DATE: June 4, 2024
TO: Board of Supervisors
SUBMITTED BY: Steven E. White, Director
Department of Public Works and Planning
SUBJECT: Approve Indemnification and Defense Agreement with Stamoules, Inc. and OPA Pistachios, LLC
RECOMMENDED ACTION(S):
TITLE
1. Approve and authorize Chairman to execute Indemnification and Defense Agreement with Stamoules, Inc. and OPA Pistachios, LLC (collectively “Applicant”), as required by condition of approval of Unclassified Conditional Use Permit No. 3709 and Variance Application No. 4112 or provide alternate direction; and
2. Approve form of Escrow Agreement with Applicant and financial institution selected by Applicant (“Escrow Agent”) and approved by the Director of Public Works and Planning (“Director”), and authorize the Director to make changes to the form of Escrow Agreement that he deems to be in the best interest of the County and to approve and execute the final form of the Escrow Agreement, subject to approval by County Counsel as to legal form and by the Auditor Controller/Treasurer-Tax Collector as to accounting form, securing $150,000 paid into escrow by Applicant to Escrow Agent as financial security for the Indemnification and Defense Agreement; and
3. Authorize the Director to do any and all things and take any and all actions and execute and provide any and all notices, certificates, and other documents which he may deem necessary or advisable in order to administer the Indemnification and Defense Agreement and the Escrow Agreement on behalf of the County.
REPORT
On March 5, 2024, your Board approved Unclassified Conditional Use Permit No. 3709 and Variance Application No. 4112 proposing to allow a pistachio processing facility including irrigation of approximately 3,740 acres of agricultural land with process water, and waiver of height limitations for specific structures to permit 48 silos at 50-feet and the two proposed huller buildings at 42.5-feet (maximum 35-foot allowed) in the AE-20 (Exclusive Agricultural, 20-acre minimum parcel size) Zone District. Your Board’s approval was conditioned upon the Applicant agreeing to indemnify and defend the County in any litigation arising from the approval and submitting a financial security to secure the agreement. County staff has requested that the indemnity agreement be secured by County’s standard form cash escrow agreement with $150,000 cash deposited immediately. The Applicant has requested, in the alternative, that the cash security be paid in installments as follows: $50,000 cash immediately, then an additional $100,000 deposited 30 days before trial if the matter is not resolved. Staff will request your Board’s direction on this point. The recommended actions fulfill requirements imposed by your Board on this project. This item pertains to a location in District 1.
ALTERNATIVE ACTION(S):
There are no viable alternative actions under the present circumstances. The recommended actions are necessary to satisfy a condition of approval imposed by the Board of Supervisors and are necessary in order for the applicant to exercise the approved conditional use permit.
FISCAL IMPACT:
There is no increase in Net County Cost associated with the recommended actions. The recommended Indemnification and Defense Agreement (“I & D Agreement”) requires the Applicant to pay for costs to defend and indemnify the County against any legal challenge filed against the County related to the Project. The recommended Escrow Agreement provides that Escrow Agent would be compensated by the Applicant for providing the escrow services.
DISCUSSION:
Unclassified Conditional Use Permit No. 3709 and Variance Application No. 4112 is comprised of a four-phase project consisting of two drive-over dumping pits, two pre-cleaning areas, two 22,040 square-foot huller buildings at 42.5 feet in height, 40 dryers, 48 silos with a height of 50 feet and a 155,169 square-foot processing building in the AE-20 Zone District. The project’s height variance permits the 48 proposed silos to be 50-feet in height and the two huller buildings to be 42.5-feet in height (maximum 35-foot allowed) in the AE-20 Zone District. The proposal also includes a request to allow process water from the proposed facility to be conveyed via existing subsurface piping to irrigate approximately 3,760 acres of agricultural land owned by the owner.
The Planning Commission had granted approval of the project at its January 25, 2024, regular meeting. On January 29, 2024, an appeal was filed on the Planning Commission’s approval by Advocates for the Environment, Inc. The appeal stated the Draft Environmental Impact Report (DEIR) violates CEQA as its infeasibility finding lacks substantial evidence, it is feasible to adopt mitigation, the project’s Greenhouse Gas (GHG) impacts must be fully mitigated, and operations emissions reductions offsets are feasible.
At its March 5, 2024, regular meeting, your Board considered the appeal and Unclassified Conditional Use Permit No. 3709 and Variance Application No. 4112, subject to the Conditions of Approval and Project Notes listed in the Planning Commission Staff Report.
In approving the UCUP and Variance, the Board imposed a condition of approval requiring that the Applicant defend and indemnify the County against any legal challenge filed against the County related to the Project. The I & D Agreement recommended for approval by this item will satisfy this indemnification and defense condition of approval.
To secure the Applicant’s obligations under the recommended I & D Agreement, staff proposes that the Applicant be required to enter into the recommended Escrow Agreement with the County and the Escrow Agent, by which the Applicant will deposit a minimum of $150,000 in a separate savings account with Escrow Agent as cash security. The terms of the Escrow Agreement require such deposit upon the parties’ execution of that agreement. The County will have the sole right to withdraw funds from the saving account upon a determination by the Director of Public Works and Planning that the Applicant has defaulted under the I&D Agreement. The Applicant has requested, in the alternative, that the cash security be paid in installments as follows: $50,000 cash immediately, then an additional $100,000 deposited 30 days before trial if the matter is not resolved.
Finally, following the Applicant’s satisfaction of his obligations under the I & D Agreement, and the passage of either 30 days from the applicable appeal period 200 days from final disposition of any legal actions challenging the County’s approval of Unclassified Conditional Use Permit No. 3709 and Variance Application No. 4112, the recommended I & D Agreement provides that the Applicant may submit a request to the Director to terminate the Escrow Agreement; that would allow any remaining cash security to be delivered by Escrow Agent to the Applicant. Provided that these requirements are satisfied, the Director would be authorized to issue notice terminating the Escrow Agreement and releasing the County’s interest in any remaining cash security, within 30 County business days of receiving the Applicant’s request.
REFERENCE MATERIAL:
BAI #8, March 5, 2024
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Indemnification and Defense Agreement
On file with Clerk - Form of Escrow Agreement
CAO ANALYST:
Salvador Espino