HomeMy WebLinkAbout2004-2682
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RESOLUTION NO. 2004-268
A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING THE AUGUST 2004
AMENDMENT TO THE 2000 COMMUNITY DEVELOPMENT BLOCK
GRANT PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN
AGREEMENT, DATED SEPTEMBER 18, 2000, BY AND BETWEEN 303,
L.L.C., AND THE CITY OF SAN BERNARDINO
WHEREAS, 303, L.L.C., a California limited liability company (the "Borrower") and
the City of San Bernardino (the "City") have previously entered into that certain loan agreement
entitled "2000 Community Development Block Grant Program Section 108 Project
Development Loan Agreement", dated as of September 18, 2000, as amended on August 4.
2003 (the "Agreement"); and
WHEREAS, the City has previously disbursed to the Borrower the sum of One Million
Six Hundred Four Thousand Seventy Four Dollars and Six Cents Dollars ($1,604,074.06),
exclusive of funded interest under the terms of the Agreement for the acquisition of the "303
Third Street Parcel" and for the construction and installation of the "Borrower Improvements
(Phase I)", as these terms are defined in the Agreement; and
WHEREAS, on August 4, 2003, the Community Development Commission of the City
of San Bernardino approved an Amendment to the 2000 Owner Participation and EDI Loan
Agreement, by and between the Owner and the Agency to defer the repayment of the scheduled
HUD Section 108 Loan in accordance with the terms of the 2003 City Section 108 Loan
Agreement and subsequent amendments thereto; and
WHEREAS, the Owner has negotiated a purchase and sale agreement with the County
of San Bernardino ("County") for improvement and sale of the 303 Third Street Parcel for
which the County will acquire the 303 Third Street Parcel ("Sale") upon completion of certain
tenant improvements ("Tenant Improvements") by the Owner in order to accommodate the
relocation of the Superior Court of California; and
WHEREAS, in order to facilitate the Owner and County Sale, the Owner has requested
-1-
Pfi(CDRG Uqu�Maggle\Un1(1 UocA114-117-19 303 W ThLd S, MCC Reno ver MP.dne
2004-268
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that the Agency take certain actions to enable the Agency and the City to subordinate its HUD
Section 108 Loan in the amount of $1.8 to a Senior Construction Loan in the approximate
amount of $15 million of which the Owner will use a portion of said Senior Construction Loan
to accomplish certain Tenant Improvements to the 303 Third Street Parcel and furthermore the
Owner has requested that the Agency and City consider deferring the Section 108 Loan
repayment due date of August 1, 2005 and August 1, 2006; and
WHEREAS, the Owner and the Agency believe it is appropriate and necessary to amend
the Agreement as set forth in the August 2004 Amendment of the 2000 Community
Development Block Grant Program Section 108 Project Development Loan Agreement
("August 2004 Amendment").
NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED
BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
FOLLOWS:
Section 1. The Mayor and Common Council hereby approves the form of the
August 2004 Amendment and Loan Forbearance Agreement (303 Third Street Project), dated as
of August 16, 2004 by and between the Borrower and the City in the form attached hereto as
Exhibit "A". The Mayor, City Clerk and the Executive Director of the Economic Development
Agency are hereby authorized and directed to execute the August 2004 Amendment on behalf
of the City together with such technical and conforming changes as may be approved by the
Mayor upon the recommendation of special legal counsel to the City and the Executive Director
of the Economic Development Agency.
Section 2. This Resolution shall take effect upon its adoption and execution in the
manner as required by the City Charter.
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2004-268
1 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO APPROVING THE AUGUST 2004
2 AMENDMENT TO THE 2000 COMMUNITY DEVELOPMENT BLOCK
3
GRANT PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN
AGREEMENT, DATED SEPTEMBER 18, 2000, BY AND BETWEEN 303,
4 L.L.C., AND THE CITY OF SAN BERNARDINO
5
6
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
7 Common Council of the City of San Bernardino at a it- reg. meeting thereof, held on the
8 16th day of August , 2004, by the following vote to wit:
Council Members: Ayes Nays Abstain Absent
9
ESTRADA x
10
LONGVILLE x
11
MCGINNIS x
12 DERRY x
13 KELLEY x
14 JOHNSON x
15 MC CAMMACK x n A
16 �•1X 0"�
Rache G. Clark, City Clerk
17
18
The foregoing resolution is hereby approved this /5 TH day of August '2004.
19
20
21 ud th alles, Mayor
Ci of San Bernardino
22 Approved as to form and Legal Content:
23
By:
24 Special Counsel
25
PzA DIIU W"IVN -'.61har,D.-04-04- 19303 NNThlnl S, Nice Res. vrr. MPAno
2004-268
AUGUST 2004
AMENDMENT TO 2000 COMMUNITY
DEVELOPMENT BLOCK GRANT PROGRAM SECTION 108
PROJECT DEVELOPMENT LOAN AGREEMENT
(B-94-MC-06-0539-A)
(303 Third Street Project)
THIS AUGUST 2004 AMENDMENT TO 2000 COMMUNITY DEVELOPMENT
BLOCK GRANT PROGRAM SECTION 108 PROJECT DEVELOPMENT LOAN
AGREEMENT ("August 2004 Amendment") is dated as of August 16, 2004, by and between
303, L.L.C., a California limited liability company (the "Borrower") and the City of San
Bernardino, a municipal corporation (the "City") is made and executed in light of the following
facts:
-- RECITALS --
The Borrower and the City have previously entered into that certain loan agreement
entitled "2000 Community Development Block Grant Program Section 108 Project Development
Loan Agreement", dated as of September 18, 2000, as amended (the "Agreement").
The City has previously disbursed to the Borrower certain funds for the acquisition of the
"303 Third Street Parcel" and for the construction and installation of the "Borrower
Improvements (Phase I)", as these terms are defined in the Agreement.
The Borrower has entered into an agreement entitled "Agreement for Purchase and Sale
of Real Property", as authorized by the Board of County Supervisors dated June 29, 2004 (the
"County Purchase Contract"), by and between the County of San Bernardino ("County") and the
Borrower, whereby the Borrower shall construct and finance certain additional improvements to
the 303 Third Street Parcel and upon the completion of such additional improvements, the
Borrower shall transfer its fee title interest in the 303 Third Street Parcel, as improved, to the
County of San Bernardino for the purchase price payable to the Borrower by the County as set
forth in the County Purchase Contract.
The Borrower and the City believe it is appropriate to further amend the Agreement as set
forth in this August 2004 Amendment in order to accommodate the terms and conditions of the
improvement and sale of the 303 Third Street Parcel to the County in accordance with the terms
of the County Purchase Contract.
NOW THEREFORE AND FOR GOOD AND VALUABLE CONSIDERATION THE
BORROWER AND THE CITY AGREE AS FOLLOWS:
Section 1. Unless the context of the usage of a particular term or phrase may
otherwise require, the meaning of terms and phrases as used in this August 2004 Amendment
shall be the same as set forth in the Agreement.
Section 2. (a) At the time when this August 2004 Amendment is fully executed
by the parties, the Borrower and the City mutually acknowledge and agree that no default exists
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under the Agreement, and the parties mutually acknowledge and agree further that neither party
is aware of any fact or circumstance which, with the giving of notice to the other party under the
Agreement and the passage of the applicable cure period, would constitute a default under the
Agreement.
Section 3. The text which appears in Section 1.0 of the Agreement under the heading
"Approved 303 Third Street Project Budget" is hereby labeled to read as: "(A) Approval 303
Third Street Project Budget (June 1, 2001)", and section 1.0 of the Agreement is further
amended to add the following text:
"(B) Approved 303 Third Street Project Budget (County Purchase
Contract)" On the effective date of the August 2004 Amendment to the Agreement, the
words "Approved 303 Third Street Project Budget" refer to the various elements of cost
which comprise the "Bid Purchase Price", as this term is defined in Section 2.5 of the
County Purchase Contract, and the "Approved 303 Third Street Project Budget", as
originally approved by the City as provided in Section 7.0 of the Agreement shall have no
force or effect with respect to the Borrower Improvements (Phase II)."
Section 4. The text of Section 1.0 of the Agreement is hereby amended to add the
following defined term:
"• Borrower Improvements (Phase II). The words "Borrower Improvements
(Phase II)" mean and refer to the improvements to be financed, constructed and installed
on the 303 Third Street Parcel by the Borrower in accordance with the terms and
conditions of the County Purchase Contract. The Borrower shall obtain the Construction
Loan to pay for a portion of the costs associated with the Borrower Improvements (Phase
II). Section 1.43 of the County Purchase Contract defines the term "Improvements" as
follows: "Improvements" means the Shell Improvements, the Tenant Improvements and
the Landscape Improvements." The "Plans and Specifications" as this term is defined in
Section 1.53 of the County Purchase Contract, are attached as Exhibit "D" to the County
Purchase Contract."
Section 5. The text of Section 1.0 of the Agreement is hereby amended to add the
following defined term:
"• County Purchase Contract. The words "County Purchase Contract" mean and
refer to that certain instrument entitled "Agreement for Purchase and Sale of Real
Property" dated as of June 29, 2004, by and between the County and the Borrower. A
true and correct copy of the County Purchase Contract is on file with the Agency Clerk.
The County Purchase Contract provides for the terms and conditions on which the
County of San Bernardino may hereafter acquire the 303 Third Street Parcel, and/or
provide the County with an option to also purchase the non-contiguous "Option Property"
owned by the Borrower under Section 16 of the County Purchase Contract. Such non-
contiguous "Option Property" is identified in the Agreement as the "Parking Lot
Parcel".,,
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Section 6. The text of Section 1.0 of the Agreement is hereby amended to add the
following defined term:
"* Mezzanine Financing. The words "Mezzanine Financing" shall have the
meaning as set forth in Section 12.0(9)."
Section 7. Subject to the terms and conditions of this August 2004 Amendment,
Section 5.0(a) of the Loan Agreement is hereby amended to read as follows:
"Section 5.0 SECTION 108 LOAN
(a) The Section 108 Loan shall be in an amount not to exceed the principal
sum of One Million Eight Hundred Forty Thousand Dollars United States currency
($1,840,000.00), and the Section 108 Loan shall bear interest on so much of the principal
sum as shall be drawn by the City under its HUD Section 108 Loan Agreement for
disbursement to the Borrower from time -to -time. The outstanding principal balance of
the Section 108 Loan shall bear interest payable to the City by the Borrower from the
date of each disbursement of principal under the HUD Section 108 Loan Agreement at
the variable rate of interest specified in the Borrower Section 108 Loan Promissory Note
until such time as such variable rate of interest may be reset as a permanent rate of
interest following the "Conversion Date" as this term is set forth under the HUD Section
108 Loan Agreement and the Borrower Section 108 Promissory Note. The City shall
notify the Borrower as promptly as feasible of such notification as the City may receive,
if any, from the Secretary of HUD, that the Secretary of HUD intends for a Conversion
Date to occur under the "HUD Note", as set forth in subparagraph number six of
Paragraph I.A. of the Borrower Section 108 Promissory Note. The City agrees to
exercise best efforts, if directed by the Borrower, to request the Secretary of HUD not to
cause a Conversion Date to occur; provided however, that the Secretary of HUD reserves
its sole discretion under the HUD Note and the HUD Section 108 Loan Agreement to
cause a Conversion Date to occur. Payments of interest on the Section 108 Loan shall be
due and payable by the Borrower to the City in installments at the times set forth in the
Borrower Section 108 Loan Promissory Note. Installments of principal disbursed to the
Borrower shall be payable to the City prior to maturity or the acceleration of the Section
108 Loan, (assuming that the Borrower has received disbursements of the aggregate
principal sum of $1,840,000.00) from and after the close of Escrow on the dates and in
the amounts scheduled for payment as follows:
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Date of Principal
Amount of
Date of Principal
Amount of
Installment
Principal Due
Installment
Principal Due
August 1, 2001
$ -0-
August 1, 2011
$100,000.00
August 1, 2002
-0-
August 1, 2012
100,000.00
August 1, 2003
-0-
August 1, 2013
100,000.00
August 1, 2004
100,000.00
August 1, 2014
100,000.00
August 1, 2005
-0-
August 1, 2015
100,000.00
August 1, 2006
-0-
August 1, 2016
100,000.00
August 1, 2007
100,000.00
August 1, 2017
100,000.00
August 1, 2008
100,000.00
August 1, 2018
100,000.00
August 1, 2009
100,000.00
August 1, 2019
100,000.00
August 1, 2010
100,000.00
August 1, 2020
440,000.00
Section 8. Section
10.0(6) of the Agreement is hereby amended to read as follows:
"(6) Use the funds disbursed to the Borrower under the Section 108 Loan, and later
under the Mezzanine Financing and the Construction Loan, solely for payment of
Approved 303 Third Street Project Budget costs, subject to the provisions of the
next sentence relating to the Construction Loan. No proceeds of the Construction
Loan, shall be disbursed or made available to the Borrower under the terms of the
Construction Loan for any Approved 303 Third Street Project Budget costs
identified in Section 2.5 of the County Purchase Contract as "General Contractor
OH&P" or "Developer Fee", except in the amounts as specifically authorized by
the County in Exhibit "L" to the County Purchase Contract.
Section 9. Section 11.0(8) of the Agreement is hereby amended to read as follows:
"(8) Create or allow to be created any lien or charge upon the 303 Third Street
Property, except as may arise under the Mezzanine Financing (provided that any
such lien of Mezzanine Financing shall be subordinate to the Section 108 Loan)
The Construction Loan, the Permanent Loan, the OPA, this Agreement, or a
Tenant lease."
Section 10. Section 12.0 of the Agreement is hereby amended to add three (3) new
subsections to Section 12.0 (Section (8), (9) and (10)) which read as follows:
"(8) The City has approved the County Purchase Contract concurrently with the
approval by the City of the August 2004 Amendment to this Agreement. From
and after the effective date of the August 2004 Amendment to the Agreement, the
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Borrower shall not consent to a material amendment of the County Purchase
Contract without first obtaining the prior written consent of the City, which
consent shall not be unreasonably withheld, conditioned or delayed by the City.
(9) Provided the Borrower has satisfied the requirements of Section 12.0(10), the City
hereby permits and authorizes the Borrower to obtain certain interim financing
prior to the recordation of the Construction Loan (the "Mezzanine Financing") in
a principal amount not to exceed Eight Hundred Thousand Dollars ($800,000), for
the purpose of paying for the actual third party costs incurred by the Borrower
prior to the recordation of the Construction Loan, in connection with the design
and design engineering work associated with the preparation by the Borrower of
the "Plans and Specifications," as this term is defined under the County Purchase
Contract. The Mezzanine Financing may be secured by the 303 Third Street
Parcel, subject to the senior security interest of the City under its City Security
Interest in the 303 Third Street Parcel, including the City Deed of Trust. The
security interest of the lender under the Mezzanine Financing shall be released by
such lender in the 303 Third Street Parcel and the Mezzanine Financing shall be
paid in full concurrently with the recordation of the Construction Loan, or sooner,
upon the receipt by the Borrower of any sums payable by the County of San
Bernardino to the Borrower under Section 2.8 of the County Purchase Contract.
(10) Within the earlier period of sixty (60) days following the effective date of the
August 2004 Amendment to this Agreement or prior to the recordation of any
security interest of the third party lender under the Mezzanine Financing, the
Borrower shall execute an appropriate amendment or supplement to the Borrower
Assignment of Agreements in a form reasonably satisfactory to the City, to
include a collateral security assignment of the County Purchase Contract, to the
City as security for the Borrower Indebtedness. Such amendment or supplement
to the Borrower Assignment of Agreements shall contain an acknowledgement of
the City that its security interest in the County Purchase Contract and all of the
related contracts, agreements and permits associated with the Borrower
Improvements (Phase II) shall be subordinate to the security interest of the
Construction Lender in the County Purchase Contract and related contracts,
agreements and permits, as provided in Section 14.0 of this Agreement."
Section 11. Section 13.0(13) of the Agreement is hereby amended to read as follows:
"(13) After the Construction Lender Subordination Agreement is executed by the
Borrower and the Agency and filed for recordation, if the construction of the
Borrower Improvements (Phase II) is not promptly commenced, or after its
commencement, such work is abandoned or work thereon ceases for a period of
more than ninety (90) days for any reason, or if the Borrower Improvements
(Phase 11) are not completed within fifteen (15) months following the recordation
of the Construction Lender Subordination Agreement, subject to force majeure
events under the County Purchase Contract, and further subject to such permitted
extensions of time as may be approved by the County under the County Purchase
Contract; provided however, that the aggregate amount of permitted extensions of
time as may be approved by the County shall not exceed more that one hundred
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eighty (180) days without the Borrower first obtaining the approval of the City
which approval shall not be unreasonably withheld, conditioned or delayed by the
City."
Section 12. Section 13.0 of the Agreement is hereby amended to add a new Section
13.0(21) and Section 13.0(22) which reads as follows:
"(21) The Borrower is in default of any material term of the Mezzanine
Financing loan agreement.
(22) The Borrower is in default of any material term of the County Purchase
Contract."
Section 13. Section 14.0(a) of the Agreement is hereby amended to read as follows:
"(a) Upon the completion of the Borrower Improvements (Phase 1) the City
hereby agrees to subordinate the City Security Interest in the 303 Third Street Property to
the Construction Loan as provided in this Section 14.0, subject to the satisfaction of the
following conditions:
(i) The maximum principal amount of the Construction Loan (including
funded interest reserves and customary and reasonable costs of financing)
shall not exceed $15,000,000 unless the proposed amount of the
Construction Loan in excess of $8,500,000.00, and up to the maximum
amount of $15,000,000 does not cause the loan -to -value ratio referenced
in Section 14.0(a)(viii) to exceed 80% and is acceptable to HUD under the
HUD Section 108 Loan Agreement, if applicable;
(ii) At the time of the City's execution of the Construction Lender
Subordination Agreement, there shall be no default of the Borrower under
the OPA, this Agreement or the City Security Interest;
(iii) the Borrower shall repay the Mezzanine Financing upon recordation of the
Construction Lender Subordination Agreement;
(iv) at the time of recordation of the Construction Lender Subordination
Agreement there shall be no default by either party under the County
Purchase Contract;
(v) the Borrower shall have paid all financing costs charged by HUD to the
City under the HUD Section 108 Loan through the date of the recordation
of the Construction Lender Subordination Agreement (including HUD
underwriter costs presently estimated to be $25,000.00) if not previously
paid by the Borrower to the City;
(vi) no provision of the Construction Lender Subordination Agreement shall
require the City (or HUD) to waive or suspend its right to receive
payments of principal and interest when due under the Section 108 Loan,
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this Agreement or the City Security Interest prior to a default by the
Borrower to the Construction Lender; and in the event of a default by the
Borrower under the Construction Loan or this Agreement, no provision of
the Construction Loan or the Construction Lender Subordination
Agreement shall require the City to first obtain the consent of such
Construction Lender following a default of the Borrower before the City
may draw on the Borrower Letter of Credit or demand payment from any
person under the Borrower Guaranties. In the event of a default by the
Borrower under the Construction Loan the Construction Lender shall not
unreasonably delay its approval, if requested by the City, of the exercise
by the City of any of the City's remedies under the other security interests
of the City in the 303 Third Street Property given by the Borrower to the
City;
(vii) the Construction Loan documents shall contain provisions reasonably
satisfactory to the City which assure the City that:
(1) an independent lender's disbursement control service shall be used
to perform the customary functions of a construction lender
disbursement control and payment verification;
(2) the Construction Lender, and the construction lender disbursement
control service, shall require the Borrower to provide the
Construction Lender as part of each application for a disbursement
of funds under the Construction Loan for labor performed on the
303 Third Street Property, a written certification (with a copy to
the City) that all labor and construction trades personnel employed
by either the Borrower or the Borrower Contractor and all
subcontractors of either of them who perform work on the 303
Third Street Project have been paid not less than "prevailing
wages" as this term is defined under 40 U.S.C. Section 276a-276a-
5 (Davis -Bacon Prevailing Wage Law, as amended);
(3) the Construction Loan documents shall not be materially modified
or amended following the approval of the Construction Loan by
the City under Section 14.0(b) without the Borrower first obtaining
the written approval of the City, and such approval shall not be
reasonably withheld, conditioned or delayed;
(4) the Construction Loan documents shall be consistent with the
provisions of Section 10.0(6) and shall provide that no "developer
fees, costs, expenses, overhead and profit" and the like shall be
payable from the proceeds of the Construction Loan to the
Borrower;
(viii) receipt by the City of a MAI appraisal prepared in accordance with real
property standards acceptable to a federally chartered lending institution,
and otherwise reasonably acceptable in form to the Agency, which
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indicates that the loan -to -value ratio of the 303 Third Street Project under
the proposed Construction Loan and the Section 108 Loan shall not
exceed 80% of the appraised value of the 303 Third Street Property."
Section 14. Subject to the terms and conditions of this August 2004 Amendment, the
City hereby agrees to forbear from the collection of the principal sum of Two Hundred Thousand
($200,000) which would otherwise be due and payable by the Developer to the City on August 1,
2005, and on August 1, 2006, respectively, under the terms of the Borrower Section 108
Promissory Note, to a new date of August 1, 2020, at which time the Borrower shall pay, in
addition the $240,000 scheduled amount of principal due under the Borrower Section 108 Loan
Promissory Note on such date, an additional aggregate sum of $200,000 in principal, so that as
modified by this August 2004 Amendment, the total amount of principal as shall be due on
August 1, 2020, shall be $440,000. If requested by the Borrower, the Executive Director of the
Economic Development Agency is hereby authorized and directed to deliver to the Borrower a
loan forbearance letter in a form approved by Special Legal Counsel to the City which includes a
notice to Borrower that the "Commitment Schedule" (page 12 of the Borrower Section 108
Promissory Note) is hereby amended to read as follows:
"COMMITMENT SCHEDULE
Principal Due Date Commitment Amount
August 1, 2001
$ -0-
August 1, 2002
-0-
August 1, 2003
-0-
August 1, 2004
100,000.00
August 1, 2005
-0-
August 1, 2006
-0-
August 1, 2007
100,000.00
August 1, 2008
100,000.00
August 1, 2009
100,000.00
August 1, 2010
100,000.00
August 1, 2011
100,000.00
August 1, 2012
100,000.00
August 1, 2013
100,000.00
August 1, 2014
100,000.00
August 1, 2015
100,000.00
August 1, 2016
100,000.00
August 1, 2017
100,000.00
August 1, 2018
100,000.00
August 1, 2019
100,000.00
August 1, 2020
440,000.00
Maximum Commitment Amount $1,840,000.00"
The Executive Director of the Economic Development Agency is further authorized and
directed to include in the loan forbearance letter referenced in the preceding paragraph, a notice
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to the Borrower that the "Schedule P&I" (page 15 of the Borrower Section 108 Promissory Note)
has been amended to read as follows:
"SCHEDULE P & I
Principal Amount Principal Interest Rate Optional Redemption
Available
Due Date
YES
NO
$ -0-
August 1, 2001
X
-0-
August 1, 2002
X
-0-
August 1, 2003
X
100,000
August 1, 2004
X
-0-
August 1, 2005
X
-0-
August 1, 2006
X
100,000
August 1, 2007
X
100,000
August 1, 2008
X
100,000
August 1, 2009
X
100,000
August 1, 2010
X
100,000
August 1, 2011
X
100,000
August 1, 2012
X
100,000
August 1, 2013
X
100,000
August 1, 2014
X
100,000
August 1, 2015
X
100,000
August 1, 2016
X
100,000
August 1, 2017
X
100,000
August 1, 2018
X
100,000
August 1, 2019
X
440,000
August 1, 2020
X
$1.840.000 = Aggregate Principal Amount
Principal Amounts for which Optional Redemption is available may be redeemed, subject
to the terms contained herein and in the Loan Agreement, on any Interest Due Date on or
after August 1, 2010."
The Executive Director of the Economic Development Agency shall transmit such loan
forbearance letter to the Borrower concurrently upon the satisfaction of the conditions set forth in
Section 16.
Section 15. (a) The City and the Borrower hereby agree that as of July 31, 2004,
the balance of funds in the "Funded Interest Reserve Fund" established by the Borrower and the
City under the Section 108 Loan was approximately $163,403. As of August 1, 2004, the
Borrower hereby authorizes and directs the City to withdraw the sum of One Hundred and
Thousand Dollars ($100,000) from the Funded Interest Reserve Fund, which the City shall use
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and apply to pay HUD the principal installment amount of $100,000 which became due and
payable on August 1, 2004, under the terms of the HUD Section 108 Loan Agreement and the
City shall also withdraw from such Funded Interest Reserve Fund an amount sufficient to bring
current all interest payments due from the Borrower as of August 1, 2004. The City shall use
and apply the remaining balance of the Funded Interest Reserve Fund, after the application of the
sums described in the preceding sentence to pay principal and accrued interest to the City due as
of August 1, 2004, to pay current accrued interest from and after August 1, 2004 to HUD under
the HUD Section 108 Loan Contract, and the City shall transfer all interest payments received
from the Borrower under subsection (b), below, commencing with the first such current interest
payment on November 1, 2004, to the Funded Interest Reserve Fund, and the City shall use any
remaining balance in the Funded Interest Reserve Fund to pay the outstanding principal balance
of the Section 108 Loan upon its maturity, or sooner upon prepayment in full of the Section 108
Loan by the Borrower.
(b) Notwithstanding any other provision of this Agreement or the Section 108 loan
Agreement to the contrary, commencing on November 1, 2004, the Borrower shall pay to the
City current interest, which accrues on the outstanding balance of the Section 108 Loan on and
after August 1, 2004 or a quarterly basis. Such quarterly payments of current accrued interest by
the Borrower to the City shall be due November 1, February 1, June 1 and on August 1, each
year until the earlier date of when the interest rate under the Section 108 Loan is converted to a
fixed rate of interest or the Section 108 Loan is paid in full.
Section 16. The City hereby acknowledges that the Borrower has substituted one of its
former managing members, J. Kevin Brunk, for another managing member, CJJ, Inc., a
California Corporation. Subject to the delivery by the Borrower to the Agency of an approving
legal opinion by the attorneys for the Borrower addressed to the City and to HUD in a form
reasonably satisfactory to the Agency Counsel stating that the substitution of such former
managing member for CJJ, Inc., has been duly authorized by the Borrower and that the
obligations of the Borrower as arise in favor of the City under the Agreement are in full force
and effect and are enforceable in accordance with their terms, the City hereby acknowledges its
acceptance of CJJ, Inc., a California Corporation as a managing member of the Borrower.
Section 17. This August 2004 Amendment shall take effect when it has been approved
and fully executed by the Borrower and the City and when each of the following conditions have
been satisfied:
(i) the City and the Secretary of the United States Department of Housing and Urban
Development have entered into an appropriate amendment to HUD Section 108
Loan No. B-94-MC-06-0539-A in a form satisfactory to the Mayor and the
Executive Director of the Economic Development Agency which provides that
the principal sums payable by the City to HUD under HUD Contract Loan No. B-
94-MC-06-0539-A, shall be due and payable by the City to HUD in the amounts
and on the dates as follows:
Prineiaal Due Date Commitment Amount
August 1, 2001 $ -0-
August 1, 2002 -0-
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2004-268
August 1, 2003
-0-
August 1, 2004
100,000.00
August 1, 2005
-0-
August 1, 2006
-0-
August 1, 2007
100,000.00
August 1, 2008
100,000.00
August 1, 2009
100,000.00
August 1, 2010
100,000.00
August 1, 2011
100,000.00
August 1, 2012
100,000.00
August 1, 2013
100,000.00
August 1, 2014
100,000.00
August 1, 2015
100,000.00
August 1, 2016
100,000.00
August 1, 2017
100,000.00
August 1, 2018
100,000.00
August 1, 2019
100,000.00
August 1, 2020
440,000.00
Maximum Commitment Amount $1,840,000.00
(ii) the Borrower and the Redevelopment Agency of the City of San Bernardino have
entered into an appropriate amendment to that certain agreement entitled "2000
Owner Participation and EDI Loan Agreement' dated as of September 18, 2000,
as amended (the "OPA"), which provides that: (A) the maturity date of the EDI
Loan Promissory Note shall be modified to a new date of August 1, 2006 and (B)
due date for the payment of the sum of Two Hundred Thousand Dollars
($200,000) by the Borrower to the Agency under Section 5 of the OPA shall be
modified to a new date of August 1, 2006 provided however that in the case of
both subparagraphs (A) and (B), such obligation of the Borrower to the Agency
shall be payable sooner upon: (i) the sale of the 303 Third Street Parcel by the
Borrower to San Bernardino County under the terms of the County Purchase
Contract or; (ii) the occurrence of a default under the EDI Loan Promissory Note;
(iii) Wells Fargo Bank National Association, as custodian for HUD under the terms of
that certain "Financial and Document Custodian and Trustee Agreement' dated
June 6, 2001 by and between Wells Fargo National Association and the City, shall
have accepted the receipt of the collateral assignment of this August 2004
Amendment by the City of this Amendment for the benefit of HUD;
(iv) the Borrower shall have delivered to the City the approving legal opinion of its
attorney as described in Section 16; and
(v) the Executive Director of the Economic Development Agency shall have issued a
loan forbearance letter in form approved by Special Legal Counsel to the City
which acknowledge to Borrower that so long as no Event of Default exists under
the Agreement as hereby amended (and further provided that no other event of
prepayment has occurred under any of the Section 108 Loan Collateral), that the
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next installment of principal due the City under the terms of the Borrower Section
108 Promissory Note shall be on the new date of August 1, 2007.
Section 18. Except as modified by this August 2004 Amendment all other provisions
of the Agreement and Section 108 Loan Collateral remain in full force and effect and all of the
representation, warranties and covenants of the Borrower under the Agreement and the Section
108 Loan Collateral remain true and correct as of the date of execution of this August 2004
Amendment by the Borrower.
Section 19. This August 2004 Amendment may be executed by the parties in
counterparts and when fully executed, each counterpart shall be deemed to be one original
instrument.
4813-3284-6080.2
(signature page to follow)
12
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2004-268
THIS AUGUST 2004 AMENDMENT is executed by the authorized officers and
members of the parties whose signatures appear below.
CITY
City of San *mardino, a municipal corporation
Date: fl O By:
avor
APPROVED AS TO FORM
Legal Cou el
By:
Ex�� rtive Director of 3e Economic
Ilevelopment Agency
TIT
303, L.L.C., a California limited liability company
Date: a By:Qi%
Martin A. Matich, Manager
-and-
By: CJJ, Inc., a California CorpAration, Manager
APPROVED AS TO FORM
Brunk, its President
Attorney for Borrower
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