HomeMy WebLinkAbout2006-088
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RESOLUTION NO. 2006-88
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BERNARDINO
AUTHORIZING THE EXECUTION AND DELIVERY OF THE FACILITY LEASE
AND THE SITE LEASE BY AND BETWEEN THE CITY OF SAN BERNARDINO
AND THE CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION
THEREWITH
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN
BERNARDINO, AS FOLLOWS:
Section 1. The Mayor is authorized and directed to execute and deliver the Facility Lease,
dated as of April 15, 2006 (the "Facility Lease") and the Site Lease dated as of April 15, 2006
(the "Site Lease") proposed to be entered into by the City of San Bernardino and the
California Infrastructure and Economic Development Bank. As executed and delivered, such
documents shall be in substantially the form presented at this meeting, with such minor
additions thereto or minor changes therein as the officers executing such document shall
require or approve, such approval to be conclusively evidenced by the execution and delivery
thereo f.
Section 2.The Mayor, City Manager, Director of Finance, and City Attorney are hereby each
authorized and directed, in the name and on behalf of the City of San Bernardino, to take any
and all steps and to execute and deliver any and all certificates, contracts and other documents
which they might deem necessary or appropriate in order to consummate the delivery of the
Facility Lease and the Site Lease and otherwise to effectuate the purposes of this resolution,
including the execution of a tax certificate, and such actions previously taken by the
employees of the Lessee are hereby ratified and confirmed.
Section 3.
adoption.
This resolution shall take effect from and after its passage, approval and
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2006-88
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BERNARDINO
AUTHORIZING THE EXECUTION AND DELIVERY OF THE FACILITY LEASE
AND THE SITE LEASE BY AND BETWEEN THE CITY OF SAN BERNARDINO
AND THE CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION
THEREWITH
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
. joint
and Common Council of the City of San Bernardino at aregular meeting thereof, held on
the 3rd day of April
, 2006, by the following vote, to wit:
Council Members: AYES
ESTRADA x
BAXTER x
MCGINNIS x
DERRY x
KELLEY x
JOHNSON x
MCCAMMACK x
NAYS
ABSTAIN
ABSENT
Q,~h~
'- \
Rachel G. C ark
City Clerk
The foregoing resolution is hereby approved this
2006.
)L
day of
April
Appro d as to form and legal content:
1. ?
James F. Penman
City Attorney
Recording Requested By
And When Recorded Mail To:
)
)
)
)
California Infrastructure and Economic )
Development Bank )
Attn: Credit Support Unit )
1001 I Street, 19th floor
Sacramento, CA 95814
)
(Space above for Recorder' s use)
This document is recorded for the benefit of the CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK and the recording is fee-exempt under section 27383 of
the California Government Code.
FACILITY LEASE
by and between the
California Infrastructure and Economic Development Bank
and the
The City of San Bernardino
relating to ten million dollars ($10,000,000)
Agreement No. CIEDB B05-064
Dated as of April 15, 2006
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ................... ............... ........... .......... ............ ...... ............. ........... 2
SECTION 1.0 I Definitions ..........................................................................................2
SECTION 1.02 Rules of Construction................................................ .........................6
ARTICLE II THE FACILITY.. ........ .... .............. ........ ..................... ........... ........................... 6
SECTION 2.01 Lease of the Facility ........................................................................... 6
SECTION 2.02 Quiet Enjoyment.................................................................................7
SECTION 2.03 Right of Entry and Inspection ............................................................ 7
SECTION 2.04 Prohibition Against Encumbrance or Sale ......................................... 7
SECTION 2.05 Liens........ ....... .... ............................... ....... ........ ......... ........... .............. 7
SECTION 2.06 Substitution or Removal of Facility ................................................... 8
SECTION 2.07 Construction, Acquisition and Installation of the Project;
Construction Contracts.. ........... ........................ ........ ..................... ..... 9
Project Account ..... ................ ...................... .......... ...... ....... ................ 9
Disbursement of Project Amount ..................................................... 10
Withholding of Project Amount ....................................................... II
SECTION 2.08
SECTION 2.09
SECTION 2.10
ARTICLE III TERM OF THE FACILITY LEASE ............................................................. II
SECTION 3.01 Commencement and Termination of the Facility Lease;
Vesting of Title................ ....... ............ .............. ........ ........... ...... ....... I I
ARTICLE IV USE OF PROCEEDS; TAX COVENANTS; CONTINUING
DISCLOSURE....... ....... ...... .... .......... ........ ....... .... ........... ................. .......... .... 12
SECTION 4.01 Use of Project Amount.....................................................................12
SECTION 4.02 Tax Covenant.................................................................................... 12
SECTION 4.03 Continuing Disclosure ...................................................................... 12
ARTICLE V RENTAL PAYMENTS .................................................................................13
SECTION 5.01 Rental Payments ............................................................................... 13
SECTION 5.02 Annual Budgets ................................................................................ 15
SECTION 5.03 Application of Rental Payments....................................................... 15
SECTION 5.04 Rental Abatement.............................................................................15
SECTION 5.05 Prepayment of Base Rental Payments .............................................. 16
SECTION 5.06 Obligation to Make Rental Payments............................................... 16
SECTION 5.07 Fair Rental Value.............................................................................. 17
ARTICLE VI MAINTENANCE; TAXES; INSURANCE AND OTHER CHARGES....... 17
SECTION 6.01 Maintenance of the Facility by the Lessee ....................................... 17
SECTION 6.02 Taxes, Other Governmental Charges and Utility Charges ............... 17
SECTION 6.03 Insurance...... ...... ................... ........................ .......... ............... ...... .... 18
SECTION 6.04 Advances ........................... ........ ............. .......... ......... .......... ......... .... 20
SECTION 6.05 Title Insurance .................................................................................. 2 I
TABLE OF CONTENTS
(continued)
Page
ARTICLE VII DAMAGE, DESTRUCTION, TITLE DEFECT AND
CONDEMNATION ....................................................................................... 21
SECTION 7.01 Damage, Destruction, Title Defect and Condemnation; Use of
Net Proceeds............................... ............ ........... ............................... 21
ARTICLE VIII DISCLAIMER OF WARRANTIES; VENDOR'S WARRANTIES;
USE OF THE FACILITy.............................................................................. 22
SECTION 8.01 Disclaimer of Warranties....................................................... ...........22
SECTION 8.02 Use of the Facility ............................................................................ 23
ARTICLE IX ASSIGNMENT AND INDEMNIFICATION ............................................... 23
SECTION 9.01 Assignment by Lessor ...................................................................... 23
SECTION 9.02 Assignment by Lessee ...................................................................... 23
SECTION 9.03 Indemnification................... ..................................... ......... ................ 23
ARTICLE X DEFAULT ..................................................................................................... 24
SECTION 10.01 Events of Default...................................................... ........................24
ARTICLE XI REPRESENTATIONS AND WARRANTIES OF THE LESSEE................ 27
SECTION 11.01 Organization; Authority; Application Correct ................................. 27
SECTION 11.02 Agreement Valid and Binding; Approval by Lessee........................ 27
SECTION 11.03 No Conflict in Execution of Facility Lease...................................... 27
SECTION 11.04 No Litigation .................................................................................... 27
SECTION 11.05 No Breach or Default........................................................................ 27
SECTION 11.06 No Consent, Approval or Permission Necessary ............................. 27
SECTION 11.07 Information Submitted to the Lessor................................................ 28
SECTION 11.08 Financial Statements of the Lessee .................................................. 28
SECTION 11.09 Licenses, Permits and Approvals for Operation of Facility and
the Project .............................. ............................ ......... ...................... 28
SECTION 11.10 Project Completion........................................................................... 28
ARTICLE XII AFFIRMATIVE COVENANTS OF THE LESSEE ..................................... 29
SECTION 12.01 Budgets and Punctual Payment ........................................................ 29
SECTION 12.02 Books and Accounts; Financial Statements ..................................... 29
SECTION 12.03 Notification to the Lessor ................................................................. 30
SECTION 12.04 Protection of Security and Rights..................................................... 30
SECTION 12.05 Management of Properties................................................................ 30
SECTION 12.06 Reserved ...........................................................................................30
SECTION 12.07 Further Assurances ........................................................................... 30
SECTION 12.08 Project Documentation ..................................................................... 30
SECTION 12.09 Lessee's General Responsibility ...................................................... 31
SECTION 12.10 Lessee's Assurances and Commitments........................................... 31
SECTION 12.11 Facility and Project Access .............................................................. 32
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TABLE OF CONTENTS
(continued)
Page
SECTION 12.12
SECTION 12.13
SECTION 12.14
Performance and Payment Bonds..................................................... 32
Notice of Event of Default ............................................................... 32
Compliance with State Contract Requirements................................ 32
ARTICLE XIII NEGATIVE COVENANTS OF THE LESSEE ............................................ 32
SECTION 13.0 I Nondiscrimination....................... ................ ............ ......................... 32
ARTICLE XlV MISCELLANEOUS ......................................................................................33
SECTION 14.0 I Notices.................................................... ........... ............................... 33
SECTION 14.02 Contact Persons ................................................................................34
SECTION 14.03 Binding Effect .................................................................................. 34
SECTION 14.04 Third Party Beneficiaries.................................................................. 35
SECTION 14.05 Net Lease ..........................................................................................35
SECTION 14.06 Amendments to Facility Lease ......................................................... 35
SECTION 14.07 Reserved. ..........................................................................................35
SECTION 14.08 Partial Invalidity............................................................................... 35
SECTION 14.09 California Law; Venue ..................................................................... 35
SECTION 14.10 Section Headings.............................................................................. 35
SECTION 14.11 No Merger ........................................................................................ 35
EXHIBIT A - Description of the Project ..................................................................................A-I
EXHIBIT B - Description of the Site........................................................................................ B-1
EXHIBIT C _ Form of Resolution of Lessee ............................................................................C-I
EXHIBIT C-I Form of Certificate ofResolution......................................................................C-3
EXHIBIT D - Project Costs ......................................................................................................D-I
EXHIBIT E - Conditions Precedent to Disbursement .............................................................. E-I
EXHIBIT F - Base Rental Payments......................................................................................... F-I
EXHIBIT G - State Contract Requirements..............................................................................G-I
EXHIBIT H - Tax Certificate............................................................... ..................................... H-I
EXHIBIT I - Certificate of Chief Financial Officer of the City of San Bernardino
(the "Lessee") .......................................................................... ......... ..... ............... I-I
EXHIBIT J -Reserved ................................................................................................................ J-I
EXHIBIT K - Form of Certificate of the City Manager ...........................................................K-I
EXHIBIT L - Legal Opinion..................................................................................................... L-I
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FACILITY LEASE
This FACILITY LEASE (the "Facility Lease") is executed and entered into as of
the Effective Date, by and between the CALIFORNIA INFRASTRUCTURE AND ECONOMIC
DEVELOPMENT BANK (the "Lessor"), duly organized and existing pursuant to the Bergeson-
Peace Infrastructure and Economic Development Bank Act, constituting Division I of Title 6.7
of the California Government Code (commencing at section 63000 thereof) as now in effect and
as it may from time to time hereafter be amended (the "Act") and the City of San Bernardino, a
charter city and municipal corporation duly organized and existing under the laws ofthe State of
California (the "Lessee").
WITNES SETH:
WHEREAS, the Lessee and the Lessor desire to finance the construction,
acquisition and installation of the Pavement Reconstruction and Rehabilitation Project, as
described in Exhibit A attached hereto (the "Project");
WHEREAS, the Lessee owns the real property situated at 1201 9th Street, 2121
Medical Center Drive, 2641 North E Street, 1640 Kendall Street, 1290 North Del Rosa Avenue,
282 West 4th Street, 3398 East Highland Avenue and 450 Vanderbilt Way all in San Bernardino,
CA. on which property is located the Fire Stations #2, #3, #4, #5, #6, #7, #8, and #11, described
in Exhibit B attached thereto (collectively, the "Facility");
WHEREAS, the Lessee has leased the Facility to the Lessor pursuant to the Site
Lease, dated as of the Effective Date, between the Lessee, as lessor and the Lessor, as lessee;
WHEREAS, the Lessee has determined that it is in the public interest,
convenience and welfare and for the common benefit of the inhabitants of the Lessee that the
Lessee finance the Project through the delivery of this Facility Lease (as defined in section 1.01);
WHEREAS, the Lessee is authorized by law to lease the Facility and the Facility
is necessary and proper for public purposes;
WHEREAS, the Lessor has issued tax-exempt bonds ("Proceeds Bonds" as
defined in Section 1.01), the proceeds of which will be used to fund the Project;
WHEREAS, the Lessor may pledge its rights under this Facility Lease to secure
bonds ("Secured Bonds" as defined in Section 1.01);
WHEREAS, Lessee acknowledges that the issuance of both the Secured Bonds
and Proceeds Bonds impacts its rights and obligations as described herein, and Lessee hereby
agrees to adhere to the requirements contained in this Facility Lease necessary in order to
maintain the tax-exempt status of the Proceeds Bonds; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Facility Lease to exist, have happened and have been performed in a regular
and due time, form and manner as required by law, the parties hereto are now duly authorized to
execute and enter into this Facility Lease;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE
AS FOLLOWS:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms
defined in this Section shaU for aU purposes hereof and of any amendment hereof have the
meanings defined herein, the foUowing definitions to be equaUy applicable to both the singular
and plural forms of any of the terms defined herein.
Act
"Act" means the Bergeson-Peace Infrastructure and Economic Development Bank Act,
constituting Division 1 of Title 6.7 of the California Government Code (commencing at section
63000 thereof) as now in effect and as it may from time to time hereafter be amended.
Additional Rental Payments
"Additional Rental Payments" means aU amounts payable by the Lessee pursuant to
Section 5.01(b) hereof.
Base Rental Payments
"Base Rental Payments" means aU amounts payable by the Lessee as Base Rental
pursuant to Section 5.01(a) hereof.
Business Day
"Business Day" means any day, Monday through Friday, which is not a legal holiday of
the State or the Trustee.
Certificate of the Lessee
"Certificate of the Lessee" means a request or certificate, in writing, signed by a duly
authorized representative of the Lessee.
Code
"Code" means the Internal Revenue Code of 1986, as amended, and the regulations of the
United States Department of the Treasury issued thereunder, and in this regard reference to any
particular section of the Code shaU include reference to aU successors to such section of the
Code.
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Effective Date
"Effective Date" means April IS, 2006, the date on which this Facility Lease becomes
effective and binding upon the Lessee and the Lessor.
Event of Default
"Event of Default" means any of the events described in Section 10.01.
Expiry Date
"Expiry Date" means April 14, 2016, except as extended or sooner terminated pursuant to
Section 3.01 hereof.
Facility
"Facility" means the Site and any and all improvements thereon, as described in
Exhibit B hereto (as the same may be changed from time to time by Removal or Substitution as
provided in Section 2.06).
Facility Lease
"Facility Lease" means this facility lease, dated as of the Effective Date, by and between
the Lessor and the Lessee, as originally executed and as it may from time to time be amended or
supplemented in accordance with the terms hereof.
Fiscal Year
"Fiscal Year" means any twelve month period extending from July I in one calendar year
to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve month
period selected and designated by the Lessee as its official fiscal year period.
Independent Accountant
"Independent Accountant" means any certified public accountant or firm of certified
public accountants duly licensed or registered or entitled to practice and practicing as such under
the laws of the State, appointed by the Lessee who, or each of whom:
(I) is in fact independent and not under the control ofthe Lessee or the Lessor;
(2) does not have any substantial interest, direct or indirect, in the Lessee or the
Lessor; and
(3) is not connected with the Lessee or the Lessor as an officer or employee of the
Lessee or the Lessor, but who may be regularly retained to make reports to the Lessee or the
Lessor.
Insurance Consultant
"Insurance Consultant" means an individual or firm either retained by the Lessee as an
independent insurance consultant or an employee of the Lessee, experienced in the field of risk
management.
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Lease Year
"Lease Year" means the period from each July I to and including the following June 30,
during the term hereof; except that the initial Lease Year means the period from the Effective
Date to and including June 30, 2006 and the last Lease Year shall be that period from July I to
and including the day that this Facility Lease expires or is earlier terminated as provided herein.
Lessee
"Lessee" means the City of San Bernardino, a charter city and municipal corporation
duly organized and existing under the laws of the State.
Lessor
"Lessor" means the California Infrastructure and Economic Development Bank, and its
successors and assignees.
Net Proceeds
"Net Proceeds" means, collectively, the net proceeds of any insurance or condemnation
award resulting from any damage or destruction of any portion of the Facility payable in
accordance with Section 7.01.
Operating Budget
"Operating Budget" means the annual approved budget of the Lessee which includes
Base Rental Payments and Additional Rental Payments due during the year.
Opinion of Counsel
"Opinion of Counsel" means a written opinion of counsel of recognized national standing
in the field of law relating to municipal bonds, appointed by the Lessee or the Lessor and in all
cases paid for by the Lessee and acceptable to the Lessor.
Owner
"Owner" means the registered owner of any outstanding Proceeds Bond.
Permitted Encumbrances
"Permitted Encumbrances" means, as of any particular time:
(I) liens for general ad valorem taxes and assessments, if any, not then
delinquent, or which the Lessee may, pursuant to Section 6.02, permit to remain unpaid;
(2) this Facility Lease, as it may be amended from time to time;
(3) any right or claim of any mechanic, laborer, materialman, supplier or vendor
that has not been filed or perfected in the manner prescribed by law;
(4) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of a non-monetary nature, which exist of
record as of the Effective Date and are acceptable to the Lessor; and
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(5) easements, rights of way, mineral rights, drilling rights and other rights,
reservations, covenants, conditions or restrictions, all of a non-monetary nature, established
following the date ofrecordation of this Facility Lease and to which the Lessor and the Lessee
consent in writing.
Proceeds Bonds
"Proceeds Bonds" means bonds issued by the Lessor the proceeds of which will be used,
in whole or part, to fund the Project.
Proiect
"Project" means the public development facility to be constructed by the Lessor for the
Lessee pursuant to this Facility Lease, authorized by Government Code section 63010(q) and the
Act and more particularly described in Exhibit A.
Proiect Account
"Project Account" means the account or subaccount by that name established by the
Lessor pursuant to Section 2.08.
Proiect Amount
"Project Amount" means ten million dollars ($10,000,000).
Proiect Costs
"Project Costs" means the costs of construction, acquisition and installation of the
Project, as approved by the Lessor and set forth in Exhibit D.
Removal
"Removal" means the release of all or a portion of the Facility from the leasehold hereof
as provided in Section 2.06.
Report
"Report" means a document in writing signed by an Independent Consultant or an
Independent Accountant, and including:
(I) a statement that the person or firm making or giving such Report has read the
pertinent provisions ofthis Facility Lease to which such Report relates;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the Report is based; and
(3) a statement that, in the opinion of such person or firm, sufficient examination
or investigation was made as is necessary to enable said consultant to express an informed
opinion with respect to the subject matter referred to in the Report.
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Secured Bonds
"Secured Bonds" means bonds of one or more series issued by the Lessor to which
certain rights of the Lessor under this Facility Lease may be from time to time pledged directly
or indirectly.
Site
"Site" means the real property described in Exhibit B attached hereto.
Site Lease
"Site Lease" means the site lease, dated as of the Effective Date, by and between the
Lessee, as lessor and the Lessor, as lessee, of the Site as originally executed and as it may from
time to time be amended or supplemented.
State
"State" means the State of California.
Substitution
"Substitution" means the removal, and the lease of substituted real property and
improvements hereunder as provided in Section 2.06.
Tax Certificate
'Tax Certificate" means the tax certificate as set forth in Exhibit H executed and
delivered by the Lessee as of the Effective Date setting forth certain conditions, covenants,
expectations and elections of the Lessee with respect to the Facility Lease in accordance with the
Code.
Trustee
"Trustee" means the trustee acting in its capacity as such in connection with the Proceeds
Bonds and Secured Bonds, or any successor or assignee as therein provided, including the
Lessor.
SECTION 1.02 Rules of Construction. The singular form of any word used herein,
including the terms defined in this Section 1.0 I, shall include the plural, and vice versa, unless
the context otherwise requires. The use herein of a pronoun of any gender shall include
correlative words of the other genders. All references herein to "Sections" and other
subdivisions hereof are to the corresponding Sections or subdivisions of this Facility Lease as
originally executed; and the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Facility Lease as a whole and not to any particular Section or subdivision
hereof.
ARTICLE II
THE FACILITY
SECTION 2.01. Lease of the Facilitv. The Lessor hereby leases to the Lessee, and
the Lessee hereby rents and hires from the Lessor, the Facility on the conditions and terms
herein. The Lessee hereby agrees and covenants that during the term hereof, except as
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hereinafter provided, it will use the Facility for public purposes so as to afford the public the
benefits contemplated hereby and so as to permit the Lessor to carry out its agreements and
covenants contained herein, and the Lessee hereby further agrees and covenants that during the
term hereof that it will not abandon or vacate the Facility.
SECTION 2.02. Ouiet Eniovrnent. The parties hereto mutually covenant that the
Lessee, so long as it observes and performs the agreements, conditions, covenants and terms
required to be observed or performed by it contained herein and is not in default hereunder, shall
at all times during the term hereof peaceably and quietly have, hold and enjoy the Facility
without suit, trouble or hindrance from the Lessor.
SECTION 2.03. Right of Entrv and Inspection. The Lessor shall have the right to
enter the Facility and the Project and inspect the Facility and the Project during reasonable
business hours (and in emergencies at all times) for any purpose connected with the Lessor's
rights or obligations hereunder and for all other lawful purposes.
SECTION 2.04. Prohibition Against Encumbrance or Sale. The Lessee and the
Lessor will not create or suffer to be created any mortgage, pledge, lien, charge or encumbrance
upon the Facility except Permitted Encumbrances. The Lessee and the Lessor will not sell or
otherwise dispose of the Facility or any property essential to the proper operation of the Facility
except as otherwise provided herein. Notwithstanding anything to the contrary herein contained,
the Lessee may assign, transfer or sublease any and all of the Facility or its other rights
hereunder, provided that (a) the rights of any assignee, transferee or sublessee shall be
subordinate to all rights of the Lessor hereunder, (b) no such assignment, transfer or sublease
shall relieve the Lessee of any of its obligations hereunder, (c) the assignment, transfer or
sublease shall not result in a breach of any covenant of the Lessee contained in any other Section
hereof, or in the Tax Certificate, (d) any such assignment, transfer or sublease shall by its terms
expressly provide that the fair rental value ofthe Facility for all purposes shall be first allocated
to this Facility Lease, as the same may be amended from time to time before or after any such
assignment, transfer or sublease and (e) no such assignment, transfer or sublease shall confer
upon the parties thereto any remedy which allows reentry upon the Facility unless concurrently
with granting such remedy the same shall be also granted hereunder by an amendment to this
Facility Lease which shall in all instances be prior to and superior to any such assignment,
transfer or sublease.
SECTION 2.05 Liens. In the event the Lessee shall at any time during the term
hereof cause any improvements to the Facility to be constructed or materials to be supplied in or
upon or attached to the Facility, the Lessee shall payor cause to be paid when due all sums of
money that may become due or purporting to be due for any labor, services, materials, supplies
or equipment furnished or alleged to have been furnished to or for the Lessee in, upon, about or
relating to the Facility and shall keep the Facility free of any and all liens against the Facility or
the Lessor's interest therein. In the event any such lien attaches to or is filed against the Facility
or the Lessor's interest therein, and the enforcement thereof is not stayed or ifso stayed such
stay thereafter expires, the Lessee shall cause each such lien to be fully discharged and released
at the time the performance of any obligation secured by any such lien matures or becomes due.
If any such lien shall be reduced to final judgment and such judgment or any process as may be
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issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter
expires, the Lessee shall forthwith pay and discharge or cause to be paid and discharged such
judgment.
SECTION 2.06
Substitution or Removal of Facilitv.
(a) The Lessee and the Lessor may amend this Facility Lease to either
substitute alternative real property and/or improvements (the "Substituted Property") for the
property comprising the Facility and/or to remove real property (including undivided interests
therein) or improvements from the definition of Facility ("Removal"), in each case upon
compliance with all of the conditions set forth in subsection (b). After a Substitution or
Removal, the part of the Facility for which the Substitution or Removal has been effected shall
be released from the leasehold hereunder.
(b) No Substitution or Removal shall take place hereunder until the Lessee
delivers to the Lessor the following:
(I) A Certificate of the Lessee containing a description of all or part of
the Facility to be released and, in the event ofa Substitution, a description of the Substituted
Property constituting the Substitution;
(2) A Certificate of the Lessee stating that the annual fair rental value
of the Facility after a Substitution or Removal, in each year during the remaining term of this
Facility Lease, is at least equal to the maximum annual Base Rental Payments and Additional
Rental Payments attributable to the Facility during the remaining term of this Facility Lease.
Annual fair rental value shall be determined by the Lessee on the basis of an appraisal of the
Facility after said Substitution or Removal conducted by a member of the American Institute of
Real Estate Appraisers or the American Society of Appraisers designated by the Lessee (or on
such other basis and with such other evidence of annual fair rental value as may be approved by
the Lessor in its discretion);
(3) An opinion oflegal counsel to the effect that the Facility Lease and
Site Lease amendment containing the Substitution or Removal have been duly authorized,
executed and delivered by the Lessee and constitute the valid and binding obligations of the
Lessee enforceable in accordance with their terms;
(4) In the event of a Substitution, a policy of title insurance covering
the Substituted Property in an amount at least equal to the proportionate share of the Base Rental
Payments and Additional Rental Payments represented by the Substitution, insuring the Lessor's
interest in the Substituted Property (except any portion thereof which is not real property)
subject to Permitted Encumbrances;
(5) In the event ofa Substitution, an opinion of the attorney of the
Lessee or endorsement by a title company acceptable to the Lessor to the effect that the
exceptions, if any, contained in the title insurance policy referred to in (4) above do not interfere
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with the beneficial use and occupancy ofthe Substituted Property described in such policy by the
Lessee for the purposes ofleasing or using the Substituted Property;
(6) An Opinion of Counsel nationally recognized as having expertise
in the exemption of interest from gross income under the Code that the Substitution or Removal
does not cause the interest with respect to the Proceeds Bonds to be includable in gross income
of the Owners thereof for federal income tax purposes;
(7) A Certificate of the Lessee stating that the Lessee has complied
with the covenants contained in subsections (I) and (2) of Section 6.03(a) hereof with respect to
the Substituted Property; and
(8) Evidence that the Lessee has delivered to the Lessor copies of the
certificates and appraisal described in subsections (I) and (2) above.
SECTION 2.07
Construction Contracts.
Construction. Acquisition and Installation of the Proiect;
(a) The Lessee hereby agrees to cause the Project to be constructed, acquired
and installed as agent of the Lessor. The Lessee shall enter into contracts and provide for, as
agent of the Lessor, the complete construction, acquisition and installation of the Project. The
Lessee hereby agrees that it will cause the construction, acquisition and installation of the Project
to be diligently performed in accordance with the terms and conditions of this Facility Lease.
(b) All construction contracts shall be let to the lowest responsible bidder at a
fixed price subject to increase only for allowable extra work, change orders approved by Lessee,
and damages or delays authorized by the laws of the State. Lessee shall not approve any change
orders resulting in an increase in Project Costs without having funds committed for the increased
Project Costs.
SECTION 2.08
Proiect Account.
(a) The Lessor hereby agrees to establish a Project Account for the benefit of
the Lessee, and the Lessee, pursuant to resolution previously adopted in form substantially
similar to Exhibit C, hereby agrees to utilize the Project Account, as the agent of the Lessor, to
construct, acquire and install the Project, subject to the covenants, agreements, provisions and
conditions herein.
(I) Moneys in the Project Account shall be disbursed solely upon
receipt by the CIEDB of invoices documenting, to the satisfaction of the CIEDB, that the Lessee
has incurred costs that constitute both reasonable and necessary components of the Project and
which are consistent with the cost categories, amounts and requirements described in Exhibit D
hereto; provided, however, that no disbursements shall be approved until and unless the Lessee
has complied with the conditions precedent to disbursement set forth in Exhibit E hereto.
(b)
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(2) Except for preliminary expenditures, no expenditure shan be
reimbursed ifpaid prior to September 27,2005. "Preliminary expenditures," as used in this
section, means architectural, engineering, surveying, soil and environmental testing and reports,
studies (including environmental impact, rate and feasibility studies), CEQA reports, permits and
similar costs incident to commencement of construction of the Project. which are paid prior to
September 27, 2005. Reimbursement of preliminary expenditures incurred prior to September
27,2005, are limited to twenty percent (20%) of the Project Amount.
(3) Preliminary expenditures do not include land acquisition, site
preparation or similar costs incident to the commencement of construction; such costs may be
reimbursed only ifpaid on or after September 27, 2005 and are not subject to a limitation.
(c) The Lessor shan encumber an amount equal to the Project Amount in the
Project Account and make such amounts available to the Lessee as provided herein. Funds in
the Project Account paid to Lessee ("Disbursed Funds") plus funds not yet paid to Lessee
("Undisbursed Funds") shan together equal the Project Amount.
(d) Lessee must both: (i) begin Project construction no later than twelve
months after September 27,2005 , and (ii) submit invoices to the Lessor for the entire Project
Amount no later than November 14, 2008. If the Lessee fails to meet either of these conditions,
the Lessor may withhold any and an undisbursed funds in the Project Account pursuant to
Section 2.10 herein.
(e) Notwithstanding any contrary provisions of this Facility Lease or any
other documents, under no circumstances will the Lessor be obligated to make disbursements in
excess of the lesser of (i) the actual Project Costs incurred in connection with the completion of
the Project or (ii) ten million donars ($10,000,000).
(I) The Lessee agrees to pay any and an costs connected with the Project,
including, without limitation, any and an Project Costs as defined in the Act exceeding the
Project Amount, and the Lessee shan not be relieved of its obligation even if the Lessor reduces
the Project Amount pursuant to any provision hereunder.
SECTION 2.09 Disbursement of Proiect Amount. Upon receipt of a written
request for disbursement, the Lessor will disburse moneys in the Project Account to the Lessee
no more than once a month, in amounts of at least five thousand dollars ($5,000) and only after
specific compliance with an Exhibit E conditions precedent and only after the Lessee presents
evidence that a Project Cost has been incurred. An requests for payment shan be accompanied
by information and documentation as may be required by the Lessor to determine the amount of
Project funds to be disbursed. If Lessee is authorized to bill for the cost of Lessee's employees
pursuant to Exhibit D, the disbursement request shall include documentation, to the satisfaction
of the Lessor, that costs incurred are directly for the Project, are not billed to other sources, and
are bined at hourly rates not to exceed Lessee's actual costs of salary and benefits. In addition,
an requests for payment shan be accompanied by a certification by the Lessee that the Project
funds so requested are for eligible Project Costs as defined in the Act and this Facility Lease; are
incurred in the amounts and for the purposes represented; and that the work or materials for
10
which payment has been requested are satisfactory. The Lessor will provide the Lessee with a
description of the documentation required for payment. Further, not more than ninety percent
(90%) of each invoice payable from the Project Account designated for construction shall be
disbursed until the Lessor receives a recorded notice of completion for the Project or other
evidence satisfactory to the Lessor; and the Lessee has met all conditions precedent to final
disbursement set out in Exhibit E; provided that if the Lessee demonstrates to the satisfaction of
the Lessor that the Lessee is obliged by law to make payments to certain construction contractors
of one hundred percent (100%) of invoiced amounts or to establish a retention fund for final
payment to certain contractors, the Lessor shall disburse Project funds in the amount required by
law. Each disbursement request shall specify one or more of the following for costs included in
the disbursement request:
(I) Lessee previously paid the costs and is requesting reimbursement;
(2) Lessee will pay the costs directly upon receipt of funds from the
Lessor; or
(3) Lessor is requested to pay the disbursement directly to the party
owed the funds instead of Lessee.
SECTION 2.1 0
Withholding ofProiect Amount
(a) The Lessor may withhold all or any portion of the Project Amount in the
event that:
(1) The Lessee has substantially violated any of the terms, provisions,
conditions or commitments of this Facility Lease, or if an Event of Default has occurred; or
(2) The Lessee is unable to demonstrate, to the satisfaction of the Lessor
the ability to complete the Project or to maintain adequate and timely progress toward completion
thereof.
(b) In the event that any portion of the Project Amount is withheld from the
Lessee, the Lessor shall notify the Lessee of the reasons and advise the Lessee that the Lessee
has thirty (30) days in which to remedy the failure or violation.
(c) If any portion of the Project Amount is withheld pursuant to this section,
the Lessee remains obligated to repay the entire Project Amount but to the extent applicable, the
Lessee may request that the withheld amount be applied as a prepayment pursuant to Section
5.05.
ARTICLE III
TERM OF THE FACILITY LEASE
SECTION 3.01.
Commencement and Termination of the Facility Lease: Vesting of
Title.
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(a) The term of this Facility Lease shall commence on the Effective Date, and
shall end on the Expiry Date, unless the Expiry Date is extended or is sooner terminated as
hereinafter provided. If on the Expiry Date the rental payable hereunder shall not be fully paid,
or if the rental payable hereunder shall have been abated at any time and for any reason, then the
term of this Facility Lease shall be extended until ten days after the rental payable hereunder
shall be fully paid, except that the term of this Facility Lease shall in no event be extended
beyond April 14, 2021, the maximum expiry date. If prior to the Expiry Date, the rental payable
hereunder shall be fully paid in accordance with the terms of the Facility Lease, the term of this
Facility Lease shall end ten days thereafter or ten days after written notice by the Lessor to the
Lessee to the effect that the rental payable hereunder has been fully paid, whichever is earlier,
and this Facility Lease shall thereupon terminate.
(b) Upon the termination or expiration of this Facility Lease (other than as
provided in Article X), full and complete title to the Facility shall vest in the Lessee, free of any
leasehold or other encumbrance established hereunder. Upon such termination or expiration, the
Lessor shall execute such conveyances, deeds and other documents as may be necessary or
appropriate to evidence such vesting of record.
ARTICLE IV
USE OF PROCEEDS; TAX COVENANTS; CONTINUING DISCLOSURE
SECTION 4.01. Use ofProiect Amount. The parties hereto agree that the Lessor shall
apply funds from the Project Amount to the Project Account in the amount often million dollars
($10,000,000).
SECTION 4.02 Tax Covenant. The Lessee recognizes that the Project Amount
consists of proceeds of a tax-exempt financing program. In order to maintain the tax-exempt
status of the financing, the Lessee will not take any action, or fail to take any action, if such
action or failure to take such action would adversely affect the exclusion from gross income of
the interest on the Proceeds Bonds, and the Lessee specifically agrees to comply with all terms
and conditions contained in the Tax Certificate. The Lessee shall provide annual certification of
its compliance with the Tax Certificate.
The provisions of this Section 4.02 shall survive the discharge of the Lessor's obligations
hereunder and shall apply to any trustee or other successor or assignee described in Section 9.0 I.
SECTION 4.03 Continuing Disclosure. Upon the request of the Lessor, the Lessee
covenants to furnish certain financial and operating data pertaining to the Lessee that may be
required to either: (i) enable the Lessor to issue any Secured Bonds; or (ii) enable any
underwriter of any Secured Bonds to comply with Rule 15c2-12(b)(5) of the Securities and
Exchange Commission.
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ARTICLE V
RENTAL PAYMENTS
SECTION 5.0 I. Rental Pavments. The Lessee agrees to pay to the Lessor, its
successors or assignees, without deduction or offset of any kind, as rental for the use and
occupancy of the Facility, the following amounts at the following times:
(a) Base Rental. The Lessee shall pay to the Lessor rental hereunder as Base
Rental Payments with respect to the Facility at the times and in the amounts set forth in the Base
Rental Payment schedule attached hereto as Exhibit F and made a part hereof.
(I) The Lessee shall deposit with the Lessor not later than each
February I and August I, commencing August 1,2006, the Base Rental Payments due in the
then current fiscal year (as set forth in Exhibit F) and the same shall be held by the Lessor as
security for the Base Rental Payments due on such dates.
(2) Base Rental Payments shall consist of both an interest component
and a principal component based upon the Proj ect Amount, but Lessee shall receive a credit
against any Base Rental Payment due and payable hereunder for the actual interest earned by the
Lessor on the undisbursed funds in the Project Amount or two and thirty-seven hundredths
percent (2.37%), whichever is lower. The Lessee may choose to prepay the Base Rental
Payments pursuant to Section 5.05.
(b) Additional Rental Pavrnents. The Lessee shall pay as Additional Rental
Payments as rental hereunder in addition to the Base Rental Payments, to the Lessor as
hereinafter provided:
(I) a payment of an annual fee due with the principal payment each year
during the term ofthis Facility Lease in an amount equal to three-tenths of one percent (.3%) ofthe
outstanding principal component of the remaining Base Rental Payments as of the first day of the
month prior to the month in which the principal payment is due as set forth in Exhibit F; and
(2) amounts in each year as shall be required by the Lessor for the
payment of extraordinary expenses of the Lessor in connection with an Event of Default, the
enforcement ofthis Facility Lease or any amendments thereto requested by the Lessee, including all
expenses, fees of accountants, trustees, attorneys, litigation costs, insurance premiums, taxes,
assessments (if any), and all other extraordinary costs of the Lessor. Extraordinary expenses and
extraordinary costs are those expenses and costs related to this Facility Lease in excess of ordinary
and customary expenses incurred as part ofthe annual fee pursuant to Section 5.01(b)(1). Such
additional payments shall be billed by the Lessor from time to time, together with a statement
certifying that the amount so bi\led has been paid by, or wi\l be paid by, the Lessor for one or more
of the items above described, or that such amount is then payable by the Lessor for such items.
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(3) Lessee shall deposit the amount required pursuant to (1) above with
the Lessor not later than August I of each year; if billed pursuant to (2) above, Lessee shall deposit
the amount billed within thirty (30) days after receipt of the bill by the Lessee. Any amount billed
and not deposited within thirty (30) days of billing or due date shall accrue interest at the lesser of
twelve percent (12%) per annum or the maximum rate permitted by law.
(4) The Lessor may issue bonds and may enter into leases to finance
facilities other than the Project. Any taxes levied against the Lessor with respect to real property
other than the Facility, or the fees of any trustee or paying agent under any resolution securing bonds
of the Lessor and any other expenses directly attributable to any facilities other than the Facility shall
not be included in the administrative costs of the Facility and shall not be paid from the Additional
Rental Payments payable hereunder. The Trustee may conclusively rely upon a written certificate of
the Lessor in making any determination that costs are payable as Additional Rental Payments
hereunder, and shall not be required to make any investigation as to whether or not the items so
requested to be paid are expenses of operation of the Facility.
(c) Consideration. Such payments of Base Rental Payments and Additional
Rental Payments for each Lease Year or portion thereof during the term ofthis Facility Lease shall
constitute the total rental for such Lease Year or portion thereof and shall be paid or payable by the
Lessee for and in consideration for the right of the use and possession of, and the continued quiet use
and enjoyment of, the Facility. The parties hereto have agreed and determined that the annual fair
rental value of the Facility is not less than the maximum Base Rental Payments and Additional
Rental Payments payable hereunder in any year.
(d) Payment; Credit. Each installment of Base Rental Payments and
Additional Rental Payment payable hereunder shall be paid in lawful money of the United States
of America to or upon the order of the Lessor at such place as the Lessor shall designate. Any
such installment of rental accruing hereunder which shall not be paid when due shall remain due
and payable until received by the Lessor, except as provided in Section 5.04 hereof, and to the
extent permitted by law shall bear simple interest at the rate ofthe lesser of (i) twelve percent
(12%) per annum or (ii) the maximum rate authorized by law from the date when the same is due
hereunder until the same shall be paid. Notwithstanding any dispute between the Lessee and the
Lessor, the Lessee shall make all rental payments when due, without deduction or offset of any
kind, and shall not withhold any rental payments pending the final resolution of any such
dispute. In the event of a determination that the Lessee was not liable for said rental payments or
any portion thereof, said payments or excess of payments, as the case may be, shall, at the option
of the Lessee, be credited against subsequent rental payments due hereunder or be refunded at
the time of such determination.
(e) A one-time Facility Lease origination fee in the amount of eighty-five
thousand dollars ($85,000) shall be due and payable by the Lessee at the time of the first
disbursement and shall be payable from, the Project Account.
(f) All payments hereunder shall be payable by the Lessee in immediately
available funds which constitute lawful money of the United States of America. Such payments
14
shall be unsecured, and amounts for the payment thereof shall be paid to, or upon the order of,
the Lessor as set forth in this Article.
SECTION 5.02. Annual Budgets. The Lessee covenants to take such action as may
be necessary to include all Base Rental Payments and Additional Rental Payments due under this
Facility Lease in its Operating Budget for each fiscal year commencing after the Effective Date
and to make all necessary appropriations for such Base Rental Payments and Additional Rental
Payments. In addition, to the extent permitted by law, the Lessee covenants to take such action
as may be necessary to amend or supplement the budget appropriations for payments under this
Facility Lease at any time and from time to time during any Fiscal Year in the event that the
actual Base Rental Payments and Additional Rental Payments to be paid in any fiscal year
exceed the appropriations then contained in the Lessee's Operating Budget.
SECTION 5.03. Application of Rental Pavrnents. All Base Rental Payments
received shall be applied first to the interest component of Base Rental Payments, then to the
principal component of Base Rental Payments due hereunder (including any prepayment
premium components) and thereafter to all Additional Rental Payments due hereunder, but no
such application of any payments which are less than the total rental due and owing shall be
deemed a waiver of any default hereunder.
SECTION 5.04. Rental Abatement. Except to the extent of, (i) amounts received in
respect of use and occupancy insurance, and (ii) amounts, ifany, otherwise legally available to
the Lessee for payments due hereunder during any period in which, by reason of material
damage, destruction, title defect or condemnation there is substantial interference with the use
and possession by the Lessee of any portion of the Facility, rental payments due hereunder with
respect to the Facility shall be abated to the extent that the annual fair rental value of the portion
of the Facility in respect of which there is no substantial interference is less than the annual Base
Rental Payments and Additional Rental Payments, in which case rental payments shall be abated
only by an amount equal to the difference. In the event the Lessee shall assign, transfer or
sublease any or all of the Facility or other rights hereunder, as permitted by Section 2.04 hereof,
for purposes of determining the annual fair rental value available to pay Base Rental Payments
and Additional Rental Payments, annual fair rental value of the Facility shall first be allocated to
this Facility Lease as provided in subsection (d) of Section 2.04. Any abatement of rental
payments pursuant to this Section shall not be considered an Event of Default. The Lessee
waives the benefits of Civil Code sections 1932(2) and 1933(4) and any and all other rights to
terminate this Facility Lease by virtue of any such interference and this Facility Lease shall
continue in full force and effect. Such abatement shall continue for the period commencing with
the date of such damage, destruction, title defect or condemnation and ending with the
substantial completion of the work of repair or replacement of the portions of the Facility so
damaged, destroyed, defective or condemned.
In the event that rental is abated, in whole or in part, pursuant to this Section
5.04 due to damage, destruction, title defect or condemnation of any part of the Facility and the
Lessee is unable to repair, replace or rebuild the Facility from the Net Proceeds, if any, the
Lessee agrees to promptly apply for and to use its best efforts to obtain any appropriate State
and/or federal disaster relief in order to obtain funds to repair, replace or rebuild the Facility.
15
SECTION 5.05.
Prepayment of Base Rental Payments.
(a) Lessee may at any time request Lessor's approval for Lessee to prepay all
or a portion of the principal component of Base Rental Payments. A request for reduction in the
Project Amount is a request for a prepayment. The Lessor shall promptly respond to any such
request, and shall make every effort to accommodate the request, subject to the prepayment
restrictions of the Secured Bonds.
(b) Notwithstanding subsection (a), Lessee shall be authorized to prepay all or
a portion of the principal amount of Base Rental Payments, as follows: (i) If the prepayment date
is on or after ten years after the Effective Date but prior to eleven years after the Effective Date,
the prepayment amount shall be one hundred two percent (102%) of the outstanding principal
amount; (ii) if the prepayment date is on or after eleven years after the Effective Date, but prior
to twelve years after the Effective Date, the prepayment amount shall be one hundred one
percent (101 %) of the outstanding principal amount; and (iii) if the prepayment date is on or
after twelve years after the Effective Date, the prepayment amount shall be one hundred percent
(100%) of the outstanding principal amount, without premium. Lessee shall notifY the Lessor at
least sixty (60) days prior the date fixed for any prepayment made pursuant to this subsection
(b).
(c) Notwithstanding the prepayment provisions of this section, the Lessee
may, on any date, provide for the legal defeasance of the amount outstanding hereunder by
providing amounts sufficient to pay, in full, Base Rental Payments and Additional Payments
when due, until the dates set forth in subsection (b).
(d) The Lessee hereby covenants to notify the Lessor at least forty-five (45)
days before making any repayment or prepayment of this Facility Lease from the proceeds of
any tax-exempt debt incurred by the Lessee that is otherwise permitted by Section 5.05 herein.
(e) Extraordinary Prepayment. Subject to the provisions of Section 7.01, the
Lessee may prepay, from Net Proceeds, all or any portion of the components of Base Rental
Payments relating to any portion of the Facility then unpaid on any date, in whole or in part, so
that the aggregate annual amounts of principal components of Base Rental Payments which shall
be payable after such prepayment date shall each be as nearly proportional as practicable to the
aggregate annual amounts of principal components of Base Rental Payments with respect to the
portion of the Facility so prepaid.
SECTION 5.06. Obligation to Make Rental Payments. The agreements and
covenants on the part of the Lessee contained herein shall be deemed to be and shall be
construed to be duties imposed by law and it shall be the duty of each and every public official
of the Lessee to take such action and do such things as are required by law in the performance of
the official duty of such officials to enable the Lessee to carry out and perform the agreements
and covenants contained herein agreed to be carried out and performed by the Lessee.
16
THE OBLIGATION OF THE LESSEE TO MAKE BASE RENTAL PAYMENTS AND
ADDITIONAL RENTAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION OF
THE LESSEE FOR WHICH THE LESSEE IS OBLIGATED TO LEVY OR PLEDGE ANY
FORM OF TAXATION OR FOR WHICH THE LESSEE HAS LEVIED OR PLEDGED ANY
FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE
BASE RENTAL PAYMENTS AND ADDITIONAL RENTAL PAYMENTS CONSTITUTES
AN INDEBTEDNESS OF THE LESSEE, THE COUNTY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
SECTION 5.07. Fair Rental Value. Base Rental Payments for each Lease Year
during the term of this Facility Lease shall constitute the total rental for said Lease Year and
shall be paid by or on behalf of the Lessee in each Lease Year for and in consideration of the
right of use and occupancy of the Facility during each such Lease Year. The parties hereto have
agreed and determined that such total Base Rental Payments for each Lease Year represents no
more than the fair rental value of the Facility for each such Lease Year. In making such
determination, consideration has been given to costs related to the Facility, other obligations of
the parties under this Facility Lease, the uses and purposes that may be served by the Facility,
and the benefits therefrom which will accrue to the Lessee and the general public.
ARTICLE VI
MAINTENANCE; TAXES;
INSURANCE AND OTHER CHARGES
SECTION 6.01. Maintenance of the Facility bv the Lessee. The Lessee agrees that,
at all times during the term hereof, it will, at its own cost and expense, maintain, preserve and
keep the Facility and every portion thereof in good repair, working order and condition and that
it will from time to time make or cause to be made all necessary and proper repairs, replacements
and renewals. The Lessor shall have no responsibility in any of these matters or for the making
of additions or improvements to the Facility.
SECTION 6.02. Taxes. Other Governmental Charges and Utility Charges. The
parties hereto contemplate that the Facility will be used for public purposes by the Lessee and,
therefore, that the Facility will be exempt from all taxes presently assessed and levied with
respect to real and personal property, respectively. In the event that the use, possession or
acquisition by the Lessee or the Lessor of the Facility is found to be subject to taxation in any
form, the Lessee will pay during the term hereof, as the same respectively become due, all taxes
and governmental charges of any kind whatsoever that may at any time be lawfully assessed or
levied against or with respect to the Facility and any other property acquired by the Lessee in
substitution for, as a renewal or replacement of, or a modification, improvement or addition to,
the Facility, as well as all gas, water, steam, electricity, heat, power, air conditioning, telephone,
utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of
the Facility; provided, that with respect to any governmental charges or taxes that may lawfully
17
be paid in installments over a period of years, the Lessee shall be obligated to pay only such
installments as are accrued during such time as this Facility Lease is in effect.
SECTION 6.03.
Insurance.
(a) The Lessee shall procure or cause to be procured and maintain or cause to
be maintained throughout the term hereof insurance against the following risks in the following
respective amounts:
(1) Insurance against loss or damage to the Facility caused by fire,
lightning or earthquake, with an extended coverage endorsement covering the risk of vandalism and
malicious mischief, sprinkler system leakage and boiler loss; Ilrovided that earthquake coverage
shall be required only if: (i) available from reputable insurers at commercially reasonable rates; and
(ii) the Facility cannot satisfy any earthquake standards which may be imposed by any rating agency
then rating the Secured Bonds. In the event the Lessee is unable to obtain earthquake coverage on
the Facility which it previously has maintained, it will promptly so notify the Lessor. The insurance
described in this paragraph (1) shall be in an amount equal to the lesser of (i) replacement cost
(without deduction for depreciation) of improvements located or to be located on the Facility or
(ii) the remaining unpaid principal amount owed under this Facility Lease outstanding plus the
amount of use and occupancy coverage described in paragraph (2) below, except that such insurance
may be subject to deductible clauses of not to exceed the first one hundred thousand dollars
($100,000) subject to Lessor's approval of the amount of any one loss (or ten percent (10%) of the
amount insured, in the case of earthquake). Insurance described in this paragraph (1) and in
paragraph (2) below may be in the form of a policy which covers the Facility and one or more
additional parcels of real property insured by the Lessee; provided that the amount of coverage
available thereunder shall be at least equal to the cumulative replacement values ofthe Facility and
any other such property which is the subject of a lease, installment purchase or other financing
arrangement ("Financed Property") for which bonds, certificates of participation or other obligations
shall have been issued ("Obligations") plus the amount of use and occupancy coverage required by
paragraph (2) below; in the event the Lessee elects to obtain insurance for the Facility and one or
more additional parcels of real property and the amount of the insurance proceeds available to pay
all claims thereunder is not sufficient to cover the replacement values of all such properties, then any
such proceeds shall be used first to rebuild or repair the Facility and all Financed Properties or to
repay all Obligations and the Secured Bonds.The Lessor shall be named as loss payee and additional
insured.
(2) Use and occupancy insurance against loss, total or partial, of the use
and occupancy of the Facility as a result of any of the hazards covered by the insurance required by
paragraph (1) hereof, in an amount sufficient to pay the Base Rental Payments attributable to the
Facility for a twenty-four (24) month period; provided, that the amount of such insurance need not
exceed the total remaining Base Rental Payments attributable to the Facility; provided further, that
such insurance may be part of a policy permitted under paragraph (1) above, which policy may
provide that insurance proceeds paid for coverages contemplated by paragraph (I) above may reduce
amounts payable under coverage required by this paragraph (2), and vice-versa; the Lessee may
obtain use and occupancy insurance covering the Facility as well as other parcels of property owned
by the Lessee, provided that the cumulative amount thereof is at least equal to the cumulative
18
amount of use and occupancy insurance required by this paragraph (2) and any agreements relating
to Financed Property in respect of which Obligations are outstanding. The Lessor shall be named as
a loss payee and an additional insured.
(3) Workers' compensation insurance covering all employees working in
or on the Facility and the Project, in the same amount and type as other workers' compensation
insurance maintained by the Lessee for similar employees doing similar work; and the Lessee shall
also require any other person or entity working in or on the Facility and the Project to carry the
foregoing amount of workers' compensation insurance; any such policy maintained by the Lessee
may provide for a deductible so long as the deductible is covered by a self-insurance or self-funding
method or plan permitted by this Section.
(4) A standard, commercia] general liability insurance policy or policies
in protection of the Lessor, the Lessee and their directors, officers and employees, indemnifying and
defending such parties against direct or contingent loss or liability for damages for personal injury,
death or property damage related to the possession, operation or use of the Faci]ity and the Project,
with a minimum combined single limit of one million dollars ($] ,000,000) for personal injury or
death of one or more persons, and for property damage, in each accident or event (subject to a
deductible clause of not to exceed one hundred thousand dollars ($100,000) or such greater amount
as may be covered by any self-insurance or self-funding method or plan permitted by this Section).
The Lessor shall be named as a loss payee and an additional insured.
The Lessee shall collect, adjust and receive all moneys which may become due
and payable under any policies contemplated by paragraphs (I) and (2) above, may compromise
any and all claims thereunder and, subject to the provisions of Section 7.0] hereof, shall transfer
such Net Proceeds to the Lessor for application as provided herein. The Lessor shall not be
responsible for the sufficiency of any insurance herein required. The Lessor shall be fully
protected in accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss agreed to by the Lessee.
(b) Notwithstanding the provisions of Section 6.03(a), as an alternative to
providing the insurance required by paragraphs (1), (3) and (4) of Section 6.03(a), the Lessee
may provide a self-insurance or self-funding method or plan of protection for any part or all of
the requirements for such insurance and, through such a plan or method, provide for deductible
or retention amounts greater than those contemplated by paragraphs (I), (3) or (4) of Section
6.03(a). Any such self-insurance or self-funding maintained by the Lessee pursuant to the
foregoing Sections shall comply with the following terms:
(I) The self-insurance or self-funding program shall be approved by an
Insurance Consultant;
(2) The self-insurance or self-funding program shall include a reasonable
claims reserve fund out of which each self-insured or self-funded claim and any deductible amount
authorized by paragraphs (I), (3) and (4) of Section 6.03(a) shall be paid; prior to the end ofthe first
Lease Year, the adequacy of each such fund shall be evaluated by an Insurance Consultant who shall
also evaluate the appropriateness ofthe reserving and funding methods and practices employed in
19
establishing and maintaining each such fund; any deficiencies in any claims reserve fund shall be
remedied in accordance with the recommendation of the Insurance Consultant and any
recommended changes in the reserving or funding methods or practices shall be adopted in
accordance with the recommendation of the Insurance Consultant; after the first Lease Year, at least
annually and not later than July 1 of each year that is a Lease Year, the Lessee shall provide to the
Lessor, a report by either the independent accountants which provide the audit report on the Lessee's
annual audited financial statements or by an Insurance Consultant, as selected by the Lessee, as to
the appropriateness of the reserving and funding methods and practices employed by the Lessee in
funding the claims funds, and any changes recommended by the report shall promptly be
implemented by the Lessee;
(3) The claims reserve fund shall be held in a separate fund by the Lessee
or by the self-insurance program; and
(4) In the event the self-insurance or self-funding program shall be
discontinued, the soundness of its claim and deductible or retention reserve fund, as determined by
the Insurance Consultant, shall be maintained.
(c) Any insurance policy issued pursuant to paragraph (I) of Section 6.03(a)
shall be so written or endorsed as to make losses, if any, payable to the Lessee and the Lessor as
their respective interests may appear and the Net Proceeds of the insurance required by that
paragraph shall be applied as provided in Section 7.01 hereof. The net proceeds, if any, of the
insurance policy described in that paragraph shall, to the extent that such proceeds are paid on
account of loss or damage to the Facility, be payable and applied as described in Section 7.01.
The net proceeds, if any, of the insurance policy described in paragraph (2) of Section 6.03(a)
shall, to the extent that such proceeds relate to the use and occupancy of the Facility, be payable
to the Lessor. Each insurance policy provided for in the Facility Lease shaH contain a provision
to the effect that the insurance company shaH not cancel the policy or modify it materiaHy and
adversely to the interests of the Lessor without first giving written notice thereof to the Lessor at
least sixty (60) days in advance of such intended canceHation or modification.
(d) The Lessee shall provide copies of policy endorsement, or in the case of
self-insurance, provide the insurance report described in section 6.03 (b) (2) and file a Certificate
of the Lessee with the Lessor as a condition of the first disbursement and not later than July 1 of
each year, certifying that the insurance required by this Section is in fuH force and effect and that
the Lessor is named as loss payees and additional insured on each insurance policy which this
Facility Lease requires to be so endorsed.
SECTION 6.04. Advances. In the event the Lessee shaH fail to maintain the fuH
insurance coverage required by Section 6.03 hereof or shall fail to keep the Facility in good
repair and operating condition, the Lessor may (but shaH be under no obligation to) purchase the
required policies of insurance and pay the premiums on the same or may make such repairs or
replacements as are necessary and provide for payment thereof; and aH amounts so advanced
therefor by the Lessor shaH become Additional Rental Payments, which amounts the Lessee
agrees to pay within thirty (30) days of a written request therefor, together with interest thereon
at the lesser of (i) twelve percent (12%) per annum; or (ii) the maximum rate aHowed by law.
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SECTION 6.05. Title Insurance. The Lessee covenants and agrees to deliver or
cause to be delivered to the Lessor upon recordation of this Facility Lease and the Site Lease, a
CL T A policy or policies with appropriate endorsements with respect to the Facility with liability
in the aggregate amount equal to the Project Amount. Such policy or policies shall name the
Lessor as the insured and shall insure the Lessor's interests in the Facility subject only to such
exceptions as do not materially affect the Lessee's right to the use and occupancy of the Facility.
ARTICLE VII
DAMAGE, DESTRUCTION, TITLE DEFECT AND CONDEMNATION
SECTION 7.01.
Proceeds.
Damage. Destruction, Title Defect and Condemnation; Use of Net
(a) Ifprior to the termination of the term hereof (i) the Facility or any other
improvements in or on the Facility are damaged (each of which is hereinafter called "Damaged
Improvements") by a peril covered by a policy of insurance described in Section 6.03(a)(1)
hereof (an "Insured Peril"); or (ii) title to, or the temporary use of, the Facility or any portion
thereof or the estate of the Lessee or the Lessor in the Facility or any portion thereof is defective
or shall be taken under the exercise of the power of eminent domain by any governmental body
or by any person or firm or corporation acting under governmental authority, then the Lessee and
the Lessor will cause the Net Proceeds of any insurance claim (other than rental interruption
insurance pursuant to Section 6.03(a)(2) hereof which shall be directly transferred to the Lessor
for deposit pursuant to Section 6.03 hereof) or condemnation award to be transferred to the
Lessor and applied as follows:
(I) Net Proceeds Exceeding Costs. Within one hundred twenty (120)
days of the date of said Insured Peril, the Lessee shall obtain written estimate(s) of the (i) cost of the
repair, replacement and reconstruction of the Damaged Improvements (collectively referred to
herein as the "Reconstruction"), and (ii) Net Proceeds available to pay such costs. Copies of such
estimate(s) shall be provided to the Lessor. If the one hundred twenty (120) day period is
insufficient to obtain said estimates, the period may be reasonably extended by the Lessee upon the
approval ofthe Lessor. If the Net Proceeds (not including proceeds of any policy of title insurance
or condemnation award received by the Lessor in respect of the Facility) exceed the estimated costs
of Reconstruction, the Damaged Improvements shall be repaired, replaced and reconstructed to the
same or better quality as existed before the damage occurred. The Lessee shall commence and
manage the Reconstruction and shall complete the Reconstruction as soon as reasonably possible
after the occurrence of such damage. Any balance of Net Proceeds remaining after the
Reconstruction has been completed shall be transferred to the Lessor for the payment of unpaid Base
Rental Payments and Additional Rental Payments. Net Proceeds remaining after payment of the
amounts specified in the previous sentence shall be transferred to Lessee.
(2) Costs Exceeding Proceeds, If the estimated costs of Reconstruction
exceed the Net Proceeds (not including proceeds of any policy of title insurance or condemnation
award received by the Lessor in respect of the Facility), the Lessee, in its sole discretion, may elect
21
to budget and appropriate to the Reconstruction the amount of such excess, and to manage the
Reconstruction as set forth in Section 7.01(a)(5). The Lessee shall exercise this election by written
notice thereof delivered to Lessor within thirty (30) days after the Lessee obtains the written
estimate( s).
(3) Net Proceeds Sufficient to Prepav All Unpaid Base Rental Payments.
If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2) and Net
Proceeds are at least sufficient to prepay all unpaid Base Rental Payments, such Net Proceeds shall
be transferred to the Lessor to prepay such Base Rental Payments. If the Net Proceeds (not
including proceeds of any policy of title insurance or condemnation award received by the Lessor in
respect ofthe Facility) exceed the amount necessary to prepay the unpaid Base Rental Payments and
any due and owing Additional Rental Payments, the Lessee shall be entitled to the amount of
proceeds remaining after such prepayment.
(4) Net Proceeds Insufficient to Prepav All Unpaid Base Rental
Payments. If the Lessee does not exercise the election to reconstruct pursuant to Section 7.01(a)(2)
and Net Proceeds are insufficient to prepay the unpaid Base Rental Payments hereunder, the Lessee,
in its sole discretion, may elect to budget and appropriate funds to cause the prepayment of the Base
Rental Payments and due and owing Additional Rental Payments and the Net Proceeds, together
with such funds, shall be transferred to the Lessor with directions to apply the proceeds to the
prepayment ofthe Base Rental Payments and due and owing Additional Rental Payments; provided,
that if the Lessee elects not to appropriate funds for such prepayment, the Lessee shall apply Net
Proceeds (not including proceeds of any policy of title insurance or condemnation award received by
the Lessor in respect of the Facility) to the Reconstruction. If the Lessee, in its sole discretion, elects
to budget or appropriate funds for the prepayment of the unpaid Base Rental Payments and due and
owing Additional Rental Payments, the Lessee shall transfer such funds to the Lessorfor the
prepayment of Base Rental Payments and due and owing Additional Rental Payments.
(5) Management of Reconstruction. If the Facility or any part thereof
becomes Damaged Improvements, the Lessee shall promptly cause, manage and supervise the
Reconstruction.
(b) The proceeds of any policy of title insurance or condemnation award
received by the Lessor in respect of the Facility shall be applied to prepay Base Rental
Payments.
ARTICLE VIII
DISCLAIMER OF WARRANTIES;
VENDOR'S WARRANTIES; USE OF THE FACILITY
SECTION 8.01. Disclaimer of Warranties. THE LESSOR MAKES NO
AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED,
AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE OR FITNESS FOR USE OF THE FACILITY, OR WARRANTY
WITH RESPECT THERETO. THE LESSEE ACKNOWLEDGES THAT THE LESSOR IS
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NOT A MANUFACTURER OF ANY PORTION OF THE FACILITY OR A DEALER
THEREIN, THAT THE LESSEE LEASES THE FACILITY AS-IS, IT BEING AGREED
THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE LESSEE.
In no event shall the Lessor or its assignees be liable for any incidental, indirect, special or
consequential damage in connection with or arising out of this Facility Lease or the existence,
furnishing, functioning or the Lessee's use of the Facility as provided hereby.
SECTION 8.02. Use of the Facilitv. The Lessee will not use, operate or maintain
the Facility improperly, carelessly, in violation of any applicable law or in a manner contrary to
that contemplated hereby. The Lessee shall provide all permits and licenses, if any, necessary
for the use of the Facility. In addition, the Lessee agrees to comply in all respects (including,
without limitation, with respect to the use, maintenance and operation of each portion of the
Facility) with all laws of the jurisdictions in which its operations involving any portion of the
Facility may extend and any legislative, executive, administrative or judicial body exercising any
power or jurisdiction over the Facility; provided, that the Lessee may contest in good faith the
validity or application of any such law or rule in any reasonable manner which does not, in the
opinion of the Lessee adversely affect the estate of the Lessor in and to the Facility or its interest
or rights hereunder.
ARTICLE IX
ASSIGNMENT AND INDEMNIFICATION
SECTION 9.01. Assignment bv Lessor. The parties understand that certain of the
rights of the Lessor hereunder may, at the Lessor's discretion, be assigned to the Trustee.
Accordingly, the Lessee agrees to make all payments due hereunder to the Trustee when so
directed by the Lessor, notwithstanding any claim, defense, setoff or counterclaim whatsoever
(whether arising from a breach hereof or otherwise) that the Lessee may from time to time have
against the Lessor. The Lessee agrees to execute all documents, including notices of assignment
and chattel mortgages or financing statements, which may be reasonably requested by the Lessor
or the Trustee to protect their interests in the Facility during the term hereof.
SECTION 9.02. Assignment bv Lessee. This Facility Lease and the interest of the
Lessee in the Facility may not be assigned or encumbered by the Lessee except as permitted by
Section 2.04 hereof.
SECTION 9.03. Indemnification. The Lessee shall, to the full extent permitted by
law, indemnify, protect, hold harmless, save and keep harmless the Lessor and its members,
directors, officers, employees and agents, and the Trustee and any underwriter for the Proceeds
Bonds and Secured Bonds and its respective directors, officers and employees from and against
any and all liability, obligations, losses, claims and damages whatsoever, regardless of the cause
thereof, and expenses in connection therewith, including, without limitation, counsel fees and
expenses as incurred, penalties and interest (collectively, a "Claim"), arising out of or as the
result of entering into the Facility Lease, and the acquisition, construction, operation, use,
condition, or possession of the Facility or the Project and any portion thereof, including:
23
(I) any accident in connection with the operation, use, condition or
possession ofthe Facility or the Project resulting in damage to property or injury to or death to any
person including, without limitation, any claim alleging latent and other defects, whether or not
discoverable by the Lessee or the Lessor;
(2) patent, trademark or copyright infringement as a consequence of the
operation of the Facility or the Project;
(3) strict liability in tort as a consequence of the operation of the Facility or
the Project;
(4) any claim based upon environmental law or regulation relating to the
Facility or the Project;
(5) any claim of any nature directly arising from or related to the Facility or
the Project, which claim is based upon the operation ofthe Facility or the Project from and after the
Effective Date;
(6) the existence, placement, delivery, storage or release of hazardous
materials on the Facility or the Project or contamination of property, arising therefrom; and
(7) the Trustee's acceptance or administration of the trusts in connection with
the Proceeds Bonds and Secured Bonds, including performance ofthe Trustee's duties, to the extent
provided herein and as assigned by the Lessor.
The indemnification arising under this Section 9.03 shall continue in fun force
and effect notwithstanding the full payment of all obligations hereunder or the termination
hereof for any reason or the resignation or removal of the Trustee. Any party seeking indemnity
hereunder shan promptly give notice to the Lessee of any claim or liability hereby indemnified
against upon learning of any circumstances giving rise to any such claim or liability.
ARTICLE X
DEFAULT
SECTION 10.01.
Events of Default.
(a) Each of the following events shall constitute an Event of Default under
this Facility Lease and the terms Event of Default and "default" shall mean, whenever they are
used in this Facility Lease, anyone or more of the following events:
(I) The Lessee shall fail to deposit with the Lessor or its assignee any Base
Rental Payment or Additional Rental Payment required to be so deposited by the close of business
on the day such deposit is required pursuant to Section 5.01(a) hereof, provided, that the failure to
deposit any Base Rental Payment abated pursuant to Section 5.04 hereof shall not constitute an
Event of Default;
24
(2) The Lessee shall breach any other terms, covenants or conditions
contained herein, and shall fail to remedy any such breach with all reasonable dispatch within a
period of thirty (30) days after written notice thereof from the Lessor to the Lessee; provided,
however, that if the failure stated in the notice cannot be corrected within such period, then the
Lessor shall not unreasonably withhold its consent to an extension of such time if corrective action is
instituted by the Lessee within such period and is diligently pursued until the default is corrected.
Upon the happening of any of the events specified in subsection (a) or (c) of this
Section (in either case an "Event of Default"), it shall be lawful for the Lessor or its assignee,
subject to the terms of this Facility Lease, to exercise any and all remedies available or granted
to it pursuant to law or hereunder.
(b) The Lessor or its assignee, in addition to all other rights and remedies it
may have at law, shall have the option to do any of the following:
(I) To terminate this Facility Lease in the manner hereinafter provided on
account of default by the Lessee, notwithstanding any retaking of possession or re-Ietting of the
Facility as hereinafter provided for in subparagraph (2) hereof, and to retake possession of the
Facility. In the event of such termination, the Lessee agrees to surrender immediately possession of
the Facility, without let or hindrance, and to pay the Lessor or its assignee all damages recoverable at
law that the Lessor or its assignee may incur by reason of default by the Lessee, including, without
limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any
such retaking possession ofthe Facility. Neither notice to pay rent nor to deliver up possession of
the Facility given pursuant to law nor any proceeding in unlawful detainer, or otherwise, brought by
the Lessor or its assignee for the purpose of obtaining possession of the Facility nor the appointment
of a receiver upon initiative ofthe Lessor or its assignee to protect the Lessor's or its assignee's
interest under this Facility Lease shall of itself operate to terminate this Facility Lease, and no
termination of this Facility Lease on account of default by the Lessee shall be or become effective by
operation oflaw or acts ofthe parties hereto, unless and until the Lessor or its assignee shall have
given written notice to the Lessee ofthe election on the part of the Lessor or its assignee to terminate
this Facility Lease.
(2) Without terminating this Facility Lease, (i) to collect each installment of
rent as it becomes due and enforce any other term or provision hereof to be kept or performed by the
Lessee and/or (ii) to exercise any and all rights to retake possession of the Facility. In the event the
Lessor or its assignee does not elect to terminate this Facility Lease in the manner provided for in
subparagraph (I) hereof, the Lessee shall remain liable and agrees to keep or perform all covenants
and conditions herein contained to be kept or performed by the Lessee and, to pay the rent to the end
of the term ofthis Facility Lease or, in the event that the Facility is re-Iet, to pay any deficiency in
rent that results therefrom; and further agrees to pay said rent and/or rent deficiency punctually at the
same time and in the same manner as hereinabove provided for the payment of rent hereunder
(without acceleration), notwithstanding the fact that the Lessor or its assignee may have received in
previous years or may receive thereafter in subsequent years rental in excess of the rental herein
specified and notwithstanding any retaking of possession of the Facility by the Lessor or its assignee
or suit in unlawful detainer, or otherwise, brought by the Lessor or its assignee for the purpose of
25
obtaining possession of the Facility. Should the Lessor or its assignee elect to retake possession of
the Facility as herein provided, the Lessee hereby irrevocably appoints the Lessor or its assignee as
the agent and attorney-in-fact of the Lessee to re-Iet the Facility, or any items thereof, from time to
time, either in the Lessor's or its assignee's name or otherwise, upon such terms and conditions and
for such use and period as the Lessor or its assignee may deem advisable and the Lessee hereby
indemnifies and agrees to hold harmless the Lessor or its assignee from any costs, loss or damage
whatsoever arising out of, in connection with, or incident to any retaking of possession of and re-
letting ofthe Facility by the Lessor or its assignee or its duly authorized agents in accordance with
the provisions herein contained. The Lessee agrees that the terms of this Facility Lease constitute
full and sufficient notice ofthe right ofthe Lessor or its assignee to re-Iet the Facility in the event of
such reentry without effecting a surrender of this Facility Lease, and further agrees that no acts of the
Lessor or its assignee in effecting such re-Ietting shall constitute a surrender or termination of this
Facility Lease irrespective of the use or the term for which such re-Ietting is made or the terms and
conditions of such re-Ietting, or otherwise, but that on the contrary, in the event of such default by
the Lessee the right to terminate this Facility Lease shall vest in the Lessor or its assignee to be
effected in the sole and exclusive manner provided for in subparagraph (I) hereof The Lessee
further waives the right to rental obtained by the Lessor or its assignee in excess of the rental herein
specified and hereby conveys and releases such excess to the Lessor or its assignee as compensation
to the Lessor or its assignee for its services in re-Ietting the Facility or any items thereof. The Lessee
further agrees to pay the Lessor or its assignee the cost of any alterations or repairs to the Facility or
any items thereof necessary to place the Facility or any items thereof in condition for re-Ietting
immediately upon notice to the Lessee of the completion and installation of such alterations or
repairs.
The Lessee hereby waives any and all claims for damages caused or which may
be caused by the Lessor or its assignee in taking possession of the Facility as herein provided
and all claims for damages that may result from the destruction of or injury to the Facility and all
claims for damages to or loss of any property belonging to the Lessee, or any other person, that
may be on or about the Facility.
The Lessor expressly waives the right to receive any amount from the Lessee
pursuant to section 1951.2(a)(3) of the California Civil Code.
(c) In addition to any default resulting from breach by the Lessee of any
agreement, condition, covenant or term hereof, if (i) the Lessee's interest herein or any part
thereof be assigned, sublet or transferred without the written consent of the Lessor (except as
otherwise permitted by Section 2.04 hereof), either voluntarily or by operation oflaw; or (ii) the
Lessee or any assignee shall file any petition or institute any proceedings under any act or acts,
State or federal, dealing with or relating to the subject of bankruptcy or insolvency or under any
amendment of such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any
similar capacity, wherein or whereby the Lessee asks or seeks or prays to be adjudicated a
bankrupt, or is to be discharged from any or all of its debts or obligations, or offers to its
creditors to effect a composition or extension of time to pay its debts, or asks, seeks or prays for
a reorganization or to effect a plan of reorganization or for a readjustment of its debts or for any
other similar relief, or if the Lessee shall make a general or any assignment for the benefit of its
creditors; or (iii) the Lessee shall abandon or vacate the Facility or any portion thereof (except
26
as permitted by Section 2.04 hereof); then in each and every such case the Lessee shall be
deemed to be in default hereunder.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
SECTION 11.0 I. Organization; Authority; Application Correct. The Lessee is duly
organized and existing under the laws of the State and has all necessary power and authority to
enter into and perform its duties under this Facility Lease. The application for the financing,
including all attachments, amendments and clarifications submitted by the Lessee to the Lessor,
were accurate and correct at the time of submission and as of the Effective Date.
SECTION 11.02. Agreement Valid and Binding; Approval bv Lessee. This Facility
Lease has been duly authorized, executed and delivered by the Lessee and constitutes the legal,
valid and binding obligation of the Lessee, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles relating to or limiting creditors' rights generally. The legislative
body of the Lessee has authorized the Lessee to enter into this Facility Lease by duly adopting a
resolution in substantially the form attached hereto as Exhibit C.
SECTION 11.03. No Conflict in Execution of Facility Lease. The execution and
delivery by the Lessee of this Facility Lease and compliance with the provisions hereofwill not
conflict with or constitute a breach of or default under any law, administrative regulation, court
decree, resolution, charter, by-law or any agreement to which the Lessee is subject or by which it
is bound or by which its properties may be affected.
SECTION 11.04. No Litigation. There is no action, suit, proceeding or investigation
at law or in equity before or by any court or governmental agency or body pending or threatened
against the Lessee to restrain or enjoin the execution or delivery of this Facility Lease, or in any
way contesting or affecting the validity of this Facility Lease, or contesting the powers of the
Lessee to enter into or perform its obligations under this Facility Lease.
SECTION 11.05. No Breach or Default. The Lessee is not in breach of or in default
under any applicable law or administrative regulation of the State or the United States, the
Constitution of the State (including article XVI, section 18 thereof), any applicable judgment or
decree, any loan agreement, indenture, bond, note, resolution, agreement or other instrument to
which the Lessee is a party or is otherwise subject which would have a material adverse impact
on the Lessee's ability to perform its obligations under this Facility Lease and no event has
occurred and is continuing which, with the passage of time or the giving of notice, or both,
would constitute a default or an event of default under any such instrument.
SECTION I I .06. No Consent. Approval or Permission Necessary. No consent or
approval of any trustee or holder of any indebtedness of the Lessee, and no consent, permission,
authorization, order or licenses of, or filing or registration with, any governmental authority is
necessary in connection with the execution and delivery of this Facility Lease or the
27
consummation of any transaction contemplated herein, except as have been obtained or made
and as are in full force and effect.
SECTION 11.07. Information Submitted to the Lessor. The information relating to
the Lessee, the Site, the Project and the Facility submitted by the Lessee to the Lessor, including,
but not limited to, all information in the application, was true at the time submitted to the Lessor
and as of the date of this Facility Lease, remains true and correct in all material respects, and
such information does not contain any untrue or misleading statement of a material fact or omit
to state any material fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made.
SECTION 11.08. Financial Statements of the Lessee. The Lessee's financial
statements furnished to the Lessor have been prepared in conformity with generally accepted
accounting principles and fairly present in all material respects the financial condition of the
Lessee as of the date thereof and the results of its operations for the period covered thereby.
There has been no material adverse change in the business, condition (financial or otherwise) or
operations of the Lessee since the date of such financial statements.
SECTION 11.09. Licenses. Permits and Approvals for Operation of Facilitv and the
Proiect. The Lessee has obtained all licenses, permits and approvals from any governmental
agency or authority having jurisdiction over the Lessee required for the operation of the Facility
and will obtain all licenses, permits and approvals from any governmental agency or authority
having jurisdiction over the Lessee required for the operation of the Project.
SECTION 11.10.
Proiect Completion.
(a) The Project is described in Exhibit A and the Lessee shall make no
changes thereto or to the operation thereof which would affect the qualification of the Project as
a "public development facility" within the meaning of the Act or the qualification of the Project
for tax exempt financing under the Code.
(b) The Lessee intends to utilize the Project or cause the Project to be utilized
as a "public development facility" within the meaning of the Act.
(c) The Project will be located wholly within the corporate limits of the
Lessee.
(d) To the best of the Lessee's knowledge, no officer or official of the Lessor
has any material interest whatsoever in the Project or in the transactions contemplated by this
Facility Lease.
(e) All applicable local governmental agency, State and federal government
certificates, approvals, permits and authorizations with respect to the construction of the Project
have been obtained or will be obtained as soon as practicable.
28
ARTICLE XII
AFFIRMATNE COVENANTS OF THE LESSEE
SECTION 12.01.
Budgets and Punctual Payments.
(a) The Lessee will annually budget and appropriate the Base Rental
Payments and use its best efforts to maintain sufficient general fund revenues to provide moneys
to fund all necessary and appropriate general fund operations.
(b) Not later than sixty (60) days after the start of each Fiscal Year, the Lessee
will adopt and deliver to the Lessor, a budget approved by the governing board of the Lessee
setting forth the estimated revenues, expenses and debt service for the current Fiscal Year;
provided, that any such budget may be amended at any time during the Fiscal Year and such
amended budget shall be delivered to the Lessor or its designee.
(c) The Lessee will punctually pay, or cause to be paid, all payments required
hereunder in strict conformity with the terms of this Facility Lease, and it will faithfully observe
and perform all of the conditions, covenants and requirements of this Facility Lease.
SECTION 12.02.
Books and Accounts; Financial Statements.
(a) The Lessee will keep proper books of record and accounts in which
complete and correct entries shall be made of all transactions relating to the Facility and the
Project (which may be consolidated with other activities of the Lessee). Such books of record
and accounts shall at all times during business hours be subject to the inspection of the Lessor.
To the extent that any continuing disclosure reports required by Section 4.03 herein sets out the
information required by subsections (b) and (d) of this Section 12.02, the Lessee shall not be
obliged to provide separate statement setting forth the requested information.
(b) The Lessee will prepare and file with the CIEDB annually as soon as
practicable, but in any event not later than two hundred ten (210) days after the close of each
Fiscal Year, so long as this Facility Lease has not been discharged by the CIEDB, an audited
financial statement of the Lessee relating to the Project Area for the preceding Fiscal Year,
prepared by an Independent Accountant; provided, however, that in the event that such audited
financial statement is not available by the above-referenced filing date, an unaudited financial
statement may be substituted therefore. In the event an unaudited financial statement is
submitted, the Lessee shall file the audited financial statement with the CIEDB as soon as it
becomes available. The Lessee will furnish to the CIEDB such reasonable number of copies of
such financial statements as may be required by the CIEDB for distribution (at the expense of the
Lessee).
(c) Simultaneously with the delivery of the annual audited financial
statements, the Lessee will deliver to the Lessor a Certificate of the Lessee stating the following:
29
(I) Certification that no Event of Default has occurred and no event has
occurred which, with the passing of time would constitute an Event of Default;
(2) Notification of any other event or circumstance that would materially
affect completion of the Project and/or the payment ofthe Base Rental Payments;
(3) Certification that the Lessee is in compliance with the Tax
Certificate, as set forth in Exhibit H; and
(4) Such other information as may be reasonably required.
(d) The Lessee shall, upon request, furnish to the Lessor, in a format specified
by the Lessor, information concerning employment and other public benefits connected to the
Project.
SECTION 12.03. Notification to the Lessor. The Lessee agrees to notifY the Lessor,
immediately, by telephone promptly confirmed in writing, if any representation made in this
Facility Lease or in the application for financing to the Lessor shall at any time so long as the
Facility Lease is outstanding prove untrue or incorrect in any manner. Further, the Lessee agrees
to notifY the Lessor, immediately, by telephone promptly confirmed in writing, ifthere is a stop
notice, litigation or any other legal proceeding which may impact the completion of the Project.
SECTION 12.04. Protection ofSecuritv and Rights. The Lessee shall preserve and
protect the security of the Facility Lease and the rights of the Lessor. From and after the
Effective Date hereof, the Facility Lease shall be incontestable by the Lessee.
SECTION 12.05. Management ofProoerties. The Lessee shall manage and operate
the Facility and the Project in a sound and business-like manner and in conformity with all valid
requirements of any governmental authority.
SECTION 12.06.
Reserved.
SECTION 12.07. Further Assurances. The Lessee will adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
required by the Lessor as necessary or proper to carry out the intention or to facilitate the
performance of this Facility Lease and for the better assuring and confirming unto the Lessor of
the rights and benefits provided in this Facility Lease.
SECTION 12.08.
Proiect Documentation.
(a) The Lessee may supplement or amend the Project description with written
approval from the Lessor from time to time, provided that no such supplement or amendment
shall cause the Project or any portion thereof to fail to constitute a "public development facility"
within the meaning of the Act.
30
(b) At any time, upon request of the Lessor, the Lessee agrees to make
available to the Lessor for review and copying all then current plans and specifications for the
Project. The Lessee may identify any proprietary information in such plans and specifications
and, to the extent legally permissible, the Lessor agrees to keep such information confidential.
(c) As soon as the Project is completed, the Lessee shall evidence such
completion by providing a Certificate of the Lessee to the Lessor stating that (i) construction of
the Project has been completed substantially in accordance with the final plans and specifications
therefor and all labor, services, materials and supplies used in construction have been paid for,
and (ii) all other facilities necessary in connection with the Project have been constructed,
acquired and installed in accordance with the final plans and specifications therefor and all costs
and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing,
such certificate may state that it is given without prejudice to any rights of the Lessee against
third parties for the payment of any amount not then due and payable which exist at the date of
such certificate or which may subsequently exist.
SECTION 12.09. Lessee's General Responsibilitv. The Lessee is solely responsible
for the design, construction, operation and maintenance of the Project. Any review or approval
of plans, specifications, bid documents or other construction documents by the Lessor is solely
for the purpose of proper administration of Project funds by the Lessor and shall not be deemed
to relieve or restrict the Lessee's responsibility or result in any duty, obligation or responsibility
on the part of the Lessor or the officers and agents thereof.
SECTION 12.10.
Lessee's Assurances and Commitments.
(a) Compliance with Laws and Regulations. The Lessee shall at all times
comply and require its contractors and subcontractors to comply with all applicable federal and
State laws, rules and regulations, and all applicable local ordinances, specifically including, but
not limited to, prevailing wage, environmental, procurement and safety laws, rules, regulations,
and ordinances. Lessee agrees that its failure to act in accordance with the provisions of this
subsection (a) will not result in any duty, obligation or responsibility on the part of the Lessor or
the officers and agents thereof. The Lessee will comply with all laws of the State so as not to
adversely affect the payment of the Base Rental Payments and Additional Rental Payments.
(b) Archeological or Historical Resources. Should a potential archeological
or historical resource be discovered during construction, the Lessee agrees that all work in the
area of the find will cease until a qualified archeologist has evaluated the situation and the
Lessee has determined appropriate actions regarding preservation of the resource.
(c) Construction Activities. The Lessee shall assure that adequate supervision
and inspection of Project construction activities are maintained. The Lessor or the Lessor's
designee reserves the right to conduct an audit of Lessee's construction expenditures during
construction and up to three years following receipt by Lessor of notice of completion. The
Lessor, at its discretion, may require the Lessee to conduct an interim and/or a final audit at the
Lessee's expense, such audit to be conducted by and a report prepared by an Independent
Accountant.
31
SECTION 12.11. Facility and Proiect Access. The Lessee shall assure that the
Lessor or its designee will have suitable access to the Facility and the Project at all reasonable
times throughout the term of this Facility Lease and shall include provisions assuring such access
in all contracts and subcontracts relating to the Facility and the Project.
SECTION 12.12.
Performance and Payment Bonds.
(a) The Lessee shall require its contractor to certify under penalty ofpeIjury,
and provide the Lessee with a copy of such certification, which shall be available for the
Lessor's inspection, ifrequested, that it has obtained a bond or bonds by one or more authorized
surety companies satisfactory to the Lessee has been obtained; surety companies must be
authorized to do business in California and have an agent for service of process in California.
The Lessee shall require that the Lessee be named as loss payee and additional insured and shall
provide the Lessor with a copy of the bonds to that effect.
(b) Said bond shall be in the amounts and for the following purposes: (i) an
amount not less than one hundred percent (100%) of the total estimated cost of the Project
construction contract amount conditioned upon the faithful performance of the terms of the
construction agreement for the Project including the maintenance of the work for a period of one
year from the date of final acceptance of work or improvements by the Lessee against any
defective work or labor done, or defective materials furnished, and (ii) an additional amount not
less than one hundred percent (100%) of the estimated cost of the Project securing payment to
the subcontractors and to persons renting equipment or furnishing labor or materials to them for
the Project.
SECTION 12.13. Notice of Event of Default. The Lessee covenants that it will
deliver to the Lessor, immediately after the Lessee shall have obtained koowledge of the
occurrence of an Event of Default or failure as described in Section 10.01(a)(2), a Certificate of
the Lessee setting forth the details of such Event of Default or failure and the action which the
Lessee proposes to take with respect thereto.
SECTION 12.14. Comoliance with State Contract Reauirements. The Lessee shall
comply with all provisions contained in Exhibit G throughout the term of this Facility Lease.
ARTICLE XIII
NEGATIVE COVENANTS OF THE LESSEE
SECTION 13.01.
Nondiscrimination.
(a) During the performance of this Facility Lease, Lessee, any contractor and
its subcontractors shall not deny the contracts' benefits to any person on the basis ofreligion,
color, ethnic group identification, sex, age, physical or mental disability, nor shall they
discriminate unlawfully against any employee or applicant for employment because of race,
religion, color, national origin, ancestry, physical handicap, mental disability, medical condition,
32
marital status, age or sex. The Lessee, any contractor and its subcontractor shall insure that the
evaluation and treatment of employees and applicants for employment are free of such
discrimination.
(b) The Lessee, any contractor and its subcontractors shall comply with the
provisions of the Fair Employment and Housing Act (Government Code section 12900 et seq.),
the regulations promulgated thereunder (Title 2, California Code of Regulations, section 7285.0
et seq.) the provisions of Article 9.5, Chapter I, Part I, Division 3, Title 2 of the Government
Code (sections 11135-11139.5) and any regulations promulgated thereunder.
(c) The Lessee, any contractor and its subcontractors shall not knowingly give
preferential treatment of any kind whatsoever in connection with any business transaction related
to the construction or operation of the Project to any of its affiliates or to any business enterprise
in which Lessee has any financial interest, but in such business transactions shall deal at all times
with such affiliates and enterprises on the same basis as though Lessee were dealing with any
other parties.
(d) The Lessee, any contractor and its subcontractors shall, with respect to the
Project described herein, give written notice of their obligations under this section to labor
organizations representing employees of the Lessee and any contractor or subcontractor
performing work on the Project which have a collective bargaining or other contract with the
Lessee, such contractor or subcontractor.
(e) The Lessee, any contractor and its subcontractors shall include the
provisions of this section in all subcontracts to perform work with respect to the Facility and the
Project.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Notices. All written notices to be given hereunder shall be given
by first class mail to the party entitled thereto at its address set forth below, or at such other
address as such party may provide to the other parties in writing from time to time, namely:
33
If to the Lessor:
California Infrastructure and Economic Development Bank
Attn: Credit Support Manager, CIEDB B05-064
P.O. Box 2830
Sacramento, California 95812-2830
Or, if for purposes of overnight mail, to:
California Infrastructure and Economic Development Bank
Attn: Credit Support Manager, CIEDB B05-064
100 I I Street, 19th floor
Sacramento, California 95814
Or to such other address as may be designated in writing by the Lessor.
If to the Lessee:
The City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Attn: City Manager
Or to such other address as may be designated in writing by the Lessee.
SECTION 14.02
Contact Persons.
(a) The executive director of the Lessor or such other person as designated in
writing by the Lessor shall manage this Facility Lease for the Lessor and shall have authority to
make determinations and findings with respect to each controversy arising under or in
connection with the interpretation, performance, or payment for work performed under this
Facility Lease.
(b) The Lessee Project manager shall be the City Manager or such other
person as may be designated in writing by the City Manager. The Lessee Project manager shall
be the Lessee's representative for the administration of this Facility Lease and shall have full
authority to act on behalf of the Lessee and may designate in writing another person or persons
authorized to request disbursement of Project Amounts. All communications given to the Lessee
Project manager shall be as binding as if given to the Lessee.
SECTION 14.03. Binding Effect. This Facility Lease shall inure to the benefit of
and shall be binding upon the Lessor and the Lessee and their respective successors and
assIgnees.
34
SECTION 14.04. Third Party Beneficiaries. The Trustee is hereby expressly
designated as a third party beneficiary hereunder for the purpose of enforcing any of the rights
hereunder assigned to the Trustee and for the purpose of the Trustee enforcing its own rights.
SECTION 14.05. Net Lease. It is the purpose and intent of the Lessor and the
Lessee that lease payments hereunder shall be absolutely net to the Lessor so that this Facility
Lease shall yield to the Lessor the lease payments, free of any charges, assessments or
impositions of any kind charged, assessed or imposed on or against the Facility, and without
counterclaim, deduction, defense, deferment or set-off by the Lessee except as herein specifically
otherwise provided. The Lessor shall not be expected or required to pay any such charge,
assessment or imposition, or be under any obligation or liability hereunder except as herein
expressly set forth, and all costs, expenses and obligations of any kind relating to the
maintenance and operation of the Facility which may arise or become due during the term of this
Facility Lease shall be paid by the Lessee.
SECTION 14.06. Amendments to Facilitv Lease. This Facility Lease may be
amended by the parties in writing.
SECTION 14.07.
Reserved.
SECTION 14.08. Partial Invaliditv. If anyone or more of the agreements,
conditions, covenants or terms hereof shall to any extent be declared invalid, unenforceable, void
or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order
or decree of which becomes final, none of the remaining agreements, conditions, covenants or
terms hereof shall be affected thereby, and each provision of this Facility Lease shall be valid
and enforceable to the fullest extent permitted by law.
SECTION 14.09. California Law; Venue. This Facility Lease shall be governed by
and construed and interpreted in accordance with the laws of the State. Any proceeding
pertaining to this Facility Lease shall be filed in the Superior Court of Sacramento County,
unless otherwise expressly agreed to by the Lessor in its discretion.
SECTION 14.10. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any provision
hereof.
SECTION 14.11. No Merger. This Facility Lease shall not operate as a merger of
the Lessee's leasehold estate in the Facility pursuant to this Facility Lease and its fee estate in
the Site.
[The balance of this page is intentionally left blank.]
35
IN WITNESS WHEREOF, the parties hereto have executed and entered into
this Facility Lease by their officers thereunto duly authorized as of the day and year first
written above.
Attest
~P.hD &.4
Blake Fowler
Assistant Executive Director
By
Approved as to form and legal content:
By
Attest
'j.~
James F. Penman
City Attorney
By ~ h~
Rachel G. Clark
City Clerk
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
~
- . ~
By ,
Stanton C. elr
Executive Director-
THE CITY OF SAN BERNARDINO
By ~V-______<!r'("~
Pick 1. MOITts--_ ~
Mayor
36
STATE OF CALIFORNIA
)
) ss
)
COUNTY OF SACRAMENTO
On mAl.{ '--{ , :2..00 <:, , before me, Tom Martin, a Notary Public in and
for the State of California, personally appeared STANTON C. HAZELROTH, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person or the entity on behalf
of which the person acted, executed the instrument.
Witness my hand and official seal
[SEAL] ....---),_~
[/t?k//f/C/t#7 .
TOM MARTIN
COMM.1I15l6828 ~
NOTARY PUBUC-cAuFORNIAGl
SACRAMENTO COUNTY 0
COMM. EXP. MAYl. 2009"
~
37
STATE OF CALIFORNIA )
) ss
COUNTY OF San Bernardino)
On April 7 2006 , before me, David M. Gutierrez a Notary
Public in and for the State of California, personally appeared Patrick J. Morris
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he/mexecuted
the same in his/1m" authorized capacity, and that by his/klilr signature on the instrument the
person or the entity on behalf of which the person acted, executed the instrument.
Witness my hand and official seal
[SEAL]
o .-J7c.. ~~;~-)
I
. DAW> M. QUIIIIItlI2
. Co/..,tIoIb n # 1363195
Notary /IldC - c.Alk.l1lI
San ......o.dIl '" COUlty -
Mtcarm.ep.obI30.m>>
38
EXHIBIT A
DESCRIPTION OF THE PROJECT
Project Title: Pavement Reconstruction and Rehabilitation Project
Project Description: The Project consists of3.4 miles of pavement reconstruction and 25.5 miles
of pavement rehabilitation on public streets throughout the City of San Bernardino
A-I
EXHIBIT B
DESCRIPTION OF THE SITE
Real property in the City of San Bernardino, County of San Bernardino, State of California, described as
follows:
PARCEL 1:
LOT 11, BLOCK IB, OF THE FIVE ACRE SURVEY OF THE RANCHO SAN BERNARDINO, IN THE cm OF
SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS SHOWN BY MAP ON
FILE IN BOOK 7, PAGE 2 OF MAPS, RECORDS OF SAID COUNTY. EXCEPTING THEREFROM THAT
PORTION OF SAID LAND CONVEYED TO THE cm OF SAN BERNARDINO BY DOCUMENT RECORDED IN
APRIL 30, 1914 IN BOOK 548, PAGE 119 OF DEEDS, RECORDS OF SAID COUNTY.
0139-241-07-0-000 1201 9th Street
PARCEL 2:
THE SOUTH 150 FEET OF THE WEST 250 FEET OF LOT 1 OF TRACT NO. 2B52, PER MAP RECORDED IN
BOOK 40 OF MAPS, PAGES 29 AND 30, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY;
SAID MEASUREMENTS BEING ALONG THE WEST AND SOUTH LINES, RESPECTIVELY, OF SAID LOT 1.
0143-012-44-0-000 2121 Medical Center Drive
PARCELS 3 & 4:
THAT PORTION OF LOT 4, BLOCK 85, RANCHO SAN BERNARDINO, IN THE cm OF SAN BERNARDINO,
AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF LOT 4, BLOCK "H", TRACT NO. 175B,
POLYTECHNIC SQUARE #3, AS PER PLAT RECORDED IN BOOK 25 OF MAPS, PAGE 51, RECORDS OF
SAID COUNTY; THENCE WEST 25 FEET TO THE SOUTHWEST CORNER OF THE PARCEL OF LAND
CONVEYED TO LESTER E. BAILEY AND WIFE BY DEED RECORDED JUNE 30,1936 IN BOOK 1144, PAGE
399 OF OFFICIAL RECORDS; THENCE NORTH ALONG THE WEST LINE OF THE PROPERTY CONVEYED,
B4.0 FEET TO THE SOUTH LINE OF THE PROPERTY CONVEYED TO THE cm OF SAN BERNARDINO BY
DEED RECORDED IN BOOK 55, PAGE 267 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE EAST 65
FEET; THENCE SOUTH 84 FEET TO A POINT IN THE NORTH LINE OF LOT 5, SAID TRACT NO. 175B;
THENCE WEST 40 FEET TO THE POINT OF BEGINNING. ALSO THAT PORTION OF LOT 4, BLOCK 85,
RANCHO SAN BERNARDINO; COMMENCING AT THE SOUTHWEST CORNER OF THE CATHOLIC
CEMETARY; THENCE EAST ALONG THE SOUTH LINE OF THE CATHOLIC CEMETARY THREE HUNDRED
(300) FEET; THENCE SOUTH EIGHTY-FOUR (84) FEET; THENCE WEST THREE HUNDRED (300) FEET TO
THE EAST LINE OF "E" STREET; THENCE NORTH EIGHTY-FOUR (84) FEET TO THE POINT OF
BEGINNING.
0149-161-17-0-000 AND 0149-161-12-0-000 2641 North E Street
B-1
PARCEL 5:
PARCEL NO.1 OF PARCEL MAP NO. 3339 AS PER PLAT THEREOF RECORDED IN BOOK 30 OF PARCEL
MAPS, PAGE 2, RECORDS OF THE COUN1Y RECORDER OF SAID COUN1Y. EXCEPTING THEREFROM ANY
PORTION LYING WITHIN TRACT 13039 ON FILE IN BOOK 195 PAGES 87 AND 88 OF MAPS, RECORDS
OF SAN BERNARDINO COUN1Y.
0266-601-03-0-000 1640 Kendall Street
PARCEL 6:
PORTION OF THOSE PARTS OF LOT 2, BLOCK 4 AND OF LOT 6, BLOCK 7, ORANGE GROVE TRACT, AS
PER PLAT RECORDED IN BOOK 11 OF MAPS, PAGE 14, RECORDS OF SAID COUN1Y, DESCRIBED IN
DOCUMENTS RECORDED IN BOOK 1555, PAGE 56 AND IN BOOK 1560, PAGE 4, BOTH OF OFFICIAL
RECORDS OF SAID COUN1Y, SAID PORTION BEING ALL OF SAID PARTS LYING EASTERLY FROM A LINE
THAT IS PARALLEL WITH AND DISTANT WESTERLY, 335 FEET FROM THE CENTERLINE OF DEL ROSA
AVENUE. EXCEPTING ALL OIL, GAS AND HYDROCARBON SUBSTANCES IN SAID PROPER1Y, WITH THE
RIGHT TO DRILL FOR AND EXTRACT THE SAME UPON MAKING COMPENSATION FOR INJURY TO
IMPROVEMENTS AND ANY USE THEN BEING MADE OF THE SURFACE AS RESERVED IN A DEED OF
RECORD. EXCEPTING THEREFROM THAT PORTION LYING WITHIN A STRIP OF LAND 60 FEET IN
WIDTH, THE SOUTHERLY LINE OF SAID STRIP BEING THE SOUTHERLY LINE OF" PARCEL A "
DESCRIBED IN DOCUMENT TO THE SAN BERNARDINO COUN1Y FLOOD CONTROL DISTRICT,
RECORDED IN BOOK 1560, PAGE 4, OFFICIAL RECORDS OF SAID COUN1Y. TOGETHER WITH AN
EASEMENT FOR ACCESS PURPOSES IN, OVER AND ACROSS THAT PORTION OF AFOREDESCRIBED 60
FOOT WIDE STRIP LYING WITHIN THE NORTHERLY 41.64 FEET OF THE SOUTHERLY 100 FEET OF SAID
LOT 6 , BLOCK 7, ORANGE GROVE TRACT.
0273-011-22-0-000 1920 N. Del Rosa Avenue
PARCEL 7:
THAT PORTION OF THE SOUTHWEST ONE-QUARTER ( 1/4) OF SECTION 15, TIN, R4W, SAN
BERNARDINO BASE AND MERIDIAN, (UNSURVEYED) BEING WITHIN THE MUSCUPIABE RANCHO
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST RIGHT OF WAY LINE OF THE PACIFIC ELECTRIC
RAILWAY AND THE NORTH RIGHT OF WAY LINE OF "C" STREET, AS SHOWN ON MAP OF ARROWHEAD
SUBURBAN FARMS, TRACT "B", AS RECORDED IN BOOK 21 OF MAPS, AT PAGE 44, RECORDS OF SAN
BERNARDINO COUN1Y; THENCE EASTERLY ALONG THE NORTH LINE OF SAID "C" STREET, TO A ONE
INCH PIPE AT THE SOUTHEAST CORNER OF THE SOUTHWEST ONE-QUARTER (1/4) OF SAID SECTION
15, THENCE NORTH ALONG THE SOUTHWEST ONEQUARTER (1/4) OF SAID SECTION 15, 125 FEET;
THENCE WESTERLY ALONG A LINE PARALLEL WITH THE NORTH LINE OF "C" STREET, TO ITS
INTERSECTION WITH THE EAST RIGHT OF WAY LINE OF THE PACIFIC ELECTRIC RAILWAY, TO THE
POINT OF BEGINNING. ALONG WITH THAT PORTION OF 40TH STREET FORMERLY KNOWN AS "C"
STREET VACATED BY RESOLUTION BY THE cm COUNCIL OF THE cm OF SAN BERNARDINO.
0154-211-17-0-000 282 W. 40th Street
PARCELS 8 & 9:
BEGINNING AT A POINT IN THE CENTER LINE OF HIGHLAND AVENUE, WHICH POINT IS WESTERLY
THEREON A DISTANCE OF 246.15 FEET FROM THE INTERSECTION OF SAID CENTERLINE WITH THE
CENTERLINE OF ORANGE STREET; THENCE NORTH 89043' 01" EAST ALONG SAID CENTERLINE OF
B-2
HIGHLAND AVENUE, A DISTANCE OF 246.15 FEET TO THE CENTERLINE OF SAID ORANGE STREET;
THENCE NORTH 000 21' 29" WEST ALONG SAID CENTERLINE OF ORANGE STREET, A DISTANCE OF
460.60 FEET; THENCE NORTH 820 29' 49" WEST, A DISTANCE OF 186.86 FEET; THENCE SOUTH 630 18'
31" WEST, A DISTANCE OF 68.21 FEET, THENCE SOUTHERLY IN A STRAIGHT LINE A DISTANCE OF
455.50 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. EXCEPTING THEREFROM ALL OIL, GAS
AND OTHER MINERAL DEPOSITS, LYING BELOW A DEPTH OF TWO HUNDRED FEET, AS RESERVED IN
THE DEED RECORDED JULY 25,1968 IN BOOK 7065, PAGE 990 OF OFFICIAL RECORDS.
0285-191-05-0-000 AND 0285-191-04-0-000 3398 E. Highland Avenue
PARCEL 10:
BEING A PORTION OF LOT 31, TRACT NO. 12034, PER MAP ON FILE IN BOOK 168 OF MAPS, PAGES 75-
87, RECORDS OF SAN BERNARDINO COUNTY, STATE OF CALIFORNIA, MORE PARTICULARLY
DESCRIBED AS: BEGINNING AT THE SOUTHWEST CORNER OF LOT 31, THENCE NORTHERLY ALONG
WEST LINE OF SAID LOT, A DISTANCE OF 290.00 FEET; THENCE SOUTH 890 58' 58" EAST, A DISTANCE
OF 225.00 FEET; THENCE SOUTH 000 01' 02" WEST, A DISTANCE OF 190.00 FEET; THENCE SOUTH 210
15' 19" WEST, A DISTANCE OF 143.18 FEET: TO A POINT ON A NON-TANGENT CURVE THROUGH
WHICH A RADIAL LINE BEARS NORTH 210 15' 19" EAST WITH A RADIUS OF 493.00 FEET; SAID POINT
BEING ON THE NORTH RJGHT OF WAY OF VANDERBILT WAY; THENCE NORTHWESTERLY ALONG SAID
CURVE THROUGH A CENTRAL ANGLE OF 200 36' 16", A DISTANCE OF 177.29 FEET TO THE TRUE POINT
OF BEGINNING. SAID PARCEL CONTAINS 1.50 ACRES.
0281-341-09-0-000 450 Vanderbilt Way
B-3
EXHIBIT C
1
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3
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5
6
7
8
9
10
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RESOLUTION NO. 2006-88
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BERNARDINO
AUTHORIZING THE EXECUTION AND DELIVERY OF THE FACILITY LEASE
AND THE SITE LEASE BY AND BETWEEN THE CITY OF SAN BERNARDINO
AND THE CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION
THEREWITH
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN
BERNARDINO, AS FOLLOWS:
Section I. The Mayor is authorized and directed to execute and deliver the Facility Lease.
dated as of April 15, 2006 (the "Facility Lease") and the Site Lease dated as of April 15,2006
(the "Site Lease") proposed to be entered into by the City of San Bernardino and the
California Infrastructure and Economic Development Bank. As executed and delivered, such
documents shall be in substantially the form presented at this meeting, with such minor
additions thereto or minor changes therein as the officers executing such document shall
require or approve, such approval to be conclusively evidenced by the execution and delivery
thereof.
Section 2.The Mayor, City Manager, Director of Finance, and City Attorney are hereby each
authorized and directed, in the name and on behalf of the City of San Bernardino, to take any
and all steps and to execute and deliver any and all certificates, contracts and other documents
which they might deem necessary or appropriate in order to consummate the delivery of the
Facility Lease and the Site Lease and otherwise to effectuate the purposes of this resolution,
including the execution of a tax certificate, and such actions previously taken by the
employees of the Lessee are hereby ratified and confirmed.
Section 3.
adoption.
This resolution shall take effect from and after its passage, approval and
III
III
III
III
III
III
III
III
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....vvv-uu
EXHIBIT C
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BERNARDINO
AUTHORIZING THE EXECUTION AND DELIVERY OF THE FACILITY LEASE
AND THE SITE LEASE BY AND BETWEEN THE CITY OF SAN BERNARDINO
AND THE CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
BANK AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION
THEREWITH
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
. joint
and Common Council of the City of San Bernardino at a regular meeting thereof. held on
the 3rd day of April
, 2006, by the following vote, to wit:
Council Members: AYES
ESTRADA X
BAXTER X
MCGINNIS X
DERRY X
KELLEY X
JOHNSON X
MCCAMMACK X
NAYS
ABSTAIN
ABSENT
~
/ ~ /.-) ~
\ . ,c<:)vL /..; C-ZA/L/C
Rachel G. Clark
City Clerk
f>~~
The foregoing resolution is hereby approved this J
2006.
day of April
-"
f:c "......~--
Patrick 1. Morris
Mayor
Appro' d as to form and legal content:
By , (>11","7. '
/ James F. Penman
.'
! City Attorney
:
EXHIBIT C-l
CERTIFICATION OF RESOLUTION
The undersigned hereby states and certifies:
(1) I am the duly qualified and acting City Clerk ofthe City of San Bernardino (the
"Lessee"), and, as such, am familiar with the facts herein certified and am fully authorized to
certify the same.
(2) Attached hereto is a true, correct and complete copy of the resolution of the governing
body ofthe Lessee authorizing the execution and delivery of the Facility Lease dated as of
April 15, 2006, by and between the Lessee and the California Infrastructure and Economic
Development Bank, and the Site Lease dated as of April 15, 2006, by and between the Lessee
and the California Infrastructure and Economic Development Bank, adopted at a meeting
thereof duly held on the date set forth in such resolution, of which meeting all of the members
of said governing body had due notice and at which a quorum was present and acting
throughout.
(3) I further certify that I have carefully compared the attached copy of the resolution with
the original minutes of said meeting on file and of record in my office; that said copy is a true,
correct and complete copy of the original resolution duly adopted by said governing body at
said meeting and entered in said minutes; and that said resolution has not been amended,
modified or rescinded since its adoption and is in full force and effect as of the date hereof.
(4) I further certify that in accordance with Government Code section 54954.2, the
agenda of the meeting contained a brief description of the resolution to be considered at
the meeting, and a copy thereof was posted at least seventy-two (72) hours before the
meeting in a location freely accessible to members ofthe public.
Dated~j ", 2.00&
The City of San Bernardino
By~Jh.~
Rachel G. Clark
City Clerk
EXHIBIT D
PROJECT COSTS
Project Costs:
Modifications to any Project sources and uses line item financed by the Lessor shall require the
written approval of the Lessor. The Lessor Credit Support Unit Manager shall provide a revised
Project sources and uses chart for approved cumulative modifications that are less than ten
percent (10%) of the Project Amount. Approved cumulative modifications to the Lessor Project
budget that are ten percent (10%) or greater than ten percent (10%) of the Project Amount shall
require an amendment to the Facility Lease.
The Lessor shall not be responsible for the payment of any cost overruns.
The Lessee shall submit invoices only for expenses incurred. Expenses contained in the invoices
shall be listed according to the categories contained in the above Project Costs. The Lessor shall
pay ninety percent (90%) of all approved invoices for construction costs submitted to the Lessee
prior to compliance with the conditions precedent to final disbursement; provided, that if the
Lessee demonstrates to the satisfaction of the Lessor that the Lessee is obliged by law to make
payments to certain construction contractors for one hundred percent (100%) of invoiced
amounts or to establish a retention fund for final payment to certain contractors, the Lessor shall
disburse Project funds in the amount required by law.
Lessee shall not approve any change orders resulting in an increase in Project Costs without
having funds committed for the increased Project Costs.
Costs of the Project not covered by this Facility Lease will be paid by the Lessee.
No costs of the Project to be paid by the Lessor can be incurred prior to
September 27,2005 except for preliminary expenditures as shown in the Project Sources and
Uses chart herein and as described in Section 2.08(b).
Street Reconstruction and Rehabilitation $9,350,300 $4,174,804 $13,525,104
Street Reconstruction and Rehabilitation Con tin enc $147,600 $417,896 $565,496
En ineerin /Architectural/Desi n $390,000 $450,000 $840,000
Permit/Environmental $10,000 $10,000
Lessor Loan Fee $85,000 $85,000
Title and A raisal Costs $27,100 $27,100
Totals $10,000,000 $5,052,700 $15,052,700
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EXHIBIT E
CONDITIONS PRECEDENT TO DISBURSEMENT
(a) Initial Disbursement. Disbursements for the Lessor origination fee shall be made upon
the initial disbursement. No other funds shall be disbursed pursuant to this Facility Lease until
and unless Lessee, in the good faith judgment of the Lessor, has submitted the following:
(I) Documents in a form substantially similar to Exhibit C, Exhibit C-I, Exhibit H,
Exhibit I, and Exhibit L herein;
(2) Certificate of the Lessee that the Project has met all requirements ofCEQA.
Lessee shall furnish the Lessor with CEQA documents demonstrating compliance with CEQA;
(3) Insurance certificates, as required by Section 6.03;
(4) CLTA title policy in an amount not less than the Project Amount meeting the
requirements of Section 6.05;
(5)
($85,000).
Payment of origination fee in the amount of eighty-five thousand dollars
(b) Preliminary Expenditures. When all the requirements of section (a) herein are met in a
manner satisfactory to the Lessor, disbursement shall be allowed for the following costs:
preliminary expenditures as specified in Exhibit D.
(c) Construction Costs. For those costs other than the origination fee and costs described in
section (b) herein, no funds shall be disbursed pursuant to this Facility Lease until and unless
Lessee has, in the good faith judgment of the Lessor, provided Lessor with all the documents
required in section (a) herein and the following documents:
(1) Document in a form substantially similar to Exhibit K herein; and
(2) One copy of the executed construction contract(s), including any exhibits,
attachments or change orders, if and when applicable.
(d) Final disbursement: The final disbursement of Project funds shall not be made until and
unless Lessee, in the good faith judgment of the Lessor, has specifically complied with each and
every one of the following, and provided a copy of the specified document or certificate to the
Lessor:
(1) Recorded Project notice of completion or other evidence of completion
satisfactory to the Lessor;
(2) Lien waivers for the Project, or passage of the applicable statutory time periods
for filing mechanics and other similar liens;
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(3) Certification by the Lessee that the Project has been completed according to its
approved final plans and specifications, that the completed Project is consistent with the
definition of Project in this Facility Lease and is acceptable to the Lessee and that the
requirements of Section 12.08(c) have been met;
(4) Certification of Recycled Content as set out in Section 6 of Exhibit G; and
(5) Certification that the Lessee has obtained all licenses and permits (including
operating permits), and approvals from any governmental agency or authority having jurisdiction
over the Lessee in connection with the Project, where applicable;
E-2
EXHIBIT F
BASE RENTAL PAYMENTS
NOTE: The Base Rental Payments below shall confonn to the following guidelines:
This schedule is based on a tenn often years beginning May 15,2006 at an interest rate of two and thirty-seven hundredths
percent (2.37%) per annum and indicates \\lhat the Base Rental Payments will be over the course of the Facility Lease. Base
Rental Payments shall have an interest only component through July 31, 2007.
The interest component of each Base Rental Payment shall be calculated on the basis of a 360-rlay year of twelve 3D-day
months. Any installment of a principal component or an interest component of a Base Rental Payment that is not paid when
due shall continue to accrue interest at the lesser oftwc\vc percent (12%) per annum or the maximum rate permitted by law
from and including the Base Rental Payment date with respect to which such principal component or interest component is
payable to but not including the date of actual payment.
Base Rental Payment billing statements will be mUlled to the Lessee reflecting the actual amount owed prior to each Base
Rental Payment due date. With the exception of the annual fee, any Additional Rental Payments will be billed separately as
the cost is incurred.
15-May-2006
1-Aug-2006 $50,033.3 $50,033.3
1-Feb-2007 $118,500.0 $118,500.0 $198,533.3
1-Aug-2007 $1,009,886.8 $118,500.0 $1,128,386.8
1-Feb-2008 $106,532.8 $106,532.8 $1,264,919.6
1-Aug-2008 $1,033,821.14 $106,532.8 $1,140,353.9
1-Feb-2009 $94,282.0 $94,282.0 $1,261,606.38
1-Aug-2009 $1,058,322.7 $94,282.0 $1,152,604.7
1-Feb-2010 $81,740.9 $81,740.9 $1,258,214.58
1-Aug-201(j $1,083,404.9 $81,740.9 $1,165,145.8
1-Feb-2011 $68,902.5 $68,902.5 $1,254,742.3
1-Aug-2011 $1,109,081.6 $68,902.5 $1,177,984.2
1-Feb-2012 $55,759.9 $55,759.9 $1,251,187.9
1-Aug-2012 $1,135,366.8 $55,759.9 $1,191,126.8 $14,116.4
1-Feb-2013 $42,305.87 $42,305.8 $1,247,549.1
1-Aug-2013 $1,162,275.0 $42,305.8 $1,204,580.9 $10,710.3
1-Feb-2014 $28,532.91 $28,532.91 $1,243,82421
1-Aug-2014 $1,189,821.0 $28,53291 $1,218,353.91 $7,223.5
1-Feb-2015 $14,433.5 $14,433.5 $1,240,010.9
1-Aug-2015 $1,218,0197 $14,433.5 $1,232,4532 $1,236,107.3
Total Payments: $10,000,000.0 $1,272,0147 $11,272,014.7 $184,681.1 $11,456,695.9
F-I
EXHIBIT G
ST ATE CONTRACT REOUlREMENTS
SECTION 1. Record Establishment. Access and Retention.
(a) The Lessee agrees that the Lessor shall have the right to review, obtain,
and copy all records pertaining to performance of this Facility Lease. The Lessee agrees to
provide the Lessor with any relevant information requested and shall permit the access to its
premises, upon reasonable notice, during normal business hours for the purpose of interviewing
employees and inspecting and copying such books, records, accounts, and other material that
may be relevant to a matter under investigation for the purpose of determining compliance with
Government Code section 8546.7. The Lessee further agrees to maintain records concerning
costs paid with State funds for three years following the Lessor's receipt of a notice of
completion or payment of an invoice, whichever is later. In the event of a Facility Lease
performance or payment dispute, the three year minimum shall automatically be extended until
the dispute is resolved.
(b) Upon inspection, the Lessee shall promptly implement any corrective
measures recommended by the Lessor, its representatives, or the Bureau of State Audits ("BSA")
regarding the requirements of this section.
(c) The Lessee shall keep all books, records, accounts and documents
pertaining to this Facility Lease separate from other activities unrelated to this Facility Lease.
SECTION 2. Nondiscrimination Clause and Compliance Statement.
(a) By signing this Facility Lease, the Lessee and its contractors agree that
each shall not, during the performance of this Facility Lease, unlawfully discriminate, harass or
allow harassment, against any employee or applicant for employment because of sex, race, color,
ancestry, religious creed, national origin, disability (including HIV and AIDS), medical
condition (cancer), age, marital status, denial of family and medical care leave or denial of
pregnancy disability leave. The Lessee and its contractors shall ensure that the evaluation and
treatment of their employees and applicants for employment are free from such discrimination
and harassment. The Lessee and its contractors shall comply with the provisions of the Fair
Employment and Housing Act (Government Code section 12900 et seq.), and the applicable
regulations promulgated thereunder (Title 2, California Code of Regulations, section 7285.0 et
seq.). The applicable regulations of the Fair Employment and Housing Commission
implementing Government Code section 12990 (a) through (t), set forth in Chapter 5 of Division
4 of Title 2 of the California Code of Regulations are incorporated into this Facility Lease by
reference and made a part hereof as if set forth in full. The Lessee and its contractor shall give
written notice of their obligations under this clause to labor organizations with which they have a
collective bargaining or other Facility Lease.
(b) The Lessee shall include the nondiscrimination and compliance provisions
as detailed in clause (a) of this section, in all contracts to perform work under this Facility Lease.
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SECTION 3. Americans with Disabilities Act Certification. By signing this Facility
Lease, the Lessee assures the Lessor that it complies with the Americans with Disabilities Act
("ADA") of 1990 (42 U.S.C. 12101 et seq.), which prohibits discrimination on the basis of
disability, as well as all applicable regulations and guidelines issued pursuant to the ADA.
SECTION 4. National Labor Relations Board Certification. By signing this Facility
Lease, the Lessee does swear under the penalty of peIjury that no more than one final
unappealable finding of contempt of court by a federal court has been issued against the Lessee
within the immediately preceding two year period because of the Lessee's failure to comply with
an order of a federal court which orders the Lessee to comply with an order of the National
Labor Relations Board.
SECTION 5. Certification of Drug Free Workplace.
(a) By signing this Facility Lease, the Lessee hereby certifies under penalty of
peIjury under the laws of the State of California that the Lessee shall comply with the
requirements of the Drug Free Workplace Act of 1990 (Government Code section 8350 et seq.)
and shall provide a drug free workplace by:
(1) publishing a statement notifying employees that unlawful
manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited
and specifYing actions to be taken against employees for violations, as required by Government
Code section 8355(a).
(2) establishing a Drug Free Awareness Program as required by
Government Code section 8355(b), to inform employees about:
(A) the dangers of drug abuse in the workplace;
(B) the person's or organization's policy of maintaining a drug-
free workplace;
(C) any available counseling, rehabilitation and employee
assistance programs; and,
(D) penalties that may be imposed upon employees for drug
abuse violations; and,
(3) providing, as required by Government Code section 8355(c), that
every employee who performs work under this Lessee shall:
(A) receive a copy of the Lessee's drug-free policy statement; and,
(B) agree to abide by the terms of the Lessee's statement as a
condition of employment under this Facility Lease.
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(b) In addition to any other consequences specified in this Facility Lease,
failure to comply with these requirements may result in the Lessee being ineligible for award of
any future State Contracts if the Lessor determines that the Lessee:
(I) has made a false certification; or,
(2) violates the certification by failing to carry out the requirements as
noted above.
SECTION 6. Certification of Recvcled Content. The Lessee shall certify in writing,
under penalty of perjury, the minimum, if not exact, percentage of recycled content of both post-
consumer material and secondary material as defined in Public Contract Code sections 12161
and 12200, in materials, goods or supplies offered, or products used in the performance of this
Facility Lease, regardless of whether the product meets the required recycled product percentage
as defined in Public Contract Code sections 12161 and 12200. The Lessee may certify that the
product contains zero recycled content. The Recycle Certification shall be delivered to the
Lessor not more than thirty (30) calendar days following the date of the notice of completion.
SECTION 7. Child Support Compliance Act.
(a) The Lessee recognizes the importance of child and family support
obligations and shall fully comply with all applicable State and federal laws relating to child and
family support enforcement, including, but not limited to, disclosure of information and
compliance with earnings assignment orders, as provided in Chapter 8 (commencing with section
5200) of Part 5 of Division 9 of the Family Code; and
(b) The Lessee, to the best of its knowledge, is fully complying with the
earnings assignment orders of all employees and is providing the names of all new employees to
the New Hire Registry, maintained by the California Employment Development Department.
SECTION 8. Welfare Recipients.
(a) The Lessee shall give priority consideration in filling vacancies in
positions funded by the Lessee to qualified recipients of aid under Chapter 2 (commencing with
section 11200) of Part 3 of Division 9 of the Welfare and Institutions Code in accordance with
Article 3.9 (commencing with section 11349) of Chapter 2 of Part 3 of Division 9 of the Welfare
and Institutions Code.
(b) Nothing in this provision shall be construed to:
(I)
bargaining agreements;
interfere with or create a violation of the terms of valid collective
(2)
require the Lessee to hire an unqualified recipient of aid;
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(3) interfere with or create a violation of any federal affirmative action
obligation of the Lessee for hiring disabled veterans or veterans of the Vietnam era; or,
(4) interfere with or create a violation of the requirements of Government
Code section 12990.
SECTION 9. Prevailing Wages.
(a) By signing this Facility Lease, the Lessee agrees to comply with the
provisions of section 1720 et seq. of the California Labor Code in the award of public works
contracts and subcontracts involving the expenditure of funds provided in this Facility Lease,
and to insure that its contractor and subcontractors meet the requirements of those enactments.
(b) The Lessee shall comply with Labor Code provisions that include but are
not limited to the following requirements: The Lessee shall obtain, from the Director of the
Department of Industrial Relations, the general prevailing rate of per diem wages and the general
prevailing rate for holiday and overtime work in the locality in which the public work is to be
performed for each craft, classification, or type of worker needed to execute the Facility Lease.
The Lessee shall either specifY the general prevailing rates in bid and contract documents or
include a statement in those documents that such information is available; take cognizance of
any violations of prevailing wage law and notify the Department of Industrial Relations of such
violations; require that the contractor and subcontractors keep adequate payroll and other records
and withhold funds pending investigation of violations.
(c) The Lessee shall require its contractor and subcontractors to adhere to
prevailing wage requirements, including but not limited to the following requirements: contracts
between the contractor and subcontractors must include provisions regarding prevailing wage;
the contractor shall monitor subcontractors' payment of prevailing wage by periodically
reviewing certified payroll records and diligently taking corrective action if the subcontractors
fail to pay prevailing wage; contractor and subcontractors shall maintain certified payroll records
and time records. The contractor to whom a contract is awarded, and any subcontractor under
him, shall not pay less than the specified prevailing wage; contractor and subcontractors are
subject to penalties for violations of prevailing wage provisions.
(d) The Lessee acknowledges that it has been informed by the Lessor that the
Lessor may contract with the Department ofIndustrial Relations to conduct random audits of
some contracts to assure compliance with prevailing wage requirements. The Lessee shall
require its contractor and subcontractors to cooperate in an audit if requested to do so by the
Lessor and shall inform its contractor and subcontractors that spot audits are planned.
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EXHIBIT H
TAX CERTIFICATE
This Tax Certificate is executed and delivered by the City of San Bernardino (the
"Lessee") in connection with the Facility Lease between the Lessee and the California
Infrastructure and Economic Development Bank (the "Lessor"), dated as of April 15, 2006 (the
"Obligation") in the amount often million dollars ($10,000,000). The Lessee certifies,
covenants, warrants and represents as follows:
ARTICLE I. IN GENERAL
1.1 The Lessee. The Lessee is a charter city and municipal corporation duly
organized and existing under the laws of the State of California.
1.2 Purpose of Tax Certificate. The Lessor has issued bonds (the "Bonds")
that will be used to fund the Obligation. The Lessee is delivering this Tax Certificate to the
Lessor with the understanding that the Lessor will rely in part upon this Tax Certificate in
obtaining an opinion from bond counsel that interest on the Bonds is excluded from gross
income for federal income tax purposes under section 103 of the Code (as defined below).
1.3 Purpose of Financing. The Obligation is being issued to finance the
Pavement Reconstruction and Rehabilitation Project on the Lessee's property (the "Project"), as
described in more detail in the application of the Lessee to the Lessor, dated September 1, 2005,
including amendments thereto and in Exhibit D of the Obligation.
1.4 Definitions. Unless the context otherwise requires, the following
capitalized terms have the following meanings:
"Code" means the Internal Revenue Code of 1986 (including amendments
thereto).
"Current Revenues" has the meaning given thereto in Section 2.7 hereof.
"Governmental Unit" means any state, or political subdivision of a state, but
excludes the United States and its agencies or instrumentalities.
"Investment Property" means any security or obligation, any annuity contract, or
any other investment-type property, but does not include any Tax-Exempt Bond unless
such obligation is a "specified private activity bond" within the meaning of section
57(a)(5)(C) of the Code.
"Nongovernmental Person" means any person or entity other than a
Governmental Unit.
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"Payment Account" has the meaning given thereto in Section 2.7 hereof.
"Preliminary Expenditures" means architectural, engineering, surveying, soil
testing, and similar costs paid with respect to the Project in an aggregate amount not
exceeding twenty percent (20%) of the Obligation. However, Preliminary Expenditures
do not include land acquisition, site preparation or similar costs incident to the
commencement of construction.
"Tax-Exempt Bond" means any obligation the interest on which is excluded from
gross income for federal income tax purposes pursuant to section 103 of the Code or
section 103 of the Internal Revenue Code of 1954, as amended, and Title XIII of the Tax
Reform Act of 1986, as amended, as well as stock in a regulated investment company to
the extent at least ninety- five percent (95%) of income to the stockholder is treated as
interest that is excludable from gross income under section 103 of the Code.
ARTICLE II. TAX LIMITATIONS
2.1 Expenditure of Proceeds. On September 27, 2005, the Lessor adopted a
resolution stating its official intent to be reimbursed from the proceeds of a borrowing to finance
costs of the Project (the "Reimbursement Resolution"). Proceeds of the Obligation shall be used
exclusively for the following purposes: (i) Preliminary Expenditures paid prior to September 27,
2005, (ii) architectural, engineering, surveying, soil testing, and similar costs paid with respect to
the Project paid on or after September 27,2005; (iii) capital expenditures originally paid by the
Lessee on or after September 27,2005; (iv) interest on the Obligation through the later of three
years after the date hereof or one year after the Project is placed in service, and (v) initial
operating expenses directly associated with the Project (in aggregate amount not exceeding five
percent (5%) of the amount of the Obligation).
2.2 Governmental Bond Status. The Lessee will not loan any of the
proceeds of the Obligation to one or more Nongovernmental Persons. The Lessee will not allow
more than five percent (5%) of proceeds of the Obligation or more than five percent (5%) of the
Project to be used directly or indirectly by any Nongovernmental Person, other than as a member
of the general public. In addition, a Nongovernmental Person will be treated as "using" proceeds
of the Obligation to the extent the Nonexempt Person:
(i) borrows proceeds of the Obligation, or
(ii) uses the Project (~, as owner, lessee, service provider, operator or
manager).
2.3 Change in Use. The Lessee reasonably expects to use all proceeds of the
Obligation and all of the Project as set forth in Section 2.1 for the entire stated term to maturity
of the Obligation. Absent written agreement by the Lessor, the Lessee in fact will use all
proceeds of the Obligation and all of the Project as set forth in Section 2.1.
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2.4 Federal Guarantee. The Lessee will not directly or indirectly use or
permit the use of any proceeds of the Obligation or take or omit to take any action that would
cause the Bonds to be obligations that are "federally guaranteed" within the meaning of section
149(b) of the Code. In furtherance of this covenant, the Lessee will not allow the payment of
principal or interest with respect to the Obligation to be guaranteed (directly or indirectly) in
whole or in part by the United States or any agency or instrumentality thereof. The Lessee will
not use five percent (5%) or more of the proceeds of the Obligation to make or finance loans the
payment of principal or interest with respect to which is guaranteed in whole or in part by the
United States or any agency or instrumentality thereof.
2.5 No Refunding. Proceeds of the Obligation will not be used directly or
indirectly to make principal, interest or premium payments with respect to any tax-exempt
obligation.
2.6 No Hedge Bonds. The Lessee reasonably expects that more than eighty-
five percent (85%) of proceeds of the Obligation will be expended for the purposes of the
Obligation within three years.
2.7 Rental Payments. "Payment Account" means the funds or accounts (or
any portions of any funds or accounts) that will hold monies that are expected by the Lessee to
be used to pay rental payments on the Obligation. "Current Revenues" means revenues which
are both received by the Lessee and utilized for the payment of rental payments on the
Obligation within a six month period. All amounts used to fund the Payment Account will be
deemed to have been made from the Payment Account by using a last-in, first-out accounting
method. Lessee agrees that the amounts used to pay debt rental payments shall be both received
by the Lessee and utilized for the payment of rental payments on the Obligation within a thirty
(30) day period. The Payment Account will be used primarily to achieve a proper matching of
revenues and rental payments within each year; a matching of revenues means that revenue and
rental payments come in and go out at approximately the same level and the Payment Account is
cleared out to a very low balance at least one time during the year. Current Revenues in the
Payment Account shall be invested without regard to yield so long as Lessee complies with this
section.
2.8 No Other Replacement Proceeds. The Lessee will not use any proceeds
of the Obligation to replace funds of the Lessee which are or will be used to acquire Investment
Property reasonably expected to produce a yield that is materially higher than the yield on the
Obligation.
2.9 No Expected Sale. It is not expected that the Project or any part thereof
will be sold or otherwise disposed of so long as the Obligation is outstanding.
2.10 Tax Covenant. The Lessee will not take any action, or fail to take any
action, if such action or failure to take such action would adversely affect the exclusion from
gross income of the interest on the Bonds pursuant to section 103 ofthe Code and specifically
(i) the Lessee will not directly or indirectly use or make any use of the proceeds of the Bonds or
any other funds of the Lessee or take or omit to take any action that would cause the Bonds or to
H-3
be "arbitrage bonds" subject to federal income taxation by reason of section 148 of the Code or
obligations subject to federal income taxation because they are "federally guaranteed" as
provided in section 149(b) of the Code, as applicable; and (ii) to that end the Lessee, with respect
to the proceeds of the Bonds will comply with all requirements of such sections of the Code to
the extent that such requirements are, at the time, applicable and in effect; provided, that if the
Lessee shall obtain an Opinion of Counsel nationally recognized in the area of the exemption of
interest from gross income under the Code to the effect that any action required under this
Section is no longer required, or to the effect that some further action is required, to maintain the
exclusion from gross income of the interest evidenced and represented by the Bonds pursuant to
section 103 of the Code, as applicable, the Lessee may rely conclusively on such opinion in
complying with the provisions hereof.
2.11 Private Use. No more than five percent (5%) of the Project (determined
both on the basis of space and cost) shall be used for private use. Private use includes use in the
trade or business of any nongovernmental persons, but does not include the portion of the
proceeds properly allocable to facilities expected to be used by an organization described in
section 501(c)(3) of the Code in a manner that does not constitute an unrelated trade or business
of such organization, as defined in section 513(a) of the Code. For purposes of this section, the
federal government is considered a nongovernmental person.
(a) For purposes of this section, private use shall include any contract for
the management or operation of any portion of the Project unless each of the following conditions is
met: (i) the term of such contract (including renewal options) does not exceed five years; (ii) the
manager or operator under such contract is not compensated on the basis of a share of net profits;
(iii) the compensation ofthe manager or operator is reasonable; (iv) the Lessee must be able to
cancel such contract without penalty or cause at the end of the third year of the contract; and
(v) neither the Lessee nor the manager or operator may control more than twenty percent (20%) of
the voting power of the other's governing board; and
(b) The service provider's compensation for management or operation
services rendered must be pursuant to one of the following four methods: (i) at least fifty percent
(50%) of annual compensation is based on a periodic fixed fee; (ii) the compensation is based on a
capitation fee or a combination of a capitation fee and a periodic fixed fee; (iii) in the case of certain
contracts with a term not longer than three years, the compensation is based on a per-unit fee or a
combination of a per-unit fee and periodic fixed fee and the contract is cancelable after two years;
and (iv) in the case of certain contracts with a term not longer than two years, the compensation is
based on a percentage offees charged and the contract is cancelable after one year.
(c) The term "renewal option" as used in this Section, means a provision
under which the service provider has a legally enforceable right to renew the contract. Thus, for
example, a provision under which a contract is automatically renewed for one year periods absent
cancellation by either party is not a renewal option (even if it is expected to be renewed).
H-4
ARTICLE III. OTHER MATTERS
3.1 Expectations. The undersigned is an authorized representative of the
Lessee acting for and on behalf of the Lessee in executing this Tax Certificate. To the best of the
knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that
would materially change the expectations as set forth herein, and said expectations are
reasonable.
3.2 Amendments. Notwithstanding any other provision of this Tax
Certificate, the Lessee may amend this Tax Certificate and thereby alter any actions allowed or
required by this Tax Certificate if such amendment is signed by an authorized officer and is
supported by formal written agreement by the Lessor.
3.3 Survival of Defeasance. Notwithstanding any provision in this Tax
Certificate to the contrary, the obligation to comply with all requirements contained in this Tax
Certificate shall survive defeasance or prepayment of the Obligation.
.,
Dated: (Gp,,"Y7/)D tJ{.
THE CITY OF SAN BERNARDINO
By ~:v~
p . ck J. Mo' .
.. ___ Mayor
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EXHIBIT I
FORM OF CERTIFICATE OF
DIRECTOR OF FINANCE OF THE CITY OF SAN BERNARDINO (THE "LESSEE")
The undersigned hereby states and certifies:
(I) I am the duly qualified Director of Finance of the Lessee, and, as such, am familiar with
the facts herein certified and am fully authorized to certify the same.
(2) The financial data submitted to the California Infrastructure and Economic Development
Bank (the "Lessor") by Lessee in the application for financing (including supplements thereto) in
connection with the Facility Lease by and between the Lessor and the Lessee (the "Facility
Lease") was true at the time submitted to Lessor and as of the date of this certification, remains
true and correct in all material respects, and such information did not and does not contain any
untrue or misleading statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under which they were
made.
(3) The Base Rental Payments and Additional Rental Payments for the current fiscal year are
included in the adopted budget of the Lessee.
(4) The Lessee is not in breach of or in default under any bond indenture, loan agreement,
note, lease or other instrument to which it is a party.
(5) The representations and warranties made in the Facility Lease are true and correct as if
made on the date of this certificate.
(6) All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Facility Lease.
Dated:
~/~
,~
THE CITY OF SAN BERNARDINO
By ~.f",~J/ gL
Barbara Pachon, rector of Finance
I-I
EXHIBIT J
Reserved
J-1
EXHIBIT K
FORM OF CERTIFICATE OF
THE CITY MANAGER OF THE CITY OF SAN BERNARDINO (THE "LESSEE")
The undersigned hereby states and certifies:
(I) I am the duly qualified and acting City Manager of the Lessee, and, as such, am
familiar with the facts herein certified and am fully authorized to certify the same.
(2) The Lessee has obtained any and all lands, rights-of-way, easements, lot line
adjustments, and orders of possession which are required for construction and operation of the
Project;
(3)
All required permits have been obtained for the construction of the Project;
(4)
obtained.
Performance and Payment Bonds complying with Section 12.12 have been
(5)
Regarding the construction contracts for the Project:
(A) All construction contracts and subcontracts necessary for Project
construction have been awarded, and were awarded pursuant to competitive
bidding and Lessee procedures normally required for similar construction
projects;
(B) Costs are consistent with the Exhibit D budget;
(C) All prime contracts require the contractor to maintain appropriate builder's
risk insurance and name Lessee as loss payee and additional insured, require the
contractor to maintain liability insurance and name the Lessee as a loss payee and
an additional insured, and include the performance and payment bond provisions
set forth in Section 12.12 of this Facility Lease and name the Lessee as loss payee
and additional insured;
(D) All construction contracts are let to the lowest responsible bidder at a fixed
price subject to increase only for allowable extra work, change orders approved
by Lessee, and damages or delays authorized by the laws of the State. Lessee
shall not approve any change orders resulting in an increase in Project costs
without having funds committed for the increased Project costs;
(E) All construction contracts require payment of prevailing wage rates and
compliance with Chapter 1 (commencing with section 1720) of Part 7 of
Division 2 of the California Labor Code;
K-l
(F) All construction contracts require payment of workers' compensation
insurance by contractors and subcontractors; and
(G) All construction contracts include the nondiscrimination provisions set
forth in Section 13.01; and.
(H) Lessee utilized contractor pre-qualification forms developed by the
Director ofIndustrial Relations as set forth in AB 574 (Chapter 972 of the
Statutes of 1999) codified in Public Contract Code section 20101 et seq.
(6) All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Facility Lease.
Dated: ~ / t.f
t
,~
THE CITY OF SAN BERNARDINO
By
~
Fred Wilson
City Manager
K-2
EXHIBIT L
OFFICE OF THE CITY ATTORNEY
CITY OF SAN BERNARDINO
JAMES F. PENMAN
CITY ATTORNEY
April 16, 2006
The City of San Bernardino
Fred Wilson, City Manager
California Infrastructure and Economic Development Bank
Attn: Credit Support Unit, CIEDB B05-0M
1001 I Street, 19th Floor
Sacramento, CA 95814
RE: Facility Lease, By and Between the City of San Bernardino, as Lessee and the California
Infrastructure and Economic Development Bank, as Lessor, Dated as of April 15, 2006,
Agreement No. CIEDB B05-0M in the amount not to exceed ten million dollars
($10,000,000), for the Pavement Reconstruction and Rehabilitation Project and Site Lease,
Dated as of April 15, 2006.
Ladies and Gentlemen:
In my capacity as Senior Assistant City Attorney of the City of San Bernardino (the "Public
Agency") and in connection with the above described Facility Lease and Site Lease (together the
"Agreements"), I have examined the laws pertaining to the Public Agency; the originals of the
Agreements, signed by the Public Agency; the Public Agency's resolution adopted April 3, 2006
(the "Resolution"); and such other information and documents as I considered necessary to render
this opinion.
Based upon the foregoing, it is my opinion that:
(i) the Public Agency is a body public and corporate, and a public instrumentality of the State
of California duly organized and validly existing pursuant to the laws of the State of California;
(ii) the Resolution and other actions of the Public Agency approving and authorizing the
execution and delivery of the Agreements were duly adopted at a meeting of the governing body of
the Public Agency which was called and held pursuant to law and with all public notice required by
law and at which a quorum was present and acting throughout;
(iii) the Public Agency has full right and lawful authority to execute and deliver the
Agreements and the Agreements have been duly authorized and executed on behalf of the Public
300 NORTH "D" STREET. SAN BERNARDINO, CA 92418-000 j . (909) 384-5355 . FAX (909) 384-5238
EXHIBIT L
Agency and the Agreements are the legal, valid and binding obligations of the Public Agency
enforceable in accordance with its respective terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws, or by legal or equitable principles relating to
or limiting creditors' rights generally;
(iv) to the best of my knowledge, after due inquiry, the execution and delivery of the
Agreements and compliance with the provisions thereof, under the circumstances contemplated
thereby, do not and will not in any material respect conflict with or constitute on the part of the
Public Agency a breach of or default under any agreement or other instrument to which the Public
Agency is a party or by which it is bound or any existing law, regulation, court order or consent
decree to which the Public Agency is subject; and
(v) to the best of my knowledge, after due inquiry, there is no action, suit, proceeding,
inquiry or investigation before or by any court or public body pending or threatened against or
affecting the Public Agency: I) challenging or questioning the transactions contemplated by the
Agreements or any other agreement, document or certificate related to such transactions; 2)
challenging or questioning the creation, organization, existence or powers of the Public Agency; 3)
seeking to enjoin or restrain the execution of the Agreements or the building of the Project defined
in the Agreements or the collection of any of the revenues due under the Agreements; 4) in any way
questioning or affecting any of the rights, powers, duties or obligations of the Public Agency with
respect to the obligation to budget and appropriate available funds as required by the Agreements;
5) in any way questioning or affecting any authority for the execution of the Agreements or validity
or enforceability of the Agreements; or 6) in any way questioning or affecting any other agreement
or instrument concerning the Agreements to which the Public Agency is a party.
I do not render any opinion as to any federal or state securities or tax law. I am furnishing
this letter solely for your benefit. This letter is not to be used, circulated, quoted or otherwise
referred to for any other purpose.
The opinions expressed herein may be affected by actions taken or events occurring after the
date hereof. The undersigned has not undertaken to determine or to inform any person whether any
such subsequent actions or events are taken or occur.
Yours very truly,
JAMES F. PENMAN,
C70~!/(lil~
Douglas H. Calkins
Senior Assistant City Attorney
Recording Requested By and Return To:)
)
CALIFORNIA INFRASTRUCTURE AND )
ECONOMIC DEVELOPMENT BANK )
Attn: Credit Support Manager )
1001 I Street, 19th Floor )
Sacramento, CA 95814 )
This document is recorded for the benefit of the CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK and the recording is fee-exempt under Section 27383 of
the California Government Code.
SITE LEASE
Dated as of April 15, 2006
by and between the
THE CITY OF SAN BERNARDINO, as lessor
and the
CALIFORNIA INFRASTRUCTURE AND ECONOMIC
DEVELOPMENT BANK, as lessee
SITE LEASE
THIS SITE LEASE, dated as of April 15, 2006, by and between The City of San
Bernardino, a charter city and municipal corporation duly organized and existing under the laws
of the State of California (herein called the "Site Lessor") and the CALIFORNIA
INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, duly organized and
existing pursuant to the Bergeson-Peace Infrastructure and Economic Development Bank Act,
constituting Division I of Title 6.7 of the California Government Code (commencing at Section
63000 thereot) as now in effect and as it may from time to time hereafter be amended (the "Act")
(herein called the "CIEDB");
WIT N E SSE T H:
WHEREAS, the CIEDB intends to assist the Site Lessor pursuant to the Act by
financing the construction, plus certain related costs, of the Pavement Reconstruction and
Rehabilitation Project (herein called the "Project" and
WHEREAS, the Site Lessor owns the real property situated at 120 19th Street,
2121 Medical Center Drive, 2641 North E Street, 1640 Kendall Street, 1290 North Del Rosa
Avenue, 282 West 4th Street, 3398 East Highland Avenue and 450 Vanderbilt Way all in San
Bernardino, CA. * (the land and improvements are together herein called the "Facility"); and
WHEREAS, the CIEDB intends to lease the Facility to the Site Lessor by a
facility lease (herein called the "Facility Lease") and the Site Lessor intends to enter into such a
lease with the CIEDB as a material consideration for the CIEDB's agreement to finance the
construction of the Project for and on behalf of the Site Lessor;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED as follows:
SECTION 1. Site.
The Site Lessor hereby leases to the CIEDB and the CIEDB hereby hires from the
Site Lessor, on the terms and conditions hereinafter set forth, the real property situated in San
Bernardino County, State of California, and described in Exhibit A attached hereto and made a
part hereof and all improvements thereon (herein called the "Site").
SECTION 2. Assignment bv the CIEDB.
The Site Lessor acknowledges that the CIEDB has authority to issue tax-exempt
bonds, that the Facility may be used to secure such bonds and that certain of the rights of the
CIEDB hereunder will be assigned to a trustee under an indenture (the "Indenture"). The Site
Lessor agrees to execute all documents which may be reasonably requested by the CIEDB or the
trustee to protect their interests in the Facility during the term hereof.
SECTION 3. Term.
The term of this lease shall commence on the earlier of the date of recordation of
this lease in the office of the County Recorder of San Bernardino County, State of California, or
April 15, 2006, and shall end on April 14, 2016, unless such term is extended or sooner
terminated as hereinafter provided. If on such date, the indebtedness of or advance for
construction costs of the Project and related costs provided by or owed to the CIEOB (the
"CIEOB Obligation") shall not be fully paid, or if the rental payable under the Facility Lease
shall have been abated at any time and for any reason, then the term of this lease shall be
extended until ten days after the CIEDB Obligation shall be fully paid pursuant to the Facility
Lease or the Indenture, except that the term of this lease shall in no event be extended beyond
April 14, 2021. If prior to April 14, 2021, the CIEDB Obligation is discharged by its terms, the
term of this lease shall end ten days thereafter or ten days after written notice by the Site Lessor
to the CIEOB, whichever is earlier.
SECTION 4. Rental.
The CIEOB shall pay to the Site Lessor as and for rental hereunder the sum of
One Dollar ($1), all of which rental shall be payable in full within ten days of the recordation
hereof. In addition to the foregoing rental payment, the CIEDB may pay to the Site Lessor as
and for rental hereunder such surplus moneys, if any, as shall be paid over to the Site Lessor
pursuant to the Facility Lease.
SECTION 5. Purpose.
The CIEOB shall use the Site solely for the purpose ofleasing the Facility to the
Site Lessor pursuant to the Facility Lease and for such purposes as may be incidental thereto,
provided, that in the event of default by the Site Lessor under the Facility Lease the CIEOB may
exercise the remedies provided in the Facility Lease.
SECTION 6. Right of Entrv.
The Site Lessor reserves the right for any of its duly authorized representatives to
enter upon the Site at any reasonable time to inspect the same or to make any repairs,
improvements or changes necessary for the preservation thereof.
SECTION 7. Termination.
The CIEOB agrees, upon the termination or expiration of this lease, to quit and
surrender the Site in the same good order and condition as the same was in at the time of
commencement of the term hereunder, except for acts of God and reasonable wear and tear and
any actions taken by the Site Lessor that may affect the condition of the Site, and agrees that any
permanent improvements and structures existing upon the Site at the time of such termination or
expiration of this lease shall remain thereon and title thereto shall vest in the Site Lessor.
2
SECTION 8. Default.
In the event the CIEDB shall be in default in the performance of any obligation on
its part to be performed under the terms of this lease, which default continues for sixty (60) days
following notice and demand for correction thereof to the CIEDB, the Site Lessor may exercise
any and all remedies granted by law, except that no merger of this lease and of the Facility Lease
shall be deemed to occur as a result thereof; orovided, however, that the Site Lessor shall have
no power to terminate this lease by reason of any default on the part of the CIEDB if such
termination would affect or impair any assignment or sublease of all or any part of the Site then
in effect between the CIEDB and any assignee or subtenant of the CIEDB (other than the Site
Lessor under the Facility Lease); and provided further, that so long as the CIEDB Obligation is
outstanding and unpaid in accordance with the terms of the Facility Lease or the Indenture, the
rentals or any part thereof payable to the CIEDB or its assignees shall continue to be paid to the
CIEDB or its assignees. So long as any assignee or subtenant of the CIEDB shall duly perform
the terms and conditions of this lease and of its then existing sublease (if any), such assignee or
subtenant shall be deemed to be and shall become the tenant of the Site Lessor hereunder and
shall be entitled to all of the rights and privileges granted under any such assignment or sublease;
orovided further, however, that so long as the CIEDB Obligation is outstanding and unpaid in
accordance with the terms of the Facility Lease or the Indenture, the rentals or any part thereof
payable to the CIEDB or its assignees (by the terms of such assignment or sublease) shall
continue to be paid to the CIEDB or its assignees.
SECTION 9. Ouiet Eniovment.
The CIEDB at all times during the term of this lease, subject to the provisions of
Section 8 hereof, shall peaceably and quietly have, hold and enjoy all of the Site.
SECTION 10. Waiver of Personal Liabilitv.
All liabilities under this lease on the part of the CIEDB are solely liabilities of the
CIEDB as an entity of state government, and the Site Lessor hereby releases each and every
member, officer, agent and employee of the CIEDB of and from any personal or individual
liability for negligence under this lease. All liabilities under this lease on the part of the Site
Lessor are solely liabilities of the Site Lessor as a local government entity under the laws of the
State of California, and the CIEDB hereby releases each and every member, officer, agent and
employee of the Site Lessor of and from any personal or individual liability for negligence under
this lease.
SECTION 11. Taxes.
The Site Lessor covenants and agrees to pay any and all assessments of any kind
or character and also all taxes, including possessory interest taxes, levied or assessed upon the
Site (including both land and improvements); orovided, however, that the Site Lessor shall not
pay any possessory interest taxes levied as a result of any assignment or sublease of all or any
part of the Site then in effect between the CIEDB and any assignee or subtenant of the CIEDB
(other than the Site Lessor under the Facility Lease).
3
SECTION 12. Eminent Domain.
In the event the whole or any part of the Site or the improvements thereon
(including the Facility) is taken permanently or temporarily under the power of eminent domain,
the interest of the CIEDB shall be recognized and is hereby determined to be the amount of the
then unpaid indebtedness incurred or advanced by the CIEDB to finance or refinance the
construction of the Project, including the unpaid principal of and interest on the CIEDB
Obligation, and shall be paid as required by the Facility Lease or the Indenture. The term
"unpaid indebtedness," as used in the preceding sentence, includes the face amount of the
indebtedness evidenced by the CIEDB Obligation, together with the interest thereon and all other
payments required to be made pursuant to the Facility Lease or the Indenture, until such
indebtedness, together with the interest thereon, has been paid in full in accordance with the
terms thereof.
SECTION 13. License to Access Site Utilities and Parking.
The Site Lessor hereby irrevocably grants to the CIEDB and the CIEDB hereby
accepts from the Site Lessor, during the term of this lease, a license for ingress and egress to the
Facility.
The Site Lessor agrees to provide or cause to be provided to the CIEDB, at
reasonable rates and charges payable by the CIEDB, its assigns or sublessees, adequate parking
spaces and such utility services, including electricity, gas, water, sewer, garbage disposal,
heating, air conditioning and telephone, as the Site Lessor provides or causes to be provided to
structures similar to the Facility.
SECTION 14. Partial Invaliditv.
If anyone or more of the terms, provisions, covenants or conditions of this lease
shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this lease shall be
affected thereby, and each provision of this lease shall be valid and enforceable to the fullest
extent permitted by law.
SECTION 15. Notices.
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests, agreements or promises or other communications hereunder by either
party to the other shall be in writing and shall be sufficiently given and served upon the other
party if delivered personally or if mailed by United States certified or registered mail, return
receipt requested, postage prepaid, and, if to the Site Lessor, addressed to The City of San
Bernardino, 300 North D Street, San Bernardino, CA 924]8, Attention: City Manager, or, if to
the CIEDB, addressed to the CIEDB at California Infrastructure and Economic Development
Bank, Attn: Credit Support Manager, P.O. Box 2830, Sacramento, CA 95812-2830 or ifby
personal delivery or overnight mail, to California Infrastructure and Economic Development
Bank, Attn: Credit Support Manager, 1001 I Street, 19th F]oor, Sacramento, CA, 95814, with a
copy to the trustee for the bonds issued by the CIEDB, if any, at such address as may be
4
provided by such trustee for such purpose, or to such other addresses as the respective parties
may from time to time designate by notice in writing.
SECTION 16. Section Headings.
All section headings contained herein are for convenience of reference only and
are not intended to define or limit the scope of any provision of this lease.
SECTION 17. Amendment.
This lease may only be amended by a written instrument duly authorized and
executed by the ClEDB and the Site Lessor.
[The balance of this page is intentionally left blank.]
5
IN WITNESS WHEREOF, the Site Lessor and the CIEDB have caused this lease to be
executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
THE CITY OF SAN BERNARDINO, as Site
Lessor
BY~.~"""""'"
Pa ick 1. Morris ~'---
Mayor
Attest
By ~G~ar~
City Clerk
Approved as to form and legal content:
By
a
/
.~
James F. Penman
City Attorney
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK, as lessee
BY~.d(
Stanton C. Hazelro
Executive Director
Attest
By
&~JJI) ~
,
Blake Fowler
Assistant Executive Director
6
STATE OF CALIFORNIA
)
) ss
)
COUNTY OF SACRAMENTO
On YYl ~ 4 , 20.i. before me, Tom Martin, a Notary Public in and for the
State of Califo la, personally appeared STANTON C. HAZELROTH, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person or the entity on behalf
of which the person acted, executed the instrument.
Witness my hand and official seal
[SEAL] :;;;;;Jf~'
TOM MARTIN
COMM. 1/1576828 S;
. NOTARY PUBUC-<:AUFORNIA G)
SACRAMENTO COUNTY 0
COMM. EXP. MAY 7. 2009"'
7
STATE OF CALIFORNIA )
) ss
COUNTY OF San Bernardino)
On April 7 ,2006, before me, David M. Gutierrez a Notary
Public in and for the State of Cali fomi a, personally appeared Patrick J. Morris
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he/shecexecuted
the same in his/Ja~r authorized capacity, and that by hisla.ef signature on the instrument the
person or the entity on behalf of which the person acted, executed the instrument.
Witness my hand and official seal
O~;/L~i
DiM) II. GiIIII!lIU
000...-".# IWI9I
. Noby IUlIC - ~
San Ben'.o.UH.o ~ty
MyCorrm ~""30._
[SEAL]
-;;.
8
EXHIBIT A
Property Description
Real property in the City of San Bernardino, County of San Bernardino, State of California, described as
follows:
PARCEL 1:
LOT 11, BLOCK 18, OF THE FIVE ACRE SURVEY OF THE RANCHO SAN BERNARDINO, IN THE CITY OF
SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CAliFORNIA, AS SHOWN BY MAP ON
FILE IN BOOK 7, PAGE 2 OF MAPS, RECORDS OF SAID COUNTY. EXCEPTING THEREFROM THAT
PORTION OF SAID LAND CONVEYED TO THE CITY OF SAN BERNARDINO BY DOCUMENT RECORDED IN
APRIL 30, 1914 IN BOOK 548, PAGE 119 OF DEEDS, RECORDS OF SAID COUNTY.
0139-241-07-0-000 1201 9th Street
PARCEL 2:
THE SOUTH 150 FEET OF THE WEST 250 FEET OF LOT 1 OF TRACT NO. 2852, PER MAP RECORDED IN
BOOK 40 OF MAPS, PAGES 29 AND 30, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY;
SAID MEASUREMENTS BEING ALONG THE WEST AND SOUTH LINES, RESPECTIVELY, OF SAID LOT 1.
0143-012-44-0-000 2121 Medical Center Drive
PARCELS 3 & 4:
THAT PORTION OF LOT 4, BLOCK 8S, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO,
AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS
FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF LOT 4, BLOCK "H", TRACT NO. 1758,
POLYTECHNIC SQUARE #3, AS PER PLAT RECORDED IN BOOK 25 OF MAPS, PAGE 51, RECORDS OF
SAID COUNTY; THENCE WEST 25 FEET TO THE SOUTHWEST CORNER OF THE PARCEL OF LAND
CONVEYED TO LESTER E. BAILEY AND WIFE BY DEED RECORDED JUNE 30, 1936 IN BOOK 1144, PAGE
399 OF OFFICIAL RECORDS; THENCE NORTH ALONG THE WEST LINE OF THE PROPERTY CONVEYED,
84.0 FEET TO THE SOUTH LINE OF THE PROPERTY CONVEYED TO THE CITY OF SAN BERNARDINO BY
DEED RECORDED IN BOOK 55, PAGE 267 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE EAST 65
FEET; THENCE SOUTH 84 FEET TO A POINT IN THE NORTH LINE OF LOT 5, SAID TRACT NO. 1758;
THENCE WEST 40 FEET TO THE POINT OF BEGINNING. ALSO THAT PORTION OF LOT 4, BLOCK 85,
RANCHO SAN BERNARDINO; COMMENCING AT THE SOUTHWEST CORNER OF THE CATHOLIC
CEMETARY; THENCE EAST ALONG THE SOUTH liNE OF THE CATHOliC CEMETARY THREE HUNDRED
(300) FEET; THENCE SOUTH EIGHTY-FOUR (84) FEET; THENCE WEST THREE HUNDRED (300) FEET TO
THE EAST LINE OF "E" STREET; THENCE NORTH EIGHTY-FOUR (84) FEET TO THE POINT OF
BEGINNING.
0149-161-17-0-000 AND 0149-161-12-0-000 2641 North E Street
A-I
PARCEL 5:
PARCEL NO.1 OF PARCEL MAP NO. 3339 AS PER PLAT THEREOF RECORDED IN BOOK 30 OF PARCEL
MAPS, PAGE 2, RECORDS OF THE COUN1Y RECORDER OF 5AID COUN1Y. EXCEPTING THEREFROM ANY
PORTION LYING WITHIN TRACT 13039 ON FILE IN BOOK 195 PAGES 87 AND 88 OF MAPS, RECORDS
OF SAN BERNARDINO COUN1Y.
0266-601-03-0-000 1640 Kendall Street
PARCEL 6:
PORTION OF THOSE PARTS OF LOT 2, BLOCK 4 AND OF LOT 6, BLOCK 7, ORANGE GROVE TRACT, AS
PER PLAT RECORDED IN BOOK 11 OF MAPS, PAGE 14, RECORDS OF SAID COUN1Y, DESCRIBED IN
DOCUMENTS RECORDED IN BOOK 1555, PAGE 56 AND IN BOOK 1560, PAGE 4, BOTH OF OFFICIAL
RECORD5 OF 5AID COUN1Y, SAID PORTION BEING ALL OF 5AID PARTS LYING EASTERLY FROM A LINE
THAT IS PARALLEL WITH AND DISTANT WESTERLY, 335 FEET FROM THE CENTERLINE OF DEL ROSA
AVENUE. EXCEPTING ALL OIL, GAS AND HYDROCARBON SUBSTANCES IN SAID PROPER1Y, WITH THE
RIGHT TO DRILL FOR AND EXTRACT THE SAME UPON MAKING COMPENSATION FOR INJURY TO
IMPROVEMENTS AND ANY USE THEN BEING MADE OF THE SURFACE AS RESERVED IN A DEED OF
RECORD. EXCEPTING THEREFROM THAT PORTION LYING WITHIN A STRIP OF LAND 60 FEET IN
WIDTH, THE SOUTHERLY LINE OF SAID STRIP BEING THE SOUTHERLY LINE OF" PARCEL A"
DESCRIBED IN DOCUMENT TO THE SAN BERNARDINO COUN1Y FLOOD CONTROL DISTRJCT,
RECORDED IN BOOK 1560, PAGE 4, OFFICIAL RECORDS OF SAID COUN1Y. TOGETHER WITH AN
EASEMENT FOR ACCESS PURPOSES IN, OVER AND ACROSS THAT PORTION OF AFOREDESCRIBED 60
FOOT WIDE STRIP LYING WITHIN THE NORTHERLY 41.64 FEET OF THE SOUTHERLY 100 FEET OF SAID
LOT 6 , BLOCK 7, ORANGE GROVE TRACT.
0273-011-22-0-000 1920 N. Del Rosa Avenue
PARCEL 7:
THAT PORTION OF THE SOUTHWEST ONE-QUARTER ( 1/4 ) OF SECTION 15, TIN, R4W, SAN
BERNARDINO BASE AND MERIDIAN, (UNSURVEYED) BEING WITHIN THE MUSCUPIABE RANCHO
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE EAST RIGHT OF WAY LINE OF THE PACIFIC ELECTRJC
RAILWAY AND THE NORTH RIGHT OF WAY LINE OF "C" STREET, AS SHOWN ON MAP OF ARROWHEAD
SUBURBAN FARMS, TRACT "B", AS RECORDED IN BOOK 21 OF MAPS, AT PAGE 44, RECORDS OF SAN
BERNARDINO COUN1Y; THENCE EASTERLY ALONG THE NORTH LINE OF SAID "C" STREET, TO A ONE
INCH PIPE AT THE SOUTHEAST CORNER OF THE SOUTHWEST ONE-QUARTER (1/4) OF SAID SECTION
15, THENCE NORTH ALONG THE SOUTHWEST ONEQUARTER (1/4) OF SAID SECTION 15, 125 FEET;
THENCE WESTERLY ALONG A LINE PARALLEL WITH THE NORTH LINE OF "C" STREET, TO ITS
INTERSECTION WITH THE EAST RIGHT OF WAY LINE OF THE PACIFIC ELECTRIC RAILWAY, TO THE
POINT OF BEGINNING. ALONG WITH THAT PORTION OF 40TH STREET FORMERLY KNOWN AS "C"
STREET VACATED BY RESOLUTION BY THE cm COUNCIL OF THE cm OF SAN BERNARDINO.
0154-211-17-0-000 282 W. 40th Street
PARCELS 8 & 9:
BEGINNING AT A POINT IN THE CENTER LINE OF HIGHLAND AVENUE, WHICH POINT IS WESTERLY
THEREON A DISTANCE OF 246.15 FEET FROM THE INTERSECTION OF SAID CENTERLINE WITH THE
CENTERLINE OF ORANGE STREET; THENCE NORTH 89043' 01" EAST ALONG SAID CENTERLINE OF
A-2
HIGHLAND AVENUE, A DISTANCE OF 246.15 FEET TO THE CENTERLINE OF SAID ORANGE STREET;
THENCE NORTH 000 21' 29" WEST ALONG SAID CENTERLINE OF ORANGE STREET, A DISTANCE OF
460.60 FEET; THENCE NORTH 820 29' 49" WEST, A DISTANCE OF 186.86 FEET; THENCE SOUTH 630 18'
31" WEST, A DISTANCE OF 68.21 FEET, THENCE SOUTHERLY IN A STRAIGHT LINE A DISTANCE OF
455.50 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. EXCEPTING THEREFROM ALL OIL, GAS
AND OTHER MINERAL DEPOSITS, LYING BELOW A DEPTH OF TWO HUNDRED FEET, AS RESERVED IN
THE DEED RECORDED JULY 25,1968 IN BOOK 7065, PAGE 990 OF OFFICIAL RECORDS.
0285-191-05-0-000 AND 0285-191-04-0-000 3398 E. Highland Avenue
PARCEL 10:
BEING A PORTION OF LOT 31, TRACT NO. 12034, PER MAP ON FILE IN BOOK 168 OF MAPS, PAGES 75-
87, RECORDS OF SAN BERNARDINO COUN1Y, STATE OF CALIFORNIA, MORE PARTICULARLY
DESCRIBED AS: BEGINNING AT THE SOUTHWEST CORNER OF LOT 31, THENCE NORTHERLY ALONG
WEST LINE OF SAID LOT, A DISTANCE OF 290.00 FEET; THENCE SOUTH 890 58' 58" EAST, A DISTANCE
OF 225.00 FEET; THENCE SOUTH 000 01' 02" WEST, A DISTANCE OF 190.00 FEET; THENCE SOUTH 210
15' 19" WEST, A DISTANCE OF 143.18 FEET: TO A POINT ON A NON-TANGENT CURVE THROUGH
WHICH A RADIAL LINE BEARS NORTH 210 15' 19" EAST WITH A RADIUS OF 493.00 FEET; SAID POINT
BEING ON THE NORTH RIGHT OF WAY OF VANDERBILT WAY; THENCE NORTHWESTERLY ALONG SAID
CURVE THROUGH A CENTRAL ANGLE OF 200 36' 16", A DISTANCE OF 177.29 FEET TO THE TRUE POINT
OF BEGINNING. SAID PARCEL CONTAINS 1.50 ACRES.
0281-341-09-0-000 450 Vanderbilt Way
A-3