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HomeMy WebLinkAbout2006-271 ~. " I , . " . RESOLUTION NO. 2006-271 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED,42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) - NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT 'PROJECT (IVDA REDEVELOPMENT PROJECT AREA) 3 4 5 6 7 WHEREAS, for the past several years the City of San Bernardino (the "City") and th 8 Redevelopment Agency of the City of San Bernardino (the "Agency") have been engaged . 9 efforts to address blighting conditions in a portion of the City known as the Arden-Guthri 10 11 neighborhood; and 12 WHEREAS, the Arden-Guthrie neighborhood has been afflicted with a number 0 13 physical and economic conditions of blight over the years, as these terms are defined in Heal 14 and Safety Code Section 33032, including without limitation, conditions of substan 15 structures and dwellings, residential overcrowding, substandard property maintenanc 16 conditions, inadequate design of improvements, abandonment of property, depreciating an 17 stagnant property values, and criminal activity which has occurred at rates substantially high 18 than crime rates in other neighborhoods of the City; and 19 WHEREAS, the Agency, in cooperation with the City, has previously embarked on 20 program to acquire properties in the Arden-Guthrie neighborhood and to relocate the persons an 21 households occupying such property into safe, sanitary and decent housing at other suitabl 22 23 locations; and 24 WHEREAS, as of June 30, 2006, the Agency has incurred a redevelopment indebtednes 25 in excess of $1 0,000,000 in connection with its previous efforts to address conditions of blight ' 4829-3957-2993.1 -1- P;~-.....uIll6\l'7-J.f-I6~ G..tIII'Ie SedJH.IHLeaaMCC ....A.Uc: . , , , I the Arden-Guthrie neighborhood and to prevent the spread of blight from the Arden-Guthri 2 neighborhood into nearby neighborhoods and communities; and 3 WHEREAS, the City believes it is necessary and appropriate for the Agency to acquir 4 additional lands in the Arden-Guthrie neighborhood in order to foster a commercially viable an 5 economically sustainable plan of redevelopment and reuse of the Arden-Guthrie neighborhoo 6 and to prevent the spread of blight in the Arden-Guthrie neighborhood into other surroundin 7 8 neighborhoods and communities; and 9 WHEREAS, the Arden-Guthrie neighborhood is situated within the redevelopmen 10 project area of the Inland Valley Development Project (the "Project Area") which is a speci redevelopment project area administered by the Inland Valley Development Agency (th 11 12 "IVDA"); and 13 WHEREAS, the IVDA has been established pursuant to a joint exercise of pow 14 agreement in January 1990, as a former military base civilian reuse local redevelopmen 15 authority as recognized by the United States Secretary of the Air Force, for the purpose 0 16 assisting in the conversion, redevelopment and civilian reuse of the former Norton Air Forc 17 Base located within the City of San Bernardino; and 18 WHEREAS, the IVDA has been granted specific powers by the State Legislature in 198 (Stats. 1989 c.545 and See Now Stats 1997, c.580 and Health and Safety Code Section 33492.40 19 20 et seq.) to assist in the redevelopment of the former Norton Air Force Base and the lands i 21 proximity thereto pursuant to the Community Redevelopment Law (Health and Safety Cod 22 Section 33000, et seq.); and 23 WHEREAS, the IVDA has adopted the Redevelopment Plan for the Inland Valle 24 Redevelopment Project Area (the "Redevelopment Plan") in accordance with the provisions 0 the CRL, and the Redevelopment Plan provides for certain redevelopment activities to b undertaken within the Project Area as more fully described in the Redevelopment Plan; and 25 4829-3957-2993.\ -2- P:~M-HAnIIllGldluilSectleaI"lAaaMCC"'A.dec , , \ I 1 WHEREAS, the IVDA, the City and the Agency have entered into an agreement entitle 2 "2003 Redevelopment Cooperation Agreement", dated as of October 8, 2003 (the "IVD 3 Redevelopment Cooperation Agreement") to assist the City and the Agency to accomplish th 4 redevelopment of the Arden-Guthrie neighborhood. 5 WHEREAS, at the request of the Agency, the City has made arrangements with th 6 United States Secretary of the Department of Housing and Urban Development ("HUD"), t 7 provide the City with a "Section 108 Loan Guarantee" under the provisions of the Housing an 8 Community Development Act of 1974, as amended (42 USC Section 5308) and HUD Sectio 9 108 Loan Program regulations set forth at 24 CFR Part 570.700 (the "2006 HUD Section 10 10 Loan") in an amount of Seven Million Five Hundred Thousand Dollars ($7,500,000), and in 11 the City proposes to loan to the Agency the proceeds of the 2006 HUD Section 108 Loan to th 12 Agency in support of the Project; and 13 WHEREAS, HUD has confirmed it is prepared to provide a Section 108 Loan to the Cit 14 in the maximum principal sum of Seven Million Five Hundred Thousand Dollars ($7,500,000 15 under HUD Section 108 Loan Program Guarantee No. B-03-MC-06-0539 (the "2006 HU 16 Section 108 Loan Contract"); and 17 WHEREAS, the City shall provide the Agency with the proceeds of the 2006 Ci 18 Section 108 Loan, as the authorized Subrecipient of the City under the terms of the 2006 Cit 19 Section 108 Loan Contract, for the following activities in connection with the Arden-Guthri 20 Redevelopment Project: 21 (i) (ii) completing the acquisition by the Agency of certain lands in the "Project Site" ( site acquisition, pursuant to 24 CFR Part 570.703(a); 22 23 this term is defined in the 2006 HUD Section 108 Loan Contract); 24 (iii) residential relocation assistance, pursuant to 24 CFR Part 570. 703( d); 25 4829-3957-2993.1 -3- r:~"""-14-HAIdeIIGtlGrieSecduI""""MCC"'A.dIc: 'j' ',' 1 (iv) demolition and clearance, pursuant to 24 CFR Part 570.703(e) (See 2006 2 Section 108 Loan Contract Paragraph 15(b)). 3 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED 4 BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS 5 FOLLOWS: 6 Section 1. The Recitals of this Resolution are true and correct. The Mayor an 7 Common Council have previously authorized the submission by the City of the HUD Lo 8 Application in support of the Arden-Guthrie Redevelopment Project, and the Mayor an 9 Common Council have previously conducted public hearings related to the use and applicatio 10 of the HUD Section J08 Loan Guarantee Program and the 2006 HUD Section J08 Loan Contrac 11 for the Arden-Guthrie Redevelopment Project in an aggregate amount not to exceed Sev 12 Million Five Hundred Thousand Dollars ($7,500,000.00), including the public hearin 13 conducted on February 23, 2006, May I, 2006 and July 24, 2006. The text of the HUD Lo 14 15 Application and the text of the 2006 HUD Section 108 Loan Contract, together with th 16 confirming correspondence of the City addressed to HUD as relates thereto, is incorporate 17 herein by this reference. 18 Section 2. The Mayor and Common Council have conducted public hearings relatin 19 to the use of the HUD Section 108 Loan Guarantee Program assistance and funding for th 20 Arden-Guthrie Redevelopment Project as described in the HUD Loan Application and as furthe 21 set forth in the staff report dated July 24, 2006, and during each such public hearing the Mayo 22 and Common Council considered all comments and information submitted by interested perso 23 in connection with the HUD Loan Application, the Arden-Guthrie Redevelopment Project an 24 the 2006 HUD Section J08 Loan Contract. 25 4829-3957-2993.1 -4- P:\.Io. .. ....-.. '''_1 ~1N\I7014-MAJ1I.G.dIdIs.m..l''''''''MCC''''A._ " { Section 3. The Mayor and Common COWlcil hereby finds and declares that sever 2 conditions of blight exist in the Arden-Guthrie neighborhood and that the approval of the 200 3 HUD Section 108 Loan Contract and the implementation of the commWlity redevelopmen 4 activities contemplated thereWlder, shall substantially and materially assist the City to preven 5 and eliminate the spread of blight which adversely affects the Arden-Guthrie neighborhood an 6 the commWlity generally. The redevelopment of the Arden-Guthrie neighborhood is in the vita 7 and best interests of the City. 8 Section 4. The Mayor and Common COWlcil hereby approve the terms of the 200 9 10 HUD Section 108 Loan Contract for the Arden-Guthrie Redevelopment Project in the form 11 submitted to the Mayor and Common COWlcil at the meeting at which this Resolution is adopted 12 The Mayor or his designee are hereby authorized and directed to execute the form of the 200 13 HUD Section 108 Loan Contract on behalf of the City as the "Borrower", all as set forth in th 14 2006 HUD Section 108 Loan Contract. The Mayor or his designee are further authorized an 15 directed to execute on behalf of the City as the Borrower the $7,500,000 HUD Section 108 Lo 16 Promissory Note and all of the other 2006 HUD Section 108 Loan Contract-related instrument 17 and certificates as may be required by HUD in order to complete the transaction contemplate 18 Wlder the 2006 HUD Section 108 Loan Contract as relates to the Arden-Guthrie Redevelopmen 19 Proj ect. 20 Section 5. Upon execution by the City as the Borrower, the Mayor or his designe 21 22 shall cause the fully executed original copy of the 2006 HUD Section 108 Loan Contract and th 23 $7,5000,000 HUD Section 108 Loan Promissory Note, and the related instruments and oth 24 certificates, to be delivered to HUD as soon as practicable, including without limitation th 25 collateral assignment of the Agency Lands by the City to HUD as initially pledged as security b 4829-3957-2993.1 -5- r:\AaeaUl\llell~~II6\I7..z.... AnIea G8duie Secdu .11..... MCC .... A.doc " " 10 " I the Agency to the City under the terms of the 2006 Redevelopment Cooperation Lo 2 Agreement, dated as of July 24, 2006, by and between the City and the Agency. The Mayor 0 3 his designee are further authorized and directed to initiate all other ministerial actions on behal 4 of the City relating to the delivery to HUD of all related documents in support of the Arden 5 Guthrie Redevelopment Project, including authorized City offer signature certificates, wire fun 6 transfer instructions, the establishment of custodial account agreements among HUD, Well 7 8 Fargo Bank NTSA, and the City, account fund balance confirmation reports and the like, contemplated under the 2006 HUD Section 108 Loan Contract. 9 Section 6. (a) The Mayor and Common Council hereby acknowledges that th 11 $7,500,000 HUD Section 108 Loan Promissory Note sets forth a specific schedule of repaymen 12 by the City to HUD of the principal amount of the loan under the 2006 HUD Section 108 Lo 13 Contract, as shall be due and payable in the amounts and at the times provided as follows: 14 15 16 17 18 19 20 21 22 23 24 25 Princinal Due Date Commitment Princinal Due Date Commitment Amount Amount August I, 2006 $0 August 1,2016 $424,000 August 1,2007 $0 August 1,2017 $454,000 August 1,2008 $0 August 1,2018 $494,000 August 1, 2009 $0 August 1,2019 $534,000 August 1, 2010 $0 August 1,2020 $574,000 August 1,2011 $334,000 August 1,2021 $624,000 August 1,2012 $344,000 August 1,2022 $654,000 August 1,2013 $354,000 August 1,2023 $654,000 August 1,2014 $384,000 August 1, 2024 $634,000 August 1,2015 $404,000 August 1, 2025 $634,000 (Aggregate Principal Amount = $7,500,000) 4829-3957-2993.1 -6- P;~..uIN\l7.UN AnleaGtlIMie Secdn ......... MCC'" A.cIee " ' , I Payments of interest which accrue on the outstanding principal balance of the 2006 HOD Sectio 2 108 loan from the date of the $7,500,000 HOD Section 108 Loan Promissory Note (e.g., th 3 "Interim Interest Rate" and later, the "Public Offering Date", as these terms are defined in th 4 $7,500,000 HOD Section 108 Loan Promissory Note) shall be paid by the City at the rate 0 5 interest per annum determined in accordance with the interim HOD financing and later on th 6 Public Offering Date to be inserted by HOD or its fiscal agent, in the Schedule "P&I" of th 7 $7,500,000 HOD Section 108 Loan Promissory Note, all as provided in the 2006 HOD Sectio 108 Loan Contract. 8 9 (b) Except for the special source of funds as may be available to the City by virtue 0 10 the collateral assignments by: 11 (i) the Agency to the City of the Agency's beneficial interest in the Agency Lan 12 pursuant to the 2006 Redevelopment Cooperation Loan Agreement; 13 (ii) the Agency to the City for the collateral assignment to HUD of the Agency' 14 beneficial interest in the "Annual Agency Site Tax Increment Payment" whic 15 16 arises in favor of the Agency under the terms of the 2003 Redevelopmen 17 Cooperation Agreement, dated October I, 2003, by and among the City, IVD 18 and the Agency; 19 (iii) the Agency to the City for the collateral assignment to HUD of the Agency' 20 beneficial interest in the "Annual Agency Site Sales Tax Payment" which arise 21 in favor of the Agency under the terms of Section 6 of the 2006 Redevelopmen 22 Cooperation Loan Agreement; 23 (iv) the Agency to the City for collateral assignment to HUD of the Agency' 24 beneficial interest in the "Annual Agency Grant Assistance Revenue Payment' 25 4829-3951-2993.1 -7- ,:~~atIeu\2""".J40" AnleaG.tlute SeetIn .11 IAu MCC RIM A.dec " " .' 1 which arises in favor of \he Agency under \he terms of Section 7 of \he 20 2 Redevelopment Cooperation Loan Agreement; 3 (v) \he Agency to \he City for collateral assignment to HUD of \he Agency' 4 beneficial interest in "Developer Grant Agreement Revenues", which arises' 5 favor of \he Agency under \he terms of Section 9 of \he 2006 Redevelopmen 6 Cooperation Loan Agreement or o\herwise under \he Developer Gran 7 8 Agreement; 9 The sole source of funds of \he City available to repay \he 2006 HUD Section 108 Loan shall b 10 \he CDBG Program revenues of \he City, all as more fully provided under \he 2006 11 Section 108 Loan Contract and no o\her source of funds of \he City is pledged or shall b 12 available for \he repayment of \he 2006 HUD Section 108 Loan, For \he purposes of \he 200 13 HUD Section 108 Loan Contract, \he source of funds identified above in subsection (b )(ii), (iii 14 and (iv), are referred to collectively as "Pledged Revenues". 15 Section 7. The disbursement of \he proceeds of \he 2006 HUD Section 108 Loan b 16 \he City to \he Agency shall be subject to and conditional upon \he satisfaction by \he Agency 0 17 each and every condition of Section 4 \he 2006 Redevelopment Cooperation Loan Agreemen 18 substantially in \he form as such loan agreement is presented to \he City at \he meeting at whic 19 20 this Resolution is adopted. The final form of \he 2006 Redevelopment Cooperation Lo 21 Agreement (Arden-Guihrie Redevelopment Project) shall be subject to approval by \he Mayo 22 and Common Council, in its sole discretion, as evidenced by a separate resolution of \he Mayo 23 and Common Council approving \he final form of such 2006 Redevelopment Cooperation Lo 24 Agreement (Arden-Guihrie Redevelopment Project), 25 4829-3957-2993.1 -8- P:~IM\I7-UI6AMuc.dutlSecdM 1....... MCC a-A.dec " " . Section 8. Special legal counsel to the City in connection with the Arden-Guthri 2 Redevelopment Project and the 2006 HUD Section 108 Loan Contract is the law firm of Lewi 3 Brisbois Bisgaard & Smith, LLP. Special legal counsel, in consultation with the City Attorney 4 is hereby authorized and directed to submit to HUD on behalf of the City, an approving leg 5 opinion with respect to the transaction contemplated under the 2006 HUD Section 108 Lo 6 Contract, in the form required by HUD as part of the documentation associated with the 2 7 HUD Section 108 Loan Contract. 8 9 Section 9. This Resolution shall take effect upon its adoption and execution in the 10 manner as required by the City Charter. III 11 III 12 III 13 III 14 III 15 III 16 III 17 III 18 III 19 III 20 III 21 III 22 III 23 III 24 III 25 III 4829-39S7-2993.\ -9- 1':\"'. ~ ~.... 'D_' d u....,-u-HAr*-G.dIritSedlM.l.IAuMCC...A._ " 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE CONTRACT AND RELATED DOCUMENTS FOR THE LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 USC SECTION 5308 (CDBG SECTION 108 CONTRACT NO. B-03-MC-06-0539) - NORTH ARDEN GUTHRIE COMMERCIAL DEVELOPMENT PROJECT (IVDA REDEVELOPMENT PROJECT AREA) 2 3 4 5 6 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 7 Conunon Council of the City of San Bernardino at a i oint regular meeting thereof, held 8 on the 24 th day of July , 2006, by the following vote to wit: 9 Council Members: Aves Navs Abstain Absent 10 ESTRADA x - 11 BAXTER X 12 MCGINNIS --X....- 13 DERRY -X- KELLEY -1L 14 JOHNSON -1L 15 MC CAMMACK -1L 16 17 ~eUb~ Racli G, Clark, CIty Clerk -(rI' ~1 Vdayof July ,2006. 18 19 The foregoing resolution is hereby approved this 20 21 ~ San Bernardino 22 23 Approved as to Form: 24 25 4829-3957-2993.1 -10- ':\ApMu'D ..~ ~- ... -I.Z1N\I'7~ANlaGtlduilSecdM1U"""MCC"'A.4M .. ,-- ."0';"....-_",. ., U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT CONTRACT FOR LOAN GUARANTEE ASSXSTANCE ONDER SECTXON 108 OF THE HOUSXNG AND COMMUNXTY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. 55308 Date of Contract This Contract for Loan Guarantee Assistance ("Contract") is entered into City of San Bernardino, California, as Borrower (the "Borrower"), and the Secretary of Housing and Urban Development ("Secretary"), as guarantor for the Guarantee made pursuant to section 10S ("Section 10S") of title I of the Housing and Community Development Act of 1974, as amended (the "Act") and 24 CFR Part 570, Subpart M, of the promissory note executed contemporaneously herewith and numbered B-03-MC-06-0539, in the Maximum Commitment Amount of $7,500,000, and any amended note or note issued in substitution for such note and having the same note number (the "Note"). This is the first Contract under the Funding Approval ("Commitment") of the same number, which was approved by the Secretary on January 2S, 2005. The funds paid or credited to the account of the Borrower pursuant to the Note are referred to herein as the "Guaranteed Loan Funds." The Note (including the Fiscal Agency Agreement and the Trust Agreement as 'defined in Section I.A. of the Note and incorporated therein) is hereby incorporated into the Contract. Terms used in the Contract with initial capital letters and not otherwise defined in the text hereof shall have the respective meanings given thereto in the Note. The Fiscal Agency Agreement and the Trust Agreement are sometimes collectively referred to herein as the "Fiscal Agency/Trust Agreements," and the Fiscal Agent and the Trustee respectively are sometimes collectively referred to as the "Fiscal Agent/Trustee." PART X A. The Note: Advances and Records. The Note provides that Advances and Conversion Date Advances shall be made thereunder, upon the written request of the Borrower and the approval of the Secretary, pursuant to this Contract and the Fiscal Agency Agreement. The Commitment Schedule attached to the Note represents the principal repayment schedule for the Maximum Commitment Amount of the Note. At all times, the total amount of all Advances and Conversion Date Advances under the Note for all Principal Due Dates shall not exceed the Maximum Commitment Amount of the Note. Prior to the Conversion Date (as defined in the Note, Section I.A.), the total amount of Advances made by the Holder for each Principal Due Date under the Note shall not exceed the applicable Commitment Amount for such Principal Due Date set forth in the Commitment Schedule of the Note. Prior to the Conversion Date, the Borrower agreeS that the Fiscal Agent pursuant to the Fiscal Agency Agreement shall record the date " ," 2 and amount of each payment and Advance under the Note and shall maintain the books and records of all Advances and Conversion Date Advances for each Principal Due Date, interest rates on Advances, payments, and Principal Amounts outstanding for each Principal Due Date. On and after the Conversion Date, the Borrower agrees that the Trustee pursuant to the Trust Agreement will maintain the books and records of all payments on the Note and all Principal Amounts and interest rates on such Principal Amounts (each as to be set forth on Schedule P&I to the Note). No advances of 'any kind may be made on the Note after its Conversion Date. B. Borrower's Requests for Advances. All requests for Advances or Conversion Date Advances by the Borrower under the Note shall: be in writing; specify the amount of the Advance requested; identify the Note by Borrower, number and Maximum Commitment Amount; be addressed to the Secretary at the address for notices specified in paragraph 12(f) of this Contract; be signed by an authorized official of the Borrower; and otherwise be in the form prescribed by the Secretary. Advances and Conversion Date Advances shall be requested and will only be approved and made in increments of not less than $1,000 for any Principal Due Date. A request for an initial Advance under a Note, or a request for a Conversion Date Advance, shall be received by the Secretary at least ten Business Days prior to the Borrower's proposed Funding Date or Conversion Date, as applicable. All other requests for Advances shall be received by the Secretary not less than five Business Days prior to the proposed Funding Date. The Borrower may not deliver a Note or a request for an Advance or Conversion Date Advance to the Secretary more than two calendar months prior to the Borrower's proposed Funding Date. At least two Business Days prior to the proposed Funding Date or Conversion Date if the Borrower's request was timely received, or the next available Funding Date for which the request was timely received, the Secretary shall, except as otherwise provided in paragraph ll(c) or 12 her~of, deliver a.corresponding Authorization Order or Advance Order (as applicable) to the Fiscal Agent in accordance with Section 2.03 or 2.04 of the Fiscal Agency Agreement for the applicable Funding Date or Conversion Date. If the Borrower requests an Advance or Conversion Date Advance of less than the outstanding Maximum Commitment Amount under the Note, the Borrower may also specify in its written request the amount of the Advance or Conversion Date Advance to be allocated to each Commitment Amount or Principal Amount per Principal Due Date under the Note. If the Borrower does not specify how the Advance or Conversion Date Advance should be allocated among Commitment Amounts/Principal Due Dates, the Borrower hereby authorizes the Secretary to direct the Fiscal Agent to allocate the Advance to the respective Commitment Amounts or Principal Amounts in order of the earliest Principal Due Date(s) . : " 3 C. Conversion; Pub1ic Offerig. On the Conversion Date (if any), trust certificates backed by the Note (and similar notes issued by other Section 108 borrowers) will be purchased for a purchase price of the full principal amount thereof by underwriters selected by the Secretary (the "Underwriters") pursuant to an Underwriting Agreement between the Underwriters and the Secretary, at a closing on such Conversion Date as determined by the Secretary and the . Underwriters. The Borrower agrees that the interest rate at which the trust certificate of a specified maturity is sold to the Underwriters shall govern the interest rate inserted on the Conversion Date in Schedule P&I of the Note for the Principal Amount of corresponding maturity. D. Consents. By execution of this Contract, the Borrower ratifies and consents to the Secretary's selection of the Underwriters and authorizes the Secretary to negotiate with the Underwriters the terms of the Underwriting Agreement and of the public offering of interests in the trust certificates to investors (including the applicable inte;est rates). In addition, by execution hereof the Borrower ratifies and consents to the Secretary's selection of the Fiscal Agent/Trustee and a~rees to the respective terms of the Fiscal Agency/Trust Agreements. If Advances have been made in the Maximum Commitment Amount of the Note not less than ten Business Days prior to the proposed Conversion Date, or if the Borrower requests a Conversion Date Advance, the Borrower authorizes the Secretary to deliver Schedule P&I to the Note completed in accordance herewith to the Fiscal Agent/Trustee on the Conversion Date in accordance with the Fiscal Agency/Trust Agreements, concurrent with delivery of the Secretary's Guarantee of the trust certificates at the closing on the Conversion Date, and thereafter the Note shall be enforceable in accordance with its terms including Schedule P&I. In addition, the Secretary reserves the right to notify the Borrower not less than one calendar month in advance of a specified Conversion Date that the Note will be sold to the Underwriters on such date, if the Secretary in his sole discretion determines that market conditions or program needs require the participation in the proposed public offering of all or substantially all Borrowers with outstanding Advances. . .. 4 PART J:J: 1. Receipt, neposit and Use of Guaranteed Loan Funds. (a) Except for funds deducted on the Conversion Date pursuant to paragraph 4(b) and fees and charges deducted by the Fiscal Agent/Trustee pursuant to paragraph 4(a), the Guaranteed Loan Funds shall be electronically transferred in accordance with the Borrower's instructions for deposit in a separate., identifiable custodial account (the "Guaranteed Loan Funds Account") with a financial institution whose deposits or accounts are Federally insured. The Guaranteed Loan Funds Account shall be established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Account" (Attachment 1) and shall be continuously maintained for the Guaranteed Loan Funds. Such Letter Agreement must be executed when the Guaranteed Loan Funds Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution. ) The Borrower shall make withdrawals from said account only for payment of the costs of approved Section 108 activities, for transfer to the Loan Repayment Account or for the temporary investment of funds pursuant to this paragraph l(a). Such temporary investment of funds into the Guaranteed Loan Funds Investment Account shall be required within three Business Days after the balance of deposited funds exceeds the amount of the Federal deposit insurance on the Guaranteed Loan Funds Account. At that time, any balance of funds in the Guaranteed Loan Funds Account exceeding such insurance coverage shall be fully (100%) and continuously invested in Government Obligations, as defined in paragraph 10 hereof, held in the Guaranteed Loan Funds Investment Account. All temporary investments, whether or not required as above, shall be limited to Government Obligations having maturities . that arecohsistent with the cash requirements of the approved aCtivities. In ho event shall the investments mature on or after October 31, 2007, or have maturities which exceed one year. All such investments shall be held in trust for the benefit of the Secretary by the above financial institution in an account (the "Guaranteed Loan Funds Investment Account") established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account" (Attachment 2), which account shall be maintained for all Government Obligations purchased with funds from the Guaranteed Loan Funds Account. The Guaranteed Loan Funds Investment Account need only be established if and when the Borrower is required to invest, or otherwise invests, the Guaranteed Loan Funds in Government Obligations. Such Letter 5 Agreement must be executed when the Guaranteed Loan Funds Investment, Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution.) All proceeds and income derived from such investments shall be returned to the GUaranteed Loan Funds Account. All funds in the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account must be withdrawn and disbursed by the Borrower for approved activities by October 31, 2007. Any funds remaining in either Account after this date shall be immediately transferred to the Loan Repayment Account established pursuant to paragraph 6 of this Contract. (b) The Borrower shall by the fifteenth day of each month provide the Secretary with a written statement showing the balance of funds in the Guaranteed Loan Funds Account and the withdrawals from such account during the preceding calendar month, and a statement identifying the obligations and their assignments in the Guaranteed Loan Funds Investment Account. (c) Upon the Secretary giving notice that the Borrower is in Default under this Contract or the Note, all right, title, and interest of the Borrower in and to the Guaranteed Loan Funds and Guaranteed Loan Funds Investment Accounts shall immediately vest in the Secretary for use in making payment on the Note, purchase of Government Obligations in accordance with paragraph 10, or payment of any other obligations of the Borrower under this Contract or the Fiscal Agency/Trust Agreements. 2. Payments Due on Note; Final Payment and Discharge. The Borrower shall pay to the Fiscal Agent/Trustee, as collection agent for the Note, all amounts due pursuant to the terms of the Note. In accordance with the Note and the Fiscal Agency/Trust Agreements, payment shall be made by 3:00 P.M. (New York City time) on the seventh Business Day. (the "Note PaYment Date") preceding the relevant Interest Due Date or Principal Due Date (each as defined in the Note). If any Note Payment Date falls on.a day that is not a Business Day, then the required payment shall be made on the next Business Day. Payment may be made by check or wire transfer. Upon final payment of all amounts due to Holders under the Note, including any payment made by the Secretary pursuant to the Guarantee, the Fiscal Agent/Trustee is required by the Fiscal Agency/Trust Agreements to return the Note to the Secretary; Upon final payment to the Secretary of any amounts due as a result of Guarantee Payments or otherwise due under this Contract, the Secretary will cancel and return the Note to the Borrower in discharge of the Borrower's obligations under the Note. 6 3. Selection of New Fiscal Agent or Trustee. The Secretary shall select a new Fiscal Agent or Trustee if the Fiscal Agent or Trustee resigns or is removed by the Secretary. The Borrower hereby consents in advance to any such selection and to any changes in the Fiscal Agency/Trust Agreements agreed to by any Fiscal Agent or Trustee and the Secretary, subject to paragraph 4(e) of this Contract. 4. payments Due Fiscal Agent or Trustee; Documents to the Secretary. (a) The Borrower agrees to pay the fees of the Fiscal Agent as required by Exhibit G to the Fiscal Agency Agreement, and any additional amounts that may be due pursuant to Section 6.01 of the Fiscal Agency Agreement. If not paid by. the Borrower by any other means prior thereto, the Borrower agrees that any such fees or additional amounts that have been incurred prior to an Advance or a Conversion Date Advance may be deducted by the Fiscal Agent/Trustee from the proceeds of the Advance or Conversion Date Advance, as applicable. (b) The Borrower agrees to pay the Borrower's share, as determined by the Secretary, of the customary and usual issuance, underwriting, and other costs related to the public offering and future administration of the Note and the trust certificates, as approved by the Secretary, including the cost of reimbursement and/or compensation of the Trustee pursuant to the Trust Agreement, including Sections 3.11 and 7.01 thereof. In connection with the public offering on the Conversion Date, such payment shall either be made by wire transfer to the Trustee on the day prior to the Conversion Date or shall be deducted from the Guaranteed Loan Funds on the Conversion Date. (c) The Borrower shall submit to the Secretary not later than ten Business Days prior to th~ Funding Date for the initial Advance hereunder, or if not submitted earlier, prior to any Conversion Date Or Public Offering Date applicable to the Note, this executed Contract, the executed Note, a request for an Advance or a Conversion Date Advance (as applicable) in proper form, and an opinion acceptable to the Secretary from the Borrower's counsel to the effect that: (i) the governing body of the Borrower has authorized by resolution or ordinance, in accordance with applicable State and local law, the issuance of the Note and the execution of this Contract; (ii) the Note and this Contract are valid, binding, and enforceable obligations of the Borrower; (iii) the pledge of funds pursuant to 24 CFR 570.705(b) (2) and paragraph 5(a) of this Contract is valid and binding; and (iv) there is no outstanding litigation that will affect the validity of the Note or this Contract. In addition, the Borrower shall submit any other additional documents or opinions specifically : 7 required by this Contract (e.g., paragraph 5(c), or paragraph 15, et seq.), at the time required thereby. (d) The Borrower agrees to reimburse the Underwriters upon demand by the Secretary for the Borrower's share, as determined by the Secretary, of all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred in connection with a proposed public offering, if the Underwriters incur such additional costs for the public offering because of any refusal, inability, or failure on the part of the Borrower timely to submit in acceptable form any document required by this Contract (including paragraph 4(c)), or because of any withdrawal by the Borrower from. the public offering, after the Borrower has submitted a request for a Conversion Date Advance hereunder. By execution and delivery of this Contract to the Secretary, the Borrower hereby expressly authorizes the Secretary to pay amounts due under this paragraph from funds pledged under paragraph 5(a) of this Contract. (e) The undertakings in paragraphs 3 and 4 of this Contract are expressly subject to the requirement that the Fiscal Agency/Trust Agreements shall in no event require payment of fees or charges, reimbursement of expenses, or any indemnification by the Borrower from any source other than funds pledged pursuant to paragraphs 5 or 15 et seq. of this Contract. 5. Security. The Borrower hereby pledges as security for repayment of the Note, and such other charges as may be authorized in this Contract, the following: (a) All allocations or grants which have been made or for which the Borrower may become eligible under Section 106 of the Act, as well as any grants which are or may become available to the Borrower pursuant to Section 108(q). (b) Program income, as defined at 24 CFR 570.500(a) (or any succeSsor regulation), directly generated from the use of the Guaranteed Loan Funds. (c) Other security as described in paragraph 15, et seq. (d) All proceeds (including insurance and condemnation proceeds) from any of the foregoing. (e) All funds or investments in the accounts established pursuant to paragraphs 1 and 6 of this Contract. 6. Loan Repayment Account. (a) All amounts pledged pursuant to paragraphs 5(b), 5(c), and 5(d) of this Contract shall be deposited immediately on .. 8 receipt in a separate identifiable custodial account (the "Loan Repayment Account") with a financial institution whose deposits or accounts are Federally insured. The Loan Repayment Account shall be established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Account" (Attachment 1) and shall be maintained for such pledged funds. The Loan Repayment Account need only be established if and when the Borrower receives amounts pledged pursuant to paragraph 5(b), 5(c) or 5(d). Such Letter Agreement must be executed when the Loan Repayment Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution.) Borrower shall make withdrawals from said account only for the purpose of paying interest and principal due on the Note (including the purchase of Government Obligations in accordance with paragraph 10 hereof), for payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, or for the temporary investment of funds pursuant to this paragraph, until final payment and discharge of the indebtedness evidenced by the Note, unless otherwise expressly authorized by the Secretary in writing. Such temporary investment of funds shall be required within three Business Days after the balance of deposited funds exceeds the amount of the Federal deposit insurance on the Loan Repayment Account. At that time, the balance of funds in the Loan Repayment Account exceeding such insurance coverage shall be fully (100%) and continuously invested in Government Obligations, as defined in paragraph 10 hereof. All temporary investments, whether or not required as above, shall be limited to Government Obligations having maturities that are consistent with cash requirements for payment of principal and interest as required under the Note. In no event shall the maturities of such investments exceed one year. All such investments shall be held in trust for the benefit of the Secretary by the above financial institution in an account (the "Loan Repayment Investment Account") established and designated as prescribed in the attached form document entitled "Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account" (Attachment 2), which account shall be maintained for all Government Obligations purchased with funds from the Loan Repayment Account. Such Letter Agreement must be executed when the Loan Repayment Investment Account is established. (A fully executed copy of such Letter Agreement shall be submitted to the Secretary within thirty days of its execution.) All proceeds and income derived from such investments shall be returned to the Loan Repayment Account. (b) Borrower shall by the fifteenth day of each month, provide the Secretary with a written statement showing the .. 9 balance of funds in the Loan Repayment Account and the . deposits and withdrawals of all funds in such account during the preceding calendar month and a statement identifying the obligations and their assignments in the Loan Repayment Investment Account. (cl Upon the Secretary giving notice that the Borrower is in Default under this Contract or the Note, all right,. title, and interest of the Borrower in and to the Loan Repayment and Loan Repayment Investment Accounts shall immediately vest in the Secretary for use in making payment on the Note, purchase of Government Obligations in accordance with paragraph 10, or payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements. 7. Use of CDBG or EDI/BEDI Funds for Repayment. Any funds available to the Borrower under Section 106 of the Act (including program income derived therefrom) are authorized to be used by the Borrower for payments due on the Note, Optional Redemption (as defined in the Note), payment of any other obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, or the purchase of Government Obligations in accordance with paragraph 10. Any funds specifically available to the Borrower for such payments or as a debt service reserve under an EDI/BEDI Grant Agreement pursuant to Section 108{ql of the Act which supports the eligible project(s) and activities financed by the Note may also be used therefor; any other use of Section l08(q) funds for such purposes shall require the prior written approval of the Secretary. Unless otherwise specifically provided herein or unless otherwise expressly authorized by the Secretary in writing, the Borrower shall substantially disburse funds available in the Loan Repayment or the Loan Repayment Investment Accounts before funds from grants under Section 106 of the Act are withdrawn from the U.S. Treasury for such purposes. 8. Secretary's Right to Restrict Use of CDBG Funds to RepaYJlUi'nt. Upon a determination by. the S.ecretary that payments required by paragraph 2. and/or paragraph 4 of this Contract are unlikely to be made as specified, the Secretary may give the Borrower notice that the availability to the Borrower of funds pledged under paragraph 5(al of this Contract for purposes other than satisfaction of the pledge is being restricted. This restriction shall be in an amount estimated by the Secretary to be sufficient to ensure that the payments referred to in paragraph 2 and/or paragraph 4 hereof are made when due. This restriction may be given effect by conditioning the restricted amounts to prohibit disbursement for purposes other than .satisfaction of the pledge at the time such restricted funds are approved as grants, by limiting the Borrower's ability to draw down or expend the restricted funds for other purposes, and by disapproving payment requests submitted with respect to such grants for purposes other than satisfaction of the pledge. " 10 9. Secretary's.Right to Use Pl.edged Funds for Repayment. The Secretary may use funds pledged under paragraph 5(a) of this Contract or funds restricted under grants pursuant to paragraph 8 of this Contract to make any payment required of the Borrower under paragraph 2 and/or paragraph 4, if such payment has not been timely made by the Borrower. 10. Defeasance. For purposes of this Contract, after the Conversion Date the Note shall be deemed to have been paid (defeased) if there shall have been deposited with the Trustee either moneys or Government Obligations (as defined below), which in the sole determination of the Secretary, mature and bear interest at times and in amounts sufficient, together with any other moneys on deposit with the Trustee for such purpose, to pay when due the principal and interest to become due on the Note. The Aggregate Principal Amount of the Note or any unpaid Principal Amount may be so defeased, in whole or in part, as of any Interest Due Date, or any other Business Day acceptable to both HUD and the Borrower. In accordance with the Note and the Trust Agreement, the Borrower shall give timely notice and written instructions to the Secretary and the Trustee concerning any principal amounts proposed to be defeased, including any Optional Redemptions proposed, which instructions shall be approved by the Secretary. If the unpaid Aggregate Principal Amount of the Note guaranteed pursuant to this Contract shall be defeased and deemed to have been paid in full, then the Borrower shall be released from all agreements, covenants, and further obligations under the Note. "Government Obligation" means a direct obligation of. or any obligation for which the full and timely payment of principal and interest is guaranteed by, the United States of America, including but not limited to, United States Treasury Certificates of Indebtedness, Notes and Bonds - State and Local Government Series or certificates of ownership of the principal of or interest on direct obligations of, or Obligations unconditionally guaranteed by, the United states of America, which obligations are held in trust by a commercial bank which is a member of the Federal Reserve System and has capital and surplus (exclusive.of undivided profits) in excess of $100,000,000. 11. Defaul.t.(a) A Default under the Note and this Contract shall occur upon failure by the Borrower to: (i) pay when due an installment of principal or interest on the Note; or (ii) punctually and properly perform, observe, and comply with anY covenant, agreement, or condition contained in: (A) this Contract, (B) any security agreement, deed of trust, mortgage, assignment, guarantee, or other contract securing payment of indebtedness evidenced by the Note, or (C) any future .' 11 amendments, modifications, restatements, renewals, or extensions of any such documents. (b) The Borrower waives notice of Default and opportunity for hearing with respect to a Default under paragraph ll(a). (c) In addition to Defaults under paragraph ilea), the Secretary may declare the Note in Default if the Secretary makes a final decision in accordance with the provisions of section 111 of the Act and 24 CFR 570.913 (or any successor provisions), including requirements for reasonable notice and opportunity for hearing, that the Borrower has failed to comply substantially with title I of the Act. Notwithstanding any other provision, following the giving of such reasonable notice, the Secretary may, in the Secretary's sole discretion pending the Secretary's final decision, withhold the guarantee of any or all obligations not yet guaranteed on behalf. of the Borrower under outstanding commitments, suspend approval of any further Advances or Conversion Date Advances under the Note, and/or direct the Borrower's financial institution to: refuse to honor any instruments drawn upon, or withdrawals from, the Guaranteed Loan Funds Account or the Loan Repayment Account initiated by the Borrower, and/or refuse to release obligations and assignments by the Borrower from the Guaranteed Loan Funds Investment Account or the Loan Repayment Investment Account. 12. Remedial Actions. Upon a Default or declaration of Default under this Contract, the Secretary may, in the Secretary's sole discretion, take any or all of the following remedial actions: (a) With any funds or security pledged under this Contract, the Secretary may: (i) continue to make payments due on the Note, {ii) make a prepayment under Section I.D. of the Note or make an acceleration payment with respect to the principal amount of the Note subject to Optional Redemption as provided in Section III of the Note, (iii) purchase Government Obligations in accordance with paragraph 10 of this Contract, (iv) pay any interest due for late payment as provided in the Note, this contract, or the Fiscal Agency/Trust Agreements, (v) pay any other Obligation of the Borrower under this Contract or the Fiscal Agency/Trust Agreements, and/or (vi) pay any reasonable expenses incurred by the Secretary or the Fiscal Agent/Trustee as result of the Borrower's Default. (b) The Secretary may withhold the guarantee of any or all obligations not yet guaranteed or the disbursement of any or all grants not yet disbursed in ful~ under outstanding guarantee commitments or grant approvals for the Borrower under Sections 108 and/or 106 of the Act. (c) The Secretary may withhold approval of any or all further Advances or Conversion Date Advances under the Note (if .. 12 applicable); direct the Borrower's financial institution to refuse to: honor any instruments drawn upon, or withdrawals from, the Guaranteed Loan Funds Account or the Loan Repayment Account by the Borrower, and/or to release obligations and assignments by the Borrower from the Guaranteed Loan Funds Investment Account or the Loan Repayment Investment Account; and/or direct the Borrower and/or the Borrower's financial institution to transfer remaining balances from the Guaranteed Loan Funds Account to the Loan Repayment Account. (d) Until the Conversion Date, or with respect to amounts subject to Optional Redemption, the Secretary may accelerate the Note. (e) The Secretary may exercise any other appropriate remedies or sanctions available by law or regulation applicable to the assistance provided under this Contract, or may institute any other action available under law to recover Guaranteed Loan Funds or to reimburse the Secretary for any payment under the Secretary's Guarantee or any reasonable expenses incurred by the Secretary as a result of the Default. (f) All notices and submissions provided for hereunder shall be in writing (including by telex, telecopier or any other form of facsimile communication) and mailed or sent or delivered, as to each party hereto, at its address set forth below or at such other address as shall be designated by such party in a written notice to the other party hereto. All such notices and other communications shall be effective when received as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by mail, upon the earlier of the date of receipt or five Business Days after deposit in the mail, postage prepaid; (iii) if sent by telex, upon receipt by the sender of an answer back; and (iv) if sent by telecopier, upon receipt. .. The S'ecretarv: U.S. Dept. ofE:oulOing and Urpail Development Attention: PaulW~bster, Director Financial Management Division 451 7th Street SW, Room 7180 Washington, DC 20410 Borrower: City of San Bernardino, California Attn: Magqie Pacheco, Director San Bernardino Redevelopment Aqency 201 North E Street, #301 San Bernardino, CA 92401 .. 13 . 13. Limited Liability. Notwithstanding any other prov1s1on of this Contract, the Fiscal Agency/Trust Agreements or the Note, any recovery against the Borrower for any liability for amounts due pursuant to the Note, the Fiscal Agency/Trust Agreements or this Contract shall be limited to the sources of security pledged in paragraph 5 or any Sp~cial Conditions of this Contract. Neither . the general credit nor the taxing power of the Borrower, or of the State in which the Borrower is located, is pledged for any payment due under the Note, the Contract, or the Fiscal Agency/Trust Agreements. 14. xncorporated Grant Agreement. The Contract and the Note are hereby incorporated in and made a part of the Grant Agreement authorized by the Secretary on July 18, 2003 under the Funding Approval for grant number B~03-MC-06-0539 to the Borrower. In carrying out activities with the Guaranteed Loan Funds hereunder, the Borrower agrees to comply with the Act and 24 CFR Part 570, as provided in Subpart M thereof. 15. Special Conditions and Modifications: (a) Paragraph 5(c) of the Contract is amended by deleting the paragraph as written in its entirety and substituting therefor the following: "(c) Other security, consisting of any and all rights, titles, and interests of the Borrower in and to: (i) A pledge of the Annual Grant Assistance Revenues provided by the Borrower to the Redevelopment Agency of San Bernardino (the "Subrecipient") as described in Attachment 3 (the 'Grant Assistance Revenues') and as further described in the Redevelopment Cooperation Loan Agreement between the Borrower, as "City," and the Subrecipient, as 'Agency' ("the Cooperation Loan Agreement"). (ii) A pledge of the Annual A~ency Site Sales Tax PaYments available to the Subrecipient as described in Attachment 4 (the 'Sales Tax Payments'), and as further described in the Cooperation Loan Agreement. (iii) A pledge of the Annual Aqency Site Tax Increment revenues and receipts available to the Subrecipient as described in Attachment 5 (the 'Tax Increment Revenues'). and as further described in the Cooperation Loan Agreement. The pledge of the Grant Assistance Revenues, the Sales Tax Payments, and the Tax Increment Revenues, (collectively referred to as .Pledged Revenues.) shall be pursuant to a pledge, assignment and security agreement (the 'Pledge, 14 Assignment and Security Agreement'), which shall be in a form acceptable to the Secretary." (b) Guaranteed Loan Funds shall be used by the Borrower to make a loan to the Redevelopment Agency of San Bernardino (the "Subrecipient') for the following activities in connection with the Arden-Guthrie Redevelopment proiect (the "Project"): (i) site acquisition, pursuant to 24 CFR 570.703(a); (ii) residential relocation assistance, pursuant to ~570.703(d); (iii) demolition and clearance, pursuant to ~570.703(e); The Subrecipient loan shall be evidenced by a promissory note (the "Subrecipient Note") and a loan agreement (the "Subrecipient Loan Agreement"), which Subrecipient Note and Subrecipient Loan Agreement shall be in a form acceptable to the Secretary. At the discretion of the Borrower, the terms of the Subrecipient Loan Agreement may be included in the text of the Cooperation Loan Agreement. The amount of principal and/or interest payable under the Subrecipient Note during the twelve-month period beginning July 1 of each year and ending on June 30 of the next succeeding year shall be equal to or greater than the amount of principal and/or interest payable under the Note for the corresponding period. The Subrecipient Note shall not be subject to redemption or prepayment earlier than the earliest possible redemption date under the terms of the Note. (c) In order to secure the payment and performance of the secured obligations of the Subrecipient to the Borrower, the Borrower shall obtain the following collateral (collectively, the 'Collateral"): (i) A first priority lien on the real property described in Attachment 6 hereof (the "Property"), established through an appropriate and properly recorded Deed of Trust (the "Subrecipient Deed of Trust" or "Deed of Trust'). The Subrecipient Deed of Trust shall be subject to release and reconveyance (in whole or in part) prior to the maturity date under" the Subrecipient Note at such time as the Subrecipient conveys fee title in the Property to the third party developer entity (the "Developer") identified in the Property Disposition and Development Agreement (the "Development Agreement") described in subparagraph (c) (iv) below. The Subrecipient Deed of Trust 15 shall contain such other provisions as the Secretary deems necessary. (ii) Any and all rights, titles, and interests of the Subrecipient in and to any leases covering the Property. . Such rights, titles, and interests of the Subrecipient shall be the subject of a collateral assignment of leases and rents (the 'Collateral Assignment of Leases and Rents"), which shall be in a form acceptable to the Secretary. The Collateral Assignment of Leases and Rents shall be subject to release (in whole or in part) prior to the maturity date of the Subrecipient Note at such time as the Subrecipient conveys the Property to the Developer identified in the Development Agreement identified in subparagraph (c) (iv), below (iii) Any and all rights, titles, and interests of the Subrecipient in and to any licenses, permits, and other agreements covering the Property. Such rights, titles, and interests shall be the subject of a collateral assignment of interest in licenses, permits, and other agreements (the "Collateral Assignment of Interest in Licenses, Permits and Agreements"), which shall be in a form acceptable to the Secretary. The Collateral Assignment of Interest in Licenses, Permits and Agreements shall be subject to modification following its initial delivery by the Subrecipient in a form acceptable to the Secretary, in order to acknowledge the collateral assignment to the Secretary by the Subrecipient of the Subrecipient security interest in the Developer ~ompletion Surety, identified in subparagraph (c) (iv), below. (iv) Any and all of the right, title and interest of the Subrecipient in the Property Disposition and Deve1:opmemt ,Agreement (the "Developnlent. Agreement') by and between the Subrecipient and a third party developer entity (the "Developer") who shall commit to the Subrecipient under the terms and conditions of the Development Agreement to undertake a specific program of reuse and redevelopment of the Property as part of the Project. The Development Agreement shall contain such Project completion and Developer performance sureties in favor of the Subrecipient as acceptable to the Subrecipient (collectively, "Developer Completion Surety"). The Development Agreement and the Developer Completion Surety shall contain; 16 (A) a financial commitment of the Developer enforceable by the Subrecipient that the new buildings and improvements constructed on the portion of the Project undertaken by the Developer shall have a minimum assessed valuation for ad valorem property tax purposes of not less than Seventeen Million Dollars ($17,000,000); (B) that the building improvements on the portion of the Project undertaken by the Developer shall be substantially completed within twenty four (24) months following the date of transfer of the Property by the Subrecipient to the Developer; (C) a financial covenant of the Developer in favor of the Subrecipient that the retail sales and use taxes generated by businesses situated in the Project which are payable to the City shall be an amount each year which is not less for the applicable year than the amount of estimated Sales Tax Payments to the City shown in Attachment 4; (D) other financial commitments of the Developer acceptable to the Subrecipient, including without "limitation, new building construction completion surety of the Developer in favor of the Subrecipient; (E) an express acknowledgment by the Developer that the Developer Completion Surety and the financial performance rights of the Subrecipient under the Development Agreement shall be assigned by the Subrecipient as collateral to the Borrower and the Secretary for the repayment of the Subrecipient Note. The final form of the amendment or modification of the Collateral Assignment of Interests in License, Permits and Agreements, which is to include the collateral pledge of Developer Completion Surety by the Subrecipient to the Borrower within the scope of the collateral assignment of security interests to the Secretary, shall be in form and substance acceptable to the Secretary. (v) Such other alternative collateral or security arrangements as may be requested by the Borrower and approved by the Secretary in writing. 17 (d) The Borrower shall select a financial institution acceptable to the Secretary (the .Custodian") to act as custodian for the documents specified in (e) below (hereinafter referred to as the "Security Documents.). The Borrower and the Custodian shall enter into a written agreement containing such provisions as the Secretary deems necessary. A fully executed copy of such agreement, with original signatures, shall be forwarded to the Secretary contemporaneously with the delivery of documents pursuant to te) below. (e) Not later than five business days after the initial disbursement of the Guaranteed Loan Funds to the Subrecipient, the Borrower shall deliver to the Custodian the following: (i) The original Subrecipient Note, endorsed in blank and without recourse. (ii) The original Subrecipient Loan Agreement and a collateral assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. (iii) The original recorded Deed of Trust signed by the Subrecipient and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (iv) The original recorded Collateral Assignment of Leases and Rents and an assignment thereof to the Secretary, in a recordable form but unrecorded, which assignment shall be in a form acceptable to the Secretary. (v) The original Collateral Assignment of Interest in Licenses, Permits, and Agreements and.a collateral assignment thereof to the Secretary, which assignment shall be in a form acceptable to the Secretary. (vi) An opinion of the Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that: (A) The Subrecipient is duly organized and validly existing as a public body under the laws of the State of California and is in good standing in and under the laws of the State of California; (B) The Subrecipient Note has been duly executed and delivered by a party authorized by the 18 Subrecipient to take such action and is a valid and binding obligation of the Subrecipient, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally; and (C) The security instruments specified in (ii) through (v) above are valid and legally binding obligations, enforceable in accordance with their respective terms. To the extent that the foregoing opinion deals with matters customarily within the due diligence of counsel to the Subrecipient, Borrower's counsel may attach and expressly rely on an opinion of Subrecipient's counsel satisfactory to the Secretary. (vii) A mortgagee title policy, issued by a company and in a form acceptable to the Secretary, naming the Borrower as the insured party. The policy must either include in the definition of the "insured" each successor in ownership of the indebtedness secured by the Deed of Trust or be accompanied by an endorsement of the policy to the Secretary. (viii) If required by the Secretary, a certified survey with a legal description conforming to the title policy and the Deed of Trust. (ix) An appraisal of the fee simple ownership interest in the Property specifying an estimate of fair market value of not less than $4,300,000. The appraisal shall be completed by an appraiser who is certified by the state and has a professional designation (such as "SRA" or "MAl"), and shall conform to thestanda~ds of the Financial Institutions Reform, Recovery and EnforCement Act of 1989 ("FIRREA"). (x) Any instruments, documents, agreements, and legal opinions required pursuant to paragraph 1S(c) (v). (f) Not later than five (S) business days after the Subrecipient has transferred its interest in the Property to the Developer under the Development Agreement, the Borrower shall deliver to the Custodian the following: (i) An appraisal of the completed improved value of the project to be undertaken by the Developer pursuant to the Development Agreement specifying r 19 an estimate of fair market value of such portion of the Project as being not less than Seventeen Million Dollars ($17,000,000). The appraisal shall be completed by an appraiser who is certified by the state and has a professional designation (such as "SRA" or "MAr") and shall conform to the standards of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). (ii) The modification of the Collateral Assignment of Interest in Licenses, Permits and Agreements by and between the Borrower and the Subrecipient which includes the collateral pledge to the Borrower of the Developer Completion Surety: (iii) An opinion of the Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that the obligations of the Developer as arise in favor of the Subrecipient under the Development Agreement, including without limitation, the Developer Completion Surety, are valid and legally binding obligations of the Developer and that the Developer Completion Surety may be lawfully assigned by the Subrecipient to the Borrower and to the Secretary. (iv) An opinion of the Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that: (A) At the time of the execution of the Development Agreement the Subrecipient remains duly organized and validly existing as a public body under the laws of the State of California and is in good standing in and under the la~s of the State of.Califor~ia; . . (B) The I)evelopment Agreement has been duly executed and delivered by a party authorized by the Subrecipient to take such action and is a valid and binding obligation of the Subrecipient, enforceable in accordance with its terms, except as limited by bankruptcy and similar laws affecting creditors generally; and (C) The security instruments identified as the Developer Completion Surety are valid and legally binding obligations, enforceable in accordance with their respective terms. ! - 20 To the extent that the foregoing opinions deal with matters customarily within the due diligence of counsel to the Developer or the Subrecipient, Borrower's counsel may attach and expressly rely on an opinion of counsel to the Developer or Subrecipient satisfactory to the Secretary. (g) (i) Subject to compliance each year with applicable debt limitation requirements of the State Constitution, the Borrower pledges to provide to the Subrecipient the Grant Assistance Revenues, as described in paragraph 15(a), Attachment 3, and the Cooperation Loan Agreement, each year during the term of the Note (the "Borrower Pledge"). Borrower shall disburse the proceeds of the Grant Assistance Revenues to the Subrecipient in an amount determined by the Subrecipient as provided in Section 7 of the Cooperation Loan Agreement, in annual installments until the Subrecipient Loan is repaid in full to the City. The obligation of the City to provide such payments to the Subrecipient in each fiscal year is a current obligation of the Borrower, subject to annual appropriation by the City. The Borrower Pledge shall be in effect for the full term of the Note and shall be described and authorized in an Ordinance or Resolution of the Borrower's legislative body. (ii) The Borrower shall deliver to the Secretary contemporaneously with the delivery of this Contract and the Note: (A) A copy of the Ordinance or Resolution describing and authorizing the Borrower Pledge, and (B) An opinion of Borrower's counsel on its letterhead, addressed and satisfactory to the Secretary, that the Ordinance or Resolution provided by the Borrowerisa valid and legally binding obligation of the Borrower. (h) Paragraph 12 is amended by adding at the end thereof -the following language: "(g) The Secretary may complete the endorsement of the Subrecipient Note and record the assignments referred to in paragraph 15(e) and thereby effectuate the transfer of the documents referenced and underlying indebtedness from the Borrower to the Secretary or- the Secretary's assignee. 21 "(h) The Secretary may exercise or enforce any and all other rights or remedies (including any and all rights and remedies available toa secured party under the Uniform Commercial Code) available by law or agreement (including any of the Security Documents, as defined in paragraph 15(d) against the Collateral, against the Borrower, against the Subrecipient, or against any other person or property. " (i) The Borrower agrees that it shall promptly notify the Secretary in writing upon the occurrence of any event which constitutes a default (an "Event of Default") under (and as defined in) any of the Security Documents, as defined in paragraph 15(d). Notification of an Event of Default shall be delivered to the Secretary as directed in paragraph 12(f) above. Upon the occurrence of an Event of Default, the Secretary may (without prior notice or hearing, which Borrower hereby expressly waives), in addition to (and not in lieu of) exercising any and all remedies that may be available under the Security Documents, declare the Note in Default and exercise any and all remedies available under paragraph 12. This paragraph shall not affect the right of the Secretary to declare the Note in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12. (j) The Borrower shall deliver to the Secretary contemporaneously with the delivery of this Contract and the Note: (i) an original copy of the Pledge, Assignment,and Security Agreement; and, (ii) an opinion of Borrower's counsel on its letterhead, addresSEld and satisfactory to the Secretary,.. that the Pledge; Assignment and .Security Agreement is a valid arid legally binding obligation, enforceable in accordance with its te.rIDs. (k) Additional Grounds for Default. Restriction of Pledqed Grants. Remedial Actions. Notice of Default. Availability of Other (i) The Borrower acknowledges and agrees that the Secretary's guarantee of the Note is made in reliance upon the availability of grants pledged pursuant to paragraph 5(a) (individually, a "Pledged Grant" and, collectively, the "Pledged Grants") in any Federal fiscal year subsequent to the Federal fiscal year ending September 30, 2006 to: (A) pay when due the payments to become due on ~ 22 the Note, or (B) defease (or, if permitted, prepay) the full amount outstanding on the Note. The Borrower further acknowledges and agrees that if the Secretary (in the Secretary's sole discretion) determines that Pledged Grants are unlikely to be available for either of such purposes, such determination shall be a permissible basis for any of the actions, specified in paragraphs (ii) and (iii) below (without notice or hearing, which the Borrower expressly waives) . (ii) Upon written notice from the Secretary to the Borrower at the address specified in paragraph l2(f) above that the Secretary (in the Secretary's sole discretion) has determined that Pledged Grants are unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above (such notice being hereinafter referred to as the "Notice of Impaired Security"), the Secretary may limit the availability of Pledged Grants by withholding amounts at the time a Pledged Grant is approved or by disapproving payment requests (drawdowns) submitted with respect to Pledged Grants. (iii) If after 60 days from the Notice of Impaired Security the Secretary (in the Secretary's sole discretion) determines that Pledged Grants are still unlikely to be available for either of the purposes specified in (A) and (B) of paragraph (i) above, the Secretary may declare the Note in Default and exercise any and all remedies available under paragraph 12. This paragraph (iii) shall not affect the right of the Secretary to declare the Note and/or this Contract in Default pursuant to paragraph 11 and to exercise in connection therewith any and all remedies available under paragraph 12. (iv) All notices and submissions provided for hereunder shall be submitted as directed in paragraph l2(f) above. (1) Part II, Paragraph'l(a) of the Contract is' amended by deleting the fourth and last sub-paragraph as written in its entirety and substituting therefore the following: "All funds in the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account must be withdrawn and disbursed by the Borrower for approved activities by October 31, 2007; provided however, that in the event that the Subrecipient may not have entered into a Development Agreement with the 23 Developer, as each of these terms is defined in paragraph lS(c) (iv), by a date. not later than December 31, 2006, then in such event, the Borrower shall not thereafter disburse any other funds from the Guaranteed Loan Funds Account or the Guaranteed Loan Funds Investment Account without first obtaining the written consent of the Secretary. Any funds remaining in either Account after December 31, 2006, if . applicable, or in all events after October 31, 2007, shall on the next business day immediately following such applicable date, be transferred to the Loan Repayment Account established pursuant to paragraph 6 of this Contract." [Rest of Page Intentionally Left Blank] 24 THE UNDERSIGNED, as authorized officials on behalf of the Borrower or the Secretary, have executed this Contract for Loan Guarantee Assistance, which shall be effective as of the date of execution hereof on behalf of the Secretary. City of San Bernardino, CA BORROWER BY: ~e~~ Patrick J. Morris (Name) Mayor (TitJ.e) (Date) SECRE'1'ARY OF HOUSING AND URBAN DEVELOPMENT BY: on eneral Deputy Assistant Secretary for Community Planninq and Development (Title) SEP 1 3 2006 (Date) ATIACHMENT I u.s. DEPARlMENT OF HOUSING AND URBAN DEVELOPMENT Letter Agreement for Section 108 Loan Guarantee Program Custodial Account Wells Fargo Bank, N.A. Name oflnstitution (and Branch) 707 Wilshire Boulevard, 17th Floor Street Los Angeles, California 90017 City III This account is established for funds received by the Borrower under note(s) guaranteed by the United States Department of Housing and Urban Development (HUD) under the Section 108 Loan Guarantee Program. (Guaranteed Loan Funds Account) o This account is established for repayment of the note guaranteed by HUD under the Section 108 Loan Guarantee Program. (Loan Repayment Account) o This account is established as a debt service reserve under the Section 108 Loan Guarantee Program. (Debt Service Reserve Account) You are hereby authorized and requested to establish a Custodial Account to be specifically designated" City of San Bernardino as Trustee for United States Department of Housing and Urban Development." All deposits made in such account shall be subject to withdrawal therefrom by the Borrower named below, and shall also be subject to withdrawal therefrom by HUD. No agent ofthe Borrower shall be authorized to withdraw funds from the account. You are also authorized to pay HUD at any time upon its written demand, which need not name a specific amount, the entire amount in such account subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days. You are further authorized upon the request ofHUD to refuse to honor any instrument drawn upon or withdrawals from such account by parties other than HUD and to change the name of the aforesaid account to the "United States Department of Housing and Urban Development." In no instance shall the funds in the Custodial Account be used to offset funds which may have been advanced to, or on behalf of, the Borrower by the 'custodian institution. ) 4817-9164.5697.1 I This letter is submitted to you in duplicate. Please execute the duplicate copy of the certificate below, acknowledging the existence of such account, so that we may present the copy signed by you to HUD. City of San Bernardino Name of Borrower ~~..~. . (Signa re) Mayor Title The undersigned institution certifies to the United States Department of Housing and Urban Development (HUD) that the account identified is in existence in this institution under account number 20347200 . and agrees with the Borrower named above and HUD to honor demands on such account in the manner provided in the above letter, subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days. The undersigned institution further agrees upon the request of HUD to refuse to honor any instruments drawn upon or withdrawals from such account by parties other than HUD and to change the name of the aforesaid account to "United States Department of Housing and Urban Development." In no instance shall the funds in the Custodial Account be used to offset funds which may have been advanced to, or on behalf of, the Borrower by the custodian institution. Deposits in this institution are insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, or the National Credit Uni~ation. Wells Fargo Bank, N.A. Name ofInstitution Signature Scott C. Emmons, Vie President Print Name and Title August 7, 2006 Date 4817-9164-5697.1 2 ATIACHMENT2 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Letter Agreement for Section 108 Loan Guarantee Program Custodial Investment Account Wells Fargo Bank, N.A. Name ofInstitution (and 8ranch) 707 Wilshire Boulevard, 17th Floor Street Los Angeles, California 90017 City August 7, 2006 Date o This account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Guaranteed Loan Funds Account. (Guaranteed Loan Funds Account) IZI This Account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Loan Repayment Account. (Loan Repayment Account) o This account is established to hold obligations and their assignments, such obligations having been purchased with funds from the Debt Service Reserve Account. (Debt Service Reserve Investment Account) You are hereby authorized and requested to hold obligations and assignments of those obligations in trust for the Untied States Department of Housing and Urban Development (HUb) in an aCCOUnt specifically designated" City of San Bernardino . as Trustee for United States Department of Housing and Urban Development." AU obligations and assignments shatlbe subject to release to the Borrower named below, and shall also be subject to release to HUn. No agent of the Borrower shall be authorized to release the obligations or assignments. You are also authorized to release the obligations and assignments to HUn at any time upon its written demand, which need not name specific obligations and assignments, all obligations and assignments being held in such account subject only to notice requirements contained in applicable regulations governing this institution, but in no event to exceed seven business days. You are further authorized upon the request ofHUD to refuse to honor any request for release of the obligations and assignments from such account by parties other than HUD and to change the name of the aforesaid account to the "United States Department of Housing and Urban Development." In no instance shall the obligations in the account be used to offset funds which may have been advanced to, or on behalf of, the Borrower by the custodian institution. 4831-5060-0193.1 This letter is submitted to you in duplicate. Please execute the duplicate copy of the. certificate below, acknowledging the existence of such account, so that we may present the copy signed by you to HUD. . City of San Bernardino Name of Borrower ~~. (Signa re) . .~ Mayor Title The undersigned institution certifies to the United States Department of Housing and Urban Development (HUD) that the account identified is in existence in this institution under account number 20347201 , and agrees with the Borrower named above and HUD to honor demands release on such account in the manner provided in the above letter, subject only to any notice requirements contained in applicable regulations governing this institution, butin no event to exceed seven business days. The undersigned institution further agrees upon the request ofHUD to refuse to honor any request for release of the obligations and assignments from such account by parties other than HUD and to change the name of the aforesaid account to "United States Department of Housing and Urban Development." In no instance shall the obligations in the account be used to offset funds which may have been advanCed to, or on behalf of, the Borrower by the custodian institution. Deposits in this institution are insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, or the National Credit Union Administration. Wells Fargo Bank, N .A. ~ -=' . Name ofInstitution Signature Scott C. Emmons, Vice President Print Name and Title August 7, 2006 Date 4831-506<)-0193.1 2 Attachment 3 Grant Assistance Revenues Description to be provided by Borrower Attachment No.3 Description of Pledged Funds (a) The Mayor and Common Council hereby acknowledges that the $7,500,000 HUD Section 108 Loan Promissory Note sets forth a specific schedule of repayment by the City to HUD of the principal amount of the loan under the 2006 HUD Section 108 Loan Contract, as shall be due and payable in the amounts and at the times provided as follows: Principal Due Date Commitment Principal Due Date Commitment Amount Amount August 1, 2006 $0 August 1,2016 $424,000 August I, 2007 $0 August 1,2017 $454,000 August 1,2008 $0 August 1,2018 $494,000 August 1, 2009 $0 August 1,2019 $534,000 August 1, 2010 $0 August 1,2020 $574,000 August 1,2011 $334,000 August 1,2021 $624,000 August I, 2012 $344,000 August 1,2022 $654,000 August 1,2013 $354,000 August 1, 2023 $654,000 August 1, 2014 $384,000 August 1, 2024 $634,000 August 1, 2015 $404,000 August 1,2025 $634,000 (Aggregate Principal Amount = $7,500,000) Payments of interest which accrue on the outstanding principal balance of the 2006 HUD Section 108 loan from the date of the $7,500,000 HUD Section 108 Loan Promissory Note (e.g., the "Interim Interest Rate" and later, the "Public Offering Date", as these terms are defined in the $7,500,000 HUD Section 108 Loan Promissory Note) shall be paid by the City at the rate of interest per annum determined in accordance with the interim HUD financing and later on the Public Offering Date to be inserted by HUD or its fiscal agent, in the Schedule "P&I" of the $7,500,000 HUD Section 108 Loan Promissory Note, all as provided in the 2006 HUD Section 108 Loan Contract. (b) Except for the special source of funds as may be available to the City by virtue of the collateral assignments by: (i) the Agency to the City of the Agency's beneficial interest in the Agency Lands pursuant to the 2006 Redevelopment Cooperation Loan Agreement; (ii) the Agency to the City for the collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Site Tax Increment Payment" which arises in favor of the Agency under the terms of the 2003 Redevelopment Cooperation Agreement, dated October 1,2003, by and among the City, IVDA and the Agency; (iii) the Agency to the City for the collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Site Sales Tax Payment" which arises in favor of the Agency under the terms of Section 6 of the 2006 Redevelopment Cooperation Loan Agreement; (iv) the Agency to the City for collateral assignment to HUD of the Agency's beneficial interest in the "Annual Agency Grant Assistance Revenue Payment" which arises in favor of the Agency under the terms of Section 7 of the 2006 Redevelopment Cooperation Loan Agreement; (v) the Agency to the City for collateral assignment to HUD of the Agency's beneficial interest in "Developer Grant Agreement Revenues", which arises in favor of the Agency under the terms of Section 9 of the 2006 Redevelopment Cooperation Loan Agreement or otherwise under the Developer Grant Agreement; The sole source of funds of the City available to repay the 2006 HUD Section 108 Loan shall be the CDBG Program revenues of the City, all as more fully provided under the 2006 HUD Section 108 Loan Contract and no other source of funds of the City is pledged or shall be available for the repayment of the 2006 HUD Section 108 Loan. For the purposes of the 2006 HUD Section 108 Loan Contract, the source of funds identified above in subsection (b )(ii), (iii) and (iv), are referred to collectively as "Pledged Revenues". Attachment 4 Sales Tax Payments Description to be provided by Borrower Attachment No.4 ARDEN GUTHRIE HUD-108 DEBT SERVICE COVERAGE ANALYSIS Annual Agency Annual Agency Annual Annual Site Sales Tax Site Tax Increment HUD-108 HUD-108 Year Pavments 1 Payments2 Debt ~ervice3 Coverage4 1 -0- -0- $415,500 N1A 2 -0- -0- 412,500 N/A 3 $490,000 68,000 412,500 1.35 4 510,000 68,700 412,500 1.40 5 530,000 69,400 412,500 1.45 6 551,000 70,100 746,500 .83 7 573,000 70,800 738,130 .87 8. 596,000 71,500 729.210 .92 9 620,000 72,200 739,740 .94 10 645,000 72,900 738,620 .97 11 670,800 73,600 736,400 1.01 12 697,600 74,400 743,080 1.04 13 725,500 75,100 758,110 1.06 14 754,600 75,900 770,940 1.08 15 784,700 76,600 781,570 1.10 16 816,100 77.400 800,000 1.12 17 848,800 78.200 795,680 1.17 18 772,400 78,900 759,710 1.12 19 803,300 79.700 703,740 1.25 20 835,400 80,500 668.870 1.37 lBasee! on 175,000 sq. ft. shopping center with taxable sales of $350 per square foot, inftation at 4%. 80% pass through years one through year seventeen, 70% pass through years eighteen through twenty. 'ZSaSCld onlAltlr.emantal improvements of $17,000.000, 40% pass through and inflation at 1% per year. 3See Exhibit B. 4Column Two Plus Column Three Divided by Column Four. Not applicable dUring years one and two while project is under development and construction. Attachment 5 Tax Increment Revenues Description to be provided Qy Borrower Attachment No.5 ARDEN GUTHRIE HUD-108 DEBT SERVICE COVERAGE ANALYSIS Annual Agency Annual Agency Annual Annual Site Sales Tax Site Tax Increment HUD-108 HUD-108 ~ f.3avments 1 Pavment52 Debt Service3 Coverage4 1 -0- -0- $415,500 N/A 2 -0- -0- 412,500 NfA 3 $490,000 68,000 412,500 1.35 4 510,000 68,700 412,500 1.40 5 530,000 69.400 412,500 1.45 6 551,000 70,100 746,500 .83 7 573,000 70,800 738,130 .87 8. 596,000 71,500 729.210 .92 9 620,000 72,200 739,740 .94 10 645,000 72,900 738,620 .97 11 670,800 73,600 736,400 1.01 12 697,600 74,400 743,080 1.04 13 725,500 75,100 758,110 1.06 14 754,600 75,900 770,940 1.08 15 784,700 76,600 781,570 1.10 16 816,100 77,400 800,000 1.12 17 848,800 78,200 795,680 1.17 18 772,400 78,900 759,710 1.12 19 803,300 79,700 703,740 1.25 20 835,400 80,500 668,870 1.37 lBaseq on 1.75,000 sq. ft. shopping center with taxable sales of $350 per square foot, inflation at 4%, 80% pass through years one through year seventeen, 70% pass through years eighteen through twenty. .ZS...onil'tCi'emental impmvemenls of $17;000,01'10, 40%passthmugh. and inflation at 1% peryeal'. 3See Exhibit B. 'Column Two Plus Column Three Divided by Column Four. Not applicable dUring years one and two while project is under development and conslrucl1on. Attachment 6 Real property subject to lien Legal description to be provided by Borrower Attachment No.6 Agency Owned Properties Arden Guthrie Area Census Tract 0074.07 I. 2176 N. Newcomb Street 1191-021-12 6898 23 2. 2158 N. Newcomb Street 1191-021-13 6898 24 3. 2140 N. Newcomb Street 1191-021-14 6898 25 4. 2122 N. Newcomb Street 1191-021-15 6898 26 5. 2104 N. Newcomb Street 1191-021-16 6898 27 6. 2094 N. Newcomb Street 1191-021-17 6898 28 7. 2072 N. Newcomb Street 1191-021-18 6898 29 8. 2050 N. Newcomb Street 1191-021-19 6898 30 9. 2028 N. Newcomb Street 1191-041-17 6898 31 10. 2004 N. Newcomb Street 1191-041-18 6898 32 II. 2029 N. Newcomb Street 1191-041-20 6898 34 12. 2073 N. Newcomb Street 1191-021-21 6898 36 13. 2095 N. Newcomb Street 1191-021-22 6898 37 14. 2105 N. Newcomb Street 1191-021-23 . 6898 38 15. 2123 N. Newcomb Street 1191-021-24 6898 39 16. 2141 N. Newcomb Street 1191-021-25 6898 40 17. 2159 N. Newcomb Street 1191-021-26 6898 41 18. 2177 N. Newcomb Street 1191-021-27 6898 42 19. 2194 N. McKinley Avenue 1191-021-29 6898 44 20. 2140 N. McKinley Avenue 1191-021-32 6898 47 21. 2122 N. McKinley Avenue 1191-021-33 6898 48 22. 2104 N. McKinley Avenue 1191-021-34 6898 49 23. 2094 N. McKinley Avenue 1191-021-35 6898 50 24. 2072 N. McKinley Avenue 1191-021-36 6898 51 25. 2050 N. McKinley Avenue 1191-021-37 6898 52 26. 2028 N. McKinley Avenue 1191-041-21 6898 53 27. 2029N. McKinley Avenue 1191-041-31 7106 39 28. 2051 N. McKinley Avenue 1191-021-69 7106 38 29. 2073 N. McKinley Avenue 1191-021-68 7106 37 30. 2095 N. McKinley Avenue 1191-021-67 7106 36 31. 2159N. McKinley Avenue 1191-021-63 7106 32 32. 2177N. McKinley Avenue 1191-021-62 7106 31 33. 2194 N. DumbartonAvenue 1191-021-60 7106 29 34. 2158 N. Dumbarton Avenue 1191-021-58 7106 27 35. 2104 N. Dumbarton Avenue 1191-021-55 7106 24 36. 2094 N. Dumbarton Avenue 1191-021-54 7106 23 37. 2072 N. Dumbarton Avenue 1191-021-53 7106 22 I , Attachment No.6 Agency Owned Properties Arden Guthrie Area Census Tract 0074.07 38. 2050 N. Dumbarton Avenue 1191-021-52 7106 21 39. 2029 N. Dumbarton Avenue 1191-041-27 7106 17 40. 2004 N. Dumbarton Avenue 1191-041-29 7106 19 41. 2028 N. Dumbarton Avenue 1191-041-30 7106 20 42. 2051 N. Dumbarton Avenue 1191-021-51 7106 16 43. 2073 N. Dumbarton Avenue 1191-021-50 7106 15 44. 2095 N. Dumbarton Avenue 1191-021-49 7106 14 45. 2105 N. Dumbarton Avenue 1191-021-48 7106 13 46. 2141 N. Dumbarton Avenue 1191-021-46 7106 11 47. 2177 N. Dumbarton Avenue 1191-021-44 7106 09 48. 2122 N. Arden Avenue 1191-021-42 7106 07 Total Pro erties 48 2 ,. , I \ DATE: 09/26/2006 PAGE: 1 HOD 108 CONSOLIDATED AMORTIZATION SCHEDULE FOR SERIES: 2006-A BORROWER: SAN BERNADINO, CA NOTE NUMBER: B-03-MC-06-0539 NOTE DATE: 09/14/2006 PAYMENT DATE INTEREST DUE PRINCIPAL DUE TOTAL P & I UNPAID PRINCIPAL 02/01/2007 155,975.29 0.00 155,975.29 7,500,000.00 08/01/2007 204,931.00 0.00 204,931.00 7,500,000.00 02/01/2008 204,931. 00 0.00 204,931.00 7,500,000.00 08/01/2008 204,931. 00 0.00 204,931.00 7,500,000.00 02/01/2009 204,931.00 0.00 204,931.00 7,500,000.00 08/01/2009 204,931.00 0.00 204,931.00 7,500,000.00 02/01/2010 204,931.00 0.00 204,931.00 7,500,000.00 08/01/2010 204,931.00 0.00 204,931. 00 7,500,000.00 02/01/2011 204,931.00 0.00 204,931.00 7,500,000.00 08/0112011 204,931.00 0.00 204,931. 00 7,500,000.00 02/01/2012 204,931.00 0.00 204,931. 00 7,500,000.00 08/01/2012 204,931.00 334,000.00 538,931.00 7,166,000.00 02/01/2013 196,530.90 0.00 196,530.90 7,166,000.00 08/01/2013 196,530.90 344,000.00 540,530.90 6,822,000.00 02/01/2014 187,844.90 0.00 187,844.90 6,822,000.00 08/01/2014 187,844.90 354,000.00 541,844.90 6,468,000.00 02/01/2015 178,871.00 0.00 178,871.00 6,468,000.00 08/01/2015 178,871.00 384,000.00 562,871.00 6,084,000.00 02/01/2016 169,098.20 0.00 169,098.20 6,084,000.00 08/01/2016 169,098.20 404,000.00 573,098.20 5,680,000.00 02/01/2017 158,776.00 0.00 158,776.00 5,680,000.00 .08/01/2017 158,776.00 424,000.00 582,776.00 5,256,000.00 02/01/2018 147,540.00 0.00 147,540.00 5,256,000.00 08/01/2018 147,540.00 454,000.00 601,540.00 4,802,000.00 02/01/2019 135,327.40 0.00 135,327.40 4,802,000.00 08/01/2019 135,327.40 494,000.00 629,327.40 4,308,000.00 02/01/2020 121,865.90 0.00 121,865.90 4,308,000.00 08/01/2020 121,865.90 534,000.00 655,865.90 3,774,000.00 02/01/2021 107,154.20 0.00 107,154.20 3,774,000.00 08/01/2021 107,154.20 574,000.00 681,154.20 3,200,000.00 02/01/2022 91,168.30 0.00 91,168.30 3,200,000.00 08/01/2022 91,168.30 624,000.00 715,168.30 2,576,000.00 02/01/2023 73,633.90 0.00 73,633.90 2,576,000.00 08/01/2023 73,633.90 654,OcrO.OO 727,633.90 1,922,000.00 02/01/2024 55,125.70 0.00 55,125.70 1,922,000.00 08/01/2024 55,125.70 654,000.00 709,125.70 1,268,000.00 02/01/2025 36,486.70 0.00 36,486.70 1,268,000.00 08/01/2025 36,486.70 634,000.00 670,486.70 634,000.00 02/01/2026 18,290.90 0.00 18,290.90 634,000.00 08/01/2026 18,290.90 634,000.00 652,290.90 0.00 TOTAL: 40 5,765,644.29 7,500,000.00 13,265,644.29 . J , OFFERING CIRCULAR $324,129,000 . U.S. Department of Housing and Urban Development Section 108 Government Guaranteed Participation CertifiCates, SerieS.HUD 2006-A, Guaranteed by the Secretary of Housing and Urban Development . The certificates represent fractional undivided interests in a portion of a. trust sponsored by the Secretary ; of Housing and Urban Development or his .anthorized designee. The assets of .the Trust will consist!)f .notes issned by units of general local goverrunent or their. designated local public agencies, and a guarantee issued by the Secretary of H.ousing' ~d Urban Development pursuant to which the Secretary will guarantee the timely payment of principal and interest due .on these notes. ..... ". The Secretary o,fH.ousin,g and Urban Devel.opment will alS.o guarantee the timeIYP~~-i%gl}gbdistributiou . of interest and principal on the certificates.. . . . Distributi.ol\S of interest will be made by the trustee to the);ertificatehold;;''; on each February I and August 1, .or the next ~usiness Pay if such day is n.ot a business day/c.o!lifuenc:ing February 1, 2007. Interest will accrue on the certificates at the rates specified in the table below. ' DistributionS' of principal in respect of any certificate will be made by the trustee uo later than the related maturity da~ .for such certificate set forth in ,the table bel.ow. Principal distributi.ons.in respect of certificates thathave a maturity date before August 1,2017 are not subject to prepayment Certificates having maturitydates..on or after August I, 2017 are subject to principal prepayments if there is a prepayment on a related. note or if the Secretary accelerates, a related note because there has been a defanlt as described herein. See "Descripti.on of Notes ~ Optional Redemption and Acceleration" herein. The full faith. and credit .of the United States is pledged to h.onor the n.ote guarantee and the certificate guarantee. See "Fn1l Faith and Credit Guarantee" herein.' . . . The Certificates are exempt fr.om the regis~.onrequirements of the Securities Act of 1933, S.o no re.gistration statement related'to the certificates has been filed' with the Securities and Exchange Commission. Neither the' Securities ani;! Exchange' Commission nor any state securities' c.ommissi.on has appr.oved .or disapproved .of these securities or passed uwn the adequacY or accuracy ot this .offering circular. A.'ny representation to the contrary is a ctiminaI offense. Maturity Interest Price to CUSIP Maturity Interest Price to CUSIP Amount Date(l) . Rate Publlc(2) Number Amount Date(l) Rate PubHc(2) Number $ S,052,000 August I, 2007 5.23% 100.00% 91175911N 1 $16,037,000 August I. 2017 5.30% 100.00% 911759 HY 7 $12.022,000 August I: 200S 5.01% 100.00% 911759 lIP 6 $18,007,000 August 1, 2018 5.38% 100.00% 911759 HZ 4 $13,073,000 August I, 2009 4.96% 100.00% 911759HQ 4 $18,400,000 August I, 2019 5.45% 100.00% 9111591A 7 $13,852,000 August I, 2010 4.99% 100.00% 911759 HR 2 $19,405,000 August I, 2020 5.51% 100.00% 9117591B 5 $13,289,000 August I, 2O11 5.02% 100.00% 91175911S 0 $18,270,000 August I, 2021 .5.57% 101100%, 911159 Ie 3 $17,982,000. Augusil,2O'12 5.03% 100.00% 911759 lIT 8 $18,756,000, August I. 2022 5.62% 100.00% 911759 ill 1 $16.011,000 ,. Augi,stl, 2013 5.05% 100.00% 911759 HU 5 $19,262,000 'August I. 2023 5.66% 100.00% 911759 iE 9 $15,417,000" August I, 2014 5.07%, 100.00% 911759 HV 3 . $22,402,000 Augusll, 2024 5.70% 100.00% 9.11759 jp 6 $15,990,000 ,.,~t I, 2015 5.09% 100.00% 911159 HW 1 $19,059.000 August I, 2025 5.74% 100.00% 911759 ~9 4 $15,831,000 August 1,2O~16 5.11% 100.00% 911159 iIx 9 $13,012,000 August I, 2026 5.77% 100.00% 911759lH' 2 (1 P PrincipafamoUnls due '~ri O_T tifteT'AU~ust 1, 2017 are: sUbjecno prepaytnMt os-deScribed -1Ie~in. Distributions with respect to any prepayment or 'accele~ wiU occur no earlier than A'ugustl; 2016,' See "DescriptIOn of Notes-OptioriGl Redemption and Accekroticn." herein. (2) : PlUs accrued.inlerest; if any. fro"':. the Closing Date. ;; We eXPect that the certificates will be ready for delivery in book-eutry form .only through The Deposilory Trust C.ompany, on or abOut September ~4, 2006. Merrill Lynch & CO. Credit Suisse UBS Invesbnent Bank The date .of this Offering Circular is September 8, 1006.,