BERNAL INVESTMENT CASTLEWOOD WATER PIPELINE

as for the cost of constructing the water pipeline improvements in the new location required by San Francisco. 2. Establishment of Enterprise Fund. A. The Development Agreement envisioned that portions of the 320 acres to be dedicated to the City would be encumbered by the Easement. However, the alignment approved pursuant to Section 1(a) above encumbers a greater portion of the 320 acres to be dedicated to the City than did the original Easement alignment. The parties acknowledge that the terms of the Easement place a financial burden on the owner of the servient tenement regarding the removal and replacement of surface improvements which are disturbed as a result of San. Francisco's maintenance or expansion of its water pipeline. Accordingly, the approved alignment increases the City's potential financial liability relative to the original alignment. B. To compensate City for this increased financial liability, BIC agrees to pay to City a sum which represents the estimated costs for future removal and replacement of surface improvements. The. total amount due shall be based upon the width of the final Easement required by San Francisco, as follows: (1) If San Francisco requires a sixteen foot (16') wide Easement,. BIC shall pay City FIFTY THOUSAND DOLLARS ($50,000.); or (2) If San Francisco requires atwenty-five foot (25') wide Easement, BIC shall pay City NINETY THOUSAND DOLLARS ($90,000.). City shall place the funds received into an enterprise account which shall be used for removal, replacement, and restoration work required as a result of San Francisco's maintenance or expansion of its water pipeline in the Easement. Any interest accrued shall remain in the account and be used for such work. At its discretion, City may terminate the use of such enterprise account, place any remaining funds into the City's general fund, and pay for future removal, replacement, and restoration work directly from the general fund. C. The amount due pursuant to this section shall be paid to City upon the City Council's acceptance of the Street "B" infrastructure improvements for the Bernal Property. After paying the amount due, BIC shall have no future obligation to City for such work; except that BIC shall still be subject to the obligation in Section 1 in the event San Francisco requires a different Easement location. D. BIC acknowledges that the funds paid to City pursuant to this section are not development fees as defined by §66000 of the California Government Code; and do not reduce BIC's financial obligations or development impact fees owed to the City pursuant to the Bernal Property Preannexation and Development Agreement. 2