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The Courts order invalidates the Cap in its entirety. It also directs the City to: • "Cease and desist" from enforcing, administering and /or implementing the Cap. • Remove references to the Cap from its General Plan. • Affect sufficient, "non- illusory" rezonings to accommodate the "unmet" RHNA (521 units) for the Third Planning Period. • Cease issuing any non - residential building and all related permits for construction or development until it brings its General Plan into compliance. To fully inform the public of the Court decision, and solicit complete public involvement, the City Council held public meetings on April 6 and 20 during which potential responses to the Court ruling were discussed. While a range of comments were presented to the Council, many members of the public expressed an interest in resolving all legal matters as expeditiously as possible. In addition, many members of the public stated their concern over continued legal appeals /challenges and the expenses stemming from continuing this legal dispute. In response, and in view of information provided by staff and legal counsel, the City Council decided to pursue a settlement of the entire lawsuit and related second lawsuit and through it discussions, five general goals were identified upon which settlement options were evaluated. The five goals are as follows: • Retain local control and flexibility to the maximum extent possible relative to the Hacienda rezonings and development process, including retention of a meaningful role for the Hacienda Task Force and public input; • Restore City's non - residential permitting authority as quickly as possible; . Retain control over the City Housing Element update process to assure it reflects both State law and the interests of the community; . Reach a global settlement that addresses the Court's entire March 12, 2010 ruling as well as other outstanding litigation. . Minimize financial impacts of the litigation; To facilitate the negotiations, the City Council appointed Mayor Hosterman and Councilmember McGovern to serve on a negotiating team, which also included the City Manager, City Attorney, the City's contract legal counsel and various staff members, for the purpose of attempting to reach a settlement agreement. Numerous negotiations have occurred over the past few months which resulted in the Tentative Agreement approved by the City Council on July 20, 2010, and now the Settlement Agreement (Attachment 1). The negotiating team has determined that the Settlement Agreement meets the City Council's settlement goals, and as a result, the Settlement Agreement is being recommended for approval. Page 3 of 7