recognized active faults located within the City of Lynwood. Active faults (Quaternary Age or younger) with 15 kilometers of the Project site include the Los Alamitos fault, the Newport-Inglewood-Rose Canyon faults, and the Elsinore-Whittier Fault Zone. Other major faults nearby include the Northridge Hills fault, the Santa Monica Fault, and the San Gabriel Fault. According to the California Geological Survey's 2008 ground motion interpolator (part of the Probabilistic Seismic Hazard Assessment for the State of California), there is a 10 percent probability that the Project site will experience a peak horizontal ground acceleration of 0.419g in the next 50 years and a 2 percent probability that the Project site will experience a peak horizontal acceleration of 0.691 g in the next 50 years. The "Geotechnical Report" prepared for the Project indicates "this is a relatively high level of ground shaking for California." Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i. Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State X Geologist for the area or based on other substantial evidence of a known fault? (Refer to Division of Mines and Geology Special Publication 42.) ii. Strong seismic ground shaking? X iii. Seismic-related ground failure, X including liquefaction? iv. Landslides? X 33 I Page b) Result in substantial soil erosion or the X loss of topsoil? c) Be located in a geological unit or soil that is unstable, or that would become unstable as a result of the project, and X potentially result in on-or off-site iandsiide, iaterai spreading, subsidence, liquefaction or collapse? d) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building X Code ( 1994 ), creating substantial risks to life or property? e) Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems X where sewers are not available for the disposal of wastewater? Discussion of Checklist Answers a.i) Less than Significant Impact Earthquake Fault Zones have been established in accordance with the Alquist-Priolo Special Studies Zones Act ( 1972), which directs the State Geologist to delineate the regulatory zones that encompass surface traces of active faults that have a potential for future surface fault rupture. The purpose of the Alquist-Priolo Act is to regulate development near active faults to mitigate the hazard of surface fault rupture. Earthquakes that occur within approximately 60 miles of the Project site are generally capable of generating ground shaking of engineering significance to Project development. The Project site is located in general proximity of several active and potentially active faults. Secondary effects of earthquakes may include the following: • Fires -There is a high probability of fires following an earthquake due to the number of broken gas lines that typically occur. Water mains and lines often break due to ground movement. The combination of fires and a water shortage can seriously complicate response to an earthquake. • Hazardous Materials Spills -Hazardous materials in an industrial and manufacturing area could present a major problem in the event of an earthquake. There are industrial and manufacturing uses in the vicinity of the Project site. According to the California Geological Survey's 2008 ground motion interpolator (part of the Probabilistic Seismic Hazard Assessment for the State of California), there is a 10 percent probability that the Project site will experience a peak horizontal ground acceleration of 0.419g in the next 50 years and a 2 percent probability that the Project site will experience a peak horizontal acceleration of 0.691 g in the next 50 years. The 34 I Page "Geotechnical Report" prepared for the Project indicates "this is a relatively high level of ground shaking for California." Development of the Project commercial/residential building would be subject to all applicable City, State, and local building regulations, including the California Building Code (CBC) seismic standards as approved by the Garden Grove Building & Safety Division. Therefore, any resultant impact would be less than significant. a. ii) Less Than Significant Impact The proposed medical office building would be subject to strong seismic ground shaking, as are all projects located within Southern California. The proposed building would be subject to the seismic design criteria of the 2016 CBC. Compliance with City regulatory standards would ensure the level of potential impacts due to strong seismic ground shaking would be less than significant. a. iii) Less Than Significant Impact Liquefaction is a phenomenon that occurs when soil undergoes transformation from a solid state to a liquefied condition due to the effects of increased pore-water pressure. This typically occurs where susceptible soils (particularly the medium sand to silt range) are located over a high groundwater table. Affected soils lose all strength during liquefaction and foundation failure can occur. Liquefaction of soils can be caused by ground shaking during earthquakes. Liquefaction generally is known to occur in saturated or near-saturated cohesionless soils at depths shallower than approximately 50 feet. According to the Seismic Hazard Evaluation of the Anaheim 7.5-minute quadrangle, the Project site, much like the rest of the City, is located in a Zone of Required Investigation for liquefaction. This indicates the area has been subject to historic occurrence of liquefaction, or local geological, geotechnical, and groundwater conditions that indicate a potential for permanent ground displacement. The State Seismic Hazards Mapping Act requires preparation of a geotechnical report prior to the approval of most of the new development projects where such conditions are present. The "Geological Report" conducted for the Project site indicates the Project site "is located within a known area for liquefaction." The Project geological consultant team advanced three cone penetrometer tests (CPT) to a depth of 50 feet below ground surface, all within the proposed footprint of the proposed medical office building and subsequently performed a liquefaction analysis using data obtained from the CPT. The analysis resulted in total vertical settlements of 0.876 inches, 1.324 inches and 1.79 inches for the three CPT for a maximum considered earthquake of 6.8 magnitude per the 1998 Seismic Hazard Evaluation for the South Gate Quadrangle. Per 2008 Special Publication 117 A and the 1999 Recommended Procedures documents, total settlement less than 4 inches can be mitigated by structural measures. Therefore, "ground modification and/or deep foundation systems are not required." In addition, the geological analysis concluded that the overall probability for liquefaction was considered to be low at 4.7%, 5.0%, and 6.7% for the three CPT. The "Geotechnical Report" thereby indicates "in our opinion the proposed development is at a low risk for liquefaction." In addition, the "Geotechnical Report" indicates "due to the relatively flat 35 I Page topography at the site (approximately 2% grade or less), risk from landsliding and lateral spreading are considered to be insignificant." a.iv) No Impact Structures built below or on slopes subject to failure or landslides may expose people and buildings to harm. The Project site is relatively flat (2% grade) and is not located in an Earthquake-Induced Landslide Zone. There are no natural slopes in the vicinity of the Project site. Therefore, no impact would occur. b) less Than Significant Impact The Project site currently is developed with a 12,430 square foot commercial retail building, a vacant 3,277 square foot single-family residence previously used as a shelter, a paved parking lot and minimal landscaping. Little, if any, native topsoil exists on the n~~:~__.. ~:~~ r I Vjl:::::vL ;:)JL<::::. rv1inimal grading v·vould be included as part of Project development to prepare the site for building foundations. As such, Project development has the potential to expose surficial soils to wind and water erosion during construction activities. Wind erosion as a result of construction activities would be minimized through soil stabilization measures required by SCAQMD Rule 403 (Fugitive Dust), such as daily watering. Water erosion would be prevented through City standard erosion control practices (e.g. silt fencing or sandbags) required pursuant to the California Building Code and the National Pollution Discharge Elimination System (NPDES). Following Project development, the Project site would remain completely covered by structures, paving, and landscaping. The Impact related to soil erosion would be less than significant with compliance of existing City regulations. c)d) Less Than Significant Impact The Project site is located within the historic flood plain of the Los Angeles River within the Los Angeles Basin. The Los Angeles Basin is approximately 50 miles long and 30 miles wide and contains approximately 33,000 feet of marine and continental deposits of Miocene to early Pleistocene age sediments overlain by unconsolidated and semi- consolidated Quaternary marine and continental sediments. The Project site is located within the Central (structural) Block of the Los Angeles Basin geology. The Central Block is bounded by the Newport Inglewood-Rose Canyon fault zone to the southwest and the Whittier Elsinoie fault zone to the northeast. Land subsidence refers to the lowering of the ground surface due to extraction or lowering of water levels or other stored fluids within the subsurface soil pores, or due to seismic activity that can cause alluvial sediments to compact. Damage caused by subsidence can be visible cracks, fissures, or surface depression. The Geotechnical Report states "there is no evidence that significant subsidence has occurred or may occur in the future at the site." Therefore, subsidence "is not considered to be a hazard at this site." Action of soils exhibiting volumetric changes due to changes in moistuie content affects the performance of the supported structures and improvements. Depending upon the supply of moisture in the ground, soils may experience changes in volume of as much as thirty percent or more. Conversely, during periods of falling soil moisture expansive soils wiii shrink that can resuit in structure settlement. in addition, some unsaturated soiis 36 I Page may be subject to collapse of the loose soil matrix due to dissolving of the cemented bonds within the matrix. The Geotechnical Report indicates the groundwater level is likely lower than the probe depth of 50 feet below ground surface, which "is consistent with nearby groundwater monitoring well data obtained from the California Department of Water Resources, which lists the groundwater table at 60 to 100 feet [below ground surface]." The groundwater analysis used the historical high groundwater elevation of 8 feet below ground surface from the Seismic Hazard Evaluation of the South Gate Quadrangle. Impacts related to liquefaction and landslides are discussed above. Lateral spreading is the down slope movement of surface sediment due to liquefaction in a subsurface layer. This down slope movement is due to gravity and earthquake shaking combined. Such movement can occur on slope gradients of as little as one degree. Lateral spreading typically damages pipelines, utilities, bridges, and structures. Lateral spreading of the ground surface during a seismic activity usually occurs along the weak shear zones within a liquefiable soil layer and has been observed to generally take place toward a free face (i.e., retaining wall, slope, or channel) and to lesser extent on ground surfaces with a very gentle slope. Expansive soils are those that expand when exposed to water and contract when water is not present. The "Geotechnical Report" indicates "the soil profile to consist of silty sand in the upper two feet, underlain by poorly graded sand from 2 feet to 5 feet [below ground surface] .... " Therefore, the geological consultant "judged this material to be granular in nature and thus have a negligible expansion potential." The "Geotechnical Report" includes in its conclusions that "from an earthwork, pavement, and foundations viewpoint, the soils at this [Project] site are considered suitable for support of the anticipated loads provided our recommendations are followed properly." Therefore, although Project development indicates impacts related to all CEQA Thresholds identified above will be less than significant or will have no impact the following Mitigation Measure is recommended and should take the form of a Condition of Approval placed on the discretionary permits. e) No Impact Project development and operation would not require use septic tanks. The Project site is served by sewer. Therefore, no impact would occur. Mitigation Measures MM-G/S-1 -Prior to issuance of a grading permit, the Applicant shall submit, and obtain approval of, a Grading Plan by the Director of Public Works/City Engineer. Said Plan shall list and depict Earthwork Recommendations and Foundation Recommendations contained in the Geotechnical Report for the Project that shall be incorporated into design plans and shall be implemented during Project construction. 37 I Page VII. GREENHOUSE GAS EMISSIONS The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Municipal Code, City of Lynwood Transit Area Specific Plan Environmental Impact Report, City of Lynwood Long Beach Boulevard Specific Plan, Applicant-submitted Project plans, and the "Global Climate Change Analysis -Lynwood Medical Office, City of Lynwood, CA," prepared by Ldn Consulting, Inc. dated August 29, 2017. Setting Climate change, which involves significant changes in global climate patterns, has been associated with an increase in the average temperature of the atmosphere near the Earth's surface, or global warming. This warming has been attributed to an accumulation of greenhouse gases (GHG) in the atmosphere. The GHG trap heat in the atmosphere that in turn heats the surface of the Earth. State and federal legislation has resulted in policies that define targets for reductions in GHG emissions. In particular, California adopted the 2006 Global Warming Solutions Act (commonly referred to as AB 32), which established a statewide emission reduction target to ensure that GHG emissions in the year 2020 are equal to the statewide GHG emissions in 1990. The California Air Resources Board (ARB) 2008 Seeping Plan estimated that GHG emissions in the State would have to be reduced by approximately 29 percent from business-as-usual (BAU) levels in order to meet the GHG emissions reduction requirement. While the ARB 2008 Seeping Plan estimated GHG emissions in the State need to be reduced by approximately 29 percent, in 2011 the ARB updated its estimate of the GHG emission reductions necessary to satisfy Assembly Bill 32 requirements. In the 2011 Final Supplement to the AB 32 Seeping Plan, the ARB estimated that a 16 percent reduction below the estimated BAU levels is needed to return State GHG emissions to 1990 levels by 2020. Energy Project development and operation would involve energy use. Demolition, grading and construction activities would require fuel consumption to operate heavy equipment, light-duty vehicles, machinery and generators. Also, temporary grid power may be provided to any provisional construction trailers or electric construction equipment. Project operation would require permanent grid connections for electricity and natural gas service to power medical equipment, internal and exterior lighting, appliances, and heating and cooling systems. In addition, the increase in vehicle trips associated with Project development and operation would increase fuel consumption. The water supply infrastructure for the Project would require electrical power. Electric service to the Project would be provided by Pacific Gas and Electric Company, which has a power mix consisting of approximately 30 percent renewable energy sources. Project development would be subject to energy conservation requirements of Title 24 of the California Code of Regulation, which requires numerous energy saving measures. Additionally, Project development and operation would be subject to City of Lynwood Long Beach Boulevard Specific Plan policies that encourage energy conservation by promoting energy efficient appliances, signage and lighting. Thresholds for Analysis. Would the project -- 38 ! Page Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Generate greenhouse gas emissions, either directly or indirectly, that may have X a sig_nificant impact on the environment? b) Conflict with an applicable plan, policy or regulation adopted for the purpose of X reducing the emissions of greenhouse gases? Discussion of Checklist Answers a) b) Less Than Significant Impact Climate change is the distinct change in measures of climate for a long time period. Climate change is the result of numerous, cumulative sources of greenhouse gas emissions all over the world. Natural changes in climate can be caused by indirect processes such as changes in the Earth's orbit around the Sun or direct changes within the climate system itself (i.e. changes in ocean circulation). Human activities can affect the atmosphere through emissions of greenhouse gases (GHG) and changes to the planet's surface. Human activities that produce GHG are the burning of fossil fuels (coal, oil and natural gas for heating and electricity, gasoline and diesel for transportation), methane from landfill wastes and raising livestock, deforestation activities, and some agricultural practices. Greenhouse gases differ from other emissions in that they contribute to the "greenhouse effect." The greenhouse effect is a natural occurrence that helps regulate the temperature of the planet. The majority of radiation from the Sun hits the Earth's surface and warms it. The surface in turn radiates heat back towards the atmosphere, known as infrared radiation. Gases and clouds in the atmosphere trap and prevent some of this heat from escaping back into space and re-radiate it in all directions. This process is essential to supporting life on Earth because it warms the planet by approximately 60° Fahrenheit. Emissions from human activities since the beginning of the industrial revolution (approximately 250 years ago) are adding to the natural greenhouse effect by increasing the gases in the atmosphere that trap heat, thereby contributing to an average increase in the Earth's temperature. Greenhouse gases occur naturally and from human activities. Greenhouse gases produced by human activities include carbon dioxide (C02), methane (CH4), nitrous oxide (N20), hydrofluorocarbons (HFC), perfluorocarbons (PFC), and sulfur hexafluoride (SF6). Since 1750, the U.S. Environmental Protection Agency estimates that the concentrations of carbon dioxide, methane, and nitrous oxide in the atmosphere have increased over 36 percent, 148 percent, and 18 percent, respectively, primarily due to human activity. Emissions of greenhouse gases affect the atmosphere directly by changing its chemical composition while changes to the land surface indirectly affect the atmosphere by changing the way the Earth absorbs gases from the atmosphere. The regulatory environment pertaining to climate change relevant to the Project was summarized above in this document and includes the following. 39 I Page • California Assembly Bill 32 • California Assembly Bill 341 • California Senate Bill 97 • California Assembly Bill1493 • California Advanced Clean Car Program • California Vehicle Efficiency Measures • United States Energy independence and Security Act of 2007 • California Governor's Executive Order S-3-05 • California Governor's Executive Order S-0 1-07 • California Governor's Executive Order B-30-15 • California Governor's Executive Order S-14-08 • California Energy Code (Title 24, Part 6 of the California Code of Regulations) • California Air Resources Board Seeping Plan The City of Lynwood has not yet adopted Greenhouse Gas Emissions CEQA Thresholds of Significance. However, because Lynwood is located within the South Coast Air Quality Management District it is appropriate to utilize the most current South Coast Air Quality Management District guidance for greenhouse gas emissions screening, which stipulates Tier screening standards as the baseline for significance thresholds since September, 2010. Under this methodology, screening values are established for industrial, residential and combined project types. If the Project were to generate more greenhouse gas emissions (measured in Metric Tons/Year Carbon Dioxide Equivalent [MT/year C02e]), the Project would be required to implement mitigation measures to reduce greenhouse gas emissions impacts by 9% below City 2008 levels by 2020. The Project was analyzed under the 10,000 MT/year C02e. The "Global Climate Change Analysis" prepared for the Project estimates Project development (demolition, grading and construction) vvill commence in early 2018 and conclude approximately after commencement of development. The Analysis utilized the CALEEMOD 2016.3.1 inputs and found that Project grading and construction would produce 67.29 metric tons of C02e over the Project construction time. This calculation equates to an average of 2.24 Metric Tons over a 30-year period. in addition, the Analysis indicates emissions generated from Area, Energy, Mobile, Solid Waste and Water uses associated with Project development and operation would be 438.81 MT/year C02e. This amount "is less than the lowest screening thresholds established by South Coast Air Quality Management District (SCAOMD) of 3,000 MT for projects." The Analysis thereby concludes that "since the project wouldn't exceed these thresholds, the project would not be expected to implement mitigation measures to reduce GHG emissions. Given this, there would be neither direct nor indirect impacts under CEQA. Therefore, the project would not require further analysis or mitigation." Additionally, the City of Lynwood has adopted the 2016 edition of the California Building Code, including the California Green Building Standards Code. Construction of the Project would be subject to the California Green Building Standards Code. Therefore, there no resultant impact would occur. 40 I Page VIII. HAZARDOUS AND HAZARDOUS MATERIALS The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, the City of Lynwood Long Beach Boulevard Specific Plan, and Applicant-submitted Project plans, and the "California Health and Safety Code." Setting The City of Lynwood General Plan Public Health and Safety Element indicates the most common hazardous materials and hazardous waste problems and concerns in Lynwood and its vicinity are related to transportation accidents, illegal dumping, underground storage tank leaks, leaking natural gas pipelines, commercial/industrial wastes, pesticides, and illegal drug laboratories. The California State Department of Toxic Substance Control EnviroStor database contains information about properties in California where hazardous substances have been released or where the potential for a release exists. The Lynwood General Plan estimates 20- 25 percent of all vehicles using lnterstate-1 05 (approximately one mile east of the Project site and lnterstate-71 0 (on the easterly boundary of the City) are transporting some type of hazardous material. In addition, the Alameda Corridor is a major carrier of hazardous materials. Approximately 100 trains proceed along the corridor each 24-hour period; approximately 70 percent of the trains using the Corridor are estimated to be carrying some sort of hazardous material. Also, Lynwood is located along a major east-west Los Angeles International Airport flight corridor, which presents a potential for an accident involving an aircraft carrying hazardous materials and fuels. Definitions Hazardous Waste -The California Department of Toxic Substances Control (DTSC) defines "hazardous waste" as waste that includes any waste that, due to its quantity, concentration, or physical, chemical, or infectious characteristics may either: • Cause, or significantly, contribute to, and increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness; or, • Pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, disposed of, or otherwise managed Hazardous waste can appear in household waste, wastewater, green waste or biosolids (solids remaining after treating wastewater). Medical Waste -The State of California "Medical Waste Management Act" (California Health and Safety Code Section 117690[a]) as follows. • Any biohazardous, pathology, pharmaceutical, or trace chemotherapy waste not regulated by the federal Resource Conservation and Recovery Act of 1976 (Public Law 94-580), as amended; sharps and trace chemotherapy wastes generated in a health care setting in the diagnosis, treatment, immunization, or care of humans or animals; waste generated in autopsy or necropsy; waste during preparation of a body for final disposition such as cremation or interment; waste generated in research pertaining to the production or testing of microbiologicals; waste generated in research using human or animal pathogens; sharps and laboratory waste that poses a potential risk of infection 41 I Page to humans generated in the inoculation of animals in commercial farming operations; waste generated from the consolidation of home-generated sharps; and waste generated in the cleanup of trauma scenes. Biohazardous, pathology, pharmaceutical, sharps, and trace chemotherapy wastes that meet the conditions of this section are not subject to any of the hazardous waste requirements found in Chapter 6.5 (commencing with Section 251 00) of Division 20. Biohazardous Waste-includes the following • • • • Regulated medical waste, clinical waste, or biomedical waste that is a waste or reusable material derived from the medical treatment of a human or from an animal that is suspected by the attending veterinarian of being infected with a pathogen that is also infectious to humans, which includes diagnosis and immunization; or from biomedical research, which includes the production and testing of biological products R<=>n••"='t<=>n mc:>nir!:il w!l<:!t<=> nr rlinir!:il \AJ!l<:!tc:> nr hinmc:>nir!:il \AJ!l<:!t<=> <:!I J<:!nc:>rtc:>n nf rnnt!lininn !:! • ·~::::~~·~-~~ ···~~·~~· ··~~-~ ~· ~ ..... ~~· ··~~-~ ~· ~·~·. ·~~·~~· ··~~-~ ~~~r-~~-~~ ~· ~~· .. ~ ..... '::I ~ highiy communicable disease Laboratory waste such as human specimen cultures or animal specimen cultures that are infected with pathogens that are also infectious to humans; cultures and stocks of infectious agents from research; wastes from the production of bacteria, viruses, spores, discarded live and attenuated vaccines used in human health care or research, discarded animal vaccines ... ; culture dishes, devices used to transfer, inoculate, and mix cultures; and wastes identified by Section 173.134 of Title 49 of the Code of Federal Regulations as Category B "once waster'' for laboratory wastes Waste that at the point of transport from the generator's site or at the point of disposal contains recognizable fluid human blood, fluid human blood products, containers, or equipment containing human blood that is fluid, or blood from animals suspected by the attending veterinarian of being contaminated with infectious agents known to be contagious to humans Waste containing discarded materials contaminated with excretion, exudates, or secretions from humans or animals that are required to be isolated by the infection control staff, the attending physician and surgeon, the attending veterinarian, or the local health officer, to protect others from highly communicable diseases or disease of animals that are communicable to humans Sharps Container-defined as follows • A rigid puncture-resistant container used in patient care or research activities meeting the standards of, and receiving approval from, the United States Food and Drug Administration as a medical device used for the collection of discarded medical needles or other sharps Regulatory Setting Medical Waste Medical waste is a subset of waste generated at health care facilities such as hospitals, physician's offices, dental practices, blood banks, and veterinary hospitals/clinics, as qwll as medical research facilities and laboratories. In general, medical waste is health care waste that may be contaminated by blood, body fluids, or other potentially infectious materials and is often referred to as regulated medical waste. States largely assume the role of regulating medical 42 I Page waste. However, the United States Environmental Protection Agency retains jurisdiction over medical waste treatment technologies. The Occupational Safety and Health Administration regulates use of hazardous materials, including hazardous building materials. The United States Department of Transportation regulates transportation of hazardous materials. California requirements. Medical Waste Management Act The California Medical Waste Management Act (MWMA) became effective in 1991. The California Department of Public Health assumed responsibility as the oversight agency for medical waste management in 2007. Several amendments to the MWMA have been enacted. Assembly Bill 333 was the initial comprehensive change to the MWMA be restructuring the definition of medical waste, mandating use of separate and distinct tracking and shipping documents, modifying large and small generator requirements, and amending rules for self- transport of small amounts of medical waste. California has a "cradle-to-grave" tracking system for medical waste. Generators of medical waste are required to register with their respective Local Enforcement Agencies and are legally responsible to ensure medical waste generated by their facility is treated appropriately and managed in a manner that protects the public and the environment by minimizing or eliminating the risk of exposure to agents that cause disease. The MWMA-required "tracking document" accompanies medical waste from the point of generation through its transport to a treatment facility and point of destruction. The MWMA also governs the following: proper storage of medical waste; appropriate treatment for different types of medical waste; requirements that generators of medical waste must adhere to; operating conditions for medical waste treatment facilities; and, jurisdiction oversight by State or local authorities. The California Department of Public Health -Medical Waste Management Program is housed in Sacramento and Los Angeles/Glendale. Staff conducts comprehensive review of facility compliance inspections and responds to complaints associated with mismanagement or illegal disposal of medical waste. In addition, the California Office of Safety and Health Administration, Office of Emergency Services and the Department of Health Services have rules that govern use of hazardous materials that are consistent with federal regulations and sometimes are more stringent. The Department of Toxic Substances Control (DTSC) is the primary State agency governing storage, transportation and disposal of hazardous wastes. DTSC is authorized by the United States Environmental Protection Agency to enforce and implement federal hazardous materials laws and regulations. DTSC has oversight of Annual Work Plan sites, sites designated as having the greatest potential to affect human health and the environment. The primary California State laws pertaining to hazardous waste are the California Hazardous Waste Control Law and the Carpenter-Presley-Tanner Hazardous Substance Account Act. Regional and Local The Regional Water Quality Control Board is authorized by the State Water Resources Control Board to enforce provisions of the Porter-Cologne Water Quality Control Act of 1969. This Act gives the Regional Water Quality Control Board authority to require groundwater investigations when the quality of groundwater or surface waters of the State is threatened and to require remediation of the site if necessary. 43 I Page The Los Angeles County Department of Environmental Health has primary responsibility for enforcing most regulations that pertain to hazardous materials in the City of Lynwood. The Los Angeles County Fire Department is designated as the Administrating Agency for hazardous materials for the City of Lynwood. Hazardous waste programs in Lynwood also are governed by the County of Los Angeles Fire Department Health Hazardous Materials Division. The County of Los Angeles Dire Department's Compliance Guidelines for Hazardous Wastes and Materials includes Hazardous Waste Generator Program/Tiered Permitting, Hazardous Materials Management Program, California Accidental Release Prevention Program, aboveground Petroleum Storage Tanks-Spill Prevention Control and Countermeasure plan, Underground Storage Tank Program, and Site Remediation Oversight Program. In addition to the previously-mentioned programs, the Household Hazardous and Waste Program is sponsored jointly by the Los Angeles County Sanitation District and the County of I r~c ll.nnoloc Thic PrnnF<:>I"n niHoc I nc ll.nr1<::>lo<:> r'n11nfH roe>irlonfe> ..., lon"'>l "'>nrl """"'+_froo '"'""" +n ---I \1 1:::1V~'•"''""'• I IIHJ I I -:::11 '"-"111 :::11 VV----I \.11:::1VIV-'-'"·""'diii..J I V""'IUVIII..~ 1;.4 IV~I;.41 1;.41 1\,A VV~I.--11 VV VVr;;AJ LV dispose unwanted household chemicals. Thresholds for Analysis Would the project -- Environmental Issue a) Create a significant hazard to the public or the environment through the routine transport, use, or disposal of hazardous materials? b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? d) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? e) t-or a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for I Potentially Significant Impact less Than Significant With Mitigation X Less Than Significant Impact No Impact X X X 44 I Page people residing or working in the project area? f) For a project within the vicinity of a private airstrip, would the project result in X a safety hazard for people residing or working in the project area? g) Impair implementation of or physically interfere with an adopted emergency X response plan or emergency evacuation plan? h) Expose people or structures to a significant risk of loss, injury or death involving wildland fires, including where X wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? Discussion of Checklist Answers a)b) Less Than Significant Impact with Mitigation Small amounts of hazardous materials may be used during Project development. Construction of the medical office building/treatment center may involve transport, storage and use of chemical agents, solvents, paints and other hazardous materials typically associated with construction activities. In addition, demolition of the existing buildings and parking lot and removal of demolished materials may result in release of some hazardous materials, including asbestos and lead-based paint. All construction- related materials, including any hazardous materials, will be required to be used, handled and transported in compliance with federal, State of California, Los Angeles County and City of Lynwood requirements. Implementation of, and mandated compliance with, applicable federal, State, County and City requirements as well as compliance with Mitigation Measures MM H/H-1 and MM H/H-2 below will ensure impacts related to emissions of hazardous materials will remain at a less that significant level. c) No Impact. No school is located within one-quarter mile of the Project site. Therefore, no impact would result. d) No Impact. The Project site is not located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5. Therefore, no impact would result. e) No Impact. The Project site is not located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport. The Project 45 I Page site is located approximately ten miles east of Los Angeles International Airport, six miles east of the Hawthorne Municipal Airport, and four miles north of the Compton!Woodley Airport. Therefore, Project development and operation would not result in a safety hazard for people residing or working in the project area. f) No impact. The Project site is not located within the vicinity of a private airstrip. Therefore, Project development and operation would not result in a safety hazard for people residing or working in the Project area. g) No Impact. Project development and operation would not impair or physically interfere with City of I vnwnnd nr Lns Anaeles Countv orovision of emeraencv services relatina to ensurina -J-----------------.;;,~----~ ---, .-- - - - - -...., --.I -- - - --- effective iesponses. Theiefore, no impact would msult. h) No Impact. The Project site is located within an urban area in the City of Lynwood. The Project vicinity is nearly built out with residential, commercial and industrial uses. The City General Plan indicates the Project site is not adjacent to, or near, wildlands. There would be no risk of exposing people or structures to a significant loss, injury or death involving wildland fires. Therefore, no impact would result. Mitigation Measures MM H/H-1 -Prior to issuance of a Demolition/Grading Permit for the existing commercial and residential buildings on the Project site, the Applicant shall complete and submit an asbestos and hazardous materials survey of all building materials for review and approval by the Director of Public Works/City Engineer. MM H/H-2 -All medical and dental office tenants shall secure approval from the State of California and County of Los Angeles of a method of compliance with all applicable State and County requirements related to transport, use and disposal of medical and dental waste and shall submit evidence of said State and County approval to the Director of Public Works/City Engineer and the Director of Development Services. 46 I Page IX. HYDROLOGY AND WATER QUALITY The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, the Applicant submitted Project plans, the City of Lynwood Long Beach Boulevard Specific Plan, and the "Preliminary Low Impact Develop (LID)" Plan prepared by Atlas Civil Design dated August 2017. Setting Regional Hydrology The City of Lynwood is located in the South Coast Hydrologic Region, which covers approximately 10,600 square miles and includes the majority of Los Angeles, Ventura, San Diego and Orange counties as well as small areas of Riverside and San Bernardino Counties. This Hydrologic Region has 19 major watersheds, many of which have densely urbanized lowlands with concrete-lined channels and dams controlling flood flows. The Los Angeles River forms the eastern boundary of the City of Lynwood. The Project site is located in the Los Angeles River Watershed, which covers 834 square miles, and encompasses the Los Angeles River. However, Lynwood has no surface water bodies within its boundaries. The Project site also is located within the West Coast Sub-basin of the Coastal Plan of the Los Angeles Groundwater Basin (the "West Coast Basin." Average precipitation throughout the Sub-basin is 12-14 inches. Discharge of groundwater from the Sub- basin occurs primarily by pumping extractions. There are nine principal aquifers in the Sub- basin. The Lynwood and Gaspur Aquifers are near the Project site. Water in the underlying aquifers is confined throughout most of the Sub-basin. Water Supplies The Lynwood Public Services Department and Park Water Company provide water service to the Project site. The City owns and operates six active wells and one 3,000,000-gallon reservoir. There also is a 16-inch Metropolitan Water District feeder to the reservoir that conveys State Water Project water when needed to replenish the reservoir. The City pumps approximately 5,500 acre-feet annually and receives approximately 1 ,000 acre feet annually of imported surface water from the Metropolitan Water District feeder line. Water Quality The Project site is located within a highly urbanized area that has experienced contaminant loads from both point and non-point sources. The Los Angeles Regional Water Quality Control Board is the primary agency charged with protecting and enhancing surface and groundwater quality in the region. The primary sources of pollutants to surface and groundwater resources include wastewater treatment plants, septic systems, agricultural/livestock operations, wildlife, urban stormwater runoff, oil/gas production, and mining activities. The character and quality of groundwater in the aquifers underlying Lynwood is variable. Sea water intrusion over time has deteriorated water quality over time. In addition, groundwater in the vicinity of the Project site generally is high in total dissolved solids. 47 I Page Flood Hazards In the first half of the 201h century flooding was a serious problem in Lynwood. However, channeling the Los Angeles River and the Rio Honda River eliminated much of the danger from flooding. The City of Lynwood is located in Flood Zone X, based on the Federal Emergency Management Agency current Flood Insurance Rate Map. This Zone includes areas that would be inundated as a result of flows associated with the 500-year flood, the 1 000-year flood to average depts. Of less than one foot or with drainage areas less than one square mile and areas protected by levees from the 1 000-year flood. The Los Angeles County Department of Public Works created an online map for El Nino Storm Hazard Areas. Although some southwestern portions and the entire eastern portion of Lynwood are in the Moderate Flood Risk Area and the eastern boundary of the City near the Los Angeles River is in a High Flood Risk Area, the Project site is not located in a designated flood risk area. Tsunami and Seiche A Tsunami is a series of waves generated by an impulsive disturbance in the ocean or in a small, connected body of water that are produced when movement occurs on faults in the ocean floor. Areas susceptible to tsunamis are those near the ocean shore and along low-lying river channels. The Project site is located approximately 13 miles east of the Pacific Ocean with ground level elevations that range from approximately 70-100 feet above mean sea level. Seiches are waves generated in an enclosed body of water by seismic activity. There are no water tanks in the boundary of the Project site. Dams There are no dams or reservoirs in the City of Lynwood. The closest is the Garvey Reservoir located approximately 9 miles northeast of the Project site in the City of Monterrey Park. The Project site is not located in a dam inundation area. Drainage Approximately 97% of the 0.88-acre Project site is impervious. Existing drainage on the Project site flows easterly toward Long Beach Boulevard. The drainage flow outlets the Project site via curb drains to the gutter along Long Beach Boulevard and continues south along the eastern most curb line before joining the BL 0006-UNIT 2-LINE E storm drain main. The runoff continues to Compton Creek then to the Los Angeles River before ultimately discharging into the Pacific Ocean. Off-site runoff is not expected to enter the Project site. Federal Regulatory Setting The United States Congress in 1972 passed the Clean Water Act (Federal Water Pollution Control Act), which directs states to establish water quality standards for all waters of the United States and to review and update the standards triennially. Section 402 of this Act authorizes the California State Water Resources Control Board (SWRCB) to issue National Pollutant Discharge Elimination (NPDES) Program "General Construction Storm Water Permits." Projects such as the proposed Project that disturb on or more acres are required to obtain NPDES coverage under the "Construction" Permit. The County of Los Angeles administers NPDES regulations. Section 401 of the Clean Water Act requires any activity that may result in discharges into a State water body must be certified by the Regional Water Quality Control Board. Section 404 of the Ciean \iv'ater Act requires a permit for construction activities that 48 I Page involve placement of any kind of fill material into waters of the United States or wetlands. Section 303(d) of the Clean Water Act requires states to identify "impaired" water bodies that do not meet water quality standards. State of California Regulatory Setting The Porter-Cologne Water Quality Control Act establishes the State Water Quality Control Board (SWRCB) and each regional water resources quality control board as the principal State agencies for coordinating and controlling water quality in California and authorizes the SWRCB to adopt, review and revise policies for all waters of the State (including surface and groundwater) and directs the Regional Water Resources Control Boards to develop regional Basin Plans. The City of Lynwood is located within the Los Angeles Regional Water Resources Quality Control Board. The Los Angeles region has developed a Water Quality Control Plan (Basin Plan) that lists various beneficial uses of water in the region, describes the water quality that must be maintained to allow those uses, describes the programs, projects and other actions required to achieve the standards established in the Plan, and summarizes plans and policies to protect water quality. Narrative and numerical objectives define the level of water quality that shall be maintained in the region. Water quality objectives are achieved primarily through establishment and enforcement of waste discharge requirements (WDR). The Regional Water Resources Water Quality Control Boards have primary responsibility for issuing the WDR, which may include effluent limitations or other requirements designed to implement applicable water quality control plans. Local Regulatory Setting The Los Angeles Regional Water Resources Quality Control Board has Waste Discharge Requirements for municipal Separate Storm Sewer System Discharges into Coastal Wetlands of Los Angeles County (NPDES Permit No. CAS004001 ). The Permit establishes new performance criteria for new development and redevelopment projects in the coastal watersheds of Los Angeles County (with the exception of the City of Long Beach. Storm water and non-storm water discharges consist of surface runoff generated from various land uses that are conveyed via the municipal separate storm sewer system and ultimately discharged into surface waters throughout the region. Coverage under a general NPDES permit can be achieved through development and implementation of a project-specific Storm Water Pollution Prevention Plan (SWPPP). The Los Angeles County Flood Control District provides flood protection, water conservation, recreation and aesthetic enhancement within its boundaries (more than 3,000 square miles that encompass 85 cities). This District regulates hydrologic and hydraulic design within its boundaries through its 1982 Hydraulic Design Manual and its 2006 Hydrology Manual. City of Lynwood General Plan -Relevant Goals and Policies Infrastructure/Public Services Element Goal DW-1: Provide for the planning and funding mechanisms to construct, expand, and maintain water facilities (transmission, storage, distribution, and treatment) needed to meet current and future demand Policy DW-1.3: Water Conservation. The City shall require that water conservation measures be implemented into all construction permits. 49 I Page Safety Element Goal GE0-1: Protect the public health, safety, and welfare and minimize the damage to structures, property, and infrastructure as a result of seismic activity Policy GE0-1.3: Seiches/Water Tanks. Provide safety to property, structures and human life in areas that may be subject to seiches from water tank rupture. Open Space and Conservation Element Goal WR-1: Protect surface and subsurface water resources in the water basin that are impacted by actions in the City Policy WR-1 01: Ensure Clean WateL The City shall ensure that development and redevelopment pmjects do not degrade suiface waters and gmundwater basins Goal WR-2: Require sound water conservation measures to ensure water availability o all persons living, working, and visiting the City Policy WR-2.1: Water Conservation. The City shall ensure that water conservation measures are implemented in all development projects City of Lynwood Municipal Code Lynwood Municipal Code Chapter 14 provides regulations for public utilities and City services. Section 14.13 (Storm Water and Urban Runoff Pollution and Conveyance Controls) provides requirements for Standards Urban Storm Water Mitigation Plans (SUSMP) and Low Impact Development (LID) for new projects and redevelopment projects. The Project is subject to conditioning and controls because it is a new development project that is equal to or greater than one acre of disturbed area that adds more than 10,000 square feet of impervious surface area. The remainder of Section 14-13 of the Lynwood Municipal Code provides requirements for storm water pollution control measures and authorizes the City of Lynwood to further define and adopt storm water pollution control measures and to develop principles and requirements, including but not limited to the objectives and specifications for integration of LID strategies. Chapter 25 of the Lynwood Municipal Code consists of the City's zoning regulations. Article 93 provides regulations associated with erosion and sediment control. The purpose ofthis article is to eliminate and prevent accelerated erosion that has led to, or could lead to, degradation of water quality, loss of fish habitat, damage to property, loss of topsoil and vegetation cover, disruption of water supply, increased danger from flooding, and the deposition of sediments and associated nutrients. This article establishes required provisions for project planning, preparation of erosion control plans, runoff control, land clearing and winter construction operations and also establishes procedures for administering those provisions. Provisions of Chapter 25, Article 93 apply to projects in the Project vicinity. 50 I Page Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Violate any water quality standards or X waste discharge requirements? b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater X table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a X stream or river, in a manner which would result in substantial erosion or siltation on or off-site? d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase X the rate or amount of surface runoff in a manner which would result in flooding on- or off-site? e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or X provide substantial additional sources of polluted runoff? f) Otherwise substantially degrade water X quality? g) Place housing within a 1 00-year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood X Insurance Rate Map or other flood hazard delineation map? h) Place within a 1 00-year flood hazard area structures which would impede or X redirect flood flows? i) Expose people or structures to a X significant risk of loss, injury or death 51 I Page involving flooding, including flooding as a result of the failure of a levee or dam? j) Inundation by seiche, tsunami, or X mudflow? Discussion of Checklist Answers a) Less Than Significant Impact Project development (demolition, grading, and construction activities) would involve use of heavy machinery that could release hazardous materials, including sediments and fuels. Operation of proposed development also could result in discharges of wastewater that could be contaminated and affect downstream waters. Project development would not result in a significant impact to applicable water quality or \AJ'1C"'+.a lAI"''I+.ar rolic-r"h"''lrn.a r"'.Ortllirot"Yl.on+~ l-lnuJO\lOr"' 1"'"1"'\rYlr"\li-:'jlnl"'"o u1i+h norrni+e "=lnri VVct~\.'\J VVct\.\.il \.AIVVIICAI!::'V IV"1UIIVIIIVIII.V. I IVVVVVVI, VVIIItJIICAIIVV W¥11.11 tJVIIIIII.""' ~IIY regulations, and implementation of Best Management Practices contained therein and as specified in the "Preliminary Low Impact Development (LID)" prepared for the Project would ensure potential water quality impacts would be less than significant. Project development is subject to multiple permits and approvals associated with water quality protection. Project development will occur in a region covered by the Los Angeles County Municipal Storm Water (MS4) NPDES Permit No. CAS004001, issued by the Los Angeles County Regional Water Resources Control Board for MS4 discharges into the coastal watersheds of Los Angeles County, except for the City of Long Beach. The City of Lynwood is a designated Permittee in NPDES Permit No. CAS004001 (Waste Discharge Identification Number 48190189001 ). The NPDES permit requires implementation of a Standard Urban Storm Water Mitigation Plan (SUSMP) for the Project. The SUSMP typically contains a list of minimum required Best Management Practices that must be used for a proposed project. Additional Best Management Practices may be required by ordinance or code adopted by the City of Lynwood and applied generally or on a case-be-case basis. Activities subject to the NPDES general permit for construction, such as the Project, must develop and implement a Storm Water Pollution Prevention Plan (SWPPP) that includes a site map and description of construction activities. The SWPPP will identify Best Management Practices to be used to prevent soil erosion and discharge of other construction-related pollutants (e.g. petroleum products; solvents; paints; cement) that could contaminate water resources. A monitoring program generally is required to ensure Best Management Practices are implemented according to the SWPPP and are effective at controlling discharges of pollutants related to storm water. Project development and operation will not substantially alter existing drainage patterns that generally proceed toward Long Beach Boulevard and will not include discharge of hazardous materials directly into the existing storm water drainage system. In addition, wastewater would be treated and discharged appropriately. Project development and operation also will be implemented in compliance with existing State, regional and City programs and permits, including the City of Lynwood Storm Water and Urban Runoff Pollution and Conveyance Controls and the Regional Storm Water NPDES Permit (No. CAS004001). Furthermore, development design 52 ! Page will include Best Management Practices to avoid adverse effects associated with storm water runoff quality. The Project will be required to comply with the following. • Section 14-13.3 of the City of Lynwood Municipal Code includes a Low Impact Development that consists of building and landscape features designed to retain or filter storm water runoff, which will be accomplished by implementing Best Management Practices such as biofiltration, biioretention, and green roofs to intercept rainfall. These Practices, together with other provisions and Best Management Practices specified in the storm water NPDES Permit, may reuire long-term operational inspectins and maintenance activities to ensure effective avoidance of significant adverse impacts associated with water quality degradation. • Drainage and water quality improvement measures contained in the Lynwood Transit Area Specific Plan Chapter 4, Section 4.3 which are intended to include use oif Low Impact Development practices wherever feasible, to capture, treat and convey stormwater before it enters the storm drain system, and to minimize impacts to water quality using mechanical and natural detention, infiltration and treatment methods. • Implementation of the following Low Impact Development storm water management solutions shall be used, as appropriate. o Bio-Retention Facilities o Bio-Filtration Facilities o Infiltration Facilities o Permeable Pavement o Mechanical Filtration Systems o Subsurface Detention Systems o Tree Planting The Project includes a biofiltration area on-site. Also, compliance with existing permits discussed above will include Best Management Practices (pertaining to Source Control, Bioretention, Non-Structural Measures, and Structural Measures) identified in the "Preliminary Low Impact Development (LID)" and spill response measures to address any unanticipated occurrences that could potentially affect water quality in or near the Project site or in downstream areas. Implementation of these policies and compliance with permits and regulations discussed above will ensure potential impacts to water quality that may occur during Project development and operation will be reduced to, and maintained at, a less than significant level. b) No Impact Groundwater level, localized zones of perched water and increased soil moisture content fluctuations should be anticipated during and following the rainy season. Irrigation of landscaped areas on or adjacent to the Project site also can cause a fluctuation of local groundwater levels. Based on research and observed conditions, groundwater is not expected to impact Project development (demolition, grading and construction). 53 I Page c) No Impact The Project site is within the Long Beach Boulevard Specific Plan study area. Ninety-seven (97) percent of the Project site is impervious. Surface runoff the Project runoff flows east toward curb inlets along the adjacent Long Beach Boulevard. Stormwater is conveyed through surface runoff. Introduction of new impervious areas would not interfere with groundwater recharge because approximately 23 percent of the Project site will contain landscaping and a biofiltration area. Project development does not include installation of new groundwater wells or use of groundwater from existing wells. Therefore, Project development and operation would not result in a net deficit in aquifer volume or a lowering of the groundwater table. As a result, no impact would occur. d) Less Than Significant Impact The Project vicinity is urbanized and connected to an existing storm water drainage system located in Long Beach Boulevard. Storm water runoff on the Project site and in the Project vicinity currently is directed through a series of storm water drainage facilities to the Los Angeles River and eventually the San Pedro Bay. Project development and operation would maintain the existing drainage patterns. All surface runoff will be collected and treated with a series of EPIC flow-through planers. After filtration, post-construction surface drainage will be directed to Imperial Highway, Beechwood Avenue and State Street as surface flow through stormwater conveyance systems.Any potential impact to drainage patterns or drainage courses would be less than significant. In addition, no surface bodies of water are located within the City of Lynwood. Therefore, Project development would not alter the course of any river or stream. e) Less Than Significant Impact Refer to c) and d) above. Project development would not alter the course of any river or stream. Project development vJould not alter drainage patterns and thereby would not result in substantial adverse effects. Project development would not introduce new paved areas to the extent that the rate or amount of surface runoff would substantially increase. Approximately 23 percent of the Project will contain landscaping and a biofiltration area. Project development would not introduce new surface water discharges and would not result in flooding on-site or off-site. Any resultant impact would be less than significant. f) Less Than Significant Impact Refer to a) above. g) No Impact The Project site is in an area that has a minimal annual probability of flooding. The proposed structure would not be located within a 1 00-yar flood hazard area and thereby would not impede or redirect flood flows. No impact would result. h) No Impact 54 I Page Refer to g) above. i) No Impact No dams or reservoirs are located in the vicinity of the Project site. The closest reservoir is the Garvey Reservoir, which is located approximately 9 miles northeast of the Project site. The Project site is not located within a dam inundation area. Thereby, Project development and operation would not expose people or structures to potential inundation from dam failure. No impact would result. j) No Impact The Project site is located approximately 123 miles inland from the Pacific Ocean at an approximate elevation of 100 feet above mean sea level. The nearest water body to the Project site that could experience a seiche event is a water tank east of the Project site. However, due to the Project site location, the potential for a tsunami or seiche affecting the Project site is extremely unlikely. No impact would result. 55 I Page X. LAND USE AND PLANNING The discussion and analysis in this section is derived from information contained in the Project plans, City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan and Specific Plan Environmental Impact Report, Long Beach Boulevard Specific Plan, City of Lynwood Municipal Code, and Applicant-submitted Project plans. Setting City of Lynwood Long Beach Boulevard Specific Plan The Project site occupies 0.88 acre (38,248 square feet) within the Downtown Village I portion of the Long Beach Boulevard Specific Plan study area. That Specific Plan study area encompasses 137.967 acres and 556 parcels on either side of Long Beach Boulevard, extending the 2.3-mi!e north-south !ength of the City between Tweedy Boulevard on the north and Orchard Avenue (the City of Compton boundary) on the south. The Long Beach Boulevard Specific Plan establishes a land use plan and framework of standards and guidelines for the purpose of revitalizing the Long Beach Boulevard Corridor. The Specific Plan considers Long Beach Boulevard as an entity that is part of a larger corridor and as a functioning downtown for the City of Lynwood. The Specific Plan indicates five major policies that would guide revitalization of the Long Beach Boulevard Corridor, as follows. • Establishment of four villages with distinct functions and focus • Transit-oriented development around the Metro Green Line • Combination of land uses, particularly mixed uses • Strong architectural and landscape character • Pedestrian connectivity to transit The Downtown Village I portion of the Specific Plan encompasses 27 acres and is focused at supporting numerous existing small businesses between Tweedy Boulevard and Martin Luther King Jr. Boulevard. The Specific Plan states "the focus in this village is on revitalization, encouraging businesses to renovate their existing buildings and construct new buildings in keeping with the architectural and landscape design guidelines specified for this village." The Specific Plan does not propose any changes to land uses within Village I but does provide that "the architectural and landscape design guidelines will guide the developments in this village." The four primary types of land use in the Specific Plan study area are commercial, residential, public facility, and mixed use. Architectural Design Guidelines The architectural style "recommended" for Downtown Village I is Spanish Colonial, which is characterized by the following identifying features: low-pitched roofs; asymmetrical facades; thick stucco walls with recessed openings; arched window openings; and, elaborate grille and tile work. City of Lynwood General Plan The Project site has a land use designation of "Commercial." The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, 56 I Page safe, well-designed and well-integrated with adjacent neighborhoods. The Community Design Element also identifies proper corridors, gateways and nodes. Long Beach Boulevard is an important corridor that extends adjacent to the Project site in a general north-south path. However, Long Beach Boulevard is not designated a State or local scenic highway. Gateways near the Project site include the northernmost entry to the City of Lynwood at Long Beach Boulevard and Tweedy Boulevard. The General Plan Community Design Element indicates that visual improvement of the Long Beach Boulevard corridor is intended to enhance the urban setting AND contribute positively to the economic viability of the area. The General Plan further states "building facades are the most important elements" within the Long Beach Boulevard Corridor. In addition, the General Plan encourages use of street level glass. General Plan Goals, Policies and Implementation Measures most relevant to the Project include the following. Land Use Element Goal LU-4-To plan land areas for the provision of public and quasi-public services, such as schools, libraries, police and fire facilities, utilities, government centers, and other related facilities that are of a size and location to efficiently serve the current and future population of Lynwood. Land Use Element Implementation Measure 3.0-[The City shall] work with parties interested in the redevelopment of properties in redevelopment areas. Circulation Element Goal CIR-4 -Provide an adequate supply of private off-street and public parking to meet the needs of residents and visitors to the City. Infrastructure/Public Services Element Policy DW-1.3 -The City shall require that water conservation measures be implemented into all construction projects. Infrastructure/Public Services Element Goal HC-1 -Provide a complete range of medical services to fill the needs of all sectors of the population within the community as well as the surrounding region. Infrastructure/Public Services Element Policy HC-1.1 (Diversity of Health Care Services) -The City shall encourage a diverse range of medical service facilities, including public and private hospitals, medical clinics, emergency care facilities, convalescent hospitals, and specialized private practitioners. Infrastructure/Public Services Element Policy HC-1.3 (Location of Routine Health Care Facilities) -The City shall distribute throughout the [General Plan] Planning Area land use designations that allow medical service facilities. Community Design Element (Overall Objective)-To preserve positive aspects of the City and to eliminate aspects of the City's image which are less desirable. Economic Development Element Policy ED-1.2 -The City shall strive to diversify its local business makeup so that it avoids dependence on one segment of the local economy to provide employment, revenues, and retail outlets for the citizenry. 57 I Page Noise Element Goal NOI-1 -Protect those living, working, and visiting the community from exposure to excessive noise. Noise Element Policy NOI-1.5 -Provide guidelines to contractors for reducing potential noie impacts on surrounding land uses. Noise Element Implementation Measure 2.0-The City shall require sound attenuation features such as walls, berrning, and heavy landscaping between cornmercial and industrial uses and residential uses to reduce noise and vibration. Open Space and Conservation Element (Water Resources) Policy SR-2.1 -The City shall ensure that water conservation measures are implemented in all development projects. Open Space and Conservation Element (Water Resources) Implementation Measure 1.0-The r.itv !=:h::lll rP.nuirP. th::lt ::lll nP.w dP.velonments ::ldhere to the NPDES nermit nroaram for --·J ---~-----.---------------------------·--·---------------------------.--------.---....,- stonTiwater discharge. Open Space and Conservation Element (Water Resources) Implementation Measure 5.0-The City shall require that all new construction be equipped with water-conserving plumbing fixtures that conform to State statutes and codes. Open Space and Conservation Element (Energy Conservation) Goal EC-1 -Promote the conservation of energy resources in new and existing developments. Open Space and Conservation Element (Energy Conservation) Policy WR-2.1 -The City shall ensure that energy conservation measures are implemented in all development projects. Air Quality Element Policy AQ-1.1 (Air Quality Mitigation Measures)-The City shall ensure that to the extent practical that air quality mitigation measures are incorporated into residential, commercial and industrial projects. Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Physically divide an established X community? b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general X plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c) Conflict with any applicable habitat X conservation plan or natural community 58 I Page conservation plan? Discussion of Checklist Answers a) No Impact The Project site is located within an urbanized community. The Project site is bordered to the north and south by commercial uses, to the east by Long Beach Boulevard and commercial uses beyond, and to the west by a residential neighborhood within the City of South Gate. Project development involves demolition of a 12,430 square foot commercial building and a vacant 3,277 square foot vacant single-family residence previously used as a shelter and construction of a 11 ,468 square foot single-story medical office building/dialysis treatment center on a 38,248 square foot site. The Project site is irregularly (triangular) shaped. Project development will not physically divide the established surrounding community. Rather, Project development and operation will upgrade the deteriorating condition of the Project site with a new building. Therefore, no impact will occur. b) Less Than Significant Impact The Long Beach Boulevard Specific Plan permits Medical Office use in the Downtown Village I planning area but does not permit Medical Clinics. The Project land use has elements of each classification and is subject to a similar use determination by the Planning Manager, who has determined the proposed use may be conditionally permitted. The Project complies with Specific Plan Development Standards pertaining to setbacks, building height, fence height, floor-area ratio, driveway placement, user loading area, trash bin location, and landscape coverage. The more contemporary architectural style of the proposed medical office/treatment center incorporates many architectural components that are characteristic of the Spanish Colonial style, such as the following. • The base of the building establishes a human scale for pedestrians and joins the building to the ground. • The main body of the building is architecturally subdivided into segments. • Window header height is maintained to unify the building masses and convey a harmonious street scene. • The building fagade is relieved by vertical changes in the elevation; long, blank walls are avoided. • A significant percentage of the building fagade is treated with window and arched treatments. • The north elevation (entry) building fagade is treated with paned windows and decorative arches above the windows. • Loading/unloading areas are located away from Long Beach Boulevard. • Mechanical units are concealed from public view by walls and/or landscaping. • The stucco walls are painted a contemporary color mix of Iron Ore, Tin Lizzie, Argos, and Nebulous White 59 I Page The Project is subject to Site Plan Review for its architectural and landscape design, streetscape enhancement, lighting, and signage design. This also would ensure Project development is visually compatible with existing land uses throughout the 27-acre Downtown Village I planning area and entire Specific Plan study area. In addition, a Condition of Approval pertaining to required Applicant compliance with the City of Lynwood Art in Public Places Fee Program will be placed on the Conditional Use Permit/Site Plan Review Resolution. Project development would improve the deteriorated conditions on the Project site and no impact would result. The Project is consistent with City of Lynwood General Plan goals and policies that are relevant to the Project and with City of Long Beach Boulevard Specific Plan general goals and policies. Therefore, the resultant impact is less than significant. c)No Impact The Project site is located within a heavily urbanized area. The Project site is not located within either a habitat conservation plan or natural community conservation plan. Therefore, Project development and operation would not conflict with any habitat conservation plan or natural community conservation plan. No impact would result. 60 I Page XI. MINERAL RESOURCES The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, the Long Beach Boulevard Specific Plan, and the Applicant-submitted Project plans. Setting No mineral resources or mineral resource recovery sites are located on the Project site, which is not designated as a mineral resource recovery site in the City of Lynwood General Plan or the Long Beach Boulevard Specific Plan. Thresholds for Analysis Would the project- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation d) Result in the loss of availability of a known mineral resource that would be of X value to the region and the residents of the state? e) Result in the loss of availability of a locally-important mineral resource recovery site delineated on a local X general plan, specific plan or other land use plan? Discussion of Checklist Answers a) No Impact The Project site is fully developed with a commercial retail building, parking lot, and a vacant single-family residence previously used as a shelter. Mineral extraction activities do not occur on the Project site or on adjacent or nearby properties in the urbanized vicinity of the Project site. The Project site and surrounding areas are not identified as sources of important mineral resources. As such, the potential for mineral resources to occur on site is low. Furthermore, the Project site is not located within a mineral producing area as classified by the California Geologic Survey. Therefore, Project development and operation will not result in loss of availability of a known mineral resource that would be of value to the region and residents of the State. No impact would result. b) No Impact The Project site is fully developed with a commercial retail building, parking lot, and a vacant single-family residence previously used as a shelter. Mineral extraction activities are not present on the Project site. As such, the potential for mineral resources to occur 61 I Page onsite is low. Furthermore, the Project site is not located within a mineral producing area as classified by the California Geologic Survey. No locally-important mineral resource recovery sites are located on or near the Project site or are identified in the City of Lynwood General Plan or Long Beach Boulevard Specific Plan. Therefore, Project development will not result in loss of availability of a locally-important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan. No impact would result. 62 I Page XII. NOISE The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan and Specific Plan Environmental Impact Report, the City of Lynwood Long Beach Boulevard Specific Plan, the Applicant-submitted Project plans, and the "Lynwood Medical Office Noise Assessment - Lynwood CA" prepared for the Project by Ldn Consulting, Inc. (August 29, 2017). Noise Noise generally is considered to be unwanted sound as perceived by the ear when pressure fluctuations occur. Although there are many ways in which pressure fluctuations are generated, they are typically caused by the vibrating movement of a solid object. Noise can be annoying or can cause direct physical damage and/or environmental stress. Noise volume generally is measured in decibels (dB) using the A-weighted sound pressure level (dBA). The A-weighting scale is an adjustment to the actual sound pressure levels to be consistent with that of human hearing response. Due to the nature of the human ear, a sound must be approximately 10 dBA greater than the reference sound to be judged to be twice as loud. A 3 dBA change in community noise levels is noticeable, while 1-2 dB changes usually are not perceptible. Quiet suburban areas typically have noise levels in the range of 40-50 dBA; arterial streets have 50-60 (or greater) dBA noise ranges. Normal conversational levels range from 60-65 dBA. Ambient noise levels greater than 65 dBA can interrupt conversations. Noise levels usually attenuate at a rate of 6 dBA for each doubling of distance from point sources. Noise from lightly traveled roads typically attenuates at a rate of approximately 4.5 dBA per doubling of distance; corresponding noise attenuation from heavily traveled roads is approximately 3 dBA per doubling of distance from the noise source. Noise levels also can be reduced by intervening structures. In addition to the instantaneous measurement of sound levels, the duration of sound is important because noise that occurs over a long period of time is more likely to become an annoyance or to cause direct physical damage or environmental stress. A frequently-used noise metric that considers duration and sound power level is the equivalent noise level (Leq), which typically is summed over a one-hour period of time. The time period in which noise occurs is important to consider because noise that occurs at night tends to be more disturbing that noise that occurs during daytime. Community noise usually is measured using Day-Night Average Level (Ldn), which is the 24-hour average noise level with a 10 dBA penalty for noise that occurs between 10:00 p.m. and 7:00 a.m., or according to Community Noise Equivalent Level (CNEL), the 24-hour average noise level with a 5 dBA penalty for noise occurring between 7:00p.m. and 10:00 p.m. and a 10 dBA penalty for noise occurring between 10:00 p.m. and 7:00a.m. The principal sources of noise in the City of Lynwood are motor vehicles traveling on area roads and highways, aircraft activities, train operations, and commercial/industrial operations. The City General Plan identifies the greatest generators of noise to be transportation uses, particularly traffic along lnterstate-1 05, lnterstate-71 0, Atlantic Avenue, Imperial Highway, Long Beach Boulevard, and Martin Luther King Jr. Boulevard. In addition, the four rail lines that run along Alameda Street along the western boundary of the City and near the Project site and the Metro Green Line that runs on elevated tracks along lnterstate-1 05 are significant noise generators. Aircraft approaching Los Angeles International Airport are the primary source of aircraft noise in Lynwood because flight paths from that Airport pass over the City. Noise 63 I Page generated by these aircraft is regulated by the Federal Aviation Administration; that is, such noise regulation is outside the jurisdiction of the City. The Compton/Woodley Airport and the Hawthorne municipal Airport are the nearest municipal facilities, being respectively approximately four miles and seven miles west of the Project site. The Project site is outside the 55 dBA CNEL noise contours for both these airports. Regional and Local Regulatory Setting City of Lynwood Noise Standards The City of Lynwood General Plan Noise Element contains a goal, policies and implementation measures designed to control noise and to promote compatibility of land uses with respect to noise. Although the Noise Element does not explicitly establish exterior noise standards, it does reference noise and land use compatibility standards developed by the Office of Noise Control. ThP~P ~t;:!ncJ;:ml~ rlP-finP-noisP-exnosure for various land uses that are considered acceotable or • • •----~-·· •--·· -·----.... -.. - . - --. -~----·----- - - - - - - - - - - - - - -I unacceptable. An acceptable noise envimnment is one in which development may be permitted without requiring specific noise studies or specific noise-reducing features. A conditionally acceptable noise environment is one in which development should be permitted only after noise mitigation has been designed as part of a Project to reduce noise exposure to acceptable levels. In unacceptable noise environments, development generally should not be undertaken. Normally acceptable noise levels are 60 dBA for multi-family residential uses and 70 dBA for commercial areas. Chapter 3-12 of the City of Lynwood Municipal Code establishes regulations and standards pertaining to noise generation. It is unlawful for any person within the City to make, cause, or allow to be produced noise which is received on property occupied by another person within the designated zone in excess of the following levels indicated in the following table. City of Lynwood Ambient Exterior Noise Standards (dBA) Noise Zone Day Evening Ni.gbt. (7:00 a . .m. to 7:00 {7:00 p.m. to 10.:00 (10:00 p.mn. to 1~.00 p.m.) p.m.) a.m.:) R1 60 60 60 R2 and R3 60 60 55 Commercial 65 65 60 Manufacturing 75 75 75 In addition, general construction activities in the City of Lynwood are prohibited between 10:00 p.m. and 7:00 a.m. as indicated below. The City Municipal Code further states that it shall be unlawful for any person to operate any machinery, equipment, pump, fan, air conditioning apparatus, or similar mechanical device in any manner so as to create any noise that would cause the noise level at the property line of any property to exceed the ambient base noise level by more than five (5) decibels. The City Municipal Code also states as follows regarding construction of buildings and projects. "It shall be unlawful for any person within a residential zone, or within a radius of five hundred feet (500') therefrom, to operate equipment or perform any outside construction or repair work on buildings, structures, or projects or to operate any pile driver, power shovel, pneumatic 64 I Page hammer, derrick, power hose, or any other construction type device between the hours of ten o'clock (1 0:00) P.M. of one day and seven o'clock (7:00) A.M. of the next day in such a manner that a reasonable person of normal sensitiveness residing in the area is caused discomfort or annoyance unless beforehand a permit therefor has been duly obtained from the director of development services or his or her designee. No permit shall be required to perform 'emergency work' as defined in subsection 3-12.2 of this [City Municipal Code] section." City of South Gate Noise Standards The City of South Gate noise standards are included here because the residential neighborhood bordering the Project site to the west is within the City of South Gate. The South Gate Municipal Code establishes citywide interior and exterior noise level standards. The City's Noise Ordinance establishes daytime and nighttime noise standards of 50dBA and 40dBA, respectively. Construction activities are prohibited between 7:00 P.M. and 8:00A.M. Monday through Saturday, on Sundays, and on Federal holidays. Construction noise reduction methods are to be employed to the maximum extent feasible and may include, but not be limited to, shutting off idling equipment, installing temporary acoustic barriers around stationary construction noise sources, maximizing the distance between construction equipment staging areas and occupied sensitive receptor areas, and use of electric air compressors and similar power tools rather than diesel equipment. Thresholds for Analysis Would the project result in - - Potentially Less Than Less Than Significant No Environmental Issue Significant With Significant Impact Impact Mitigation Impact a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan X or noise ordinance, or applicable standards of other agencies? b) Exposure of persons to or generation of excessive groundborne vibration or X groundborne noise levels? c) A substantial permanent increase in ambient noise levels in the project X vicinity above levels existing without the project? d) A substantial temporary or periodic increase in ambient noise levels in X the project vicinity above levels existing without the project? e) For a project located within an airport land use plan or, where such a plan has not been adopted, within two X miles of a public airport or public use airport, would the project expose people residing or working in the 65 I Page project areas to excessive noise levels? f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in X the project area to excessive noise levels? Discussion of Checklist Answers a) No Impact Project development (demolition, grading and construction) is anticipated to begin in early 2018 and be completed within six months from commencement of development. According to U1e Noise Assessrnent produced for tf1e Project, noise generated by construction equipment includes haul trucks, water trucks, graders, dozers, loaders and pile drivers can reach relatively high level and grading activities typically represent one of the highest potential sources of noise impacts. High construction noise levels represent a short-term impact on ambient noise levels on, adjacent to, and near the Project site. The United States Environmental Protection Agency and the United States Department of Transportation have compiled data pertaining to noise generating characteristics of specific types of construction equipment. Noise levels generated by heavy construction equipment can range from 60 dBA to 100 dBA or more when measured at 50 feet, but diminish rapidly with increasing distance from the construction site at a rate of approximately 6dBA per doubling of distance. Typical noise levels associated with construction activities range from approximately 65 dBA to 95 dBA at 50 feet from the noise source. Construction noise from Project development would be audible to surrounding uses and visitors of nearby commercial uses. However, this increase in noise would be temporary and would be limited only to typical work hours between 7:00 a.m. and 10:00 p.m., Monday thmugh Fiiday, in accoidance vvith the City Noise Ordinance. As a result, the Noise Assessment concludes that "no impacts to residential receptors would occur from construction noise." The Project will include roof mounted mechanical equipment units (up to four Carrier 7.5- ton units or the equivalent) near the center of the building. The units would be located between 40 and 90 feet from the residential property line to the west and will have a noise rating of 77 dBA with a reference distance of 3 feet. The Noise Assessment used continuous reference noise levels to represent the mechanical ventilation system even though the mechanical ventilation system will cycle on and off throughout the day. This approach presents the Project's worst-case noise condition. Sound from a small localized source ("point" source) radiates uniformly outward as it travels away from the source. The sound level attenuates at a rate of 6 dBA for each doubling of distance. The following table indicates noise reductions from the distance separation of each HVAC unit to the residential properties bordering the Project site to the west. The measurements also account for the parapets that will be placed along the roof top and adjacent to the HVAC units. The parapets will be taller than the HVAC units to create acoustical and visual shielding. 66 I Page Noise Level Reductions Due To Distance and Shielding Noise Reference Distance to Reduction Reduction Adjusted Source or Adjusted Nearest From From Noise Noise Level Property Distance Parapet Level @3feet Line (dBA) (dBA) (dBA) (dBA} (feet) RoofTop 77 40 -22.5 -18.0 36.5 HVAC RoofTop 77 40 -22.5 -18.0 36.5 HVAC RoofTop 77 90 -22.5 -18.7 28.8 HVAC RoofTop 77 90 -22.5 -18.7 28.8 HVAC Cumulative Noise Level@ Property Line (dBA) 40 The Noise Assessment thereby concludes as follows. "Based upon the property line noise levels determined, none of the proposed noise sources exceeds the property line standards at the residential property line to the west. Therefore, the proposed development related operational noise levels comply with the noise standards at the property lines ... no additional analysis is required. No impacts are anticipated and no mitigation is required." b) No Impact. Groundborne vibrations from Project development will be kept to the Project site. No potential impact has been identified. c) No Impact Refer to a) above. d) No Impact Refer to a) above. e) No Impact The Project site is not located within an airport land use plan or within two miles of a public airport or a public use airport. Therefore, Project development and operation will not expose people residing or working in the Project area to excessive noise levels. No impact will result. f) No Impact 67 I Page The Project site is not located within the vicinity of a private airstrip. Therefore, Project development and operation will not expose people residing or working in the Project area to excessive noise levels. No impact will result. 68 I Page XIII. POPULATION AND HOUSING The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, City of Lynwood Municipal Code, the Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Demographic Setting According to United States Census data, the City of Lynwood's population in 2014 was 71,846 (approximately 0.71 percent of the Los Angeles County population). In 2014, there were 15,852 housing units in the City (approximately 0.46 percent of the County's housing units). The average number of persons per household in Lynwood was 4.42, which was 45 percent greater than the Countywide average of 3.04 persons per household. The average number of persons per household for owner-occupied housing in Lynwood is higher than for renter-occupied units. The Southern California Association of Governments estimates the City of Lynwood population will increase by 5,800 persons between 2012 and 2040, which will represent approximately 0.4 percent of overall growth in Los Angeles County. During this period, the number of housing units in Lynwood is anticipated to increase by 1,500 units (0.22 percent of the overall County growth in units). The number of jobs in the City is anticipated to increase by 1, 700 (accounting for 0.17 percent of overall growth in employment in Los Angeles County). The jobs-to-housing ratio in a jurisdiction is indicative of the availability of jobs and housing and the balance between local work opportunities versus local housing availability. Based on the number of households and employment levels in Lynwood in 2012, the Southern California Association of Governments estimates the City has a jobs-to-housing ration of 0.63 jobs per household (relative to Los Angeles County's ratio of 1.30 jobs per household). There generally is considered to be adequate housing to accommodate the labor market in a city when the jobs- to-housing ratio is close to 1.0. The City of Lynwood has a significantly lower ratio, which indicates there is a shortage of jobs for City residents and thereby Lynwood exports labor to surrounding areas. Regulatory Setting 2016-2040 Regional Transportation Plan/Sustainable Communities Strategy The 2016-2040 Regional Transportation Plan/Sustainable Communities Strategy (RTP/SCS) is a long-range visioning plan that balances future mobility and housing needs with economic, environmental and public health goals. The stated goals of the RTP/SCS are the following: • Align Plan investments and policies with improving regional economic development and competitiveness • Maximize mobility and accessibility for all people and goods in the region • Ensure travel safety and reliability for all people and goods in the region • Preserve and ensure a sustainable regional transportation system • Maximize productivity of the transportation system • Protect the environment and health of our residents by improving air quality and encouraging active transportation (such as walking and bicycling) • Actively encourage and create incentives for energy efficiency, where possible 69 I Page • Encourage land use and growth patterns that facilitate transit and active transportation RTP/SCS land use strategies for achieving its goals include the following. • Reflect the Changing Population and Demands -Shifting to development of more small- lot, single-family and multi-family housing in line with current housing demand • Focus New Growth around Transit -Focusing housing and employment growth in High Quality Transit Areas in support of Transit Oriented Development and active transportation infrastructure • Plan for Growth around Livable Corridors -Revitalizing commercial strips through integrated transportation and land use planning, resulting in increased economic activity and improved mobility options • Provide More Options for Short Trips -Pursue land use strategies, Complete Streets integration, and a set of State and local policies to encourage the use of alternative modes of transportation for short trips • Support Local Sustainability Planning -Support local planning practices that help lead to a reduction of greenhouse gas emissions, including Sustainable Planning & Design, Sustainable Zoning Codes, and Climate Action Plans City of Lynwood General Plan The Project site has a land use designation of "Commercial." The City of Lynwood General Plan Community Design Element envisions new development in the study area to be attractive, safe, we!!-designed and well-integrated with adjacent neighborhoods. The Community Design Element also identifies proper corridors, gateways and nodes. Long Beach Boulevard is an important corridor that extends adjacent to the Project site in a general north-south path. However, Long Beach Boulevard is not designated a State or local scenic highway. The nearest gateway to the Project site is at the northernmost entry to the City of Lynwood at Long Beach Boulevard and Tweedy Boulevard. Long Beach Boulevard Specific Plan The Project site is located within the Downtown Village I study area of the Long Beach Boulevard Specific Plan. The purposes of the Specific Plan are as follows. • To revitalize Long Beach Boulevard • To increase transit use • To instill downtown presence on Long Beach Boulevard • To provide a base for economic vitality for the future The Specific Plan identifies key issues, creates a land use development program based on sound planning principles, and establishes design guidelines for architecture and landscaping along Long Beach Boulevard. In addition, the Specific Plan provides direction to investors, developers, and the City of Lynwood by establishing a framework for the visual quality desired by the City for establishing a downtown presence along Long Beach Boulevard. Land use standards in the Specific Plan are set with a level of flexibility to address changing demands of the real estate market. 70 I Page Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Induce substantial population growth in an area, either directly (for example, by proposing new homes X and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the X construction of replacement housing elsewhere? c) Displace substantial numbers of people, necessitating the construction X of replacement housing elsewhere? Discussion of Checklist Answers a) Less Than Significant Impact Project development and operation will not induce a substantial growth in population in the City of Lynwood. Some of the employees of the Medical Office Building/treatment center who do not live in Lynwood may choose to relocate to the City. However, the Project is estimated to generate employment for 40 persons in relatively well-paying jobs; thereby, some employees may be able to relocate. The number would not be substantial. Any growth would be consistent with local and regional development goals and policies and would aid in the jobs-housing balance. The resultant impact would be less than significant. b) Less Than Significant Impact The single-family residence on the Project site is vacant. It was previously used as a shelter for abused women. Project development and operation would result in displacing only one single-family residential structure that is not occupied. Project development would provide additional housing opportunities in close proximity to transit opportunities within the City. The resultant impact would be less than significant. c) No Impact The single-family residence on the Project site is vacant. It was previously used as a shelter for abused women. Project development and operation would result in displacing only one single-family residential structure that is not occupied. Project development would provide additional housing opportunities in close proximity to transit opportunities within the City. Therefore, there would be no resultant impact. 71 I Page XIV. PUBLIC SERVICES The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting Fire and Emergency Services The consolidated Fire Protection District of Los Angeles County provides fire protection and related services under a contract basis to the City of Lynwood. Two fire stations are located in Lynwood: Station No. 147 (Fire Headquarters) at 3161 Imperial Highway and Station No. 148 at 4262 Martin Luther King Jr. Boulevard (approximately 1 mi!e from the Project site). The stations are staffed with a minimum nine fuil-time firefighters at all times who are charged with protecting City residents' lives and property from effects of fires, sudden medical emergencies, or exposure to dangerous conditions created by man or nature. Services provided include fire protection, hazardous materials, emergency medical services that include paramedic services, fire code and related code enforcement, and fire cause and arson investigation. The Los Angeles County Fire Department has an established response time goal of four minutes. Police Services The Los Angeles County Sheriff's Department provides law enforcement services for the City of Lynwood under contract with the City. The Century Station is located at 11073 Alameda Street, approximately one and one-fourth mile southwest of the Project site. Additional law enforcement services offered to residents and business owners in the City are the following. • • • • Crime prevention training Vacation security checks Dnlil"'n rnnnrt~ I VllvC I CtJVl L.:> Citizen community academies Video surveillance cameras Red signal light camera enforcement Schools The Lynwood Unified School District serves the City of Lynwood. Its boundaries are contiguous with the City boundaries. There are 12 elementary schools, three middle schools, and three high schools within the City of Lynwood, none of which are within one-fourth mile of the Project site. The Montana Avenue Elementary School in the City of South Gate is located slightly farther than one-quarter mile northwest of the Project site. Libraries The Los Angeles Public Library System serves the City of Lynwood. The Lynwood Library is located at 11320 Bullis Road, in the Lynwood Civic Center. Although the Lynwood General Plan calls for a standard of 0.5 square feet of library space per capita, the Lynwood Library has 0.17 square feet per capita. However, the Lynwood Community Development Department 72jPage conducts ongoing programs to promote library usage, modernize and improve library facilities, support literacy programs, mobile book services and other library outreach programs. Thresholds for Analysis Would the project -- Potentially Less Than Less Than Significant No Environmental Issue Significant With Significant Impact Impact Mitigation Impact a) Result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the following public services: i) Fire Protection? X ii) Police Protection? X iii) Schools? X iv) Parks? X v) Other public facilities? X Discussion of Checklist Answers a) i) Less Than Significant Impact Project development could add residents to the City if some of the anticipated 40 employees who may not live in Lynwood choose to relocate to the City. Project development would involve an 11 ,468 square foot medical office/treatment center use that would replace a 12,430 square foot commercial retail building and a vacant 3.277 square foot single-family residence previously used as a shelter. Project operation would not increase demand for fire protection and emergency services. The City does not currently asses a Fire Impact Fee for new projects. The two existing fire stations are adequate for current City needs and do not require replacement at this time. Should the Los Angeles County Fire Department and the City of Lynwood determine additional facilities are necessary to provide fire protection services to the Project site and Project vicinity, the facilities could be located within the City. The City's contract with the Los Angeles County Fire Department would ensure adequate facilities are available to accommodate Project development and operation. Therefore, the resultant impact would be less than significant. ii) Less Than Significant Impact 73 I Page Project development could add residents to the City if some of the anticipated 40 employees who may not live in Lynwood choose to relocate to the City. Project development would involve an 11 ,468 square foot medical office/treatment center use that would replace a 12,430 square foot commercial retail building and a vacant 3.277 square foot single-family residence previously used as a shelter. Project operation would not increase demand for police services. Any demand for additional personnel, equipment and operational costs generated by Project development would be funded and offset through increased tax revenue generated from Project development. Furthermore, the City of Lynwood has established a public facilities development impact fee to be imposed on all new development or development projects for which a development permit is issued. The impact fee can be utilized to offset impacts to law enforcement services. The proposed Project will be r~=>nllir~=>rl tn rnmnl\/ with imn~d f~=>~=> r~=>nllir~=>m~=>ntc::. in ~=>ff~=>rt ~t tim~=> nf h11ilrlinn n~=>rmit ,_..,_.., _ _.. •---lllf""'IJ .,.,.,,, "''f""'._..._ .. ·--·--.-.11-111-11 .. _ Ill -··--Oo _ .. .._1111--· --·1-111;:::, f""'-11111 .. issuance. Therefore, the resultant impact wouid be iess than significant iii) Less Than Significant Impact Project development could add to the student population in the City of Lynwood if some of the employees of the new medical office/treatment center building choose relocate to Lynwood. Any added student population would be distributed throughout the schools that serve the Project site, depending on grade level and location. Therefore, the resultant impact to school facilities would be less than significant. iv) Less Than Significant Impact Project development could increase the service population of the Lynwood Public Librarf. However, because adequate capacity at existing libraries within the City of Lynwood and in adjacent communities (Compton, South Gate and Los Angeles) exists to serve Project residents, Project development and operation impacts to libraries would be less than significant. v) Less Than Significant Impact Project development and operation impacts to park facilities are discussed in Section XV (Recreation), but are considered to be less than significant. 74 I P a g e XV. RECREATION The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting There are 46.1 acres of park facilities and 52 acres of school playgrounds (available to City residents during off-school hours) in the City of Lynwood. The City General Plan recommends a combined standard for neighborhood parks, community parks and sports complexes acreage- to-population ratio of three acres per 1 ,000 persons. This would equate to the City having 210 acres of parks. Therefore, (combining existing park and school facility acreage) there is a 112- acre deficit of park land in Lynwood. Thresholds for Analysis Would the project -- Potentially Less Than Less Than Significant No Environmental Issue Significant With Significant Impact Impact Mitigation Impact a) Increase the use of existing neighborhood and regional parks or other recreational facilities such that X substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the construction or expansion of recreational facilities X which might have an adverse physical effect on the environment: Discussion of Checklist Answers a) No Impact Project development will not include a residential component. Any additional residents to the City of Lynwood who may be future employees of the Project would be few in number and thereby would not be such to cause a substantial deterioration of any existing neighborhood and regional parks or other recreational facilities. Therefore, no impact would result. b) No Impact Refer to a) above. Project development will not include recreational facilities or require construction or expansion of recreational facilities. Therefore, no impact would result. 75 I Page XVI. TRANSPORTATION AND TRAFFIC The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, Applicant-submitted Project plans, and the "Trip Generation Analysis for Dialysis Clinic, Lynwood, Caiifornia," (August 7, 2017) Setting The Project site occupies 0.88 acre (38,248 square feet) at 10211 Long Beach Boulevard, within the Downtown Village I portion of the Long Beach Boulevard Specific Plan study area. Regional access to the Project site and the City of Lynwood is provided by lnterstate-1 05 and lnterstate-71 0. lnterstate-1 05 is an east-west freeway approximately one and one-fourth mile south of the Project site_ lnterstate-710 is a generally north-south freeway extending along the City's eastem border, approximately t'wo miles east of the Project site. Long Beach Boulevard is a north-south four and six lane arterial street bordering the Project site to the east and providing direct access to the Project site. The speed limit on Long Beach Boulevard is 35 miles per hour. Transit service in the City of Lynwood is comprised of fixed bus route service and rail service. The Long Beach Boulevard Metro Green Line Station is located along the lnterstae-105 right-of- way. The Lynwood Trolley/Breeze also provides service through the City with the Purple, Red, Green and Blue Lines. Pedestrian circulation in the Project area is provided via sidewalks along Long Beach Boulevard, and Beechwood Avenue. There are no bicycle lanes adjacent to the Project site. Thresholds for Anaiysis Would the project -- Environmental Issue a) Conflict with an applicable plan, ordinance or policy establishing measures of effectiveness for the performance of the circulation system, taking into account all modes of transportation including mass transit and non-motorized travel and relevant components of the circulation system, including but not limited to intersections, streets, highways and freeways, pedestrian and bicycle paths, and mass transit? b) Conflict with an applicable congestion management program, including, but not limited to level of service Less Than Significant Impact X X No Impact 76 I Page standards and travel demand measures, or other standards established by the county congestion management agency for designated roads or highways? c) Result in a change in air traffic patterns, including either an increase in traffic levels or a change in location X that results in substantial safety risks? d) Substantially increase hazards due to a design feature (e.g. sharp curves or dangerous intersections) or X incompatible uses (e.g. farm equipment)? e) Result in inadequate emergency X access? f) Conflict with adopted policies, plans, or programs regarding public transit, bicycle, or pedestrian facilities, or X otherwise decrease the performance or safety of such facilities? Discussion of Checklist Answers a)b)d) Less Than Significant Impact The Project site is located within the 27.01-acre Downtown Village I portion of the 137.967 -acre Long Beach Boulevard Specific Plan study area. The Specific Plan emphasizes a multi-modal transportation system that can meet demands of the existing and planned land uses. The Trip General Analysis for the Project calculates trip generation for the Project in comparison to trip generation associated with existing uses on the Project site. The Analysis uses a comparative framework comprised of a trip generation analysis conducted for five operating freestanding dialysis clinics that provide specific information (including a.m. and p.m. peak hour trips) that can be used to forecast grip generation associated with the Project. The five clinics observed ranged from 9,000 to 14,000 square feet in area with 10-15 employees typically on site for each shift. Subsequently, the Analysis identified resulting trip generation rates per thousand square feet of clinic space. Peak hour trip generation rates per thousand square feet of clinic space and per dialysis station were calculated for each of the five clinics and the average of the individual rates was used to estimate trip generation associated with the Project. The net change is vehicular trips generation was determined by comparing the data for the five dialysis clinics with corresponding projections for current uses on the Project site. The number of trips generated by current land uses on the Project site was estimated by applying average trip generation rates published by the Institute of Transportation Engineers to the size of the existing two buildings. Current uses on the Project site 771Page would generate approximately 256 daily vehicular trips, with 7 trips in the a.m. peak hour and 18 trips in the p.m. peak hour. The Analysis found that the Project will likely generate 28 vehicular trips in the a.m. peak hour and 25 vehicular trips in the p.m. peak hour. Also, it was determined that the Project would yield an estimated 326 daily vehicular trips based on building size or 316 daily vehicular trips bases on the number of dialysis stations. Therefore, in comparison to the existing commercial and residential uses on the Project site, the Project would generate eight additional vehicular trips in the a.m. peak hour, 7 additional vehicular trips in the p.m. peak hour, and 70 fewer vehicular trips daily. Significance of the peak hours increase in vehicular trips can be determined based on thresholds in the City of Lynwood Traffic Study Guidelines. The change in peak hour Hohil""lll<>r trin nonor<:>tinn ic locc +h<>n tho &:;n no<:>le hn11r trin throchnlrl 11corl hu tho ("itu VVIIIV\..411\..411 1.111"" :::1'-'11 ..... 1 ~1.1-11 1-·---\.1 H .. 411 lol 1---...., ..... ~I'll. 11--1 t.lll"" Ioiii --··-·------J 1.1 •--'"'} • Therefore, the City does not require a traffic impact analysis and Project impacts are considered to be less than significant. In addition, based on the Project Trip Generation Analysis, Project development and operation will not degrade traffic operations below those acceptable in the City's General Plan after implementation of circulation improvements. The Project is consistent with the City's adopted plans and policies. The Congestion Management Program requires circulation improvements be recommended at any intersection that operates at unsatisfactory level of service. For intersections that meet a jurisdiction's minimum level of service standard under existing condition, circulation improvements must maintain conformance with that standard. For intersections that fail to meet a jurisdiction's minimum level of service standard under existing conditions, circulation improvements must maintain the existing level of service. These include conversion of stop control, signalization, changes to signal phasing, and/or addition of lanes as appropriate. Access to the Project site will be via two driveways on Long Beach Boulevard. Both driveways will allow for right-turn only vehicular entrance and exit. Project driveways are designed based on City of Lynwood Code requirements. Project driveways will intersect perpendicularly with Long Beach Boulevard and will not create conflicts for motorists, pedestrians, or bicyclists. In addition, northbound left-turn movements out of Project driveways on Imperial Highway will be restricted to reduce vehicle conflicts. No existing traffic hazards are known to exist in the immediate vicinity of the Project. Due to the low number of estimated daily vehicular trips and full-service driveways, Project development and operation will not result in any design conflicts or hazards. c) No Impact Project development will not encroach into air traffic space nor result in any effects on demand for local air service or volumes of air traffic. Project development will not alter air traffic patterns. Therefore, no impact will result. e) Less Than Significant Impact 78 I Page The Project will be accessible via two 25-foot wide driveways from Long Beach Boulevard. The interior drive aisle within the Project parking area will have a minimum width of 25 feet to provide adequate emergency access. Project driveways are designed in accordance with all applicable design and safety standards required by adopted fire codes, safety codes and building codes established by the City of Lynwood Public Works Department and the Los Angeles County Fire Department. Project parking layout is designed to meet City requirements to allow emergency vehicles adequate access to the Project. Therefore, the Project impact is considered to be less than significant. f) No Impact Project development will not conflict with adopted policies or plans supporting alternative transportation modes such as bus transit, bicycles or pedestrian paths. The Project will not cause changes to existing roadway designations in the City of Lynwood General Plan. In addition, Project development will not result in removal of any existing transit or alternative transportation facilities. 79 I Page XVII. TRIBAL CULTURAL RESOURCES The discussion in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting Cultural Setting Prehistory California prehistory can be divided into three major periods, beginning in 6000 B.C. and extending to 1771 A.D. The period from 6000 to 1000 B.C. has been described as the Millingstone Horizon by Wallace (1955, 1987) and is typified by an abundance of milling stones and relatively few projectile points, which reflects a primary emphasis on collection of seeds. This earliest period is followed by Intermediate Period Cultures after approximately 1000 B.C. (Wallace 1955, 1978), which was a period that witnessed important technological changes that may be associated with increasing population levels and the beginnings of resource intensification. The appearance of the mortar and pestle is believed to reflect the increasing importance of acorns in the diet; the transition from dart to arrow points by the end of the period indicates the appearance of the bow and arrow. The Late Prehistoric Period (Wallace's [1955] Horizon IV and Warren's [1968] Shoshonean Tradition) appears in Orange County at approximately A.D. 600 and extended to A.D. 1771 (Koerper 1981 ); Mason 1991 ). Shell beads, small arrow points and, more recently, ceramics are common at these sites. Regulatory Background United States Native American Graves Repatriation Act The federal Native American Graves Repatriation Act recognizes the following types of evidence of cultural affiliation: geographical; kinship; biological; archaeological; anthropological; linguistic; folklore; oral tradition; historical; or other relevant information or expert opinion. Specifically, the court in Pueblo of Sandia observed that the affidavit of a tribal elder and religious leader which listed religious practices and alluded to sacred sites, minutes of a working group meeting that showed a site was used for ceremonial, religious, and medicinal purposes, and an anthropologist's report on a tribe's religious and cultural affiliation with a site that noted ceremonial paths and herbs uses, were all forms of evidence (Pueblo of Sandia v. United States (1995)). California State Public Resources Code California State Public Resources Code policies and regulations protect archaeological, paleontological and historical sites. Public Resources Code protections are as follows. • Sections 5020-5029.5 -These Section provide for continuation of the former Historical Landmarks Advisory Committee as the State Historical Resources Commission, which is in charge of overseeing the administration of the California Register of Historical Resources and is responsible for designation of State Historical Landmarks and Historical Points of Interest 80 I Page • Sections 5079-5079.65 -These Sections provide definitions of the functions and duties of the Office of Historic Preservation, which is responsible for administration of federally and state-mandated historic preservation programs in California and the California Heritage Fund • Sections 5097.9-5097.998 -These Sections provide protection to Native American historical and cultural resources and sacred sites and identifies powers and duties of the Native American Heritage Commission; requires notification to descendants of discoveries of Native American human remains and provides for treatment and disposition of human remains and associated grave materials. California Senate Bi/118 California State law provides for limited protection of Native American prehistoric, archaeological, cultural, spiritual and ceremonial places, such as the following: sanctified cemeteries, religious, ceremonial sites, shrines, burial grounds, prehistoric ruins, archaeological sites; and, sacred sites. California Senate Bill 18 placed new requirements on local governments for developments in or near a Traditional Tribal Cultural Place {TTCP). Local jurisdictions must provide opportunities for involvement of California Native American tribes in the land planning process to preserve traditional tribal cultural places. The Final Tribal Guidelines recommends the Native American Heritage Commission provide written information within 30 days to inform the Lead Agency if a proposed project is determined to be near a TTCP and another 90 days for tribes to respond to a local government if the tribes want to consult to determine whether the project would have an adverse impact on the TTCP. SB 18 also amended California Civil Code Section 815.3 to add California Native American tribes to the list of entities that can acquire and hold conservation easements to protect their cultural places. California Assembly Bill 52 Governor Brown signed Assembly Bill Number 52 on September 25, 2014. California Assembly Bill 52 became effective on July 1, 2015. The legislation imposes new requirements for consultation regarding projects that may affect a tribal cultural resource, includes a broad definition of what may be considered to be a tribal cultural resource, and includes a list of recommended mitigation measures. Assembly Bill 52 added "tribal cultural resources" to categories of cultural resources that are specifically required to be protected under CEQA. ''Tribal resources" are defined as either (1) sites, features, places cultural landscapes, sacred places and objects with cultural value to a California Native American tribe" that are included in the State register of historical resources or a local register of historical resources, or that are determined to be eligible for inclusion in the State register; or, (2) resources determined by the lead agency, in its discretion, to be significant based on the criteria for listing in the State register. Under this legislation, a project that may cause a substantial adverse change in the significance of a tribal cultural resource is defined as a project that may have a significant effect on the environment. Where a project may have a significant impact on a tribal cultural resource, the lead agency's environmental document must discuss the impact and whether feasible alternatives or mitigation measures could avoid or substantially lessen the impact. 81 I Page Assembly Bill 52 further requires lead agencies to provide notice to tribes that are traditionally and culturally affiliated with the geographic are of a proposed project if they have requested notice of projects proposed within that area. If a tribe requests consultation within 30 days upon receipt of the notice, the lead agency must consult with the tribe. Consultation may include discussing type of environmental review necessary, significance of tribal cultural resources, significance of project impacts on tribal cultural resources, and alternatives and mitigation measures recommended by the tribe. The parties must consult in good faith, and consultation is considered concluded when either the parties agree to measures to mitigate or avoid a significant effect on a tribal cultural resource (if such a significant effect exists) or when a party concludes mutual agreement cannot be attained. The legislation also identifies Mitigation Measures that may be considered to avoid significant impacts if there is no agreement on appropriate mitigation. Recommended measures include the following. • Preservation in place • Protecting the cultural character and integrity of the resource e Protecting the traditional use of the resource • Protecting the confidentiality of the resource • Permanent conservation easements with culturally appropriate management criteria California Public Resources Code Under existing law, environmental documents must not include information about the location of an archaeological site or sacred lands or any other information that is exempt from public disclosure pursuant to the Public Records Act. (Cal Code Regulations. Section 15120(d)) Native American graves, cemeteries and sacred places and records of Native American places, features and objects also are exempt from disclosure. This exclusion reflects California's strong policy in favor of protecting Native American artifacts. Confidential cultural resource inventories or reports generated for environmental documents should be maintained by the lead agency under separate cover and shall not be available to the public. Public Resources Code provisions include additional rules that govern confidentiality during tribal consultation (Public Resources Code, Section 21082.3(c)). First, information submitted by a California Native American tribe during the environmental review process may not be included in the environmental document or disclosed to the public without the prior written consent of the tribe. Consistent with current practice, confidential information may be included in a confidential appendix. A lead agency may exchange information confidentially with other public agencies that have jurisdiction over the environmental document. This confidentiality protection extends to a tribe's comment letter on an environmental document. A lead agency can summarize tribal comment letters in a general way while still maintaining confidentiality. Secondly, an exception to the general rule prohibiting disclosure is that the lead agency and the tribe may agree to share confidential information regarding tribal cultural resources with the project applicant and its agents. In that case, the project applicant is responsible for keeping the information confidential, unless the tribe consents to disclosure in writing, in order to prevent looting, vandalism, or damage to the cultural resource. The project applicant must use a reasonable degree of care to protect the information. Additionally, information that is already publically available, developed by the project applicant, or lawfully obtained from a third party that is not the tribe, lead agency, or another public agency may be disclosed during the environmental review process. Thirdly, the new law does not affect any existing cultural resource or 82 I Page confidentiality protections. Fourthly, the lead agency or another public agency may describe the information in general terms in the environmental document. This is so that the public is informed about the basis of the decision, while confidentiality is maintained. California Public Resources Code Section 21 084.3(b) indicates culturally appropriate mitigation for a tribal cultural resource is different than mitigating impacts to archaeological resources and appropriate mitigation measures should be identified through consultation with the tribal government. If the lead agency determines a Project may cause a substantial adverse change to a tribal cultural resource, and measures are not otherwise identified in the consultation process, new provisions in the Public Resources Code describe mitigation measures that, if determined by the lead agency to be feasible, may avoid or minimize significant adverse impacts. Examples of such mitigation measures include the following. • Avoidance and preservation of the resources in place, including but not limited to, planning and construction to avoid the resources and protect the cultural and natural context, or planning greenspace, parks or other open space, to incorporate the resources with culturally appropriate protection and management criteria. • Treating the resource with culturally appropriate dignity taking into account the tribal cultural values and meaning of the resource, including but not limited to, the following: o Protecting the cultural character and integrity of the resource o Protecting the traditional use of the resource o Protecting the confidentiality of the resource • Permanent conservation easements or other interests in real property, with culturally appropriate management criteria for the purposes of preserving or utilizing the resources or places • Protecting the resource Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Cause a substantial adverse change in the significance of a tribal cultural resource defined in Public Resources Code section 21074 as either a site, feature, place, cultural landscape that is geographically defined in terms of the size and scope of the landscape, sacred place, or object with cultural X value to a California Native American tribe, and that is; 1) Listed or eligible for listing in the California Register of Historical Resources, or in a local register of historical resources as defined in Public Resources Code section 5020.1 (k), or 83 I Page 2) A resource determined by the lead agency, in its discretion and supported by substantial evidence, to be significant pursuant to criteria set forth in subdivision (c) of Public Resources Code Section 5024.1. In applying the criteria set forth in subdivision (c) of Public Resources Code Section 5024.1, the lead agency shall consider the significance of the resource to a California Native American tribe. Discussion of Checkiist Answers a) Less Than Significant Impact with Mitigation Incorporated The Project site currently has a 12,430 square foot commercial retail building and a vacant 3,277 square foot residence. Some grading will be necessary to prepare the property for accommodating the Project. However, no cultural resources (historical; archaeological; paleontological) or human remains are known to exist on the Project site. There may be a possibility of discovery of paleontological resources or human remains associated with Native American settlement beneath the suiface. Project development could potentially result in discovery of human remains because sub-surface grading would need to be made to accommodate the proposed mixed use building and parking garage. In the event human remains are encountered during Project development, Mitigation Measures MM-TCR-1 and MM-TCR-2 would be required. Pursuant to this Mitigation the proper authorities would be notified if human remains were encountered and standard procedures for respectful handling of human remains in compliance with State Health and Safety Code Section 7050.5 and Public Resources Code Section 5097.98 would be implemented. With implementation of the Mitigation Measures, potential Project- generated impacts to Tribal Cultural Resources would be less than significant. Mitigation Measures MM-TCR-1 -Prior to issuance of the first preliminary or precise grading permit, the following note shall be placed on the grading plans. "In the event human remains are encountered during Project development (grading and construction), the following steps shall be taken: • There shall be no further excavation or disturbance of the Project site until the Los Angeles County Coroner is contacted to determine if the remains are prehistoric and that no investigation of the cause of death is required. If the Coroner determines the remains to be Native American, then the Coroner shall contact the Native American Heritage Commission within 24 hours and the Native American Heritage Commission shall identify the person or persons it 84 I Page believes to be the most likely descendant from the deceased Native American. The most likely descendant may make recommendations to the Applicant or City for means of treating or disposing of, with appropriate dignity, the human remains and any associated grave goods as provided in the Public Resources Code Section 5097.98, which shall be considered and implemented by the Applicant, as appropriate, in coordination with the City of Lynwood. • Where the following conditions occur, the landowner or his authorized representative shall rebury the Native American human remains and associated grave goods with appropriate dignity either in accordance with recommendations of the most likely descendant or on the property in a location not subject to further sub-surface disturbance: o The Native American Heritage Commission is unable to identify a most likely descendant or the most likely descendant failed to make a recommendation within 24 hours after being notified by the Commission; o The descendant identified fails to make a recommendation; or, o The Applicant rejects the recommendation of the descendant and the mediation by the Native American Heritage Commission fails to provide measures acceptable to the landowner" MM-TCR-2-A licensed professional archaeological/paleontological observer shall be present on the Project site to observe grading activities according to a schedule as appropriate and as approved by the Director of Public Works. Should artifacts be found that may be related to Native American cultures, grading operations shall be halted and the Applicant shall inform appropriate identified Tribal Councils, whose representative(s) shall determine the disposition of the found artifacts. 85 I Page XVIII. UTILITIES AND SERVICE SYSTEMS The discussion and analysis in this section is derived from information contained in the City of Lynwood General Plan, City of Lynwood Transit Area Specific Plan Environmental Impact Report, Applicant-submitted Project plans, and the City of Lynwood Long Beach Boulevard Specific Plan. Setting Water Supply Water supply to the Project site derives primarily from local groundwater extracted from the Central Groundwater Basin. The City of Lynwood also imports water purchased from the Metropolitan Water District (MWD) via the Central Basin Municipal Water District (CBMWD) and rof"'Hf"'lorl \A1'3tor nrnuirlorl hu rRI\JI\1\/n .0. nnrnvim,tolu On norf"'ont nf tho IAJ,tor ~11nnlu j~ nrn11irl1=>rl 1'-VJVI"'-4 VVt;A""I tJI V V 1\.4'-'\.4 U 1 ""'L..IIVIII V .....,. I 'I""' I""'' --11 I ~-~-IJ --..... -1 --· lt. -· 1.1 1-WW\.IIIo-1 --f""f"''J •-f"''-• •--- by the City's active groundwater wells located throughout Lynwood. The City supplements its groundwater supply with imported water from its connection to CBMWD on an as needed basis. In addition to imported water and groundwater, Lynwood's water supply system includes four 8- inch emergency interconnections with the City of Compton and one 8-inch connection with the City of South Gate. In addition, Lynwood has access to imported water from the Colorado River and the Sacramento-San Joaquin River Delta in Northern California, which provide Southern California with more than 2 million acre-feet of water annually for urban use. The Colorado River supplies 600,000-800,000 acre-feet for urban purposes in MWD's service area. The City of Lynwood distributes its water to customers through an approximately 90-mile long network of distribution mains with pipelines ranging from 2 inches to 16 inches in diameter. The water system consists of one pressure zone that provides sufficient water pressure to customers. The City also maintains a booster pump station consisting of three pumps that can deliver up to 36,000 gallons per minute. The City maintains of water storage reservoir vvith a capacity of 3 million gallons for storage and fire flow requirements. Wastewater The Project site is located in the Los Angeles County Sanitation District Number 1. The Sanitation District owns, operates and maintains the large trunk sewers that serve the regional wastewater conveyance system in Lynwood. Wastewater is collected through a Citywide system of gravity sewers and lift stations and conveyed to the Los Angeles County Sanitation District's Joint Water Pollution Control Plant in the City of Carson. Treated effluent then is discharged through an ocean outfall. The Control Plant has a design capacity of 400 million gallons per day and according to the Sanitation Districts of Los Angeles, 2016, currently processes an average daily flow of 258.4 million gallons per day. The Joint Water Pollution Control Plant is maintained and operated per guidance provided in the City of Los Angeles Regional Sewer System Management Plan, which provides direction for maintenance, repairs, rehabilitation and funding, and also supplies guidance for which hydraulic modeling to use in system design planning, capacity studies to anticipate where and how system improvements are needed, and contingency plans for emergency response. The Pollution Control Plan does not produce recycled water, but the Los Coyotes Water Reclamation Plant in Cerritos provides those recycled water services. The City of Lynwood maintains the local system of sewer lines that collects wastewater. Local sewer mains transfer sewage to County Sanitation District trunk lines where the sewage is 86 I Page received at the Pollution Control Plant. The City wastewater system is regulated under the jurisdiction of the Los Angeles Regional Water Quality Control Board and the United States Environmental Protection Agency. Solid Waste The City of Lynwood contracts with Waste Resources, Inc. to provide direct collection services for solid waste, recycling and yard waste disposal services. The Los Angeles Regional Agency, an agency approved by the California Integrated Waste Management Board, assists the City of Lynwood to achieve Assembly Bill 939 recycling goals. Recyclables are processed at both the Puente Hills Material Recovery Facility (permitted for 4 tons per day) in Whittier and the Downey Area Recycling and Transfer Facility (permitted for 5 tons per day) in Downey. Waste generated in Lynwood is taken to two landfills in Orange County - -the Frank R. Bowerman landfill (11002 Bee Canyon Road in the City of Irvine) is permitted to receive a daily maximum of 11,500 tons; and the Olinda Alpha Sanitary landfill in the City of Brea. As of 2016, the remaining capacity at the Frank R. Bowerman landfill is 205 million cubic yards (CaiRecycle, 2016) and 36.5 million cubic yards at the Olinda Alpha Sanitary landfill. Regulatory Setting -Water State of California The California State Department of Public Health, State Water Resources Control Board, and the Regional Water Quality Control Board regulate quality of drinking water in Lynwood. The Urban Water Management Planning Act of 1983 requires all urban water suppliers in California to prepare and adopt an Urban Water Management Plan and update the Plans every five years. This requirement applies to all suppliers that provide water to more than 3,000 customers or supply more than 3,000 acre-feet per year. The City of Lynwood distributes water to approximately 9,000 customers. Senate Bill 610 amended the California Water Code to require detailed analysis of water supply availability for certain types of development. The primary purpose of Senate Bill 610 is to improve the linkage between water and land use planning by ensuring greater communication between water providers and local planning agencies and ensuring that land use decisions for certain types of development projects are fully informed as to whether sufficient water supplies are available to meet project demands. Regional and Local The City of Lynwood operates under the Metropolitan Water District of Southern California's Regional Urban Water Management Plan (RUWMP) and the City of Lynwood Urban Water Management Plan (UWMP). All applicants/proponents for new construction and rehabilitated landscapes are required to comply with the City of Lynwood Water Efficient Landscaping Ordinance that was adopted in February, 2016. To meet Water Efficient Landscape Ordinance requirements all landscaping meeting a 2,500 square foot threshold must comply with the Ordinance by submitting a landscape documentation package that includes a grading, landscape and irrigation plan and water budget calculations not to exceed the maximum water allowance. City of Lynwood General Plan 87 I Page Applicable City of Lynwood General Plan actions pertaining to domestic water are as follows. • Goal DW-1: Provide for the planning and funding mechanism to construct, and expand, and maintain water facilities (transmission, storage, distribution, and treatment) needed to meet current and future demand o Policy DW-1.1: The City shall provide an adequate supply of domestic water needed to meet current City demand and future developments o Policy DW-1.2: The City shall ensure that adequate funding is available to improve existing and construct new water facilities o Policy DW1-1.3: The City shall require that water conservation measures be implemented into all construction projects o Policy DW-1.4: The City shall encourage the use of reclaimed water State of California State and federal water quality regulations provide the basis for State standards for wastewater treatment plant effluent. The Regional Water Quality Control Boards set specific requirements for community and individual wastewater treatment and disposal and reuse facilities via issuance of Waste Discharge Requirements. The California State Department of Public Health establishes specific requirements for treated effluent reuse or recycled water. Regional and Local City of Lynwood General Plan The follovving are General Plan actions that are applicable to Project development. • Goal WCT-1: Provide for the planning and funding mechanism to construct, expand, and maintain wastewater facilities (collection and treatment) needed to meet future demand o Policy WCT-1.1: The City shall work to ensure that an adequate wastewater collection and treatment system is available to service current demand and future developments o Policy WCT-1.2: The City shall work with the County of Los Angeles to maintain and operate their wastewater facilities in a manner that does not jeopardize the public's health, safety, or welfare o Policy WCT-1.3; The City shall work with the County of Los Angeles to assure that they have adequate funding available to maintain/improve existing and construct new sewer facilities o Policy WCT-1.4: The City shall work with the County of Los Angeles to pursue opportunities for the use of reclaimed wastewater Regulatory Setting-Solid Waste State of California The California Integrated Waste Management Act of 1989 (Assembly Bill 939) requires each city or county source reduction and recycling element to include an implementation schedule 88 I Page demonstrating that the city or county must divert 50 percent of solid waste from landfill disposal or transformation. Regional and Local City of Lynwood General Plan The following pertain to Project development. • Goal SW-1: Provide for the efficient collection, disposal, recycling and reuse of solid waste. o Policy SW-1.1: The City shall work with Western Waste to ensure low-cost refuse disposal is available for residential, industrial and commercial properties Thresholds for Analysis Would the project -- Potentially Less Than Less Than Environmental Issue Significant Significant Significant No Impact With Impact Impact Mitigation a) Exceed wastewater treatment requirements of the applicable X Regional Water Quality Control Board? b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing X facilities, the construction of which could cause significant environmental effects? c) Require or result in the construction of new storm water drainage facilities or expansion of existing facilities, the X construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, X or are new or expanded entitlements needed? e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the X project's projected demand in addition to the provider's existing commitments? f) Be served by a landfill with sufficient X permitted capacity to accommodate 89 I Page the project's solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations related to X solid waste? Discussion of Checklist Answers a) Less Than Significant Impact Project operation is estimated to generate approximately 5,000 gallons/day of wastewater, which is an increase over the existing uses' wastewater generation. However, the existing wastewater treatment capacity would be sufficient to accommodate Project development and operation. Therefore, the resultant impact will be less than significant. b) Less Than Significant Impact Project development would generate a demand for water service roughly commensurate (5,000 gallons per day) with the new source of wastewater generated (as indicated above. The wastewater would flow through the existing Joint Water Pollution Control Plant system. Local conveyance infrastructure will be upgraded as necessary in accordance with an existing maintenance plan but would not be required to be upgraded as a result of Project development. Project development will not require the construction of new water or wastevvater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects and the resultant impact will be less than significant. c) Less Than Significant Impact Refer to b) above. d) Less Than Significant impact with Mitigation Incorporated The Project site is located in the City of Lynwood's Water Service Area. The City operates under the Metropolitan Water District of Southern California's Regional Urban Water Management Plan and the City of Lynwood Urban Water Management Plan, which calculates water supply requirements in their service areas through the year 2035, along with water supply availability and reliability of existing and potential water sources through the year 2035. The Project site is located within the Lynwood Urban Water Management Plan. Project development will include approximately 8,800 square feet of landscaping and biofiltration area and thereby will be required to comply with the City of Lynwood's Water Efficient Landscaping Ordinance (Lynwood Municipal Code Article 45). To comply with Water Efficient Landscape Ordinance requirements, all landscaping meeting the 2,500 square foot threshold must comply with the Ordinance by submitting a landscape documentation package that includes a grading, landscape and irrigation design plan and water budget calculations not to exceed the maximum water allowance. 90 I Page Project development will occur in compliance with Lynwood General Plan goals and policies and with Lynwood Long Beach Boulevard Specific Plan landscape and water conservation objectives. Project development would generate an increased demand for water, as mentioned previously. The City of Lynwood Urban Water Management Plan anticipates under normal conditions the City will have excess supply exceeding the demand estimated for the build out of the entire Long Beach Boulevard Specific Plan. The City also has acknowledged that efficient water use is the foundation of its current and future water planning and operation policies and thereby has encouraged its customers to practice water wise conservation measures, which has enabled Lynwood to maintain relatively stable total water consumption levels over the past 16 years despite increases in City residential population and commercial uses. Compliance with water conservation strategies contained in the City of Lynwood General Plan would help ensure sufficient supplies are maintained to accommodate Project development and operation. Furthermore, implementation of Mitigation Measure MM-U- 1 will ensure resultant Project impacts will remain at a less than significant level. e)Less Than Significant Impact The Project site is located in Los Angeles County Sanitation District Number 1. The Sanitation District owns, operates and maintains the large trunk sewers serving the regional wastewater conveyance system in Lynwood. Wastewater is collected via a Citywide network of gravity sewers and lift stations and conveyed to the County Sanitation District Joint Water Pollution Control Plant in the City of Carson. The Plan has a design capacity of 400 million gallons per day and currently process an average daily flow of 258.4 million gallons per day. The local system of sewer lines that collects wastewater is maintained by the City of Lynwood. The City's wastewater collection system is regulated under jurisdiction of the Los Angeles Regional Water Quality Control Board, the State Water Resources Control Board, and the United States Environmental Protection Agency. Project development is estimated to generate up to approximately 5,000 gallons/day of wastewater. The existing wastewater treatment capacity would be sufficient to accommodate Project development and operation. Therefore, the resultant impact will be less than significant. f)Less Than Significant Impact The City of Lynwood contracts with Waste Resources, Inc. to provide direct collection services for solid waste, recycling and yard waste services. The Los Angeles Regional Agency, an agency approved by the California Integrated Waste Management Board, assists member cities including the City of Lynwood to achieve Assembly Bill 939 recycling goals. Recyclables are processed at the Puente Hills Material Recovery Facility (permitted for 4,000 tons per day) in Whittier and the Downey Area Recycling and Transfer Facility (permitted for 5,000 tons per day) in Downey. Waste generated in Lynwood is taken to two landfills in Orange County: the Frank R. Bowerman landfill (11002 Bee Canyon Access Road, Irvine), which is permitted to receive a daily maximum of 11 ,500 tons per day; and, the Olinda Alpha Sanitary landfill in Brea. The remaining capacity at the Frank R. Bowerman landfill (as of 2016) is 205 million cubic 91 I Page yards (CaiRecycle 2016a) and at the Olinda Alpha Sanitary landfill stands at 36.5 million cubic yards (CaiRecycle 2016b). The California integrated Waste Management Act of 1989 (Assembly Bill 939) requires each city or county's source reduction and recycling element to include an implementation schedule showing that a city or county must divert 50 percent of solid waste from landfill disposal or transformation on and after January 1, 2000. California Senate Bill 1016 (2008) requires the 50 percent diversion requirement to be calculated on a per capita disposal rate equivalent. Project development (demolition and construction components) will comply with this requirement. Therefore, the resultant Project impact will be less than significant. d) less Than Significant Impact Project development will result in generation of approximately 421 pounds/day of solid waste based on generation rates of 10.53 pounds/employee/day (assumption of 40 employees) generated by Project development and operation. As indicated in the "Hazards and Hazardous Materials" Section of this document, federal, State and County procedures for disposal of medical waste will be required of the Project. In accordance with the California Integrated Waste Management Act of 1989, cities and counties are required to divert 50 percent of all solid waste from landfills. Project waste disposal facilities throughout Los Angeles County are managed per the Countywide Integrated Waste Management Plan, which anticipates disposal needs and identifies policies for achieving waste management goals throughout the County. Continued implementation of the Countywide Integrated Waste Management Plan would ensure sufficient solid waste disposal capacity for full build out of the Specific Plan. Therefore, Project development impact will comply with applicable federal, State and local regulations pertaining to disposal of solid \AJaste and the resultant impact \AJill be less than significant. Mitigation Measures MM-U-1 (Water Efficiency) -The Applicant shall comply with applicable California Green Building Code requirements related to water conservation. 92 I Page XIX. MANDATORY FINDINGS OF SIGNIFICANCE a. Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? Less Than Significant Impact Project development (demolition; grading; construction) and operation will improve the deteriorating structural condition on the 38,248 square foot Project site. No fish or wildlife species or related habitat occurs on site. No rare or endangered plant species will be eliminated. No impacts to biological resources will occur as a result of Project development. No historical or archaeological resources are known to occur on the Project site. Any discovery of archaeological, paleontological or tribal cultural resources that may occur during Project development will be subject to Mitigation Measures delineated in the Cultural Resources and Tribal Cultural Resources Sections of this document. The resultant impact will be ensured to be less than significant. b. Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in the connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? Less Than Significant Impact In conjunction with other planned development within and near the Long Beach Boulevard Specific Plan study area, Project development and operation has small potential to contribute to cumulative environmental impacts. Although Project development and operation will contribute to minor additional peak hour traffic generation, the resultant impact to adjacent and nearby roadways and intersections will be less than significant. In addition, Project development and/or operation contribution to aesthetics (light and glare), air quality, geology and soils, hazards and hazardous materials, tribal cultural resources, and utilities and service systems were determined to be less than significant with implementation of noted Mitigation Measures. Project contribution to cumulative impacts pertaining to all other CEQA topical categories of analysis were determined to result in less than significant impacts or to have no impact in nature and in combination with requirements of the State of California, regional agencies and the City of Lynwood. c. Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? Less Than Significant Impact 93 I Page The potential for Project development and operation resulting in direct or indirect environmental impacts to humans was evaluated for aesthetics, air quality, geology and soils, greenhouse gas emissions, hazards and hazardous materials, hydrology and water quality, noise, public services, recreation, transportation and traffic, and utilities and service systems. Resultant Project development and/or operation impacts were determined to be less than significant outright or with recommended Mitigation Measures implemented. -THE END- 94 I Page LONG BEACH BOULEVARD MEDICAL OFFICE BUILDING INITIAL STUDY REFERENCES City of Lynwood General Plan (August 2003) City of Lynwood, Long Beach Boulevard Specific Plan (November, 2006) City of Lynwood, "Lynwood Transit Area Specific Plan Environmental Impact Report" (September 6, 2016) City of Lynwood Municipal Code, Chapter XXV-Zoning (March 17, 2015) Project Plans (August 30, 2017) • Site Plan • Floor and Roof Plan • Elevations • Conceptual Landscape Plan, including Water Efficient Landscape Worksheet • AL T A/NSPS Land Title Survey • Preliminary Grading Plan • Composite Utility Plan • Preliminary Water Quality Plan • Electrical Utility Composite Exhibit Anderson & Associates, Inc., 'Trip Generation Analysis for Dialysis Clinic, Lynwood, California" (August 7, 2017) Atlas Civil Design, "Preliminary Low Impact Development (LID)," (August, 2017) Gularte & Associates, Inc., "Geotechnical Report -Lynwood Medical Building, 10211 Long Beach Boulevard, Lynwood, California," (September 8, 2017) Ldn Consulting, Inc., "Air Quality Assessment-Lynwood Medical Office, City of Lynwood, CA," (August 29, 2017) Ldn Consulting, Inc., "Global Climate Change Analysis -Lynwood Medical Office -City of Lynwood, CA," (August 29, 2017) Ldn Consulting, Inc., "Lynwood Medical Office Noise Assessment-Lynwood CA," (August 29, 2017) State of California, "Health and Safety Code" 95 I Page GRAPHICS Available on City Web Page -- PROJECT LOCATION SITE PLAN ELEVATIONS 96 I Page APPENDICES MITIGATED NEGATIVE DECLARATION MITIGATION MONITORING AND REPORTING PROGRAM NOTICE OF INTENT 97 I Page Name of Project: CITY OF LYNWOOD MITIGATED NEGATIVE DECLARATION Long Beach Boulevard Medical Office Building Project Proponent: Market Street Development, LLC Project Location: The Project site address is 10211 Long Beach Boulevard, Lynwood, CA. The irregularly-shaped 38,248 square foot property is bordered to the north and south be commercial businesses, to the east by Long Beach Boulevard and commercial uses beyond, and to the west by a single-family residential neighborhood in the City of South Gate. The Project site is located within the Downtown Village I portion of the Long Beach Boulevard Specific Plan study area. PiOject Description: Market Street Development LLC has submitted an application that would enable development of an 11 ,468 square foot medical office building on a 38,248 square foot site that would contain a kidney dialysis treatment center with 25 dialysis stations. The proposed single-story structure also will contain a water treatment plant, supply storage area, customer service area, staff meeting rooms and offices, and other ancillary spaces as necessary and required by the California Health Code to support dialysis treatment functions. At full capacity, the Project hours of operation will be from 6:00 am. To 10:00 p.m., Monday through Saturday. Some staff will arrive one hour prior to opening to set up for the initial treatment or stay one hour after closing. All treatment is by appointment only. Most patients will be scheduled for dialysis between 8:00 a.m. and 5:00 p.m. When initially open, the clinic typically will run at a reduced capacity. Some patients who still work will require dialysis earlier or later in the day. The patients all are repeat clients who receive treatment three times weekly; each treatment !asts three to four hours. !\~ost patients do no drive themselves to treatment; rather, they arrive and leave by medical transport or are dropped off and picked up by a family member or caregiver. At full operation, the clinic may serve as many as 100-120 patients over the course of a week. When all 25 stations are in operation, there will be an average of 15 employees per shift. A total of 30-40 employees will be employed by the Project. Landscaping would occupy approximately 23 percent of the Project site. Vehicular access to the Project site parking garage would be via two access driveways from Long Beach Boulevard. A parking lot will be located on the north end of the Project site. The parking lot will contain 31 full size spaces; 29 spaces are required. Required discretionary actions include a Conditional Use Permit that would allow development of the Project site with the proposed land use and Site Plan Review that would address overall building design, on-site parking, circulation and access, compatibility with surrounding uses, landscaping and lighting. Proposed Finding: The City of Lynwood finds that all Project impacts identified and analyzed in the attached Initial Study will be of a less than significant level or a less than significant level with implementation of the following stipulated Mitigation Measures. Mitigation Measures: Attached. 98 I Page MITIGATION MEASURES Aesthetics MM-AES-1 -All Project exterior, parking structure, and security lighting shall be confined to the Project site to avoid casting light or glare onto adjacent residential properties. Prior to issuance of an Electric Permit, the Applicant shall submit a Lighting and Photometric Plan that provides evidence of this Mitigation and shall obtain the approval of the Planning Division Manager of such Plan. Air Quality MM-AQ-1: During construction, the Applicant shall comply with all Best Management Practices contained in South Coast Air Quality Management District's Rule 403 pertaining to control of fugitive dust. Geology and Soils MM-G/S-1 -Prior to issuance of a grading permit, the Applicant shall submit, and obtain approval of, a Grading Plan by the Director of Public Works/City Engineer. Said Plan shall list and depict Earthwork Recommendations and Foundation Recommendations contained in the Geotechnical Report for the Project that shall be incorporated into design plans and shall be implemented during Project construction. Hazards and Hazardous Materials MM H/H-1 -Prior to issuance of a Demolition/Grading Permit for the existing commercial and residential buildings on the Project site, the Applicant shall complete and submit an asbestos and hazardous materials survey of all building materials for review and approval by the Director of Public Works/City Engineer. MM H/H-2 -All medical and dental office tenants shall secure approval from the State of California and County of Los Angeles of a method of compliance with all applicable State and County requirements related to transport, use and disposal of medical and dental waste and shall submit evidence of said State and County approval to the Director of Public Works/City Engineer and the Director of Development Services. Tribal Cultural Resources MM-TCR-1 -Prior to issuance of the first preliminary or precise grading permit, the following note shall be placed on the grading plans. "In the event human remains are encountered during Project development (grading and construction), the following steps shall be taken: • There shall be no further excavation or disturbance of the Project site until the Los Angeles County Coroner is contacted to determine if the remains are prehistoric and that no investigation of the cause of death is required. If the Coroner determines the remains to be Native American, then the Coroner shall contact the Native American Heritage Commission within 24 hours and the Native American Heritage Commission shall identify the person or persons it 99 I Page believes to be the most likely descendant from the deceased Native American. The most likely descendant may make recommendations to the Applicant or City for means of treating or disposing of, with appropriate dignity, the human remains and any associated grave goods as provided in the Public Resources Code Section 5097.98, which shall be considered and implemented by the Applicant, as appropriate, in coordination with the City of Lynwood. • Where the following conditions occur, the landowner or his authorized representative shall rebury the Native American human remains and associated grave goods with appropriate dignity either in accordance with recommendations of the most likely descendant or on the property in a location not subject to further sub-surface disturbance: o The Native American Heritage Commission is unable to identify a most likely descendant or the most likely descendant failed to make a recommendation within 24 hours after being notified by the Commission; o The descendant identified fails to make a recommendation; or, o The Applicant rejects the recommendation of the descendant and the mediation by the Native American Heritage Commission fails to provide measures acceptable to the landowner" MM-TCR-2 -A licensed professional archaeological/paleontological observer shall be present on the Project site to observe grading activities according to a schedule as appropriate and as approved by the Director of Public Works. Should artifacts be found that may be related to Native American cultures, grading operations shall be halted and the Applicant shall inform appropriate identified Tribal Councils, whose representative(s) shall determine the disposition of the found artifacts. Utilities and Service Systems MM-U-1 (Watei Efficiency) -The Applicant shall comply ;,vith applicable California Green Building Code requirements related to water conservation. 100 I Page MITIGATION MONITORING PROGRAM Responsible Monitor Monitoring Monitoring Verification MITIGATION# AND REQUIREMENT Party Timing Action MM-AES-1 -All Project exterior, parking Applicant City Planning Prior to Review and City Planning structure and security lighting shall be Division Building Approval of Division confined to the Project site to avoid casting Permit Lighting and light or glare onto adjacent residential issuance Photometric properties. Prior to issuance of a building Plan permit, the Applicant shall submit Lighting and Photometric Plan that provides evidence of this Mitigation and shall obtain the approval of the Planning Division Manager of such Plan. MM-AQ-1 -During construction, the Applicant Applicant City Public Grading and Review dust City Public shall comply with all Best Management Works Construction control plan Works Practices contained in South Coast Air Quality Division Phase Division Management District Rule 403 pertaining to control of fugitive dust. MM-G/S-1 -Prior to issuance of a grading Applicant City Public Prior to Review and City Public permit, the Applicant shall submit, and obtain Works Grading Approval of Works approval of, a Grading Plan by the Director of Division Permit Grading Plan Director Public Works/City Engineer. Said Plan shall issuance list and depict Earthwork Recommendations and Foundation Recommendations contained in the Geotechnical Report for the Project that shall be incorporated into design plans and shall be implemented during Project construction. MM H/H-1 -Prior to issuance of a Applicant City Public Prior to start Review and City Public Demolition/Grading Permit for the existing Works of Demolition Approval of Works commercial and residential buildings on the Division; Grading Plan Division; Project site, the Applicant shall complete and Contractor Contractor submit an asbestos and hazardous materials survey of all building materials for review and approval by the Director of Public Works/City Engineer. MM H/H-2 -All medical and dental office Applicant City Public Prior to Review and City Public tenants shall secure approval from the State of Works issuance of Approval of Works California and County of Los Angeles of a Division; Certificate of Transport and Division; City method of compliance with all applicable State Contractor Occupancy Disposal Development and County requirements related to transport, Services use and disposal of medical and dental waste Division and shall submit evidence of said State and County approval to the Director of Public Works/City Engineer and the Director of Development Services. MM-TCR-1 -Prior to issuance of the first Applicant; City Director Prior to Review and City Director preliminary or precise grading permit, the Grading of Develop. Precise Approval of of Develop. following note shall be placed on the grading Contractor Services Grading Precise Services plans. Permit Grading Plans issuance "In the event human remains are encountered during Project development (grading and construction), the following steps shall be taken: • There shall be no further excavation or disturbance of the Project site until the Los Angeles County Coroner is contacted to determine if the remains are prehistoric and that no investigation of the cause 101 I Page of death is required. If the Coroner determines the remains to be Native American, then the Coroner shall contact the Native American Heritage Commission within 24 hours and the Native American Heritage Commission shall Identify the person or persons it believes to be the most likely descendant from the deceased Native American. The most likely descendant may make recommendations to the Applicant or City for means of treating or disposing of, with appropriate dignity, the human remains and any associated grave goods as provided in the Public Resources Code Section 5097.98, which shall be considered and implemented by the Applicant, as appropriate, in coordination with the City of Lynwood. • Where the following conditions occur, the landowner or his authorized representative shall rebury the Native American human remains and associated grave goods with appropriate dignity either in accordance with recommendations of the most likely descendant or on the property in a location not subject to further sub-surface disturbance: o The Native American Heritage Commission is unable to identify a most likely descendant or the most likely descendant failed to make a recommendatio n within 24 hours after being notified by the Commission; o The descendant identified fails to make a recommendatio n; or, o The Applicant 102 I Page rejects the recommendatio n of the descendant and the mediation by the Native American Heritage Commission fails to provide measures acceptable to the landowner'' MM-TCR-2 -A licensed professional Applicant; Applicant; Ongoing Observation of City Director archaeological/paleontological observer shall Grading Grading during Site Grading of Develop. be present on the Project site to observe Contractor Contractor; Grading Activities Services grading activities according to a schedule as Native appropriate and as approved by the Director of American Public Works. Should artifacts be found that Monitor may be related to Native American cultures, grading operations shall be halted and the Applicant shall inform appropriate identified Tribal Councils, whose representative(s) shall determine the disposition of the found artifacts. MM-U-1 (Water Efficiency) -The Applicant Applicant Project Prior to Building Plan City Director shall comply with applicable California Green Architect Building design of Public Building Code requirements related to water Permit Works conservation. issuance 103 I Page NOTICE OF INTENT TO ADOPT A NEGATIVE DECLARATION The City of Lynwood has prepared an Initial Study for the following project in accordance with City and State of California Environmental Quality Act Guidelines. Project Title: Conditional Use Permit 2017-03/Site Plan Review No. 2017-18 Project Applicant: Market Street Development, LLC Project Location: 10211 Long Beach Boulevard, Lynwood, Los Angeles County Project Description: Market Street Development LLC has submitted an application that would enable development of an 11,468 square foot medical office building on a 38,248 square foot site that would contain a kidney dialysis treatment center with 25 dialysis stations. The proposed single-story structure also will contain a water treatment plant, supply storage area, customer service area, staff meeting rooms and medical offices, and other ancillary spaces as necessary and required by the California Health Code to support dialysis treatment functions. The City prepared an Initial Study to determine the Project's impact(s) on the environment and found that the Project would not have any significant impacts on the environment. Therefore, a Mitigated Negative Declaration was prepared. The public hearing to consider the Mitigated Negative Declaration and proposed Conditional Use Permit No. 2017- 03 and Site Plan Review No. 2017-18 is scheduled before the Planning Commission on Tuesday, December 12, 2017 at 6:00 PM in the City Council Chambers, 11330 Bullis Road, Lynwood, CA 90262. Copies of the proposed Mitigated Negative Declaration and related documents are on file and available for public review in the Planning Division, Lynwood City Hall, 11330 Bullis Road, Lynwood, CA 90262 during the hours of 7:00 a.m. to 6:00 p.m. Monday through Thursday. This Notice will be posted at the following locations. • Los Angeles County Recorder's Office 12400 Imperial Highway, Norwalk, CA 90650 • Lynwood City Hall-Planning Division 11330 Bullis Road, Lynwood, CA 90262 • Lynwood Public Library 11320 Bullis Road, Lynwood, CA 90262 The starting date for the review period during which the Lead Agency will receive comments about the proposed Mitigated Negative Declaration shall be Wednesday, November 15, 2017. The ending date for the review period shall be Wednesday, December 6, 2017, at which time all written comments about the Mitigated Negative Declaration must be received by the City. Persons wishing to review or obtain copies of the proposed Negative Declaration and Initial Study may contact Albert Armijo, Interim Planning and Building Manager, Lynwood City Hall, 11330 Bullis Road, Lynwood, CA 90262 or call for more information (310) 603.0220, extension 251. Albert Armijo, Interim Planning and Building Manager 104 I Page DATE: TO: APPROVED BY: PREPARED BY: SUBJECT: Recommendation: AGENDA STAFF REPORT December 12, 2017 Honorable Chair and Members of the Planning Commission of the City of Lynwood Alma K. Martinez, City Manager Francisco Leal, Special Counsel Development Agreement No. 2017-03 Modification No. 1 and Development Agreement No. 2017-13 through 2017-20 Staff recommends that the Planning Commission of the City of Lynwood adopt Resolution No. 3387 recommending the approval of Development Agreement No. 2017-03 Modification No. 1 and Development Agreement Nos. 2017-13 through 2017-20, , and: FIND that approval of the Development Agreement No. 2017-03 Modification No. 1 and Development Agreement Nos. 2017-13 through 2017-20 qualify as exempt pursuant to CEQA Guidelines, Section 15302(b)-Replacement of a commercial structure with a new structure of substantially the same size, purpose and capacity; or Section 15332 -In-Fill Development Projects. The In-Fill Development exemption (Class 32) consists of projects characterized as in-fill development meeting the conditions described in Section 15332 and that it is consistent with the Lynwood General Plan. Project Description: The proposed project, referenced herein as the Cannabis Development Agreements 2017-03 MOD 1 and 2017-13 through 2017-20, represent eight (8) applicants seeking new development agreements and one (1) applicant seeking a modification of an existing development agreement (DA No. 2017-03) approved by the Planning Commission on September 5, 2017, for cannabis activities in the City. Background: In 1996, the voters of the State of California approved Proposition 215 (codified In Health and Safety Code Section 11362.5 and entitled "The Compassionate Use Act of 1996"). The Compassionate Use Act ("CUA") allows individuals to obtain and use medical marijuana without the threat of criminal prosecution. Under the CUA, "qualified patients" with a physician's prescription for medical cannabis and "primary caregivers" are exempt from prosecution under Health and Safety Code Section 11357 (possession of marijuana) and 11358 (cultivation of marijuana) for specified amounts. On January 1, 2004, the California State Legislature enacted Senate Bill 420 (Medical Marijuana Program Act or "MMPA") to clarify the scope of the CUA. MMPA allows cities and other governing bodies to adopt and to enforce rules, regulations, and laws consistent with Senate Bill 420. The California Supreme Court has made clear that neither the CUA nor the MMPA expressly or impliedly preempt the authority of cities or counties, under their traditional land use and police powers to allow, restrict, limit or entirely exclude marijuana cultivation or distribution within their jurisdictions. Therefore, cities and counties may adopt local ordinances that regulate the location, operation or establishment of medical marijuana collectives and to enforce such ordinances. Pursuant to the City's police power, the adopted regulations should include consideration of the safety of all residents and businesses, both consumers and non-consumers. The proposed development agreements are designed to address safety and professional management of any cultivation, manufacturing, or testing cannabis business. On October 9, 2015, the Governor signed three pieces of state legislation, collectively the Medical Marijuana Regulation and Safety Act (MMRSA): Assembly Biii (AB) 266, AB 243, and Senate Bill (SB) 643. AB 266 establishes a dual licensing structure requiring a state license and a local license or land use permit. The Department of Consumer Affairs will coordinate the overall regulatory structure establishing minimum health and safety and testing standards. AB 243 establishes a regulatory and licensing structure for cultivation sites under the Department of Food and Agriculture. SB 643 establishes criteria for licensing of medical marijuana businesses, regulates physicians, and recognizes local authority to levy taxes and fees. In June 2016, the California State Legislature amended MMRSA and re-titled it the "Medical Cannabis Regulation and Safety Act (MCRSA)", which provides for the licensure and regulation of medical cannabis and requires all commercial cannabis activity to be conducted between licensees. Upon the date of implementation of regulations by the licensing authority, MCRSA prohibits a person from engaging in commercial cannabis activity without possessing a state license and a local permit, license, or other authorization. Generally, MCRSA governs the licensing and control of all medical marijuana businesses in the State, including granting criminal immunity for licensees. Nonetheless, the legislation protects local control in several ways: (1) requires dual licensing; (2) allows local governments to enforce state law in addition to its own local ordinance (upon request by the local jurisdiction): and (3) maintains civil and criminal penalties for unlicensed activity. On November 8, 2016, the State of California voters approved the Control, Regulate, and Tax Adult Use Marijuana Act (AUMA) (Proposition 64), which immediate legalized personal use of marijuana by persons 21 years of age or older, possession of small amounts of marijuana for personal use (up to an ounce), and the cultivation of up to six (6) marijuana plants within a single private residence for personal use. The adoption of AUMA also authorized the issuance of State licenses for commercial nonmedical marijuana business operations by 2018. In June 2017 the California State Legislature enacted Senate Bill 94, "Cannabis - Medicinal and Adult Use," which conformed MCRSA and AUMA into a single regulatory system and moved many of the laws relating to cannabis into the Business and Professions Code. It also added certain new provisions, including creating agricultural cooperatives, a method for collecting taxes, and a process for testing and packaging, and a system for collecting data on driving under the influence. On September 18, 2017, California Governor Brown signed AB 133 into law. AB 133 contains many so called "clean-up" provisions to the California Medical and Adult-Use Cannabis Regulatory and Safety Act ("MAUCRSA"). Like Senate Bill 94, AB 133 moved many of the laws relating to cannabis into the Business and Professions Code and expanded on already existing provisions, such as modifying the definition of "premises" so as to allow multiple cannabis licenses to be issued to the same owner/lessee of one premises. Other changes include removing the provision from MAUCRSA that requires a licensed medical manufacturer to only manufacture cannabis products for sale by medical cannabis retailers; increasing the amount of cannabis concentrates a person may possess from 4 grams to 8 grams; and removing and/or amending requirements that regulate how cannabis products are taxed. Discussion On December 20, 2016, the City Council adopted Ordinance No. 1688, which added Chapter 4 Article 34 to the Lynwood Municipal Code, entitled "Medical Cannabis Business and Activity" ("Cannabis Ordinance"). The Cannabis Ordinance regulates the location and operation of cannabis cultivation, manufacturing, and testing businesses. The Cannabis Ordinance provides as follows: 1. Purpose and Intent: Generally, to regulate all commercial cannabis within the City. 2. Legal Authority and Definitions 3. Permit Application and Selection Process, including: a. Deveiopment Agreement requirements; b. Initial application process; c. Permittee selection guidelines; d. Appeal procedure; and e. Permit revocation and abatement. 4. Security measures, including limited access, storage and transportation plan, surveillance cameras and alarm systems. 5. Operating requirements, including recordkeeping, limitations on City's liability, City rights of inspection and testing, and restrictions on ownership and location changes. 6. Designates distance and other conditions for approval. The City Council approved 11 development agreements for cannabis-related businesses in September 2017, including cultivation, manufacturing, distribution, and combinations thereof. Staff has reviewed the applications ot the foiiowing applicants and has drafted Development Agreements with these applicants: CULTIVATION, MANUFACTURING, AND DISTRIBUTION Aftercare Alliance Group Green Fantasy Corp. Lynwood Canna Plex NMC Organization Incorporated COF Organic Farms, Inc. MANUFACTURING AND DISTRIBUTION Growerks LLC Magnolia Extracts LLC TESTING General Testing LLC PGH LLC Staff considered the following factors when reviewing the applications: 1. Experience in proposed classification; 2. Proposed location (i.e., zoning, General Plan designation, etc.); 3. Site plans, operation plans, safety and security plans, and other application materials; and 4. Viability of applicants' proposed community benefits plan. Each applicant has submitted the necessary information for background checks. Results of background checks are forthcoming. California Environmental Quality Act: The proposed projects for which Development Agreements have been negotiated are Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15302 -Replacement or Reconstruction. This exemption (Class 2) consists of replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced. More specifically, Section 15302 (b) applies to the replacement of commercial structures with a new commercial structure of substantially the same size, purpose, and capacity. In this case, the proposed cannabis activities occur in areas zoned for manufacturing. The proposed project sites are currently developed with manufacturing uses authorized pursuant to the zoning code or are vacant. Most of the sites also qualify for the In-Fill exception (Class 32) pursuant to CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. Fiscal Impact: There are no anticipated negative fiscal impacts. Each approved Development Agreement is expected to generate revenues for the City's General Fund. Coordinated With: Not applicable. Attachments: Resolution No.3387 COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-03-Mod 1 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and NMC Organization Incorporated ("Owner") this day of September, 2017, and Lyntad, LLC ("Landlord") as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis cultivation, manufacturing and distribution facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as 10810-10844 Alameda Avenue, APN 6170-003-034. b. Owner and Other Person with Legal or Equitable Interest. Owner: NMC Organization Incorporated Landlord: Lyntad, LLC c. Permitted Uses. The subject property may be used for any commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although chapter 25 does not specifically identify commercial cannabis facilities as allowed uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, three-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation for year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility are incorporated by reference. The floor plan identifies the uses of each interior space, and is the basis for calculating the annual per-square-foot fee specified in Article 7 below. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted no later than 90 days after issuance of building permits for construction activities, or if no building permit is required, 30 days before operations begin on the site. c. An exterior signage plan wil! be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. Page 2 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 4. Facility Operations a. Standard Operating Procedures. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures for the safety and security of its employees, visitors, vendors, and neighboring communities and properties. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing (except where it is physically infeasible), security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web- based with direct access provided to the Los Angeles County Sheriff for real-time monitoring from the Los Angeles County Sheriff upon request. The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. Page 3 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Diversion of Commercial Cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its commercial cannabis products to minors; prevent revenue from the sale or distribution of its commercial cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other Page 4 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution to its patient collective membership affiliates. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 19347 of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: 1) The name, address and telephone number of the commercial cannabis facility to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercial cannabis in the container; and Page 5 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 3) The date the commercial cannabis was transferred to a commercial cannabis facility. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Point of Sale Tracking System. Owner will maintain an inventory control and reporting system that accurately documents the location of medicinal cannabis products from inception through distribution, including descriptions, weight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by Section 19335 of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. i. Record Keeping. Owner will maintain records for all dispensed commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4- 34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. j. Processing, Handling, Storino. and Distribution of Commercial Cannabis and Related Products. Commercial cannabis cultivation, manufacturing, handling, storing, distribution, and processing shall be concealed from public view at all stages, and there shall be no exterior evidence of cultivation, manufacturing, handling, storing, distribution, or processing occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, manufacturing,handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity Page 6 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed commercial cannabis entities in California. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. k. Odor Control. All structures shall have ventilation and filtration systems installed that prevent cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management. I. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. m. Transportation Plan. Owner will comply with all state and local law regarding transportation, including the rules governing delivery service. Owner will retain a list of names and cellular contact numbers for all employees engaged Page 7 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other licensed commercial cannabis entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other licensed commercial cannabis entity to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Community Relations. Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health care providers, drug abuse treatment providers, and mental health and drug counseling providers. Owner wiii coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercia! cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision-making process for identifying and prioritizing community needs and Page 8 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing Agent/General Manager will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment. Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of the its workforce. Owner will also seek companies located in the City of Lynwood to serve as its general contractor and subcontractors needed for construction and build-out improvements of Owner's commercial cannabis facilities. Additionally, companies located in the City of Lynwood will be sought to employ as licensed security guards needed once Owner's facility is opened, as well as for ancillary services needed. f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year according to the Consumer Price Index for Los Angeles County for the quarter ending September 30 of the preceding year. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other Page 9 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit to Owner or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shail not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees. Costs. and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fees: 1) an annual fee of $12.50 per square foot of cultivation area (flowering canopy); and Page10of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 2) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities; and 3) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner. d. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. The cultivation space to which the fee applies is as identified on the attached floor plan. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. e. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-square- foot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner shall be responsible for paying to City a per-square-foot fee based on any increase in the amount of space allocated to those uses to which the per-square- foot fee applies retroactive to the date the Regulatory Permit became effective. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing, Cultivation, and Distribution Permits or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation and Distribution Permits are based upon the direct and indirect costs City incurs in Page 11 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. --~ "Necessary for" means that but for the Manufacturing, Distribution, and Cultivation Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Manufacturing, Distribution, and Cultivation Permits, or any Additional Permits. c. l?illir:lQ an9 _payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obliaations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in Page 12 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and from adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses Page 13 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 1 0 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. Page 14 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than One Million Dollars ($1 ,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, comm1ss1ons, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. Page 15 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any negligent actions or omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. Page 16 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 13, Article 20, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology. High efficiency LED lighting systems for the exterior lighting will be used. If economically and technologically feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally controlled watering and fertilization systems shall be used for all plant cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water mixed with nutrients will be recycled. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction, attached hereto and incorporated herein by reference. The Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such Page 17 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty {30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and ail successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Page 18 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non- monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Page 19 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred Page 20 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental Page 21 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any cha!!enge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. VVith respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or Page 22 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner shall reimburse City for any and all costs incurred by City related to project review under the California Environmental Quality Act (CEQA), Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any Page 23 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner and Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 24(k) ("Costs and fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement Page 24 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment Page 25 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis Facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Future Permits Should City amend the Lynwood Municipal Code or its Administrative Regulations to permit and issue permits for any recreational cannabis facility or for other authorized uses other than those now permitted under Section 1 (c) of this Agreement (for example, retail sales of commercial or recreational cannabis or other cannabis businesses), the City shall give priority for such permits to Owner, provided Owner has complied with its obligations under this Agreement and is otherwise in good standing. 24. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. if personally delivered, a notice shall be deemed to have been given when delivered to Page 26 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: If to Landlord: 25. Miscellaneous Provisions City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Ryan Rivera NMC Organization Incorporated 10810 Alameda Avenue Lynwood, CA 90262 Lyntad, LLC 10810 Alameda Avenue Lynwood, CA 90262 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to Page 27 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner agrees that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of Page 28 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. Page 29 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 Page 30 of31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD City Manager APPROVED AS TO FORM: Francisco Leal Special Counsel NMC ORGANIZATION INC. Name: ____________ _ Title: ____________ _ LYNTAD, LLC Name: ____________ __ Title: ____________ _ Page 31 of 31 Cultivation, Manufacturing and Distribution Development Agreement No. 2017-03 Mod 1 COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-13 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and Lynwood Canna Plex, Inc. ("Owner") and Paula Pope and Salih Kadric (collectively "Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis cultivation, manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6170-015-017, APN 6170-015- 018, and APN 6170-015-019, whose street addresses are 10842-46 Stanford Avenue and 10868 Stanford Avenue in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Lynwood Canna Plex, Inc. Landlord: Paula Pope and Salih Kadric c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as allowed uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply vvith the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation following the end of year 2 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the ::>meement and neaotiations shall be concluded before the anniversarv date. --t;J----------1 ------- --""' -- - --.I 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the --------RegulatmyrPerm1t-shan-oe vana. ·Th-efloor plan iderntifies the uses ofeacfl interior space, and is the basis for calculating the annual per-square-foot cultivation fee specified in Article 7 below. The parties agree and understand that due to the time required for the completion of necessary surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. Page 2 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis cultivation, manufacturing, distribution, and delivery. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill420, the Medical Marijuana Program Act (H&S Code §§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill133, which was enacted in September 2017 During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: or local agency authorizing him or her to possess such firearm; 2) A copy of his or her iaw enforcement identification (if he or she is employed by a law enforcement agency); ----· --------3r --A -cop~T ofhis or ner California driver's license or California identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of a!! laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution or delivery. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates or delivery to individual customers in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercial cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will nol be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Delivery. If Owner applies for and receives a Delivery permit from City, Owner may sell and deliver manufactured cannabis products to individual customers, as long as such activity is consistent with and permitted under state law, and Owner has a valid state license therefor. As long as such products are sold and delivered to individual customers, and no in-person sales occur at Owner's facility, such activity shall not constitute a dispensary under the municipal code. L Point of Sale Tracking System. Owner will maintain an inventory control and reporting system that accurately documents the location of cannabis products from inception through distribution or delivery, including descriptions, weight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis dispensary facilities or licensed distribution companies or delivery to individual customers. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, Mj Freeway, or similar system wiii have the capacity to produce historicai transactional data in accordance with City's requirements. Page 6 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Record Keeping. Owner will maintain records for all cultivated or manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. k. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis cultivation, manufacturing, handling, storing, and processing shall be concealed from public view at all stages of growth and processing, and there shall be no exterior evidence of cultivation, manufacturing, or processing occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed dispensaries or licensed distribution companies in California, except as provided in section 4(h) above. Excess or contaminated product will be securely stored on- site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. I. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, Page 7 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 5. and closed loop aeration systems will be utilized as necessary for effective odor control and management. m. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. n. Transportation Plan. Owner will comply with all state and local law regarding transportation, including the rules governing delivery service. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any related donation or other monetary transaction. Community Relations. Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, -religious organiZatio-ns, nealfh care provia-ers,-d-n.i~fabuse treafmenfproviders, and mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel Page 8 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercial cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing Agent/General Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 1 0% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. Page 9 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees fm similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the California State minimum wage increases, or according to the Consumer Price Index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its ,.,,...,..,,...f., nffi,..or<> <:lnrl arnnln\1<::>£:><> raf..,farl fA fha <:lnnrn\/..,1 nr i<><>ll-:>nt"'o nf fho O~:fCilll.~, VIIIV\JI..;JI' t;A.IIU \JIIItJIVJVV..;Ji 1\JIUL\JU LV LII\J UtJtJIVVUI VI I-...;J'-o}'Y~.411V"" VI 11.11'-' Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion; participate -af its o'vVn -expense-Tri-the d-efense-of any such-action, - but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as weii as any fees set forth in this Agreement. Permit appiication, processing, and renewal fees shall be due and payable at the time application is made. Page 10 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of $12.50 per square foot of cultivation area (canopy). 2) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; 3) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner; and 4) an annual fee of two and one-half percent (2.5%) of gross income from delivery activities. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. The cultivation space to which the fee applies is as identified on the approved floor plan, as may be modified. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. f. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-square- foot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner Page 11 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement shall be responsible for paying to City a per-square-foot fee based on any increase in the amount of space allocated to those uses to which the per-square-foot fee appiies retroactive to the date the Regulatory Permit became effective. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Cultivation, Manufacturing, Distribution, and/or Delivery Permits and any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Cultivation, Manufacturing, Distribution, and Delivery Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits. -----------c. ---s-illing ·ana-p·a·yment-:--city-.·shall Dilr -o-wnerthe· CRF on-tn·e--fifsl aa-y··at-each--- quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must Page 12 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have Page 13 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 10. occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financiai documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not Tnclucfe taxes, fees, or-assessments levied on or colleaed from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (coliectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. Page 14 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies Page 15 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its -electeaand appointed cauncn, -boards, conimfssions,-officers,agemts, employees~­ consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall Page 16 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. If economically and technologically feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally controlled watering and fertilization systems shall be used for all plant cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water mixed with nutrients will be recycled. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. Page 17 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 14. Defaults and Remedies a. Remedies in generaL it is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. in generai, each of the parties hereto may pursue any remedy at iaw or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) . -Forany tifeacn of this Agreement or for anV cause of actlon-wnich- arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 6) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Page 18 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits Page 19 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such --actions and cure sucli aefau-lfwlfhln siXty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the Page 20 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. Page 21 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidentai thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, empioyees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and g-roundwater conditions,-and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. Page 22 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required, Public Resources Code, §§21000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor Page 23 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 240), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and . a-dministration -of this Agreement during the succeeding. year, consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at ail times shail be required to comply with the terms of this Agreement. Page 24 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment Page 25 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by 0\-"mer as authorized herein sha!! be effective on!y if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis Facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal .. Express, UPS or other-similar couriers providing overnighf delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. if given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar Page 26 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: If to Landlord: 24. Miscellaneous Provisions City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Lynwood Cannaplex, Inc. 1 0842-46 Stanford Avenue Lynwood, CA 90262 Paula Pope/Salih Kadric 10842-46 Stanford Avenue Lynwood, CA 90262 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or Page 27 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or vaiidity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shafl hear the case. i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. Page 28 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. Page 29 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD Alma K. Martinez City Manager Date: _______ _ APPROVED AS TO FORM: LYNWOOD CANNA PLEX, INC. Wojciech Smolenski Title: Chief Executive Officer Date: ---------------- LANDLORD Paula Pope Date: _______ _ Saiih Kadric Date: ---------------- Page 30 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-14 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and Green Fantasy Corp. ("Owner") and Jie Chen ("Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis cultivation, manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6169-010-001, whose street address is 11511 Bellinger Street in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Green Fantasy Corp. Landlord: Jie Chen c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under tho Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation following the end of ycm 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the Regulatory Permit shall be valid. The floor plan identifies the uses of each interior ---------------space,amJ is the--easis for caleulatifl§-the-aflfltJal per~settJare=foot cultivation fee - specified in Article 7 below. The parties agree and understand that due to the time required for the completion of necessary surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design revievv process. f1l. final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. Page 2 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis cultivation, manufacturing, distribution, and delivery. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill 420, the Medical Marijuana Program Act (H&S Code §§11362. 7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill 133, which was enacted in September 2017. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued hy City shall be valid unless and until the Los Angeles Counly Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager f:lnd tho Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her !aw enforcement identification (if he or she is employed by a law enforcement agency); ~-3) ---A --COf3Y ef his-or-her-8e~Hfornia driver's license-or ealifornia -~~ identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees 'lJill be peniiitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution or delivery. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates or delivery to individual customers in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercial cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Delivery. If Owner applies for and receives a Delivery permit from City, Owner may sell and deliver manufactured cannabis products to individual customers, as long as such activity is consistent with and permitted under state law, and Owner has a valid state license therefor. As long as such products are sold and delivered to individual customers, and no in-person sales occur at Owner's facility, such activity shall not constitute a dispensary under the municipal code. i. Point of Sale Trar.kinq System. Owner wi!! maintain an inventorJ contra! and reporting system that accurately documents the location of cannabis products from inception through distribution or delivery, including descriptions, weight, and quantity. The inventory contra! and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities or delivery to individual customers. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactionai data in accordance with City's requirements. Page 6 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Record Keeping. Owner will maintain records for all cultivated or manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. k. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis cultivation, manufacturing, handling, storing, processing, and distribution shall be concealed from public view at all stages of growth and processing, and there shall be no exterior evidence of cultivation, manufacturing, processing, or distribution occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed commercial cannabis facilities in California, except as provided in section 4(h) above. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. I. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, Page 7 of 30 Cultivation. Manufacturing, Distribution, and Delivery Development Agreement and closed loop aeration systems will be utilized as necessary for effective odor control and management. m. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. n. Transportation Plan. Owner will comply with all state and local law regarding transportation, including the rules governing delivery service. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercia! cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of lhe employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any mlated donation or other monetary transaction. 5. Community Relations, Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, -------religiotJs-erganizaticns, -health care providers, drug abuse-treatmenl providers~ a-ria mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shaii provide a detaiied description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel Page 8 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercial cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing Agent/General Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment. Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 1 0% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. Page 9 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" Is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the California State minimum wage increases, or according to the Consumer Price index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and ulher employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its U H-----sele-aiscretion~ -particip-ate-at its own-expenseHmtne aefen-se -of any su-cfl aCtion, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. Page 10 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of $12.50 per square foot of cultivation area (canopy). 2) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; 3) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner; and 4) an annual fee of two and one-half percent (2.5%) of gross income from delivery activities. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. The cultivation space to which the fee applies is as identified on the approved floor plan, as may be modified. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. f. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-square- foot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner Page 11 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement shall be responsible for paying to City a per-square-foot fee based on any increase in the amounl of space allocated to those uses to which the per-square-foot fee applies retroactive to the date the Regulatory Permit became effective. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Cultivation, Manufacturing, Distribution, and Delivery Permits or any Additional Permits ("CRF"). The City shaii submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Eroc:~ssing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Cultivation, Manufacturing, Distribution, and Delivery Permits are based upon the direct and indirect costs City incurs in confirm in~ the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits. c~ . -Hillii'I§JanEI-P-aymeAt. Gity she:& bill ewner the-CRF un the lirst day oreacn-- quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supeNisor of the City representative who determined the CRF invoice. The written request must Page 12 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have Page 13 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financial documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined ClS a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue meehanism" does-not include-iaxes, fees~o-r assessm-ents levied on orcolleCfed. from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 1 0 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. Page 14 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies Page 15 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement City for any damage resulting from failure of Owner, its agents, employees, contractors, ur subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of Um expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its ------------elected and appointe-d cuancil,tm-aTds; comm1ssioris~ officers, agenfs,-employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall Page 16 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. If economically and technologically feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally controlled watering and fertilization systems shall be used for all plant cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water mixed with nutrients will be recycled. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. Page 17 of 30 Cultivation. Manufacturing, Distribution, and Delivery Development Agreement 14. Defaults and R,emedies a. Remedies in genera!. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Aareement. the oartv a !lea ina sur.h default or breach --• • ., -· v·· -v --· -· · shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes ur termination or institution of le~al proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. After notice and expiiation of the thirty (30) day period, the other party to this Agreement, at its option, may institute legal proceedings pursuant to this Agreement. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. ~~----t )--~ -po-orany breach or-thrs Agreemencor-rorany cause of action wn1d1 arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or J) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Page 18 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits Page 19 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of defauit setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such ·· -a-ctian·sc:md-core-sLrch-default wilnln sixty (60)aays alte-r1ne effective cfale of su-ch --· notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the Page 20 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1 032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. Page 21 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceerlinos and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or apfJroval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. EnvironmenlCll Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, empioyees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not ··· ····--·----·--~ ~nmitec:tto;sOil and grounawater condillons, ancfowner-s-hall defend~atlts expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. Page 22 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required, Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor Page 23 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in inlerest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obiigation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 240), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and ~~~~~-ad mlmstrationof-tnis Agreement au ring Ille--su-cceed~ing ~year:-consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. Page 24 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Aweement c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment Page 25 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective on!y if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis FC:lGiJity Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requeste_Q), or by_fedf;3@L_ Express, -lJ PS or other similar-co-uriers -provTding overnight-delivery ~--ff -personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar Page 26 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: If to Landlord: 24. Miscellaneous Provisions City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Green Fantasy Corp. 11511 Bellinger Street Lynwood, California 90262 Jie Chen 432 S Valley Center Avenue San Dimas, California 91773 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by the City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or Page 27 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. if the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator wno snaH hear the case-: . --------~- i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. Page 28 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD Alma K. Martinez City Manager Date: ---------------- ~~TASY CORP. Date: l;;_/7 I { J I I LANDLORD Jie Chen Page 29 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement APPROVED AS TO FORM: Date: 1 --:; /7/ ( 1 I I ~------ Page 30 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-15 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and PGH LLC, a limited liability company ("Owner") and Alfred Navarro and Estella Navarro, a California corporation ("Landlord") this_ day of , 2017, as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis testing facility (also, the "Project") pursuant to its Regulatory Permits that are in addition to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as Los Angeles County APN: 6170- 029-031, whose street address is 3148 Martin Luther King Jr. Blvd., City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Landlord: PGH LLC Carmen Gonzalez, Member Kirt Hopson, Member Alfred Navarro and Estella Navarro c. Permitted Uses. The subject property may be used for any commercial cannabis testing activities as presently authorized under Article 4-34 of the municipal code. Although chapter 25 does not specifically identify commercial cannabis testing facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services-clinics, offices, laboratories; and, therefore, commercial cannabis testing facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 26 Testing Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permits shall comply with the City's municipal code, including the zoning ordinance and any and ail development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permits without having obtained all necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis testing facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re- negotiation for year 4 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the four-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's preliminary site plan and floor plan for the facility shall be provided as part of any land use application that may be necessary for the City to approve the activity. The floor plan identifies the uses of each interior space. b. A preliminary landscape plan will be prepared and reviewed and approved ~~oy-tlieFI~mmng DTrecloras-partoflhe-desig~nreview process. A finaTiandscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner will test commercial cannabis and will comply with all relevant California State laws and local ordinances. (See Page 2 of 26 Testing Development Agreement California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill 420, the Medical Cannabis Program Act (H&S Code §§1362.7 to 11362.83); the August 2008 Guidelines for the Security and Non- Diversion of Cannabis Grown for Medical Use (2008 Attorney General Guidelines); the newly enacted Medicinal and Adult-Use Cannabis Regulation and Safety Act (Senate Bill94); Assembly Bill133 (2017), and Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted thereunder. During the term of its Regulatory Permits and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff for real-time monitoring from the Los Angeles County Sheriff upon request. The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner's employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and Page 3 of 26 Testing Development Agreement insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and A\ A-~~·y· ~u4-Lhll~;;"~ ;~~~~+lu"'~l ..... llla'"'"'L;Ion i"'F'It.-.t:"''F'It.io9o.F'tihl, ........... F'I.II;""......,,.J h,, 4-h"' I "r-J\.....,rr"'l"l" '1") • , ~ I I:JO;:)UIIOUIY I vl..jUII I:JU uy liii:J L..U;:) r\1 ll;1vlv;:) County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Authorized Employees/Procedures for Inventory Control to Prevent Diversion of Cannabis. Only authorized employees will be permitted to enter ---~owrrer'sfatllity.-Each employee-will-nave ro-meeta--criminar 6acl<grouna investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Owner rules will seek to prevent the diversion of cannabis by implementing strict policies and practices, as well as efficient transparency to maintain tight controls on inventory and donations and/or cost reimbursements received. Owner wiii prohibit the use of cannabis by its empioyees at its facility, in the neighborhood vicinity of its facility, and while driving. Page 4 of 26 Testing Development Agreement Owner will take all necessary and reasonable steps to prevent the distribution of any commercial cannabis products to minors; prevent revenue from the sale or distribution of commercial cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Electronic Tracking System. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all transportation of cannabis products from and to other licensed commercial cannabis facilities. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. g. Record Keeping. Owner will maintain records for all commercial cannabis samples that are tested. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis tested at Owner's facility. h. Testing of Cannabis. Testing of commercial cannabis shall be concealed from public view at all times and there shall be no exterior evidence of testing at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis testing shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store all cannabis samples in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rated walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store Page 5 of 26 Testing Development Agreement commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed dispensaries in California. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include com posting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. i. Odor Control. All structures shall have ventilation and filtration systems installed that prevent cannabis plant odors from exiting the interior of the structure. The ventilation and fillralion syslern shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management. j. Transportation. Owner will not transport any cannabis products or samples. 5. Employment and Wages a. Local Recruitment. Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of Owner's workforce. -owner wilr also-seelc compames locatea Tn the--City ofTynwooaror-ancilrar-y services needed as Owner's operating protocols reasonably warrant. b. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum. Such wage shall increase on January 1 of each subsequent year according to the percent change in the Consumer Price Index (CPI-U covering all urban consumers) for Los Angeles County, over the preceding year ending September 30. Page 6 of 26 Testing Development Agreement c. Emolovee Benefits. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. d. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis testing facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis testing facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. Page 7 of 26 Testing Development Agreement c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of two and one-half percent (2.5%) of gross income from testing activities. d. Owner agrees that the operating fees are to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Testing Permit or any Additionai Permits ("CRF"). The City shaii submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff -------~--flme,-legar Tees, ana consultant fees~~"Necessary for" means thaT 5ut for the ------ Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for testing activities are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Testing Permit, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Testing Permit, or any Additional Permits. Page 8 of26 Testing Development Agreement c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process, review the applications, and implement the program. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure Page 9 of26 Testing Development Agreement and maintain such books and records as shall be of a character and from adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. lf it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said --------------------d·· .IJnaerstatemenr,-then 0\Alnersnan, In aOcfltlon, pay aTrOfG~ty'Sreas·ona519 costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis opemtions (e.g., a cannabis tax), Owner agrees to pay to City the Page 10 of26 Testing Development Agreement greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. Page 11 of 26 Testing Development Agreement 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Vvorkers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the \AJork is subcontracted, 0\AJner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Articie, inciuding evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly -------····--------------~--executedcertificates ofinsurance evidencing theTn-surance required herein~- 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. Page 12 of 26 Testing Development Agreement 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement (or some portion thereof, if such termination relates to only part of the Site or Project). Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 15, Article 20, Section 23(e), Section 23(f), and Section 23(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate to the furthest Page 13 of26 Testing Development Agreement extent economically and technologically feasible solar, wind, high efficiency lighting, and water recycling systems and technology. High efficiency LED lighting systems also shall be used to the furthest extent economically and technologically feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction, attached hereto and incorporated herein by reference. The Project, after operations begin, shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in defauit for purposes of termination or institution of iegai proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. Page 14 of 26 Testing Development Agreement 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Page 15 of 26 Testing Development Agreement Owner may be foreclosed from other choices it may have had to use the Property or portions thereof Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment to the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section shall apply to such unknown or unknowable claims and damages. VVithout limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section ·1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." -------------------------· ---------------- Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to Page 16 of26 Testing Development Agreement cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Project, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees Page 17 of26 Testing Development Agreement harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors~ Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and {iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete -defense-or any third:::party challenge as described herein~-ln fne evenfCity eleCts- to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or Page 18 of 26 Testing Development Agreement to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner shall reimburse City for any and all costs incurred by City related to project review under the California Environmental Quality Act (CEQA), Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. Page 19 of 26 Testing Development Agreement 17. Rules. Regulations. and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the ~~~-~---anniversary olthe Effective Date, -buCOwn-er-has-no-66Tigation to compef such~-~ hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 23U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 23(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fees being due. Page 20 of26 Testing Development Agreement b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 19. Rights and Obligations of Landlord Page 21 of 26 Testing Development Agreement Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 20. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior '.Nritten consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 21. Operating Commercial Cannabis testing facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis testing facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis testing facility or business operation that is the subject of this Agreement. ~---- 22. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be Page 22 of 26 Testing Development Agreement deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager and H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 If to Owner: Carmen Gonzalez, Member Kirt Hopson, Member PGH LLC 3148 Martin Luther King, Jr. Blvd. Lynwood, CA 90262 If to Landlord: Alfred Navarro Estella Navarro 23. Miscellaneous Provisions 7847 Florence Avenue, #112 Downey, CA 90240 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. Page 23 of26 Testing Development Agreement c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shDII not be construed DS WDiver of Dny other term or condition under this Agreement. d. t:nrorcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but a!! of which together shali constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in -----Tfi-e County of los Angeles Superior Court~-An-y-dTspute,-claimor-controversy ---... -- arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Page 24 of26 Testing Development Agreement RECORDING REQUESTED BY CITY OF LYNWOOD (Exempt from Recording Fees Pursuant to Government Code Section 27383 -Benefits City) AND WHEN RECORDED MAIL TO: CITY CLERK CITY OF LYNWOOD ADDRESS: 11330 BULLIS ROAD COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-16 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and General Testing, LLC, a California limited liability company ("Owner") and 2800 Norton Avenue LLC, a California Limited Liability Company ("Landlord") this __ day of December 2017, as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis testing facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as Los Angeles County APN: 6170- 016-004, whose street address is 2826 Norton Avenue, City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: General Testing, LLC Siamak P. Etehad, M.D., Chief Executive Officer Page 1 of 27 Testing Development Agreement Landlord: Shaoul Levy, Manager 201 Wilshire Blvd. Santa Monica CA 90405 c. Permitted Uses. The subject property may be used for any commercial cannabis testing activity and commercial cannabis distribution as presently authorized under Article 4-34 of the municipal code. Although chapter 25 does not specifically identify commercia! cannabis testing facilities as allowed uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; and, therefore, commercial cannabis testing facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Tern1 This Agreement shall start on the date on which all parties have executed it and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis testing facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not uu _u ____ aoarKiohed-for a periodof morelliarf six(6) monf~The term may be exten-ded for up _____ _ to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re- negotiation for year 3 and all subsequent years of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans Page 2 of 27 Testing Development Agreement a. Owner's preliminary site plan and floor plan for the facility shall be provided in advance of the signing of this Agreement and incorporated by reference. The floor plan identifies the uses of each interior space. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a California limited liability company that will test commercial cannabis and commercial cannabis distribution and will comply with all relevant California State laws and local ordinances. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill420, the Medical Cannabis Program Act (H&S Code §§1362. 7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Cannabis Grown for Medical Use (2008 Attorney General Guidelines); the newly enacted Medicinal and Adult-Use Cannabis Regulation and Safety Act (Senate Bill 94); and Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted thereunder. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility Page 3 of27 Testing Development Agreement with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local la·ws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff for real-time monitoring from the Los Angeles County Sheriff upon request. The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner's employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety pian, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the --------------firea-rm onto tfie premises~Wiffitfle folloWing: ____ _ ., .. ~------·--·--··---·---- 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and Page 4 of 27 Testing Development Agreement 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Authorized Employees/Procedures for Inventory Control to Prevent Diversion of Cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Owner membership rules will seek to prevent the diversion of cannabis by implementing strict policies and practices, as well as efficient transparency to maintain tight controls on inventory and donations and/or cost reimbursements received. Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its commercial cannabis products to minors; prevent revenue from the sale or distribution of its commercial cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Electronic Tracking System. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. g. Record Keeping. Owner will maintain records for all commercial cannabis samples that are tested. Owner will comply with all records-keeping Page 5 of 27 Testing Development Agreement responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis tested at Owner's facility. h. Testing of Cannabis Samples. Testing of commercial cannabis samples shall be concealed from public view at all times and there shall be no exterior evidence of testing at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis testing shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store all cannabis samples in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rated walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance 'vVith state and county health and safety codes and regulations. i. Distribution I transportation of Cannabis. A testing facility may transport cannabis samples from the location where cannabis is manufactured or cultivated to the testing facility. New regulations that are promulgated may take the position that testing facilities may also distribute cannabis on behalf of state licensed ~ ~----~~ ~-~-~ companies:As allowed by state law, General testing~sflall comply with all tracT< and trace software and registration requirements of a distribution company. j. Odor Control. All structures shall have ventilation and filtration systems installed that prevent cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed ioop aeration systems will be utilized as necessary for effective odor control and management. Page 6 of 27 Testing Development Agreement k. Transportation. Owner will comply with all state and local law regarding transportation. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of cannabis including the amount provided, the form or product category in which the cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful cooperative corporation to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Employment and Wages a. Local Recruitment. Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of Owner's workforce. Owner will also seek companies located in the City of Lynwood for ancillary services needed as Owner's operating protocols reasonably warrant. b. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum. Such wage shall increase on January 1 of each subsequent year according to the percent change in the Consumer Price Index (CPI-U covering all urban consumers) for Los Angeles County, over the preceding year ending September 30. c. Emolovee Benefits. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. d. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Page 7 of 27 Testing Development Agreement 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis testing facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis testing facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of two and one-half percent (2.5%) of gross income from testing activities; and 2) an annual fee of one and one-half percent (1.5%) of gross income generated from distribution activities. Page 8 of 27 Testing Development Agreement d. Owner agrees that the operating fees are to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing, Cultivation, and Distribution Permits or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for testing activities are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Testing Permit, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Testing Permit, or any Additional Permits. c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs Page 9 of 27 Testing Development Agreement exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year rnay be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of aiternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall iNOik, in good faith to resolve Ovvner's VvTitten request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of ali quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such ~~~~ ~~~~---~~~~-~~~ ~--____ book~§l_l1~ ~ecgrds, as well_~~ ~IL()ther_~~Leva_l'1_t_Q_OCU!11Emts_?§ Ql!Y' sha_ll_~~~~ reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and from adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, Page 10 of 27 Testing Development Agreement records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. Page 11 of27 Testing Development Agreement 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" ..... ----oyu enaOrsemenCwith respecftO-p-eiiofmance of -this Agreement. .. ihe coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the Page 12 of 27 Testing Development Agreement work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, Page 13 of 27 Testing Development Agreement subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination UQon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 15, Article 20, Section 23(e), Section 23(f), and Section 23(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency ..... ~~--·--·-- The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate to the furthest extent economically and technologically feasible solar, wind, high efficiency lighting, and water recycling systems and technology. High efficiency LED lighting systems also shall be used to the furthest extent economically and technologically feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shali comply with all applicable terms and conditions of City's Standard Page 14 of 27 Testing Development Agreement Conditions for Construction, attached hereto and incorporated herein by reference. The Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or Page 15 of 27 Testing Development Agreement 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the gross!y negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at la\N are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for ihe enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. -~---------~--~ -----2T-Due ro-fhe ___ size~-natureandscop-e of the Proje-ct, it may-not b-e practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. Page 16 of 27 Testing Development Agreement c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises Page 17 of27 Testing Development Agreement out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to ..... e ..~eterm·lned by "'"he~~· ·rt 'he p~~v~·i 1:nn part" sh~l1 be d~"'"e~~:~ed .......... h~ "O' .~ U U I I l I...UU L. I I . II:: Cl II I~ y I Cl I I::L 1111111 uy L IC \... Ul L in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section include those incurred during any appeal from an underlying judgment and in the enforcement of any judgr11ent rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to peiform undei this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. ~ ~-~------~-~~~~--~-~-~~-----~-~------~-~~~~ ~-----------------~--~---~ b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owne(s contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shaii defend City and its eiective and Page 18 of27 Testing Development Agreement appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or Page 19 of27 Testing Development Agreement modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. \/\lith respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner shall reimburse City for any and all costs incurred by City related to project review under the California Environmental Quality l\ct (CEQA), Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act ------·· (GEQA)requirements under -provisions()fC~QA Guidelines Section 15332 -!n-Fl_ll ___ . Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to Page 20 of27 Testing Development Agreement the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 23U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 23(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to Page 21 of 27 Testing Development Agreement demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith vvith the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Cerliricale or Agreemenl Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f !. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 19. Rights and Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 20. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. Page 22 of 27 Testing Development Agreement b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 21. Operating Commercial Cannabis testing or distribution facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis testing or distribution facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis testing facility or business operation that is the subject of this Agreement. 22. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days written notice to the other Party hereto, designate any Page 23 of27 Testing Development Agreement other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager and H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 If to Owner: Siamak P. Etehad General Testing LLC 3700 Westfall Drive Encino CA 91436 If to Landlord: With a courtesy copy to: Shaoul Levy 2800 Norton Avenue LLC 201 Wilshire Avenue #201 Santa Monica, CA 90405 David R. Welch, Esq. DIR Welch Attorneys at Law, A P.C. 500 South Grand Avenue Suite 1800 Los Angeles, CA 90071 23. Miscellaneous Provisions a. Regulatory Permit Conditions of Approval. Owner shall comply with all ---~---~~~--~~ ~~----~--~:;onditions of c:lpproval of the_g~gulatoryEermit approved_tl_y City Council. ----~-~~~-~--~~----~~- b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. Page 24 of 27 Testing Deveiopment Agreement d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the Page 25 of 27 Testing Development Agreement manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section and Article 14. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Fmce Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated with the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses, and all documents evidencing compliance with state and local laws, and as such Owner agrees to reimburse City for any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this ,.o.,greement. -------------------~-----~-------~----------- Page 26 of27 Testing Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD Alma K. Martinez City Manager APPROVED AS TO FORM: GENERAL TESTING, LLC Siamak P. Etehad Chief Executive Officer 2800 NORTON AVENUE LLC ShaouiJ. Levy Manager Page 27 of 27 Testing Development Agreement RECORDING REQUESTED BY CITY OF LYNWOOD (Exempt from Recording Fees Pursuant to Government Code Section 27383 -Benefits City) AND WHEN RECORDED MAIL TO: CITY CLERK CITY OF LYNWOOD ADDRESS: 11330 BULLIS ROAD COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-16 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and General Testing, LLC, a California limited liability company ("Owner") and 2800 Norton Avenue LLC, a California Limited Liability Company ("Landlord") this __ day of December 2017, as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis testing facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as Los Angeles County APN: 6170- 016-004, whose street address is 2826 Norton Avenue, City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: General Testing, LLC Siamak P. Etehad, M.D., Chief Executive Officer Page 1 of 27 Testing Development Agreement Landlord: Shaoul Levy, Manager 201 Wilshire Blvd. Santa Monica CA 90405 c. Peimitted Uses. The subject pmperty may be used foi any commeicial cannabis testing activity and commercial cannabis distribution as presently authorized under Article 4-34 of the municipal code. Although chapter 25 does not specifically identify commercia! cannabis testing faci!ities as a!!owed uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; and, therefore, commercial cannabis testing facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained ali necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Tenn This Agreement shall start on the date on which all parties have executed it and it shall end five years fmm the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis testing facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not aoanaorfecrtor a perioa of more tnan srx-(6} monf~The term maybe extended for up-··· to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re- negotiation for year 3 and all subsequent years of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans Page 2 of 27 Testing Development Agreement a. Owner's preliminary site plan and floor plan for the facility shall be provided in advance of the signing of this Agreement and incorporated by reference. The floor plan identifies the uses of each interior space. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a California limited liability company that will test commercial cannabis and commercial cannabis distribution and will comply with all relevant California State laws and local ordinances. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill 420, the Medical Cannabis Program Act (H&S Code §§1362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Cannabis Grown for Medical Use (2008 Attorney General Guidelines); the newly enacted Medicinal and Adult-Use Cannabis Regulation and Safety Act (Senate Bill 94); and Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted thereunder. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility Page 3 of 27 Testing Development Agreement with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveiilance system shail be web-based with direct access provided to the Los Angeles County Sheriff for real-time monitoring from the Los Angeles County Sheriff upon request. The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner's employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the --------------------------firearm onfOlfie premises;wlffi1nerorrowir1g: -------------~~-------------- 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and Page 4 of 27 Testing Development Agreement 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Authorized Employees/Procedures for Inventory Control to Prevent Diversion of Cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Owner membership rules will seek to prevent the diversion of cannabis by implementing strict policies and practices, as well as efficient transparency to maintain tight controls on inventory and donations and/or cost reimbursements received. Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its commercial cannabis products to minors; prevent revenue from the sale or distribution of its commercial cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Electronic Tracking System. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities. Such approved system will track all Owner commercial cannabis products, each edible, haNested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. g. Record Keeping. Owner will maintain records for all commercial cannabis samples that are tested. Owner will comply with all records-keeping Page 5 of 27 Testing Development Agreement responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis tested at Owner's facility. h. Testing of Cannabis Samples. Testing of commercial cannabis samples shall be concealed from public view at all times and there shall be no exterior evidence of testing at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis testing shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, mother impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store all cannabis samples in a locked safe room with T -card identification access for management only. The safe room will be constructed of fire-rated walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. i. Distribution I transportation of Cannabis. A testing facility may transport cannabis samples from the location where cannabis is manufactured or cultivated to the testing facility. New regulations that are promulgated may take the position that testing facilities may also distribute cannabis on behalf of state licensed · compan-ies. Asallowed by state law, General tE3sfingsl1aflcomply-with alllrcick aria···----- trace software and registration requirements of a distribution company. j. Odor Control. All structures shall have ventilation and filtration systems installed that prevent cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management. Page 6 of 27 Testing Development Agreement k. Transportation. Owner will comply with all state and local law regarding transportation. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of cannabis including the amount provided, the form or product category in which the cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful cooperative corporation to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Employment and Wages a. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of Owner's workforce. Owner will also seek companies located in the City of Lynwood for ancillary services needed as Owner's operating protocols reasonably warrant. b. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum. Such wage shall increase on January 1 of each subsequent year according to the percent change in the Consumer Price Index (CPI-U covering all urban consumers) for Los Angeles County, over the preceding year ending September 30. c. Employee Benefits. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. d. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Page 7 of 27 Testing Development Agreement 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis testing facility or the prosecution of Owner's faciiity or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney tees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis testing facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of two and one-half percent (2.5%) of gross income from testing activities; and 2) an annual fee of one and one-half percent (1.5%) of gross income generated from distribution activities. Page 8 of 27 Testing Development Agreement d. Owner agrees that the operating fees are to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing, Cultivation, and Distribution Permits or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for testing activities are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Testing Permit, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Testing Permit, or any Additional Permits. c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs Page 9 of 27 Testing Development Agreement exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shaii work, in good faith to resoive Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obliaations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shaii keep complete, accurate and appropriate books and records of a!! receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such book~~il~_l"ec~~9s, as wel!_(:l~ a!L~th~_~e~evantdo_c::l!m~llts_?~_Ql!y shal! ____ _ reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and from adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shaii make aii such books, Page 10 of 27 Testing Development Agreement records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. Page 11 of27 Testing Development Agreement 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile iiabiiity insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional lnsureqs" -----------------------m~-~oy -enaorSement Wtth res·p·ect to performance of -lnrs-· Agree·ment. mm• The __ _ coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the Page 12 of 27 Testing Development Agreement work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, Page 13 of27 Testing Development Agreement subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination, and this Agreement sha!! be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 15, Article 20, Section 23(e), Section 23(f), and Section 23(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate to the furthest extent economically and technologically feasible solar, wind, high efficiency lighting, and water recycling systems and technology. High efficiency LED lighting systems also shall be used to the furthest extent economically and technologically feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Page 14 of 27 Testing Development Agreement Conditions for Construction, attached hereto and incorporated herein by reference. The Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or Page 15 of 27 Testing Development Agreement 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. ~------~~--~~-~--zr ------uue f6lne size, -nature and scope of the-Project, if may not -be ---- practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. Page 16 of27 Testing Development Agreement c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises Page 17 of27 Testing Development Agreement out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shaii defend City and its elective and Page 18 of 27 Testing Development Agreement appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or Page 19 of 27 Testing Development Agreement modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shali not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. VVith respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner shall reimburse City for any and ail costs incurred by City related to project review under the California Environmental Quality Act (CEQA), Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQAJ re-quirenlents under provisions of CEQA Guidelines Section 15332 -_ ln...-FIIf ___ - Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to Page 20 of 27 Testing Development Agreement the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 23U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 23(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to Page 21 of 27 Testing Development Agreement demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Aqreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a peiiodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 19. Rights and Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 20. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. Page 22 of 27 Testing Development Agreement b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 21. Operating Commercial Cannabis testing or distribution facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis testing or distribution facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis testing facility or business operation that is the subject of this Agreement. 22. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any Page 23 of 27 Testing Development Agreement other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager and H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 If to Owner: Siamak P. Etehad General Testing LLC 3700 Westfall Drive Encino CA 91436 If to Landlord: Shaoul Levy 2800 Norton Avenue LLC 201 Wilshire Avenue #201 Santa Monica, CA 90405 With a courtesy copy to: David R. Welch, Esq. DIR Welch Attorneys at Lavv, A P.C. 500 South Grand Avenue Suite 1800 Los Angeles, CA 90071 23. Miscellaneous Provisions a. Regulatory Permit Conditions of Approval. Owner shall comply with all ---~~------CO!"Idi!ions<=!f approvalg_f the Regul'!tmy Permit approved by City Co(,!nciL m----~---- b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. Page 24 of27 Testing Development Agreement d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the Page 25 of 27 Testing Development Agreement manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section and Article 14. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated with the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses, and all documents evidencing compliance with state and local laws, and as such Owner agrees to reimburse City for any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. Page 26 of 27 Testing Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD Alma K. Martinez City Manager APPROVED AS TO FORM: GENERAL TESTING, LLC Siamak P. Etehad Chief Executive Officer 2800 NORTON AVENUE LLC ShaouiJ. Levy Manager Page 27 of 27 Testing Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-17 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and Aftercare Alliance Group LLC ("Owner") and Arthur Rubinstein ("Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis cultivation, manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6170-015-028, whose street address is 2899 Norton Avenue in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Aftercare Alliance Group, LLC Landlord: Arthur Rubinstein c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and appmvals fmm the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation following the end of year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the Regulatory Permit shall be valid. The floor plan identifies the uses of each interior space, and is the basis for calculating the annual per-square-foot cultivation fee specified in Article 7 below. The parties agree and understand that due to the time required for the completion of necessary surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape pian shaii be prepared and submitted in conjunction with buiiding and site improvement plans prior to issuance of building permits for construction activities. Page 2 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. · 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis cultivation, manufacturing, distribution, and delivery. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill420, the Medical Marijuana Program Act (H&S Code §§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill133, which was enacted in September 2017. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video suNeillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video suNeillance and building alarms will be approved by City. Video suNeillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video suNeillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the vvelfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner;s site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees will be permitted to enter Owner's facility. Each ernpioyee wiii have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution or delivery. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates or delivery to individual customers in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commerciai cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Delivery. If Owner applies for and receives a Delivery permit from City, Owner may sell and deliver manufactured cannabis products to individual customers, as long as such activity is consistent with and permitted under state law, and Owner has a valid state license therefor. As long as such products are sold and delivered to individual customers, and no in-person sales occur at Owner's facility, such activity shall not constitute a dispensary under the municipal code. i. Point of Sale Tracking System. Owner will maintain an inventory control and reporting system that accurately documents the location of cannabis products from inception through distribution or delivery, including descriptions, 'vveight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities, or delivery to individual customers. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by ·weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. Page 6 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Record Keeping. Owner will maintain records for all cultivated or manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. k. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis cultivation, manufacturing, handling, storing, processing, and distribution shall be concealed from public view at all stages of growth and processing, and there shall be no exterior evidence of cultivation, manufacturing, processing, or distribution occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T -card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed commercial cannabis facilities in California, except as provided in section 4(h) above. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. I. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, Page 7 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement and closed loop aeration systems will be utilized as necessary for effective odor control and management. m. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operationai costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and insta.ll safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. n. Transportation Plan. Owner will comply with all state and local law regarding transportation, including the rules governing delivery service. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Community Relations, Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health cAre providers, drug abuse treatment providers, and mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel Page 8 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercial cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing Agent/General Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 10% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. Page 9 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the California State minimum wage increases, or according to the Consumer Price Index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness uenerils and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its solo discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. Page 10 of 30 Cultivation, Manufacturing, Distribution, and · Delivery Development Agreement b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of $12.50 per square foot of cultivation area (canopy). 2) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; 3) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner; and 4) an annual fee of two and one-half percent (2.5%) of gross income from delivery activities. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. The cultivation space to which the fee applies is as identified on the approved floor plan, as may be modified. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. f. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-square- foot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner Page 11 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement shall be responsible for paying to City a per-square-foot fee based on any increase in the amount of space allocated to those uses to which the per-square-foot fee applies retroactive to the date the Regulatory Permit became effective. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Cultivation, Manufacturing, Distribution, and Delivery Permits and any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processina Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Cultivation, Manufacturing, Distribution, and Delivery Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shaii not include costs for other City management objectives, uniess they are necessary for monitoring the Cultivation, Manufacturing, Distribution, and Delivery Permits, or any Additional Permits. c. Billing and Payment. City sha!! bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must Page 12 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant item$ in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have Page 13 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financial documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or coiiected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. Page 14 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) · Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies Page 15 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California \Vith a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. 1 ermination upon l.-omp1euon or ueveiopment. 1 ms Agreement shaii terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall Page 16 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e ), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. If economically and technologically feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally controlled watering and fertilization systems shall be used for all plant cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water mixed with nutrients will be recycled. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. Page 17 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged def?ulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or iender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Page 18 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits Page 19 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of f:a!iforni~ f:ivi! f:ode Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effe_ctive date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the Page 20 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. Page 21 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any Claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval ot any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soii and groundwater conditions, and Owner shali defend, at its expense; including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. Page 22 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be . unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of mon~tary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required,, Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor Page 23 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and ho implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 240), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. Page 24 of30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to ·be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment Page 25 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial CarmalJi:; Facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally _ delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar Page 26 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: If to Landlord: 24. Miscellaneous Provisions City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Aftercare Alliance Group, LLC 5273 Calatrana Drive Woodland Hills, CA 91364 Arthur Rubinstein 20800 Dearborn Street Chatsworth, CA 91311 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by the City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest Page 27 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint ::~nd Sever::~! I i:=~bi!ity. 0\"mer and Landlord sha!! be jointly and severally liable for any amount due under this Agreement, and any breach of this . Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federalla\AJ. The Federal Controlled Substances /\.ct~ 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. Page 28 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. [SIGNATURES FOLLOW ON NEXT PAGE] Page 29 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF lYNWOOD Alma K. Martinez City Manager Date: ______________ __ APPROVED AS TO FORM: Date: ______________ __ AFTERCARE ALLIANCE GROUP, LLC Martial Maitam President Date: LANDLORD Arthur Rubinstein Date: ___.!.1 '--~-1 f--"-b.J..+f--=1""'--D .!.....Jr}L.__ I I Page 30 of 30 Cultivation, Manufacturing, Distribution, and Delivery Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-18 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and COF Organic Farms, Inc. ("Owner") and Michael Wood ("Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis cultivation, manufacturing, and distribution facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6170-015-027, whose street address is 10869 Drury Lane in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: COF Organic Farms, Inc. Landlord: Michael Wood c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 29 Cultivation, Manufacturing, and Distribution Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained a!! necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation following the end of year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the Regulatory Permit shall be valid. The floor plan identifies the uses of each interior -space, a nd-is the basis-for -calcu lating-th-e-annual-p-er~square-footcu ltivation-fe-e specified in Article 7 below. The parties agree and understand that due to the time required for the completion of necessary surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as paii of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. Page 2 of 29 Cultivation, Manufacturing, and Distribution Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis cultivation, manufacturing, and distribution. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill420, the Medical Marijuana Program Act (H&S Code §§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill133, which was enacted in September 2017. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 29 Cultivation, Manufacturing, and Distribution Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the \Nelfare and safety of Ovmer employees and to ensure public safety to the neighboring community. Owner shall use security personnel during hours of operation. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); -3t A-copy--of his or her--California--driver's -lrcense or Californra----- identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees wiii be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of 29 Cultivation, Manufacturing, and Distribution Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the cultivation, manufacture and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of 29 Cultivation, Manufacturing, and Distribution Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercial cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Point of Sale Trackina Svstem. Owner will maintain an inventory control and reporting system that accurately documents the location of cannabis products from inception through distribution, including descriptions, weight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis dispensary facilities or licensed distribution companies. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with Cityts-requirements. ----- i. Record Keeping. Owner will maintain records for all cultivated or manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. j. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis cultivation, manufacturing, handling, storing, processing, and distribution shall be concealed from public view at all Page 6 of 29 Cultivation, Manufacturing, and Distribution Development Agreement stages of growth and processing, and there shall be no exterior evidence of cultivation, manufacturing, processing, or distribution occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification (or similar security system approved by the City Manager) access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed dispensaries or licensed distribution companies in California. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. k. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management. I. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. Page 7 of 29 Cultivation, Manufacturing, and Distribution Development Agreement m. Transportation Plan. Owner will comply with all state and local law regarding transportation, including the rules governing delivery service. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable 0\/orc'fnht 811fhnrit\/ k-ooninn thA lict f"llrrAnt ~nn lin to datA V~~ ~ t11 \.Al.ll'-111 y) llo.'-1'-lf"l ~ I 1-U---·I-llo -· 1--t' 1o lo-• Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Community Relations, Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health care providers, drug abuse treatment providers, and mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types · -of-materials and information will b-e-pTovrde-d;-howlnuch time-ewn-er's-p-eTsunnel-- expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation faciiities, expansion andior improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a Page 8 of 29 Cultivation, Manufacturing, and Distribution Development Agreement foundation or other association of commercial cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing AgenUGeneral Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 10% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the California State minimum wage increases, or according to the Consumer Price Index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its Page 9 of 29 Cultivation, Manufacturing, and Distribution Development Agreement eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made. · b.-----eosts. Owner agrees--to-Teimburs·e-eity for·au·-add itiunal-costs ·ut-eity resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of $12.50 per square foot of cultivation area (canopy). Page 10 of 29 Cultivation, Manufacturing, and Distribution Development Agreement 2) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; and 3) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. The cultivation space to which the fee applies is as identified on the approved floor plan, as may be modified. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. f. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-square- foot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner shall be responsible for paying to City a per-square-foot fee based on any increase in the amount of space allocated to those uses to which the per-square-foot fee applies retroactive to the date the Regulatory Permit became effective. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Cultivation, Manufacturing, and Distribution Permits or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. Page 11 of 29 Cultivation, Manufacturing, and Distribution Development Agreement a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Cultivation, Manufacturing, and Distribution Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Cuitivation, Manufacturing, and Distribution Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Cultivation, Manufacturing, and Distribution Permits, or any Additional Permits. c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must _____________ include supporting .documentation. After _f'eview of Owner:'s.written-request,-Owrter and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Page 12 of29 Cultivation, Manufacturing, and Distribution Development .A.greement Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financial documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be Page 13 of29 Cultivation, Manufacturing, and Distribution Development Agreement determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner sha!!, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. ---------------------------· ·----· ----------·--·-~- b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. Page 14 of29 Cultivation, Manufacturing, and Distribution Development Agreement 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance Page 15 of 29 Cultivation, Manufacturing, and Distribution Development Agreement will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Repiace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant ---to -the-terms-of this-Agreement-Upon-termination-of this-Agreement,-eity--shall- record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, hovvever, eliminate the rights of 0'v'vner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. Page 16 of 29 Cultivation, Manufacturing, and Distribution Development Agreement c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. If economically and technologically feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally controlled watering and fertilization systems shall be used for all plant cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water mixed with nutrients will be recycled. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying Page 17 of 29 Cultivation, Manufacturing, and Distribution Development Agreement the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shal! not be deemed in default as !ong as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this ~~~-~~~-~--~~-~----~Agreement.-------~-~-------~-~ ---~~--~-~--~~----~-~~-~--- Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pUisuant to the Govemment Liability Act and all other applicable statutes and decisional law. Page 18 of 29 Cultivation, Manufacturing, and Distribution Development Agreement Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those setforth in this Section 14(a), Section 14(b), and Section 14(c). Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of Page 19 of 29 Cultivation, Manufacturing, and Distribution Development Agreement this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision ···-----contained··herein-;-the "prevailing-party)i__in-soch·action-·or-pro·ceeding-shall·-b·e--··· ------- entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined Page 20 of29 Cultivation, Manufacturing, and Distribution Development Agreement by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative Page 21 of 29 Cultivation, Manufacturing, and Distribution Development Agreement declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of ---------------theProp-erty:-------~--~-----------------------~ --- e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible Page 22 of 29 Cultivation, Manufacturing, and Distribution Development Agreement for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required, Public Resources Code, §§21000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews Page 23 of29 Cultivation, Manufacturing, and Distribution Development Agreement This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Ag'"'"'8m'"'n+ Or"' '""8""'"' .. in in+'"'res+ +her"'+'"' h,S n'"'+ "'"''"""''"'l"lerl in 9'"'0...1 f...,ith utifh +ho +ori'Y"Ic-n I C C l, ~UV\..1 WWVI Ill I IlL~ L Lll I t:au, I let IVL \JVIIItJI U I I V U IC\1 I YVILII LIIV LVIII IV' or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shaii be given an opportunity to be heard. if City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify Page 24 of29 Cultivation, Manufacturing, and Distribution Development Agreement this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis Facility Page 25 of29 Cultivation, Manufacturing, and Distribution Development Agreement Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance ··vith +h,-.. pro"erh •recoo anrl I'"OI"'uiromon+coo nf 11r+icle A 34 ,..f tho municinal 1"'1"\rlo· .:>nd VI II LIIC \.1 UUI Y IIU IV'-1 IIVII VI I..V V 1'\lll 1---r=-VI IIV I Ill lfu' I vvuv, ~11 b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on ,,_,,_, __ tfieaate aelfverea~a-s-sfiown ori-a receipnssuea-oy-the couner. AnYParcyherero may a1-_____ , any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and City of Lynwood 11330 Bullis Road Lym.vood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Page 26 of 29 Cultivation, Manufacturing, and Distribution Development Agreement If to Owner: If to Landlord: 24. Miscellaneous Provisions Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 COF Organic Farms, Inc. 1 0869 Drury Lane Lynwood, California 90262 Michael Wood 11933 Julius Avenue Downey, CA 90242 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by the City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. Page 27 of 29 Cultivation, Manufacturing, and Distribution Development Agreement g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreernent to arbilrale, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, -----msurrecflon; acts ofGoa~local~ state or nat1onalemergencies; strikes-and othe-r- labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including ali environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated 'vvith processing the Project, as detailed in this Agreement. Page 28 of 29 Cultivation, Manufacturing, and Distribution Development Agreement -----"-" I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF LYNWOOD Alma K. Martinez City Manager Date: _______ _ APPROVED AS TO FORM: COF ORGANIC FARMS, INC. Calm O'Faolain President Date: _______ _ LANDLORD Michael Wood Date: _______ _ Page 29 of 29 Cultivation, Manufacturing, and Distribution Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-19 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and Magnolia Extracts LLC ("Owner") and Anton Goss ("Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis manufacturing and distribution facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6194-030-019, whose street address is 11118 Wright Road in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Magnolia Extracts LLC Landlord: Anton Goss c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 29 Manufacturing and Distribution Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary' permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation following the end of year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the Regulatory Permit shall be valid. The parties agree and understand that due to the time required for the completion of necessary surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of buiiding permits for construction activities. Page 2 of 29 Manufacturing and Distribution Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis manufacturing and distribution. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill 420, the Medical Marijuana Program Act (H&S Code §§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non- Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill133, which was enacted in September 2017. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 29 Manufacturing and Distribution Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of 29 Manufacturing and Distribution Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cann~bis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the manufacture of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of 29 Manufacturing and Distribution Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercial cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing, distribution, and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Point of Sale Trackinq System. Owner will maintain an inventory control and reporting system that accurately documents the location of cannabis products from inception through distribution, including descriptions, weight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis dispensary facilities or licensed distribution companies. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. i. Record Keeping. Owner will maintain records for all cultivated or -manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. j. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis manufacturing, handling, storing, processing, and distribution shall be concealed from public view at all stages of Page 6 of 29 Manufacturing and Distribution Development Agreement growth and processing, and there shall be no exterior evidence of manufacturing, processing, or distribution occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed dispensaries or licensed distribution companies in California. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. k. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing manufacturing or distribution within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management. I. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. Page 7 of 29 Manufacturing and Distribution Development Agreement m. Transportation Plan. Owner will comply with all state and local law regarding transportation. Owner will retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Community Relations, Employment. and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health care providers, drug abuse treatment providers, and mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercia! cannabis facility Owners issued Page 8 of 29 Manufacturing and Distribution Development Agreement regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing Agent/General Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 10% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the California State minimum wage increases, or according to the Consumer Price Index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other Page 9 of 29 Manufacturing and Distribution Development Agreement employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner wiii indemnify City from any ciaims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement Permit application, processing, and renewal fees shall be due and payable at the time application is made. b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; and Page 10 of 29 Manufacturing and Distribution Development Agreement 2) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing and Distribution Permits or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Manufacturing and Distribution Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for" means that but for the Manufacturing and Distribution Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other Page 11 of 29 Manufacturing and Distribution Development Agreement City management objectives, unless they are necessary for monitoring the Manufacturing and Distribution Permits, or any Additional Permits. c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts frorn Operations for the irmnediate prior quarier received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations Page 12 of 29 Manufacturing and Distribution Development Agreement as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financial documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related Page 13 of29 Manufacturing and Distribution Development Agreement to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not iimited to cannabis operations shaii be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. Page 14 of29 Manufacturing and Distribution Development Agreement 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. Page 15 of 29 Manufacturing and Distribution Development Agreement 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measmes to minimize resomce consumption. The design shall incorporate solar, wind, Page 16 of 29 Manufacturing and Distribution Development Agreement high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. Page 17 of 29 Manufacturing and Distribution Development Agreement 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, inciuding, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c). No!'Nithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property_ b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Page 18 of 29 Manufacturing and Distribution Development Agreement Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to Page 19 of 29 Manufacturing and Distribution Development Agreement cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently pmceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees Page 20 of29 Manufacturing and Distribution Development Agreement harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set.forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or Page 21 of 29 Manufacturing and Distribution Development Agreement to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required, Public Resources Code, §§21000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Page 22 of 29 Manufacturing and Distribution Development Agreement Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules, Regulations, and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's Page 23 of29 Manufacturing and Distribution Development Agreement estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. .§_Qecial Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. Page 24 of29 Manufacturing and Distribution Development Agreement g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis Facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by facsimile (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally Page 25 of 29 Manufacturing and Distribution Development Agreement delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next nmmal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: If to Landlord: 24. Miscellaneous Provisions City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Magnolia Extracts LLC 11118 Wright Road Lynwood, California 90262 Anton Goss 11118 Wright Road Lynwood, California 90262 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by the City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that Page 26 of29 Manufacturing and Distribution Development Agreement do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement m~y be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. Page 27 of29 Manufacturing and Distribution Development Agreement i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. Page 28 of29 Manufacturing and Distribution Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement. CITY OF LYNWOOD Alma K. Martinez City Manager Date: -------- APPROVED AS TO FORM: MAGNOLIA EXTRACTS LLC Michael Lum Managing Partner Date: -------- LANDLORD Anton Goss Date: -------- Page 29 of 29 Manufacturing and Distribution Development Agreement COMMERCIAL CANNABIS DEVELOPMENT AGREEMENT Development Agreement No. 2017-20 This Agreement is made by and between and among the CITY OF LYNWOOD ("City") and Growerks LLC ("Owner'') and Felipe Alcazar ("Landlord"), as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions under which Owner shall operate a commercial cannabis manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to, public outreach and education, community service, payment of fees and other charges as set forth or referenced herein, and such other terms and conditions as will protect and promote the public health, safety, and welfare. The requirements set forth in Ordinance No. 1688, Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council of the City of Lynwood are incorporated herein by reference. All subsequent references to "municipal code" mean the Lynwood Municipal Code. 1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Lynwood, County of Los Angeles, State of California, described as APN 6169-017-002, whose street address is 2820 Butler Avenue in the City of Lynwood. b. Owner and Other Person with Legal or Equitable Interest. Owner: Growerks LLC Landlord: Felipe Alcazar c. Permitted Uses. The subject property may be used as a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code, and for any other use as authorized under applicable provisions of the municipal code. Although Chapter 25 does not specifically identify commercial cannabis facilities as permitted uses in any zoning district, such uses are similar to other listed uses, including, but not limited to, medical services -clinics, offices, laboratories; garden center/plant nursery; food and beverage manufacturing; and agricultural products processing; and, therefore, commercial cannabis facilities are allowed uses in the same zoning districts in which such similar uses are allowed under Chapter 25 of the municipal code. Page 1 of 30 Manufacturing, Distribution, and Delivery Development Agreement d. Zoning. Owner shall guarantee that all activities conducted under this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained a!l necessary permits, licenses, and approvals from the City. e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes. 2. Term This Agreement shall start on the date on which all parties have executed it, or 30 days after final approval by the City Council, whichever is later, and it shall end five years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as presently authorized under Article 4-34 of the municipal code; provided, however, such use is not abandoned for a period of more than six (6) months. The term may be extended for up to two, five-year extensions by mutual agreement of the Parties. However, at the request of either Party, the fees required under Article 7 of this Agreement may be subject to re··negotiation following the end of year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to the other Party no less than 90 days before the three-year anniversary of the agreement, and negotiations shall be concluded before the anniversary date. 3. Owner's Site and Floor Plans a. Owner's site plan and floor plan for the facility will be submitted for approval and must be approved before any building permit is issued and before the Regulatory Permit shall be valid. The parties agree and understand that due to the time required for the completion of necessarf surveys including approvals from the Los Angeles County Fire Department and Building and Safety, the specific design may change in which case all revised site and floor plans shall be provided to the City at the earliest possible time. b. A preliminary landscape plan will be prepared and reviewed and approved by the Planning Director as part of the design review process. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities. Page 2 of 30 Manufacturing, Distribution, and Delivery Development Agreement c. An exterior signage plan will be prepared and reviewed and approved by the Planning Director in accordance with the procedures and requirements of Article 70 of Chapter 25 of the municipal code. 4. Facility Operations a. Standard Operating Procedures. Owner is a Cooperative Corporation who will comply with all relevant California State laws and local ordinances with regard to commercial cannabis manufacturing, distribution, and delivery. (See California's Compassionate Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate Bill 420, the Medical Marijuana Program Act (H&S Code §§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq., and Assembly Bill 133, which was enacted in September 2017. During the term of its Regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner will employ exemplary operating procedures to comply with state and local laws. Owner's facility will employ safety and security measures as set forth herein for the safety and security of its employees, as well as other individuals in its neighboring community. b. Security Plan. The issuance of a Regulatory Permit is conditional upon approval of the proposed security plan by the Los Angeles County Sheriff. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, product handling and storage procedures, and a professionally monitored alarm system. Equipment and systems used for video surveillance and building alarms will be approved by City. Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where commercial cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure commercial cannabis products are received, handled, stored, packaged, shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request. Page 3 of 30 Manufacturing, Distribution, and Delivery Development Agreement The security system will also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors. Owner will employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner employees and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services. c. Fire Department Approval. Owner may not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval. d. Possession of Firearms. Except for licensed security personnel approved by the Los Angeles County Sheriff, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following: 1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); 3) A copy of his or her California driver's license or California identification card; and 4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Employees/Procedures for Inventory Control to Prevent Non-Medical Diversion of Commercial cannabis. Only authorized employees will be permitted to enter Owner's facility. Each employee will have to meet a criminal backgmund investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check. Page 4 of30 Manufacturing, Distribution, and Delivery Development Agreement Owner will prohibit the use of cannabis by its employees at its facility, in the neighborhood vicinity of its facility, and while driving. Owner will take all necessary and reasonable steps to prevent the distribution of any of its cannabis products to minors; prevent revenue from the sale or distribution of its cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; prevent violence and the use of firearms in the manufacture of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property. f. Quality Control and Testing. Owner will utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner will inspect the product to insure its identity and quantity, and will have a testing lab approved by City, perform testing of random samples prior to distribution. Inspection and testing will be conducted by the approved testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations. All commercial cannabis products will undergo a quality assurance review prior to distribution to Owner's patient collective affiliates or delivery to individual customers in order to ascertain its quantity and content. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner will employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner will employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures. g. Packing of Commercial Cannabis and Infused Products. All Owner commercial cannabis products will be packaged and labeled as required by Section 26071, et seq., of the California Business and Professions Code and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum: Page 5 of 30 Manufacturing, Distribution, and Delivery Development Agreement 1) The name, address and telephone number of the commercial cannabis dispensary facility or licensed distribution company to which the commercial cannabis product is distributed, sold, or transferred; 2) The amount of commercia! cannabis in the container; and 3) The date the commercial cannabis was transferred to a commercial cannabis dispensary facility or licensed distribution company. Owner intends to produce infused products and will secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products will not be produced, manufactured, stored or packaged in private homes. All Owner commercial cannabis infused products shall be individually wrapped at the original point of preparation. h. Delivery. If Owner applies for and receives a Delivery permit from City, Owner may sell and deliver manufactured cannabis products to individual customers, as long as such activity is consistent with and permitted under state law, and Owner has a valid state license therefor. As long as such products are sold and delivered to individual customers, and no in-person sales occur at Owner's facility, such activity shall not constitute a dispensary under the municipal code. i. Point of Sale Tracking System. Owner will maintain an inventory control and reporting system that accurately documents the location of cannabis products from inception through distribution, including descriptions, weight, and quantity, The inventory control and reporting system shall comply with the track and trace program required by Section 26067, et seq., of the California Business and Professions Code and regulations issued thereunder. Owner will employ an electronic point of donation/sale system approved by City, such as BioTrack THC, MJ Freeway, or similar system for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities or delivery to individual customers. Such approved system will track all Owner commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system will have the capacity to produce historical transactional data in accordance with City's requirements. Page 6 of 30 Manufacturing, Distribution, and Delivery Development Agreement j. Record Keeping. Owner will maintain records for all cultivated or manufactured commercial cannabis and/or infused products. Owner will comply with all records-keeping responsibilities that are set forth in Municipal Code Section 4-34-10, including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, or packaged at Owner's facility. k. Processing, Handling, Storing, and Distribution of Commercial Cannabis and Related Products. Commercial cannabis manufacturing, handling, storing, processing, and distribution shall be concealed from public view at all stages of growth and processing, and there shall be no exterior evidence of manufacturing, processing, or distribution occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis manufacturing, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes. Owner will store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room will be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of commercial cannabis and infused products. Owner will not store commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility. Commercial cannabis products will be sold or distributed only to licensed commercial cannabis facilities in California, except as provided in section 4(h) above. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations. I. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and City Manager and installed prior to commencing manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, Page 7 of 30 Manufacturing, Distribution, and Delivery Development Agreement and closed loop aeration systems will be utilized as necessary for effective odor control and management. m. Description of Banking Plan. Owner will seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments, among others. Should a bank account not be forthcoming, Owner will purchase and install safes to secure all daily funds received from its collective membership or other lawful cooperative corporations to implement debit and credit card transactions. Owner will not accept personal or corporate checks. n. Transportation Plan. Owner will comply with all state and local law regarding transportation. Owner will retain a list of names and cellular contact numbers for ali employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful licensed entities, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful licensed entities to whom delivery is made, and the amount of any related donation or other monetary transaction. 5. Community Relations, Employment, and Wages a. Public Outreach and Education Program. Owner shall create an effective public outreach to City of Lynwood's community, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health care providers, drug abuse treatment providers, and mental health and drug counseling providers. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within City of Lynwood in the establishment and implementation of appropriate public outreach and education programs. The public outreach and education programs shall be approved by City. The public outreach and education program shall provide a detailed description of Owner's intentions with regard to public outreach and education, including but not limited to the following: what schools or programs Owner will work with; what types of materials and information will be provided; how much time Owner's personnel Page 8 of 30 Manufacturing, Distribution, and Delivery Development Agreement expect to spend on these activities; and how much money Owner expects to spend on an annual basis. b. Community Benefits Program. Owner will coordinate and cooperate with City and other Owners of commercial cannabis facilities located within the City of Lynwood in the establishment, implementation, and funding of a community benefits program which could include such items as new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service and special districts and organizations. This community benefits program may be implemented by a foundation or other association of commercial cannabis facility Owners issued regulatory permits by City. City and the public will participate in the decision- making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by City. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's Managing AgenUGeneral Manager, will be responsible for community inquiries and complaints and on-site during normal business hours. d. Interface with Los Angeles County Sheriff. Owner's general manager will interface with the Los Angeles County Sheriff to ensure its operation complies with state and local laws and regulations. e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner will take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of its workforce. Owner agrees to include local contractors in its bidding process as a 1st priority. All local contractors will be given the first right of refusal in competitive bidding process. However, all local contractors will need to stay within 10% of all other bids that are comparable. In the event there is no local company capable of proposed construction contract either due to direct licensing, insurance, or specialty of construction type then Owner maintains the right to hire whoever it deems fit and meets all legal criteria set forth by the building code. Page 9 of30 Manufacturing, Distribution, and Delivery Development Agreement f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage. A "Living Wage" is the higher of whatever Owner currently pays its employees for similar work elsewhere in the State of California, or the following: until December 31, 2017: 150% of the California State minimum wage. Such wage shall increase on January 1 of each subsequent year at the same rate as the Caiifornia State minimum wage increases, or according to the Consumer Price Index for Los Angeles County, for the quarter ending September 30 of the preceding year, whichever is higher. g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 75% full-time employees. Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws. 6. Indemnification of City from Liability a. Pursuant to City's requirement, Owner will indemnify City from any claims, damages, injuries, or liabilities of any kind associated with the registration or operation of Owner's commercial cannabis facility or the prosecution of Owner's facility or its owners, managers, directors, officers, employees, or its qualified patients or primary caregivers for violation of federal or state laws. b. Owner agrees to defend, at its sole expense, any action against City, its agents, officers, and employees related to the approval or issuance of the Regulatory Permit and this Agreement. c. Owner agrees to reimburse City for any court costs and attorney fees that City may be required to pay as a result of any legal challenge related to City's approval or issuance of a Regulatory Permit or this Agreement. City may, at its sole discretion, participate at its own expense in the defense of any such action, but such participation shall not relieve the holder of the Regulatory Permit or this Agreement. 7. Fees, Costs, and Future Taxes a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 4-34-11 of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and rene'A'al fees shall be due and payable at the time application is made. Page 10 of30 Manufacturing, Distribution, and Delivery Development Agreement b. Costs. Owner agrees to reimburse City for all additional costs of City resulting from the operation of a commercial cannabis facility authorized under Article 4-34 of the municipal code and the administrative regulations. Reimbursement to City for such costs shall be due and payable upon demand. c. Operating Fees. Owner agrees to pay to City, to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the following fee: 1) an annual fee of two and one-half percent (2.5%) of gross income from manufacturing activities or the sum of one hundred fifty thousand dollars ($150,000.00), whichever is higher; 2) an annual fee of one and one-half percent (1.5%) of gross income from distribution/transportation of product for anyone other than Owner; and 3) an annual fee of two and one-half percent (2.5%) of gross income from delivery activities. d. Owner agrees to compensate City for the increased demand on City services, infrastructure, and utilities; local traffic demands; and increased City review and oversight by the Los Angeles County Sheriff, planning department, and code enforcement of the operations of Owner's facility. Owner understands and agrees the determination of the required per-square-foot fee will consider such factors as the size, design, layout, operation, and security plan for the facility; potential adverse effects on the community; and the allocation of City services and staff time to oversee the operation of the facility. e. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule agreed to by City and Owner, in intervals of no more than three months. Payment shall be in equal installments paid quarterly commencing at the end of the first quarter after the effective date of the Regulatory Permit which shall be no sooner than the date a certificate of occupancy is issued for the subject premises. 8. Cost Recovery Fee City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing, Distribution, and Delivery Permits, or any Additional Permits ("CRF"). The City shall submit sufficient information to Owner of City's total number of hours required to process their Application or monitor their authorizations. CRFs are separate and apart from any fees set forth in Article 7. Page 11 of 30 Manufacturing, Distribution, and Delivery Development Agreement a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for'' means that but for the Application, the costs would not have been incurred. The processing fee shall not include costs for other City management objectives, unless they are necessary for processing the Application. b. Monitoring Fees. Monitoring fees for the Manufacturing, Distribution, and Delivery Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance. this Aareement. and the Aoolication. The monitorina fees shall be • -• If -.J based only on costs that are necessary for conducting these reviews. "Necessary for'' means that but for the Manufacturing, Distribution, and Delivery Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the Manufacturing, Distribution, and Delivery Permits, or any Additional Permits. c. Billing and Payment. City shall bill Owner the CRF on the first day of each quarter (March, June, September, and December) with an invoice providing an hourly breakdown of hours expended by City and its representatives. Owner shall pay the CRF invoice within sixty (60) days of the date the bill for the CRF is received by Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven Thousand Dollars ($7,000) during a given year, except that the first year may be as high as twenty thousand dollars ($20,000) because of the costs required to set up the application process and review the applications. d. Disputes. If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the immediate supervisor of the City representative who determined the CRF invoice. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of receipt. 9. Additional Owner Obligations a. Reporting of Gross Receipts from Operations 1) Quarterly Receipts. No later than January 15, 2018, and 15 days after the last day of each subsequent quarter during the Term hereof, Owner Page 12 of 30 Manufacturing, Distribution, and Delivery Development Agreement shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from Operations for the immediate prior quarter received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior quarter, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year. 2) Statement of Receipts. Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles. For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as City shall reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of City, procure and maintain such books and records as shall be of a character and form adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, but only to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination. Upon request by City, Owner shall make all such books, records and documents available to City, and provide removable copies thereof, within thirty (30) of the date of City's request. The cost for any audit shall be shared equally by the Parties. Owner shall preserve such books, records, documents, and other items in Lynwood for a period of not less than seven (7) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue and other financial documents furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of Page 13 of 30 Manufacturing, Distribution, and Delivery Development Agreement such revenue either by City or agent to be designated by City. If it shall be determined as a result of such audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable. If such statement of revenue for the relevant year shall be found to have understated receipts by more than two percent and City is entitled to any additional payment as a result of said understatement, then Owner shall, in addition, pay all of City's reasonable costs and expenses connected with such audit, including the expense incurred in retaining such agent; otherwise City shall bear the cost and expense of such audit. 3) Copies of Tax Filings. Owner shall provide City with copies of any reports Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes. b. Applicability of Future Revenue Mechanisms. During the term of this Agreement, if City imposes an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the greater of the payment required under such alternative revenue mechanism or the payment required by this section. As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both cannabis and non-cannabis operations. Payments required by revenue mechanisms that are not limited to cannabis operations shall be in addition to, and not in lieu of, payments under this section. 10. Insurance and Indemnity a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 10 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City. b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also: 1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement w1rn respecr ro performance or tnls Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured. Page 14 of 30 Manufacturing, Distribution, and Delivery Development Agreement 2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also: 1) Name City, its elected and appointed officials, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds. 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives. 3) Contain standard separation of insured provisions. d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained. e. Other Insurance Requirements. Owner shall do all the following: 1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance Page 15 of 30 Manufacturing, Distribution, and Delivery Development Agreement will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City. 2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein. 3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement. 4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement. 5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City. f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commissions, officers, agents, employees, consultants, and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project. 11. Termination a. Termination Upon Completion of Development. This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination, and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement. b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or om1ss1ons occurring before termination. Page 16 of 30 Manufacturing, Distribution, and Delivery Development Agreement c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination. 12. Resources Efficiency The design of the facility shall include significant water and energy conservation measures to minimize resource consumption. The design shall incorporate solar, wind, high efficiency lighting, and water recycling systems and technology to the extent feasible. High efficiency LED lighting systems for the exterior lighting will be used. Storm water shall be collected and recycled to the extent feasible. 13. Standard Conditions for Construction During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner and Landlord shall comply with all applicable terms and conditions of City's Standard Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued for the Project, or when operations begin, whichever is earlier, the Project shall comply with the applicable parking standards established by the City for cannabis activities. 14. Defaults and Remedies a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged default Page 17 of 30 Manufacturing, Distribution, and Delivery Development Agreement is of such a nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 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. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or 2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or 3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law. Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Seciion 14(c). Page 18 of 30 Manufacturing, Distribution, and Delivery Development Agreement Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property. b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other non-monetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons: 1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis. c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement. Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing, Owner acknowledges the provisions of California Civil Code Section 1542, which provide: Page 19 of30 Manufacturing, Distribution, and Delivery Development Agreement "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect. / Initials d. Termination of Agreement for Default of City. Owner may terminate this Agreement only in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shaii be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1 032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding. f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder. Page 20 of30 Manufacturing, Distribution, and De!iverf Development .L\greement 15. Third Party Litigation a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination. City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, ·or for the inability of Owner to develop the Property as contemplated by the Development Plan, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or no in compliance with the law. b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its agents, officers, and employees against and from any and all liabilities, demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the Page 21 of 30 Manufacturing, Distribution, and Delivery Development Agreement event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors, excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding. The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property. e. City to Approve Counsel. With respect to Sections 15(a) through 15( d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City . hereunder, which approval shall not be unreasonably withheld. f. Accept Reasonable Good Faith Settlement. With respect to this Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that Page 22 of30 Manufacturing, Distribution, and Delivery Development Agreement requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement. 16. California Environmental Quality Act Owner and the City are of the belief that the Project is exempt from the California Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all costs incurred by City related to project review under CEQA as required, Public Resources Code, §§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill Development Projects. This exemption applies to projects characterized as in-fill development meeting the conditions described in Section 15332. 17. Rules. Regulations. and Official Policies Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations, and policies applicable to the property as set forth herein, nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies. 18. Regulatory Permit Conditions of Approval Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council. 19. Periodic Reviews This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and Page 23 of30 Manufacturing, Distribution, and Delivery Development Agreement determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement. a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 240), "Force Majeure"). Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due. b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to be issued under this Agreement shall be treated as if it were a Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement. c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement. The_burgem of proof on this issue shall be on Owner. d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. Page 24 of 30 Manufacturing, Distribution, and Delivery Development Agreement e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default. City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner. f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner. 20. Obligations of Landlord Landlord shall have rights, duties, obligations, and liability only as expressly set forth herein. Landlord shall have no responsibility or liability for the failure of Owner to perform as required by this Agreement. 21. Assignment a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement, without the prior written consent of City. b. Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights, duties, and obligations under this Agreement without the prior written consent of City. Any assignment, delegation, or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, or assignment is made is issued a Regulatory Permit as required under Article 4-34 of the municipal code. 22. Operating Commercial Cannabis Facility Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless: Page 25 of 30 Manufacturing, Distribution, and Delivery Development Agreement a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirements of Article 4-34 of the municipal code; and b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement. 23. Notice Any notice or communication required hereunder between City and Owner must be in writina. and mav be aiven either oersonallv. bv facsimile (with oriainal forwarded bv -. "' -• J' , --'-"------...:, ----.I regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by facsimile transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving Party's facsimile machine. Notices transmitted by facsimile after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date deiivered, as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (1 0) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below: If to City: and If to Owner: City of Lynwood 11330 Bullis Road Lynwood, California 90262 Attention: City Manager H. Francisco Leal, Esq. Leal Trejo, APC 3767 Worsham Avenue Long Beach, California 90808 Growerks LLC Page 26 of 30 Manufacturing, Distribution, and Delivery Development Agreement If to Landlord: 24. Miscellaneous Provisions 2820 Butler Avenue Lynwood, California 90262 Felipe Alcazar 17515 Santa Fe Avenue Compton, CA 90221 a. Regulatory Permit Conditions of Approval. Owner shall comply with all conditions of approval of the Regulatory Permit approved by the City Council. b. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments that do not affect a substantive provision of this Agreement may be approved by the City Manager. The decision whether a proposed amendment is "minor'' shall be in the exclusive discretion of the City Manager. c. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement. d. Enforcement. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement. e. Joint and Several Liability. Owner and Landlord shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party. Owner and Landlord agree that City may impose a lien and seek foreclosure on any parcel of the Site due to any default by Owner. f. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. Page 27 of30 Manufacturing, Distribution, and Delivery Development Agreement g. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature. h. Jurisdiction and Arbitration. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement shall be filed and maintained in the County of Los Angeles Superior Court. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by binding arbitration in Los Angeles, California before one arbitrator. Said arbitrator sha!! be chosen by mutual agreement of the Parties. If the Parties cannot agree on an arbitrator within 30 days of the first notice by either Party of the need for arbitration, each Party shall name one arbitrator, then the two arbitrators shall choose the arbitrator who shall hear the case. i. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC § 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use. j. Force Maieure. if deiays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or anydeJauJlb_y Cjty hereunder, which Force Majeure event substantially interferes with the development or construction of the Project. k. Costs and Fees. Owner shall be responsible for all of the reasonable and fixed costs associated the Project, including but not limited to costs associated with City's review and processing of the Project, including but not limited to reviewing the Project's entitlements, including all environmental clearance documents, permits, licenses and all documents evidencing compliance with state and local law, and as such Owner agrees to reimburse City and pay any costs and fees associated with processing the Project, as detailed in this Agreement. Page 28 of30 Manufacturing, Distribution, and Deiivery Deveiopment Agreement I. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement. [SIGNATURES FOLLOW] Page 29 of30 Manufacturing, Distribution, and Delivery Development Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CITY OF lYNWOOD Alma K. Martinez City Manager Date: _______ _ APPROVED AS TO FORM: GROWERKS LLC Michael Steinberg Managing Member Date: _ __..:./_,/""""-f-/_,7'-f-j_I-L,7_ -.._( '/ 1 LANDLORD Felipe ~rCazar I . Date/ I~ / t2 ) /2 ~ f 7 Page 30 of 30 r T l Manufacturing, Distribution, and Delivery Development Agreement