HomeMy WebLinkAboutR31-Economic Development Agency
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
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Emil A. Marzullo
Interim Executive Director
SUBJECT: Joint Public Hearing - Waterman Holdings, LLC -
Amendment No. 4 to tbe 2004 Disposition and
Development Agreement (Central City. East
Redevelopment Project Area)
DATE: October 21, 2008
Svnonsis of Previous Commission/Council/Committee Action{s):
On November 2. 2004, Redevelopment Committee Members Estrada and Longville unanimously voted to recommend that the
Community Development Commission of the City of San Bernardino (the "Commission") consider a disposition and development
agreement with Waterman Holdings, LLC, for approval.
On December 6, 2004, the Commission adopted Resolution No. CDC/2004-49 approving the sale of certain real property by the
Agency to Waterman Holdings, LLC, and authorized the Executive Director to execute the Disposition and Development
Agreement between the Agency and Waterman Holdings, LLC, and the Mayor and Common Council simultaneously adopted
Resolution No. 2004-386 approving the sale of certain real property (4"' and Waterman Avenue - APN: 0135-191-11) within the
Central City East Redevelopment Project Area ("Project Area").
Svnonsis Continued to Next Pal!e....
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Recommended Motion{s):
Open/Close Joint Public Hearing
Mavor and Common Council
Resolution of the Mayor and Common Council of the City of San Bernardino consenting to the disposition of Certain Real
Property by tbe Redevelopment Agency of the City of San Bernardino ("Agency") to Waterman Holdings, LLC (4"' and
Waterman Avenue - APN: 0135-191-17) (Central City East Redevelopment Project Area)
(Communitv Develonment Commission)
Resolution of the Community Development Commission of the City of San Bernardino approving the sale of Certain Real
Property by the Redevelopment Agency of the City of San Bernardino ("Agency") to Waterman Holdings, LLC, and
authorizing the Interim Executive Director of the Agency to execute Amendment No. 4 to the 2004 Disposition and
Development Agreement, as amended, between the Agency and Waterman Holdings, LLC (4"' Street and Waterman Avenue
- APN: 0135-191-17) (Central City East Redevelopment Project Area)
Contact Person(s):
(909) 663-1044
Phone:
Mike Trout
Central City East Redevelopment Project
Area
Ward(s):
Project Area(s)
Supporting Data Attached:
Ii'] Staff Report Ii'] Resolution(s) Ii'] Amendment(s)/Agreement(s) Ii'] Map(s) 0 Letters
FUNDING REQUIREMENTS Amount: $
N/A
N/A
Source:
Budget Authority:
N/A
Fiscal Review:
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Barbara Lindseth, Administrative Services Director
SIGNATURE:
Emil A. Mar
cutive Director
Commission/Council Notes:
P:\Agendu\Comm De" Commllsion\COC 2008\11-03-08 Waterman Holdings, LLC - Amendmem NO.4 SR,doc
COMMISSION MEETING AGENDA
Meeting Date: 1110312008
Agenda Item Number: }l. 31
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Economic Development Agency Staff Report
Watennan Holdings, LLC - Amendment No.4
October 21,2008
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Svnonsis of Previous Commission/Council/Committee Aetion(s):
On June 7. 2005, Redevelopment Committee Members Estrada and McGinnis unanimously voted to recommend that the
Commission consider the action of June 20,2005.
On June 20, 2005, the Commission adopted Resolution No. CDC/2005-19 approving Amendment No. I to the 2004..
Disposition and Development Agreement between the Agency and Watennan Holdings, LLC and authorized the Executive
Director to execute Amendment No. I.
On June 19, 2006, the Commission adopted Resolution No. CDC/2oo6-20 approving Amendment No. 2 to the 2004
Disposition and Development Agreement between the Agency and Watennan Holdings. LLC, and authorized the Executive
Director to execute Amendment No.2.
On November 8, 2007, Redevelopment Committee Members Estrada, Baxter and Johnson unanimously voted to recommend
that the Commission consider the action of Amendment No.3.
On July 21. 2008, the Commission adopted Resolution No. CDCl2oo8-26 approving Amendment No. 3 to the 2004
Disposition and Development Agreement between the Agency and Watennan Holdings, LLC and authorized the Interim
Executive Director to execute Amendment No.3.
On October 9, 2008, Redevelopment Committee Members Estrada, Baxter and Johnson unanimously voted to recommend the
Mayor and Common Council and Commission consider the action of Amendment No.4.
P:\Agendas\Comm Dev Commiuion\CDC 2008\11-03.08 Wuermm Holdinp. LLC . Amendment No.4 SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 1110311008
Agenda Item Number:
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
JOINT PUBLIC HEARING - WATERMAN HOLDINGS, LLC-
AMENDMENT NO.4 TO THE 2004 DISPOSITION AND DEVELOPMENT AGREEMENT
(CENTRAL CITY EAST REDEVELOPMENT PROJECT AREA)
BACKGROUND:
On December 6, 2004, the Mayor and Common Council. of the City of San Bernardino (the "Council")
and Community Development Commission of the City of San Bernardino (the "Commission") approved
the sale of approximately 3.9 acres owned by the Redevelopment Agency of the City of San Bernardino
(the "Agency") located at the southwest corner of 4th Street and Waterman Avenue (APN: 0135-191-11)
(the "Property") pursuant to a 2004 Disposition and Development Agreement (the "DDA") between the
Agency and Watennan Holdings, LLC (the "Buyer/Developer").
The DDA, as approved, required for the Buyer/Deve10per to construct a minimum of 16,864 square feet
of office space for the County Preschool Services Department (the "PSD") on the most westerly 2 acres of
the Property ("Phase I") with an option to construct an additional building for another County Department
on the remaining 1.6 acres on the easterly portion of the Property ("Phase II"). During the interim period .
until the option on the Phase II site was exercised, the DDA required the Agency to insta1l and maintain
perimeter fencing, landscaping and an irrigation system for the Phase II site. The Agency would sell the
Phase I Property for the fair market value and the BuyerlDeveloper would have the option to purchase the
Phase II Property at a later date. The Agency pledged 60% of the tax increment that the completed
Project would generate over' a period of ten years to offset the below market rental rate that the County
required of the Buyer/Developer.
On May 17, 2005, the San Bernardino County Board of Supervisors approved a ten-year lease with the
Buyer/Developer to construct 17,000 square feet of office space for the PSD.
On June 20, 2005, the Commission approved Amendment No. 1 to the DDA whereby the location of
Phase I and Phase II were redefined. As a result, the Phase I project was then to be located at the
southwest corner of 4th Street and Watennan Avenue.
In the interim, two items arose that would necessitate a change to the original DDA; first, it was
determined that the pledge of tax increment to the Buyer/Developer needed to be restructured because the
last date to incur tax increment debt payable from direct pledge of tax increment revenues in the Project
Area was January I, 2004. Second, the County needed a larger building constructed for a different
County Department and consequently, the Buyer/Developer would now require both the Phase I and
Phase II sites (APN: 0135-191-11) (the "Agency Property") be combined as a single site.
The BuyerlDeveloper will purchase the Agency Property for $512,424, which is equal to the fair market
value of the Agency Property based upon the final surveyed square footage. Escrow has been opened
under the tenns of the original DDA and the Buyer/Developer has deposited the sum of $20,000 into
escrow and the balance of $492,424 will be paid upon the closing of the escrow. Per Amendment No.2,
the Agency will pledge to the Buyer/Developer from general Agency revenues under a Promissory Note
P:\Agendas\Comm Dev Commission\CDC 2008\] ).(l)-OII Waterman Holdings, llC - Amendment No.4 SR.dtx:
COMMISSION MEETING AGENDA
Meeting Date: 1110312008
Agenda Item Number: -EiL
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and not as a pledge of tax increment revenues, an amount equal to 60% of the I % tax revenues generated
by the proposed Project (estimated development cost is $6 million) for a period of ten years. As per the
original DDA, the 60% pledge was authorized by the Commission in an effort to offset or compensate the
Buyer/Developer for the below market rate ten-year lease with the County. The Agency payment
obligation will commence upon presentation of a cancelled check by the Buyer/Developer and as of the
fiscal year following completion of the Project by the Buyer/Developer and said payment will be paid
after each December 10lh and April 10lh tax payment.
On June 19, 2006, the Commission approved Amendment No. 2 to the DDA, whereby the
Buyer/Developer will develop on the Agency Property, a 2-story building containing a minimum of
45,000 square feet of office space, to include parking and landscaping, and to lease to TAD (the
"Project"). TAD provides jobs and employment services to residents and job training programs.
Additionally, in Amendment No.2, the Agency pledged to reimburse, to the Buyer/Developer, an amount
equal to 60% of the 1 % of new property taxes generated by the Project for a period of ten years from the
general revenues of the Agency.
On July 21, 2008, the Commission approved Amendment No.3 to the DDA, wherein the Agency would
reimburse the Buyer/Developer an amount not to exceed $399,500 for the actual costs for the required
Off-Site Improvements. This reimbursement would be paid from the sale proceeds of the Agency
Property 30 days following the completion of the Project as evidenced by a Certificate of Occupancy
issued by the City of San Bernardino ("City") and verification that the Off-Site Improvements have been
constructed by the Buyer/Developer and accepted by the City. The cost reimbursements to the
Buyer/Developer would not exceed the lesser of the actual cost paid for the Off-Site Improvements or
$399,500 utilizing prevailing wage rates. All other terms and conditions of the DDA, as amended by
Amendments No. I and No.2, would remain unchanged.
CURRENT ISSUE:
The Buyer/Developer has infonned the Agency that they need additio!1alland for additional parking for
the Project. The Buyer/Developer approached the Agency about acquiring the Flood Control Channel
Property (the "Flood Control Property," APN: 0135-191-17 formerly APN: 0135-191-15). The Flood
Control Channel runs along the southern boundary of the Agency Property. The Buyer/Developer has
estimated that it will cost $1.1 million to improve the Flood Control Property for use as parking.
The Buyer/Developer has already had preliminary conversations with the Western Regional Water
District and has formulated a plan which the Western Regional Water District has indicated will be a very
good solution to the current open Flood Control Property. Additionally, the Buyer/Developer has stated
that they will be paying for the entire cost of improving the Flood Control Property for use as parking.
The Agency has obtained a current appraisal for the Flood Control Property. The Agency appraiser has
determined that the fair market value of the property is $36,000.
Approval of Amendment No.4 to the DDA allows the Agency to sell the Flood Control Channel to the
Buyer/Developer for $36,000, this dollar amount and the value of the improvements to this property will
generate additional property tax for the calculation of the annual payment to the Buyer/Developer per the
DDA, as amended. All other terms and conditions of the DDA, as amended by Amendments No.1, No.2
and No.3, would remain unchanged.
P:\Agendas\Comm Dev Commission\COC 2008\11-03-08 Waterman Holdina:1l, LLC. Amendment No_" SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 1110312008
Agenda Item Number: R~'
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ENVIRONMENTAL IMPACT:
The proposed new project description has been reviewed under the California Environmental Quality Act
("CEQA") and it has been detennined that the project qualifies for a Categorical Exemption, Class 32
(Guidelines Section 15332).
FISCAL IMPACT:
The Agency will receive $36,000 from the Buyer/Developer for sale of the Flood Control Property. The
Agency estimates that it will take 30 days to close from the opening of escrow.
Additionally, any new property taxes generated as a result of the improvements to the Flood Control
Property will be included in the calculation of the Agency in detennining the annual payment to the
Buyer/Developer per the tenns and conditions of the DDA, as amended. The annual payment to the
Buyer/Developer will be an amount equal to 60% of the I % of the new property taxes generated from the
development of the Flood Control Property as well as the Agency Property. The total payment to the
Buyer/Developer is estimated to be $420,000 over a ten-year period.
RECOMMENDATION:
That the Mayor and Common Council and Community Development Commission adopt the attached
Resolutions.
Em~ E..~"". 01.....'
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COMMISSION MEETING AGENDA
Meeting Date: 1110312008
Agenda Item Number: 12.1 , _
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SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF
THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW REGARDING THE
DISPOSITION AND DEVELOPMENT OF CERTAIN AGENCY PROPERTY LOCATED
SOUTH OF THE SOUTHWEST CORNER OF 4TH STREET AND WATERMAN AVENUE
(APN: 0135-191-17) SAN BERNARDINO, CALIFORNIA PURSUANT TO THE TERMS OF
AMENDMENT NO.4 TO THE 2004 DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO AND WATERMAN HOLDINGS, LLC - CENTRAL CITY EAST
REDEVELOPMENT PROJECT AREA
INTRODUCTION
This Swnmary Report (the "Report") has been prepared by the Redevelopment Agency of the City of
San Bernardino (the "Agency") pursuant to Section 33433 of the California Health and Safety Code.
This Report sets forth certain details of the proposed sale by the Agency of real property totaling
approximately .84 +/- acres of vacant land, described as Assessor Parcel Number 0135-191-17 located
south of the southwest corner of 4th Street and Watennan Avenue, San Bernardino, California (the
"Site"), to Waterman Holdings, LLC (the "Developer"). An appraisal was perfonned on the Site by
James Smothers, MAl (the "Appraiser") in August 2008 and reported the basic value of $9.85/square
foot and the appraised value to be $.97/square foot.
To arrive at the appraised value of $.97 /square foot, the Appraiser reviewed sales of properties With
low development potential due to their topography and/or accessibility. The sales were then time
adjusted for market conditions, up to the date of value and divided by the basic value of land,
$9.85/square foot. The range of percentage of the base value went from 2.0% to 25.9%. The average
percentage of the base value was 9.75% and the median was 10.05%. The Appraiser determined that
the fair market value of the Site is 10% of the base value.
APN: 0135-191-17
Site Base Value '= ($9.85/square foot x 36,489 square feet)
Less % discount for lack of development potential
Less $ discount for lack of development potential
Fair Market Value ($35,900)
$359,000
90%
($323,000)
$36,000 (rounded)
The Agency acquired title to the Site in 1983 from the City of San Bernardino (the City"). The
Site was part of the historic Wann Creek flood control system until a permanent concrete channel was
built to the east of Waterman Avenue. No capital improvements have been perfonned on the Site since
the Agency acquired title. The Site is currently vacant land. Pursuant to the proposed Amendment No.
4 (the "Amendment") to the 2004 Disposition and Development Agreement (the "DDA") the
Developer will acquire the Site from the Agency and develop the Site so that it may be used for
parking.
This Report is organized into the following 6 sections:
I.
Salient Points of the proposed Amendment No.4: This section includes a description of the
major responsibilities to be assumed by the Agency and the Developer.
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II.
Cost of the Amendment No. 4 to the A2encv: This section outlines the proposed costs of
Amendment No.4 to the Agency.
III. Estimated Value of the Interests to be Conveved Determined at the Hi2hest and Best Use
Permitted Under the RedeveloDment Plan: This section summarizes the value of the Flood
Control Channel Property to be conveyed to the Developer at the highest use permitted
pursuant to the tenns of Amendment No.4.
IV. Estimated Reuse Value of the Interests Determined at the Required Use and with the
Conditions. Covenants and Restrictions Reauired bv the ProDosed Amendment No.4:
This section summarizes the sales price to be paid to the Agency by the Developer.
V. Bli2ht Alleviation: This section describes the existing blighting conditions in and around the
Project Area, and an explanation of how the proposed sale and development of the Agency Lots
will assist in alleviating the blighting conditions.
VI. Conformance with the AB 1290 Imnlementation Plan: This section identifies how the
proposed Amendment No. 4 will result in a development activity that fulfills goals and
objectives established in the Agency's AB 1290 Five-Year Implementation Plan.
I. SALIENT POINTS OF THE PROPOSED DDA
A.
Description of the proposed Proiect
. The purpose of Amendment No.4 is to transfer the Flood Control Channel Property
to the Developer to facilitate the development of a single floor parking structure in
support of a 2-story 45,000 square foot office building structure that the Developer
is constructing for the County of San Bernardino. The Developer will provide all
necessary improvements required in connection with the construction of the single
floor parking structure.
B.
Agencv Responsibilities
. Transfer the Flood Control Channel Property to the Developer pursuant to the tenns
. of Amendment No.4. .
C. Developer Resoonsibilities
. Execute and implement Amendment No.4 with the Agency and agree to accept the
Flood Control Channel Property per the tenns of Amendment No. 4 and develop a
parking structure.
. Complete the construction of the parking structure without any further Agency
assistance per the tenns of Amendment No.4.
II.
COST OF THE PROPOSED AMENDMENT NO.4 TO TilE AGENCY
The costs of the proposed Amendment No. 4 would be the usual and nonnal costs associated
with the sale of property which is estimated to be $2,000.
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III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT
THE mGHEST AND BEST USE PERMITTED UNDER THE REDEVELOPMENT
PLAN
The estimated value of the interest to be conveyed ($36,000) is based upon the low
development potential of the property. Construction of a single floor parking structure is
considered the highest and best use pennitted under the Project Area Plan.
IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED
DETERMINED AT THE REOUlRED USE AND WITH THE CONDITIONS.
COVENANTS AND RESTRICTIONS REQUIRED BY THE PROPOSED
AMENDMENT NO.4
The estimated fair market value of the interest to be conveyed to the Developer is $36,000
based upon the tenns and conditions pursuant to Amendment No.4.
V. BLIGHT ALLEVIATION
The development of the Flood Control Channel Property will eliminate existing blight, foster
the reuse of underutilized property into a single floor parking structure and return the Flood
Control Channel Property to the property tax rolls.
C VI. CONFORMANCE WITH THE AD 1290 IMPLEMENTATION PLAN
The Five-Year Implementation Plan ("Plan") adopted by the Agency contains several broad
operational goals and objectives for the Project Area. Among these are the following:
. Eliminate blighting influences, including deteriorating buildings, uneconomic
land uses, obsolete structures, and other environmental, economic and social
deficiencies.
. To re-plan, redesign and redevelop underdeveloped areas that are stagnant or
improperly utilized.
Amendment No.4 will assist the Agency in meeting the objectives and goals of its Plan for the Project
Area in the following way:
The execution of Amendment No.4 with the Developer will continue redevelopment activities of the
Agency by developing underutilized Flood Control Channel Property and increasing property taxes.
Based upon the preceding factors, Amendment No. 4 is consistent with the Plan. The interest in the
Flood Control Channel Property to be conveyed to the Developer will be developed in conformance
with the City's General Plan and the Municipal Development Code.
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RESOLUTION NO.
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF
CERTAIN REAL PROPERTY BY THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") TO WATERMAN
HOLDINGS, LLC (4TH AND WATERMAN AVENUE - APN: 0135-191-17)
(CENTRAL CITY EAST REDEVELOPMENT PROJECT AREA)
WHEREAS, the City of San Bernardino (the "City") is a municipal corporation and charter
city, duly organized and existing pursuant to the provisions of the constitution of the State 0
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California; and
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") is a
11 public body, corporate and politic existing under the laws of the State of California, Health and
12 Safety Code Section 33100, and is charged with the mission of redeveloping blighted and
13 underutilized land; and
WHEREAS, the Agency desires to dispose of certain real property (the "Flood Control
Channel Property," APN: 0135-191-17) owned by the Agency, as set forth in that certain
Amendment No.4 (the "Amendment") to the 2004 Disposition and Development Agreement (the
"DDA") by and between the Agency and Watennan Holdings, LLC (the "Buyer/Developer"); and
WHEREAS, the Agency Property is located south of the southwest corner of 41h Street and
Watennan Avenue within the Central City East Redevelopment Project Area and is presently an
21 unimproved vacant lot; and
WHEREAS, an appraisal of the Flood Control Channel Property was perfonned in August
2008 by Smothers Appraisal (the "Appraiser"); and
WHEREAS, according to the appraisal report dated September 4, 2008 (the "Agency
Appraisal Report"), prepared by the Appraiser, the fair market value of the Flood Control Channel
Property is $36,000 for the approximately .84 acres ofland; and
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1 WHEREAS, the Agency intends to enter into the Amendment pursuant to which the Agency
2 proposes to sell the Flood Control Channel Property to the Buyer for the fair market value of
3 $36,000; and
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WHEREAS, the Amendment provides for the development of the Flood Control Channel
Property so that it may be used as a parking lot; and
WHEREAS, the Developer has estimated that it will cost $1,100,000 for the construction of
8 the improvements to the Flood Control Channel Property; and
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WHEREAS, the Agency has prepared and published a notice of joint public hearing in the
10 San Bernardino County SUN newspaper on October 20,2008 and October 27, 2008, regarding the
11 consideration and approval of the Amendment; and
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WHEREAS, pursuant to Health and Safety Code Section 33433(b), the Agency may transfer
the Flood Control Channel Property to the Buyer subject to the Mayor and Common Council of the
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15 City of San Bernardino (the "Council") and the Community Development Commission of the City
16 of San Bernardino (the "Commission") adopting separate Resolutions authorizing the Agency to
17 transfer the Flood Control Channel Property in light of the findings set forth herein, pursuant to
18 Health and Safety Code Section 33433; and
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WHEREAS, the Agency has prepared a Summary Report pursuant to Health and Safety
20 Code Section 33433 (the "Report") that describes the salient point of the Amendment and identifies
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the cost of the Amendment to the Agency; and
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WHEREAS, pursuant to Section 15332 of the California Environmental Quality Act (the
"Act") Guidelines the Agency has reviewed the proposed sale and use of the Flood Control Channel
Property and has detennined that the project, as identified in the Amendment, is exempt from the
Act and qualifies for a Categorical Exemption, Class 32 (Guidelines Section 15332) as the project
meets all four requirements for an Infill Project; and
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1 WHEREAS, the acquisition of the Flood Control Channel Property by the Buyer is
2 consistent with the Central City East Redevelopment Plan.
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NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY
THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS
FOLLOWS:
Section 1.
On November 3, 2008, the Council conducted a full and fair joint public
hearing with the Commission, as the governing board of the Agency, relating to the disposition of the
Flood Control Channel Property from the Agency to the Buyer and the development thereof pursuant
to the Amendment The minutes of the City Clerk for the November 3, 2008 meeting of the Council
shall include a record of all communication and testimony submitted to the Council by interested
persons relating to the public hearing and the approval of the Amendment.
Section 2.
The Council hereby receives and approves the Report and the other written
materials submitted to the Council at the meeting at which this Resolution is adopted. The Report
contains infonnation required under Health and Safety Code Section 33433.
Section 3.
This Resolution is adopted in order to satisfy the provisions of Health and
Safety Code Section 33433(a)(l) and (b)(2) related to the disposition of the Flood Control Channel
Property to the Buyer in accordance with the Amendment and the Council hereby approves the
transfer of the Flood Control Channel Property to the Buyer pursuant to the Amendment for the
consideration as provided therein. The Council hereby finds and determines as follows:
1. That the Report a copy of which is attached hereto as Attachment 1 and by this reference
made a part hereof, contains the findings described in Health and Safety Code Section 33433(b)(2)
23 and said findings are hereby adopted.
24 2. The Flood Control Channel Property is being sold to the Buyer at the purchase price of
25 $36,000 for the development of a parking lot which consideration is the fair market value
26 determined at its highest and best use.
27 3. This action is consistent with the implementation plan adopted pursuant to Health and
28 Safety Code Section 33490, the Central City East Redevelopment Plan.
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BAXTER
13 BRINKER
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15 KELLEY
16 JOHNSON
17 MC CAMMACK
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The foregoing Resolution is hereby approved this
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF
CERTAIN REAL PROPERTY BY THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") TO WATERMAN
HOLDINGS, LLC (4TH AND WATERMAN AVENUE - APN: 0135-191-17)
(CENTRAL CITY EAST REDEVELOPMENT PROJECT AREA)
Section 4.
This Resolution shall take effect upon its adoption and execution in the
manner as required by the City Charter.
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
, 2008, by the following vote to wit:
Council Members:
Aves
Navs
Abstain
Absent
ESTRADA
Rachel G. Clark, City Clerk
day of
,2008.
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Approved as to Fonn:
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PaUickJ.Morris,~ayor
City of San Bernardino
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SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF
THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW REGARDING THE.
DISPOSITION AND DEVELOPMENT OF CERTAIN AGENCY PROPERTY LOCATED
SOUTH OF THE SOUTHWEST CORNER OF 4TH STREET AND WATERMAN AVENUE
(APN: 0135-191-17) SAN BERNARDINO, CALIFORNIA PURSUANT TO THE TERMS OF
AMENDMENT NO.4 TO THE 2004 DISPOSITION AND DEVELOPMENT AGREEMENT
BY . AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
BERNARDINO AND WATERMAN HOLDINGS, LLC - CENTRAL CITY EAST
REDEVELOPMENT PROJECT AREA
INTRODUCTION
This Swnrnary Report (the "Report") has been prepared by the Redevelopment Agency of the City of
San Bernardino (the "Agency") pursuant to Section 33433 of the California Health and Safety Code.
This Report sets forth certain details of the proposed sale by the Agency of real property totaling
approximately .84 +1- acres of vacant land, described as Assessor Parcel Number 0135-191-17 located
south of the southwest corner of 4th Street and Watennan Avenue, San Bernardino, California (the
"Site"), to Waterman Holdings, LLC (the "Developer"). An appraisal was perfonned on the Site by
James Smothers, MAl (the "Appraiser") in August 2008 and reported the basic value of $9.85/square
foot and the appraised value to be $.97/square foot.
To arrive at the appraised value of $.97/square foot, the Appraiser reviewed sales of properties with
low development potential due to their topography and/or accessibility. The sales were then time
adjusted for market conditions, up to the date of value and divided by the basic value of land,
$9.85/square foot. The range of percentage of the base value went from 2.0% to 25.9%. The average.
percentage of the base value was 9.75% and the median was 10.05%. The Appraiser determined that
the fair market value of the Site is 10% of the base value.
AJPN:0135-l9l-l7
Site Base Value = ($9.85/square foot x 36,489 square feet)
Less % discount for lack of development potential
Less $ discount for lack of development potential
Fair Market Value ($35,900)
$359,000
90%
($323,000)
$36,000 (rounded)
The Agency acquired title to the Site in 1983 from the City of San Bernardino (the City"). The
Site was part of the historic Wann Creek flood control system until a pennanent concrete channel was
built to the east of Waterman Avenue. No capital improvements have been perfonned on the Site since
the Agency acquired title. The Site is currently vacant land. Pursuant to the proposed Amendment No.
4 (the "Amendment") to the 2004 Disposition and Development Agreement (the "DDA") the
Developer will acquire the Site from the Agency and develop the Site so that it may be used for
parking.
This Report is organized into the following 6 sections:
I.
Salient Points of the proposed Amendment No.4: This section includes a description of the
major responsibilities to be assumed by the Agency and the Developer.
ATTACHMENT "1"
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II.
Cost of the Amendment No. 4 to the Al!:encv: This section outlines the proposed costs of
Amendment No.4 to the Agency.
Ill. Estimated Value ofthe Interests to be Conveved Determined at the Hil!:hest and Best Use
Permitted Under the Redevelooment Plan: This section summarizes the value of the Flood
Control Channel Property to be conveyed to the Developer at the highest use permitted
pursuant to the tenns of Amendment No.4.
IV. Estimated Reuse Value of the Interests Determined at the Reauired Use and with the
Conditions. Covenants and Restridions Required bv the Prooosed Amendment No.4:
This section summarizes the sales price to be paid to the Agency by the Developer.
V. Blil!:ht Alleviation: This section describes the existing blighting conditions in and around the
Project Area, and an explanation of how the proposed sale and development of the Agency Lots
will assist in alleviating the blighting conditions.
VI. Conformance with the AB 1290 Imolementation Plan: This section identifies how the
proposed Amendment No. 4 will result in a development activity that fulfills goals and
objectives established in the Agency's AB 1290 Five-Year Implementation Plan.
I. SALIENT POINTS OF THE PROPOSED DDA
A.
Descriotion of the orooosed Proiect
. The purpose of Amendment No.4 is to transfer the Flood Control Chaunel Property
to the Developer to facilitate the development of a single floor parking structure in
support of a 2-story 45,000 square foot office building structure that the Developer
is constructing for the County of San Bernardino. The Developer will provide all
necessary improvements required in connection with the construction of the single
floor parking structure.
B.
Agencv Responsibilities
. Transfer the Flood Control Channel Property to the Developer pursuant to the tenns
of Amendment No.4.
C. Develooer Resoonsibilities
II.
. Execute and implement Amendment No.4 with the Agency and agree to accept the
Flood Control Channel Property per the tenns of Amendment No.4 and develop a
parking structure.
. Complete the construction of the parking structure without any further Agency
assistance per the tenns of Amendment No.4.
COST OF THE PROPOSED AMENDMENT NO.4 TO THE AGENCY
The costs of the proposed Amendment No. 4 would be the usual and nonnal costs associated
with the sale of property which is estimated to be $2,000.
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III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT
. THE mGHEST AND BEST USE PERMITTED UNDER THE REDEVELOPMENT
PLAN
The estimated value of the interest to be conveyed ($36,000) is based upon the low
development potential of the property. Construction of a single floor parking structure is
considered the highest and best use pennitted under the Project Area Plan.
IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED
DETERMINED AT THE REOUIRED USE AND WITH THE CONDmONS.
COVENANTS AND RESTRICTIONS REQUIRED BY THE PROPOSED
AMENDMENT NO.4
The estimated fair market value of the interest to be conveyed to the Developer is $36,000
based upon the tenns and conditions pursuant to Amendment No.4.
V. BLIGHT ALLEVIATION
The development of the Flood Control Channel Property will eliminate existing blight, foster
the reuse of underutilized property into a single floor parking structure and return the Flood
Control Channel Property to the property tax rolls.
C VI. CONFORMANCE WITH THE AD 1290 IMPLEMENTATION PLAN
The Five-Year Implementation Plan ("Plan") adopted by the Agency contains several broad
operational goals and objectives for the Project Area. Among these are the following:
. Eliminate blighting influences, including deteriorating buildings, uneconomic
land uses, obsolete structures, and other environmental, economic and social
deficiencies.
. To re-plan, redesign and redevelop underdeveloped areas that are stagnant or
improperly utilized.
Amendment No.4 will assist the Agency in meeting the objectives and goals of its Plan for the Project
Area in the following way:
The execution of Amendment No.4 with the Developer will continue redevelopment activities of the
Agency by developing underutilized Flood Control Channel Property and increasing property taxes.
Based upon the preceding factors, Amendment No.4 is consistent with the Plan. The interest in the
Flood Control Channel Property to be conveyed to the Developer will be developed in confonnance
with the City's General Plan and the Municipal Development Code.
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RESOLUTION NO.
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING THE SALE OF CERTAIN
REAL PROPERTY BY THE REDEVE~OPMENT AGENCY OF THE CITY
OF SAN BERNARDINO ("AGENCY") TO WATERMAN HOLDINGS, LLC,
AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE
AGENCY TO EXECUTE AMENDMENT NO.4 TO THE 2004 DISPOSITION
AND DEVELOPMENT AGREEMENT, AS AMENDEDm BETWEEN THE
AGENCY AND WATERMAN HOLDINGS, LLC (4 STREET AND
WATERMAN AVENUE - APN:. 0135-191-17) (CENTRAL CITY EAST
REDEVELOPMENT PROJECT AREA)
WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency"), is a
public body, corporate and politic existing under the laws of the State of California, Health and
Safety Code Section 33100, and is charged with the mission of redeveloping blighted and
13 underutilized land; and
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WHEREAS, the Community Development Commission of the City of San Bernardino (the
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"Commission") is the governing board of the Agency; and
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WHEREAS, the City of San Bernardino, California (the "City") is a municipal corporation
18 and charter city, duly organized and existing pursuant to the provisions of the constitution of the
19 State of California; and
20 WHEREAS, on December 6, 2004, the Commission adopted Resolution No. CDC/2004-49
21 approving the sale of certain real property (APN: 0135-191-11) (the "Agency Property") by the
22 Agency to Watennan Holdings, LLC (the "Developer"), and authorizing the Agency Executive
23 Director to execute the 2004 Disposition and Development Agreement (the "DDA'') between the
24
Agency and the Developer; and
25
26
WHEREAS, on June 20, 2005, the Commission adopted Resolution No. CDC/2005-19
o 27 approving and authorizing the Executive Director of the Agency to execute Amendment No. I to the
28 DDA between the Agency and the Developer; and
#f{31 B
II - '3-0
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1 WHEREAS, Amendment No. I to the DDA caused Phase I and Phase II of the Project to
2 exchange locations for each such Phase; and
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WHEREAS, on June 19, 2006, the Commission adopted Resolution No. CDC/2006-20
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approving and authorizing the Executive Director of the Agency to execute Amendment No.2 to the
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DDA between the Agency and the Developer; and
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WHEREAS, Amendment No.2 to the DDA eliminated the previously proposed Phase I and
Phase II of the Project and was replaced with a single phase Project consisting of the construction 0
an approximately 45,000 square foot, two-story building along with the appropriate and necessary
improvements and landscaping as well as establishing a reimbursement schedule wherein the
Agency would pledge to the Developer an amount equal to 60% of the 1 % of new property taxes
generated by the Project for a period of ten (10) years; and
WHEREAS, on July 21, 2008, the Commission adopted Resolution No. CDC/2008-26
approving and authorizing the Interim Executive Director of the Agency to execute Amendment No.
3 to the DDA between the Agency and the Developer; and
WHEREAS, Amendment No. 3 to the DDA will allow the Agency to reimburse the
Developer, from the Agency Property sale proceeds, an amount not to exceed the lesser of the actual
cost paid for the Off-Site Improvements or $399,500 utilizing prevailing wage rates; and
WHEREAS, this payment will be made to the Developer 30 days following the completion
of the Project as evidenced by a Certificate of Occupancy issued by the City and upon
submission/validation by the Agency of the actual costs paid for the Off-Site Improvements; and
WHEREAS, the Agency owns certain real property, approximately .84 acres, located south
of the southwest corner of 4th Street and Watennan Avenue within the Central City East
Redevelopment Project Area and is presently an unimproved flood control channel (the "Flood
Control Channel Property", APN: 0135-191-17); and
WHEREAS, the Developer has determined that additional parking is necessary for the
development of the Project to the north of the Flood Control Channel Property; and
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1 WHEREAS, the Developer has offered to purchase the Flood Control Channel Property
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WHEREAS, an appraisal of the Flood Control Channel Property was perfonned in August
2008 by Smothers Appraisal (the "Appraiser"); and
WHEREAS, according to the report dated September 4, 2008 (the "Appraisal Report"),
7 prepared by the Appraiser, the fair market value of the Flood Control Channel Property is $36,000;
8 !IIId
9 WHEREAS, the Agency intends to enter into Amendment No.4 to the DDA,.as amended
(the "Amendment"), pursuant to which the Agency proposes to sell the Flood Control Channel
Property to the Developer for the fair market value of $36,000; and
WHEREAS, the Amendment provides for the development of the Flood Control Channel
Property so that it may be used asa parking lot; and
WHEREAS, the Developer has estimated that it will cost $1,100,000 for the construction 0
the improvements to the Flood Control Channel Property; and
WHEREAS, the Agency has prepared and published a notice of joint public hearing in the
San Bernardino County SUN newspaper on October 20, 2008 and October 27, 2008, regarding the
19
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consideration and approval of the Amendment; and
WHEREAS, pursuant to Health and Safety Code Section 33433(b), the Agency may transfer
the Flood Control Channel Property to the Buyer subject to the Mayor and Common Council of the
City of San Bernardino (the "Council") and the Commission adopting separate Resolutions
authorizing the Agency to transfer the Flood Control Channel Property in light of the findings set
forth herein, pursuant to Health and Safety Code Section 33433; and
WHEREAS, the Agency has prepared a Summary Report pursuant to Health and Safety
Code Section 33433 (the "Report") that describes the salient point of the Amendment and identifies
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the cost of the Amendment to the Agency; and
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1 WHEREAS, pursuant to Section 15332 of the California Environmental Quality Act (the
2 "Act") Guidelines, the Agency has reviewed the proposed sale and use of the Flood Control
3 Channel Property and has determined that the project, as identified in the Amendment, is exempt
4 from the Act and qualifies as a Categorical Exemption, Class 32 (Guidelines 15332) as the project
5 meets all four requirements for an In-fill Project; and
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WHEREAS, disposition of the Flood Control Channel Property to the Developer is
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consistent with the Central City East Redevelopment Plan; and
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9 WHEREAS, it is appropriate for the Commission to approve the Amendment and the
10 disposition of the Flood Control Channel Property to the Developer as set forth in the Amendment,
11 and this Resolution.
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NOW, TIffiREFORE, lHE COMMUNITY DEVEWPMENT COMMISSION OF mE CITY
13 OF SAN BERNARDINO DOES HEREBY RESOL VB, DEfERMlNE AND ORDER, AS FOLLOWS:
Section 1.
On November 3, 2008, the Commission, as the governing board of the
15
Agency, conducted a full and fair joint public hearing with the Council relating to the disposition of
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the Flood Control Channel Property from the Agency to the Buyer and the development thereof
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pursuant to the Amendment The minutes of the Agency Secretary for the November 3, 2008
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meeting of the Commission shall include a record of all communication and testimony submitted to
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the Commission by interested persons relating to the public hearing and the approval of the
20
Amendment.
Section 2.
The Commission hereby receives and approves the Report and the other
written materials submitted to the Commission at the meeting at which this Resolution is adopted.
The Report contains infonnation required under Health and Safety Code Section 33433.
Section 3.
This Resolution is adopted in order to satisfy the provisions of Health and
Safety Code Section 33433(a)(1) and (b)(2) related to the disposition of the Flood Control Channel
Property to the Buyer in accordance with the Amendment. The Commission hereby fmds and
determines as follows: that the Report contains the information described in Health and Safety
Code Section 33433(b)(2) wherein the Flood Control Channel Property is being sold to the Buyer
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1 at the purchase price of $36,000 for the developrnent of a parking lot which consideration is the fair
2 market value detennined at its highest and best use in accordance with the Central City East
3 Redevelopment Plan.
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Section 4.
The Commission hereby approves the Amendment and the Interim
5 Executive Director is hereby authorized and directed to execute the Amendment on behalf of the
6 Agency together with nonsubstantive and confonning changes as may be recommended by the
7 Interim Executive Director and Agency Counsel. The Interim Executive Director is hereby
8 authorized to take all appropriate actions as set forth in the Amendment to implement the
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disposition and redevelopment of the Flood Control Channel Property.
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Section 5.
This Resolution shall take effect from and after its date of adoption by this
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RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO APPROVING THE SALE OF
CERTAIN REAL PROPERTY BY THE REDEVELOPMENT AGENCY OF
THE CITY OF SAN BERNARDINO ("AGENCY") TO WATERMAN
HOLDINGS, LLC, AND AUTHORIZING THE INTERIM EXECUTIVE
DIRECTOR OF THE AGENCY TO EXECUTE AMENDMENT NO.4 TO
THE 2004 DISPOSmON AND DEVELOPMENT AGREEMENT, AS
AMENDED, BETWEEN THE AGENCY AND WATERMAN HOLDINGS,
LLC (4111 STREET AND WATERMAN AVENUE - APN: 013~191-17)
(CENTRAL CITY EAST REDEVELOPMENT PROJECT AREA)
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
8
Development Commission of the City of San Bernardino at a
meeting
9
thereof, held on the
10 Commission Members:
11 ESTRADA
12 BAXTER
13 BRINKER
14 DERRY
15 KELLEY
16 JOHNSON
17 MC CAMMACK
18
19
20
day of
, 2008, by the following vote to wit:
Abstain
Absent
Aves
Navs
Secretary
day of
.2008.
The foregoing Resolution is hereby approved this
21
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Patrick J. Morris, Chairperson
Community Development Commission
of the City of San Bernardino
25 Approved as to Fonn:
26
O 27 By: '-A~
A;~~
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AMENDMENT NO.4 TO THE
2004
DISPOSITION AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
WATERMAN HOLDINGS, LLC
(4th Street and Waterman Avenue Property)
This Amendment No.4 (this "Fourth Amendment") is dated as of November 3,2008, by
and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate
and politic (the "Agency''), and Waterman Holdings, LLC, a California limited liability company
(the "Buyer" or "Developer''), and is an amendment to that certain 2004 Disposition and
Developrnent Agreement by and between the Agency and the Developer, dated as of December
6, 2004, for the sale and purchase of certain Agency owned property located at the southwest
corner of 4111 Street and Watennan Avenue within the City of San Bernardino and within the
Central City East Redevelopment Project Area of the Agency (the "DDA" or "Agreement"), as
amended by that certain Amendment No. 1 to the DDA, dated June 20, 2005 (the "First
Amendment"), as amended by that certain Amendment No.2, dated June 19,2006 (the "Second
Amendment'') and as amended by that certain Amendment No.3, dated July 21, 2008 (the
"Third Amendment''), by and between the Agency and the Buyer, and is entered into in light of
the facts set forth in the following Recital Paragraphs.
RECITALS
A. The Agency and the Buyer executed the DDA on December 6, 2004, wherein the
Buyer, without limitation, agreed to purchase certain land that the Agency owned at the
southwest corner of 4th Street and Watennan Avenue (the "Agency Property", fonnerly APN:
0135-191-11 and now APN: 0135-191-16 after and pursuant to the Lot Line Adjustment, as
defined below), in the City of San Bernardino (the "City"), County of San Bernardino (the
"County"), State of California (the "State"). The Agency and the Buyer executed the First
Amendment to the DDA on June 20, 2005. The First Amendment modified the Agreement, to
provide, without limitation, for the transposition of the Phase I project and the Phase II project.
The Agency and the Buyer executed the Second Amendment to the DDA on June 19,2006. The
Second Amendment modified the DDA and the First Amendment, to provide, without limitation,
for the elimination of the Phase I and Phase II projects and was replaced by a single phase, two-
story building of approximately 45,000 square feet of floor space including the necessary and
appropriate on-site improvements and landscaping (the "Project").
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B. Pursuant to the Second Amendment, the Developer and the Agency, without
limitation, agree1\ to the following: (i) the Developer would purchase the Agency Property for
Five Hundred Twelve Thousand Four Hundred Twenty-Four Dollars ($512,424), (ii) the
Agency would reimburse the Developer a portion of the Agency Revenues (as defined in the
Agency Revenues Promissory Note (the "Note") attached as Exhibit "F' to the Second
Amendment) to be received by the Agency, in the manner provided therein and subject to the
tenns, covenants and conditions of the Note, and (Hi) the Developer would have a right of first
refusal on the "Flood Control Channel Property" (as defined in the Second Amendment).
C. After the approval and execution of the Second Amendment, the City added
additional requirements to the Project by requiring the Developer to construct certain off-site
improvernents including, without limitation, new curbs, rtters and sidewalks along 4th Street
and Waterman Avenue and street repair/resurfacing on 4 Street along the front of the Project
(collectively, the "Off-Site Impr~vements"). Pursuant to the Third Amendment, the Agency
agreed to reimburse the Developer for the actual costs paid by the Developer to construct the
Off-Site Improvements or the sum of Three Hundred Ninety-Nine Thousand Five Hundred
Dollars ($399,500), whichever is less, in the manner provided for in the Third Amendment.
D. The legal descriptions of the Agency Property and the Flood Control Channel
Property were revised and amended by the Lot Line Adjustment No. LLA 08-01 (the "Lot Line
Adjustment"), recorded on June 12, 2008, as Instrument No. 2008-0268868, in the Official
Records of the County Recorder's Office for the County of San Bernardino, State of California.
Pursuant to the Lot Line Adjustment, APN: 0135-191-11 and APN: 0135-191-15 were amended
and became APN: 0135-191-16 and APN: 0135-191-17, respectively.
E. The Agency and the Developer wish to further amend the DDA, as amended by
the First Amendment, as amended by the Second Amendment and as amended by the Third
Amendment, pursuant to the tenns, covenants and conditions of this Fourth Amendment.
F. Pursuant to this Fourth Amendment, the Agency and the Developer shall agree,
without limitation, to the following: (i) the Agency shall sell to the Developer, and the
Developer shall purchase from the Agency, the Flood Control Channel Property, for the sum of
Thirty-Six Thousand Dollars ($36,000), (ii) the legal description for the Agency Property and for
the Flood Control Channel Property shall be amended in accordance with and as revised by the
Lot Line Adjustment, and (Hi) the Note shall be revised as provided for in the "Revised Agency
Revenues Promissory Note" attached hereto and to the DDA as Exhibit "F".
G. The Agency and the Buyer desire to approve and execute this Fourth Amendment
to the DDA upon the terms, covenants and conditions as set forth herein.
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NOW, THEREFORE, THE AGENCY AND THE BUYER DO HEREBY AGREE
AS FOLLOWS:
1. Section 1.01. Pumose of Al!:reement. In Section 1.01 of the DDA, the following shall
be deleted from the end of the first section "the granting by the Agency to the Buyer of the First
Refusal Right, and the exercise by the Buyer of the First Refusal Right" and replaced with the
following "and the Flood Control Channel Property." Additionally, the'second sentence of
Section 1.01 shall be deleted in its entirety and replaced with the following "The purchase and
development of the Agency Property and the Flood Control Channel Property are in the vital and
best interests of the City of San Bernardino (the "City") and the health, safety and welfare of its
residents, and is in accord with the public purposes and provisions of applicable state and local
laws."
2. Section 1.03. Benefit to Proiect Area. Section 1.03 of the DDA shall be deleted in its
entirety and replaced with the following: "The Agency has determined that the purchase and
development of the Agency Property and Flood Control Channel Property by the Buyer, in
accordance with this Agreement, will materially assist in the elimination of blight and the
implementation of the Redevelopment Plan for the Project Area."
3. Section 1.06. Chanl!:e in Manal!:ement and Control of BUYer - Assil!llment and
Transfer. In Section 1.06(a)(I) of the DDA, the wording "and/or the Flood Control Channel
Property" shall be added immediately following the word "Property." In Section 1.06(a)(3) of
the DDA, the wording "and/or the Flood Control Channel Property" shaI1 be added immediately
following the word "Property." In Section 1.06(a)(4) of the DDA, the word "Agency" shall be
added immediately preceding the word "Property" and the wording "and/or the Flood Control
Channel Property" immediately following the "Property."
4. Section 1.07. List of Attachments to Aueement. As a result of the Lot Line
Adjustment which was necessary for the development of the Project, the legal descriptions and
assessor's parcel number for both the Agency Property and for the Flood Control Channel
Property have been changed. Accordingly, Exhibit "A", Exhibit "B", Exhibit "C", Exhibit "E"
and Exhibit "F" of the DDA, as revised by the First Amendment, by the Second Amendment and
by the Third Amendment, shall be deleted and replaced by the following Exhibits (which
Exhibits are attached hereto and incorporated herein by this reference):
Exhibit "A" "Revised Legal Description of the Agency Property"
Exhibit "B" "Revised Site Map of the Agency Property and the
Flood Control Channel Property"
Exhibit "C" "Revised Legal Description of the Flood Control Channel Property"
Exhibit "E" "Revised Improvements"
Exhibit "F" "Revised Agency Revenues Promissory Note"
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5. Section 1.08. No Recordation of A_ment: Survival. In line two (2) in Section 1.08
of the DDA, the word "Agency" shall be added immediately preceding the word "Property".
The wording "and/or the Flood Control Channel Property" shall be immediately added following
the word "Property", where appearing in Section 1.08 of the DDA.
6. Section 1.09. Flood Control Channel PropertY. Section 1.09 shall be added to the
DDA as follows: "The flood control channel consists of approximately 0.84 acres that is
presently aligned to the south of the Agency Property (the "Flood Control Channel Property").
The Buyer intends to purchase and to develop the Flood Control Channel Property as additional
parking for the Project. The Buyer shall be entitled to close escrow to acquire the Flood Control
Channel Property at anytime on or before April 30, 2009, unless such date is extended, in
writing, at the discretion of the Interim Executive Director for a total period of time not to exceed
six (6) months without an amendment to this Agreement.
7. Section 2.01. Acauisition and Disposition of the PropertY. In Section 2.01 of the
DDA, the word "Agency" shall be added immediately preceding the word "Property" and the
wording "and Flood Control Channel Property" shall be added immediately following the word
"Property", where appearing in the title. Additionally, the wording "and Flood Control Channel
Property" shall be added immediately following the word "Property", wherever found in this
Section.
8. Section 2.02. Conditions for Transfer of the Al!:enev Prouertv. In Section 2.02(a) and
Section 2.02(b) of the DDA, the wording "and Flood Control Channel Property" shall be added
immediately following the word "Property", where appearing in the title. Section 2.02(c) sha11
be added to the DDA as follows: "The Flood Control Channel Property shall be transferred to the
Buyer at the Close of Escrow provided that within the periods of time set forth in this Agreement
(i) neither party has tenninated this Agreement, (ii) the Buyer has delivered to the Agency the
Due Diligence Certificate in connection with the Flood Control Channel Property regarding
Section 2.11 and (iii) all other conditions of the Close of Escrow in connection with the Flood
Control Channel Property set forth in this Agreement have been met and the escrow costs
relating to the Close of Escrow have been paid by the appropriate party." Section 2.02(d) shall
be added to the DDA as follows: "The parties shall deliver jointly, approved written escrow
instructions (consistent with the tenus of this Agreement) to the Escrow Holder for transfer of
the Flood Control Channel Property, as soon as reasonably possible."
9. Section 2.03. Purchase Price. The Purchase Price for the Flood Control Channel
Property shall be Thirty-Six Thousand Dollars ($36,000) (the "Flood Control Channel Property
Purchase Price").
10. Section 2.04. Openinl!: of Escrow. Section 2.04(c) shall be added to the DDA as
follows: "The transfer and sale of the Flood Control Channel Property shall take place through
Escrow to be administered by the Escrow Holder. The Escrow for the Flood Control Channel
Property shall be deemed open (the "Opening of Escrow") upon receipt by the Escrow Holder of
a fully executed copy of the Agreement, the First Amendment, the Second Amendment, the
Third Amendment and this Fourth Amendment. The Escrow Holder shall promptly.confinn to
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the parties the escrow number and the title insurance order number assigned to the Escrow for
the Flood Control Channel Property with the Escrow Holder."
11. Section 2.06(a). Conveyance of Title. In Section 2.06(a) of the DDA, the wording
"and Flood Control Channel Property" shall be added immediately following the wording
"Agency Property", where appearing in this Section. Additionally, Section 2.06(a)(3) shall be
amended as folloWs: "(3) the Redevelopment Plan (existing as of the date of the Fourth
Amendment)."
12. Section 2.07. Additional Closinl!: Oblil!:ations of A2enev. In Section 2.07 of the DDA,
the wording "and/or Flood Control Channel Property" shall be added immediately following the
wording "Agency Property", where appearing in this Section.
13. Section 2.08. Closinl!: Oblil!:ations of Buver. In Section 2.08 of the DDA, the wording
"and/or Flood Control Channel Property" shall be added immediately following the wording
"Agency Property", where appearing in this Section.
14. Section 2.09. Environmental Law. In Section 2.09 of the DDA, the wording "and/or
the Flood Control Channel Property" shall be immediately added following the word "Agency
Property", where appearing in this Section.
15. Section 2.10. Due Dilil!:ence Investil!:ation of the Al!:enev ProDertv. In the section
heading for Section 2.10 of the DDA, the wording "and/or Flood Control Channel Property"
shall be added immediately following the wording "Agency Property." In Section 2.l0(a) of the
DDA, the wording "and/or Flood Control Channel Property" shall be added immediately
following the wording "Agency Property". In Section 2.l0(b) and (c) the wording "and/or the
Flood Control Channel Property" shall be added immediately following the wording <<Agency
Property." In Section 2.l0(d) of the DDA, the word "Agency" shall be added immediately
preceding the word "Property" and the wording "and/or the Flood Control Channel Property"
shall be added immediately following the word "Property." In Section 2.l0(e) of the DDA, the
. wording "and/or the Flood Control Channel Property" shall be added immediately following the
wording "Agency Property."
16. Section 2.11. Due Dilil!:enee Certificate. In Section 2.11, Section 2.11(a) and Section
2. 11 (b) of the DDA, the wording "and/or Flood Control Channel Property" shall be added
. immediately following the wording "Agency Property", .where appearing in this Section.
17. Section 2.12. Books and Records. In line three (3) of Section 2.12 of the DDA, the
words "respective portion of the" shall be deleted. Additionally, the wording "and/or Flood
Control Channel Property" shall be added immediately following the wording "Agency
Property", where appearing in this Section.
18. Section 2.13 Condition of the Prouertv. In Section 2.13 of the DDA, the wording
"and/or Flood Control Channel Property" shall be added immediately following the wording
C "Agency Property", where appearing in this Section.
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19. Section 2.14. Review and Anoroval of Condition of Title. In Section 2.14(a) and
Section 2.14(b) of the DDA, the wording "and/or Flood Control Channel Property" shall be
added immediately following the wording "Agency Property", where appearing in this Section.
20. Section 3.01. Uses. In Section 3.01 of the DDA, the wording "and the Flood Control
Channel Property" shall be added immediately following the wording "Agency Property", where
appearing in this Section.
21. Section 3.02. Modification of Covenants. In Section 3.02(a), Section 3.02(b), Section
3.02(c) and Section 3.02(d) of the DDA, the wording "and/or Flood Control Channel Property"
shall be added immediately following the wording "Agency Property", where appearing in this
Section.
22. Section 3.03. Oblil!ation to Refrain from Discrimination. In Section 3.03 of the
DDA, the wording "and/or the Flood Control Channel Property" shall be added immediately
following the wording "Agency Property", where appearing in this Section.
23. Section 3.05. No Liabilitv for Breach to a Predecessor in Interest. In Section 3.05 of
the DDA, the wording "and/or the Flood Control Channel Property" shall be added immediately
following the wording "Agency Property", where appearing in this Section.
24. Section 3.06. Al!encv Ouit Claim Deed. Section 3.06 of the DDA shall be deleted in
its entirety and replaced with the following: "All of the provisions in Sections 3.01 to 3.05,
inclusive, shall be included in the Agency Quit Claim Deed for the Agency Property and the
Flood Control Channel Property. Accordingly, Sections 3.01 to 3.05, inclusive, shaI1 survive the
Close of Escrow."
25. Section 3.07. Maintenance Condition of the Al!encv Prooertv. In the heading for
Section 3.07 of the DDA, the wording "and Flood Control Channel Property" shall be added
immediately following the wording "Agency Property." In Section 3.07(a) and Section 3.07(b)
of the DDA, the wording "and/or the Flood Control Channel Property" shall be added
immediately following the wording "Agency Property", where appearing in Section 3.07(a) and
Section 3.07(b).
26. Section 3.08. Pledl!e of Al!encv Revenues to Buver. In Sections 3.08(a), 3.08(e) and
3.08(f) of the DDA, the word "Revised" shall be added immediately preceding the wording
"Agency Revenues Promissory Note." Additionally, the wording "and Flood Control Channel
Property" shall be added immediately following the wording "Agency Property", where
appearing in .Section 3.08(a), Section 3.08(b), Section 3.08(c), Section 3.08(d) and Section of
3.08(e) of the DDA.
27. Section 3.10. Develooer First Refusal Rimt. Section 3.10 of the DDA shall be
deleted, in its entirety.
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28. Section 4.01. Defaults aud Remedies. In Section 4.0l(c) and Section 4.0l(g) of the
DDA. the wording "and the Flood Control Channel Property" shall be added immediately
following the wording "Agency Property".
29. Section 5.02. Conflict of Interest. In Section 5.02 of the DDA. the wording "and/or
Flood Control Channel Property" shall be added immediately following the wording "Agency
Property", where appearing in this Section.
30. Section 5.05. Enforced Delav: Extension of Time of Performance. In line ten (10) in
Section 5.05(b) of the DDA. the word "Agency" shall be added immediately preceding the word
"Property" and the wording "and/or the Flood Control Channel Property" shall be added
immediately following the wording "Agency Property." In line nine (9) in Section 5.05(c) of the
DDA. the word "Agency" shall be added immediately preceding the word "Property" and the
wording "and/or the Flood Control Channel Property" shall be added immediately following the
wording "Agency Property."
31. Section 5.06. Insoection of Books and Records. In Section 5.06 of the DDA, the
wording "and/or Flood Control Channel Property" shall be added immediately following the
wording "Agency Property", where appearing in this Section.
32. Section 5.13. Entire A2reement. The Agreement, as amended by the First Amendment,
as amended by the Second Amendment, as amended by the Third Amendment and as amended
by this Fourth Amendment constitutes the entire understanding and agreement between the
parties with respect to the Agency Property and the Flood Control Channel Property.
33. Section 5.14. Intel!:ration. In Section 5.14 of the DDA, the wording "and Flood Control
Channel Property" shall be added immediately following the wording "Agency Property", where
appearing in this Section.
34. Exhibit Headings. The following Exhibit headings shall be modified as set forth below:
Exhibit "A". Exhibit "A" shall be amended as follows:
"REVISED LEGAL DESCRIPTION FOR THE AGENCY PROPERTY"
Exhibit "B". Exhibit "B" shall be amended as follows together with the inclusion of a
new Site Map for the Agency Property and the Flood Control Channel Property:
"REVISED SITE MAP FOR THE AGENCY PROPERTY AND FOR THE FLOOD
CONTROL CHANNEL PROPERTY"
Exhibit "C". Exhibit "C" shall be amended as follows:
"REVISED LEGAL DESCRIPTION OF THE FLOOD CONTROL CHANNEL
PROPERTY"
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Exhibit "E". Exhibit "E" shall be amended as follows:
"REVISED IMPROVEMENTS"
Exhibit "F". Exhibit "F' shall be amended as follows:
"REVISED AGENCY REVENUES PROMISSORY NOTE"
35. Leol Effect. The DDA, the First Amendment, the Second Amendment and the Third
Amendment shall only be amended to the extent set forth herein. All other tenns, covenants
and/or conditions of the DDA, the First Amendment, the Second Amendment and the Third
Amendment, unless specifically amended or modified by the terms, covenants and/or conditions
of this Fourth Amendment, shall remain unmodified and in full force and effect. In the event of
any inconsistency, contraction and/or ambiguity between the terms, covenants and conditions of
this Fourth Amendment, and the DDA and/or the First Amendment and/or the Second
Amendment and/or the Third Amendment, the inconsistency, contraction and/or ambiguity shall
be resolved in favor of the tenns, covenants and conditions set forth in this Fourth Amendment.
36. Dermed Terms. Tenns not otherwise defined or redefined in this Fourth Amendment
shall have the meanings provided for in the Second Amendment.
37. Effective Date. This Fourth Amendment shall take effect from and after the date of final
approval hereof by the governing body of the Agency at a duly held public meeting and after the
execution of this Fourth Amendment by the Agency and the Buyer.
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IN WITNESS WHEREOF, the parties have signed this Fourth Amendment as of the date
first set forth above.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Dated:
By:
Emil A. Marzullo, Interim Executive Director
Approved as to Fonn and Legal Content:
By, \.~
Agency I .
DEVELOPER
Watennan Holdings, LLC,
a California limited liability company
Dated:
By:
]ian Torkan
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Exhibit" A"
Revised Legal Description of the Agency Property
APN: 0135-191-16
PARCEL 1 OF PARCEL MAP NO. 7140, LOCATED IN THE CITY OF SAN
BERNARDINO, AS PER MAP RECORDED IN BOOK 69 OF PARCEl MAPS,
PAGES I AND 2, RECORDS OF THE COUNTY OF SAN BERNARDINO, STATE
OF CALIFORNIA.
EXCEPTING THERE FROM THAT PORTION OF SAID PARCEl 1 DESCRIBED AS
FOLlOWS:
8E(;iNNING AT THE SOIJTHWEST CORNER OF SAID PARCEL 1, SAID POINT
AJ.,SO:EiEING THE NORTtlWESTCORNER OF PARCEL 9 OF SAID OF PARCEL
MAP NO. 7140;
THENCE NORTH 00007'14' EAST 16.70 FEET ALONG THE weST LINE OF SAID
PARCel 1 ;
THENCE LEAVING SAle WEST UHe SOUTH 89056'51' EAST 275.19;
THENCe SO'-lTH 86024'160 EAST 260.00 TO A POtNT ON THE SOUTH LINE OF
SAID PARCEl. 1, SAID SOUTH LINE BEtNG THE NORTH l.1NE OF S"'PPMCEl9:
THENCE SOUTHI9059'06"WEST 534.71 FEET AlONG SAID SOUTH LINE ANI)
SAID NORTH LINE TO THE SOl/THWEST CORNER OF SAID PARCEl. 1, ANO THE
POINT OF BEGINNING.
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Exhibit "8"
Revised Site Map of the Agency Property the Flood Control Channel Property
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Exhibit "C"
Revised Legal Description of the Flood Control Channel Property
APN: 0135-191-17
PARCEL 9 OF PARCEL MAP NO. 7140. LOCA~D IN THE CITY OF SAN
BERNARQlNO. AS PER MAP RECORDED IN BOOK 69 OF PARCEL MAPS, PAGES
1 AND 2, RECORDS OF THE COUNtY OF SAN BeRNAROlNO. STATE OF
CALIFORNIA
TOGETHER WITH THAT PORTION OF PARCeL 10F SAtD PARCEL MAP NO. 7140,
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID PARCEL 1, SAID POINT
ALSO BEING.THE NORTHWEST CORN1;ROF SAID PARCEL 9;
THENCE NORTH 0000T14" EAST 16.70 FEET ALONG THE WEST LINE OF SAID
PARCEL 1;
THENCE I.EAVING SAIO WEST LINE SOUTH tl!r~'51"eAST275.19;
C. THENCE SOUTH 86024'16" EAST 260.00 TO. A POINTQN THE SOUTH LINE OF
SAID PARCEL 1, SAID SOUTH LINE BEING THE NORTH LINE OF SAID PARCEL 9;
THENCE SOUTH 80.59'06" WEST 534.11 FEJ:T ALONGSAIOSOUTH LINE ANO
SAIO NORTH LINe TO THE SOUTHWEST CORNER o.F SAID PARCEL 1 ,AND'rHE
POINT OF BEGINNING.
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Exhibit "D"
Fonn of Agency Quitclaim Deed
[NO CHANGES MADE]
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Exhibit "E"
Revised Improvements
The Improvement on the Agency Property shall consist of an approximately 2-story, 45,000
square foot office building of concrete tilt-up or concrete block construction with sufficient
parking spaces to comply with both City ordinances and the County Lease Agreement. The
building will include full tenant improvements as required for the County Lease Agreement for
use by the County of San Bernardino, Transitional Assistance Department, and the tenant.
The Improvement of the Flood Control Channel Property shall consist of a single floor structure
built above the Flood Control Channel Property to provide additional parking spaces for the 2-
story, 45,000 square foot building. The construction, landscaping, etc., of the single floor
parking structure shall comply with the City Development Code and requirements from any
federal and/or state governmental agency, concerning improvements to and/or near flood control
channel land, that may be imposed on the Developer.
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Exhibit "F"
Revised Agency Revenues Promissory Note
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REVISED AGENCY REVENUES PROMISSORY NOTE
Date: July _, 200_
Los Angeles, California
The undersigned, the Redevelopment Agency of the City of San Bernardino, a public agency
(the "Agency"), promises to pay, and pledges to Watennan Holdings, LLC, a California limited
liability company (the "Buyer"), or the Buyer's assignee, one or more principal advances of a
portion of the Agency Revenues (as that tenn is defined below) due and owing by the Agency to the
Buyer in accordance with and pursuant to the terms, covenants and conditions of this Revised
Agency Revenues Promissory Note (the "Note") and the Agreernent (as that tenn is defined in this
Note), together with interest on the unpaid principal balance thereof, at the Interest Rate (as that tenn
is defmed in this Note), in lawful money of the United States,with the then outstanding principal
balance thereof, all accrued and unpaid interest, late charges, fees, and all other amounts due and
owing under this Note being due and payable by the Agency to the Buyer on the Maturity Date (as
defmed in this Note). The principal, interest, late charges, fees and all other amounts due under this
Note are payable by the Agency to the Buyer at 4221 Wilshire Boulevard, Suite 240, Los Angeles,
California 90010.
C This Note shall be subject to the following tenns, covenants and conditions:
I. Defmitions. The initially capitalized terms defined herein shall have the following meanings
where appearing in this Note. Otherwise, any initially capitalized tenn (not defmed herein) shall
have the meaning provided for in the Second Amendment (as defined below).
1.1 Mreement. The "Agreement" shall mean the Original Agreement (as defmed
below), as amended by the First Amendment (as defined below), as further amended by the Second
Amendment (as defined below), as further amended by the Third Amendment (as defmed below)
and as further amended by the Fourth Amendment (as defined below), as executed by and between
the Agency and the Buyer, and all exhibits attached thereto.
1.2 Certificate of Oeeuoancv. The "Certificate of Occupancy" shall mean the
.Certificate of Occupancy issued by the City to the Buyer in connection with the development,
construction and installation of the improvements at the Agency Property (as that term is defmed in
the Second Amendment) and at the Flood Control Channel Property.
1.3 City. The "City" shall mean the City of San Bernardino.
1.4 County. The "County" shall mean San Bernardino County.
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1.5 First Amendment. The "First Amendment" shall mean that certain Amendment No.
1 to the Original Agreement, dated June 20, 2005, as executed by and between the Agency and the
Buyer.
1.6 Fourth Amendment. The "Fourth Amendment" shall mean that certain Amendment
No.4 to the Original Agreement, dated November 3, 2008, as executed by and between the Agency
and the Buyer.
1. 7 Fiscal Year. The "Fiscal Year" shall mean any given fiscal year for the County.
1.8 Initial Fiscal Year. The "Initial Fiscal Year" shall mean the first (I ") Fiscal Year
following the Fiscal Year in which the City issued the Certificate of Occupancy.
1.9 Interest Rate. The "Interest Rate" shall mean five percent (5%) per annum which
shall only apply to late payments remitted by the Agency to the Buyer and such Interest Rate shall
not be calculated upon the unpaid Principal balance of this Note, and shall accrue in the ~anner
provided for in Section 3(b) of this Note.
1.1 O. Late ChaNe. The "Late Charge" shall mean three percent (3%) on the payment due
and owing by the Agency to the Buyer under this Note (subject to any applicable cure period(s) in
this Note and/or the Agreement).
1.11 Maturitv Date. The "Maturity Date" shall mean the first business day following the
C expiration of the Term.
1.12 OriPinal Al!I'eement. The "Original Agreement" shall mean that certain 2004
Disposition and Development Agreement, dated December 6, 2004, as executed by and between the
Agency and the Buyer.
1.13 Principal. The "Principal" shall mean one or more principal advances, in the
aggregate, of a portion of the Agency Revenues due and owing by the Agency to the Buyer in
accordance with and pursuant to the terms, covenants and conditions of this Note and the
Agreement, as increased, decreased and adjusted from time-to-time. As of the date of this Note,
there is no discemable method to calculate the total Principal amount that may be payable by the
Agency to the Buyer pursuant hereto.
1.14 Second Amendment. The. "Second Amendment" shall mean that certain
Amendment No.2 to the 2004 Disposition and Development Agreement Watennan Holdings, LLC
(4th and Waterman Property), dated June 19,2006, as executed by and between the Agency and the
Buyer.
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1.15 Term. The "Tenn" shall mean the tenn of this Note commencing on the date of
execution of this Note and continuing thereafter until the end of the tenth (10th) Fiscal Year (with
the Initial Fiscal Year being the first Fiscal Year of this ten (lO)-year Fiscal Year period). ThisNote
has been duly executed and delivered as of July I the next succeeding Fiscal Year of the Agency
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during which the Buyer has obtained a Certificate of Occupancy from the City of San Bernardino for
the project described in the Original Agreement, as amended.
1.16 Third Amendment. The "Third Amendment" shall mean that certain Amendment
No. 3 to the Original Agreement, dated as of July 21, 2008, by and between the Agency and the
Buyer.
2. Interest. Interest shall not be paid on the Principal balance of this Note but shall be paid only
upon a default or other late payment by the Agency as provided in this Note. Subject to Section 3(b)
of this Note, interest on the unpaid Principal under this Note will accrue at the fixed annual Interest
Rate until paid in full by the Agency to the Buyer. Interest shall be computed based on a 365-day
year and the actual number of days elapsed.
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3. Payment of Princinal. Interest and Late Chanr:e. (a) The Agency hereby pledges to
the Buyer certain revenues of the Agency attributable to sources of funds that are legally available to
the Agency in each fiscal year during the tenn of such pledge (the "Agency Revenues") in an
amount based upon the Index as hereinafter defined. The Index for the calculation of the dollar
amount of the Agency Revenues to be remitted in each fiscal year to the Buyer shall be on the basis
of (A) sixty percent (60%), multiplied by (B) the one percent (I %) general property taxes, exclusive
of any override taxes, special taxes, ad valorem taxes for general obligation bonded indebtedness or
other special assessments, that are actually paid by the Buyer and/or the Buyer's successor-in-
interest to the ownership of the Agency Property and of the Flood Control Channel Property
attributable to the development to occur on the Agency Property and on the Flood Control Channel
Property pursuant to this Agreement (such 60% of the 1 % of the real property taxes as actually paid
by the Buyer and/or Buyer's successor-in-interest to the ownership of the Agency Property and of
the Flood Control Channel Property to the County is herein referred to as the "Index").
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(b) The payments of the Agency Revenues shall commence in the fiscal year next
succeeding the fiscal year in which the Buyer receives a Certificate of Occupancy for the
development of the Agency Property and the Flood Control Channel Property and continuing for a
total of ten (10) fiscal years thereafter with the Initial Fiscal Year commencing as of the fiscal year
following the fiscal year in which a Certificate of Occupancy is so issued by the City for the
development of the Agency Property and of the Flood Control Channel Property. Such payments
shall be remitted by the Agency to the Buyer within thirty (30) calendar days after the Buyer has
provided written documentation to the Agency that the applicable property taxes on the Agency
Property and on the Flood Control Channel Property as of each December 10 and/or April 1 0 (or any
other delinquency date established by the County for the payment of supplemental property taxes)
have been duly paid. The Buyer shall provide to the Agency, a copy of the property tax bill and a
copy of the cancelled check illustrating payment of the appropriate real property tax amount. The
Agency shall within thirty (30) calendar days after receipt of the documentation required by this
Section, remit the appropriate payment of the Agency Revenues based upon the Index to the Buyer.
Any failure of the Agency to dispute in writing the adequacy of the documentation as submitted by
the Buyer within the applical;>le 30-day period of time, shall constitute approval of same by the
Agency. The Agency shall be obligated to provide written notice to the Buyer within said 30-day
period of time, as to any inadequacy of any documentation provided by the Buyer to the Agency.
Failure of the Agency to remit the requested payment of the Agency Revenues within ten (10)
30f7
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calendar days after the expiration of the initial 30-day period for review of the docume:ntation as
submitted, unless notice has been provided by the Agency to the Buyer in the manner as provided
above, shall subject the Agency to a three percent (3%) late charge on the amount owed and interest
at the rate offive oercent (5%) per annum calculated on the number of days from the due date of the:
applicable payment until such amount has been paid to the Buyer.
(c) It shall be a condition precedent to each payment of the Agency Revenues
hereunder that as of each such Agency Revenues payment due date there has been no Transfer (as
defined in the Agreement), assignment, or sale or other conveyance of the Agency Property or of the
Flood Control Channel Property or any interest in the Agreement which is prohibited by the
Agreement.
(d) In the event that the Buyer should Transfer any interest in the Agreement, this
Note and/or the Agency Property and/or the Flood Control Channel Property in violation of the
Agreement or this Note, or sell the Agency Property and/or the Flood Control Channel Property in
violation of the Agreement or this Note, prior to the expiration of the applicable ten-year period for
the receipt of the Agency Revenues, the obligation of the Agency for any further remittances of the
Agency Revenues shall immediately cease and terminate as to that portion of the Agency Property
and/or of the Flood Control Channel Property to which such prohibited Transfer or other sale or
conveyance has occurred.
(e) Notwithstanding anything herein to the contrary, upon the issuance of a
Certificate of Occupancy by the City for the Agency Property and/or for the Flood Control Channel
Property, any of the following transactions shall not be deemed a "Transfer" prohibited by the
Agreement or this Note: (i) the transfer of fee title to the Agency Property and/or to the Flood
Control Channel Property to any entity in which an entity directly or indirectly, majority-owned and
controlled by Jian Torkan, is the general partner or managing member or partner, (ii) a transfer offee
title to the Agency Property and/or to the Flood Control Channel Property in a transaction in which
the Buyer enters into a lease for the Agency Property and/or for the Flood Control Channel Property
pursuant to which it is obligated to pay all property taxes, or (iii) a transfer to any entity which is
directly or indirectly majority-owned and controlled by Jian Torkan. On and after the issuance of the
Certificate of Occupancy as specified above and for a period of time equal to ten (10) years after the
date of the issuance of the Certificate of Occupancy, and in addition to the ability of the Buyer to
enter into a transaction that is deemed not to be a Transfer as defined above, the Buyer may sell,
transfer or assign the Agency Property and/or the Flood Control Channel Property, the Agreement
and this Note to any other person or entity subject to the following: (i) such subsequent owner of the
Agency Property and/or of the Flood Control Channel Property has assumed in writing all duties and
obligations of the Buyer as contained in the Agreement and this Note in form and substance as may
be reasonably required by the Agency General Counsel and (ii) the subsequent owner has assumed
all Agency Property and/or Flood Control Channel Property maintenance, covenants and obligations
set forth in the Agreement, or in any other document mutually executed by Buyer and the Agency.
Following the ten (1 0) year period referred to above, there shall be no restriction or condition to any
sale of transfer by the Buyer of the Agency Property and/or of the Flood Control Channel Property
and/or the Buyer's interest in this Agreement. Following the expiration of the Tenn, the Agency
shall have no further duty or obligation to make any payment of the Agency Revenues, or any
portion thereof, to the Buyer or to any successor-in-interest in the ownership of the Agency Property
and/or of the Flood Control Channel Property (except for the Agency Revenues and/or any other
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amounts due and owing by the Agency to the Buyer under this Agreement). Notwithstanding
anything herein to the contrary, any transfer of the Agency Property and/or of the Flood Control
Channel Property and/or the Buyer's interest in the Agreement and in this Note pursuant to a
foreclosure or deed-in-lieu thereof shall not constitute a prohibited Transfer.
(t) The Buyer shall have all rights and remedies against the Agency pursuant to
the laws of the State of California and as further set forth in this Agreement and in this Note. Any
failure of the Agency to remit the timely payments of the Agency Revenues to the Buyer shall be
deemed to be a default hereof for which the Buyer shall be entitled, after delivery of the notice or
otherwise as set forth in this Note, to be reimbursed for all costs and expenses of the collection of
any dollar amount that is then due and payable by the Agency to the Buyer from the Agency
Revenues.
4. PreDavment. This Note may be prepaid by the Agency, at any time, in whole or in part,
without premium or penalty, as long as any principal prepayment is accompanied by a payment of
interest accrued to the date of prepayment on the amount prepaid, but only if interest is payable due
to a prior payment default by the Agency, and any and all late charges or other amounts then owed
by the Agency hereunder.
5. ADDlication of Pavments. Each payment under this Note shall be credited frrst to any late
charges and fees (including, without limitation, attorneys' fees and costs), all accrued and unpaid
interest, if any, and then to Principal then due and payable under this Note.
6. Maturity Date. On the Maturity Date, the Agency shall pay to the Buyer the then
outstanding Principal balance, all accrued and unpaid interest, late charges, fees, and all other
amounts (including, without limitation, attorneys' fees and costs) then due and payable under this
Note.
7. Condition Precedent. The Agency shall have no duty or obligation to execute, deliver or
perfonn under this Note until all conditions precedent provided for in this Note and the Agreement
have been fully perfonned and satisfied by or for the Buyer or have been expressly waived in writing
by the Agency.
8. Notice. Any notice required to be provided in this Note shall be given in writing and shaI1 be
sent (i) for personal delivery by a delivery service that provides a record of the date of delivery, the
individual to whom delivery was made, and the address where delivery was made; (ii) by first-class
certified United States mail, postage prepaid, return receipt requested; or (iii) by a nationally
recognized overnight courier service, marked for next day business delivery. All notices shall be
addressed to the party to whom such notice is to be given at the address stated below or to such other
address as a party may designate by written notice to the other. All notices shall be deerned effective
on the earliest of (a) actual receipt; (b) rejection of delivery; (c) if sent by certified mail, the third day
on which regular United States mail delivery service is provided after the day of mailing or, if sent
by overnight delivery service, on the next day on which such service makes next business day
deliveries after the day of sending. The address for the Agency and for the Buyer shall be as
follows, subject to any written notice of a change of address by one party to the other:
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Address for the Agency:
Redevelopment Agency of the City of San Bernardino
201 North "E" Street, Suite 301
San Bernardino, CA 92401
Attention: Interim Executive Director
Address for the Buyer:
Watennan Holdings, LLC
4221 Wilshire Boulevard, Suite 240
Los Angeles, CA 90010
Attention: ]ian Torkan
9. Default. Subjectto Section 7 of this Note, and any applicable cure period(s) provided for in
this Note and/or in the Agreement, a default shall occur whenever the Agency fails to pay to the
Buyer any sum due under this Note when it becomes due and payable, or (b) any breach of any other
promise or obligation in this Note, the Agreement or any other instrument, document and/or
agreement, now or hereafter, evidencing, securing, guaranteeing, hypothecating, relating to, or in
connection with, the transaction contemplated in the Agreement and/or this Note (collectively, a
"Default''). Upon the occurrence of a Default, the Buyer may, at its option, declare this Note
(including, without limitation, all principal, all accrued and unpaid interest, late charges, attorneys'
fees and costs) to be immediately due and payable, regardless of its Maturity Date, subject to the
cure periods provided for in this Note and/or the Agreement (collectively, the "Default Payment
Amount"), and the Agency shall immediately pay to the Buyer the Default Payment Amount.
10. Unseeured Promissorv Note. This Note is unsecured, and is not secured by any real or
personal property of any nature whatsoever.
11 Modification. This Note may not be modified, amended, waived or extended, changed,
discharged or tenninated orally or by any act on the part of the Agency or of the Buyer, but only by
an agreement in writing signed by the Agency and the Buyer.
12. Headin2s. The headings of this Note are for purposes of reference only and shall not limit or
otherwise affect the meaning thereof.
13. Interoretation. Common nouns and pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the person or entity may in the context
reqwre.
14. Goveroin2 Law. This Note shall be governed by and construed in accordance with the laws
of the State ofCalifomia. .
15. Judicial Proceedinl!S and Attornevs' Fees. If either party hereto files any action or brings
any action or proceeding against the other arising out of this Note, then as between the Buyer and the
Agency, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as
damages, its reasonable attorneys' fees as fixed by the Court, in such action or proceeding or in a
separate action or proceeding brought to recover such attorneys' fees. The costs, salary and
expenses of the City Attorney for the City and members of his office in enforcing this Note shall be
considered as "attorneys' fees" for purposes of this Section. Any such action or proceeding must be
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commenced in the Superior Court for the County of San Bernardino, San Bernardino District, State
of California.
16. Enforcement Costs. All reasonable out-of-pocket costs incurred by the Buyer in the
enforcement of this Note shall be added to the amounts due under this Note.
17. Assinment. This Note may be assigned by the Buyer, subject to the restrictions and
limitations provided for in Section 3.08( c), 3 .08( d) and 3.08( e) of this Note and by the Agency, but
no such assignment shall relieve the Agency from any ofits obligations or liabilities hereunder. The
tenns, covenants and conditions of this Note shall be binding upon, and inure to the benefit of, the
successors and assigns of the Buyer (subject to the restrictions and limitations provided for in
Section 3.08(c), 3.08(d), and 3.08(e)ofthis Note) and of the Agency.
IN WITNESS WHEREOF, the Agency has executed this Agency Revenues Promissory
Note as of the date first written above.
AGENCY
Redevelopment Agency of the City of San Bernardino
a public agency
By:
Emil A. Marzullo, Interim Executive Director
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