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HomeMy WebLinkAboutResolution 2022-078 Approving and Authorizing the Mayor to Execute the First Amendment to Rancho Marana Development Agreement MARANA RESOLUTION NO. 2022-078 RELATING TO DEVELOPMENT; APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT BETWEEN THE TOWN OF MARANA AND MERITAGE HOMES OF ARIZONA, INC. WHEREAS, on February 6, 1990, the Town Council adopted Marana Ordinance No. 90.04, creating the Rancho Marana Specific Plan; and WHEREAS Meritage Homes of Arizona, Inc. (the "Developer") is the current master developer of the Rancho Marana 154 development project, as described and defined in the final plat for Rancho Marana 154 Lots 1-167 and Blocks 2-7 recorded in the office of the Pima County Recorder on December 8, 2004 in Book 59 of Maps and Plats, Page 13 (Sequence No. 20042360739); and WHEREAS the Town and the Developer's predecessor in interest entered into the Rancho Marana Development Agreement recorded in the office of the Pima County Recorder on September 8, 2005 at Docket 12634, Page 1496 (Sequence No. 20051750556) (the "Original Agreement"); and WHEREAS the Town and the Developer have negotiated an amendment to the Original Agreement to address various changed circumstances related to the development; and WHEREAS the Mayor and Council find that entering into the First Amendment to the Rancho Marana Development Agreement is in the best interest of the Town. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF MARANA, ARIZONA,that the First Amendment to the Rancho Marana Development Agreement between the Town of Marana and the Developer attached to and incorporated by this reference in this resolution as Exhibit A is hereby approved, the Mayor is hereby authorized and directed to sign it for and on behalf of the Town of Marana, and the Town's Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to carry out its terms, obligations, and objectives. 00082641.DOCX/1 Resolution No.2022-078 - 1 - PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona, this 3rd day of August, 2022. b61 "-4 Mayor Ed Honea ATTES. ,, APPROVED AS TO FORM: Cherry L. Law:on, own Clerk Jan: .irall, Town Attorney MARANA AZ ESTABLISHED 1977 00082641.DOCX/1 Resolution No. 2022-078 - 2- Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 1 - FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT TOWN OF MARANA, ARIZONA This First Amendment to Rancho Marana Development Agreement (this “Amend- ment”) is entered into by and between the TOWN OF MARANA, an Arizona municipal cor- poration (the “Town”) and MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation formerly known as Monterey Homes of Arizona, Inc. (the “Developer”), as successor in interest to Monterey Homes Construction, Inc. and Stewart Title and Trust of Tucson. The Town and the Developer are collectively referred to in this Amendment as the “Par- ties,” each of which is sometimes individually referred to as a “Party.” RECITALS A. Monterey Homes Construction, Inc. (now Meritage Homes Construction, Inc.) and Stewart Title and Trust of Tucson (collectively the “Original Owners”) and the Town en- tered into a Development Agreement dated August 20, 2004 and recorded in the office of the Pima County Recorder on September 8, 2005 at Docket 12634, Page 1496 (Sequence No. 20051750556) (the “Original Agreement”)1 to facilitate development of the Rancho Marana 154 project on the property described and depicted on Exhibit A to the Original Agreement (the “Project” or the “Rancho Marana Project”). B. The Original Owners subsequently transferred ownership of the property that is the subject of the Rancho Marana Project to the Developer. C. The property that is the subject of the Project has been subdivided as follows: i) The Final Plat for Rancho Marana 154 Lots 1-167 and Blocks 2-7 was recorded in the office of the Pima County Recorder on December 8, 2004 in Book 59 of Maps and Plats, Page 13 (Sequence No. 20042360739). ii) The Final Plat for Rancho Marana 154 Block 2, Lots 1-140 and Common Areas “A” through “N” was recorded in the office of the Pima County Recorder on Septem- ber 8, 2006 in Book 61 of Maps and Plats, Page 65 (Sequence No. 20061740621). iii) The Final Plat for Rancho Marana 154 Block 4, Lots 1-81 and Common Areas “A” through “M” was recorded in the office of the Pima County Recorder on February 12, 2007 in Book 62 of Maps and Plats, Page 26 (Sequence No. 20070290500). 1 The Original Agreement was first recorded on August 20, 2004 at Docket 12370, Page 2849 (Sequence No. 20041620637) without its Exhibits A, B, and C included. It was re-recorded with the Exhibits on the date noted in Recital A. Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 2 - iv) The Final Plat for Rancho Marana 154 Block 3, Lots 1-128 and Common Areas “A” through “N” was recorded in the office of the Pima County Recorder on May 10, 2019 at Sequence No. 20191300072. D. The Developer has developed Blocks 1 and 2 as medium density residential use, and intends to develop Blocks 3 and 4 for medium density residential use. E. The Developer has sold Blocks 5 through 7. A portion of Block 7 has been developed for commercial use; the remaining portion of Block 7 and Blocks 5 and 6 are intended to be developed for future commercial uses. F. The property that is the subject of this Amendment is the property within the Ran- cho Marana Project that is still owned by the Developer, specifically, Block 3 of Rancho Marana as described in the final plat described in recital C (iv) above, and Block 4 of Rancho Marana as described in the final plat described in recital C (iii) above (the “Prop- erty”). G. Pursuant to the terms of the Original Agreement, the Developer is obligated to provide certain Regional Public Infrastructure, as defined in paragraph 2.1 of the Original Agreement, to serve the planned development of the Project and also to facilitate and support the ultimate development of the larger land area that includes the Project. H. As a part of the Developer’s Regional Public Infrastructure obligations, the Devel- oper is obligated to construct certain Transportation Improvements, as defined in para- graph 2.3 of the Original Agreement, including, without limitation, construction of Tan- gerine Farms Road from Moore Road north to Barnett Road, and construction of Clark Farms Boulevard from Sandario Road to the western boundary of the Project (the “Tan- gerine Farms and Clark Farms Improvements”). I. Tangerine Farms Road from Moore Road north to Barnett Road, and Clark Farms Boulevard from Sandario Road to the western boundary of the Project are both included within the Town’s Streets Facilities Infrastructure Improvements Plan, as adopted by the Town Council, most recently pursuant to Resolution No. 2017-090. J. The Developer has constructed the first phase of Tangerine Farms Road, from Moore Road north to Clark Farms Boulevard, but has not yet constructed the second phase from Clark Farms Boulevard north to Barnett Road (the “Tangerine Farms Road Phase 2 Improvements”). The Developer has completed construction of Clark Farms Boulevard as required by the Original Agreement. The Tangerine Farms Road Phase 2 Improvements shall include completion of the landscaping elements and improvements required for Tangerine Farms Road as set forth in the approved Revised Landscape Plans (as defined in subparagraph 3(f) below). K. The Original Agreement obligates the Developer to complete the Tangerine Farms Road Phase 2 Improvements prior to the release of the assurances posted to assure com- pletion of the improvements set forth on the Rancho Marana Final Block Plat for each Block. Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 3 - L. The Original Agreement acknowledged that if the Town adopted an impact fee for the same infrastructure for which the Developer had contributed land or made improve- ments, the Developer shall be entitled to a credit for its contributions as set forth in A.R.S. §9-463.05. M. On April 5, 2005, the Town Council adopted Ordinance No. 2005.12, establishing the Northwest Streets Development Impact Fee (the “NW Streets DIF”). The Project is located in the NW Streets DIF Benefit Area as established by Ordinance No. 2005.12, and as amended from time to time. N. On July 19, 2005, via adoption of Resolution No. 2005-88, the Town Council ap- proved a Development Agreement regarding Development Impact Fee Credits for Ran- cho Marana 154 (the “DIF DA”) to memorialize the amount of development impact fee credits due to the Developer for its infrastructure obligations. Pursuant to A.R.S. §9-463.05 and the DIF DA, the Developer was entitled to full credit against the NW Streets DIF. The DIF DA was executed by the Town, but does not appear to have ever been executed by the Developer. Nonetheless, the Town has credited the Developer as required by A.R.S. §9-463.05 and the Original Agreement. O. The Original Agreement also obligates the Developer to construct certain Off-Site Recreation Improvements (as defined in paragraph 2.4.2 of the Original Agreement), in- cluding the shoulder, a 100-foot buffer with landscaping, a trail and drainage facilities along the east side of Tangerine Farms Road, and the shoulder and landscape buffer along the west side of Tangerine Farms Road, and a landscaped median strip (the “Tan- gerine Buffer Improvements” as defined in paragraph 2.3.1.1 of the Original Agreement), and landscaping in, on and around the Barnett Road Channel, and a regional trail located within the Barnett Road Channel (the “Barnett Linear Park” as defined in paragraph 2.4 of the Original Agreement). P. The Town’s plans for the development of the Barnett Road Channel have signifi- cantly changed since 2004, the Town no longer intends to develop the Barnett Linear Park as originally conceived. Q. The Tangerine Farms Sewer Improvements (as defined in subparagraph 3(i) be- low) are included in the Town of Marana’s proposed Sewer Infrastructure Improvements Plan, supporting development impact fees, which is proposed to be forwarded to the Town Council for consideration of adoption within the next year. R. The Developer is the sole beneficiary of TITLE SECURITY AGENCY LLC, a Delaware limited liability company, formerly known as Title Security Agency of Arizona, LLC, a Delaware limited liability company, as Trustee under Trust 201812T and not otherwise, which is the title owner of the Developer’s remaining land holdings within the Rancho Marana Project, and to the extent the trust’s interests are implicated, is signing this Amendment in its capacity as sole beneficiary of the trust. S. The Town is authorized by A.R.S. § 9-500.05 to enter into a development agreement with a landowner or other person or entity having an interest in real property located Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 4 - within the Town to facilitate development of the property by providing for, among other things, the conditions, terms, restrictions, and requirements for development and public infrastructure and the financing of public infrastructure. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises made in this Amendment, the Parties hereby agree as follows: 1. Incorporation of the recitals. The foregoing Recitals are incorporated here by this ref- erence. 2. Effect. Capitalized words and phrases in this Amendment shall have the meanings set forth in the Original Agreement as modified by this Amendment, and the terms of the Original Agreement shall continue in full force and effect except as expressly modified by this Amendment. 3. Additional definitions. The following additional definitions shall apply to this Amendment: a. “Construction Sales Tax Revenues” means three-quarters (75%) of the Town’s transaction privilege taxes (currently 4%) generated pursuant to Section 8-415 or 8- 416 of the Marana Tax Code (or corresponding sections of successor codes) from con- struction contracting or speculative builder activities on the Property after the Effec- tive Date of this Amendment. b. “Northwest Streets Development Impact Fee” or “NW Streets DIF” is defined in recital M above. c. “Reimbursable Costs” means all costs, expenses, fees, transaction privilege taxes and charges actually incurred and paid by or on behalf of the Developer to contrac- tors, architects, engineers, surveyors, governmental agencies, other professionals and consultants, and other third parties for materials, labor, planning, design, engineer- ing, surveying, site excavation and preparation, governmental permits and payments, payment and performance bonds, other professional services, and all other costs and expenses related or incidental to and reasonably necessary for, the acquisition, im- provement, construction, installation, or provision of the Tangerine Farms and Clark Farms Improvements and the Tangerine Farms Sewer Improvements and warranting them for one year after completion. Reimbursable Costs shall not include and shall not accrue interest. d. “Reimbursement Account” means either a separate account within the Town’s General Fund or a separate book or ledger entry designation for the purpose of mak- ing Reimbursement Payments. e. “Reimbursement Payments” is defined in paragraph 9 below. f. “Revised Landscape Plans” means (a) the Landscape Plan for Rancho Marana 154 Block 3, having plan number LPR1811-003, approved by the Town on April 19, Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 5 - 2022, and (b) the Landscape Plan for Rancho Marana 154 Block 4, having plan number LPR0607-003, approved by the Town on October 19, 2021, as they may be amended and accepted by the Town. g. The “Tangerine Farms and Clark Farms Improvements” means those improve- ments described in recital H above. h. The “Tangerine Farms Road Phase 2 Improvements” means those improve- ments described in recital J above. i. The “Tangerine Farms Sewer Improvements” means sewer improvements within the Tangerine Farms Road right-of-way, including 767 linear feet of 24” sewer pipe, two new manholes, and other necessary items considered incidental to sewer installation as designed and detailed on sheets 8 and 9 on the Town of Marana im- provement plan titled Rancho Marana 154, Block 4 Improvement Plans Lots 1 Thru 81 and Common Areas “A” Thru “M”, having plan number ENG1704-006, approved by the Town on May 26, 2021. j. “Unrecovered Transportation Improvement Costs” is defined in paragraph 4(d) below. k. “Wastewater Facilities Development Impact Fee” is the fee adopted by the Town pursuant to Section 3 of Marana Ordinance No. 2014.013 and amended by Sec- tion 9 of Marana Ordinance No. 2017.029. 4. Overview of costs, credits, and reimbursements for the Tangerine Farms and Clark Farms Improvements a. As verified by the Town Engineer, the Developer has spent $1,827,998.00 in Re- imbursable Costs (as defined in subparagraph 3(c) above) for the construction of Clark Farms Boulevard and the first phase of Tangerine Farms Road. Based on engineer’s estimates as verified by the Town Engineer, the cost of construction of Tangerine Farms Road Phase 2 Improvements is estimated to be approximately $1,553,519.00, for a total cost to the Developer of approximately $3,381,517.00 for construction of the Tangerine Farms and Clark Farms Improvements. b. As of date of this Amendment, the Project has received $1,893,678.00 in NW Streets DIF credits as follows: $1,838,676 for Blocks 1 and 2 and $55,002.00 for the portion of Block 7 that has been developed. c. The Developer will continue to receive applicable credits against the NW Streets DIF (as it may be amended from time to time) for Blocks 3 and 4. The devel- oper/owner of Blocks 5 through 7 will also receive applicable credits against the NW Streets DIF. As of the date of this Amendment, the NW Streets DIF is $3,719.00 per EDU as adopted by Marana Ordinance No. 2017.029. d. If and only to the extent the total amount of NW Streets DIF credits applied to the Project do not reimburse the Developer for the Reimbursable Costs for the Tange- rine Farms and Clark Farms Improvements, the Developer will be reimbursed for the Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 6 - difference (the “Unrecovered Transportation Improvement Costs”) through reim- bursement of the Construction Sales Tax Revenues generated on the Property after the Effective Date of this Amendment (“Construction Sales Tax Reimbursements”), as described in paragraph 8 below. e. The Parties acknowledge that if there is an increase in the NW Streets DIF that applies to the Property, the Developer will be credited for that increased amount which will result in a corresponding reduction in the amount of Construction Sales Tax Reimbursements to the Developer. 5. Developer reimbursement for Tangerine Farms Sewer Improvements. If the Developer constructs the Tangerine Farms Sewer Improvements, and if the Tangerine Farms Sewer Improvements are included in the Wastewater Facilities Development Impact Fee via adoption of the proposed Sewer Infrastructure Improvements Plan (described in recital Q above), then the Developer will be reimbursed only through reimbursement of the Wastewater Facilities Development Impact Fee, payable for construction occurring on the Property, in accordance with paragraph 9 below. The full amount of the Wastewater Fa- cilities Development Impact Fees will be charged to the Property and placed in the Reim- bursement Account (see subparagraph 9(a) below). Once the Developer has been fully reimbursed for the Reimbursable Costs of constructing the Tangerine Farms Sewer Im- provements, the full Wastewater Facilities Development Impact Fee will be due and pay- able for construction occurring on the Property with no reimbursement to the Developer. 6. Development impact fees. Nothing in this Amendment shall be construed as a waiver or reduction of development impact fees properly adopted by the Town pursuant to A.R.S. § 9-463.05 and applicable to the Project. 7. Town review and approval of plans. The plans and specifications for a portion of the Tangerine Farms Road Phase 2 Improvements (from Clark Farms Boulevard to Charis- matic Drive), known as Rancho Marana 154, Block 4 Improvement Plans, having plan number ENG1704-006, were approved by the Town on May 26, 2021. The plans and specifications for the remainder of the Tangerine Farms Road Phase 2 Improvements (from Charismatic Drive to Barnett Road), known as Rancho Marana 154, Block 4 Con- arch and Paving Plan, having plan number ENG2110-006, were approved by the Town on March 24, 2022. The plans and specifications for the Tangerine Farms Sewer Improve- ments were approved as described in subparagraph 3(i) above. The Revised Landscape Plans were approved as described in subparagraph 3(f) above. The Tangerine Farms Road Phase 2 Improvements, the Tangerine Farms Sewer Improvements, and the land- scaping elements and improvements required by the Revised Landscape Plans are subject to the Town’s normal construction inspection requirements. 8. Developer Reimbursement for Unrecovered Transportation Improvement Costs from Con- struction Sales Tax Revenues. If and to the extent the Developer constructs the Tangerine Farms Road Phase 2 Improvements, the Unrecovered Transportation Improvement Costs, if any, will be reimbursed to the Developer through reimbursement of the Con- struction Sales Tax Revenues as described in this paragraph 8 until the combined total Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 7 - amount of the NW Streets DIF credits and Construction Sales Tax Reimbursements to the Developer equals the Reimbursable Costs for the Tangerine Farms and Clark Farms Im- provements, except that the Town’s reimbursement obligation shall not exceed the amount of actual Construction Sales Tax Revenues generated by the Property after the Effective Date of this Amendment. a. Tangerine Farms Road Phase 2 Improvements construction and reimbursement. In sat- isfaction of the Developer’s Tangerine Farms Road Phase 2 Improvements obligations under the Original Agreement and as a condition precedent to receiving Reimburse- ment Payments under paragraph 9 of this Amendment, the Developer shall, as re- quired by paragraph 2.3.1 of the Original Agreement: i. Design and construct the Tangerine Farms Road Phase 2 Improvements; and ii. Pay all Reimbursable Costs for the Tangerine Farms Road Phase 2 Improve- ments as they become due. b. Developer cost statements and Town reimbursement for Unrecovered Transportation Improvement Costs. The Town shall make Reimbursement Payments to the Developer for the Unrecovered Transportation Improvement Costs pursuant to paragraph 9 be- low. The Developer shall submit to the Town quarterly statements showing the actual Tangerine Farms Road Phase 2 Improvements costs incurred and paid to date. The Developer shall provide the Town with invoices or other backup information reason- ably requested by the Town to confirm the accuracy of the Developer’s quarterly state- ments of costs. c. Effect of loss of construction sales tax revenues. If the laws of the State of Arizona are revised in a way that reduces or eliminates Construction Sales Tax Revenues, the Town shall make deposits into the Reimbursement Account from such funding, if any, that the Town receives under then-existing laws of the State of Arizona to replace the reduced or eliminated Construction Sales Tax Revenues, in an amount that is propor- tional, in the Town Finance Director’s reasonable opinion, to the Construction Sales Tax Revenues that the Town would have received if the laws of the State of Arizona had not been so revised. d. No Town representation of sufficiency of Reimbursement Payments. The Developer acknowledges and understands that the amount of the Construction Sales Tax Reve- nues depends on many factors and may be insufficient to pay all of the Unrecovered Transportation Improvement Costs. e. Developer’s audit. Not more than once each calendar year, the Developer may, at its own cost, audit Town sales tax returns and other appropriate financial records of the Town to assure prompt and accurate deposit into the Reimbursement Account of all revenues as required pursuant to this Amendment. The Developer’s audit author- ized by this paragraph shall be subject to all applicable laws that may prohibit or limit the dissemination or use of transaction privilege tax and related information. Before the Developer’s audit occurs, the Developer shall obtain and provide to the Town Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 8 - written waivers of confidentiality sufficient to satisfy the requirements of Arizona Re- vised Statutes § 42-2003(A)(6) from each taxpayer whose sales tax returns and other financial records are provided by the Town in connection with the audit. f. Limitations. During the Term of this Amendment, the Town shall not enter into any agreement or transaction which impairs the rights of the Developer under this Amendment, including, without limitation, the right to receive the Reimbursement Payments and the proceeds of the Reimbursement Account in accordance with the procedures established in this Amendment. g. Contractor and subcontractor disaggregation of tax information for the Property; release of tax information. The information provided to the Town by the Arizona Department of Revenue does not contain the level of detail required for the Town to be able to identify the construction sales tax revenues generated for any specific project. The Developer shall require each contractor and subcontractor responsible for the pay- ment of Construction Sales Tax Revenues to separately report construction sales tax attributable to construction on the Property. The Developer shall exercise reasonable efforts to obtain from each contractor and subcontractor doing work attributable to the Property a consent to release of tax information in a form reasonably acceptable to the Town. If the separate report required by this paragraph is not provided to the Town, the Town shall make a reasonable estimate of Construction Sales Tax Revenues based on all information available to the Town, including information provided by the Developer, and the good faith certification by the Town’s Finance Director shall be considered final and binding upon the Developer. The final certification of the Town’s Finance Director shall be subject to all applicable laws that may prohibit or limit the dissemination or use of transaction privilege tax and related information. 9. Reimbursements. All reimbursements under this Amendment shall be paid to the Developer as provided in this paragraph. a. Reimbursement Account. The town shall deposit into the Reimbursement Account the following: i. As they are received from the Arizona Department of Revenue, the Construc- tion Sales Tax Revenues beginning with the first such revenues generated from the Property after the Effective Date of this Amendment and ending upon the earlier of the following: (a) The expiration of the Term of the Original Agreement (as extended by this Amendment). (b) When construction contracting and speculative builder activities, as de- fined in Section 8-415 and 8-416 of the Marana Tax Code, on the Property cease and all Construction Sales Tax Revenues generated from the Property have been deposited into the Reimbursement Account. (c) When the Town has reimbursed the Developer for the full amount of the Unrecovered Transportation Improvement Costs. Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 9 - ii. Any Wastewater Facilities Development Impact Fees paid for development on the Property that are reimbursable to the Developer (see paragraph 5 above). b. Reimbursement Payments. The Town shall pay to the Developer within the first 45 days of each calendar quarter all funds in the Reimbursement Account (“Reim- bursement Payments”), beginning the first calendar quarter after: i. The Town has determined, after calculating the total amount of NW Streets DIF credits applied to the Project and determining the Developer’s total Transpor- tation Improvement Costs, that the Developer has incurred Unrecovered Trans- portation Improvement Costs; and ii. The Developer satisfies all conditions precedent to receiving Reimbursement Payments as set forth in this Amendment; and iii. The Town has accepted the Tangerine Farms Road Phase 2 Improvements and the Tangerine Farms Sewer Improvements for maintenance; and iv. The Town has funds in the Reimbursement Account. Any funds accrued in the Reimbursement Account and due to the Developer pursu- ant to the terms of this Amendment, but not yet disbursed to the Developer upon the expiration of the Term of the Original Agreement (as extended by this Amendment), shall be paid to Developer within 120 days after the expiration of the Term of the Original Agreement (as extended by this Amendment). 10. Off-Site Recreation Improvements. In lieu of the required landscaping elements of the Tangerine Buffer Improvements, as described in paragraph 2.3.1.1 of the Original Agreement, the required landscaping elements of the Barnett Linear Park and Barnett Road Channel improvements, as described in paragraph 2.4 of the Original Agreement, and the required landscaping elements of the Improvement Plans submitted by the De- veloper, as described in recital E of the Original Agreement, the Developer shall complete all landscaping elements and improvements required by the Revised Landscape Plans. Upon completion of the landscaping elements and improvements as required by the ap- proved Revised Landscape Plans, and the Town’s acceptance of the elements and im- provements, the Developer’s obligation to construct the Off-Site Recreation Improve- ments described in paragraph 2.4 of the Original Agreement shall be deemed to be com- pleted and satisfied, except as provided in paragraph 12 below. 11. Barnett Road Channel materials. Paragraph 2.3.4 of the Original Agreement provides that the Developer shall excavate the Barnett Road Channel where it runs along the north- ern boundary of the Project and that the Developer shall be permitted to use the exca- vated material. Excavation of the Barnett Road Channel occurred several years ago and the excavated material has been used by other parties. The Town has other excavated material available at the Marana Water Reclamation Facility (the “MWRF”) located at 14393 North Luckett Road. The Parties agree that the Developer is permitted to retrieve excavated material from the MWRF, at the Developer’s own cost, as needed for the De- veloper’s use on the Property. The Town makes no representation as to the amount of Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 10 - excavated material available at the MWRF. Moreover, the excavated material is not for the exclusive use of the Developer and may be used by other parties. 12. Barnett Linear Park. The Town’s plans for the development of the Barnett Road Channel have significantly changed since 2004, and the Town no longer intends to de- velop the Barnett Linear Park as originally conceived. Accordingly, the Developer shall not be required to construct the landscaping and trail improvements described in Section 2.4.2.1 of the Original Agreement. The Developer shall grade the channel to its final di- mensions, install drywells or other devices to allow the channel to function as a basin, and install materials for stabilization. Notwithstanding anything to the contrary in the Original Agreement, the defined terms “Recreation Improvements” and “Off-Site Recre- ation Improvements” shall not include the landscaping and trail improvements described in Section 2.4.2.1 of the Original Agreement regarding the Barnett Linear Park. 13. Barnett Road Connection. The Parties acknowledge and agree that pursuant to par- agraph 2.3.1.1 of the Original Agreement, the Developer is obligated to construct Tange- rine Farms Road from Moore Road to Barnett Road. The Parties further acknowledge and agree that pursuant to paragraph 2.3.4 of the Original Agreement, the Developer is not obligated to construct a bridge, a crossing structure, or drainage structures in connection with the Barnett Road Channel, and that any such crossing is the Town’s obligation. To take advantage of economies of scale and to avoid rework of the Tangerine Farms Road Phase 2 Improvements, in connection with the Developer’s construction of the Tangerine Farms Road Phase 2 Improvements, the Developer shall design and construct a culvert bridge crossing over the Barnett Channel (the “Barnett Culvert Bridge”) subject to reim- bursement by the Town for all costs and expenses for the design, construction, and in- stallation of the Barnett Culvert Bridge (the “Barnett Culvert Bridge Costs”). The Town will reimburse the Developer for any Barnett Culvert Bridge Costs within 30 days follow- ing the Developer’s submission to the Town of an invoice for the Barnett Culvert Bridge Costs along with supporting documentation and other backup information reasonably requested by the Town to confirm such Barnett Culvert Bridge Costs, which invoices shall not be submitted more often than monthly. Currently, not including design costs, the Barnett Culvert Bridge Costs are estimated to be $839,737.35; provided that such estimate will be increased by any change orders approved by the Town, the addition of design costs, and any other unforeseen cost increases incurred as part of the Barnett Culvert Bridge Costs. The plans and specifications for the Barnett Culvert Bridge, known as Ran- cho Marana 154, Block 4 Conarch and Paving Plan, having plan number ENG2110-006, were approved by the Town on March 24, 2022. 14. Extension of Term. This Amendment shall become effective upon its execution by all the Parties and the effective date of the resolution or action of the Town Council ap- proving this Amendment (the “Effective Date”). Pursuant to paragraph 6.1 of the Origi- nal Agreement, the Parties hereby agree to extend the Term of the Original Agreement such that, unless sooner terminated by the mutual consent of the Parties, the Term shall automatically terminate and shall thereafter be void for all purposes on the 15th anniver- sary of the Effective Date of this Amendment. The Town’s reimbursement obligations Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 11 - under paragraph 9 above shall terminate when the Town has reimbursed the Developer the Unrecovered Transportation Improvement Costs as defined in subparagraph 4(d) above and subject to the limitations of paragraph 8 above, or on the 15th anniversary of the Effective Date, whichever occurs first. If the Parties determine that a longer period is necessary for any reason, the term of the Original Agreement or this Amendment may be extended by written agreement of the Parties. 15. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The signature pages from one or more counterparts may be re- moved from such counterparts and such signature pages all attached to a single instru- ment so that the signatures of all Parties may be physically attached to a single document. 16. Good standing; authority. The Developer represents and warrants to the Town that it is duly formed and validly existing under the laws of Arizona and is authorized to do business in the state of Arizona. The Town represents and warrants to the Developer that it is an Arizona municipal corporation with authority to enter into this Amendment un- der applicable state laws. Each Party represents and warrants that the individual execut- ing this Amendment on its behalf is authorized and empowered to bind the Party on whose behalf each such individual is signing. 17. Severability. If any provision of this Amendment is declared void or unenforceable, it shall be severed from the remainder of this Amendment, which shall otherwise remain in full force and effect. If a law or court order prohibits or excuses the Town from under- taking any contractual commitment to perform any act under this Amendment, this Amendment shall remain in full force and effect, but the provision requiring the act shall be deemed to permit the Town to act at its discretion, and if the Town fails to act, the Developer shall be entitled to terminate this Amendment. 18. Governing law. This Amendment is entered into in Arizona and shall be construed and interpreted under the laws of Arizona, and the Parties agree that any litigation or arbitration shall take place in Pima County, Arizona. Nothing in the use of the word “lit- igation” in the preceding sentence shall constitute a waiver of paragraph 3.5 of the Orig- inal Agreement, requiring disputes to be resolved by binding arbitration. 19. Interpretation. This Amendment has been negotiated by the Town and the Devel- oper, and no party shall be deemed to have drafted this Amendment for purposes of construing any portion of this Amendment for or against any party. 20. Recordation. The Town shall record this Amendment in its entirety in the office of the Pima County Recorder no later than ten days after it has been executed by the Town and the Developer. 21. No representations of development. Except as specifically set forth in this Amend- ment, nothing contained in this Amendment shall be deemed to obligate the Town or the Developer to complete any part or all of the development of Rancho Marana. Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 12 - 22. Approval. If any Party is required pursuant to this Amendment to give its prior written approval, consent or permission, such approval, consent or permission shall not be unreasonably withheld or delayed. 23. Force majeure. If any Party shall be unable to observe or perform any covenant or condition of this Amendment by reason of “force majeure,” then the failure to observe or perform such covenant or condition shall not constitute a default under this Amendment so long as such Party shall use its best effort to remedy with all reasonable dispatch the event or condition causing such inability and such event or condition can be cured within a reasonable amount of time. “Force majeure,” as used in this paragraph, means any con- dition or event not reasonably within the control of such party, including without limita- tion, “acts of God,” strikes, lock-outs, or other disturbances of employer/employee rela- tions; acts of public enemies; orders or restraints of any kind of government of the United States or any state thereof or any of their departments, agencies, or officials, or of any civil or military authority; insurrection; civil disturbances; riots; epidemics; landslides; light- ning; earthquakes; subsidence; fires; hurricanes; storms; droughts; floods; arrests, re- straints of government and of people; explosions; and partial or entire failure of utilities. Failure to settle strikes, lock-outs and other disturbances of employer/employee relations or to settle legal or administrative proceedings by acceding to the demands of the oppos- ing Party or Parties, in either case when such course is in the judgment of and unfavorable to a Party shall not constitute failure to use its best efforts to remedy such a condition. 24. Conflict of interest. This Amendment is subject to A.R.S. § 38-511, which provides for cancellation of contracts in certain instances involving conflicts of interest. 25. Notices and filings. All notices, filings, consents, approvals and other communica- tions provided for in or given in connection with this Amendment shall be validly given, filed, made, transmitted or served if in writing and delivered personally, sent via over- night national courier, or sent by registered or certified United States mail, postage pre- paid, if to (or to such other addresses as any Party may from time to time designate in writing and deliver in a like manner): To the Town: TOWN OF MARANA Attn: Town Manager Marana Municipal Complex 11555 West Civic Center Drive, A3 Marana, Arizona 85653 With a copy to: Town Attorney Marana Municipal Complex 11555 West Civic Center Drive, A3 Marana, Arizona 85653 Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 13 - To Owner/Developer: MERITAGE HOMES OF ARIZONA, INC. Attn: Scott Kolt and Ryan Hamilton 5326 N. La Cholla Blvd. Tucson, Arizona 85741 With a copy to: Meritage Homes Corporation Attn: Curtis Keller 8800 E. Raintree Dr., Suite 300 Scottsdale, Arizona 85260 [Remainder of page intentionally left blank.] Exhibit A to Marana Resolution No. 2022-078 00073297.DOCX /12 6/15/2022 FIRST AMENDMENT TO RANCHO MARANA DEVELOPMENT AGREEMENT - 14 - IN WITNESS WHEREOF, the Parties have executed this Amendment as of the last date set forth below their representatives’ respective signatures. TOWN: THE TOWN OF MARANA, an Arizona mu- nicipal corporation By: Ed Honea, Mayor Date: ATTEST: Cherry L. Lawson, Town Clerk APPROVED AS TO FORM: Jane Fairall, Town Attorney DEVELOPER: MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation By: Ryan Hamilton, Vice President Date: ______________________________ STATE OF ARIZONA ) ss County of Pima ) The foregoing instrument was acknowledged before me on _________________, 2022 by Ryan Hamilton, the Vice President of MERITAGE HOMES OF ARIZONA, INC., an Arizona corporation, on behalf of the corporation. (Seal) Notary Public