HomeMy WebLinkAboutAGR-7850 - MILAN REI X, LLC. - MOU 6146 E. SANTIAGO CANYON RD.
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MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING (this “MOU”) is entered into as of
________________ __, 2025 (the “Reference Date”) by MILAN REI X, LLC, a California limited liability
company (“Developer”), and the CITY OF ORANGE, a California municipal corporation (“City”).
Developer and City are sometimes referred to herein, individually, as a “Party” and, collectively, as the
“Parties”.
RECITALS
A. Developer owns the following real property located in the City and identified as: (i) TTM
0050-20 property (the “TTM Property”); (ii) Sully Miller property (the “Sully Miller Property”); and (iii)
6146 E. Santiago Canyon Road (the “Residential Property”).
B. Among other things, the Parties desire to work toward the eventual development of the
Sully-Miller Property as public open space, providing a substantial environmental and land use benefit to
City residents and surrounding communities.
C. In August 2020, the City approved a tract map for the development of 22 single family
homes on the TTM Property (the “TTM Project”). The Developer is currently pursuing ministerial permits
for the TTM Project.
D. In 2023, the Developer submitted applications for “Builder’s Remedy” residential projects
on the Sully Miller and Residential properties (the “Builder’s Remedy Applications”). Due to
disagreements regarding the Builder’s Remedy Applications and a desire to work toward a potential
agreement regarding development of the Sully Miller and Residential properties, the City and the Developer
entered into tolling agreements (the “Tolling Agreements”) regarding the Builder’s Remedy Applications,
which tolling agreements are still in effect.
E. The Parties desire to set forth the terms of an agreement that would address development
of the Sully Miller and Residential properties while Milan moves forward with the ministerial development
of the TTM Property. The Parties acknowledge that all components of the agreement are necessary for the
Developer to move forward, and that absent development of the TTM, Sully Miller, and Residential
properties as set forth below, the Developer will pursue the Builder’s Remedy Applications.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1.1 Residential Property Project Submission and Approval. Developer plans to submit plans
to the City for a 30-unit residential project on the Residential Property (the “Residential Project”). The
Residential Project shall consist of the necessary applications for the 30-unit project, utilizing state Density
Bonus law, an application for a tract map under the Subdivision Map Act, and any submissions necessary
for the City to undertake CEQA review of the tract map application. Developer shall submit all necessa ry
applications for the Residential Project by August 1, 2025, and City commits to review the applications for
the Residential Project and, if appropriate under relevant code, use its best efforts to approve them by July
1, 2026. In the event Developer does not submit required applications for the Residential Project by August
1, 2025, the City’s time to approve the submitted applications shall be extended by the number of days
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AGR-7850
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beyond August 1, 2025, that Developer submits the required applications. During the City review process,
the City commits to expeditiously review Developer submissions, and Developer commits to expeditiously
respond to City application comments. Specifically, Developer commits to respond to City comments
within 30 days of receipt.
1.2 Sully Miller Property Utilization. Developer anticipates entering into access agreements
with Landify, a company that possesses the capacity to develop the Sully Miller site into public open space
(the “Open Space Project”). Upon completion these agreements will allow Landify to conduct such studies
and investigations as may be necessary to develop an appropriate open space vision for the Sully -Miller
Property and a feasible plan for achieving that vision. Developer and the City understand that Landify will
need the City’s full cooperation in this planning and implementation process . City commits to providing
such cooperation, including expeditious review and, if appropriate under relevant code, approval of any of
the required applications for the Open Space Project.
1.3 Divestment of Sully Miller Property. The Parties agree that the objective of the Open Space
Project, whether undertaken by Landify or a comparable third party, is to put Milan in a position to divest
itself of the Sully Miller Property. Milan has indicated that it may engage a third party to develop the open
space project and once complete transfer ownership to the City for a nominal sum. Milan intends to divest
itself of the property either through the sale of the property to the City for a nominal sum or, alternatively,
to Landify or a third party for a nominal sum, with the needed restoration then completed and ownership
can be transferred to the City. The Parties recognize that Milan’s ability to execute such divestment is a
material term of this agreement for Milan, and that prior to divestment, Milan will obtain any required
clearance of the Sully Miller Property from applicable regulatory agencies. The City’s acceptance of the
property is contingent upon the property’s clearance from all applicable regulatory agencies.
1.4 Tolling Agreement Extension. The City and Developer agree to extend the Builder’s
Remedy Tolling Agreements for one year from the Reference Date, subject to the timing of approval of
ministerial TTM Project permits, discussed below. If the City issues the ministerial permits for t he TTM
Project by August 1, 2025, and approves (i) the Residential Project, and (ii) the Open Space Project
(collectively, the “Required Developer Approvals”) by July 1, 2026, Developer shall withdraw the
Builder’s Remedy Applications, provided Developer has obtained any required regulatory clearance of the
Sully Miller Property. In the event the City has not issued the ministerial permits for the TTM Project by
August 1, 2025, or if the City is still reviewing/processing the Required Developer Approvals beyond July
1, 2026, Developer reserves the right to move forward with the Builder’s Remedy Applications. In the event
Developer moves forward with the Builder’s Remedy Applications due to the City not issuing the
ministerial TTM Project permits by August 1, 2025, or not issuing the Required Developer Approvals by
July 1, 2026, any extension of the Builder’s Remedy Tolling Agreements still in effect shall terminate.
Developer also reserves the right to extend the Tolling Agreements, and the City, upon finding that
extension of the Tolling Agreements is in the City’s best interest, shall extend the Tolling Agreements for
at least six months (the “Tolling Agreements Extension”). During the Tolling Agreements Extension, the
City shall continue to expeditiously process the Required Developer Approvals.
1.5 Ministerial TTM Project Permits. Developer has and will submit ministerial plans for the
TTM Project, including but not limited to grading and haul route permit applications. In the event
Developer does not make all necessary submissions for the ministerial TTM Project by June 1, 2025, the
August 1, 2025, date for City approval of the permits for the TTM Project shall be extended beyond
August 1, 2025, by the number of days beyond June 1, 2025, the Developer makes all necessary
submissions.
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MISCELLANEOUS
1.6 Representations and Warranties. Each Party represents and warrants to the other Party as
of the Reference Date that (i) the execution and delivery of this MOU and the consummation of the
transactions contemplated hereby have been duly authorized by such Party, including by obtaining all
required internal consents and approvals, and do not violate the formation documents of such Party, any
agreement by which such Party is bound or applicable law and (ii) such Party is duly organized and existing
in good standing under the laws of the state of its incorporation and authorized to do business in California.
1.7 Assignment. Neither Party shall assign or otherwise transfer all or any interest in this MOU
without the prior written consent of the other Party.
1.8 Further Assurances. In addition to the actions recited herein and contemplated to be
performed, executed and/or delivered by the Parties, the Parties shall perform, execute and/or deliver any
and all such further acts, instruments, deeds and assurances as may be reasonably required to effectuate the
purposes of this MOU and the transactions contemplated hereby. Unless otherwise expressly stated in this
MOU, each Party shall act reasonably in carrying out its rights and obligations under and taking any actions
in connection with this MOU. Unless otherwise expressly stated in this MOU, any notice delivered by a
Party hereunder shall be reasonable prior notice and no approval or consent by a Party to a matter presented
hereunder shall be unreasonably withheld, conditioned or delayed.
1.9 Notices. Any notice required or authorized by this MOU shall be in writing and may be
delivered personally, by registered mail, return receipt requested, or by reputable air or ground courier
service, and shall be deemed to have been given and received upon the actual receipt by the person(s) to
whom notices are to be sent at the addresses set forth below, which may be changed by a Party from time
to time upon notice thereof to the other Party given in accordance herewith:
Milan Representative:
Christopher Nichelson, President
Milan Capital Management, Inc.
701 S. Parker Street, Suite 5200
Orange, CA 92868
For Legal Notice Copy to:
Alexander M. DeGood
Cox, Castle & Nicholson LLP
2029 Century Park East, Suite 2100
Los Angeles, CA 90067
adegood@coxcastle.com
City Representative:
City of Orange
City Manager
300 E. Chapman Avenue
Orange, CA 92866
For Legal Notice Copy to:
City of Orange
City Attorney
300 E. Chapman Avenue
Orange, CA 92866
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1.10 Entire Agreement; Severability. This MOU, including all Exhibits attached hereto,
contains the entire agreement between the Parties with respect to the subject matter hereof, and all prior
communications or agreements between the Parties or their respective representatives with respec t to the
subject matter hereof, whether oral or written, are merged into this MOU and extinguished. No
modification of this MOU shall be effective unless in writing and signed by the Parties. If any term or
provision of this MOU or any application thereof is held unenforceable, the remainder of this MOU and
any other application of such term or provision shall not be affected thereby, and each provision of this
MOU shall be valid and enforceable to the fullest extent permitted by law.
1.11 No Waiver. Neither Party may waive any condition or breach of any term of this MOU
except in a signed writing, and no such waiver shall be deemed a waiver of any other condition or any
subsequent breach of the same or of any other term of this MOU.
1.12 Governing Law. This MOU is made under and shall be governed and construed in
accordance with the laws of the State of California without regard to its conflict of law principles.
1.13 Time. Time is of the essence with respect to each provision of this MOU in which time is
a factor.
1.14 Interpretation. The section headings of this MOU are for convenience of reference only
and shall not be used to explain or otherwise affect the meaning of any provision hereof. Whenever the
singular number is used the same includes the plural if required by the context, and the masculine gender
includes the feminine and neuter genders. All references herein to “Section” or “Exhibit” reference the
applicable Section of this MOU or Exhibit attached hereto; and all Exhibits attached hereto are incorporated
into this MOU and made a part hereof. The Parties acknowledge and agree that this MOU represents a
negotiated agreement, having been drafted, negotiated and agreed upon by the Parties and their respective
legal counsel. Therefore, the Parties agree that the fact that a Party may have been primarily responsible
for drafting or editing this MOU shall not, in any dispute over the terms of this MOU, cause this MOU to
be interpreted against such Party.
1.15 Counterparts; Electronic Signatures. This MOU may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken together shall constitute
one and the same instrument. Electronic signatures shall have the same legal effect as original signatur es.
[Signatures appear on following page]
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IN WITNESS WHEREOF, this MOU is hereby entered into by the Parties as of the Reference
Date.
MILAN REI X, LLC, A California limited liability company
By:
Christopher Nicheleson
President of its Managing Agent
CITY OF ORANGE, a municipal corporation
By:
Thomas C. Kisela, Interim City Manager
ATTEST;
By:
Pamela Coleman, City Clerk
APPROVED AS TO FORM:
By:
Wayne W. Winthers
Interim City Attorney √
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