HomeMy WebLinkAboutR09-Economic Development Agency
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REOUEST FOR COMMISSION/COUNCIL ACTION
FROM:
RONALD E. WINKLER
Development Director
SUBJECT,
PREMIS PARTNERS DDA
(HA TLE)
DATE:
October 2, 19%
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SvnODIU of Previous CommilsionlCounciVCommittH! Action{s):
On 8/22/% die Redevelopment Committee heard this matter and recommended diat a joint public hearing be advertised
to anow consideration by die Community Development Commission.
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OPEN PUBLIC HEARING
CLOSE PUBLIC HEARING
Recommended Motion{s):
t'Mavor and Common CouncUl
MOTION A: RESOLUTION OF TIIE MAYOR AND COMMON COUNCIL OF TIIE CITY OF SAN
BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN TIIE REDEVELOPMENT AGENCY OF TIIE CITY OF
SAN BERNARDINO AND PREMIS PARTNERS PERTAINING TO TIIE DEVELOPMENT OF
'- A WAREHOUSING AND DISlRIBUTION FACILITY
(ModonCo) Continued to Next Pa.......)
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Contact Person(s): Ronald E Winkler/
Phone,
5081
Project Area(s):
Nor1hwest
Ward(s):
Six (6)
Supporting Data Attached: II!I Staff Report II Resolution(s) III Agreement(s)/Contract(s) 0 Map(s) 0 Memorandum
FUNDING REQUIREMENTS: Amount: $ N/A
Somce: N/A
SIGNATURE:
Administrator
Budget Audiority: ~{J~
Ronald E. inkler, Director
Development
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Comml..ionlCouneU Notes:
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Continued to 11/0'1/1(,
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COMMISSION MEETING AGENDA
MEETING DATE: 10/07/1996
Agenda Item Number: ~ q
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REQUEST FOR COMMISSION/COUNCIL ACTION
Premis Partners DDA (HatIe)
.r' October 2, 1996
"- Page Number -2-
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Recommended Motion(s) Continued:
(Community Development Commission)
MOTION B: RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING A CERTAIN
DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND PREMIS PARTNERS PERTAINING TO THE DEVELOPMENT OF A
WAREHOUSING AND DISTRIBUTION FACILITY
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COMMISSION MEETING AGENDA
MEETING DATE: 10107/1996
Agenda Item Number: q
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
Premjs Partners DDA (Hath:)
In November of 1994, the Agency received title to 40 acres of heavy industrial land in the
Northwest Industrial Park. The land lies adjacent to 1-215 and is connected to the State College
Business Park by means of Hallmark Parkway which runs through the center of the 40 acres. The
land has been divided into parcels as shown on the lot line adjustment map.
Last year, the Agency sold Parcel 2 to Mr. Russ Hatle who has now completed construction of a
packaging and distribution facility for Prime Line Products, a San Bernardino based supplier of
hardware goods shipped throughout the United States. The completed building totals 100,528 SF
and currently houses 115 employees. There is room for an expansion that will accommodate an
additional 40 employees in the future.
Mr. Hatle now proposes to develop an adjacent parcel for a similar but even larger user This new
proposal is for Parcel 1 which is shown on the attached map as a slender triangular piece of
property northwesterly of the Prime Line building. This parcel can accommodate a building as
large as 285,000 SF. Mr. Hatle would have two years to obtain a tenant during which time he
would pay the Agency an option fee that is the equivalent of property tax (the property does not
currently produce tax due to the Agency's ownership). During this same time period he must
design, process and obtain approval of development plans on a specified time table. Upon
successfully obtaining a tenant, he would buy the property at its full appraised price and carry out
actual construction. If a use cannot be found within two years then the Agency will keep both the
land and the option payments.
An economic impact analysis has been completed for this proposal. It indicates impressive
benefits from the proposed operation. These include:
. Direct creation of 425 new jobs in the primary sector which will also cause the creation of
367 new jobs in the secondary tier of the economy for a total increase of 792 jobs.
. Creation ofa new primary payroll of $9,500,000 plus an increase of $7,080,000 in
secondary income for a total income increase of $16,581,195 per year.
. Generation of new City sales taxes of $46,951 per year.
· Generation of new tax increment of$76,000 per year.
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COMMISSION MEETING AGENDA
MEETING DATE: 10/07/1996
Agenda Item Number:
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Premis Partners DDA (Hade)
October 2, 1996
Page Number -2-
. The development produces approximately $500,000 in one time fees to the City.
. The sale results in a one time payment of $807,000 in cash for the Agency from the land
sale.
This proposal fits the criteria for a Priority One project as defined in the Commission's adopted
Economic Strategic Plan. It produces jobs in the basic tier of the economy that are mainly
supported by revenues coming from outside of the community. This brings new money into the
economy which, in turn, creates employment and earnings in the secondary tier of the area
economy. The above numbers are based upon a 283,000 SF facility and the results (but not the
sales price) would be reduced pro rata for a smaller building. The proposed agreement specifies a
minimum building of200,000 SF but the actual size will depend upon actual the marketing results.
In addition, building a facility with higher improvement standards that are now typical of new
industrial buildings will show corporate location specialists that San Bernardino has industrial
product comparable to that in Ontario and Rancho Cucamonga. This project has the capacity to
cause a distinct increase in national awareness of San Bernardino as an effective location for
manufacture, assembly and distribution to the Western United States and the Pacific Rim. The
r high cubic storage density, high capacity fire suppression systems, large number of truck wells and
\..... very large truck turning radii combine to produce a product very different from that of even a few
years ago.
RUSS HATLE PRIMUS PARTNERS
Primus Partners would be a California Limited Partnership formed to carry out the development
of this project. The Agency would rely on the general partner who is Mr. Russ Hatle. Mr. Hade
has been building redevelopment projects in San Bernardino for more than 20 years and is
responsible for a significant share of the industrial and retail product built in Agency project areas
during that time.
His Agency association started with the land development of the Hospitality area in 1975 where
he built Bobby McGees, GuadlaHarry's and more than half a dozen other buildings and
complexes. He did all the land development of66 acres west of Waterman and north of
Hospitality Lane. In 1980 he developed 297,000 SF of industrial buildings on 16 acres in the
eastern portion of the South East Industrial Park project area. Also in 1980 he partnered with
Mr. Ray Fox to acquire and restore the Heritage Building on Court Street; this was renovated and
upgraded again in 1993 when it was converted to an entertainment use. In 1988 he took over a
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COMMISSION MEETING AGENDA
MEETING DATE: 10/07/1996
Agenda Item Number:
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Premis Partners DDA (Batie)
October 2, 1996
Page Number -3-
failed project from another developer and completed 153,000 SF on 9 acres of Agency land in
SEIP, attracting Carrier, International Technology, Super Shops, and eventually Rockwell
Corporation. In 1989 he build 120,000 SF on 7.26 acres in the State College Business Center.
Most recently he completed 100,528 SF on 7.1 acres for Prime Line in the Northwest Industrial
Park.
Mr. Hatle has been a very active developer in the San BernardinolRedlands area and is currently
active in Denver, Colorado as well. He is experienced at construction of multifamily residential,
commercial office, and industrial product. He has also been active in development offoreign
investment in Southern California real estate and has traveled for that purpose to Pacific Rim
countries including Hong Kong, Japan, and the Peoples Republic of China.
LARRY TAYLOR. LEE & ASSOCIATES
The developers marketing effort will be carried out by a team led by Mr. Larry Taylor who is a
Senior Vice President with Lee & Associates. Mr. Taylor has specialized in industrial and
commercial properties in the Inland Empire for more than 15 years. He has worked on many
Agency projects and delivered many users for developments in the Central City South, Southeast
Industrial Park, State College, and Northwest Redevelopment Project Areas. Despite the
economic slowdown of the past three years he has nevertheless maintained a high level of activity
including deals with more than 1 million square feet of buildings and 300 acres ofIand totaling in
excess of $30 million dollars.
THE MARKETING PLAN
The key service being provided by the developer during the 24 month option period is an
aggressive marketing effort. In addition the developer will submit and process plans through
DRC so as to shorten the development time for potential users. This allows for construction of a
custom facility that matches the user's needs while dramatically shortening the time required
before move-in.
The marketing effort will be nationwide to distribution warehousing users who have more than
100 employees. It will target client companies of Lee & Associates plus those on a nationwide
list that will be created by matching targeted SIC codes. It will include personal contact and
direct mail components and feature a specific effort to contact and influence corporate location
specialists making recommendations to companies considering relocation to the Southwestern
United States.
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COMMISSION MEETING AGENDA
MEETING DATE: 10/07/1996
Agenda Item Number: ~
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Premis Partners DDA (Hatle)
October 2, 1996
Page Number -4-
This is especially important as many companies make decisions based upon the advice of these
specialists. Such companies often restrict their search to a narrow list of finalists before even
disclosing the possibility that they may relocate. If San Bernardino is not on that short list then
the City never hears of that a company is considering relocating and the company never learns
about the possibilities of San Bernardino. NACORE, IDRC and SIOR are among the most
influential associations of corporate location specialists. Larry Taylor is a member of SIOR and
Lee & Associates will provide networking access to the others. This awareness campaign will
benefit San Bernardino both for future industrial warehousing projects and for manufacturing
facilities.
THE PROPERTY
This is 18.57 acres ofland located on the northerly side ofIndustrial Parkway and lies between
the Cable Canyon Flood Control Channel and Interstate Route 215. It was appraised by an MAl
appraiser within the last 12 months at $1.00 per square foot which indicates a full market value of
$807,000. It is very roughly graded with a fairly large amount oflarge rock debris on site. The
site features a long expanse of freeway frontage with excellent visibility. Challenges in the
development of the site include limited access and the inefficient narrow triangular shape of the
property. The large amount of upgraded landscaping required along the freeway and the on-site
rock handling add somewhat to the development costs.
THE PROPOSED AGREEMENT
The agreement gives the developer 24 months to attract a user and provides performance
benchmarks to be met during that time period. Plans and other documents are required on a
schedule that begins 30 days after execution and ends with submission of development plans and
fees for DRC approval at 180 days. The marketing effort is to be fully engaged at 180 days and
will be reviewed in depth at 180 day intervals.
Escrow will not open unless a user has executed a lease or sales agreement. Escrow will not
close unless the Agency is satisfied with the evidence that binding commitments of capital are in
place and building permits are ready to be issued for construction of the improvement. These
provisions are aimed at assuring that the project is ready to go forward before title is transferred.
Meanwhile, the developer has assurance that the land is available at a known price and can
commit to the predevelopment activities of design and marketing.
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COMMISSION MEETING AGENDA
MEETING DATE: 10/07/1996
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ECONOMIC DEVELOPMENT AGENCY STAFF REPORT
Premis Partners DDA (Batie)
October 2, 1996
Page Number -5-
The developer will pay an option fee equivalent to property tax during the planning period. This
is a benefit to the Agency because it does not currently earn property tax on this land. The sales
price will be $807,000 which is the appraised value.
RECOMMENDATION
It was the recommendation of the Redevelopment Committee to forward this item to the full
Commission for approval. This matter involves the possible disposition of property acquired with
tax increment funds so that certain provisions of California's Health and Safety Code apply. For
that reason, staff advertised a joint public hearing for todays meeting. After the hearing is closed,
the Council may take action to adopt the resolutions and enabling motion.
Based upon the foregoing, staff recommends adoption of the form motion.
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Development Department
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COMMISSION MEETING AGENDA
MEETlNGDATE: 10/07/1996
Agenda Item Number: q
ECAP
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economic .nd polltlc.1 .n,lysls
3142 c.ctus Circle
Hlghl.nd. ~ 92346-1739
(909)425'8952
lAX (909)425.8952
ECONOMIC IMPACT OP A NEW
WAREHOUSING & DISTRIBUTION CENTER
by
John E. Husing, Ph.D.
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In order to determine the economic impact of a new Warehousing &
Distribution center on the area in and around the City of San
Bernardino, it is necessary to deal with both short term and long
term considerations. .
1. Warehousing & Distribution jobs are assumed to be in
the basic tier of a city's economy. This is the case
as they are mainly supported by revenues coming from
outside of the community. In this sense, they are
comparable to gold miners in an old western town.
In the short term, adding a new Warehousing & Dis-
tribution center thus creates new basic employment and
earnings. When the new job holders spend their incomes
locally, they in turn create employment and earnings
in the secondary tier of the area's economy.
The immediate impact of the new Warehousing & Dis-
tribution facility is thus the combination of the jobs
and income added at the facility, plus the jobs and
income set off in the secondary tier of the economy.
2 . For the City of San Bernardino, the building of a maj or
new Warehousing & Distribution center has long term
consequences for the community as it provides the
opportunity to show corporate location specialists
that it now has the complete infrastructure necessary
to back-up modern manufacturing, storage and.distri-
bution operations.
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SHORT TERM ANNUAL ECONOMIC IMPACT
In order to estimate the impact of a new Warehousing & Distribution
center located in the City of San Bernardino, the following as-
sumptions are made:
1. The new facility will have 283,000 square feet.
2. It will employ 1.5 people per 1,000 square feet.
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The warehousing facility will be associated with a
trucking distribution operation placing it in SIC code
4214.
4. The average employee will earn $22,374, the average
income for employees working in firms in SIC code 4214.
This figure comes from the 1993 ES202 reports of the
California Employment Development Department for the
Inland Empire.
5. lOOt of the employees will live in the Inland Empire,
primarily in San Bernardino.
6. Each $1.00 in payroll will cause a total of $1.7458
in payroll to be created in the Inland Empire, primarily
in San Bernardino. This ratio comes from the Input-
Output model created for the Inland Empire by the U. S.
Bureau of Economic Analysis.
7. Each one job at the facility will cause 1. 8652 new
jobs to be created in the Inland Empire, primarily in
San Bernardino. This ratio also comes from the
Input-Output model created for the Inland Empire by
the U.S. Bureau of Economic Analysis.
8 . Inland Empire recipients of income are assumed to spend
it in the pattern identified for the greater Los Angeles
area by the U.S. Bureau of Labor Statistics for 1988- 89.
9. The portion of the spending in each sector which is
assumed to occur within the area in and around San
Bernardino is estimated by ECAP.
In the WAREHOUSING & DISTRIBUTION-ANNUAL ECONOMIC IMPACT table,
these assumptions lead to the following UQa conclusions:
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1. 283,000 feet of new Warehousing & Distribution space
will generate 425 new jobs in that primary sector.
2. These in turn will create 367 jobs in the secondary
tier of the economy, for a TOTAL JOB INCREASE OF ~.
In the WAREHOUSING & DISTRIBUTION-ANNUAL ECONOMIC IMPACT table,
these assumptions lead to the following EARNINGS conclusions:
1. 425 new jobs at $22,374 each will create a new primary
payroll of $9,497,763 in the Warehousing & Dist.ribution
sector.
2. Spending of this payroll will in turn create secondary
incomes of $7,083,065, for a TOTAL INCOME INCREASE OF
S16. 581. 195.
3. The table shows how this total income change is used
by sector of the economy (e.g. new apparel purchases
$851,772) .
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WAREHOUSING & DISTRIBUTION - ANNUAL ECONOMIC IMPACT
Square Fee 283,000 Inland Empire Warehousing Inl. Emp.
Emoloveees!l 000 Ft 1.5 Worker Multiolier New Jobs
EMPLOYEES 425 1.8652 792
AVERAGE EARNINGS 1993 $22374 Inland Empire Warehousing with Trucking jobS (SIC 4214)
TOTAL PAYROLL $9,497,763
Percent Inland Emolre 100.0%
LOCAL DIRECT HOUSEHOLD PAYROLL $9,497,763
Waret'Ousino & Transoortatlon Eamlnos Multlotier 1.7458
TOTAL LOCAL INCOME CREATED $16,581,195
HOUSEHOLD INCOME USE, SOUTHERN CAUFORNIA FAMIUES. 1990
CATEGORY PERCENT SPENDING EAST SB SPENDING "AX SALES t.O%
Food at Home 7.6% $1,252,956 99% $1,240,426 0
Food Out 6.0% 1,000,901 90% 900,811 $900,811 $9,008
Alcohol 0.9% 147,756 99% 146,279 146,279 1,463
Home Mortgage Interest 8.0% 1,321,116 50% 660,558 0
Home Property Tax 1.7% 289 ,566 100% 289,566 0
Home Maintenance & Repairs 1.7% 279,502 95% 265,527 0
Rented DwelDngs 8.0% 1,324,318 100% 1,324,318 0
Other Dwel&ngs 1.5% 243,821 100% 243,821 0
Utilities 4.6% 767 ,144 100% 767,144 0
Household Services 2.1% 341,715 100% 341,715 . 0
Household Supplies 1.2% 199,906 95% 189,910 189,910 1,899
r Furniture & FIxt....es 3.6% 589,196 75% 441,897 441,897 4,419
. Apparel 5.1% 851,772 75% 638 ,829 638,829 6,388
\"..., Vehicle Purcheses 6.8% 1,123,955 75% 842,966 842,966 8,430
Gas &OU :. 2.7% 455,620 70% 318,934 318,934 3,189
Vehicle Insurance 2.0% 338 ,683 15% 50,502 0
Vehicle Maintenance/Repair/Other 3.3% 549,855 90% 494,870 494,870 4,949
Public Transportation 1.3% 214,087 100% 214,087 0
Health Insurance 1.4% 2Zl,353 15% 34,103 0
MecflCaI Service 2.1% 355 ,439 95% 337,667 0
Drugs & Medical Supplies 0.7% 115,735 95% 109,948 0
Entertainment 4.4% 729,175 65% 473,964 0
Personal Care ProduclS 1.4% 228,268 95% 216,854 216,854 2,169
Reading 0.4% 68,160 95% 64,752 64,752 646
Education 1.1% 179,320 65% 116,558 0
Tobacco 0.5% 89,203 99% 88,311 88,311 883
Miscellaneous 2.2% 369,162 95% 350,704 350,704 3,507
Conltlbutlons 3.1% 512,344 95% 486,727 0
life & Other Personal Insurance 0.5% 87,830 15% 13,175 0
Pensions & Social Security 6.4% 1,064,486 0% 0 0
Federal Income Tax 6.1% 1,013,252 0% 0 0
State Income Tax 1.5% 245,193 0% 0 . 0
Other Taxes 0.0% 6,404 0% 0 0
EMPLOYEE DIRECT PAYROLL SPENDING $16581 195 $11 664 923 $4 695 117 $46951
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Sources:
u.s. Bureau of Labor Statistics, Consumer Expenditure SUNev. 1988-89. Los AnCleles ReClion.
U.S. Bureau 01 Economic Analysis, Reoionallnput-OulOut ModelinCl System (RIMS 1Il,Inland Empire. 1994.
...-- ......CA Employmenl Development Department, ES202 EaminCls Reports bv Seclor. Inland Empire. 1993.
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It also estimates how much of the new spending in each
sector would be in and around San Bernardino. Thus,
new apparel purchase of $851,772 would have 75% or
638,829 spent locally.
Finally, the table estimates the amount of local sales
taxes generated off of these local sales. Thus,
$638,829 times 1% would yield $6,388 per year in new
sales taxes from the apparel sector.
The table shows that the new facility would generated
NEW TOTAL SALES TAXES OF S46.951 per year from all
sectors.
5.
6.
LONG TERM ANNUAL ECONOMIC IMPACT
At this point in San Bernardino's history, the city's economy is
in repair mode, making up for the job and earnings losses caused
by the closure of Norton Air Force Base. Crucial to this phase in
the city's development is the ability to show location scouts from
U.S. and international corporations that the community has the
infrastructure to support modern goods manufacturing and distri-
bution.
IVDA's and the San Bernardino International Airport are working to
bring local air cargo capacity on line. Santa Fe Railroad already
has excellent intermodal rail/truck handling capability, and is
looking to expand it. What the area lacks is an example of a new
large, successful warehousing << distribution facility comparable
- to those in Ontario and Rancho Cucamonga.
The building and leasing of such a complex would prove that the
area now stands ready to compete with West San Bernardino County
locations at every level of the industrial and warehousing << dis-
tribution market. In fact, since warehouses in the westend must
ship goods to Santa Fe's intermodal depot, San Bernardino in fact
is more competitive in some ways.
Thus, beyond the strictly employment << earnings impact, the con-
struction and successful occupancy of a 200,000+ square foot Wa-
rehousing & Distribution facility in San Bernardino could represent
a major breakthrough for the city's economy. The timing is certainly
right, as commercial realtors indicate that almost no speculative
space of this size is currently available in the Inland Empire.
SUMMARy
Altogether, the proposed Warehousing & Distribution facility in San
Bernardino would annually generate a total of 792 jobs, $16,581,195
in income, and $46,951 in local sales taxes. In addition, it would
highlight the fully developed infrastructure now available in the
city.
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EXHIBIT "E"
PARCELS AFTER ADJUSTMENT
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CHANNEl. R/W PER
DEED TD SAN eERNAADlND
COUNTY 1l.00D CONTRCl.
DISTRICT BlC. 2218/141.
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PARCFJ 3 J 01
157,130 s.r. ~
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CHANIlE1. R/W PER
DEED TO 5l\N BEIlNARlIIND
COUNTY I'\.DOD CONTRCt.
411.38"
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N SUII'M" E 1251.21'
DEVIL CREEK FLOOD
CONTROL CHANNEL
POINT OF B€C1NNINC
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SABO & GREEN
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
SUITE 206
201 NORlH "E" STREET
SAN BERNARDINO, CAIJFORNIA 92401
(909) 383-9373
ENCLOSURE MEMO
Date:
September 20, 1996
TO:
John Hoeger, Project Manager
REDEVELOPMENT AGENCY OF SAN BERNARDINO
FROM:
Andre de Bortnowsky
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Please see attached. If you have any questions please call.
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO APPROVING A CERTAIN DISPOSITION AND
DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT
AGENCY OF THE CITY OF SAN BERNARDINO AND PREMIS
PARTNERS PERTAINING TO THE DEVELOPMENT OF A WAREHOUSING
AND DISTRIBUTION FACILITY
WHEREAS, the Community Development Commission of the
City of San Bernardino (the "Commission") on behalf of the
Redevelopment Agency of the City of San Bernardino (the
"Agency"), is a redevelopment agency, a public body, corporate
and politic of the State of California, organized and existing
pursuant to the Community Redevelopment Law (Part 1 of Division
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24) commencing with Section 33000 of the Health and Safety Code
of the State of California (the "Act)"; and
WHEREAS, the Redevelopment Plan for the State College
Redevelopment Project (the "Redevelopment Plan") was previously
approved and adopted by the Mayor and Common Council of the City
of San Bernardino (the "Council") by duly authorized Ordinance of
the Council; and
WHEREAS, the Redevelopment Plan provides for the
redevelopment of real property pursuant to the Redevelopment Plan
both within and outside of the redevelopment project area which
,
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is subject to the Redevelopment Plan (the "Project Area") by
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owners thereof or by parties seeking to acquire real property
from the Agency; and
WHEREAS, Section 33391 of the Act provides that a
redevelopment agency may acquire any interest in real or personal
property within a redevelopment project area or for the purposes
of redevelopment and Section 33430 of the Act provides that a
redevelopment agency may dispose of any interest in real or
personal property within a redevelopment project area or for the
purposes of redevelopment; and
WHEREAS, the Agency and Premis Partners, a California
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general partnership (the "Developer") desire to enter into a
certain Disposition and Development Agreement (the "Agreement"),
a copy of which is attached hereto as Exhibit "A" and
incorporated herein by reference, pursuant to which, among other
matters, the Developer would acquire from the Agency certain real
property (the "Property") which is more fully described in the
Agreement.
The Property is located in the Project Area.
The
transaction would be for purposes of causing the redevelopment of
the Property,
as described in the Agreement,
including
construction thereon by the Developer of an approximately Two
Hundred Thousand square foot warehousing and distribution
facility (the "Project"); and
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WHEREAS, the Agency Staff has prepared and made
available for pUblic inspection a certain Summary Report (the
"Summary") concerning the proposed Agreement, as required by
Health and Safety Code Section 33433, a copy of which is on file
with the Agency and is incorporated herein by reference; and
WHEREAS, the Agency and the City have duly noticed and
conducted a public hearing in accordance with the requirements of
Health and Safety Code Section 33433 concerning the proposed
disposition of the Property by the Agency to the Developer
pursuant to the proposed Agreement; and
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WHEREAS, the Agency has duly noticed and conducted a
public hearing in accordance with the requirements of Health and
Safety Code Section 33431 concerning the proposed disposition of
the Property by the Agency to the Developer pursuant to the
proposed Agreement; and
WHEREAS, based upon evidence and testimony submitted to
the City Counsil, it is reasonable and appropriate for the City
Council to approve the proposed Agreement.
NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO, DOES HEREBY RESOLVE, DETERMINE AND ORDER
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AS FOLLOWS:
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Section l.
The Council finds and determines that
the development of the Property as described in the proposed
Agreement is within the scope, terms and provisions of the
Redevelopment Plan, is consistent with the Agency's previously
approved Implementation Plan and will help eliminate blighting
conditions in the Project Area by increasing the assessed
valuation in the Project Area and creating a significant number
of employment opportunities.
Section 2.
The Council has held a public hearing on
the disposition of the Property in accordance with Health and
Safety Code Sections 33433 and hereby accepts and approves the
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Summary as prepared by Agency Staff.
Section 3.
The Council hereby finds and determines
that the conveyance of the Property to the Developer pursuant to
the terms of the Agreement is reasonable and necessary to
effectuate the purposes of the Redevelopment Plan, in that it
will permit the Developer to develop the Property in order to
eliminate blight, to create employment opportunities and to
increase the value of real property in the Project Area.
Section 4.
The Council hereby further finds and
determines that the consideration to be received by the Agency
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through the sale of the Property is equal to the fair market
value of the Property.
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section 5. The Council hereby approves the proposed
Agreement and the conveyance of the Property to the Developer.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO APPROVING A CERTAIN DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF
SAN BERNARDINO AND PREMIS PARTNERS PERTAINING TO THE DEVELOPMENT
OF A WAREHOUSING AND DISTRIBUTION FACILITY
Section 6.
This Resolution shall take effect upon
the date of its adoption.
I HEREBY CERTIFY that the foregoing Resolution was duly
adopted by the Mayor and Common Council of the City of
San Bernardino at a
meeting
thereof, held on the
day of
1996, by the following vote, to wit:
Council:
lIYE..S.
M8YS.
ABSTAIN
ABSENT
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NEGRETE
CURLIN
ARIAS
OBERHELMAN
DEVLIN
ANDERSON
MILLER
City Clerk
day of
The foregoing resolution is hereby approved this
, 1996.
Mayor of the City of
San Bernardino
Commission of the
City of San Bernardino
Approved as to
form and legal content:
By:
City Attorney
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SBEO\0001\3176
09/20/96 MMC
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RECORDING REQUESTED BY )
REDEVELOPMENT AGENCY OF THE )
CITY OF SAN BERNARDINO )
AND WHEN RECORDED MAIL TO: )
)
SABO & GREEN )
A Professional Corporation )
Suite 1015 )
23801 Calabasas Road )
Calabasas, California 91302 )
(Space Above for Recorde~s Use)
Disposition and Development Agreement
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Section 1.01
Section 1.02
Section 1.03
Section 1.04
Section 2.01.
Section 2.02
Section 2.03.
Section 2.04.
Section 2.05
Section 2.06.
Section 2.07
Section 2.08
Section 2.09
Section 2.10
Section 2.11
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TABLE OF CONTENTS
ARTICLE I
SUBJECT AGREEMENT
Purposes of Agreement ................................ 1
The Project Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Parties to the Agreement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Prohibition Against Change in Ownership,
Management and Control of Developer, for
Assignment of Agreement ............................. 3
ARTICLE II
DISPOSITION OF PROPERTY
Purchase of Property .................................. 5
Developer's Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Condition Precedent to the Opening of Escrow . . . . . . . . . . . . .. 5
Escrow .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7
Conveyance of Title and Delivery of Possession ............. 9
Form of Deed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Condition of Title ................................... IJ.. 11
Conditions for Close of Escrow ........................ IJ.. 11
Time and Place for Delivery of Documents
to Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IJ.. 14
Payment of the Consideration and Recordation
Of the Grant Deed(s) and other Documents. . . . . . . . . . . . . . IJ.. 15
Title Insurance ..................................... IJ.. 16
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Section 2.12.
Section 2.13.
Section 2.14.
Section 2.15.
Section 2.16
Section 3.01.
Section 3.02.
Section 3.03.
Section 3.04.
Section 3.05.
Section 3.06.
Section 3.07.
Section 3.08.
Section 4.01.
Section 4.02
Section 4.03
Section 4.04
Section 4.05
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Taxes and Assessments ............................. 1J.16
Zoning of the property and Environmental Approvals ....... IJ. 16
Condition of the Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1J.16
Submission of Evidence of Financing Commitments. . . . . . . . 1J.17
Pre-Disposition Consideration ......................... IJ. 19
ARTICLE III
DEVELOPMENT OF THE SITE
Development by Developer ........................... IJ. 21
Responsibility of the Agency .......................... IJ. 33
Taxes, Assessments, Encumbrances and Liens ........... IJ. 33
In Lieu Tax PaymentsfTax Appeals ..................... IJ. 34
Prohibition Against Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . IJ. 34
Security Financing; Right of Holders .................... IJ. 35
Right of the Agency to Satisfy Other Liens on
the Property after Conveyance ofTitle . . . . . . . . . . . . . . . . . . IJ. 41
Certificate of Completion ............................. IJ. 42
ARTICLE IV
USE OF SITE
Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IJ. 44
Maintenance of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . IJ. 45
Obligation to Refrain from Discrimination . . . . . . . . . . . . . . . . . IJ. 46
Form of Nondiscrimination and Nonsegregation Clauses .... IJ. 46
Effect and Duration of Covenants. . . . . . . . . . . . . . . . . . . . . . . IJ. 48
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Section 5.01.
Section 5.02.
Section 5.03.
Section 5.04.
Section 5.05.
Section 5.06
Section 5.07.
Section 5.08.
Section 6.01.
Section 6.02.
Section 6.03.
Section 6.04.
Section 6.05.
Section 6.06.
Section 6.07.
Section 6.08.
Section 6.09.
Section 6.10.
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ARTICLE V
DEFAULTS. REMEDIES AND TERMINATION
Defaults - General .................................. A 49
Legal Actions ...................................... A 50
Rights and Remedies are Cumulative ................... A 51
Damages ......................................... A 51
Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 52
Rights and Remedies of Termination .. ... ... ... .... . .... A 52
Right to Reenter, Repossess, Terminate and Revest ....... A 56
Limitation on Rights and Remedies After Issuance
of Certificate of Completion .......................... A 60
ARTICLE VI
GENERAL PROVISIONS
Notices, Demands and Communications Between
the Parties ....................................... A 60
Conflict of Interest .................................. A 62
Warranty Against Payment of Consideration
For Agreement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 62
Nonliability of Agency Officials and Employees ............ A 62
Enforced Delay; Extension of Time of Performance . . . . . . . . . A 62
Inspection of Books and Records. . . . . . . . . . . . . . . . . . . . . . . A 63
Approvals .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 64
Real Estate Commissions ............................ A 65
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 65
Release of Developer from Liability ..................... A 65
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Section 6.11.
Attorneys' Fees .................................... A 66
Section 6.12.
Dispute Resolution .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 66
Section 6.13.
Effect ............................................ A 67
ARTICLE VII
ENTIRE AGREEMENT. WAIVERS AND AMENDMENT
I Section 7.01.
Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A 68
ARTICLE VIII
TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION
Section 8.01.
Execution and Recordation ........................... A 69
EXHIBIT "A" - LEGAL DESCRIPTION
EXHIBIT "B" - SCOPE OF DEVELOPMENT
EXHIBIT "C" - GRANT DEED
EXHIBIT "D" - SCHEDULE OF PERFORMANCE
EXHIBIT "E" - CERTIFICATE OF COMPLETION
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--------------- COMPARISON OF FOOTERS ------------------
-FOOTER 1-
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Exhibit A - Page IJ. 74
-FOOTER 4-
Exhibit B - Page 2
-FOOTER 5-
Exhibit C - Page 2
-FOOTER 6-
Exhibit D - Page IJ. 6
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DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
PREMIS PARTNERS
a California limited partnership
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THIS AGREEMENT is entered into by and between the Redevelopment
Agency of the City of San Bernardino (the "Agency"), and Premis Partners, a California
limited partnership (the "Developer"). The Agency and the Developer agree as follows:
ARTICLE I
SUBJECT OF AGREEMENT
Section 1.01.
Purooses of Agreement. The purpose of this
Disposition and Development Agreement (the "Agreement") is to effectuate redevelopment
within the boundaries of the City of San Bernardino (the "City") by providing for the
purchase and the redevelopment by the Developer of certain real property located within
a duly established redevelopment project area of the City designated as the State College
Redevelopment Project Area (the "Project Area"), and as described in Exhibit "A" attached
hereto and incorporated herein by reference (the "Property"). The purchase and the
redevelopment of the Property by the Developer pursuant to this Agreement, and the
fulfillment generally of the Agreement, are in the vital and best interests of the City, the
Agency, and the health, safety, morals, and welfare of the City's residents, and are in
accord with the public purposes and provisions of applicable federal, state and local laws
and requirements.
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C Section 1.02. The Proiect Area. The State College Project Area was
approved and adopted by the City Council of the City of San Bernardino by duly adopted
ordinance in accordance with the provisions of the Community Redevelopment Law of the
State of California (the "Community Redevelopment Law"). This Agreement shall be
subject to the provisions of the Community Redevelopment Law. The Agency represents
and warrants that the uses and improvements to be constructed on the Property in
accordance with the Scope of Development attached hereto as Exhibit "B" and
incorporated herein by reference (the "Project") comply with the provisions of the
Community Redevelopment Law.
Section 1.03.
Parties to the Agreement.
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a. The Agency is a public body, corporate and politic, exercising
governmental functions and powers, and organized and existing under Chapter 2
of the Community Redevelopment Law, Health and Safety Code Section 33000, et
~. The principal office of the Agency is located at 201 N. "E" Street, San
Bernardino, California 92401-1507. As used in this Agreement, the term "Agency"
shall be deemed to include the Agency and any assignee and/or successor to the
Agency or to its rights, powers and responsibilities under this Agreement.
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b.
The Developer is Premis Partners, a California limited partnership.
The principal office of the Developer for purposes of this Agreement is located at
74-225 Highway 111, Suite C, Palm Desert, California 92260, (Telephone Number:
(619) 776-8838), and for purposes of Section 6.01 hereof, any and all notices,
demands or communications shall be sent to the Developer addressed to the
attention of "Russ Hatle". Prior to the Agency's execution of this Agreement and,
in addition, on or before ten (10) calendar days prior to the close of escrow, as set
forth hereafter, the Developer shall provide to the Agency satisfactory evidence of
the legal formation and existence of the Developer and the good standing of the
Developer with the State of California (the "Staten) to transact business within the
State, to hold title to the Property and to develop the Project, as hereinafter defined.
Section 1.04.
Prohibition Against Change in Ownership. Management
and C~>ntrol of Developer. for Assignment of Agreement.
a. The qualifications and identities of the persons and entities comprising
the Developer are of particular concern to the Agency. It is because of these
qualifications and identities of the Developer that the Agency has entered into this
Agreement with the Developer. No voluntary or involuntary successor in interest of
the Developer shall acquire any rights or powers under this Agreement, except as
expressly set forth herein.
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b. Except as otherwise provided in this Agreement, the Developer shall
not assign all or any part of this Agreement prior to the issuance of a Certificate of
Completion applicable to all portions of the Property without the prior written
approval of the Agency, which approval shall not be unreasonably withheld.
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c. The Developer shall promptly notify the Agency in writing of any and
all changes whatsoever in the identity of the parties either comprising or in control
of the Developer, as well as any and all changes in the interest or the degree of
control of the Developer by any such party, of which information the Developer or
any of its members, officers or shareholders has been notified or may otherwise
have knowledge or information. This Agreement may be terminated by the Agency
and the Agency may declare Developer in default if there is any significant or
material change, whether voluntary or involuntary, in membership, ownership,
management or control of the Developer (other than such changes occasioned by
the death or incapacity of any individual) that has not been approved by the Agency
at the time of such change, prior to issuance of a Certificate of Completion for the
Property as hereinafter provided; provided, however, that: (a) the Agency shall first
notify the Developer in writing of its intention to terminate this Agreement pursuant
hereto, and (b) the Developer shall have twenty (20) calendar days following the
date of receipt of such written notice to commence and thereafter diligently and
continuously proceed with the cure of the default of the Developer under this
Section 1.04(c), and (c) the Developer shall submit evidence of the satisfactory
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completion of such cure to the Agency within thirty (30) calendar days following the
receipt of such written notice in a form and substance deemed satisfactory to the
Agency, in its reasonable discretion.
ARTICLE II
DISPOSITION OF PROPERTY
Section 2.01.
The
Developer shall
Purchase of Property.
purchase, and the Agency shall sell, the Property under the terms of this Agreement and
the attachments hereto.
Section 2.02.
Developer's Purchase Price.
As the purchase price
for the Property, the Developer shall pay to the Agency on or before the Close of Escrow,
as hereinafter defined, and by means of the escrow hereunder a sum equal to Eight
Hundred Seven Thousand Dollars ($807,000) (the "Purchase Price").
Section 2.03.
Condition Precedent to the Ooening of Escrow. Prior to
the opening of Escrow, as hereinafter described, and as a condition precedent to the
Agency's obligation to sell the Property to the Developer, the Developer shall have
completed the following tasks:
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a. Within the times set forth in the Schedule of Performance (Exhibit "D"),
the Developer shall prepare and submit to the Agency preliminary plans and
performance specifications for the proposed Project;
b. Within the times set forth in the Schedule of Performance, the Developer
shall prepare and submit application and pay all fees required for the City's Design
Review Committee ("DRC") for approval of the Project by the City;
c. Within the times set forth in the Schedule of Performance, the Developer
.
shall complete Site Plan, Floor Plan, Elevations and Renderings, Preliminary
Grading Plan, Landscape Plan and Preliminary Drainage and Utility Plans, all in
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accordance with Design Review Committee approval of the Project;A
d. The Developer shall provide a full report on marketing efforts and results,
thirty (30) days before the end of each one hundred eighty (180) day period after
the date of this Agreement; and
e. The Developer shall have obtained and submitted to the Agency an
executed lease or contract of sale from a qualified tenant or purchaser who will
lease or purchase the Project for uses in accordance with the provisions of Section
4.01 hereof;A
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Section 2.04.
Escrow.
a. The Agency and the Developer agree to establish an escrow for the
purchase and sale of the Property at First American Title Insurance Company, San
Bernardino, California Telephone: (909) 889-0311), Attention:
(the
"Escrow Agent"). The escrow shall be opened within twenty-four (24) months of the
date of this Agreement
b. Prior to the opening of escrow, the Agency shall cause a Preliminary
Title Report to be prepared and issued by First American Title Insurance for Order
No. (the "Title Company") within ninety (90) days of the date of execution
of this Agreement and shall provide the Developer with copies thereof along with
legible copies of all reported title exceptions. Developer will respond in writing
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within sixty (60) days of receipt of said Preliminary Title Report and will indicate any
exceptions which Developer requests to be removed. Within thirty (30) days of
receipt of said response, Agency may terminate this Agreement and any obligations
hereunder if the Agency believes, in its sole discretion, that removing such title
exception(s) will place an undue burden on the Agency. The Agency and the
Developer must approve the Preliminary Title Report in writing as a condition
precedent to close of escrow
c. The Agency and the Developer shall provide and execute such
additional escrow instructions consistent with this Agreement as shall be necessary.
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indicating its acceptance of this Section in writing, delivered to the Agency and the
Developer, within five (5) calendar days after the establishment of the escrow, shall
carry out its duties as the Escrow Agent hereunder.
tJ. d. The Agency and the Developer shall deliver to the Escrow Agent all
documents necessary for the conveyance of title to the Property, to the extent
provided in this Agreement, in conformity with, within the times, and in the manner
provided in this Agreement.
tJ. e. The Agency and the Developer shall pay all fees, related to the
transfer of the Property from the Agency to the Developer, promptly after the
Escrow Agent has notified the Developer and the Agency of the amount of such
fees, charges, pro rations and costs. The allocation of fees, charges, pro rations
and costs shall be in accordance with the customary practice of Escrow Agent.
tJ. f. The Agency shall timely and properly execute, acknowledge and
deliver to the Escrow Agent a grant deed conveying to the Developer title to the
Property in accordance with the requirements of this Agreement.
tJ.
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g.
All funds received in escrow shall be deposited by the Escrow Agent
in an insured account with any state or national bank doing business in the State
of California, and such funds may be combined with other escrow funds of the
Escrow Agent. Such funds shall draw the highest reasonable rate of interest and
such interest shall accrue to the party to this Agreement who shall have made the
deposit thereof with the Escrow Agent.
h. All communications from the Escrow Agent to the Agency or the
Developer shall be directed to the respective parties at the addresses set forth in
Section 1.03 of this Agreement for notices, demands and communications between
the Agency and the Developer.
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Section 2.05.
Conveyance of Title and Delivery of Possession.
a. Subject to the conditions set forth in Section 2.08 hereof and to any
mutually agreed upon written extension of time or extensions otherwise authorized
by this Agreement, conveyance to the Developer of title to the Property in
accordance with the provisions of this Section and Section 2.07 of this Agreement
shall be completed on or prior to within sixty (60) days of the opening of escrow
("Close of Escrow"). The Agency and the Developer agree to perform all acts
necessary for conveyance of title to the Property, in the form and to the extent
required herein, in sufficient time for title to be conveyed in accordance with this
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b.
Possession of the Property shall be delivered to the Developer
concurrently with the conveyance of title, or as otherwise provided in this Section.
The Developer shall accept title and possession to the Property on the date
established therefor in this Section.
c. The acquisition of the Property or the acquisition of any parcels
comprising the Property by the Developer must occur prior to June 30, 1998. In the
event that the date for Close of Escrow cannot be met due to one or more of the
conditions for Close of Escrow set forth in Section 2.08 of this Agreement having not
been satisfied or waived, this Agreement shall be automatically extended for an
additional period of thirty (30) days to permit the satisfaction or waiver of such
unsatisfied conditions. The Agency and Developer may agree to such additional
extensions not to exceed an additional ninety (90) days, provided there is a
reasonable likelihood that such additional time will permit the satisfaction of the
unsatisfied condition or conditions. To the extent the Property is not acquired within
the times set forth herein, as extended, then the Agency's obligations under this
Agreement shall be deemed terminated.
Section 2.06.
Form of Deed.
The Agency shall convey to the
Developer title to the Property in the condition provided in Section 2.07 of this Agreement
by a grant deed substantially in the form attached hereto as Exhibit "C".
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Section 2.07.
Condition of Title. The Title to the Property conveyed
by the Agency to the Developer shall be a marketable title free and clear of encumbrances
and exceptions, except for: (a) the agreements, covenants and conditions of this
Agreement and the Grant Deed, (b) such pre-existing easements or rights-of-way as may
be disclosed by the Preliminary Title Report and approved by the Agency and the
Developer and (c) real property taxes for the fiscal year in which escrow closes which
constitute a lien not yet payable.
Section 2.08.
Conditions for Close of Escrow.
a) The Agency's obligation to convey the Property to the Developer and
the Close of Escrow shall be expressly conditioned upon satisfaction or waiver by the
Agency of each of the following:
1. The Developer shall have deposited into the escrow the Purchase
Price and all other sums required to be deposited by it into the escrow pursuant to
this Agreement;
2. The Developer shall have provided to the Agency satisfactory
evidence of the legal formation and existence of the Developer and the good
standing of the Developer with the State of California to transact business within the
State, to hold title to the Property and to develop the Project, as provided in
Section 3.01(a) hereof;
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3.
The Developer shall have received approval from the Agency of
financing commitments as set forth in Section 2.15 hereof; and
4. The Developer shall have received final approval by the Design
Review Committee for the Project and shall have completed the obligations set forth
in Section 2.03 hereof.
5. The City shall be prepared to issue building permits for the
construction of the building improvements comprising the Project.
b. The Developer's obligation to purchase the Property from the Agency
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and the Close of Escrow shall be expressly conditioned upon satisfaction or waiver
by the Developer of each of the following:
1. The Agency shall be able to convey good, marketable and insurable
title to the Property to Developer, subject only to those exceptions as set forth in
Section 2.07 of this Agreement and delivery of title insurance evidencing such title
as set forth in Section 2.11 of this Agreement.
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2. The Developer shall have submitted in a timely manner all applications
for any approvals required hereunder and shall have diligently pursued receipt of
such approvals. The Developer shall have received final approval of any changes
in zoning, variances, special use permits, site plan approvals, environmental
approvals or other approvals under applicable law as are required for Developer's
intended use of the Property as described in the Scope of Development (the
"Intended Use"). For the purposes of this Agreement, "final approval" shall mean
approval by the applicable governmental agency authorized to grant such approval
and expiration of any and all appeal or challenge periods with respect to any such
approval without any appeal being taken or judicial challenge to such approval
being filed or threatened.
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3. The results of any inspection, soil tests, drainage tests, survey,
topographical analysis, engineering and/or architectural drawings (all to be
performed at Developer's expense) do not disclose that the Property is unsuitable
for the Intended Use as described in the Scope of Development. The Agency shall
provide to Developer, its employees and agents, a license for access over and
through the Property for the purposes of conducting any of the foregoing tests,
inspections or surveys, provided the Developer shall hold the Agency harmless from
any liability, damage or expense which either may incur by reason thereof. This
requirement shall be deemed satisfied and the Agency's obligations and/or liability
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Agency with written objections within one hundred twenty (120) days of date of
execution of this Agreement.
4. The Property shall constitute a single legal parcel and shall be in
compliance with all of the applicable provisions of the Subdivision Map Act.
5. The results of any hazardous substance site assessment to be
performed at Developer's expense on the Property does not disclose evidence
suggesting the presence of any hazardous materials or environmental
contamination, or if present, the same shall have been approved by Developer
based on such assessment. The Developer agrees and acknowledges that
Developers reliance on previously completed environmental assessment performed
for the benefit of the Agency shall be at Developers own risk and shall not impose
any liability upon the Agency. The requirements set forth in this subparagraph shall
be deemed satisfied and the Agency's obligations or liability with respect thereto
shall be deemed terminated if Developer has not provided the Agency with written
objections within one hundred twenty (120) days of the date of execution of this
Agreement.
Section 2.09.
Time and Place for Delivery of Documents to Escrow. Subject
to any mutually agreed upon written extensions of time or any extensions otherwise
authorized by this Agreement, the parties shall deposit with the Escrow Agent promptly at
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C such time as such documents have been fully prepared and executed, but in no event later
than ten (10) calendar days before the date established for the conveyance of the
Property, any and all documents which are required in order for escrow to close in
accordance with this Agreement. The grant deed conveying the Property from the Agency
to the Developer hereunder shall be prepared by the Agency, at the Agency's expense.
The legal descriptions regarding the Property will be supplied by the Agency. All other
documents required to be recorded in order to permit the Close of Escrow shall be
prepared by the Developer at its cost and expense.
Section 2.10.
Payment of the Consideration and Recordation of the
Grant Deed(s) and other Documents. Payment of the Purchase Price shall be made by
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Escrow Agent submits notice to the Developer in writing that the grant deed conveying the
Property to the Developer has been delivered to the Escrow Agent, that title is in the
condition to be conveyed in conformity with the provisions of this Agreement and that
escrow otherwise is in a condition to close. When the parties have deposited into escrow
all documents and funds as required by this Agreement and all conditions for the Close of
Escrow have been satisfied, the Escrow Agent shall promptly file for recordation among
the land records in the Office of the County Recorder where the Property is located: (I) the
grant deed to the Property, and (ii) this Agreement. The Escrow Agent shall thereafter
promptly provide a copy of said recorded documents to both parties, shall promptly deliver
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C the Purchase Price to the Agency and shall promptly deliver to the Developer a title
insurance policy insuring title in conformity with this Agreement.
Section 2.11.
Title Insurance.
Concurrently with recordation of the
grant deed to the Property, the Title Company shall provide and deliver to the Developer
an AL TA owners policy of title insurance issued by the Title Company insuring that the title
to the Property is as required pursuant to the terms of this Agreement. The title insurance
policy shall be in the amount of the Purchase Price of the Property.
Section 2.12.
Taxes and Assessments. Ad valorem taxes and
assessments, if any, on the Property and taxes upon this Agreement or any rights
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hereunder levied, assessed or imposed as to any period prior to conveyance of title
through the escrow, shall be borne by the Agency.
Section 2.13.
Zoning of the Property. The Developer will undertake
the obligation to confirm that the City's general plan and zoning ordinance permit the
contemplated development, construction and operation of the Property in accordance with
this Agreement, and Developer agrees to obtain any and all necessary conditional use
permits required pursuant to the zoning ordinance, and Developer agrees to obtain any
and all modifications or variances including, but not limited to, those modifications or
variances necessary for height, parking, signs and any and all other matters.
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Section 2.14.
Condition of the Prooerty.
a. The Property shall be conveyed in an "as is" condition with no
warranty or liability, except as otherwise provided herein, express or implied on the
part of the Agency as to the condition of the soil, its geology or the presence of
known or unknown faults or defects.
b. It shall be the responsibility solely of the Developer, at the Developer's
expense, to investigate and determine the soil and seismic conditions of the
Property and its suitability for the development to be constructed thereon. It shall
be the responsibility solely of the Developer, at the Developer's expense, to perform
all work necessary to prepare the Property for development. The Developer shall
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not disapprove any soils report or soils condition which would permit the
construction with normal foundation conditions of the contemplated improvements.
Section 2.15.
Submission of Evidence of Financing Commitments.
a. As a condition to the Close of Escrow, the Developer shall submit to
the Agency evidence reasonably satisfactory to the Agency that the Developer: (a)
has obtained sufficient equity capital and firm and binding commitments for land
purchase financing; (b) either has obtained or can obtain, as evidenced by a letter
of intent or similar instrument, sufficient equity capital and firm and binding
commitments for construction financing; and (c) either has obtained or can obtain,
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as evidenced by a letter of intent or similar instrument, sufficient equity capital and
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firm and binding commitments for permanent financing; all as may be necessary for
the purchase of the Property and construction of the Project on the Property in
accordance with this Agreement. In lieu ofthe foregoing, the Developer may submit
evidence to the Agency that it has sufficient funds of its own for the purposes set
forth in this Section.
b. Any and all financing for the development of the Property shall be
obtained from reputable, recognized and well-established financial institutions or
lending sources including, but not limited to, banks, savings and loan institutions,
insurance companies, real estate investment trusts, pension programs and the like.
Whenever the source of financing for all or any part of the development is from
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other than the Developer, the Developer shall promptly submit the following to the
Agency:
1. Copies of all construction and/or land purchase financing
commitments received by the Developer; and
2. Proof of acceptance of each such loan commitment by the Developer
and proof of payment of all up-front loan commitment fees, if any.
c. The Director of the Agency shall approve or disapprove such
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documents and/or financing commitments or sources within fifteen (15) business
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days of receipt by the Agency of the documents and information required
hereunder; provided, however, that the failure of the Director to disapprove any of
the foregoing matters in writing within said fifteen (15) business day period shall be
deemed to constitute approval thereof.
d. Prior to submitting documents and evidence to the Agency as required
by this Section, the Developer shall obtain approval by its lender for the Project of
the form and manner of conveyance of the Property by the Agency to the
Developer, as set forth in Sections 2.05, 2.06 and 2.07 hereof. In the event that
said lender for the Project selected by the Developer disapproves of the form and
manner of conveyance of the Property, as set forth in Sections 2.09, 2.10 and 2.11
hereof, the Developer shall in good faith use its best efforts to obtain the necessary
financing for the Project from such other lender or lenders who approve said form
and manner of conveyance.
Section 2.16.
Pre-DisDosition Consideration. The Developer
shall pay to the Agency each month during the term of this Agreement, and up until the
sale of the Property from the Agency to the Developer, beginning on the date of execution
of this Agreement, an amount equal to the ad valorem taxes, prorated, that would
otherwise be paid on the Property if IJ. the Property had an assessed valuation equal to
Eight Hundred Ten Thousand Dollars ($810,000). If the sale of the Property is culminated,
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C then the total amount of in lieu payments described in this Section shall be applied as a
credit (without credit for interest) to the Purchase Price for the Property.
IN THE EVENT THAT THIS AGREEMENT EXPIRES WITHOUT THE SALE
OF THE PROPERTY DUE TO THE FAILURE OF THE DEVELOPER TO PERFORM THE
CONDITIONS PRECEDENT AS REQUIRED IN THIS ARTICLE II, THE AGENCY SHALL
HAVE THE RIGHT TO RETAIN ALL OR A PORTION OF THE AMOUNTS OTHERWISE
PAID BY THE DEVELOPER TO THE AGENCY EQUAL TO ANY COSTS AND
EXPENSES INCURRED BY THE AGENCY IN PREPARING AND IMPLEMENTING THIS
AGREEMENT, AS LIQUIDATED DAMAGES AND/OR AS COMPENSATION FOR ITS
EXPENSES, TIME AND EFFORT, AND FOR HAVING KEPT THE PROPERTY OUT OF
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THE REDEVELOPMENT MARKET DURING THE PENDENCY OF THIS AGREEMENT.
EACH OF THE PARTIES ACKNOWLEDGES AGREEMENT TO THE FOREGOING
PROVISION AND THE REASONABLENESS THEREOF UNDER THE CIRCUMSTANCES
BY EXECUTION OF THIS AGREEMENT.
Developer:
Agency:
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ARTICLE III
DEVELOPMENT OF THE SITE
Section 3.01.
Development by Developer.
a. Scope of Development. The Developer agrees to develop the
Property as a two hundred thousand (200,000) square foot warehousing and
distribution facility in accordance with and within the limitations established in the
Scope of Development set forth in Exhibit nsn attached hereto and incorporated
herein by reference.
b. The City's zoning ordinance including, but not limited to, parking and
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height requirements, and the City's building requirements are applicable to the use
and development of the Property pursuant to this Agreement. The Developer
acknowledges that any change in the plans for development or the use of the
Property as set forth in the Scope of Development shall be subject to the City's
zoning ordinance and building requirements. No action by the Agency or the City
with reference to this Agreement or related documents shall be deemed to
constitute a waiver of any City parking, height or other requirements which are
applicable to the Project or to the Developer, any successor in interest or tenant of
the Developer or any tenant or successor in interest pertaining to the Property,
except by modification or variance approved by the City consistent with this
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Agreement. The Agency shall cooperate with and shall assist the Developer in
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order to obtain modifications or variances from City zoning regulations necessary
to develop the Project consistent with this Agreement and, in particular, with the
Scope of Development, within forty-five (45) calendar days following written
application therefor by the Developer. Any failure by the City either to approve or
disapprove any of such modifications or variances within said forty-five (45)
calendar day period shall constitute an enforced delay hereunder, and the Schedule
of Performance, as defined hereinafter, shall be extended by that period of time
beyond said forty-five (45) calendar day period in which the City approves or
disapproves such modifications or variances.
c. The Scope of Development set forth in Exhibit "B" is hereby approved
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by the Agency upon its execution of this Agreement. The Project shall be
developed and completed in conformance with the approved Scope of Development
and any and all other plans, specltlcations and similar development documents
required by this Agreement, except for such changes as may be mutually agreed
upon in writing by and between the Developer and the Agency. The Agency agrees
to approve preliminary and final construction plans and preliminary and final
landscaping plans, if reasonably consistent with the approved Scope of
Development.
d. The approval of the Scope of Development by the Agency hereunder
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shall not be binding upon the City Councilor the Planning Commission of the City
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with respect to any approvals of the Project required by such other bodies. If any
revisions of the Scope of Development as approved by the Agency shall be required
by another government official, agency, department or bureau having jurisdiction
over the development of the Property, the Developer and the Agency shall
cooperate in efforts to obtain waivers of such revisions, or to obtain approvals of any
such revisions which have been made by the Developer and have thereafter been
approved by the Agency. The Agency shall not unreasonably withhold approval of
such revisions.
e. Notwithstanding any provision to the contrary in this Agreement, the
Developer agrees to accept and comply fully with any and all reasonable conditions
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of approval applicable to all permits and other governmental actions affecting the
Project and consistent with this Agreement.
f. The Developer shall cause landscaping plans fer the Project to be
prepared by a licensed landscape architect. The Developer shall prepare and
submit to the Agency for its approval, preliminary and final landscaping plans for the
Property. These plans shall be prepared, submitted and approved within the times
respectively established therefor in the Schedule of Performance as shown on
Exhibit "D" attached hereto and incorporated herein by reference and shall be
consistent with the Scope of Development.
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g.
The Developer shall prepare and submit development plans,
construction drawings and related documents for the development of the Property
consistent with the Scope of Development to the City and the Agency for review
(including, but not limited to, architectural review of the exterior of structures);
provided, however, that the Agency shall not have the right or responsibility to
approve development plans, construction drawings or related documents for
purposes of the issuance of a building permit or otherwise on behalf of the City, but
shall only have the right of review and approval of such plans, drawings and
documents for purposes of: (a) architecture and design of structures and the overall
development of the Project, and (b) conformity of such plans, drawings and
documents with the terms and conditions of this Agreement. The development
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plans, construction drawings and related documents shall be submitted in two
stages -- preliminary and final drawings (Le., working drawings), plans and
specifications. Final drawings, plans and specifications are hereby defined as those
which contain sufficient detail necessary to obtain a building permit from the City.
Any such items submitted to and approved in writing by the Agency shall not be
subject to subsequent disapproval by the Agency, and any such Agency approval
shall not be unreasonably withheld.
h. During the preparation of all drawings and plans for the Project, the
Agency Staff and the Developer shall hold regular progress meetings to coordinate
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the preparation by the Developer, and the submission to and review by the City and
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the Agency of construction plans and related documents. The Agency Staff and the
Developer shall communicate and consult informally as frequently as is necessary
to ensure that any such plans and related documents submitted by the Developer
to the City and the Agency can receive prompt and speedy consideration.
i. The Agency shall have the right of reasonable architectural review and
approval of building exteriors and design of the Project. The Agency shall also have
the right to review all plans, drawings and related documents pertinent to the
development of the Property in order to ensure that they are consistent with this
Agreement and with the Scope of Development set forth in Exhibit "B".
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j.
The Developer shall timely submit to the City for its review and
approval any and all plans, drawings and related documents pertinent to the
development of the Property, as required by the City. The Agency shall cooperate
with and shall assist the Developer in order for the Developer to obtain the approval
of any and all development plans, construction drawings and related documents
submitted by the Developer to the City consistent with this Agreement within thirty
(30) calendar days following the City's receipt of said plans. Any failure by the City
to approve any of such plans or to issue necessary permits for the development of
the Property within said thirty (30) calendar day period shall constitute an enforced
delay hereunder, and the Schedule of Performance shall be extended by that period
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of time beyond said thirty (30) calendar day period in which the City approves said
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plans; provided, however, that in the event that the City disapproves of any of such
plans, the Developer shall within thirty (30) calendar days after receipt of such
disapproval revise and resubmit such plans in accordance with the City's
requirements and in such form and substance so as to obtain the City's approval
thereof.
k. The Agency shall in good faith use its best efforts to cause the City to
approve in a timely fashion any and all plans, drawings and documents submitted
by the Developer hereunder and to cause the City not to impose new conditions
inconsistent with: (a) prior plans, drawings and documents approved by the City or
(b) the Scope of Development.
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I. The Agency shall approve any modified or revised plans, drawings
and related documents to which reference is made in this Agreement within the
times established in the Schedule of Performance as long as such plans, drawings
and related documents are generally consistent with the Scope of Development and
any other plans which have been approved by the Agency. Upon any disapproval
of plans, drawings or related documents, the Agency shall state in writing the
reasons for such disapproval. The Developer, upon receipt of notice of any
disapproval, shall promptly revise such disapproved portions of the plans, drawings
or related documents in a manner that addresses the reasons for disapproval and
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reasonably meets the requirements of the Agency in order to obtain the Agency's
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approval thereof. The Developer shall resubmit such revised plans, drawings and
related documents to the Agency as soon as possible after its receipt of the notice
of disapproval and, in any event, no later than thirty (30) calendar days thereafter.
The Agency shall approve or disapprove such revised plans, drawings and related
documents in the same manner and within the same times as provided in this
Section for approval or disapproval of plans, drawings and related documents
initially submitted to the Agency.
m. If the Developer desires to make any change in the final construction
drawings, plans and specifications and related documents after their approval by the
Agency and/or the City, the Developer shall submit the proposed change in writing
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to the Agency and/or the City for approval. The Agency shall notify the Developer
of approval or disapproval thereof in writing within thirty (30) calendar days after
submission to the Agency. This thirty (30) calendar day period may be extended
by mutual consent of the Developer and the Agency. Any such change shall, in any
event, be deemed to be approved by the Agency unless rejected, in whole or in
part, by written notice thereof submitted by the Agency to the Developer, setting
forth in detail the reasons therefor, and such rejection shall be made within said
thirty (30) calendar day period unless extended as permitted herein. The Agency
shall use its best efforts to cause the City to review and approve or disapprove any
such change as provided in Section 3.01(b) hereof.
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n.
The Developer, upon receipt of a notice of disapproval by the Agency
and/or the City, may revise such portions of the proposed change in construction
drawings, plans and specifications and related documents as are rejected and shall
thereafter resubmit such revisions to the Agency and/or the City for approval in the
manner provided in Section 3.01(b) hereof.
o. The Developer shall have the right during the course of construction
to make changes in construction concerning the interior of structures and "minor
field changes" without seeking the approval of the Agency; provided, however, that
such changes do not affect the type of use to be conducted within all or any portion
of a structure. Said "minor field changes" shall be defined as those changes from
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the approved final construction drawings, plans and specifications which have no
substantial effect on the improvements and are made in order to expedite the work
of construction in response to field conditions. Nothing contained in this Section
shall be deemed to constitute a waiver of or change in the City's Building Code
requirements governing such "minor field changes" or in any and all approvals by
the City otherwise required for such "minor field changes."
p. The costs of developing the Property and of constructing all
improvements thereon and adjacent thereto as set forth in the Scope of
Development shall be borne by the Developer. Developer shall pay for the costs
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of any off-site improvements described in the Scope of Development.
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q. The Developer shall at its expense cause to be prepared, and shall
pay any and all fees pertaining to the review and approval thereof by the City, all
required construction, planning and other documents reasonably required by
governmental bodies pertinent to the development of the Property hereunder
including, but not limited to, specifications, drawings, plans, maps, permit
applications, land use applications, zoning applications and design review
documents.
r. The Developer shall pay for any and all costs as described in the
Scope of Development which are attributable to the Developer concerning the
design, construction, relocation and securing of permits for utility improvements and
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connections. The Developer shall obtain any and all necessary approvals prior to
the commencement of applicable portions of said construction, and the Developer
shall take reasonable precautions to ensure the safety and stability of surrounding
properties during said construction.
s. The Developer shall begin and complete all construction and
development and undertake all obligations and responsibilities of the Developer
within the times specified in the Schedule of Performance shown in Exhibit "D"
attached hereto, or within such reasonable extensions of such times as may be
granted by the Agency or as otherwise provided for in this Agreement. The
Schedule of Performance shall be subject to revision from time to time as mutually
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agreed upon in writing by and between the Developer and the Agency. Any and all
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deadlines for performance by the parties shall be extended for any times attributable
to delays which are not the fault of the performing party and are caused by the other
party, other than periods for review and approval or reasonable disapprovals of
plans, drawings and related documents, specifications or applications for permits
as provided in this Agreement.
t. Prior to and during the period of construction of the Project, the
Developer shall submit to the Agency written progress reports when and as
reasonably requested by the Agency but in no event more frequently than every two
(2) weeks. The reports shall be in such form and detail as may reasonably be
required by the Agency, and shall include a reasonable number of construction
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photographs taken since the last such report submitted by the Developer.
u. Prior to the commencement of construction on the Property, the
Developer shall furnish, or shall cause to be furnished, to the Agency duplicate
originals or appropriate certificates of public indemnity and liability insurance in the
amount of One Million Dollars ($1,000,000.00) combined single limit, naming the
Agency and the City as additional insureds. Said insurance shall cover
comprehensive general liability including, but not limited to, contractual liability; acts
of subcontractors; premises-operations; explosion, collapse and underground
hazards, if applicable; broad form property damage, and personal injury including
libel, slander and false arrest. In addition, the Developer shall provide to the
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Agency adequate proof of comprehensive automobile liability insurance covering
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owned, non-owned and hired vehicles, combined single limit in the amount of One
Million Dollars ($1,000,000.00) each occurrence; and proof of workers'
compensation insurance. Any and all insurance policies required hereunder shall
be obtained from insurance companies admitted in the State of California and rated
at least B+: XII in Best's Insurance Guide. All said insurance policies shall provide
that they may not be canceled unless the Agency and the City receive written notice
of cancellation at least thirty (30) calendar days prior to the effective date of
cancellation. Any and all insurance obtained by the Developer hereunder shall be
primary to any and all insurance which the Agency and/or City may otherwise carry,
including self insurance, which for all purposes of this Agreement shall be separate
and apart from the requirements of this Agreement. Any insurance policies
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governing the Property as obtained by the Agency shall not be transferred from the
Agency to the Developer. Appropriate insurance means those insurance policies
approved by the Agency Counsel consistent with the foregoing. Any and all
insurance required hereunder shall be maintained and kept in force until the Agency
has issued the Certificate of Completion for the Property.
v. The Developer for itself and its successors and assigns agrees that
in the construction of the improvements on the property provided for in this
Agreement, the Developer will not discriminate against any employee or applicant
for employment because of sex, marital status, race, color, religion, creed, national
origin, or ancestry.
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w. The Developer shall carry out its construction of the improvements on
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and off the Property in conformity with all applicable laws, including all applicable
federal and state labor standards and requirements. The Agency covenants and
agrees likewise to meet the requirements set forth in this Subsection with regard to
any and all construction und-ertaken by the Agency in accordance with this
Agreement.
x. Before commencement of construction and development of any
buildings, structures or other work or improvements upon the Property, the
Developer snail, at its own expense, secure or shall cause to be secured, any and
all permits which may be required for such construction, development or work by the
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City or any other governmental agency having jurisdiction thereof. The Agency
shall cooperate in good faith with the Developer in the Developer's efforts to obtain
from the City or any other appropriate governmental agency any and all such
permits and, upon completion of applicable portions of the Project, certificates of
occupancy.
y. Officers, employees, agents or representatives of the Agency and the
City shall have the right of reasonable access to the Property, without the payment
of charges or fees, during normal construction hours during the period of
construction of the Project for the purposes of this Agreement including, but not
limited to, the inspection of the work being performed in constructing the Project.
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Such officers, employees, agents or representatives of the Agency and/or the City
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shall be those persons who are so identified by the Director. Any and all officers,
employees, agents or representatives of the Agency and the City who enter the
Property pursuant hereto shall identify themselves at the job site office upon their
entrance on to the Property and shall at all times be accompanied by a
representative of the Developer while on the Property; provided, however, that the
Developer shall make a representative of the Developer available for this purpose
at all times during normal construction hours upon reasonable notice from the
Agency. The Agency shall indemnify and hold the Developer harmless from injury,
property damage or liability arising out of the exercise by the Agency and/or the City
of this right of access, other than injury, property damage or liability relating to the
negligence of the Developer or its officers, agents or employees.
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Section 3.02.
Responsibility of the Agency. The Agency, without any
expense of the Developer therefor and without the creation of the assessments or claims
against the Property as a result thereof, shall perform the work specified for the Agency
to perform, if any, and shall assume the other obligations imposed on the Agency, if any,
as set forth in the Scope of Development.
Section 3.03. Taxes. Assessments Encumbrances and Liens. The
Developer shall pay prior to the delinquency all real property taxes and assessments
assessed and levied on or against the Property subsequent to the close of the escrow and
the conveyance to the Developer of title to the Property hereunder. The Developer shall
C not place and shall not allow to be placed on the Property any mortgage, trust deed, deed
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of trust, encumbrance or lien not otherwise authorized by this Agreement. The Developer
shall remove, or shall have removed, any levy or attachment made on the Property, or shall
assure the satisfaction thereof, within a reasonable time but in any event prior to a sale of
the Property, or any portion thereof, thereunder. Nothing herein contained shall be
deemed to prohibit the Developer from contesting the validity or amounts of any tax
assessment, encumbrance or lien, nor to limit the remedies available to the Developer in
respect thereto. The covenants of the Developer set forth in this Section relating to the
placement of any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien,
shall remain in effect only until all Certificates of Completion have been recorded with
respect to the Property.
Section 3.04.
In Lieu Tax PavmentslTax Appeals. In addition to the
provisions set forth in Section 2.16, to the extent the Developer fails to develop the
Property in accordance with the terms and provisions of this Agreement once it has
acquired the Property from the Agency, the Developer shall pay to the Agency an in lieu
tax payment in the amount equal to the amount otherwise payable had the Property had
an appraised valuation of I>. Five Million Five Hundred I>. Thousand Dollars 1>.($5,500,000),
at the end of each year that the Property remains undeveloped. The Developer agrees
that for the duration of the Redevelopment Plan, it shall not institute, file or participate in
any property tax assessed valuation appeals or challenges related to the Property or any
portion thereof.
Section 3.05. Prohibition Against Transfer.
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a. Prior to the recordation of all Certificates of Completion with respect
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to the Property as set forth in Section 3.08 of this Agreement, the Developer shall
not, without prior written approval of the Agency, or except as permitted by this
Agreement, (I) assign or attempt to assign this Agreement or any right herein or (ii)
make any total or partial sale, transfer, conveyance, lease, leaseback, or
assignment of the whole or any part of the Property or the improvements thereon.
This prohibition shall not apply to any of the following: (I) the reasonable grant of
limited easements or permits to facilitate the development of the Property; (ii)
leases, other than ground leases, to prospective tenants whose use of the Property
is in conformity with the Community Redevelopment Law and all applicable zoning
laws or ordinances.
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b. It is understood and agreed by the Developer that neither the
Developer, nor its assigns or successors in interest to the Property or this
Agreement, shall use or otherwise sell, transfer, convey, assign, lease, leaseback
or hypothecate the Property or any portion thereof to any entity or party, or for any
use of the Property, that is partially or wholly exempt from the payment of real
property taxes pertinent to the Property, or any portion thereof, or which would
cause the exemption of the payment of all or any portion of such real property
taxes.
c. In the absence of specific written agreement or approval by the
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Agency, no unauthorized sale, transfer, conveyance, lease, leaseback or
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assignment of the Property shall be deemed to relieve the Developer or any other
party from any obligations under this Agreement.
Section 3.06. Securitv Financing: Right of Holders.
a. Notwithstanding any provision set forth in Section 3.05 hereof to the
contrary, mortgages, deeds of trust, or any other form of lien required for any
reasonable method of financing are permitted before the recordation of the
Certificate of Completion (referred to in Section 3.08 of this Agreement), but only for
the purpose of securing loans of funds to be used for financing the acquisition of the
Property, and any other expenditures necessary and appropriate to develop the
Property under this Agreement. The Developer shall notify the Agency in writing in
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advance of any mortgage, deed of trust, or other form of lien for financing if the
Developer proposes to enter into the same before the recordation of the Certificate
of Completion. The Developer shall not enter into any such conveyance for
financing without prior written approval of the Agency,
b. In any event, the Developer shall promptly notify the Agency of any
mortgage, deed of trust or other refinancing, encumbrance or lien that has been
created or attached thereto prior to completion of the construction of the
improvements on the Property whether by voluntary act of the Developer or
otherwise; provided, however, that no notice of filing of preliminary notices or
mechanic's liens need be given by the Developer to the Agency prior to suit being
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filed to foreclose such mechanic's lien.
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c. The words "mortgage" and "deed of trust" as used herein shall be
deemed to include all other customary and appropriate modes of financing real
estate acquisition, construction and land development. The Agency agrees to make
such amendments regarding the rights of any lender as the approved lender shall
reasonably require.
d. The holder of any mortgage, deed of trust or other security interest
authorized by this Agreement shall in no manner be obligated by the provisions of
this Agreement to construct or complete the improvements or to guarantee such
construction or completion; nor shall any covenant or any other provision in the
grant deed for the Property be construed so to obligate such holder. Nothing in this
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Agreement shall be deemed to permit or authorize any such holder to devote the
Property to any uses, or to construct any improvements thereon, other than those
uses or improvements provided for or authorized by this Agreement.
e. Whenever the Agency shall deliver any notice or demand to the
Developer with respect to any breach or default by the Developer in the completion
of construction of the improvements, or any breach or default of any other
obligations which might entitle the Agency to terminate this Agreement or exercise
its right to re-enter under Section 5.07 hereof, the Agency shall at the same time
deliver to each holder of record of any mortgage, deed of trust or other security
interest authorized by this Agreement a copy of such notice or demand. Each such
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holder shall (insofar as the rights of the Agency are concerned) have the right, at
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its option, to commence the cure or remedy of any such default and to diligently and
continuously proceed with such cure or remedy, within thirty (30) calendar days
after the receipt of the notice; and to add the cost thereof to the security interest
debt and the lien of its security interest. If such default shall be a default which can
only be remedied or cured by such holder upon obtaining possession, such holder
shall seek to obtain possession with diligence and continuity through a receiver or
otherwise, and shall remedy or cure such default within thirty (30) calendar days
after obtaining possession; provided that in the case of a default which cannot with
diligence be remedied or cured, or the remedy or cure of which cannot be
commenced, within such thirty (30) calendar day period, such holder shall have
such additional time as is reasonably necessary to remedy or cure such default of
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the Developer. Nothing contained in this Agreement shall be deemed to permit or
authorize such holder to undertake or continue the construction or completion of the
improvements (beyond the extent necessary to conserve or protect the
improvements or construction already made) without first having expressly assumed
the Developer's obligations by written agreement satisfactory to the Agency. The
holder in that event must agree to complete, in the manner provided in this
Agreement, the improvements to which the lien or title of such holder relates and
must submit evidence satisfactory to the Agency that it has the qualifications and
financial responsibility necessary to perform such obligations. Any such holder
completing such improvements in accordance herewith shall be entitled, upon
written request made to the Agency, to be issued a Certificate of Completion by the
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Agency.
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f. In any case where, ninety (90) calendar days after default by the
Developer in the completion of construction of improvements under this Agreement,
the holder of any mortgage, deed of trust or other security interest creating a lien
or encumbrance upon the Property or any portion thereof has not exercised the
option to construct the applicable portions of the Project, or has exercised the option
but has not proceeded diligently and continuously with construction, the Agency
may purchase the mortgage, deed of trust or other security interest by payment to
the holder of the amount of the unpaid debt, including principal, accrued and unpaid
interest, late charges, costs, expenses and other amounts payable to the holder by
the Developer under the loan documents between holder and the Developer. If the
ownership of the Property has vested in the holder, the Agency, if it so desires, shall
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be entitled to a conveyance from the holder to the Agency upon payment to the
holder of an amount equal to the sum of the following:
1. The unpaid mortgage, deed of trust or other security interest debt,
including principal, accrued and unpaid interest, late charges, costs,
expenses and other amounts payable to the holder by the Developer
under the loan documents between the holder and the Developer, at
the time title became vested in the holder (less all appropriate credits,
including those resulting from collection and application of rentals and
other income received during foreclosure proceedings.)
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2.
All expenses, if any, incurred by the holder with respect to
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foreclosure.
3. The net expenses, if any (exclusive of general overhead), incurred by
the holder as a direct result of the subsequent ownership or
management of the Property, such as insurance premiums and real
estate taxes.
4.
The cost of any improvements made by such holder.
5.
An amount equivalent to the interest that would have accrued on the
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aggregate on such amounts had all such amounts become part of the
mortgage or deed of trust debt and such debt had continued in
existence to the date of payment by the Agency.
6. After expiration of the aforesaid ninety (90) calendar day period, the
holder of any mortgage, deed of trust or other security affected by the
option created by this Section, may demand, in writing, that the
Agency act pursuant to the option granted hereby. If the Agency fails
to exercise the right herein granted within ninety (90) calendar days
from the date of such written demand, the Agency shall be
conclusively deemed to have waived such right of purchase of the
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applicable portion of the Property or the mortgage, deed of trust or
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other security interest.
g.
In the event of a default or breach by the Developer of a mortgage,
deed of trust or other security interest with respect to the Property (or any portion
thereof) prior to the issuance of a Certificate of Completion for the applicable portion
or portions of the Property, and the holder has not exercised its option to complete
the development, the Agency may cure the default prior to completion of any
foreclosure. In such event, the Agency shall be entitled to reimbursement from the
Developer of all co"sts and expenses incurred by the Agency in curing the default.
The Agency shall also be deemed to have a lien upon the Property (or any portion
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thereof) to the extent of such costs and disbursements. Any such lien shall be
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subordinate and subject to mortgages, deeds of trust or other security instruments
executed for the sole purpose of obtaining funds to purchase and develop the
Property as authorized herein.
Section 3.07. Right of the Agency to Satisfy Other Liens on the Property after
Conveyance of Title. After the conveyance of title to the Property by the Agency to the
Developer and prior to the recordation of the Certificate of Completion (referred to in
Section 3.08 of this Agreement), and after the Developer has had a reasonable time to
challenge, cure or satisfy any unauthorized liens or encumbrances on the Property, the
Agency shall after sixty (60) calendar days prior written notice to the Developer have the
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Agreement shall require the Developer to payor make provisions for the payment of any
tax, assessment, lien or charge so long as the Developer in good faith shall contest the
validity or amount thereof, and so long as such delay in payment shall not subject the
Property, or any portion thereof, to forfeiture or sale.
Section 3.08. Certificate of Comoletion.
a. Following the written request therefor by the Developer and the
completion of construction and development of the improvements, excluding any
normal and customary tenant improvements and minor building "punch-list" items,
to be completed by the Developer upon the Property, the Agency shall furnish the
Developer with a Certificate of Completion for the Property, substantially in the form
in Exhibit "E" attached hereto. Notwithstanding any provision set forth herein to the
contrary, the completion of construction and development of improvements on the
Property shall be deemed to include the completion of construction and
development of any and all buildings on said Property and any and all parking,
landscaping and related improvements necessary to support or which meet the
requirements applicable to the building and its use and occupancy on said Property.
b. The Agency shall not unreasonably withhold the issuance of such
Certificate of Completion. The Certificate of Completion shall be, and shall so state,
that it is a conclusive determination of satisfactory completion of all of the
obligations of this Agreement with respect to the development of the Property. After
the recordation of the Certificate of Completion, any party then owning or thereafter
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purchasing, leasing or otherwise acquiring any interest in the Property shall not
(because of such ownership, purchase, lease or acquisition) incur any obligation or
liability under this Agreement, except that such party shall be bound by any
covenants contained in the grant deed, lease or other instrument of transfer which
grant deed, lease or other instrument of transfer shall include the provisions of
Section 4.01 through 4.05, inclusive, of this Agreement. Neither the Agency nor any
other person, after the recordation of the Certificate of Completion, shall have any
rights remedies or controls that it would otherwise have or be entitled to exercise
under this Agreement with respect to the Property, as a result of a default in or
breach of any provision of this Agreement, and the respective rights and obligations
of the parties shall be limited to those set forth in the grant deed.
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c. The Certificate of Completion shall be in such form as to permit it to
be recorded in the Recorder's Office of the County where the Property is located.
d. If the Agency refuses or fails to furnish a Certificate of Completion for
the Property after written request from the Developer, the Agency shall, within
fifteen (15) calendar days of the written request or within three (3) calendar days
after the next regular meeting of the Agency, whichever date occurs later, provide
to the Developer a written statement setting forth the reasons with respect to the
Agency's refusal or failure to furnish a Certificate of Completion. The statement
shall also contain the Agency's opinion of the action the Developer must take to
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obtain a Certificate of Completion. If the reason for such refusal is confined to the
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immediate unavailability of specific items or materials for construction or
landscaping at a price reasonably acceptable to the Developer or other minor
building "punch-list" items, the Agency will issue its Certificate of Completion upon
the posting of a bond or irrevocable letter of credit, reasonably approved as to form
and substance by the Agency Counsel and obtained by the Developer in an amount
representing a fair value of the work not yet completed as reasonably determined
by the Agency. If the Agency shall have failed to provide such written statement
within the foregoing period, the Developer shall be deemed conclusively and without
further action of the Agency to have satisfied the requirements of this Agreement
with respect to the applicable portion of the Property as if a Certificate of Completion
had been issued therefor.
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e. Such Certificate of Completion shall not constitute evidence of
compliance with or satisfaction of any obligation of the Developer to any holder of
a mortgage, or any insurer of a mortgage securing money loaned to finance the
improvements described herein, or any part thereof. Such Certificate of Completion
shall not be deemed to constitute a notice of completion as referred to in Section
3093 of the California Civil Code, nor shall it act to terminate the continuing
covenants or conditions subsequent contained in the Grant Deed attached hereto
as Exhibit "C".
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ARTICLE IV
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USE OF THE SITE
Section 4.01. Uses. The Developer covenants and agrees for itself, its
successors, its assigns, and every successor in interest to the Property, or any part
thereof, that upon completion of construction, Developer shall cause to be opened on the
Property a fully fixtured warehouse and distribution facility. Developer agrees that at the
time of opening, the Project will result in the creation of at least two hundred seventy five
( 275) direct jobs and two hundred (200) secondary jobs.
It is understood and agreed by the Developer that neither the Developer, nor
C its assigns or successors in interest to the Property or this Agreement, shall use or
otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property or
any portion thereof to any entity or party, or for any use of the Property, that is partially or
wholly exempt from the payment of real property taxes pertinent to the Property, or any
portion thereof, or which would cause the exemption of the payment of all or any portion
of such real property taxes.
Section 4.02. Maintenance of the Property. The Developer covenants and
agrees for itself, its successors, its assigns, and every successor in interest to the Property,
or any part thereof, that the Developer, such successors and such assigns shall maintain
in good condition the improvements on the Property, shall keep the Property free from any
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and shall maintain in a neat, orderly, healthy and good condition the landscaping required
to be planted in accordance with the Scope of Development. In the event the Developer,
or its successors or assigns, fails to perform the maintenance as required herein, the
Agency and/or the City shall have the right, but not the obligation, to enter the Property and
undertake, such maintenance activities. In such event, the Developer shall reimburse the
Agency and/or City for all reasonable sums incurred by it for such maintenance activities.
Section 4.03. Obligation to Refrain from Discrimination. The Developer
covenants and agrees for itself, its successors, its assigns and every successor in interest
to the Property or any part thereof, that there shall be no discrimination against or
segregation of any person, or group of persons, on account of sex, marital status, race,
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color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
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occupancy, tenure or enjoyment of the Property; nor shall the Developer, itself or any
person claiming under or through it, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessee or vendees ofthe Property.
Section 4.04. Form of Nondiscrimination and Nonsegregation Clauses. The
Developer covenants and agrees for itself, its successors, its assigns, and every successor
in interest to the Property, or any part thereof, that the Developer, such successors and
such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use,
occupancy, tenure or enjoyment of the Property (or any part thereof) on the basis of sex,
'- marital status, race, color, religion, creed, ancestry or national origin of any person. All
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deeds, leases or contracts pertaining thereto shall contain or be subject to substantially the
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a. In deeds: "The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of, any person or group of persons
on account of race, color, creed, religion, sex, marital status, national origin, or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or
enjoyment of the premises herein conveyed, nor shall the grantee or any person
claiming under or through it, establish or permit any such practiCl3 or practices of
discrimination or segregation with reference to the selection, location, number, use
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or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the
premises herein conveyed. The foregoing covenants shall run with the land."
b. In leases: "The Lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this
lease is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or group of
persons, on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure,
or enjoyment of the premises herein leased nor shall the lessee itself, or any person
claiming under or through it, establish or permit any such practice or practices of
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discrimination or segregation with reference to the selection, location, number, use,
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or occupancy, of tenants lessees, sublessee, subtenants, or vendees in the
premises herein leased."
c. In contracts: "There shall be no discrimination against or segregation of
any person or group of persons on account of race, color, creed, religion, sex,
marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use,
occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor
shall the transferee or any person claiming under or through it, establish or permit
any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy, of tenants, lessees, sublessees,
subtenants, or vendees of the premises herein transferred." The foregoing
provision shall be binding upon and shall obligate the contracting party or parties
and any subcontracting party or parties, or other transferees under the instrument.
Section 4.05. Effect and Duration of Covenants. The covenants established
against discrimination shall remain in effect in perpetuity. The covenants respecting uses
of the Property shall remain in effect for a period of ten (10) years from the date of
execution of this Agreement, shall run with the land and shall constitute equitable
servitudes thereon, and shall, without regard to technical classification and designation,
be binding for the benefit and in favor of the Agency, its successors and assigns, and the
City.
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The Agency is deemed the beneficiary of the terms and provisions of this
Agreement and of the covenants running with the land for and in its own rights and for the
purposes of protecting the interests of the community. The Agency shall have the right,
if such covenants are breached, to exercise all rights and remedies and to maintain any
actions or suits at law or in equity or such other proper proceedings to enforce the curing
of such breaches to which it or any other beneficiary of such covenants may be entitled,
including, without limitation, to specific performance, damages and injunctive relief. The
Agency shall have the right to assign all of its rights and benefits hereunder to the City.
ARTICLE V
DEFAULTS. REMEDIES AND TERMINATION
Section 5.01. Defaults - General.
a. Subject to the extensions of time set forth in Section 6.05 hereof, failure
or delay by either party to perform any term or provision of this Agreement shall
constitute a default under this Agreement; provided, however, that if a party
otherwise in default commences to cure, correct or remedy such default within thirty
(30) calendar days after receipt of written notice specifying such default and shall
diligently and continuously prosecute such cure, correction or remedy to completion
(and where any time limits for the completion of such cure, correction or remedy are
specifically set forth in this Agreement, then within said time limits), such party shall
not be deemed to be in default hereunder.
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b. The injured party shall give written notice of default to the party in
default, specifying the default complained of by the nondefaulting party. Delay in
giving such notice shall not constitute a waiver of any default nor shall it change the
time of default.
c. Any failure or delays by either party in asserting any of its rights and
remedies as to any default shall not operate as a waiver of any default or of any
such rights or remedies. Delays by either party in asserting any of its rights and
remedies shall not deprive either party of its right to institute and maintain any
actions or proceedings which it may deem necessary to protect, assert or enforce
any such rights or remedies.
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Section 5.02. Legal Actions.
a. In addition to any other rights or remedies, either party may institute legal
action to cure, correct or remedy any default, to recover damages for any default,
or to obtain any other remedy consistent with the purposes of this Agreement. Such
legal actions must be instituted in the Superior Court of the County of San
Bernardino, State of California, in any other appropriate court in that County, or in
the Federal District Court in the Eastern District of California.
b. The laws of the State of California shall govern the interpretation and
enforcement of this Agreement.
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c. In the event that any legal action is commenced by the Developer
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against the Agency, service of process on the Agency shall be made by personal
service upon the Director or Chairman or the Agency, or in such other manner as
may be provided by law.
d. In the event that any legal action is commenced by the Agency against
the Developer, service of process on the Developer shall be made by personal
service on Premis Partners (or such other Agent for service of process and at such
address as may be specified in written notice to the Agency), or in such other
manner as may be provided by law, and shall be valid whether made within or
without the State of California.
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Section 5.03. Rights and Remedies are Cumulative. Except with respect to
any rights and remedies expressly declared to be exclusive in this Agreement, the rights
and remedies of the parties are cumulative and the exercise by either party of one or more
of such rights or remedies shall not preclude the exercise by it, at the same or different
times, of any other rights or remedies for the same default or any other default by the other
party.
Section 5.04. Damages. If either party defaults with regard to any provision
of this Agreement, the nondefaulting party shall serve written notice of such default upon
the defaulting party. If the defaulting party does not diligently commence to cure such
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complete the cure of such default within a reasonable time, not to exceed ninety (90)
calendar days (or such shorter period as may otherwise be specified in this Agreement for
any specific default), after the service of written notice of such default, the defaulting party
shall be liable to the other party for damages caused by such default.
Section 5.05. Specific Performance. If either party defaults under any of the
provisions of this Agreement, the nondefaulting party shall serve written notice of such
default upon such defaulting party. If the defaulting party does not commence to cure the
default and diligently and continuously proceed with such cure within thirty (30) calendar
days after service of the notice of default, and such default is not cured within a reasonable
time thereafter (and where any time limits for the completion of such cure, correction or
remedy are specifically set forth in this Agreement, then within said time limits), the
nondefaulting party, at its option, may institute an action for specific performance of the
terms of this Agreement, except as otherwise provided in Section 5.04 hereof.
Section 5.06. Rights and Remedies of Termination.
a. Termination by the Develooer.
The Developer may terminate this Agreement if the Agency does not tender
conveyance of title to and possession of the Property to the Developer in the
manner and condition and by the date provided in this Agreement (or any and all
extensions thereof as authorized by this Agreement), and if any such failure is not
cured within thirty (30) calendar days after written demand therefor submitted by the
Developer to the Agency. Such written demand shall specify the Agency's default
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and the action required to cure same. Developer may also terminate this
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Agreement if one or more of the conditions set forth in Section 2.08(b) of this
Agreement have not been satisfied or otherwise waived by Developer by the date
set for Close of Escrow, such termination to be effective thirty (30) calendar days
after receipt by Agency of written notice from Developer specifying the one or more
conditions set forth in Section 2.08(b) which have not been satisfied or waived by
Developer.
b. Termination by the Agency.
1.
Notwithstanding any provision set forth in this Agreement to the
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contrary, upon written notice of default which shall specify the
Developer's default and the action required to cure same and upon
thirty (30) calendar days notice to the Developer of the Agency's
intent to terminate this Agreement pursuant to this Section, the
Agency at its option may terminate this Agreement if following
satisfaction of all conditions precedent for conveyance of the Property
by the Agency to the Developer and at the time the Developer is
required to deposit into escrow the Purchase Price, the Developer has
not in fact made such deposit.
2.
Subject to written notice of default which shall specify the Developer's
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default and the action required to cure same and upon thirty (30)
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calendar days notice to the Developer of the Agency's intent to
terminate this Agreement pursuant to this Section, the Agency at its
option may terminate this Agreement if the Developer in breach of this
Agreement assigns or attempts to assign this Agreement, or any right
therein, or attempts to make any total or partial sale, lease or
leaseback, transfer or conveyance of the whole or any part of the
Property or the improvements to be developed thereon in violation of
the terms of this Agreement, and the Developer does not correct such
violation within thirty (30) calendar days from the date of receipt of
such notice.
3.
Subject to written notice of default, which shall specify the Developer's
default and the action required to cure same and upon thirty (30)
calendar days notice to the Developer of the Agency's intent to
terminate this Agreement pursuant to this Section, the Agency at its
option may terminate this Agreement if the Developer: (a) does not
within the time limits set forth in this Agreement or as specifically
provided in the Schedule of Performance, subject to extensions
authorized by this Agreement due to force majeure or otherwise,
submit development plans, construction drawings and related
documents acceptable to the Planning Department and Building
Division of the City for plan check purposes and in order to obtain
building permits for the Project, together with applicable fees therefor,
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all prepared to the minimum acceptable standards as required by the
Planning Department and Building Division of the City for
commencement of formal review of such documents and as required
by this Agreement, or (b) does not carry out its other responsibilities
under this Agreement or in accordance with any modification or
variance, precise plan, design review and other environmental or
governmental approvals and such default is not cured or the
Developer does not commence and diligently and continuously
proceed with such cure within thirty (30) calendar days after the date
of receipt of written demand therefor from the Agency.
4.
Subject to written notice of default which shall specify the Developer's
default and the action required to cure same and upon thirty (30)
calendar days notice to the Developer of the Agency's intent to
terminate this Agreement pursuant to this Section, the Agency at its
option may terminate this Agreement if upon satisfaction of all
conditions precedent and concurrent therefor under this Agreement,
the Developer does not take title to the Property under tender of
conveyance by the Agency, and such breach is not cured within thirty
(30) calendar days after the date of receipt by the Developer of written
demand therefor from the Agency.
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Section 5.07. Right to Reenter. Repossess. Terminate and Revest.
a. The Agency shall, upon thirty (30) calendar days notice to the Developer
which notice shall specify this Section, have the right, at its option, to re-enter and
take possession of all or any portion of the Property, together with all imp-rovements
thereon, and to terminate and revest in the Agency the estate conveyed to the
Developer hereunder, if after conveyance of title, the Developer (or its successors
in interest) shall:
1. Fail to commence construction of <all or any portion of the
improvements as required by this Agreement for a period of ninety
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(90) calendar days after written notice to proceed from the Agency;
provided that the Developer shall not have obtained an extension or
postponement to which the Developer may be entitled pursuant to
Section 6.05 hereof; or
2. Abandon or substantially suspend construction of all or any portion of
the improvements for a period of ninety (90) calendar days after
written notice of such abandonment or suspension from the Agency;
provided that the Developer shall not have obtained an extension or
postponement to which the Developer may be entitled to pursuant to
Section 6.05 hereof; or
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3. Assign or attempt to assign this Agreement, or any rights herein, or
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transfer, or suffer any involuntary transfer, of the Property or any part
thereof, in violation of this Agreement, and such violation shall not
have been cured within thirty (30) calendar days after the date of
receipt of written notice thereof from the Agency to the Developer.
b. The thirty (30) calendar day written notice specified in this Section
shall specify that the Agency proposes to take action pursuant to this Section and
shall specify which of the Developer's obligations set forth in Subsections (1)
through (3) herein have been breached. The Agency shall proceed with its remedy
set forth herein only in the event that the Developer continues in default of said
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obligation(s) for a period of thirty (30) calendar days following such notice or, upon
commencing to cure such default, fails to diligently and continuously prosecute said
cure to satisfactory conclusion.
c. The right of the Agency to reenter, repossess, terminate, and revest
shall be subject and subordinate to, shall be limited by and shall not defeat, render
invalid or limit:
1. Any mortgage, deed of trust or other security interest permitted by this
Agreement;
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2.
Any rights or interests provided in this Agreement for the protection
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of the holders of such mortgages, deeds of trust or other security
interests;
3. Any leases, declarations of covenants, conditions and restrictions,
easement agreements or other recorded documents applicable to the
Property.
d. The grant deed or ground lease to any portion of the Property
conveyed or leased by the Developer to another party shall contain appropriate
references and provisions to give effect to the Agency's right, as set forth in this
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Section under specified circumstances prior to the recordation of the Certificate of
Completion, to reenter and take possession of such parcel, or any part thereof, with
all improvements thereon, and to terminate and revest in the Agency the estate
conveyed to the Developer.
e. Upon the revesting in the Agency of title to the Property, or any part
thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities
under State law, use its best efforts to resell the Property, or any part thereof, at fair
market value as soon and in such manner as the Agency shall find feasible and
consistent with the objectives of such law, to a qualified and responsible party or
parties (as determined by the Agency) who will assume the obligations of making
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or completing the improvements, or such other improvements in their stead as shall
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be satisfactory to the Agency and in accordance with the uses specified for the
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Property, or any part thereof. Upon such resale of the Property, or any part thereof,
the proceeds thereof shall be applied:
1. First, to make any payment made or necessary to be made to
discharge or prevent from attaching or being made any subsequent
encumbrances or liens due to obligations incurred with respect to the
making or completion of the agreed improvements or any part thereof
on the Property, or part thereof; next to reimburse the Agency on its
own behalf or on behalf of the City for all actual costs and expenses
incurred by the Agency and the City, including but not limited to
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customary and reasonable fees or salaries to third party personnel
engaged in such action (but excluding the Agency's or the City's
general overhead expense), in connection with the recapture,
management and resale of the Property or part thereof; all taxes,
assessments and water and sewer charges paid by the City and/or
the Agency with respect to the Property or part thereof; any amounts
otherwise owing to the Agency by the Developer and its successor
transferee; and
2. Second, to the extent that any and all funds which are proceeds from
such resale are thereafter available, to reimburse the Developer, or
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Purchase Price paid by the Developer for the Property (or allocable
to the applicable part thereof); and (2) the costs incurred for the
development of the Property, or applicable part thereof, or for the
construction of the improvements thereon including, but not limited to,
costs of carry, taxes and items set forth in the Developer's cost
statement which shall be submitted to and approved by the Agency.
3. Any balance remaining after the foregoing application of proceeds
shall be retained by the Agency.
Section 5.08.
Limitation on Rights and Remedies After Issuance of
Certificate of Comoletion. After issuance by the Agency of the Certificate of Completion
under Section 3.08 of this Agreement, the rights and remedies contained in this Article V
shall be applicable only with respect to the covenants and agreements contained in Article
IV of this Agreement.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Notices. Demands and Communications Between the
Parties.
a. Any and all notices, demands or communications submitted by any
party to another party pursuant to or as required by this Agreement shall be proper
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if in writing and dispatched by messenger for immediate personal delivery, or by
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registered or certified United States mail, postage prepaid, return receipt requested,
to the principal office of the Agency and the Developer, as applicable, as designated
in Section 1.03(a) and Section 1.03(b) hereof. Such written notices, demands and
communications may be sent in the same manner to such other addresses as either ~
party may from time to time designate as provided in this Section. Any such notice,
demand or communication shall be deemed to be received by the addressee,
regardless of whether or when any return receipt is received by the sender or the
date set forth on such return receipt, on the day that it is dispatched by messenger
for immediate personal delivery, or two (2) calendar days after-it is placed in the
United States mail as heretofore provided.
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b. In addition to the submission of notices, demands or communications
to the parties as set forth above, copies of all notices to any party shall also be sent
to:
(if the Developer)
Premis Partners
74-225 Highway 111, Suite C
Palm Desert, CA 92260
Attn:
(if the Agency)
San Bernardino Redevelopment Agency
201 N. "En Street, 3rd Floor
San Bernardino, CA 92401-1507
(with copy to)
Sabo & Green,
A Professional Corporation
23801 Calabasas Road, Ste. 1015
Calabasas, CA 91302
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Section 6.02. Conflict of Interest. No member, official or employee of the
Agency having any conflict of interest, direct or indirect, related to this Agreement and the
development of the Property shall participate in any decision relating to the Agreement.
The parties represent and warrant that they do not have knowledge of any such conflict of
interest.
Section 6.03. Warranty Aoainst Payment of Consideration for Agreement.
The Developer warrants that it has not paid or given, and will not payor give, any third
party any money or other consideration for obtaining this Agreement. Third parties, for the
purposes of this Section, shall not include persons to whom fees are paid for professional
services if rendered by attorneys, financial consultants, accountants, engineers, architects
and the like when such fees are considered necessary by the Developer.
Section 6.04. Nonliability of Agency Officials and Employees. No member,
official or employee of the Agency shall be personally liable to the Developer, or any
successor in interest, in the event of any default or breach by the Agency or for any
amount which may become due to the Developer or to its successor, or on any obligations
under the terms of this Agreement, except for gross negligence or willful acts of such
member, officer or employee.
Section 6.05. Enforced Delay: Extension ofTime of Performance. In addition
to specific provisions of this Agreement, performance by either party hereunder shall not
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lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of public enemy;
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\",.... epidemics; quarantine restrictions; freight embargoes or lack of transportation; weather-
caused delays; inability to secure necessary labor, materials or tools; delays of any
contractors, subcontractor or supplier; acts of the other party other than as permitted or
required by the terms of this Agreement; acts or failure to act of any public or governmental
agency or entity other than as permitted or required by the terms of this Agreement (except
that action or failure to act by the City or the Agency shall not extend the time for the
Agency to act unless such extension is otherwise expressly authorized herewith unless
such action or failure to act is the result of a lawsuit or injunction including by way of
illustration, but not limited to, lawsuits pertaining to the adoption of the Agreement, the EIR
and any other environmental documentation and procedures, eminent domain, and the
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like) or any other causes beyond the control or without the fault of the party claiming an
extension of time to perform. Any extension of time for any such cause hereunder shall
be for the period of the enforced delay and shall commence to run from the time of the
commencement of the cause, if notice by the party claiming such extension is sent to the
other party within thirty (30) calendar days of the commencement of the cause. Times of
performance under this Agreement may also be extended by mutual agreement in writing
by and between the Agency and the Developer.
Section 6.06. Inspection of Books and Records. The Agency shall have the
right at all reasonable times at the Agency's cost and expense to inspect the books and
records of the Developer pertaining to the Property and/or the development thereof as
C necessary for the Agency, in its reasonable discretion, to enforce its rights under this
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Agreement. Matters discovered by the Agency shall not be disclosed to third parties
- unless required by law or unless otherwise resulting from or related to the pursuit of any
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remedies or the assertion of any rights of the Agency hereunder. The Developer shall also
have the right at all reasonable times to inspect the books and records of the Agency
pertaining to the Property and/or the development thereof as pertinent to the purposes of
this Agreement.
Section 6.07. Approvals.
a. Approvals required of the Agency or the Developer, or any officers,
agents or employees of ~ither the Agency or the Developer, shall not be
unreasonably withheld and approval or disapproval shall be given within the time
set forth in the Schedule of Performance or, if no time is given, within a reasonable
time.
b. The A Chairman of the Commission, the Secretary of the Agency and
the Director of the Agency are each authorized to make such determinations as are
provided for herein on behalf of the Agency. Each of the preceding officers when
acting with the consent of legal counsel is further authorized to execute such
documents and instruments as are necessary to carry ~the intent of this
Agreement. Each such officer is further authorized to sign on his own authority
amendments to this Agreement which are of routine or technical nature, including
minor adjustments to the Schedule of Performance.
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Section 6.08. Real Estate Commissions. The Agency shall not be liable for
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to this Agreement.
The Agency represents to Developer that it has not retained or entered info
any Agreement with any broker in connection with the sale of the Property or negotiation
of this Agreement.
Section 6.09. Indemnification. The Developer agrees to indemnify and hold
the City and the Agency, and their officers, employees and agents: harmless from and
against all damages, judgments, costs, expenses and fees arising from or related to any
f act or omission of the Developer in performing its obligations hereunder. The Agency
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agrees to indemnify and hold the Developer and its officers, employees and agents,
harmless from and against all damages, judgments, costs, expenses and fees arising from
or related to any act or omission of the Agency in performing its obligations hereunder.
Section 6.10. Release of Developer from Liability. Notwithstanding any
provision herein to the contrary, the Developer shall be relieved of any and all liability for
the obligations of the Developer hereunder with regard to the Property when a Certificate
of Completion has been issued by the Agency hereunder, other than any covenants and
obligations provided by the grant deed by which the Property is conveyed to the Developer
hereunder.
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Section 6.11. Attorneys' Fees. If either party hereto files any action or brings
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any action or proceeding against the other arising out of this Agreement, seeks the
resolution of disputes pursuant to Section 6.12 hereof, or is made a party to any action or
proceeding brought by the Escrow Agent, then as between the Developer and the Agency,
the prevailing party shall be entitled to recover as an element of its costs of suit or
resolution of disputes pursuant to Section 6.12 hereof, and not as damages, its reasonable
attorneys' fees as fixed by the Court or other forum for resolution of disputes as set forth
in Section 6.12 hereof, in such action or proceeding or in a separate action or proceeding
brought to recover such attorneys' fees.
Section 6.12. Dispute Resolution. If any dispute shall arise concerning the
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provisions of this Agreement including, but not limited to, those provisions set forth in the
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Scope of Development attached hereto, such dispute shall be submitted to reference
pursuant to Code of Civil Procedure Sections 638 to 645.1, inclusive, or, alternatively, to
arbitration, on written notice of demand for arbitration ("Notice of Demand") of either party
hereto given to the other. The arbitration shall be conducted pursuant to the provisions of
Title 9 of Part 3 of the California Code of Civil Procedure (statutory section references in
this Section shall be deemed to be references to the Code of Civil Procedure), as
amended, amplified and modified by the following provisions: The arbitration shall be by
a single neutral arbitrator. If the parties hereto have not agreed on the selection of the
arbitrator within five (5) calendar days after giving of Notice of Demand, then either party
hereto may petition the court to select the arbitrator pursuant to Section 1281.6. Each
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said petition is served and filed. The arbitrator shall make his award within forty-five (45)
calendar days after his appointment. Certain periods of time set forth in said Title 9 shall
be shortened as follows: Section 1284, 1288.4, 1290.2 and 1290.6--halved; Section 1288-
-four (4) years to sixty (60) calendar days, and one hundred (100) days to thirty (30)
calendar days; and Section 1288.2--one hundred (100) days to thirty (30) calendar days.
Venue of the arbitration hearing and any court proceedings referenced below shall be in
the county where the Property is located. The parties hereto as parties to any such
arbitration shall have the right to petition the court to confirm, correct or vacate the
arbitrator's award pursuant to Section 1285 and to appeal the decisions of the Superior
Court in any such proceeding as provided in Section 1294 and 1294.2; provided, however,
that any such appeal shall not stay or have the effect of staying the decision of the
C Superior Court. The costs of the arbitration and reimbursement to the other party for any
and all legal fees related thereto pursuant to this Agreement, shall be borne by the losing
party or in such proportions as the arbitrator shall decide. Nothing contained in this
Agreement shall preclude either party hereto from seeking judicial relief which may not be
obtainable or enforceable in, or which is in aid of, the arbitration proceedings referenced
in this Section; provided that such judicial relief shall be sought in good faith and not as a
subterfuge to avoid the arbitration procedures.
Section 6.13. Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
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ARTICLE VII
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ENTIRE AGREEMENT. WAIVERS AND AMENDMENT
Section 7.01. Entire Agreement.
a. This Agreement shall be executed in four (4) duplicate originals each
of which is deemed to be an original. This Agreement includes _ pages and 5
attachments, which constitute the entire understanding and Agreement of the
parties.
b. This Agreement integrates all of the terms and conditions mentioned
herein or incidental hereto, and supersedes all negotiations or previous agreements
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between the parties with respect to all or any part of the Property and the
development thereof.
c. None of the terms, covenants, agreements or conditions set forth in
this Agreement shall be deemed to be merged with the grant deed conveying title
to the Property, and this Agreement shall continue in full force and effect before and
after such conveyance until issuance of the Certificate of Completion for the
Property.
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d. All waivers of the provisions of this Agreement and all amendments
hereto must be in writing and signed by the appropriate authorities of the Agency
and the Developer.
ARTICLE VIII
TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY AND RECORDATION
Section 8.01. Execution and Recordation.
a. Following its execution by the Developer and prompt delivery thereafter
to the Agency, this Agreement niUst be approved, executed and delivered by the
Agency to the Developer within forty-five (45) calendar days after the date of
signature by the Developer. In the event that the Agency has not approved,
executed and delivered the Agreement to the Developer within the foregoing period,
then this Agreement shall be deemed to be of no further force or effect unless the
time for such approval, execution and delivery is extended by written notice from the
Developer to the Agency. The date of this Agreement shall be the date when the
Agreement shall have been approved by the Agency.
b. The Developer and the Agency agree to permit recordation of this
Agreement or any portion thereof against the Property in the Office of the County
Recorder for the County where the Property is located.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
'- Agreement as of the dates set forth below.
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REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
A By:
A Director
By:
Secretary
APPROVED AS TO FORM:
SABO & GREEN,
A Professional Corporation
Agency Counsel
PREMIS PARTNERS
Date:
By:
Its:
(All Signatures Must Be Notarized)
SBEO/OOOllDDNPREMIS PARTNERS ONE
09/19/96 1 :36 MMC
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EXHIBIT "A"
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LEGAL DESCRIPTION
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Exhibit A - Page 1
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EXHIBIT "B"
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SCOPE OF DEVELOPMENT
The Property shall be developed as a 200,000 square foot warehouse and distribution
facility consisting of one or more structures, all as described herein and with a minimum
assessed valuation upon completion of Five Million Five Hundred Thousand Dollars
($5,500,000). Structures on the Property shall generally be located as shown on the Site
Plan approved by the City. The Property may be developed in accordance with this
Agreement, but subject to the requirements of the Zoning ordinance of the City and any
variances or modifications therefrom as approved by the City.
The Developer shall cause the design and construction of the 18.57 plus/minus acre
Property in accordance with the Schedule of Performance (Exhibit "D") and this Agreement
as follows:
The development shall be first class, constructed of quality materials, to City Code, and
shall be unified in architectural theme and treatment throughout the Property and adjacent
off-site areas, insofar as reasonable and practicable.
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All improvements to be constructed by the Developer shall be constructed or installed in
accordance with the technical specifications, standards and practices of the City and in
accordance with plans and specifications approved by the City.
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The Developer shall cause the proper documents to be filed and fees paid to all
governmental or regulatory agencies, including utilities, for applications for all required
permits and approvals.
The Developer shall at its cost and expense be responsible for the design and construction
of off-site improvements in accordance with any and all standards and requirements of the
City, utilities, or other governmental authorities.
The Project shall include on-site parking in accordance with applicable City regulations.
The Developer shall design all structures, landscaping and parking areas to achieve a high
degree of attractiveness and compatibility with the Property and area in which the Property
is located.
The Developer has heretofore at its cost and expense undertaken and completed any and
all soils, utility and drainage studies, plans and reports pertinent to the development of the
Property and has provided a copy of said studies and reports to the Agency.
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Exhibit B - Page 1
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EXHIBIT "C"
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GRANT DEED
Recording Requested by:
After Recordation, Mail to:
Regevelopment Agency of the City of San Bernardino
Mail Tax Statements to:
GRANT DEED
For valuable consideration, the receipt of which is hereby acknowledged,
/" THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public
...... body, corporate and politic, of the State of California (the "Grantor"), pursuant to and in
accordance with the Community Redevelopment Law of the State of California, hereby
grants to Premis A Partners, a California limited partnership (the "Grantee"), the real
property (the "Property") legally described in the document attached hereto, labeled Exhibit
A, and incorporated herein by this reference.
1. The Property is conveyed subject to the Disposition and Development
Agreement entered into between the Grantor and the Grantee, dated , 1996
(herein referred to as the "Agreement"). The provisions of the Agreement are incorporated
herein by this reference and shall be deemed to be a part hereof as if set forth at length
herein.
2. The Grantee covenants by and for itself, its heirs, executors,
administrators and assigns, and all persons claiming under or through them, that there
shall be no discrimination against or segregation of any person or group of persons on
account of race, color, creed, religion, sex, age, marital status, national origin or ancestry
in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property,
or through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of tenants,
lessees, subtenants, sublessees or vendees in the Property.
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Exhibit C - Page 2
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All deeds, leases or contracts made relative to the Property, shall contain the
r following nondiscrimination clauses:
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(a) In deeds: "The grantee herein covenants by and for himself, his
heirs, executors, administrators and assigns, and all persons claiming under or
through them, that there shall be no discrimination against or segregation of any
person or group of persons on account of race, color, creed, religion, sex, age,
marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee,
himself, or any person claiming under or through him, establish or permit any such
practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants, sublessees or
vendees in the land herein conveyed. The foregoing covenants shall run with the
land."
(b) In leases: "The lessee herein covenants by and for himself, his heirs,
executors, administrators and assigns, and all persons claiming under or through
him, and this lease is made and accepted upon and subject to the following
conditions:
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That there shall be no discrimination against or segregation of any person or group
of persons on account of race, color, creed, religion, sex, age, marital status,
national origin or ancestry in the leasing, subleasing, transferring, use, occupancy,
tenure or enjoyment of the land herein leased, nor shall the lessee himself, or any
person claiming under or through him, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy, of tenants, lessees, subtenants, sub lessees or vendees
in the land herein leased."
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(c) In contracts: "There shall be no discrimination against or segregation
of any person or group of persons on account of race, color, creed, religion, sex,
age, marital status, national origin or ancestry in the sale, lease, sublease, transfer,
use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself,
or any person claiming under or through him, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees
of the land."
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3. No violation or breach of the covenants, conditions, restrictions,
provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any
way impair the lien or charge of any mortgage, deed of trust or other financing or security
instrument permitted by the Agreement; provided, however, that any successor of Grantee
to the Property shall be bound by such. remaining covenants, conditions, restrictions,
limitations and provisions, whether such successor's title was acquired by foreclosure,
deed in lieu of foreclosure, trustee's sale or otherwise.
Exhibit C - Page 3
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4. The terms and conditions set forth in Article IV of the Agreement and
the covenants otherwise contained in this Grant Deed shall remain in effect for a period of
five (5) years from the date hereof, except that the covenants against discrimination set
forth in Article IV of the Agreement shall remain in effect in perpetuity and the covenants
set forth in Article III of the Agreement shall remain in effect until they are satisfied in full.
5. The covenants contained in this Grant Deed shall be binding for the
benefit of the Grantor and its successors and assigns, and such covenants shall run in
favor of the Grantor for the entire period during which such covenants shall be in full force
and effect, without regard to whether the Grantor is or remains an owner of any land or
interest herein to which such covenants relate. The grantor, in the event of any breach of
any such covenants, shall have the right to exercise all of the rights and remedies, and to
maintain any actions at law or suits in equity or other proper proceedings to enforce the
curing of such breach as provided in the Agreement or by law. The covenants contained
in this Grant Deed shall be for the benefit of and shall be enforceable only by the Grantor
and its successor.
Exhibit C - Page 4
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IN WITNESS WHEREOF, the Grantor and Grantee have caused this
,- instrument to be executed on their behalf by their respective officers thereunto duly
\..... authorized, this _ day of ,19_.
Grantor:
REDEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
By:
Chairperson
By:
Secretary
APPROVED AS TO FORM:
By:
C Counsel for Grantor
The provisions of this Grant Deed are hereby approved and accepted.
Grantee:
By:
Title:
By:
Title:
APPROVED AS TO FORM:
C By:
Exhibit C - Page 5
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Counsel for Grantee
EXHIBIT "D"
SCHEDULE OF PERFORMANCE
(Days shall be calendar days, and all dates herein are
subject to change due to force majeure in accordance with
Section 6.05 of the Agreement)
(1) Agency approval of DDA
(2) Developer prepares and submits
preliminary soils report to Agency and
preliminary financing plan
(3) Developer submits to Agency and City
concept site plan, floor plan elevations and
related documents.
(4) City and Agency review and approve or
disapprove concept site plan, floor plan,
elevation and related documents
(5) Developer submits revised site plan, floor
plan, elevations and preliminary landscape and
grading plans with Agency comments and
revisions incorporated
(6) Developer submits complete marketing
plan, including budgets, target market lists and
consultants employed
(7) Developer submits complete Design
Review Submittal to City Planning Department,
along with payment of all required fees and
required number of submittal plans
(8) Developer submits complete list of
prospective user inquiries and responses to
marketing efforts
Exhibit D - Page 1
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Within 30 days of DDA approval
Within 90 days of DDA approval
Within 30 days of Step 3 above
Within 30 days of Step 4 above
Within 30 days of Step 4 above
Within 60 days of Step 4 above
Each 180 days after Step 1 above
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(9) Developer opens escrow, Agency
deposits deed in escrow
Within 24 months of Step 1 above
(10) Escrow closes, developer pulls permits
Within 180 days of opening
Exhibit D - Page 2
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EXHIBIT "E"
When Recorded, Mail to:
CERTIFICATE OF COMPLETION
We, , Chairman and , Secretary of the
Redevelopment Agency of the City of San Bernardino (the "Agency") hereby certify as
follows:
By its Resolution No. _, adopted and approved
has resolved as follows:
, 199_, the Agency
Section 1. The improvements required to be constructed in accordance with
that certain Disposition and Development Agreement (the "Agreement") dated
by and between the Agency and Premis Partners, a California limited partnership (the
"Developer") on that certain real property (the "Property") more fully described in Exhibit "A"
attached hereto and incorporated herein by this reference, have been completed in
accordance with the provisions of said Agreement.
Section 2. This Certificate of Completion shall constitute a conclusive
determination of satisfaction of the agreements and covenants contained in the Agreement
with respect to the obligations of the Developer, and its successors and assigns, to
construct and develop the improvements on the Property, excluding any normal and
customary tenant improvements and minor building "punch-list" items, and including any
and all buildings and any and all parking, landscaping and related improvements necessary
to support or which meet the requirements applicable to the building and its use and
occupancy on the Property, whether or not said improvements are on the Property or on
other property subject to the Agreement, all as described in the Agreement, and to
otherwise comply with the Developer's obligations under the Agreement with respect to the
Property and the dates for the beginning and completion of construction of improvements
thereon under the Agreement; provided, however, that the Agency may enforce any
covenant surviving this Certificate of Completion in accordance with the terms and
conditions of the Agreement and the grant deed pursuant to which the Property was
conveyed under the Agreement. Said Agreement is an official record of the Agency and
a copy of said Agreement may be inspected in the office of the Secretary of the
Exhibit E - Page 1
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Redevelopment Agency of the City of San Bernardino located at the 201 N. "E" Street, 3rd
Floor, San Bernardino, California 93514, during regular business hours.
Section 3. The Property to which this Certificate of Completion pertains is
more fully described in Exhibit "A" attached hereto.
DATED AND ISSUED this _ day of
,199_.
Exhibit E - Page 2
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PRENUSPROJECTREPORT
RICHARD HART
939 E. GILBERT
SAN BERNARDINO, CALIF.
92404
Entered into Record at
CouncillCmyDevCms Mtg:
/0/1 If (,
.
by
re Agenda Item t<? DA- 1
C1~,p- ~
City ClerklCDC See,
City of San Bernardino
1~!7/1ft,
R1
Premis Partners DDA (HA TLE) has proposed the construction of a 200,000 to 300,000
sq. ft. Warehouse/distribution center which would be located in the North-West area of the City
of San Bernardino. At this time I have no objection to the basic project. However, I do have
questions concerning the figures contained in the Economic Development Agency Staff Report.
These questions concern the formula used to ascertain the nwnber of positions a development of
this nature would bring to the area, as well as the revenue the City of San Bernardino can expect
from the City tax generated by sales as a result of that employment.
Premis estimates 425 jobs in the primary sector with a payroll of $9,500,000.00 and 367
jobs in the secondary sector with a payroll of $7,080,000.00, for a total of 792 jobs with a payroll
of$16,581,195.00, and a revenue of City Sales Tax in the amount of$46,951.00 per year.
These figures are based on several asswnptions which mayor may not be correct. These
include: the average pay at the development being $22,374.00/year, the employment rate at the
development at 425 positions, and the average expenditure on taxable goods at 33% of take home
pay. In order to give a more accurate description of what might be the expected revenue from
this project, I have calculated the tax income based on several variables.
I) 425 New Positions divided into pay scales which reflect averages for the City of San
Bernardino. Having called several warehousing companies in the local area I have been able to
determining a basic structure for that type of business as follows.
50% of the employees are laborers (Group A)
35% of the employees are in lead positions are semi-skilled labor (Group B)
15% of the positions are in management/sales/clerical (Group C)
1 determined a pay scale for these positions by answering ads in the San Bernardino Sun
Telegram for like positions and came up with:
Group A $5.00 to $10.00 per hour (Avg $7.50)
Group B $10.00 to $15.00 per hour (Avg $12.50)
Group C $15.00 to $20.00 per hour (Avg $17.50)
Using these figures, combined with the breakdown of job types by category 1 determined
a different tax revenue as follows:
Group A: 425 positions X .50 X $7.50/hr X 8hrs day X 5 days wk X 52 wk yr = $3,322,800.00
This figure is then divided by the total number of positions (213) and equals an average pay of
$15,600.00/yr for Group a employees. Premis uses an income tax projection of 17.6% for
payroll deductions thus $15,600.00 X .176 = $2745.00 per year. This leaves a spendable income
of $12,855.00. Next, Premis figures show that a person will spend appx. 28.8% of their income
on household expenses (rent etc) so, $12,855.00 X .288 = $3702.00/yr for rent or $309.00 month.
Finally, another 32.9% of the remaining money is spent on taxable items which in turn generates
revenue for the city, thus, $12,855.00 - $3702.00 =$9153.00. $9153.00 X .329 = $3,011.00 and
this times the city's 1 % income equals $30.11 per employee/year, and $30.11 X 213 = $6414.00
in total Group A revenue to the City of San Bernardino.
Using the same methods on Groups B and C renders results of $50.00 per employee X
149 employees for $7,479.00 and $70.00 per employee X 64 employees for a total of $4,497.00
per year respectively. The total of these revenues to the City is then $18,389.00. So, using the
Premis figure of 1.8652 secondary jobs, a secondary tax can be estimated as $18,389.00 X
1.8652 = $34,298.00. While $34,000.00 is not a bad figure, it is also not the $47,000.00 Premis
projects in their estimate.
Also, this is an absolute best case scenario. Looking back at the figures I projected, I
estimated a person would spend 28.8% of their take home pay across the board for their rent or
mortgage. That figure, however, meant only $307.00 of Group A money could go to pay rent.
Again, using the Sun telegram as a measuring stick I determined that the average rental fee in
San Bernardino would be closer to $475.00 per month or $5,700.00 per year. Using this as a
guideline the adjusted figures for each group and the total aggregate amount totaled $33,000.00.
I had now gone from $47,000.00 to $33,000.00 and hadn't even started the real work.
The next step involves using statements made in the Premis presentation to determine a
worst case scenario, as the aforementioned cases wore the best possible results. Premis projects
1.5 employees for every 1,000 sq.ft., but the total square footage is not locked in to 300,000. In
fact, the projections are for a facility closer to 200,000 sq.ft. If this is true, then the projected
employee distribution changes to: Group A 150, Group B 105 and Group C 45. Thus the
calculation for projected revenue from an operation of this size would change to:
Group A $23.54 X 150 = $3531.00
Group B $51.73 X 105 = $5431.00
Group C $79.93 X 45 = $3596.85
This totals to $12,559.50 and when adjusted for secondary positions equals $23,426.00. Quite a
good deal less than the original $47,000.00 estimate.
Finally, on page one of the Premise report, a statement is made that this project is to be
used to construct a building for a "similar but larger user" than the development Mr. Hatle
completed for Prime Line Products. That facility is 100,000 sq. ft. And employs 115 persons.
Wait, if the figure of 1.5 employees for every 1,000 sq.ft. is correct, then there should be 150
people working at the Prime Line Products location. At the ratio of 115 employees for 100,000
sq.ft., if these are similar projects, then a 200,000 sq.ft. Facility should project to house no more
than 230 employees. Using these ratios as a base, the final figure the City of San Bernardino
should use to determine if they want to approve this project are:
Group A $23.54 X 115 = $2707.71
Group B $51.73 X 81 = $4190.13
Group C $79.93 X 35 = $2797.55
Total = $9695.39
And $9695.39 X 1.8652 = $18,083.84. This is the figure the City of San Bernardino should
depend on as a maximum for tax revenue from this facility. I say maximum because in the
warehouse business increased size does not necessarily equate to increased employment. If the
current warehouse employs 115 persons for 100,000 sq.ft., it may be that a larger building at
200,000 sq.ft. can do the same job with only 125 person, or fewer if the building is custom
designed and built.
PART II
The Premis proposal to the City of San Bernardino is that this company will acquire an
option on the property for an agreed upon price of $807,000.00. This price is to be locked-in to
the agreement until Premis decides to purchase the property. In return, Premis agrees to pay the
tax generated by the property for the 2 year period. Unfortunately, as the property is currently in
possession of the City of San Bernardino, Premis in effect will gamer a 2 year option for $00.00.
Also, the price of $807,000.00 is locked-in, thus, there is the potential for two scenarios under
which the City of San Bernardino loses:
I) The value of the land goes up, say to 1.2 million dollars. Premis, who holds the option on the
property, sell the land to another developer for 1.2 million, pays the City of San Bernardino
$807,000.00 and pockets $400,000.00 in immediate profit before the first shovelful of dirt is
turned. This is money the City of San Bernardino could have collected under a different type of
arrangement. It is also a reasonable assumption when we consider that every economist in the
country as well as our elected officials, are predicting that we are climbing out of the most recent
recession and that prices for real property have bottomed out and are due to rise sharply.
2) The value of the property goes down. Premis cannot afford to sell a piece of land for
$807,000.00 that is only worth $625,000.00. Premis allows the option to expire on the property
and the land returns to the City of San Bernardino, worth less than before. Premis negotiates a
new deal with the City at the lower price and again waits for the value of the real estate to rise.
Neither of these situations is advantageous to the City of San Bernardino, as we are put in
a no-win situation. I believe we should:
I) Charge Premis for the tax base which we have lost on this property since the City originally
acquired the property as the price for their option. Each year they do not exercise their option,
they will be charged that years estimated tax rate as if the land were privately owned.
2) Allow the price of $807,000.00 to be the minimum selling price, then conduct a new
assessment at the time of the sale. If the assessment is higher, allow Premis to purchase the land
. at the higher price, if the value is lower, allow Premis to back out of their deal (as they would in
any event if the property value declines).
3) We also need to assure the public that the original property owners are not in any way
connected with this proposal. This will help the City to avoid the appearance that we have given
the original owners a $400,000.00 property improvement for no charge as well as releasing them
from several years of property tax payments.
4) Lease the property instead of selling it directly to a developer. This has the advantage of
leaving San Bernardino in control of a valuable piece of real-estate for future projects, as well as
being a tax incentive for potential developers.